China's Online Censors Work Overtime

To maintain "social stability" during the 60th anniversary of the People's Republic, China is working hard to limit access to the Internet
By Bruce Einhorn
As China gears up to mark the 60th anniversary of the founding of the People's Republic on Oct. 1, the country's security watchdogs are on alert for threats to the big celebration.

The government is calling for "greater efforts to maintain public order and social stability," the official Xinhua news agency reported on Sept. 28.

In Beijing alone, 800,000 people have offered themselves as "safety volunteers," Xinhua reports.
Part of the campaign to ensure a smooth anniversary includes an intensified effort to limit access to China's Internet, say anti-censorship activists outside the country.

"They have tried everything they can" to block software that helps people evade censorship, says Bill Xia, president of U.S.-based Dynamic Internet Technology, a company that has developed Freegate, software that enables users to circumvent censors by rerouting traffic through proxy servers.

While there's always a high level of censorship in China, says Xia, the campaign ahead of National Day this year is more comprehensive than usual. "This time they have really put a lot of resources to this," he says.
Other censorship foes report similar problems.

The Onion Router, or TOR, also uses proxy servers to help users gain access to restricted sites. Some half a million people rely on it daily, according to TOR Executive Director Andrew Lewman, who says China is one of the service's top users.

TOR, originally developed for the U.S. Navy, depends on volunteers to run its network and publish addresses to 2,000 "relays" that give people access to servers.

"Since Sept. 25 we have seen a number of people saying that TOR has stopped working," says Lewman. More than half of the relays were blocked.

SOME ANTI-CENSORSHIP PROGRESS
The new campaign against services such as Freegate and TOR comes after critics of online censorship in China won a rare victory.

On July 1 the government had planned to force all PC vendors to install or provide filtering software called Green Dam, which was meant to limit access to online pornography. But critics said it also restricted access to politically sensitive sites.

After an outcry both abroad and at home, Beijing backed down and announced companies would not have to comply with the requirement.
Since then, though, the Chinese government has taken a hard line in the far western region of Xinjiang, where fighting between Muslim Uighurs and Han Chinese in July led to the deaths of 197 people and injuries to 1,700 others.

The local government blamed Rebiya Kadeer, an exiled leader of the World Uighur Congress, for the unrest and said she used the Internet to communicate with "secessionists" in the vast region. After the rioting, the government began blocking the Internet in Urumqi, Xinjiang's capital, and connections are still down, according to the official China Daily newspaper.
On Sept. 29, China Daily reported on new regulations designed to control use of the Internet throughout Xinjiang.

"Online activities compromising national security, damaging national and social interests, undermining ethnic unity, instigating ethnic succession, and harming social stability will be severely punished," the paper reported.

"THE ELECTRONIC GREAT WALL"
The renewed efforts to limit access to the Internet inside China, as well as recent attacks against foreign journalists, prompted Reporters Without Borders, the international group that advocates for press freedom, to criticize the Chinese government.

"The Electronic Great Wall has never been as consolidated as it is now, on the eve of the 1 October anniversary," the group said in a Sept. 29 statement.
That said, Lewman says TOR is staying ahead of the authorities. Although access is difficult, TOR "is [working] and has been," he says.

The project's volunteers regularly change the Internet protocol (IP) addresses that people can use to gain access to TOR, he says.

"It's in constant churn," Lewman says. "You can block it at one point in time, but by noon 20% of them have already changed IP addresses."
Unlike other regimes, he adds, there are limits to how far the Chinese government will go to control the Internet.

During the upheaval following the Iranian presidential election, for instance, "Iran wasn't afraid to block secure Web sites across the board, which breaks e-commerce, access to Gmail, everything," says Lewman.

"I don't think China is willing to do that."

'Paranoid' China ramps up firewall on anniversary

PARIS (AFP)— Press rights group Reporters Without Borders said Tuesday that a "paranoid" China had blocked tens of thousands of websites ahead of the 60th anniversary of the People's Republic.

The Paris-based group said that Chinese authorities had targeted Virtual Private Networks (VPNs) and other ways that residents, including foreign reporters, used to circumvent controls on the Internet.

The group said that "government security paranoia" in the run-up to Thursday's anniversary was "turning into a major headache for Internet users and reporters.

"It estimated that tens of thousands of web addresses had become inaccessible in recent days and said it was even more difficult to reach Facebook, Twitter and other social networking and blogging sites that were already blocked."

The Electronic Great Wall has never been as consolidated as it is now, on the eve of the October 1 anniversary, proving that the Chinese government is not so sure of its record," the group said.

It said that authorities particularly clamped down on websites linked to ethnic minorities in Xinjiang and Inner Mongolia.

Xinjiang in July saw China's deadliest ethnic unrest in decades that pitted the majority Uighur population against the nation's predominant Han ethnicity.

China's military plans a show of force on Thursday and is likely to parade its new intercontinental ballistic missiles as the Communist Party highlights the nation's transformation into a world power.

China Adds a Feature to Phones: Patriotism

By SHARON LaFRANIERE
BEIJING — Just in case residents of this capital are not feeling sufficiently nationalistic ahead of National Day, the state-controlled mobile service company has changed its customers’ cellphone ring-back tones to a patriotic song.
“It’s a gift,” said a customer service representative at China Mobile when asked about the switch it made Monday.
A ring-back tone is what a caller hears once a number is dialed but before the other party picks up. The standard tone is a repetitive ring.
But some cellphone users customize their ring-back tones — just as they customize their ring tones — with favorite songs.
Many Beijing customers who use the standard tone discovered Monday that China Mobile had a surprise for them: Callers heard “Guojia,” or “Country” — a patriotic tune sung by the actor Jackie Chan and a female vocalist.
The lyrics include the following lines: “A country stands up in the world,” “Only when we have a strong country can we have a prosperous family,” and “Country is glorious perseverance.”
A performance of the song is planned for the celebration on Thursday of the 60th anniversary of the founding of the People’s Republic of China.
The company’s representative said any customer who did not like the tune could switch to other options at no cost by following instructions on its Web site. She said she did not know how long the song would continue to play otherwise.
The cellular provider, China’s biggest, is far from alone in trying to add its own flourish to the commemoration of 60 years of Communist rule.
Numerous companies have changed the background colors of their Web sites to red and yellow, the colors in the Chinese flag.
But Hu Xingdou, a reform-minded economics professor at Beijing Institute of Technology, said China Mobile went overboard in tinkering with its customers’ phones.
“The current efforts to instill ideology makes me feel that the authorities consider ordinary Chinese people to be unpatriotic or even mentally challenged,” he said.

“So they enforce this patriotic education on people.”

Blood and Treasure On the Empire State Building

The Stiletto
When you look at the lights on the Empire State Building, think of the red as the blood of the millions shed in the numerous brutal repressive purges that kept the communists in power, and think of the gold as the amount of money the U.S. owes the heirs of Mao’s revolution.
Considering that communist China is financing $800 billion of the $11.8 trillion government debt incurred by the largest capitalist economy in the world, it is sadly ironic that the Empire State Building-- built during the Great Depression with American steel, a testament to the “can-do” spirit of our nation-- would drape itself in red and yellow lights tonight on September 30, to commemorate the 60th anniversary of the founding of the People’s Republic of China.
Another irony: According to The Telegraph of London, the “people” are barred from going to Beijing's Tiananmen Square to watch the parade that will celebrate the achievements of “their” republic:
The parade will be reviewed by President Hu Jintao and a few thousand invited media and dignitaries seated in red-carpeted grandstands arranged along one side of Tiananmen Square beneath a freshly painted portrait of Chairman Mao.
Later, Tiananmen Square, which at 100 acres is the largest public space in the world capable of holding several hundred thousand people comfortably, will host a night-time firework and laser light-show attended by 60,000 carefully vetted people and performers.
As in all totalitarian regimes, some animals are more equal than others. This is the bloody history that the Empire State Building's lighting scheme will be honoring:
In the years following the communist takeover of China-- known as the Yan’an Rectification Movement-- thousands of intellectuals and others who might derail the indoctrination of the populace with Marxist and Leninist principles were killed.
This campaign was followed by the Zhen Fan and Shu Fan which targeted former Chinese Nationalist officials and employees of Western corporations, business owners, landowners, and intellectuals. An estimated three to five million people were killed, and another 1.5 million were sent to labor camps.
Various campaigns and movements kept targeting intellectuals and other enemies of the state. But try as hard as they might, the secret police and communist officials couldn’t kill as many Chinese as efficiently as the widespread famine triggered by the Great Leap Forward --Chairman Mao’s attempts to impose collectivism on China’s peasant farmers -- which resulted in between 20 and 43 million people starving to death (Mao himself always seemed very well-fed).
Mao’s subsequent economic and social engineering programs were also dismal failures and fearing that capitalist sentiment was stealthily creeping into the hearts and minds of the people, he launched the Cultural Revolution and went after his enemies and those pesky intellectuals with a vengeance.

With the educated being specifically targeted, schools and universities were shuttered and students from urban areas were forcibly relocated to the remote countryside.

Illiteracy rates soared, ancient Chinese artifacts and monuments were destroyed as a symbolic break with “the old ways of thinking” and traditional customs and religious ceremonies were systematically stamped out.

As many as 36 million people were persecuted; of these up to 1.5 million were killed and an equal number maimed.
The red and yellow lights bathing the Empire State Building are meant to symbolize the flag of the People’s Republic of China, with its red field and five gold stars.
Given the immeasurable suffering of the Chinese people over the last 60 years, when you look at the lights on the Empire State Building, think of the red as the blood of the millions shed in the numerous brutal repressive purges that kept the communists in power, and think of the gold as the amount of money the U.S. owes the heirs of Mao’s revolution.

China is now the third largest economy in the world. Given its burgeoning GDP and our exploding national debt, it will soon surpass the U.S.

Then the Chinese can buy the Empire State building-- with devalued American dollars-- and keep the red and yellow lights on every day.

