Democracy Would Suffer If Google Left China

Google's leaving China would hurt democracy's growth in the country, according to panelists who discussed the row between Google and China.
By Fred O'Connor
Analyzing the quarrel between Google and China raises questions of how the Web helps an oppressed country develop democracy, according to a Massachusetts Institute of Technology panel discussion.
"The search engine has become an important tool to help the central government become more transparent," said panelist Xiaojian Zhao, a Chinese journalist studying at MIT on a fellowship, during the discussion Wednesday.

"The search engine will aid Chinese democracy."
Yasheng Huang, China program professor at MIT's Sloan School of Management, agreed, but went a step further, saying that the Internet has fostered freedom and transparency in China more than the combination of foreign aid, the rise of the middle class and other economic growth factors.

"Google leaving China undermines that process," he said.
The clamor began last December when Google claimed that Gmail e-mail accounts of Chinese human rights activists were targeted by hackers using malware and phishing scams, while some accounts were breached.

The Chinese government is widely believed to have sponsored the attacks.
Google reacted to the security issues in early January, stopping the censoring of its search results in China.

The Chinese government mandated censorship as a condition of Google operating its search services there.

In a blog post announcing its decision, Google said that it was reevaluating its Chinese business and realized that disobeying the government may force it to exit the country.

To provide unrestricted search, Google redirected users from its Chinese Web site to its Hong Kong search engine.
Chinese Web users can access the country's top search engine, Baidu, but Huang said he does not trust the site because money influences its rankings.

Since Google stopped filtering its results, instead of Baidu's top three results being paid rankings, the top 10 results are now paid, he said.
Ultimately, Google and China's dispute is a conflict between the Internet's basic premise of unrestricted access and the government's desire for control.
"The Internet was born on unfettered access, a strong value behind freedom," Huang said. "China has a different set of values, there is an emphasis on control."
And increasing levels of dissent among China's population have motivated the government to further tighten the Internet, said Craig Simons, a journalist who covered China for 10 years and is studying at MIT on a fellowship.

The number of protests against the government over pollution and social conditions has increased as people use the Web to communicate by e-mail, blogs and bulletin boards, Simon said.

This led hackers to target e-mail accounts of dissenters, he said.
"There is a massive liberalization at the bottom so the government is tightening controls at the top," said Simons.

"The government has taken the position that they need to take control of content on the Internet."
Information the hackers targeted was located on servers in the U.S., not China, so leaving the country would not increase the safety of Google's data, said David Clark, a senior research scientist at MIT's Computer Science and Artificial Intelligence Laboratory.

Google's threat to exit China is part of a negotiation strategy with the government, he said.
"I see this as a step in a process to moderate some alternative strategy with China," he said.
Despite Google's decision to stop censoring search results in China, panelists noted that the company still operates other businesses there beyond Internet search.
The company also still operates a research and development center in China, even though it decided not to continue offering search services that would be subject to regulations unpalatable to Google, said Edward Steinfeld, an MIT associate professor of political science.
"Google is neither in nor out. It is engaged with China," he said.
The Chinese government has yet to block google.cn or take direct action against the company, which some panelists attributed to the Chinese leaders' desire to keep the country's business environment hospitable to foreign companies.
"If you look at research and development innovations, they are produced by foreign companies," Huang said.

"Going after Google would create the perception that the business environment is getting worse."
Steinfeld also expects the situation to "stay status quo," saying it "would be an escalation to block google.cn or the link to the Hong Kong site."
However, Simons noted that the government retaliates by pressuring companies to end business arrangements with Google.

He gave the example of China Unicom, one of the country's top mobile-phone service providers, which announced in March that it will not use Google's search engine on handsets running Google's Android mobile OS.

Chinese automakers still can't lick quality problems

China's auto industry has come a long way, but quality is still a challenge. BYD has been one of the stronger and more popular makers.
By Calum MacLeod
If you think Chinese small cars will inundate the U.S. the way that Japanese cars took the country by storm in the 1960s and 1970s, well, rest easy.

Ain't going to happen anytime soon.

That's because there is every indication that the Chinese are not only failing to lick their quality problems -- but the cars may actually be getting worse.
For years, the American auto industry has predicted the inevitable arrival of Chinese cars.

They haven't arrived because China's internal demand for vehicles remains so high -- and because Chinese cars are so full of bugs and glitches.

The quality was supposed to gradually -- or rapidly improve -- but hasn't.
The latest indication comes from the China Association for Quality, which indicated this week that it's flooded with complaints about car flaws:
Complaints about cars that has quality problems within six months of purchase increased nearly 60% in the first quarter.

Complaints about safety issues and production defects rose 15% compared to the same period in 2009, according to Gasgoo, a publication of Automotive News.
Complaints about engine problems and crummy spare parts together comprised about half of all complaints about automotive product quality.
Whether it is quality or some other reason, Chinese cars are having trouble establishing a beachhead in Europe.

Brillance China Automotive Holdings, a BMW partner in China, is reportedly pulling out of Europe, Automotive News Europe reports.
It's pulling the plug after two models, the BS4 and BS6, didn't catch on, says Automotive News Europe.

"We have stopped exports to Europe. For now, we have no timetable for resuming the business," said an unnamed executive who reportedly has direct knowledge of the business, as quoted by the News.

That's interesting considering China is expected to have a huge price advantage when it exports cars. Like everything else from there, Chinese cars are cheap.
We expect that China will fix its quality problems.

It's in, after all, the most vibrant automotive market in the world right now. It's just taking longer than anyone expected.

'The Sun Behind the Clouds: Tibet's Struggle for Freedom

Tibet’s struggle gets worthy, if unrevealing, spotlight
By Mark Feeney

Exiles and activists marched to mark the 49th anniversary of China’s takeover of Tibet

A grim contradiction haunts “The Sun Behind the Clouds: Tibet’s Struggle for Freedom.’’ Wondrous color and beauty often fill the screen: monks’ robes, protesters’ banners, the spectacular Himalayan landscape.

Most wondrous of all are the face and character of the Dalai Lama. Yet against that is the fact of China’s domination of Tibet.

Few things are as depressing as a David-and-Goliath story with no slingshot — or even the prospect of one.

The documentary filmmakers Ritu Sarin and Tenzing Sonam have made several films about Tibet (she’s Indian, he’s Tibetan).

“The Sun Behind the Clouds’’ looks at events in 2008. China’s hosting of the Summer Olympics had a double effect: making the Chinese government especially sensitive about Tibet, which it has occupied since 1951, and inspiring worldwide protests for just that reason.
The film incorporates several approaches.

One is to follow a group of Tibetan exiles on a months-long protest march, attempting to gain access to their homeland from northern India.

Another is to include news film of protests in Lhasa, the Tibetan capital, as well as surreptitious interviews with ordinary Tibetans (there’s some archival footage, too).

Those protests, in March 2008, were the most extensive since 1959, when the Dalai Lama fled to India.
For all its worthiness politically, “The Sun Behind the Clouds’’ is a lackluster film.

That changes whenever the Dalai Lama is on screen. We see him at his residence in the northern Indian city of Dharamsala, as well as making public appearances in the United States and Western Europe.

To watch his meet-and-greet with Prince Charles is truly to see worlds colliding — those worlds being humanity at its most impressive and Madame Tussauds at its most animated (relatively speaking).

The Dalai Lama also gives interviews to the filmmakers. He’s the most prominent of several talking-head subjects, nearly all of them Tibetan activists.
While never heavy-handed about its politics, the film makes no effort to disguise its strong anti-Chinese bias.

The Chinese are their own worst enemy, in that regard — as when we see a foreign ministry spokeswoman denounce Tibetan culture as “a theocratic serf system... the darkest system in human history.’’

Somewhere Pol Pot is smiling.
The closest thing to debate in the movie is over the Dalai Lama’s “middle way’’ policy, which seeks Tibetan autonomy under Chinese rule rather than outright independence.

Several activists criticize the Dalai Lama for what they see as self-defeating moderation. It’s hard to imagine what alternative the Dalai Lama has.

“The only thing we know is that empires rise and fall,’’ says Lhadon Tethong, former executive director of Students for a Free Tibet. That’s certainly true.

But as another Tibetan activist notes, the situation of his people recalls that of Native Americans and Native Australians in the 19th century.

More Chinese than Tibetans now live in Lhasa. Cultures fall, too, especially when they’re shoved.

India imposes embargo on Chinese telecom equipment citing security

By Joe Leahy in Mumbai and Kathrin Hille in Beijing

The Indian government is blocking purchases of telecoms equipment from Chinese vendors on national security grounds, ratcheting up trade tensions between Asia's fastest-growing large economies.

The practice has prompted complaints from Beijing and is causing havoc for mobile operators in India, which need enormous amounts of equipment to sustain an industry that is adding 20m new users a month.
"Proposals for procurement of equipment from Chinese original equipment manufacturing vendors have not been recommended due to security concerns," the Department of Telecommunications wrote this week in correspondence to the Prime Minister's Office that has been seen by the Financial Times.

"Therefore, the proposals from the service providers for purchase of Chinese equipment is turned down."
India's mobile market has become an important source of revenue for Chinese companies, accounting for about 11 per cent of 2008 turnover at Shenzhen-based Huawei Technologies, one of the world's leading telecoms equipment makers.
But China's growing trade surplus with India -- about $16bn last year -- is leading to tensions, with Indian companies complaining that the market is being flooded with cheaper Chinese goods.
New Delhi has long been accused of blocking the purchase of some Chinese telecoms equipment due to fears that Beijing might embed spying devices in its networks.
Previously, this practice was thought to be mostly limited to equipment to be installed in India's disputed border regions with Pakistan and China.
But in December, the Department of Telecommunications amended its licence conditions for mobile service providers, requiring them to in future submit all plans for procurement of telecoms equipment from foreign vendors for screening for "security clearance".
Although the December amendment did not single out China, in practice, security agencies have been blocking applications involving Chinese vendors.
Indian department officials were unavailable for comment last night.
Chinese officials were also unavailable for comment.

But the correspondence seen by the FT mentioned a request from the Chinese embassy in New Delhi for information on the amendment.
ZTE, China's second-largest network equipment maker and the fifth-largest worldwide with $750m of its turnover in India, said yesterday that it was still investigating the situation.
"This is apparently not normal commercial behaviour but something related to political factors, and it is not appropriate for us to comment on political issues," said ZTE.
India is the world's second-largest mobile market after China with 584m subscribers.
Industry participants say that Chinese telecoms equipment is 30 per cent cheaper than that of many other foreign vendors.
"This is going to raise the cost of the business in India and it comes as operators are about to start 3G," said an analyst with a brokerage in Mumbai, referring to India's plans to start third generation mobile services next year, which will require new telecoms equipment.

India Blocks Orders for China-Made Telecom Equipment

By Mehul Srivastava and Mark Lee

India’s government blocked China’s Huawei Technologies Co. and ZTE Corp. from selling network equipment to domestic phone carriers because of security concerns, according to two people with knowledge of the matter.
Sistema Shyam Teleservices Ltd., the Indian unit of Russia’s AFK Sistema, didn’t get clearance to buy Chinese telecom gear, according to the people, who declined to be identified because the information is confidential.

The government denied similar requests from at least three other local phone carriers, according to one of the people.
India, which trails only China in terms of mobile-phone users, is stepping up scrutiny of imported switches and routers as phone operators plan to roll out high-speed services later this year.

The government last year imposed anti-dumping duties against gear from vendors including Huawei, China’s biggest maker, saying the products were sold at below market prices.
“Huawei and ZTE typically charge lower prices, making their products more competitive,” said Wilson Chai, who rates ZTE shares “buy” at Mirae Asset Securities in Hong Kong.

“The costs for Indian carriers will go up if they aren’t allowed to buy from Chinese vendors.”
Bharti Airtel Ltd., India’s largest phone carrier, doesn’t comment on matters related to national security, Ashutosh Sharma, a spokesman at the company, said in an e-mail.

Chen Rongkai, a media officer for China’s Ministry of Commerce in Beijing, declined to comment.

Security Clearance
Huawei hasn’t been notified about a ban though the company is seeking clarification on the matter, the network-equipment maker said in an e-mailed statement today.

Ross Gan, a Huawei spokesman, said in December the closely held Chinese company had $1.7 billion in contract sales from India in 2008.
Margrete Ma, a spokeswoman for ZTE, said the company is looking into the situation and declined further comment.
Indian carriers need to get security clearance from the Ministry of Home Affairs before they import equipment, according to a spokesman at the Department of Telecommunications, who declined to be identified.
Sistema also failed to obtain approval from the Department of Telecommunications to buy gear from Lenovo China Pvt., Mobi Antenna Technologies, Zhongxing Xindi Telecom Equipment Ltd., and Leoch Battery Co., the people said.

A Sistema spokesman declined to comment.
ZTE, China’s second-biggest phone-equipment maker, fell 4.2 percent to HK$28.30 in Hong Kong, after dropping as much as 9.9 percent earlier.

The Shenzhen, south China-based company counts India as its biggest overseas market, Vice-President Zhang Jianguo said in September.

Orders Turned Down
India’s Department of Telecommunications informed Prime Minister Manmohan Singh’s office that requests from Indian companies to import Chinese network equipment are being turned down because of security concerns, the Financial Times reported today, citing correspondence between government agencies.

Harish Khare, a media adviser for Singh, said he’s not aware of any such correspondence.
Hackers traced back to China infiltrated computers including those of India’s government, underscoring the growing threat of cyber attacks, according to a report this month by Information Warfare Monitor, a research group associated with the University of Toronto.

The Indian government said at the time it was investigating the matter, while China’s foreign ministry said it doesn’t condone Internet attacks.
China and India, which fought a war in 1962, vie for global energy resources and disagree over border territories.

India’s trade deficit with China widened more than 40 percent to $15.8 billion in 2009.

China's grand strategy

By Daniel Blumenthal
Robert Kaplan has written an excellent, thought-provoking piece in Foreign Affairs.

He argues that China's insatiable demand for energy and natural resources is driving its strategic policy, as it expands its military reach and influence both on continental as well as in maritime Asia.

It is not that China has a master plan for world domination, rather, like all rising powers, the logic of its growth requires it to play a greater international role.
To its west China is strengthening its grip on Xinjiang and Tibet. Soon it will complete two major pipelines extending from Central Asia to Xinjiang.

In Tibet it is building roads and railroads to extract resources, pacify the restive population, and keep it out of Indian hands.

China is marching southward as well, as it increases control over Burma, which may provide Beijing with a port and maritime access to the Bay of Bengal.

And it is trying, as Kaplan says, to "divide and conquer" other ASEAN states, who, in response to American inattention, are beginning to team up in opposition to China's influence. According to Kaplan, Beijing's main objective on the Korean peninsula is to help North Korea develop into a more "modern authoritarian" state, so that it remains a buffer against U.S.-allied South Korea.

Even so, Kaplan writes, China would not necessarily be opposed to a unified Korea that, for economic reasons, would be a part of "Greater China's" sphere, and eventually lead to the removal of American troops from South Korea.
According to Kaplan, as China looks to the seas along its eastern seaboard, it feels contained. South Korea, Japan, Taiwan, the Philippines, Indonesia, and Australia are all, to varying degrees, U.S. allies unwilling to acquiesce in a Chinese breakout into the Pacific Ocean.

China is trying to get out of this box by building up its submarine fleet and conventional cruise and ballistic missile force.

In the end, according to Kaplan, Taiwan is the key to China's naval breakout. Control of Taiwan would allow China to project power beyond the "first island" chain.
To its south, China strives for control of the South China Sea, both because it is a gateway to the Indian Ocean and because it is rich in natural resources.

To that end, China has built a major naval base on Hainan Island in the South China Sea. Hainan Island could allow the Chinese navy unimpeded access to the seas' major chokepoints.
While Kaplan's assessment of China's geostrategy sounds about right to me, it has also done its job in provoking some thoughts. I will offer three thoughts:
First, I do not agree that China can accomplish its continental consolidation through demographic efforts -- populating Tibet, Xinjiang, the Russian Far East -- or commercial relations alone.