The Empire State Building's Disgusting Kowtow to China

By Doug Heye
I'll never forget driving into Manhattan the evening of December 12, 1995.

It was Frank Sinatra's 80th birthday. A huge Sinatra fan, I had the radio tuned to WQEW-AM, a New York station in the middle of a multi-day Sinatra A-Z broadcast.

As the skyline came into view, I noticed the Empire State Building bathed in blue to honor Ol' Blue Eyes.
The floodlights atop to Empire State Building, of course, often use different colors—red and green for Christmas; red, white, and blue on Memorial Day, the Fourth of July, and Bastille Day; green for St. Patrick's Day, to name, but a few.
The lights are often used, as one would imagine, for commercial purposes—special colors for the launch of Microsoft's Windows95, the video release of The Simpsons Movie, and last year's three-day celebration of the accomplishments (whatever they may be) of Mariah Carey.
Tonight the Empire State Building will be awash in red and yellow.

But instead of honoring a singer intrinsically linked to the city, holidays, or something crassly commercial, the Empire State Building, as reported by the Agence France Presse, will "honor the 60th Anniversary of communist China."
What specifically has the Empire State Building decided to honor?
Will it honor the Tiananmen Square protests of 1989, where the government murdered hundreds of its own citizens and rolled out tanks to quell any showing of support for freedom?
Is this to honor Mao Zedong, whose euphemistically-named Great Leap Forward and Cultural Revolution led to the mass starvation and mass murder of 40-70 million Chinese, a death toll perhaps surpassing that of Adolf Hitler and Josef Stalin combined, and led him to declare "China is such a populous nation, it's not as if we cannot do without a few people?"
Or is this to honor China's 1950 invasion of Tibet and subsequent famine, mass deaths, and continued domination over its land, people, and culture?
You almost have to hand it to the Chinese government.

As the country opened up economically (while tightening its grip back home), it learned enough about western capitalism to know that anything has a price.

Apparently that includes honoring a regime responsible for the murder of millions upon millions of people. And with the Chinese consul on hand for a ceremonial switch of the flip, doing so with style.

In 2004, the Empire State Building paid tribute to the late actress Fay Wray, of King Kong fame, by switching off its lights. Such an action would be more appropriate than honoring a murderous regime.

At 60, China seeks greater global role

By Emma Graham-Harrison
BEIJING (Reuters) - Chinese leaders have told their diplomats to seek greater political and economic influence, changing tack from the low profile they relied on for decades to allay foreign concerns about the country's growing might.
China's new status found voice in last year's Beijing Olympics was bolstered by its role in fighting the global financial crisis and will be cemented on Thursday with the 60th birthday of the People's Republic.
President Hu Jintao earlier this year publicly urged ambassadors to give China a more powerful international presence.
His speech marked a firm step away from former leader Deng Xiaoping's slogan "conceal brilliance, cultivate obscurity," which China has followed for 20 years, downplaying its economic renaissance and keeping a modest international profile.
"Work hard to make our country more politically influential, more economically competitive, build a more congenial image and make it more morally inspiring," Hu told the July meeting.
The new-found confidence comes at a time when there are both calls from abroad for Beijing to play a more active international role, and fear in the West of how it could alter the world order.
But while a more assertive China is likely to be a permanent feature on the global stage, the government has little appetite for outright confrontation and there are limits to its overseas ambitions, which are outweighed by homegrown challenges.
The domestic pressures that dog China's ruling Communist party include a yawning rich-poor gap, sluggish consumption, widespread corruption and massive environmental degradation.
This unsteady combination of rising international standing and enduring domestic worries means that, even on the cusp of the "new China's" 60th anniversary, a longstanding ambivalence about superpower status will not soon go away.
"I see China as a country that remains very preoccupied with domestic problems and sees its greatest challenges and threats within China," said Susan Shirk, a professor at the University of California, San Diego, and former senior U.S. diplomat.
"Because they are so preoccupied with domestic issues, they do feel they want to avoid diplomatic conflicts at all costs, and are doing everything they can to avoid clashes.

STILL A LEARNER?
International relations experts said Hu has been consolidating a trend that naturally flows from decades of booming economic growth, and his July speech built on earlier calls for a more active international role.
"(This speech) does not mean that Beijing is getting more ambitious," said Zhu Feng, Deputy Director of the Center for International and Strategic Studies at Peking University.
"Is there any policy alternative for China, apart from increasing our international clout? But we are still a learner, still have to learn a lot to become a great power."
The shift to a new world order in which emerging economies are more relevant was highlighted at the meeting of the Group of 20 earlier this month, when the mix of developed and developing nations was made top coordinating body on global economic issues.
But paradoxically, Beijing often flexes its influence to fend off demands from other countries by stressing, time and again, that China remains a developing country, hobbled by poverty.
Western critics sometimes fail to understand the extent of domestic burdens for a nation that has huge global economic sway but relatively low per-capita income and serious imbalances created by years of relying on heavily export-led growth.
"Viewing China as a threat merely because it is big and its economy is growing so fast is a major misperception -- but therefore a major challenge for Beijing," Shirk said.
Beijing's appetite for leadership in areas that threaten to impinge on domestic goals will be limited.
"Especially in trade, environment and climate change areas, Western expectations will always go ahead of China's willingness and capability," said Shi Yinhong, professor of international relations at Renmin University in Beijing.
One particularly divisive issue is China's ties with countries such as Sudan, Myanmar, Iran and North Korea, many of which are resource rich but shunned and sanctioned by Western nations for human rights abuses or nuclear ambitions.
The West would like to see less business and more cajoling being done by Beijing, but China has long been averse to sanctions except as a last resort.
It says economic ties are no one else's business and has long insisted that it sticks to a doctrine of "non-interference" in other nations' affairs, in part because it does not want the likes of the United States criticizing its behavior or policies.
Critics who see more sinister motives in Beijing's dalliances with pariah regimes and its flexing of its economic muscle have been further unnerved by its ambitious military modernization.
But analysts say that while Beijing's self-confidence is rising, the leadership's domestic focus and bruising memories of decades of unrest and civil war last century mean there is little risk of assertiveness spilling over into conflict.

China’s Ties With Iran Complicate Diplomacy

President Mahmoud Ahmadinejad of Iran, center, with Chinese workers at a highway tunnel project northwest of Tehran in June.

By MICHAEL WINES

BEIJING — Leaders of the House Foreign Affairs Committee swept into Beijing last month to meet with Chinese officials, carrying a plea from Washington: if Iran were to be kept from developing nuclear weapons, China would have to throw more diplomatic weight behind the cause.
In fact, the appeal had been largely answered even before the legislators arrived.
In June, China National Petroleum signed a $5 billion deal to develop the South Pars natural gas field in Iran.

In July, Iran invited Chinese companies to join a $42.8 billion project to build seven oil refineries and a 1,019-mile trans-Iran pipeline.

And in August, almost as the Americans arrived in China, Tehran and Beijing struck another deal, this time for $3 billion, that will pave the way for China to help Iran expand two more oil refineries.
The string of energy deals appalled the Democratic chairman of the Foreign Affairs Committee, Representative Howard L. Berman of California, who called them “exactly the wrong message” to send to an Iran that seemed determined to flout international nuclear rules.
But some analysts see another message: as the United States issues new calls to punish Iran for secretly expanding its nuclear program, it is not at all clear that Washington’s interests are the same as Beijing’s.
That will make it doubly difficult, these analysts say, to push meaningful sanctions against Iran through the United Nations Security Council, where China not only holds a veto but has also been one of Iran’s more reliable defenders.
“Their threat perception on this issue is different from ours,” said Zalmay Khalilzad, who as the American ambassador to the United Nations under President George W. Bush helped persuade China to approve limited sanctions against Iran.

“They don’t see Iran in the same way as we do.”
François Godement, a prominent China scholar and the president of the Paris-based Asia Center, put it more bluntly. “Basically,” he said, “the rise of Iran is not bad news for China.”
To be sure, China and the United States, leading members of the club of nuclear nations, share a practical interest in halting the spread of nuclear weapons to volatile areas like the Middle East. And it is in China’s interest to avoid alienating the United States, its economic and, increasingly, diplomatic partner on matters of global importance.
But beyond that, many experts say, their differences over Iran are not only economic but also ideological and strategic.
The United States has almost no financial ties with Iran, regards its government as a threat to global stability and worries that a rising Tehran would threaten American alliances and energy agreements in the Persian Gulf.
In contrast, China’s economic links to Tehran are growing rapidly, and China’s leaders see Iran not as a threat but as a potential ally. Nor would the Chinese be distressed, the reasoning goes, should a nuclear-armed Iran sap American influence in the region and drain the Pentagon’s resources in more Middle East maneuvering.
“Chinese leaders view Iran as a country of great potential power, perhaps already the economic and, maybe, militarily dominant power in that region,” said John W. Garver, a professor of international relations at Georgia Tech and the author of “China and Iran: Ancient Partners in a Post-Imperial World.”
An alliance with Tehran, he said, would be a bulwark against what China suspects is an American plan to maintain global dominance by controlling Middle Eastern energy supplies.
Beyond that, China relies heavily on Iran’s vast energy reserves — perhaps 15 percent of the world’s natural gas deposits and a tenth of its oil — to offset its own shortages.

The Chinese are estimated to have $120 billion committed to Iranian gas and oil projects, and China has been Iran’s biggest oil export market for the past five years.

In return, Iran has loaded up on imported Chinese machine tools, factory equipment, locomotives and other heavy goods, building China into one of its largest trading partners.
China scholars say that the relationship is anything but one-sided.

Iran has skillfully parceled out its oil and gas reserves to Chinese companies, holding exploration and development as a sort of insurance policy to retain Chinese diplomatic backing in the United Nations.
For its part, China has opposed stiff sanctions against Iran’s nuclear program, acceding mostly to restrictions on trade in nuclear-related materials and orders to freeze the overseas assets of some Iranian companies.
Many experts question how much more punishment Beijing would agree to support. Iran has already been cited three times by the Security Council, with Beijing’s backing, for flouting prohibitions against its nuclear program.
In each case, Beijing agreed to measures only after stronger American proposals had been watered down and after Russia, the Council’s other critic of stiff sanctions and a close ally of Iran, had signed off on the proposal.
One noted Chinese analyst, Shi Yinhong of People’s University in Beijing, said in a telephone interview this week that China would probably follow much the same course should a new sanctions proposal reach the Security Council.
“China will do its utmost to find a balance” between Iran and the United States, Mr. Shi said. If Russia joins the other Council members in supporting a new sanctions resolution, he said, “China will do its best to try to dilute it, to make it limited, rather than veto it.”
But it is unlikely to do so happily.

Supporting stronger sanctions might elevate China’s image as a global diplomatic leader, but the United States, not China, would reap the real benefits.
“China is not anxious to jump on this American train,” said one Chinese analyst, who spoke on the condition of anonymity in order to freely assess China’s foreign policy.

Africa Pressures China's Oil Deals

By BENOIT FAUCON and SPENCER SWARTZ
LONDON -- China's search for large stakes in some of Nigeria's richest oil blocks comes against a backdrop of problems in other African countries where the Asian giant has oil operations.
On Tuesday, Nigeria's oil minister and a presidential spokesman said state-owned China National Offshore Oil Corp., or Cnooc, is in advanced talks with Nigeria to take over blocks that are owned by Royal Dutch Shell PLC and other companies, but are underutilized.
An official with Nigeria's state oil company said about 20 onshore blocks were on offer and that negotiations were at a late stage with some companies, including Cnooc.

He said he wasn't sure exactly how much crude Cnooc was vying for, but that targeted investment would run into several billion dollars.
Cnooc officials couldn't be reached for comment.
The news of the Nigeria talks followed setbacks for China this month on deals in Angola and Libya.

On Sept. 8, Libya vetoed a $462 million bid by China National Petroleum Corp. for Libya-focused Verenex Energy Inc.

Days later, Angola's state-owned Sonangol said it wanted to block the sale of Marathon Oil Corp.'s 20% oil-field stake to Cnooc and China PetroChemical Corp., or Sinopec.
The setback in Angola -- China's largest African partner -- is in stark contrast with the enthusiastic reception it found there five years ago, when China was launching a quest for African resources to feed its economic boom. It made a spate of resource acquisitions in the form of oil-for-infrastructure deals.
In 2004, Sonangol chose Sinopec over India's Oil & Natural Gas Corp. for the sale of an oil-field stake by Shell. The deal came just after China's Export-Import Bank had granted Angola a $2 billion loan.
In the first half of 2008, Angola became China's largest oil supplier, covering 18% of its needs. China's commerce ministry reported Sino-African trade hit a record $106.8 billion for the year, up 45% from 2007.
But some in Africa are starting to find the Chinese embrace too tight.

The formula of bartering oil for infrastructure initially had given China's oil concerns a competitive advantage against Western companies, whose investors were largely unwilling to fund such projects.

But those same projects have become a key factor in China's setbacks. In particular, China state companies' insistence on keeping local hiring to a minimum has brewed resentment.
In 2006, Cnooc bought a 45% stake in Total SA's Akpo field for $2.3 billion. The field is now the company's biggest overseas asset, with a production capacity of 175,000 barrels a day.
But more than $10 billion of contracts with Nigeria signed in 2006 -- including renovation of a railway, the refurbishment a refinery and the launch of a satellite -- didn't produce results.

That is partly because of a change of administration the following year but also because of commercial and technical pitfalls.
Chatham House, a U.K. think tank, this year published a study on how deals by Chinese oil companies with the Nigerian government in 2004-05 in exchange for bankrolling infrastructure projects had generally failed. It concluded that the main reason was the Nigerian government's lack of "follow-up mechanisms to enforce the deals."
It is unclear whether Cnooc is offering to fund and build more nonoil projects in the latest round of contract negotiations.
Angola may not need China as much as it used to.

On Tuesday, the IMF signed a tentative agreement with Angola that could lead to new loans from Western banks. And when Sonangol sought $1 billion of financing this month, the loan was 50% oversubscribed -- thanks mostly to European banks.
The U.S. has promised to ramp up investment in both oil and agricultural projects. As a result, China will likely have to pay more for its African oil push.
"China and African nations are now in the process of tailoring the high expectations raised over the last few years to the realities of any maturing relationship," said Christopher Alden, senior lecturer at the London School of Economics.

After 60 years, China's Communists mean business

People gather at a square to celebrate the upcoming 60th anniversary of the founding of the People's Republic of China during a photo call in Jilin, Jilin province on September 29, 2009.

By Lucy Hornby
BEIJING (Reuters) - Shortly after the Communist Party took power in China, capitalists in Shanghai paraded through the streets with drums and flags, asking the Party to take over their businesses.
On Thursday, the Party will celebrate the 60th year of its rule over mainland China, having mostly abandoned its Marxist ideals for "socialism with Chinese characteristics" -- a messy mix of competitive capitalism and political monopoly.
The party is now deeply entwined in the economy, giving Beijing a remarkable amount of leverage over bank lending and sectors such as telecommunications and energy, but impeding further structural and political reform.
Close ties between the Party and business paves the way for reforms like stock listings, where government and state-owned enterprise (SOE) interests are aligned, but tend to obstruct changes that reduce the power of the Party.
"Overall, China's heavy reliance on the state sector prevents the private sector from growing, hence limiting the growth of China's urban middle class," said Wang Zhengxu, senior research fellow at the University of Nottingham's China Policy Institute.
"The urban population's income depends more heavily on the state... preventing the growth of state-challenging attitudes."
SOEs are clawing back a bigger role, turning the tide after market-oriented reforms of the 1980s and 1990s allowed the private sector to flourish and reduce Party influence.
The state sector accounts for 30-40 percent of economic output, down from about 80 percent in the late 1970s, estimates Arthur Kroeber of Dragonomics in Beijing.
But over the last year, consolidation favoring SOEs, especially in steel, and the choice to keep the yuan currency essentially unchanged against the dollar, show a reassertion of control at the expense of market forces.
"The recent advance of SOEs in both the central and local level is an enormous drag on economic reform and has implications on the world," said Victor Shih, who teaches political science at Northwestern University near Chicago.
"Faced with a soft budget constraint and a government with deep pockets, Chinese SOEs are making massive investment in multiple sectors, driving out both domestic and foreign competition across the board."
The global economic downturn gave cash-rich state firms a shot at prime overseas projects that suddenly lacked funding.
Meanwhile, although China's export-oriented private firms were hit hard, the country's 4 trillion yuan ($585.9 billion) stimulus package was largely funnelled through state-owned banks to sectors such as infrastructure where SOEs are strong.
The collapse of big Wall Street names helped discredit Chinese advocates of a more open economy, and gave voice to those praising the Chinese model where the state plays the lead role.

FIGHTING BACK WITH STEEL
The Party's intimate ties with business ensured enthusiastic support for economic reforms after Deng Xiaoping's dramatic tour of southern China in 1992, when the wily pragmatist outwitted conservatives who had dominated policy since a crackdown on pro-democracy protesters on Tiananmen Square in 1989.
Following those early reforms, agriculture in China is now dominated by private firms.

They also make the bulk of the light manufactured goods and textiles that drive China's exports.
"The role of slippage in the state share of aggregate output has been fairly steady," Kroeber said.
But state planning bodies, and the Party, retain a strong grip on infrastructure, telecommunications and banking -- allowing lending to those the Party favours.
"Local governments use local SOEs to borrow money from banks to support investment growth," Shih said.
Signs of the attempt to give a lift to SOEs have been more evident in the steel sector, where nimble and ruthlessly competitive private and hybrid firms have grown to account for 45 percent of output, according to Macquarie Research.
Rizhao Steel, one of China's most active private steel firms, was forcibly taken over this month by Shandong Iron and Steel, itself a product of a recent merger of two SOEs.
The demise of Rizhao was part of a drive to bring the private mills to heel, a goal dear to the former planning officials who run the China Iron and Steel Association.
In two other cases this summer, union-backed workers at small, failing SOEs fought off takeovers by private steel conglomerates.
In China, where there are no independent unions, union involvement implies the proposed sales displeased Party bosses.