To do what Kaplan argues Beijing is trying -- consolidate its land borders, extend its reach in Central Asia and Burma and Korea -- China will also need to develop expeditionary land forces. Why?

To respond to terrorist attacks, to prepare for a border war with India, and to advance its goals on the Korean peninsula in case of collapse and chaos in the North.
Second, Kaplan seems to endorse the "Garret plan" that is making its way around the Pentagon, a plan which, in the context of America's regional political objectives, seems wrongheaded.

The basic idea is to "do away with master bases" in Japan and South Korea and instead strengthen the U.S. presence in Oceania -- on Guam and the Caroline, Northern Mariana, Solomon, and Marshal islands -- while at the same time vastly expanding America's naval presence in the Indian Ocean.

This strategy would require Washington to upgrade defense relations with India -- to use some of its outer islands -- as well as with Brunei, Malaysia, and Singapore.

The U.S. navy would still cooperate with the Japanese maritime self-defense force as well.

This plan, according to Kaplan, would be less provocative to China while at the same time still allow the United States to play something more than the role of offshore balancer.
There are a number of problems with this plan.

It is not clear that some of the countries that we would need for the plan to work would cooperate, especially after we pulled out of Japan and South Korea.

A withdrawal from the "master bases" would be seen as a waning U.S. commitment to its allies. And, while it is true that the "first island chain" is becoming less defensible, it is not too late to take prudent steps to reverse this dangerous trend.

We have not yet hardened air bases in Japan, stepped up efforts at missile defense, or sought better options for countering China's missile force (How about the deployment by Japan of cruise and ballistic missiles along the Ryukus to target Chinese launchers?)
Third, Kaplan's emphasis on the importance of Taiwan for geostrategy, rather than for geopolitics, is debatable. Taiwan would provide China with modern ports and China could extend its maritime surveillance capabilities.

But unless we develop adequate defenses, China's missiles forces will render U.S. military activity in the first island chain too costly whether China possesses Taiwan or not.
While Mahanians in and out of China would argue that acquiring more territory would extend China's maritime reach, analysts focused on China's missile forces would disagree.

With better precision guided capability and longer ranges, China missile force may, over time, give the People's Liberation Army air superiority over the first island chain, as well as allow it to target any surface ship approaching China from the Western Pacific.

We still could take steps (hardening bases, seeking new bases, deploying better missile defenses, investing in more submarines and stealthy long range fighter-aircraft and bombers) that would make operations in the first island chain less risky, but if current trends continue, China will not need Taiwan to project power into the Pacific.
From a geostrategic perspective, Taiwan would only be important if we decided to use it to counter China's missile or submarine force. But we are not doing that now nor are we likely to in the future.

Since we are decidedly not using Taiwan as our "unsinkable aircraft carrier," China does not need to consider it a barrier to its current military planning. Taiwan's geographic importance to China may be overstated.

That brings me back to broad U.S. objectives.

Taiwan's importance is the same as the importance of our Japanese, South Korean, and Philippine allies -- more geopolitical than geostrategic.

These countries have embraced the international system that the United States created and defended after World War II.

They are democratic states with free market economies that all want to be part of what used to be called the "West," the worldwide club of modern, advanced industrial democracies. Washington's interests are better served when economically vibrant democracies are free from the control of other great powers -- this better ensures that the international system remains hospitable to us.
In my opinion, for geopolitical as well as geostrategic reasons, the United States military should maintain a (more defendable) presence on the territory of as many U.S. Asian allies as welcome it, at least until all can be assured that China will be a responsible and democratic great power, uninterested in creating its own exclusive economic or military spheres.

That means we need to work harder to help our allies build capabilities that help frustrate China's military plans rather than pulling back and relying mostly on offshore bases.

China's Pakistan Corridor

By Maha Atal
In the Pakistani province of Balochistan, South Asia and central Asia bleed into the Middle East. Bordered by Afghanistan, Iran and the Persian Gulf, and well endowed with oil, gas, copper, gold and coal reserves, Balochistan is a rich prize that should have foreign investors battering at the gates.

But for a half-century it has been the exclusive playground of the Pakistani government and its state-owned Chinese partners.

China would prefer it to stay that way.
China is Pakistan's oldest military and political ally, but in the last two decades it is the economic component of the alliance that has taken center stage.

Pakistan, and in particular Balochistan, is China's physical link to its sizable investments in Iranian gas, Afghan hydropower and Gulf oil.

Explains Andrew Small, a fellow at the German Marshall Fund, the Sino-Pak relationship "matters more now, because of India's economic growth. Pakistan being a trade and energy corridor means that possible pipelines and projects [in Pakistan] have a strategic significance beyond the specific investments."

Chinese control of Pakistan's commodities corridor can "bind India down in South Asia, restricting its capacity to operate elsewhere."
Chinese companies have poured at least $15 billion into Baloch projects: an oil refinery, copper and zinc mines and a deepwater port at Gwadar, in the Gulf of Oman.

"They wanted Gwadar to be another Dubai," says Khurram Abbas, the port's managing director, "to capture the transit trade with countries that are landlocked, like Afghanistan, and to encourage transshipment trade from the Persian Gulf to East Africa."
China's Tianjin Zhongbei Harbor Engineering has invested $200 million to build the first three berths and plans to invest a total of $1.6 billion to expand the port in the future. But business at Gwadar has been slow.

Though the three berths have the capacity to handle $2 billion worth of cargo a year, the port saw only $700 million in 2009.

"The challenge," says Abbas, "is that Gwadar is not yet linked to the rest of the country. The government was supposed to provide road connectivity. Without roads there can be no commercial activity [in Balochistan]. And we need commercial activity, investors to set up factories around Gwadar, to get cargo for the port."
China is taking matters into its own hands, starting to build a highway from Gwadar to the capital of Balochistan, Quetta, on the Afghan border, where it will connect to Pakistan's national highway network, and from there to the Karakoram Highway that leads into China.

China's Harbor Engineering Corps is also working on a new airport at Gwadar, due to open in 2013.
Infrastructure is not the only challenge that Chinese investors in Balochistan face. The province is a key battleground in the wars currently threatening Pakistan.

Quetta is rumored to be hiding wanted leaders from the Afghan Taliban.

Small towns in the Baloch heartland, meanwhile, are a launchpad for a decades-old separatist movement that capitalizes on populist resentment of federal agencies and foreign investment.

Chinese firms can usually weather these threats.

Explains the German Marshall Fund's Small, "They are less concerned about security than the U.S. because they have faith in the Pakistani military's ability to look out for their interests, a level of faith that Chinese workers will get privileged levels of protection even amidst destabilizing [political] circumstances."

Unsaid: China is willing to play in the bribery culture traditional to the area.
Moreover, China recruits local figures as managers.

Muhammad Sanjrani, the managing director of China's Saindak copper mine in Chagai, Balochistan, is also the head of the local tribe, with historic control of the Chagai region, and has worked to sell the project to the populace.
Beijing is willing to play hardball to protect its position in Balochistan. That's a lesson learned the hard way for Tethyan Copper, a joint venture between Canada's Barrick Gold and Chile's Antofagasta.

In 2006 Tethyan signed a deal to survey, and then develop, the Reko Diq reserve in Balochistan, estimated to hold $70 billion in copper and gold.
Though the provincial government holds a 25% stake in the venture, the deal was signed between the federal government and Tethyan's foreign execs, and no prominent tribal authorities are involved.

As a result, the mine has been unusually unpopular, exacerbating threats to other foreign investments in the province, including China's highway project.
In January the Baloch government, struggling politically and looking to appease separatist hardliners, announced it would cancel Tethyan's license and force investors to absorb a $3 billion loss.

Almost immediately the U.S. intervened, putting pressure on the Pakistani central government to dissuade Quetta from doing this.

U.S. diplomats believe the sanctity of the Tethyan deal is essential to its efforts to encourage Western investment in Pakistan as a counterterror tool.
For China, however, American intervention was an alarm bell, confirming longstanding suspicions in Beijing that Pakistan's alliance with the U.S. in Afghanistan would come at the expense of China's relationship with the Pakistani military establishment and its exclusive access to Pakistan's wealth and strategic location.
But the confrontation between Pakistan's central government, responding to U.S. pressure, and a more intransigent provincial leadership also presented China with an opportunity.

The giant Metallurgical Corp. of China, which controls the Chinese stake in the Saindak site, bid to take over the Reko Diq site from Tethyan, too.
Though the provincial and federal governments have yet to agree, MCC made a compelling case. In private meetings with Baloch leaders the Chinese representatives agreed to build a railroad and a power plant in Balochistan as well as to waive any requirements for sovereign guarantees. Says a frustrated William N. Center, the U.S. State Department's foreign commercial attaché in Pakistan, "These are terms that no private company could compete with."
A highway from Gwadar to Quetta will serve as a pipeline for China. Metallurgical Corp. of China, a stakeholder in the Saindak copper mine, is aiming to take over Barrick's Reko Diq site.

On eve of Shanghai Expo 2010, China finds 'soft power' an elusive goal

Chinese authorities have seized on the Shanghai Expo 2010 – the largest in history – as another chance to enhance 'soft power' that is generated by the spread of cultures, values, diplomacy, and trade. The expo opens this weekend.
The China Pavilion is seen during the light testing at the Shanghai World Expo site in Shanghai December 30, 2009. Shanghai unveils to the world on Friday its multi-billion dollar World Expo.
By Peter Ford
Shanghai — At the heart of the Shanghai World Expo stands the host nation’s pavilion, a giant latticed crown painted crimson.

Packed with exhibits portraying daily Chinese life, China’s ethnic diversity, and the standard bearers of Chinese philosophy, the display shows China’s friendliest face to the world.
Hard on the heels of the Beijing Olympics, the authorities here have seized on the Expo – the largest in history – as another chance to improve the rising giant’s international image.

Learning how to win friends and influence people is a task to which the government has attached the highest priority in recent years.
It appears, however, to be failing.

A BBC poll released in April found that only one-third of respondents in 14 countries believe China is a positive influence, down from one-half just five years ago.

“The government is putting a lot of resources and a lot of attention into boosting China’s ‘soft power,’ but they’ve got a lot of problems with the message,” says David Shambaugh, head of the China Policy Program at George Washington University in Washington.

“The core aspects of their system” – such as one-party rule, media censorship, and suppression of critics – “are just not appealing to outsiders.”
Chinese policymakers and academics are increasingly fascinated by “soft power,” whereby nations coopt foreign governments and citizens through the spread of their cultures, values, diplomacy, and trade, rather than coerce them by military might.
Frustrated by Western domination of global media, from entertainment to news, and by what it sees as unfair coverage, China has launched a $6.6 billion campaign to tell its own story to the world by building its own media empires.
Li Changchun, the ruling Communist Party’s top ideology official, was blunt in a 2008 speech: “Whichever nation’s communications capacity is the strongest, it is that nation whose culture and core values spread far and wide... that has the most power to influence the world,” he said.

Is the message convincing?
But this is not enough, says Li Xiguang, head of the International Center for Communications Studies at Tsinghua University in Beijing. Even the best-paid messengers need a convincing message.
“The United States has built its soft power by making its value and political system… universal values,” he says.

“China will not beat the US in soft power until we have a better and newer form of democracy, freedom, and human rights.”
China has had some success in projecting soft power in developing countries, especially in Africa. “Wherever you go in Africa, roads are being built, and the people building them are Chinese,” says Aly Khan Satchu, a financial analyst in Nairobi. “China expresses its soft power through building infrastructure.”
China’s rapid economic development is an inspiration to many Africans, says Mr. Satchu. “The Chinese are selling themselves as having experienced catch-up and offering to help African governments do the same,” he says.
Chinese firms are also preparing to bid on high-speed railroads in California and elsewhere in the United States.
Americans are familiar with some Chinese cultural icons. “Crouching Tiger, Hidden Dragon” (2000) was a blockbuster movie, and Houston Rockets basketball star Yao Ming is a household name. But China lacks a Hollywood or a US-style TV industry.
Part of the problem, suggests Pang Zhongying, of Beijing’s Renmin Univer sity, is that English, unlike Chinese, is an international language.

Even with the creation of more than 200 Confucius Institutes around the world teaching Chinese, “I don’t think China can overcome this difficulty in the short term.”
At the same time, says François Godement, director of the Asia Centre in Paris, however admired Chinese culture may be, “it is less easily translatable” to other cultures.

Political control issues
Adding to the government’s difficulties is its insistence on controlling all expressions of contemporary Chinese culture.
Beijing squandered an opportunity at last year’s Frankfurt book fair, which showcased Chinese literature, by pressing for a ban on exiled writers. Press coverage focused not on Chinese authors but on Beijing’s heavy hand.
This desire for complete political control, says Professor Godement, means that “they don’t give creators the freedom to create works that would project soft power.”
“There is a huge gap between the official Chinese judgment and that of outsiders,” adds Professor Pang. “There are many intellectuals in China, but a good intellectual is not necessarily an officially recognized one.”
The government has opted instead to pursue public diplomacy, or “overseas propaganda,” as it is known here.
Rarely does a month pass without a visit to Beijing by media managers and journalists from one developing country or another. But this is not the same as projecting soft power, Mr. Shambaugh notes.
“China has a huge soft power deficit,” says Pang.

“The current Chinese model solves problems, of course, but it is also part of the problem. People outside China will pick China’s virtues, but try to avoid its disadvantages. We should learn from such natural choices, from the impression that China can only build roads and schools. That is a problem we must address.”

China's Alarming Spate of School Knifings

A police officer crosses the police line to enter a building where students were attacked at the Zhongxin Kindergarten in Taixing, in east China's Jiangsu Province, Thursday, April 29, 2010.

By Austin Ramzy / Beijing
China is reeling from the fourth attack on schoolchildren in just over a month.

The series of stabbings, which have left 10 dead and dozens injured, has prompted questions about school safety.

The attackers have all been adults, and at least one was known to have suffered from mental illness, prompting concerns about the state of treatment in China.

Experts say the most recent attacks were inspired by a deadly assault last month, heightening fears of further copycat attacks.
On Thursday a man entered a kindergarten in eastern Jiangsu province and stabbed 28 children, two teachers and a security guard. Two children are in serious condition, according to a statement issued by the Taizhou city government.

The suspected attacker, an unemployed 47-year-old man named Xu Yuyuan, has been arrested.
On Wednesday another man attacked a primary school in southeastern Guangdong province. Chen Kangbing, 33, slashed 15 students and a teacher before he was surrounded by teachers and then arrested by police.

State media reported that Chen was a teacher at another school in the area, but had been on sick leave since 2006.
On the afternoon of April 12 a man in the southern Guangxi region used a vegetable knife to attack several students and bystanders near a schoolhouse.

Yang Jiaqin, 40, stabbed seven people, killing a second-grade student and an 81-year-old woman.

Yang had been treated for mental illness in 2005 and 2008, and family members were preparing to send him to a hospital for further treatment when he launched his attack, according to the Beihai city government.
The news of the attacks came amid the rapid trial and sentencing of Zheng Minsheng, a 42-year-old surgeon, who was executed on Wednesday for a bloody assault on an elementary school last month in Fujian province.

In the space of a few minutes on the morning of March 23, Zheng stabbed to death eight students and seriously injured five others who were waiting to enter the Nanping Experimental Elementary School.

The Nanping Intermediate Court, in a statement announcing Zheng's death sentence, said he acted out of anger because he had been repeatedly frustrated in his romantic life.
"There's definitely a factor of imitation in terms of the crime method," says Ma Ai, a professor of sociology at China University of Political Science and Law in Beijing.

"Zheng Minsheng was the first in this batch of cases, and it seems that our society's attention has done little but incite similar crimes. The more crimes they commit in a short period of time, the more media attention they will get, and attention is exactly what they want."

The attackers "all tend to blame others for their own misfortunes," says Ma, and through their violent acts, they hoped to bring attention to their own personal problems.
The series of assaults, all in relatively well-off regions along China's coast, has raised questions in the Chinese press and online about violence in China.