China Tries for Growth and Power

By ALAN WHEATLEY
BEIJING — The Chinese Communists are partying this week like it was 1949. They should make the most of it.
Sustaining the rapid growth that has underpinned the legitimacy of the Chinese Communist Party during the second half of its 60 years in power is about to get a lot harder, now that China can no longer rely on turbo-charged exports as the global economy is retooled.
New domestic drivers of growth are easy to identify: stoke consumption by increasing wages relative to profits; expose state-dominated sectors like banking to competition; nurture a service-based urban economy by easing migration controls that tie millions of unproductive peasants and their families to the land.
Here’s the problem.
All those reforms would require the party to ease its vise-like grip on levers that it uses to control the economy and dispense political favors.
In short, it would have to surrender some of its power — not something that comes naturally to ruling parties anywhere.
“It can be done, but I’m somewhat doubtful that the Communist Party is willing to give up that kind of authority,” said Jonathan Fenby, director of China research at Trusted Sources, an emerging-market consulting firm based in London.
“Very often economic loosening up can be seen as giving power away from the center. Fiscal and monetary policy measures over the past year have increased the power of the state, not diminished it.”
It would be rash to bet against the party’s succeeding. Out of choice or necessity, it has got many of the big strategic economic decisions right since it embarked on market reforms at the end of the 1970s.
Accepting the disciplines of World Trade Organization membership in 2001, which touched off an unprecedented boom in trade and foreign direct investment, springs to mind.
But skeptics say the party leadership is so riven by factions that prospects for a fresh wave of radical reforms are poor.
“Special-interest groups have formed around China’s state monopolies, and they have a big influence over China’s rule-making,” said Sheng Hong, director of Unirule Institute of Economics, which is based in Beijing.
“Their power is still growing, and it is likely to do so for years to come.”
Nicholas Consonery, a Washington-based analyst with Eurasia, a political risk consulting firm, points to the thick ties between the many companies that have benefited from export-led growth and their backers across government.
“There’s a tremendous amount of money at stake in continuing the current export-focused strategy,” he said.
“It’s going to be tough because of this combination of corporate and political interests for the leadership to pursue the structural adjustments needed to reorient the economy towards the domestic market.”
Liberalizing the financial services sector would require an even greater sacrifice of self-interest. Banks are at the nexus of Communist power. It is through big state-owned lenders that the party channels cheap money to big state-owned firms, securing the commanding heights of the economy.
Minxin Pei with the Carnegie Endowment for International Peace in Washington said he could not envisage the party permitting significantly more financial competition.
“This is where the government makes its money and maintains its political patronage system,” Mr. Pei said. “I do not believe the Communist Party will be foolish enough to let somebody else eat this piece of juicy meat.”
For Nicholas Lardy, a China scholar at the Petersen Institute of International Economics in Washington, the lack of competition in banking matters less for the efficiency of China’s economy than state control over interest rates.
“The fact that the State Council — and, ultimately, the party — controls the interest rate structure is an important lever of power,” Mr. Lardy said.
One consequence is that banks have little incentive to lend to small and medium-size enterprises, or S.M.E.’s, most of them privately owned, even though they generate more than 75 percent of urban jobs.
That S.M.E.’s are such job machines offers perhaps the greatest hope that Beijing will do what it has long promised and make it easier for private firms to get the loans and licenses they need to compete at the margin with state-owned incumbents.
“Without steady growth of S.M.E.’s, it’s hard to solve the problem of unemployment and hard to ensure social stability,” Li Yizhong, the industry minister, said last Tuesday.
Mr. Li said a blueprint for small business introduced that day by China’s cabinet was aimed at encouraging more private investment — vital to sustain growth as Beijing’s emergency stimulus spending runs down.
“The significance of the State Council move does not lie in the measures themselves,” Mr. Li said. “The most important thing is that it sends a message to the whole of society.”
The Communist Party needs to look only at Japan to see what happens when inertia prevents a country from adapting to economic change: with politicians and bureaucrats beholden to powerful producer lobbies, Japan has failed to find new wellsprings of growth since its economy stagnated two decades ago.

Chinese 103-Year-Old Wall Street Emigrant Sees End of Communism

Sept. 29 (Bloomberg) -- Zhou Youguang was a child of 6 when a revolution toppled China’s last emperor in 1912.
He was 43 when he says he left a Wall Street banker’s job to help Mao Zedong’s Communists create what he thought would be a democracy after decades of warlord rule, occupation and civil war.
Now 103, he has seen China transformed from a country of 368 million being carved up by foreign powers to a nation of 1.3 billion and the world’s fastest-growing major economy, expanding at an average annual rate of 9.9 percent from 1978 to 2008.
He says he still believes China will eventually become a democracy -- in spite of communism, not because of it.
“China will follow the mainstream of the world, sooner or later,” the pajama-clad Zhou said during an interview in the book-lined study of his third-floor walk-up apartment in central Beijing.
His experiences encapsulate the complicated legacy of the Communist Party, which celebrates 60 years in power this week with a military parade past Tiananmen -- the Gate of Heavenly Peace -- where Mao proclaimed the founding of the People’s Republic on Oct. 1, 1949.
While Zhou endured three years of forced separation from his family during the 1966-76 Cultural Revolution, he survived a purge of intellectuals that led many of his colleagues to commit suicide.
He was also given the opportunity to devise a new system of spelling out Chinese characters with the Roman alphabet that helped hundreds of millions of Chinese peasants learn to read.

‘Lucky Ones’
“There were very few who returned from America who escaped the catastrophe,” Zhou said. “I was one of the very lucky ones.”
Like China’s leaders, Zhou divides Communist rule into two periods: the first three decades dominated by Mao, who died in 1976, and the second characterized by the opening of China to the world by paramount leader Deng Xiaoping, who died in 1997. While Deng’s era sparked rapid growth, Zhou, an economist by training, considers it a mixed success.
Deng “reformed the economy but didn’t reform politics,” Zhou said. “In the political scene, there was absolutely no change; it was an autocracy.”
That wasn’t the outcome Zhou Enlai promised Zhou in the late 1930s. The two, who aren’t related, met in Chongqing when the Yangzi River city became the wartime capital following Japan’s occupation of Nanjing in 1937.

Meetings of Intellectuals
Zhou Enlai -- who would become China’s premier in 1949 -- held monthly get-togethers with intellectuals, including Zhou, who worked for Sin Hua Trust & Savings Bank, which was founded in 1914 and became part of the Bank of China Ltd. in 2001.
“Zhou Enlai told me at those meetings that the Communist Party was a democratic party,” Zhou said.
Zhou left China for New York at the end of 1946, where he represented Sin Hua at Irving Trust Co., the bank’s U.S. agent, at its Art Deco headquarters on 1 Wall Street. He and his wife, Zhang Yunhe, returned to Shanghai in June 1949, as the Communists neared victory.
“We thought that with China liberated, there was hope; everyone wanted to come back home and do something,” Zhou wrote in a 2008 autobiography.
When he arrived, Shanghai -- occupied by the People’s Liberation Army the previous month -- straddled the communist- capitalist divide.
Zhou lived in both worlds: working at Sin Hua and at what is now the Shanghai University of Finance and Economics as a professor. There he and his colleagues, most of them scholars who returned from the U.S., watched as textbooks were jettisoned for new ones reflecting Marxist theories of class struggle.

Common Language
In 1955, Zhou, whose hobby was linguistics, was asked during a Beijing conference to lead a group creating a standardized system of writing Chinese phonetically with Roman letters.
The project would supersede a hodgepodge of Romanization systems and was part of a drive that included simplifying the way thousands of characters were written and teaching a common language, Mandarin, in schools throughout the country.
“I said no way, I’m an amateur,” Zhou said.
It was too late; the premier, who remembered his avocation from their days in Chongqing, had already called Zhou’s colleagues in Shanghai and told them he wouldn’t be coming home.
Zhou’s pinyin system, which turned “Peking” into “Beijing,” uses markers to identify which of Mandarin’s four tones to use.
It became the national standard in 1958 and has helped reduce China’s illiteracy rate to 10 percent today from about 80 percent in the 1950s.

Mao’s Purge
His new career also kept him relatively safe when economics professors, especially those who had lived in the U.S., became targets of Mao’s Anti-Rightist Campaign in 1957 to purge anyone he thought opposed his revolution.
“Every day there were people killing themselves,” Zhou wrote in his autobiography.
Zhou didn’t completely escape persecution.
He was branded a “reactionary academic authority” in 1969 during the Cultural Revolution and sent to northwestern China’s Ningxia region, where, already well into his 60s, he spent a year toiling in rice paddies.
He was allowed to return to his family in 1972. Since then he’s helped make pinyin a global standard and published books on linguistics.
Zhou never expressed regret in the interview for giving up his New York lifestyle. In 1949, the “common people trusted the Communist Party,” he said.
Looking back over 60 years, he now believes the party, which he never joined, “cheated the Chinese people. They destroyed everything, especially the intellectuals.”
That doesn’t stop Zhou from saying that China’s economic boom will someday be accompanied by the democracy he had hoped to help create.
“I’m always optimistic,” he said.

China's Wind Farms Come With a Catch: Coal Plants

A worker near a wind farm in Jiangsu province earlier this year. China hopes to double the percentage of renewable energy it uses by 2020.
By Jing Yang
SHANGHAI—China's ambition to create "green cities" powered by huge wind farms comes with a dirty little secret: Dozens of new coal-fired power plants need to be installed as well.
Part of the reason is that wind power depends on, well, the wind.
To safeguard against blackouts when conditions are too calm, officials have turned to coal-fired power as a backup.
China wants renewable energy like wind to meet 15% of its energy needs by 2020, double its share in 2005, as it seeks to rein in emissions that have made its cities among the smoggiest on Earth.
But experts say the country's transmission network currently can't absorb the rate of growth in renewable-energy output.
Last year, as much as 30% of wind-power capacity wasn't connected to the grid. As a result, more coal is being burned in existing plants, and new thermal capacity is being built to cover this shortfall in renewable energy.
In addition, officials want enough new coal-fired capacity in reserve so that they can meet demand whenever the wind doesn't blow.
This is important because wind is less reliable as an energy source than coal, which fuels two-thirds of China's electricity output. Wind energy ultimately depends on wind strength and direction, unlike coal, which can be stockpiled at generators in advance.
Further complicating matters is poor connectivity between regional transmission networks, which makes it hard for China to move surplus power in one part of the country to cover shortfalls elsewhere.
China may not be alone in having to ramp up thermal power capacity as it develops wind farms. Any country with a combination of rapidly growing energy demand, an old and inflexible grid, an existing reliance on coal for power, and ambitious renewable energy-expansion plans will likely have a similar dilemma.
What marks China out as different is the amount of new coal-fired capacity that needs to be added.
The China Greentech Initiative, a group made up of more than 80 mostly large Western companies and organizations with interests in the environmental sector, said in a report earlier this month, "China's increased focus on renewable energy exerts yet greater demands on China's electric power infrastructure. Power generation based on renewable energy sources... necessitates greater use of intermittent generation management and storage."
"China will need to add a substantial amount of coal-fired power capacity by 2020 in line with its expanding economy, and the idea is to bring some of the capacity earlier than necessary in order to facilitate the wind-power transmission," said Shi Pengfei, vice president of the Chinese Wind Power Association.
Largely due to its reliance on coal, China is the world's biggest emitter of greenhouse gases in absolute terms.
Last year, the country accounted for more than 85% of global growth in coal demand, according to BP PLC's statistical review of world energy.
Facing pressure from abroad over the pace of China's emissions growth, President Hu Jintao used a speech to the United Nations last Tuesday to stress his country's commitment to tackling climate change.
He said China will lower energy intensity as the country grows, while raising output of renewable energy and nuclear power.
China aims to cut carbon dioxide emissions per unit of gross domestic product by a "notable margin" by 2020, Mr. Hu said, without setting a concrete cap.
The city of Jiuquan, in the flat and arid northwestern province of Gansu, shows the complexities that crop up when implementing such plans.
The city is meant to showcase the strides China is making in renewable energy. Wind turbines with a combined capacity of 12.7 gigawatts are due to be installed there by 2015—more than the country's present nuclear-power capacity.
But the Jiuquan government wants to build 9.2 gigawatts of new coal-fired generating capacity as well, for use when the winds aren't favorable. That's equivalent to the entire generating capacity of Hungary.
Construction of these thermal power plants is pending approval by Beijing, an official with the Energy Department under the Jiuquan Development and Reform Bureau said Tuesday.
The heavy reliance on coal-fired power plants to add to the power supply from large wind farms in order to meet minimum power demand is essential to grid safety, said Mr. Shi of the Chinese Wind Power Association.
To be sure, any kilowatt hour of wind power consumed by end users ultimately replaces a kilowatt hour of electricity generated by other, possibly dirty, sources such as coal, and the huge power supply expected from the new wind farms represents a major stride in China's clean energy push.
In addition to Jiuquan, there are plans for six other wind farms in China with a capacity of more than 10 gigawatts each, mostly in sparsely populated inland regions such as wind-swept Inner Mongolia and Xinjiang.
Several gigawatts of new thermal power capacity will need to be built at these sites as well, Mr. Shi said.
China has plenty of windswept plains and sun-baked deserts like the Gobi which can host turbines or solar panels, but these are often far from cities and existing infrastructure for shipping power.
Sebastian Meyer, director of research and advisory services with clean-energy consultancy Azure International, says China needs a more modern and flexible grid if it wants to raise the share of renewable power in its energy mix.
So-called smart-grid technology aims to modernize the power sector by overlaying digital communications onto the grid, enabling utilities to manage supply more efficiently and compensate for any variance. But while the U.S. and many countries in Europe are lining up spending to exploit the technology, China is lagging behind.
State Grid Corp., China's monopoly power distributor in all but five provinces, says it wants to build a nationwide "strong smart grid."
But while it is investing heavily in grid improvements, its immediate focus is the construction of ultrahigh-voltage lines linking China's coal production and hydropower centers in inland areas to the densely populated east.
A single such line can carry up to 6.4 gigawatts of power, which makes it even more important that generation at its starting point is stable and reliable.

Indie Filmmakers: China’s New Guerrillas

Zhao Dayong, an independent filmmaker whose latest documentary is “Ghost Town.”
Kids from the village of Zhiziluo in the film “Ghost Town.”
By KIRK SEMPLE
BEIJING -- OVER the course of six years Zhao Dayong, an independent filmmaker from Guangzhou, China, spent many months living among the residents of Zhiziluo, an impoverished and forgotten village in the rugged mountains near the Myanmar border, and filming their lives.
Using his own money and simple digital filmmaking equipment he made “Ghost Town,” a quiet, hypnotizing, three-hour documentary that provides an extraordinary and intimate portrait of Chinese life.
Like independent filmmakers everywhere, Mr. Zhao worked with no guarantee of an audience, or even a place to show his work.
By his estimates only a few thousand people have seen “Ghost Town” in China since he finished it last year.
Several hundred more are scheduled to see it Sunday afternoon when the film has its international premiere at the New York Film Festival.
But what makes Mr. Zhao’s commitment particularly noteworthy is that his project was apparently illegal.
The Chinese government has decreed that all films must be approved by government censors before being distributed and screened, including in overseas film festivals.
Mr. Zhao, 39, said getting the approval of the censors was never a consideration.
“It’s like asking to be raped,” he said this month in an interview here. “The government certainly has its own agenda. They want us to stop. But at the same time we know we’re doing something meaningful.”
This mixture of defiance and principle defines China’s nascent yet highly dynamic crop of independent filmmakers who pursue their art in apparent violation of the law.
For decades the Chinese government had nearly full control over all aspects of the film industry, from celluloid filmmaking technology to financing to distribution and screening.
An underground filmmaking subculture emerged in China in the late 1980s, but it began to flourish only about a decade ago with the advent of inexpensive digital cameras and postproduction computer programs that helped put filmmaking further out of reach of the government authorities.
Many of this latest generation of Chinese filmmakers have no formal film training and shoot on minimal budgets, often with small crews, or alone.
Ying Liang, whose films have won numerous prizes on the international circuit, shot his widely celebrated debut film, “Taking Father Home,” using a borrowed camera. Relatives and friends were his cast and crew.
“Unlike in previous generations, the stars of this generation are not only Beijing Film Academy graduates,” said Karin Chien, a film producer in New York and president of dGenerate Films, a company she founded last year to distribute this new crop of independent Chinese films outside China.
“They’re journalists, they work at television stations, they’re painters, they’re people who just picked up a camera and made a film for $1,000.”
Output is still small. Several leading filmmakers put the annual production of unsanctioned, independent films at fewer than 200.
But this work has provided unusual ground-level views of China that possess an unvarnished authenticity often missing from mainstream, government-sanctioned films.
“There’s been an extraordinary explosion of young filmmakers — quite a few of them are quite talented — who are dedicated to record and tell the real story of what’s going on in China,” said Richard Peña, program director for the Film Society of Lincoln Center, which produces the New York Film Festival.
“That story is really more fascinating than the story that the regime wanted to be told.”
These achievements have come at a price.
About 20 filmmakers have been banned from making films for two to five years, according to Zhang Xianmin, an independent film producer and a professor at the Beijing Film Academy. Others have received intimidating phone calls, had tapes confiscated or been detained and interrogated.
But according to several filmmakers and film scholars both here and abroad, the government recently appears to have adopted a somewhat hands-off, though highly watchful, posture toward this film vanguard, leaving it to operate in an undefined gray area.
It seems that as long as certain incendiary topics are not broached — among them the Tiananmen Square massacre, Tibet, the Cultural Revolution, the outlawed religious group Falun Gong — then independent filmmakers are allowed to work.
Yet no one is absolutely sure where the boundaries are, or whether the government will start to clamp down more fiercely.
“You don’t know where that limit is,” said Zhang Yaxuan, a critic and documentary filmmaker who is organizing an independent film archive for the Iberia Center for Contemporary Art in Beijing. “You have to try to touch it. In the process of trying, you know.”
Huang Wenhai, a documentary filmmaker in Beijing, said that the process of filmmaking here “is the process of conquering your fear.”
Despite this pressure and uncertainty, there are now at least four major independent film festivals around the country and at least two theaters, both small, dedicated to showing Chinese independent films.
Meanwhile Chinese audiences largely remain out of reach. With cinemas and television off limits to their unsanctioned films, independent moviemakers are mostly restricted to screenings in front of small audiences in art galleries, bars, universities and homes.
As a result the most accomplished filmmakers have found their largest audiences overseas, especially at international film festivals.
“I feel very frustrated,” Mr. Zhao said. “I’m a Chinese filmmaker, and of course my audience should be the Chinese people, especially since my films are about ordinary working Chinese people.”
He added, “That would be more valuable than winning an international film festival.”
Mr. Zhao began his career in the fine arts. He studied oil painting at an art academy before dropping out and working as a professional artist and advertising director in Beijing and Guangzhou.
He eventually founded his own advertising firm as well as a journal for contemporary arts, and he opened a gallery in Shanghai.
His first documentary was “Street Life,” a portrait of recyclers on the streets of Shanghai, which had its premiere at the Viennale in Austria in 2006.
“Ghost Town,” his second film, is a series of vignettes and scenes that explore the economic struggles, religious beliefs and relationships of the residents of Zhiziluo, which had once been a local county seat for the Communist Party but was largely abandoned by the government.
Mr. Peña said he had heard about the film for some time but finally viewed it in the 11th hour of the festival’s film-selection process.
“It’s one of those films that, when we saw it, there was little question in our minds that it should be included,” he said.
“Ghost Town” is the first documentary from China’s new generation of digital independent filmmakers to be included in the New York festival.
Mr. Zhao, who continues to support himself by shooting television advertisements, said he had no illusions that his films would ever make him much money.
“For me, making films is a way of life, not the means to it,” he said. “And I really enjoy this life.”

Can China’s Good Fortune Last?