Violent crime is less common here than in the U.S., and strict controls on gun ownership mean school shootings are unheard of. But in recent years China has seen several knife attacks on schools, including one particularly violent stretch in the second half of 2004.

In August of that year, a guard at a Beijing kindergarten stabbed 15 students and three teachers, killing one student.

A month later a man stabbed 28 children at a nursery in the city of Suzhou, and another attacked 24 at a school in Shandong province.

In October a primary school teacher in Hunan province hacked to death four students and injured 16 more, and in November a man broke into a high school dormitory and stabbed to death eight boys.
Those attacks led to an increased focus on school safety. And while many schools in China's more developed coastal regions have unarmed guards, the recent spate of attacks shows the difficulty in protecting schoolchildren.

"In the short term, schools should take more precautionary actions," says Ma.

"And those who display similar psychological problems should receive more communication and counseling."

China includes internet in secrets law revision

By Kathrin Hille in Beijing
The Chinese government has moved to force internet and telecom companies operating in the country to turn over confidential customer information if it relates to ‘state secrets’.
The move, through amendments to the State Secrets Law passed by the standing committee of China’s legislature on Tuesday, establishes a formidable new hurdle for global companies entering the world’s largest internet and telecoms market by number of users.
The amended law, which will take effect on October 1, stipulates that “internet and other public information networking operators and service providers must cooperate in state secrets investigations by the police, state security and prosecutorial institutions”, according to a statement carried by state media.
The statement further said internet and telecom service providers had the duty to report the revelation of state secrets on their networks, keep related records and hand over the evidence to the government.
The new requirements are unlikely to make much difference to Chinese companies such as the country’s three state-owned telecom operators and its mostly privately owned internet companies.

They have long operated under the assumption that they must comply with government requirements for information.
But the changes could discourage foreign internet companies from entering the Chinese market.
In 2005, a Chinese court jailed Shi Tao, a reporter, for 10 years for revealing state secrets after Yahoo handed over some of his e-mail communications, which included a confidential government document.
The company faced fierce criticism in the US for its role in the case, and the need to avoid getting drawn into a similar situation remains a key consideration in foreign internet companies’ China strategies.
“In Shi Tao’s case, China didn’t have clear legal requirements on this yet, but now resisting government or police demands for customer data is illegal,” said Mo Shaoping, a lawyer who has defended human rights activists.
The rules come a month after Google redirected its Chinese online search traffic to its Hong Kong site to avoid self-censorship demands.

However, the company retains subsidiaries in China, and it is unclear whether Beijing could try to apply the new requirements to them although Google does not have mail servers in the country.
Facebook, whose social networking site has been blocked for a year now in China, has long pondered whether it should set up a presence in the country as social networking applications are spreading rapidly among China’s close to 400m internet users.
The rules could also add risk to potential investment in China’s cable or television content sector, one industry source said.
Beijing plans to kick off convergence between internet, telecom, and television networks later this year, and this development is being eyed by private equity investors who expect consolidation among cable companies and content providers.

As network integration will eventually allow user-generated content to spread across the different networks, cable operators and TV content operators could find themselves responsible to respond as well, the source said.

China: Futuristic yet fruitful

Distinctive: the Shanghai Expo’s Spain pavilion

The Financial Times

Shanghai these days is not just a city that never sleeps – it is a city that plants whole landscapes in the dark.
One recent evening in the city’s famous old French Concession, dumper trucks and excavators were working feverishly to complete a Metro station.

The next morning, not only was there a fully functioning new Metro line but an avenue of fully grown shade trees, planted alongside a newly laid mosaic pathway.
“Shanghai did in 15 years what London did in 150,” says Wu Zhiqiang, professor of urban planning at Tongji University.

Begun in 1995, the Metro system for China’s commercial capital has doubled in reach to 420km in just the past year.
There is a reason for the rush: the imminent arrival of an expected 100m visitors. Shanghai is about to host the biggest World Expo in history.

It is the next act in a rebranding of China that began with the 2008 Beijing Olympics and gained in substance when China emerged from the global financial crisis virtually unscathed.

The Shanghai Expo, for which Professor Wu is chief planner, opens tomorrow night and runs until October 31.

The cost is estimated at $55bn (£36bn, €42bn) – more than twice what Beijing spent on the Olympics.

But if Shanghai’s city fathers are right, it will have an impact, on both Shanghai and China (not to mention on the future of the Expo model), for decades to come.

Kevin Wale, head of General Motors in China, one of Shanghai Expo’s biggest corporate sponsors, calls it “the Olympics of technology”.

But the mere notion of splashing out so lavishly on what used to be called World’s Fairs has been out of favour globally for decades.

From the Eiffel Tower to the US superhighway system to caramel corn, Expos have given the west some of its most memorable innovation. But many of the really famous Expos took place in the 19th century – including London in 1851, with its Crystal Palace.
Startlingly, the genesis of the Shanghai Expo dates back almost that far, according to Tu Qiyu of the Shanghai Academy of Social Sciences: influential Shanghainese first started pushing for it in the early years of the last century, when Shanghai was known as the Paris of the Orient.
Since then, Shanghai’s fortunes have waxed and waned but it remains very much China’s second city: it is Beijing, for instance, that regulates its equity markets.

Expo is aimed, as much as anything, at promoting Shanghai’s image within China: only 5 per cent of Expo visitors are expected to be from overseas.
To get ready for them, virtually every street has been repaved, street-facing walls have been repainted and new drains have been dug.

Inevitably, some of the work has been shoddy: workmen were back within days to re-lay the path near the French Concession Metro station.
“The only thing we Chinese care about is face: we will even waste money to put make-up on the city; even when there is no need to repave a road, we will still do it,” says Prof Tu, appointed by the Shanghai government to do a study on Expo.

He admits that no one really knows how much the city has spent on it, since every local government is spending, without co-ordination: official figures range from Rmb300bn ($44bn, €33bn £29bn) to Rmb400bn but Jones Lang LaSalle, the property services firm, estimates infrastructure investments made or brought forward for Expo boost the total cost to $95bn.
The Expo site itself – 5.3 sq km along the banks of the Huangpu river – has been adorned with more than 200 national, corporate and municipal pavilions, filled with visions of a future where urban living is clean, green and techno-geeky.

Like the Oriental Pearl Tower, which symbolised all that was futuristic in 1990s Shanghai, the flying saucer shape of the Expo performance centre is destined to grace postcards and web pages as the new face of Shanghai.
The big international presence attests to China’s growing influence.

While the Olympics was a show that China put on for the world, Expo is a performance that the world is putting on for China, says Da Shan, Canada’s expo commissioner.

Put bluntly, countries and companies from around the world did not dare snub the rising and occasionally abrasive power by not turning up.
When the US risked not being able to participate (because American law forbids Washington from footing the bill), Hillary Clinton, secretary of state, put the squeeze on US multinationals and came up with $60m in a matter of months.

Expo demonstrates not just the rising confidence of Shanghai and of China but also the eagerness of the rest of the world to remain on its good side.
To prepare, the city government has been overhauling residents’ attitudes as well – part of what it calls a “spiritual civilisation” campaign.

Some of the 170,000 Expo volunteers have been formed into behavioural adjustment squads: they patrol Metro stations urging people to stand to the right on escalators; they discourage spitting, queue jumping, pushing and shouting – all well-loved Shanghainese habits; they penalise smoking in public places; and they even go door-to-door urging residents not to wear pyjamas in public.

Some have fought back, saying they want the freedom to choose their own wardrobe.
Expo’s theme is “Better city, better life” and some benefits are already evident: Expo has commissioned lavatory technology where toilets expel odours from below nose level. That may be a better claim to fame than even caramel corn.
Yet for a city that aims to lead the world in sustainable urban development, preparing for Expo has hardly demonstrated Shanghai’s credentials in that regard: tracts of traditional housing were knocked down in a heedless rush to the future that risks eradicating its history.
Chen Hangfeng, a Shanghai artist, is one of a handful willing to criticise Expo.

He recently exhibited his “Bubble City, Bubble Life”, a cage built to enclose a constant stream of bubbles, almost all of which are destined to crash and burst against its wire mesh walls.

“Expo is like a dream machine, generating all sorts of utopian, futuristic ideas that will never be realised,” he says.

His sculpture formed part of a recent Expo protest exhibit at Shanghai’s OV gallery, which also showcased photographs of a house torn down while its owners were out challenging the demolition in court.
“Money has been gradually taking the city and ripping out its soul,” says one long-time foreign resident.

With its generic shopping malls, its Starbucks and its ubiquitous Gucci shops, “it is hard to find what is interesting about Shanghai these days”.
Profs Wu and Tu agree – but they think Expo can help combat that trend.

The quality of urban housing is one of the biggest social problems China has today, says Prof Tu. Expo will be a six-month seminar in how to solve those problems, they say.
For beyond all the eye-candy – neon levitating dandelions (the UK pavilion) and mutant purple silkworms (Japan) – Expo will also exhibit the newest technologies to help make cities liveable. There are GM cars so light and smart that they can park themselves in the broom closet of an urban high-rise – and cities automated by Cisco, where an incident involving hazardous material instantly triggers plans to divert buses, close schools and factories, alert hospital specialists and chase away the noxious fumes.
Some pavilions change shape according to the movements – or even the feelings – of the people inside; others give visitors hand-held “dream machines” where they can plot a mythical collective future.

The Coca-Cola pavilion promises a “Happiness Clinic” for those overwhelmed by the presence of 800,000 other humans (the maximum on any day).
By hosting the show, China is finally shouldering its responsibility to the environment, says Prof Wu.

The Swiss pavilion has soyabean walls; Hanover House stays at 25°C year-round without using conventional heating or cooling; Expo uses river water for cooling and has parking only for electric buses, not cars.

And though almost every pavilion must be discarded afterwards under Expo rules, they are all 100 per cent recyclable, according to organisers.
Some Expos are seminal events in the history of a city or country: GM at the 1939 New York Expo is credited with inventing the superhighway system that transformed America less than 20 years later.

Whatever else emerges from this Expo, Shanghai will enjoy the benefits of vastly improved infrastructure for decades to come – infrastructure that could help in its ambition to become a global financial centre by 2020.
Perhaps Shanghai will be one of those Expos that lives in the memories of those that visit them for decades.

For $55bn, it had better be.

THE BURDEN OF URBANISATION

‘The scale of what they need to do is enormous’

China has the world’s biggest urbanisation problem and Expo is promising the world’s best solutions.

By 2030, China will have an urban population of 1bn, having added 350m by then – more than the entire current population of the US, according to a recent McKinsey study, Preparing for China’s urban billion. Even five years before that, China is forecast to have 219 cities of more than 1m each, compared with 35 in Europe today, and 24 cities of more than 5m.

Shanghai, with nearly 20m already, is a living experiment in urbanisation – and one that is mostly failing. The polluted Huangpu river runs between banks crowded with concrete apartment complexes with little or no greenery (but lots of hanging laundry). Parks are few and playgrounds almost unheard of; pedestrianisation is limited and walking is deemed one of the city’s most dangerous sports.

For years, Shanghai has smothered its history in skyscrapers, and Expo has accelerated that process. At the Expo site itself, the Shanghai government did convert one steel plant into a theatre; but outside Expo, numerous traditional buildings have been knocked down.

Wujiang Lu, the city’s famous snack street where stalls served everything from octopus to offal on a stick, is gone. There was nowhere to sit and the rubbish bins were too infrequently emptied – but rather than install benches and schedule extra visits from the trash collectors, the city opted for demolition. Starbucks and Krispy Kreme are there but Little Yang’s famous crispy-bottomed soup dumpling stand is no more.

Part of the point of Expo, whose motto is “Better city, better life”, is to make sure Shanghai thinks twice before demolishing the next Wujiang Lu. “Shanghai could leapfrog the rest of the world [on urbanisation], because the scale of what they want to do and what they need to do is so enormous,” says Anthony Elvey, director of Cisco’s Expo pavilion.

Hoping to sell its integrated city management systems to China’s mayors, the Cisco pavilion is a celebration of the joys of a microchip-enhanced life: right down to wristwatch-sized monitors that simultaneously check the contractions of a pregnant woman, summon the ambulance, inform her husband, rouse the obstetrician from bed and book a delivery room.

Indeed, connected urban living is a main focus of the corporate Expo pavilions: schoolchildren use global positioning devices to find the best bus route home, where they are greeted by a grandmother who has just teleported in from the provinces; cars talk to the traffic grid to find out where best to park themselves.

Some Expos are memorable for inventions that endure; others are mere graveyards for technologies that came before their time. It could take decades before it is known which category Shanghai falls into: a moment that changed urban life forever, or just an urban fantasy.

IOC strips 2000 Games bronze medal from China

By Stephen Wilson
DUBAI, United Arab Emirates — China was stripped of a bronze medal from the 2000 Sydney Olympics on Wednesday for fielding an underage gymnast, with the women's team medal now going to the United States.
The International Olympic Committee acted after investigations by the sport's governing body determined that Dong Fangxiao was only 14 at the 2000 Games. Gymnasts must turn 16 during the Olympic year to be eligible.
Dong's results from Sydney were nullified in February by the International Gymnastics Federation. Because her scores contributed to China winning the team bronze, the FIG recommended the IOC take the medal back.
As expected, the IOC executive board upheld the request and formally stripped the medal on the first day of a two-day meeting in Dubai.
The U.S. women, who had been fourth, move up to the bronze.
The IOC said Dong was also stripped of her sixth-place result in the individual floor exercises and seventh place in the vault.
Calls to the Chinese Gymnastics Association and the media officers for the Chinese gymnastics team went unanswered late Wednesday.

Dong now lives in New Zealand with her husband.
The IOC ordered China's national Olympic committee to return the team medals "as soon as possible" so they can be reallocated to the U.S. team.
The IOC also told the Chinese to "ensure, by all means, that the athletes and officials of its delegation comply with all rules and regulations (of the international federation) particularly with regard to age limits."
Questions about Dong's eligibility arose during the FIG's investigation into the ages of China's team that won the gold medal at the 2008 Beijing Games.

Media reports and Internet records suggested some of the girls on that team could have been as young as 14.
The FIG cleared the Beijing Games gymnasts in October 2008 after Chinese officials provided original passports, ID cards and family registers showing all of the gymnasts were old enough to compete.

But the FIG said it wasn't satisfied with "the explanations and evidence provided to date" for Dong and a second gymnast, Yang Yun.
Dong's accreditation information for the Beijing Olympics, where she worked as a national technical official, listed her birthday as Jan. 23, 1986. That would have made her 14 in Sydney too young to compete. Her birth date in the FIG database is listed as Jan. 20, 1983.
Dong's blog also said she was born in the Year of the Ox in the Chinese zodiac, which dates from Feb. 20, 1985, to Feb. 8, 1986.
FIG investigators didn't find sufficient evidence to prove Yang, who also won a bronze medal on uneven bars in 2000, was underage. She received a warning from the FIG.
The bronze medal salvages what had been a disappointing Olympics for the U.S. women. The squad Amy Chow, Jamie Dantzscher, Dominique Dawes, Kristin Maloney, Elise Ray and Tasha Schwikert left Sydney empty-handed, the only time since 1976 the American women had failed to win a single Olympic medal. The U.S. boycotted the 1980 Moscow Games.

China to Enforce New Encryption Rules

By LORETTA CHAO
BEIJING—China is set to implement new rules that would require makers of certain electronic equipment to disclose key encryption information to be eligible for government procurement sales, creating a possible showdown with foreign companies that are unlikely to comply.
Beginning Saturday, makers of six categories of technology products, including smart cards, firewall technology and Internet routers, will have to disclose encryption codes to authorities for certification to participate in bidding for government purchases.

Such encryption information is closely guarded by companies, and industry officials say foreign companies that fall under the new rules are unlikely to comply, which could mean they are cut off from government contracts for those products.
The product categories covered by the encryption rules account for tens of millions, or possibly hundreds of millions, of dollars a year in government sales, industry officials estimate.

That's a small fraction of the many tens of billions a year China's government spends on procurement.