Trending Upwards: Billboards in Beijing highlight the Chinese economy's growth over the last six years
The nation's economy has recovered more quickly than many expected. But why and how is up for debate.
By Daniel Drezner
For all the debates over what the Great Recession means for the global political economy, there does appear to be consensus on one point: China has had a very good year.
In response to the economic crisis, China deployed massive fiscal boosts, aggressive expansions of credit, foreign-exchange interventions, and tax rebates for the export sector.
The short-term results have been impressive.
The Asian Development Bank projects China's GDP to grow by 8.2 percent in 2009 and 8.9 percent in 2010—up significantly from forecasts made earlier in the year.
The result: job creation.
As The New York Times pointed out last week, the image of workers streaming back into Chinese factories stands in sharp contrast to the United States, where the unemployment rate continues to march toward double digits.
During this week's G20 summit in Pittsburgh, China will have more weight to throw around on everything from climate change to macroeconomic imbalances.
How should we interpret China's swift recovery from the financial crisis and what it means for the future?
Here the consensus breaks down into different camps.
Let's call the first camp the Extrapolators. These analysts look at China's recent astonishing growth rates and assume that Beijing will be the geopolitical equivalent of the Energizer Bunny: growing and growing and growing.
The Chinese model of authoritarian capitalism has been working for several decades with more stability than many Western analysts believed it could sustain.
Writing in The New Republic, Zachary Karabell asserted: "China's economy is showing no signs that it's about to collapse or even contract... While many question the recipe that China has followed, the results speak for themselves."
As China continues to grow, the Extrapolators presume that Beijing will shoulder a larger burden of supplying global public goods.
In the second camp are the Bubblers. These analysts look at China's economy and see unsustainable imbalances.
China's economy is fueled by an export engine—but with the United States and Europe saving more and consuming less, that engine will not be able to rev so hot now.
True, China's government forestalled a deep recession with its easy lending policies, but this has come with a credit bubble that is about to pop.
Soon after Beijing cut off the credit tap, the Shanghai Composite Index started to fall. In August it fell by 22 percent, and Bubblers predict an additional 25 percent decrease.
As far as political stability goes, Bubblers concede that China's Communist Party is not going away. Still, this is a country that faces periodic unrest in Xinjiang and Tibet, daily worker riots, and mounting ecological catastrophes.
Assuming that past growth equals future growth with such shaky foundations seems unwise: a crash is coming at some point.
I belong to the third camp—the one that believes that the Bubblers and the Extrapolators can both be right.
My camp looks at China and sees the parallels with America's rise to global economic greatness during the late 19th and early 20th centuries.
From an outsider's vantage point, America looked like a machine that could take immigrants and raw materials and spit out manufactured goods at will.
By 1890, the U.S. economy was the largest and most productive in the world. As any student of American history knows, however, these were hardly tranquil times for the United States. Immigration begat ethnic tensions in urban areas. The shift from an agrarian to an industrial economy led to fierce and occasionally violent battles between laborers, farmers, and owners of capital. With an immature financial sector, recession and depressions racked the American economy for decades.
It is not contradictory for China to amass a larger share of wealth and power while still suffering from severe domestic vulnerabilities.
From the perspective of the rest of the world, however, this is not a good thing. A steadily rising and confident China would have little difficulty shouldering a greater burden of providing global public goods.
A China that experienced an obvious reversal of fortune would be less able to assume aspects of global leadership—but less would be expected in this instance.
A rising and domestically fragile China, however, is the worst of both worlds. Other countries would expect Beijing to act as a responsible great power—but the Chinese elite would view themselves as too weak and fragile to oblige.
Again, the parallel is with the United States.
For the first four decades of the 20th century, the U.S. was so absorbed with its own problems that too often it failed to recognize the role it needed to play in the world.
Eventually the United States took a more active interest in world affairs—but the 50 years it took for Washington's reach to match its power were rocky ones for the rest of the globe.
Let's hope that the global political economy does not suffer from a case of déjà vu.

China Firms Selling Fuel to Iran as U.S. Sanctions Loom

BEIJING/LONDON (Reuters) - State-run Chinese companies are selling gasoline to Iran, a move that could undermine U.S. pressure on Iran to give up its nuclear programme, traders and a newspaper report said on Wednesday.
Although some sources said the trade had been quietly ongoing for at least a year as Chinese companies joined a handful of global oil traders and Indian refiners who regularly sell to Iran, the revelation of this flow comes at a time when Western powers may consider target Iran's fuel imports if it refuses to enter talks over its disputed nuclear programme.
Iran is the world's fifth-largest crude exporter but imports up to 40 percent of its gasoline as it lacks the refining capacity to meet domestic demand.
State-run Chinese firm Zhuhai Zhenrong Corp, the world's largest Iranian crude buyer by company and among the first to heed Tehran's call to pay in euros instead of U.S. dollars, has been shipping a cargo or two each month to Iran for at least a year, two trade sources familiar with the company told Reuters.
The Financial Times, citing traders and bankers familiar with Iran's purchasing, reported on Wednesday that China supplies Iran through intermediaries.
Oil sources contacted by Reuters said it was also possible that Chinese trading companies were buying spot gasoline cargoes from elsewhere to sell to Iran.
"We estimate, based on what we are hearing in the market, that 30,000-40,000 barrels a day of Chinese petrol is making its way from the Asian spot market to Iran via third parties," the newspaper quoted Lawrence Eagles, head of commodities research at JPMorgan, as saying.
The United States has agreed to take part in talks on October 1 between Iran and the so-called "P5+1," which includes the five permanent members of the U.N. Security Council -- Britain, China, France, Russia and the United States -- and Germany.
The meeting is seen as a move toward President Barack Obama's pledge during last year's U.S. presidential campaign to try to improve relations with Iran through more direct contacts.
The two countries have not had diplomatic ties since 1980.

DATA SHOW NO CHINA GASOLINE TO IRAN
Traders at both Sinopec Corp and PetroChina, China's dominant oil refiners and trading firms, told Reuters that they are not selling any gasoline to Iran.
"We used to be a regular, direct supplier to Iran back in between 2001 and 2004, when we had lots of surplus barrels for export and there was no credit/embargo problems as we are having now," said a Sinopec trader.
Official customs data issued on Tuesday showed that none of China's gasoline exports this year have been shipped directly to Iran, although overall sales have surged.
Nearly half its gasoline is shipped to Singapore, Asia's main trading and storage hub, much of which is likely then sold on.
Whether the gasoline is produced in China or not, the trade is further evidence of the growing energy ties that bind China, the world's No. 2 crude oil consumer, and Iran, which holds the world's second-largest crude oil reserves and desperately needs investment in order to develop them.
Iran's oil minister said last week the country was ready for any fuel sanctions and had signed deals with other countries to purchase more gasoline.
Iranian state media has also reported that Iran will begin importing diesel again by the end of this month.
Zhuhai Zhenrong, which has been lifting Iranian crude for more than a decade, extended its agreement with National Iranian Oil Co (NIOC) to import 240,000 bpd of crude for 2009.
While selling fuel to Iran isn't illegal or in violation of any specific international sanctions, it is becoming an increasingly popular way to pressure Tehran.
The U.S. Senate in July voted to ban firms that sell gasoline to Iran from also receiving Energy Department contracts to deliver crude to the U.S. Strategic Petroleum Reserve.
Privately owned Indian refiner Reliance Industries, once a mainstay supplier of fuel to Iran, has curbed shipments this year, just as it starts up a massive new facility and begins to make efforts to sell more fuel into the U.S. market.
While gasoline continues to be shipped regularly to Iran, the trade has become increasingly complex due to the reluctance of Western banks to finance letters of credit, reducing the number of companies willing to take the risk, traders say.

Wu Jinglian Keeps Talking

Wu Jinglian helped to create China's market economy, and now he is defending it against conservative hardliners in the Communist Party.