Still, the dispute is the latest illustration of recent tension between Chinese authorities and foreign businesses over a range of regulatory policies.
Disclosing encryption information is "something companies cannot and will not do," said Jorg Wuttke, president of the European Union Chamber of Commerce in China at a briefing last week, because such codes are often kept secret by companies for both competitive and security reasons.

Mr. Wuttke said this is one of the most important issues facing European companies from the chamber's perspective.
Two companies that are likely to be affected by the rules are Gemalto NV, a maker of smart cards and other digital security products, and Cisco Systems Inc., the U.S. network-equipment giant.

Cisco declined to comment on the new rules. Gemalto didn't immediately respond to a request for comment.
Industry observers who follow the issue say that the regulation appears to be part of a broader effort by Beijing to promote domestic enterprises.

Foreign executives say such regulations make it increasingly difficult for foreign companies to compete fairly in one of the world's most important markets.
Chinese officials have said their policies aren't discriminatory, and have complained about alleged protectionist measures taken by the U.S. and other nations.
The encryption requirement has been scaled back significantly from when it was first proposed in 2008 by the General Administration of Quality Supervision, Inspection and Quarantine.

At the time, authorities said that any uncertified security products wouldn't be permitted to be sold, imported or used in China.
But after protests from foreign industry groups, the officials narrowed the scale of the regulation to include only government procurement of certain products.
The General Administration of Quality Supervision, Inspection and Quarantine didn't respond to requests for comment on the rules. Nor did the Ministry of Finance, which funds government procurement.
Implementation of the regulation was delayed last year just days before it was to go into effect, and authorities could delay again.

It's also unclear how the regulation will be enforced.

People who follow the issue say the requirement could, for example, force the Ministry of Transportation to use only certified technology in the millions of transportation cards used in China's subway systems.

If the scope of government procurement is interpreted to include state-owned companies as well, the requirement also could encompass bank cards.
As of Wednesday evening, a government list of companies certified under the rule listed only Chinese companies.

Shenzhen-based telecom-equipment giant Huawei Technologies Co. and Internet security company Leadsec Technologies (Beijing) Co., a subsidiary of personal computer maker Lenovo Group Ltd., were among more than 20 companies listed.

China Debates Its Sexual Liberalization

By DIDI KIRSTEN TATLOW
BEIJING — In a photograph on his lawyer’s Web site, Ma Yaohai stares straight at the camera, cheekbones prominent above sunken cheeks, his expression intense, almost haunted.

The 53-year-old computer scientist, dressed soberly in a dark jacket and polo-neck pullover, holds a sign saying: “Swinging is no crime.”
Unfortunately for Mr. Ma, it is. Article 301 of China’s criminal law bans “crowd promiscuity,” with offenders liable to five years in jail.
On April 7, Mr. Ma and 21 other members of his swingers’ circle were tried in the central city of Nanjing on group sex charges, in a case that is roiling society and provoking heated debates in academic circles, among friends and in the blogosphere.

Prosecutors accuse the twice-divorced Mr. Ma, who has since been fired from his job as a professor at Nanjing University of Technology, of organizing and taking part in at least 18 group sex parties between 2007 and 2009.

Fourteen were in his own home, four in hotels and the rest in unspecified locations, according to his lawyer, Xue Huogen.
No verdict has yet emerged from the two-day trial, during which Mr. Ma was the only defendant to plead not guilty.
“This case is having an enormous impact on society, so they are deliberating very carefully right now what to do about it,” Mr. Xue said.
Yet what Mr. Ma did isn’t all that unusual, sexologists here say.

In 1978, when China began its bold, capitalist-style economic and social experiment known as Socialism with Chinese Characteristics, attitudes toward sex began changing fast, along with almost everything else.
In a sign of just how fast, Li Yinhe, a sociologist at the Chinese Academy of Social Sciences, noted how members of a rare swingers’ group in the early 1980s were treated: one person was executed, another was sentenced to life in prison and a third was given 15 years.

Today, by comparison, Ms. Li estimates that the biggest online group sex site, Happy Village, has 360,000 users alone.
Ms. Li, arguably China’s most famous sexual rights campaigner, is leading a campaign to decriminalize group sex.
“‘Crowd promiscuity’ is an out-dated law, a wrong law,” she wrote on her blog, calling on the Chinese people to defend what she said were their sexual rights.

Group sex is fine as long as it meets three criteria, she said: adults, joining in voluntarily, in a private place.
Countering critics who say decriminalization would lead to a decline in public morals, Ms. Li points to the 1997 abolition of the laws against “hooliganism,” long a punishable, catch-all term for sex outside marriage, and “counterrevolution.”
“That didn’t lead to an upsurge of hooliganism or counterrevolution, did it?” she asked.
In March, Ms. Li persuaded delegate friends at the National People’s Congress to submit a proposal she drafted to abolish the “crowd promiscuity” charge at the congress’s annual meeting.
Swinging is just one of a slew of controversial habits arising from China’s sexual liberalization. Sadomasochism clubs, many organized online, are flourishing. Many are new, such as one in the city of Baoding in Hebei Province.

“Come along and fulfill your long-suppressed happiness and excitement,” the post says. “Only Baoding residents need apply.”
Many sex shops have sprung up in China’s cities in the last decade.

At Purple Passion Adult Health Store, one of four on just two streets in my neighborhood in Beijing near the embassy district, a 43-year-old saleswoman who gave her name as Ms. Wang stood in a tiny, 2-square-meter, or 22-square-foot, space with floor-to-ceiling shelves festooned with sex toys, bondage gear and Chinese-made Viagra.
“We get all sorts of people,” she said. “Older men who are divorced, or whose wives have gone to another city to put their child in school there. Single women, too.”
“They say to me, ‘Don’t tell anyone what I bought.’ I put their purchase in two black plastic bags to hide it.”
Business had been slow that day, a rainy Sunday afternoon, but Ms. Wang said normally she did “several hundred” renminbi in sales a day. Not a lot, but steady, she said. “There’s no harm in it.”
Yet Ms. Wang has her limits.
“Oh, no!” she exclaimed, when I asked about the Nanjing case. “That is too chaotic. It’s unhygienic. They could catch diseases from each other.”
Anecdotal evidence suggests the pro and con camps in Mr. Ma’s case are about evenly split. Supporting that, a survey published in 2007 by Renmin University in Beijing, on sexual attitudes in China between 2000 and 2006, found that three in five people considered the “crowd promiscuity” law too severe. Two in five believed group sex was no crime.
In early April, another survey by Phoenix TV found that 69 percent of respondents believed he should not be tried; 47 percent said swinging was not a crime.
Meanwhile, Mr. Ma is protesting his innocence, while packing his bags and getting his things ready to go to jail.
“I didn’t do anything wrong,” he told the television station. “And there was no force involved or organizing. Why is the whole country picking on me?”

China shops for foreign firms, brands

By WILLIAM FOREMAN
GUANGZHOU -- The economics of Barbie dolls helps explain why Chinese companies are increasingly snapping up famous brands like the most recent big target: Volvo.
Chinese officials and businesses cite a much-noted analysis by UBS economist Dong Tao who said the busty plastic doll is sold for $20, but the Chinese manufacturer only earns 35 cents from that.

The lesson: the big money is in owning the brand, not just making it for foreign companies.
China's biggest acquisitions abroad are by state-owned companies that are investing in mines and oil fields -- deals geared toward supplying the country's rapidly growing economy with raw materials.

But ambitious private companies are acquiring foreign brands in hopes of speeding up their evolution into international competitors.

The trend began a few years ago, but analysts say it's speeding up now, and could generate a backlash overseas.

The acquirers, meanwhile, sometimes have little global experience and could struggle to make a success of the acquisitions.
"A lot of Chinese companies are ranked in the Fortune 500 now, and they want to do some deals that reflect their international prestige," said He Yuxin, analyst at Dragonomics, a research firm in Beijing.
For a decade, China has been encouraging its companies to think big and expand abroad to diversify its economy.