By DAVID BARBOZA
AT 79, Wu Jinglian is considered China’s most famous economist.
In the 1980s and ’90s, he was an adviser to China’s leaders, including Deng Xiaoping.
He helped push through some of this country’s earliest market reforms, paving the way for China’s spectacular rise and earning him the nickname “Market Wu.”
Last year, China’s state-controlled media slapped him with a new moniker: spy.
Mr. Wu has not been interrogated, charged or imprisoned.
But the fact that a state newspaper, The People’s Daily, among others, was allowed to publish Internet rumors alleging that he had been detained on suspicions of being a spy for the United States hints that he is annoying some very important people in the government.
He denied the allegations, and soon after they were published, China’s cabinet denied that an investigation was under way.
But in a country that often jails critics, Mr. Wu seems to be testing the limits of what Beijing deems permissible.
While many economists argue that China’s growth model is flawed, rarely does a prominent Chinese figure, in the government or out, speak with such candor about flaws he sees in China’s leadership.
Mr. Wu — who still holds a research post at an institute affiliated with the State Council, China’s cabinet — has white hair and an amiable face, and he appears frail. But his assessments are often harsh.
In books, speeches, interviews and television appearances, he warns that conservative hardliners in the Communist Party have gained influence in the government and are trying to dismantle the market reforms he helped formulate.
He complains that business tycoons and corrupt officials have hijacked the economy and manipulated it for their own ends, a system he calls crony capitalism.
He has even called on Beijing to establish a British-style democracy, arguing that political reform is inevitable.
Provocative statements have made him a kind of dissident economist here, and revealed the sharp debates behind the scenes, at the highest levels of the Communist Party, about the direction of China’s half-market, half-socialist economy.
In many ways, it is a continuation of the debate that has been raging for three decades: What role should the government play in China’s hybrid economy?
Mr. Wu says the spy rumors were “dirty tricks” employed by his critics to discredit him.
“I have two enemies,” he said in a recent interview. “The crony capitalists and the Maoists. They will use any means to attack me.”
Nevertheless, some analysts believe that Mr. Wu’s critiques are aiding one government faction in a power struggle with another, and that he is protected.
His pro-market ideas have influenced a generation of younger economists who now hold senior government posts, including Zhou Xiaochuan, the leader of China’s central bank, and Lou Jiwei, chairman of the country’s huge sovereign wealth fund.
“He is like the father of economics here,” says Laurence Brahm, who wrote several books about China’s reform period. “What he said was the blueprint for reform.”
Critics say Mr. Wu’s influence on government is waning. (They note that he is not invited to weekly economics seminars held for top leaders, including Prime Minister Wen Jiabao.)
Given this, some people say, Mr. Wu is courting danger by speaking out.
“You have to remember, China is a dictatorship,” says Victor Shih, a professor of political science at Northwestern University. “If they want to shut him up, they can.”
GIVEN the risks, it’s hard not to wonder why one of the architects of China’s reforms has turned so negative, so angry and so defiant.
Mr. Wu’s personality and tumultuous life story provide some clues.
Even his supporters acknowledge that he has a combative streak and describe him as a stubborn idealist whose verbal jousting skills were honed during years of hardship and political warfare.
“He always expressed his ideas in the sharpest way,” says Zhang Chunlin, who was a student of Mr. Wu.
“He’s not diplomatic. Even at close to 80 years old, he argues with journalists.”
That he has lived such a long life would have surprised his parents, wealthy intellectuals who ran one of the country’s largest independent newspapers, in Nanjing.
A sickly child with tuberculosis, he was not expected to live past the age of 1. He spent much of his youth confined to bed, reading Russian novels and the works of Lu Xun, an influential Chinese writer from the 1920s.
One of his earliest memories is arriving in the wartime capital, Chongqing, in 1937, at the age of 7, as his family fled Nanjing and the invading Japanese. The emaciated rickshaw driver stopped for opium; the destitute were everywhere.
“In Shanghai or Nanjing, beggars would help you and then ask for money,” he recalls. “But in Chongqing, they’d grab food from your mouth.”
Such experiences helped mold him into an idealistic socialist, as many Chinese were during that era.
He studied Marxist economics in college and graduated with honors in 1954 from Fudan University in Shanghai. That won him a position at the country’s elite research institute, the Chinese Academy of Sciences in Beijing.
Soon after he arrived, however, China was engulfed by political campaigns, like the Great Leap Forward, that required little research. The cruelest was the Cultural Revolution, from 1966 to 1976, when intellectuals and the descendants of landlords were identified as “counterrevolutionaries.”
In Beijing, Mr. Wu says, Red Guards shaved half the head of his wife, Zhou Nan, and ransacked his mother’s home.
Mao Zedong wanted intellectuals sent to the countryside to be “re-educated.” So in 1969, virtually the entire Academy was sent to Henan Province to learn to farm and to build houses in remote villages.
Ms. Zhou was ordered to work as a peasant in Shanxi Province; their two children, ages 4 and 6, were left with relatives in Beijing.
“When I left, I was prepared never to return home again,” Mr. Wu says solemnly. “We were told we’d farm for the rest of our lives.”
Mr. Wu says the hardships included sessions in which he was denounced as an anti-Maoist. When pressed to confess, or to denounce others, he says he refused, and then was beaten and placed in solitary confinement.
“They sent me to the stage to confess, then they started beating me,” he says. “Of course I felt extreme anger. But I realized it wouldn’t last for long; it was too absurd.”
This didn’t shake his faith in socialism, but he began to distrust the people around Mao who were calling believers like him enemies of the people.
His only solace, he later said, was the friendship he developed with a scholar named Gu Zhun, who was an early critic of central planning, and an advocate of market reform. Mr. Gu encouraged him to learn English and to explore the outside world, which Mr. Gu said was the only hope for China to develop.
When Mr. Wu returned home three years later, in 1972, his daughter said he was still “under the spell of Communism,” partly because of the guilt he felt for having grown up in a wealthy home.
“He said a person should have just one shirt,” recalls his daughter, Shelley, 46. “And he didn’t like my sister and I to write our names on our personal property.”
AFTER the Cultural Revolution ended with Mao’s death in 1976, Mr. Wu says he began to see that Mao’s economic policies had brought the country to the brink of collapse.
In 1978, when Deng Xiaoping began to press ahead with bold reforms aimed at opening up the country, Mr. Wu was heavily influenced by the thought and advice of his colleague Mr. Gu, who had died in 1974.
He learned English, and in 1983 went to Yale as a visiting scholar. Much of his time there was spent studying modern economic theory.
Mr. Wu returned to Beijing in 1984, just as China’s economic reforms were gathering momentum under Zhao Ziyang, the party leader and chief economic planner.
That year, Mr. Wu says he helped Ma Hong, a top government adviser, draft a paper that defined the country’s shift from a planned to a market economy. “This was a very important turning point for China’s economy,” he says.
Once the proposal was accepted, Mr. Wu was elevated to the Development Research Center, the institute affiliated with the powerful State Council.
Soon, he was visiting Zhongnanhai, Beijing’s leadership compound, to offer advice and debate economic policy.
Several research institutes advised Mr. Zhao and Mr. Deng on how to remake the old socialist system with elements of free enterprise. Some who sat in on those meetings say that Mr. Wu was argumentative and prickly when debating economic policy, even with Mr. Zhao.
The reforms, though, fueled strong growth and are widely credited with changing the course of the nation.
But by the late 1980s the reforms also opened the doors to corruption and soaring inflation, feeding public anger that contributed to the 1989 student demonstrations in Tiananmen Square.
Mr. Zhao was removed from office just ahead of the bloody assault on the students and the campaign against dissent and “liberalization.” The reforms stalled.
Not long after, Mr. Wu and other reformers were attacked for favoring a Western-style market system.
Bao Tong, a former aide to Mr. Zhao, said the reformers faced strong opposition from Soviet-trained economists who were wedded to the ideas of central planning.
“For the first guys who advocated a market system, it was pretty dangerous,” Mr. Wu said in a recent telephone interview.
He was among them, and so he was derisively branded “Market Wu.” For a time, publishers refused to sell his books.
“That’s when the conservatives came in and said the reforms had messed everything up,” says Barry J. Naughton, a professor at the University of California, San Diego, and author of “The Chinese Economy.”
Mr. Naughton says: “Wu Jinglian fought against the backlash. He said, ‘We need more market reform, not less.’ ”
The reform camp became stronger after Mr. Deng’s famous 1992 “southern tour” — in which he called for bolder reforms and encouraged people to get rich.
Soon, Mr. Wu’s influence in government grew. In the 1990s, he served as an adviser to Zhu Rongji and Jiang Zemin, the country’s top leaders, helping them speed up reforms and restructure badly run state-owned companies.
Every step of the way, he fought off opposition, and debated, often publicly, the shape and pace of the reforms.
“This debate about the market economy is the most important discussion throughout the 30 years of reform,” says Liang Guiquan, an economist at the Guangdong Academy of Social Sciences. “And it’s still going on now. Wu Jinglian has always been at the center of that debate.”
BY most measures, China’s economic transformation has been a resounding success.
Anyone who travels here can see it: the change in people’s living standards, the makeover of big cities — what has come to be called China’s economic miracle.
But Mr. Wu sees the defects: a government prone to “meddling” in the marketplace; a widening income gap; inefficient monopolies; and crony capitalism.
His critique sharpened considerably after Jiang Zemin stepped down as president in 2003, and Mr. Wu’s role was diminished.
In interviews, Mr. Wu says he feels compelled to speak out because conservatives and “old-style Maoists” have been gaining influence in the government since 2004.
These groups, he said, are pressing for a return to central planning and placing blame for corruption and social inequality on the very market reforms he championed.
At the same time, Mr. Wu says, corrupt bureaucrats are pushing for the state to take a larger economic role so they can cash in on their positions through payoffs and bribes, as well as by steering business to allies.
“I’m not optimistic about the future,” Mr. Wu said. “The Maoists want to go back to central planning and the cronies want to get richer.”

As Communist China Turns Sixty, Her Statisticians Turn to Poetry

When Putting Up Big Numbers Isn't Enough, There's This: 'Bless You, My Motherland!'
By SKY CANAVES
BEIJING -- Wang Jiaowei collects rural economic data for the local statistics station in Maidian, a town on China's eastern seaboard famed for its giant cabbages and black pigs.
Lately he has been trying his hand at poetry.
On Oct. 1, the Chinese government will celebrate the 60th anniversary of the founding of the People's Republic.
The occasion has inspired all sorts of unlikely tributes -- including poetic offerings from workers at the National Bureau of Statistics.
Mr. Wang, 30 years old, found time to pen "Love the Motherland, Love Statistics," a reflection on his role as an unappreciated civil servant and the personal satisfaction he nonetheless gets from his work:

In life
Some mock me for doing statistics
Some loathe me and statistics
Some don't understand what statistics are
Why is it that statistics
Put a calm smile on my face?
Because of statistics I can solve the deepest mysteries
Because of statistics I will not be lonely again, playing in the data
Because of statistics I can rearrange the stars in the skies above

The literary outpourings of the statistics corps are just one sign of the government-fueled enthusiasm for the state's coming birthday bash.
All year, officials have been urging government agencies to drum up programs to mark the anniversary.
Last month, Liu Yunshan, head of the Communist Party's propaganda department, expressed a desire to infuse patriotic education into the daily lives of all Chinese, so as to "turn their love for the country into concrete actions," according to the state-controlled Xinhua News Agency.
On Sept. 11, more than 4,000 central government employees participated in a choral singing contest to mark the National Day with patriotic songs.
The highway authority in Anhui province launched a campaign against counterfeit money, pitting toll gate workers against each other in a contest to distinguish real notes from fakes.
But for quirky propaganda at its best, the poets and essayists of the National Bureau of Statistics are hard to beat.
Since the initiative was launched in mid-July, more than 100 submissions have been posted on the bureau's Web site.
Among the more memorable titles: "I am Proud to Be a Brick in the Statistics Building of the Republic" and "Feelings Tied to a Sea of Numbers."
Xiong Jianfeng, 43, director of the general office of a statistical survey team in central China's Henan province, writes of his work in a rhyming poetic style he describes as "having a flavor of doggerel":

Day by day our surveys grow robust
Strategic service, its power we entrust
Stores of data show great changes
The world can see their rising ranges

Mr. Xiong says he is inspired by a sense of national pride at how far China has come over the past six decades.
"I just want to write something as a tribute to my motherland," he says. "I do, from the depth of my heart, love my country!"
In a country that takes numerology seriously, the 60th anniversary carries special cultural significance.
Chinese consider six to be an auspicious number because it sounds like the word for "to stay," with its positive connotations of endurance and perseverance. Sixty years also marks a full cycle of life in the Chinese zodiac.
The organizers of National Day Extravaganza in Beijing have pulled out the stops.
A total of 200,000 people will perform in a three-hour pageant in Tiananmen Square, including 80,000 children who will wave flowers, pom-poms and national flags. Beijing authorities plan to mobilize one million volunteers to help the celebrations go smoothly.
The state-owned China Film Group has produced an epic recounting the founding of the People's Republic that brings together an all-star cast of 100 that includes Jet Li, Jackie Chan, Zhang Ziyi and the two Tony Leungs.
Zhang Yimou, the film director who staged the opening ceremonies of the Beijing Olympics, has been enlisted to orchestrate the gala at Tiananmen Square.
Workers have widened and reinforced Chang'an Avenue, Beijing's major east-west boulevard, with 100,000 tons of durable asphalt to withstand tanks that will rumble past in a military parade.
Authorities have promised that the 66-minute parade will be more impressive than the one to mark the 50th anniversary, when 24,000 soldiers marched through the center of Beijing. Plenty of military hardware will be on display, including five new missiles to match the five stars of the national flag.
One Beijing hairdresser is creating a room-sized replica of Tiananmen Square constructed entirely out of human hair collected from his customers.
That is tough to outdo, but other cities are vying for novel ways to celebrate the 60th.
On Sept. 12, in the eastern city of Wenzhou, more than 3,600 people simultaneously painted a scroll measuring 1,949 meters long and 60 centimeters high, artistically depicting what it means to "love the motherland."
The statisticians of Anshan, a rustbelt northeast city best known for its state-owned steel mill, stand out for rallying to the banner of poetry.
Liu Yongzhong, who compiles the data that goes into the consumer price index, could be called the ringleader of Anshan's statistical literati.
Within days of hearing about the statistics bureau's campaign, he submitted "Bless You, My Motherland!" a mixed-meter composition with eight stanzas (eight being a lucky number in China).
It tracks China's modern history: from "the fires of war" to the "extreme suffering of starvation and poverty" to the glories of the recent past, including the return of Hong Kong and Macau to Chinese sovereignty ("Cathay's children stood tall and exhaled") and the completion of the mighty Three Gorges Dam across the Yangtze River.
Mr. Liu, 40, has since rallied many of his roughly two dozen colleagues to participate as well, and takes his poetic license quite seriously.
He said he has organized about 16 or 17 internal meetings so far to "perfect" the group's poetry by imposing strict quality standards.
"For example, after reading all the six contributions, we found that two of them used the same slogan -- 'one world, one dream' -- referring to the Olympics," he says. "So, we had to change one of them to express it in another way."
Stats are a serious business in Chinese politics.
The vast corps of numbers-crunchers -- 90,000 in the statistics bureau alone, plus 20,000 in other government departments -- provides the robust economic-growth figures that help the Communist Party justify its hold on power.
That has led some outside economists to cast doubt on the credibility of the data.
So, the pressure is on them this year to show that China's GDP will grow by 8%, considered the minimum needed to generate sufficient jobs and, by extension, social stability.
Mr. Wang's poem addresses that weighty challenge:

The stormy times force me to pay more attention
To the national GDP and CPI announcements...
As the motherland becomes richer and more powerful,
Statistics are emphasized.

Hong Kong publisher to issue banned China book

By MIN LEE
HONG KONG — A Hong Kong publisher best known for a memoir of the Chinese premier ousted for opposing a crackdown on student protesters in Tiananmen Square is releasing a critique of authoritarian rule that is banned in mainland China.
"The Rethinking of Chinese Civilization" goes on sale in Hong Kong on Monday, editor Bao Pu said Saturday. That is just three days before a massive Oct. 1 celebration in Beijing of the 60th anniversary of Communist rule.
The Chinese-language book by veteran journalist Xiao Jiansheng was banned on the mainland in 2007. The book is sensitive because its criticism of authoritarian governments in ancient China could be seen as a veiled attack on the current regime.
Xiao questioned the oppressive rule of the Qin Dynasty (221 B.C. to 206 B.C.), usually praised by Chinese historians because its leaders defeated rival states and united the country.
He also praised the political and religious freedom during the Song Dynasty (960 to 1279), seen by Chinese historians as weak because China was divided during the latter part of the period.
The book was scheduled to be released on the mainland in January 2007 by the China Social Sciences Press, part of the state-run Chinese Academy of Social Sciences, but it was pulled at the last minute because of its outlook on the two dynasties, Xiao said.
Calls to the mainland publisher Saturday seeking comment went unanswered.
"I decided to publish the book because I hope it will help the country's political and economic development," Xiao told The Associated Press in a phone interview.
Bao said he decided to publish the book because it challenges conventional thinking.
"It makes very clear points. It's different from the views of most Chinese scholars," he said. "Because it's banned in mainland China, it's necessary to publish it in Hong Kong," he added.
Unlike mainland China, Hong Kong enjoys freedom of speech under a semiautonomous status that was promised as part of its transfer from British to Chinese rule in 1997.
Bao's Hong Kong-based New Century Press is best known for publishing in May the posthumous memoir of former Chinese Premier Zhao Ziyang, who was ousted for opposing the military crackdown on student pro-democracy protesters at Beijing's Tiananmen Square in June 1989. At least hundreds of people were killed.
The memoir, not sold on the mainland, was crafted from secret tape recordings made by Zhao, who lived under house arrest for 15 years until he died in 2005. Bao's father, Bao Tong, was Zhao's top aide.
Xiao's editors at first asked him to cancel the Hong Kong release of "The Rethinking of Chinese Civilization" because they were worried about Bao's background, but they eventually backed down, Xiao said.
Xiao, 54, is an editor at Hunan Daily, published by the Chinese Communist Party branch in southern Hunan province.
Xiao said his bosses also declined his offer to resign.

China Clamps Down on Internet Ahead of 60th Anniversary

China has clamped down on VPNs and other online censorship circumvention tools as it prepares to mark 60 years of communist rule with a major military parade.
By Owen Fletcher

Security forces with black masks and machine guns on the streets of China's capital are just the more visible side of a security clampdown in the country this month: there is also its secretive battle to control the Internet.
The heightened security comes ahead of a massive military parade Beijing will hold in the heart of the city next week to celebrate China's 60th anniversary of communist rule, an event the government hopes will showcase the country's development and go untarnished by security threats or shows of dissent.

China's newest nuclear missiles will be included in the arsenal of weapons and equipment shown off in the parade, according to state-run media.
Security measures have included a crackdown this month on online tools that help users circumvent the "Great Firewall," the set of technical measures China uses to filter the Internet, according to providers of the tools.
"They put more resources into the blocking," said Bill Xia, president of Dynamic Internet Technology, which makes a widely used anti-censorship program called Freegate.
"It has been getting worse and worse this month," he said.
Many expatriates and savvy locals in China rely on Freegate as well as proxy servers and virtual private networks (VPNs) to bypass blocks that China places on Web sites like YouTube, Facebook and Twitter.

But accessing some of those tools has become more difficult in recent weeks.
China has always blocked IP (Internet Protocol) addresses it believes are used by Freegate, which routes users' communication through foreign IP addresses to grant access to Web sites blocked in China.

But this month it became more aggressive and began blocking a wider range of IP addresses, risking taking down unrelated targets in order to hit more Freegate users, Xia said.

The moves have left most users unable to use the program, prompting Xia's company to ready an updated version of Freegate that will be available in a few days.
China also cranked up its efforts to stifle Freegate ahead of another sensitive date this year: the 20th anniversary of its bloody crackdown on student democracy protests in Beijing's Tiananmen Square in June 1989.
Measures China uses to limit access to certain Web sites include altering entries in the DNS (domain name system), which translates URLs like www.google.com into the numeric IP addresses used to relay information online, and resetting a computer's connection when it tries to visit a banned site.

The country's police force also patrols the Internet for sensitive content.
Authorities appear to have stepped up efforts to block other circumvention tools as well.

China-based users of Hotspot Shield, another popular program that encrypts and reroutes online activity, have had problems accessing the program's Web site since last month, a representative of developer AnchorFree said in an e-mail.
China last month also started blocking the Web site of Blacklogic, a VPN provider, a company representative said, though the Web site can currently be accessed from China. The company had to switch to a new tunneling protocol when some users recently became unable to connect to any servers, the representative said.
"I'm unable to tell you with a 100 percent guarantee what [technical] measures are taken in China to interfere with our service, but these measures are being taken," the representative said.
Not all VPN providers appear to have been affected. China has mainly blocked free VPNs and proxies while allowing similar paid services, a representative of VPN provider 12vpn said in an e-mail.
Accessing blocked Web sites is fairly easy in China and many users do so through free Web-based proxies.

Most VPN users in China are expatriates, but more local Chinese may be signing up as well. 12vpn and other tool providers said their number of China-based users rose after early July, when China blocked Facebook and Twitter.
Some VPN providers declined to comment for a news story for fear of drawing China's attention and potential restrictions on VPNs.
At least one Chinese city has adopted a further measure to monitor Internet traffic.

The southern city of Guangzhou this month ordered Internet service providers to install "security monitoring" software on all servers and threatened punishment for failure to do so, according to government notices posted on the blog of one data center management company. Two such software programs, called Blue Shield and Huadun, were recommended in one of the government notices.

Huadun's Web site says the program helps server owners remove illegal and pornographic content from their systems.
The software is meant to "create a favorable online environment" for China's National Day celebration next week, the government orders said.

A representative of the data center company reached by phone said it put the orders on the blog for reference by clients and that the order applied only to Guangzhou.
Some of China's new security measures could remain in place long after the 60th anniversary celebrations, but others are likely to be lifted.

China has long gone through cycles of blocking and allowing access to Web sites such as YouTube and Wikipedia, and updates to Freegate have repeatedly allowed the tool to bypass evolving government security measures against it.
Still, Chinese users have posted skeptical notes on Twitter about China's newest Internet controls.

When asked if Twitter and Facebook would be unblocked after the National Day celebration next week, one user said they would not.
"Last year we had the Olympics, this year is National Day (which actually happens every year), and next year is the World Expo," the user wrote. "Actually, every year and every month and every day are sensitive."