China's foreign direct investment more than doubled from 2007 to 2008, rising to $55.9 billion, according to the Ministry of Commerce. Yet-to-be-released figures for 2009 were expected to be even higher.
The surge in Chinese acquisitions is reminiscent of Japan's buying binge in the 1980s when the Japanese splurged on trophy assets like the Pebble Beach Golf Links in California and Rockefeller Center in New York.

Those deals sparked a backlash from Americans fearful the Japanese were taking over the world.
Similar resistance has scuttled a few large Chinese deals.

There's much debate about whether Chinese will make some of the same mistakes as the Japanese, such as buying overpriced assets they can't manage.
The Chinese will continue to bump up against more hostility overseas if they try to buy big stakes in backbone or sensitive industries, such as oil companies, said Huo Jianguo, president of Chinese Academy of International Trade and Economic Cooperation, a Commerce Ministry think tank in Beijing.
"But if they are projects that are based on mutual benefits and bring along local employment and tax revenue, they will be welcomed," he said.
Cash-starved companies welcome Chinese investment or acquisition offers.

General Motors Co. jumped at the opportunity to unload its Hummer brand on China's Sichuan Tengzhong Heavy Industrial Machinery Corp. The Chinese government, however, vetoed the deal.
Other recent acquisitions of famous brands include Nanjing Auto Group's purchase of Britain's MG sportscar brand.

Beijing Automotive Industry Holding Co. purchased Saab Automobile's core technology from General Motors Co. The deal didn't include Saab's brand or factories, but the link with the famous Swedish automaker will likely provide crucial cachet for the Chinese company in its home market.
The push overseas comes amid grumbling from foreign companies in China who say business conditions are souring for them.

A recent report by the American Chamber of Commerce in China accused Beijing of shutting out foreign companies in various market segments in a bid to bolster Chinese global competitors.
Andy Xie, an independent economist in Shanghai, doesn't think the two phenomena are connected.
"It's just the rise of the state-owned enterprises," said Xie. Policies have been favoring state-backed firms and "Chinese private companies are facing the same trouble," he said.
But China might incite a protectionist backlash if it restricts its market at home while aggressively expanding overseas.
The bulk of China's foreign investment is still being done by state-owned enterprises in energy and natural resources, said Peter Thorp, the Asia managing partner for law firm Allen & Overy.
But the investment patterns will change in the near future, with more private investors and companies diversifying into biotechnology, agriculture and pharmaceuticals, said Thorp.

He said half the business done by his firm's China offices involves Chinese firms investing overseas.
"One can never be sure what's going to be the hot sector, but we're seeing real estate as one that is increasingly active," Thorp said.

"And the reason for that is very obvious: You have low valuations in many markets, and you have Chinese investors with plenty of money to spend."
Recently, the big head-turning deals have been in the auto industry.
The European luxury car maker Volvo was purchased by Zhejiang Geely Holding Group, an automaker that is relatively unknown outside of China.

The Chinese firm bought Volvo for $1.8 billion from cash-strapped Ford Motor Co., which was desperate to unload it.
Geely's purchase of Volvo was done for two of the main reasons why Chinese companies are investing abroad, said He, the Dragonomics analyst. One of the reasons was bargain hunting, getting a solid brand at a good price, she said.
The other was Geely could acquire technology that would strengthen its position back home.

She said China's Lenovo Group, the world's fourth-largest personal computer maker, did the same thing in 2005 when it acquired IBM Corp.'s PC unit -- a move that boosted the Lenovo's market share in China.
Other Chinese acquisitions have been "deals driven by desperation" by companies struggling with razor-thin profit margins and other growth barriers in China, He said.

One example was TCL Group's ill-fated joint venture with French TV maker Thomson and the RCA brand in 2003. The partnership has fallen far short of its goal to create the world's top-selling TV maker.
"Thomson's brand didn't do well in the U.S. or Europe," He said.

"It didn't have a technical advantage in the Chinese market, which is very globalized with Japanese and Korean competitors."
A study of Chinese mergers and acquisitions by the Economist Intelligence Unit said that China's companies still face several major handicaps when investing abroad.

One is that companies registered in mainland China have to get overseas investments approved by the government, which is keen to avoid embarrassment and can be overly cautious.

This can cause serious delays for Chinese firms competing with American and European bidders with much more experience in negotiating and lining up finance, the report said.
The report includes a survey of 110 Chinese executives, with 82 percent of them saying a lack of management expertise was their biggest challenge when investing overseas.

Only 39 percent of them said they knew what was required to integrate an acquired foreign firm into their company.
Stephen Joske, director of the China Forecasting Service at the Economist Intelligence Unit, said many of China's recent acquisitions could have problems.
"We'll have to wait and see, but it's not going to be a simple process," he said.

"China has a long learning process to go through in terms of how to operate in foreign markets and how to operate foreign companies in those markets."

A Little Danish Mermaid Comes Up for Air in China

By JOHN TAGLIABUE

A replica of Denmark’s best-known national emblem was placed at the Tivoli Gardens in Copenhagen earlier this month.

COPENHAGEN — Some call it mermaid diplomacy; others, tongue in cheek, speak darkly of illicit trafficking in young women.

The event in question was last month’s transport of Denmark’s best-known national emblem, the four-foot-tall bronze statue of Hans Christian Andersen’s Little Mermaid, from the rocky, quayside location it has occupied since 1913 to a site in Shanghai.
In Shanghai, the mermaid, perched on her rock in a pond of salt water direct from Copenhagen harbor, will be the centerpiece of the Danish pavilion in Shanghai’s 2010 World Expo, which opens this Saturday.
A crane hoisted the 385-pound statue — her perfectly formed body, her fishy tail — from its site and onto a truck. The exact route of her trip to Shanghai was kept secret, out of concern over possible attacks. Who would attack a mermaid?
Lots of people, apparently. The little mermaid has been decapitated twice, the last time in 1998; an arm has been broken off, though later recovered; she has been spattered with paint and dressed in Muslim garb, including a burqa. In 2003, she was blasted off her rock with explosives.
“It’s a national disaster in women trafficking,” said Ase Lunkvist, with a laugh. A diminutive women in her 50s, Ms. Lunkvist has hawked sugared almonds from April to September for six years from a stand in front of the mermaid’s now empty site.

It was her first day out in 2010, so she could not predict what the impact on business would be.
“It’s a kind of prostitution,” she added, waving at the empty rocks. “O.K., we make fun of it — but Copenhageners are sad, too.”
The idea to send the mermaid to China was hatched by Bjarke Ingels, 35, the Danish architect who won a competition to design Denmark’s pavilion at the fair.

By placing her and her rock seat in clean seawater from Copenhagen harbor, he hoped to demonstrate the kind of advanced environmental technology that the Danes seek to sell the Chinese, whose environment badly needs help.
The project got off to a slow start when it was discovered that no one really knew just who owned the statue. The fairy tale mermaid, who was willing to give up her life in the sea to gain the love of a prince, is the work of Edvard Eriksen, who sculpted the face of a well known ballerina, but the body of his own wife, after the dancer refused to pose in the nude.
Since then, she has been a draw to millions who make the pilgrimage to a blustery, rocky shoreline to gaze in awe, and perhaps puzzled amusement, at her bronze figure, take photographs, and then move on.
“There was a long discussion about who owns her,” said Soren Espersen, 56, a member of the conservative People’s Party and vice president of the Danish Parliament. The owner was found to be the city of Copenhagen, and the city council voted with a large majority to allow the statue to go, with opposition only from Mr. Espersen’s People’s Party.
“A broad majority thought it was a wonderful opportunity for Danish business to be seen,” Mr. Espersen said. “But she is also a national treasure. If you were to send the Lincoln Memorial to China, there would be an uproar. Why do we want to do so much for Danish business?”
For Jorgen Delman the answer is simple.

In recent years, said Mr. Delman, professor of China studies at Copenhagen University, China has emerged as the second most important trade partner for Denmark, after the United States, importing Danish telecommunications equipment and green energy technology while exporting to Denmark all sorts of manufactured goods.

“Our ties are driven by trade and now investments, and it’s increasing,” said Mr. Delman, whose business cards are in English and Chinese.
At Copenhagen’s central tourism office, called “Wonderful Copenhagen,” perhaps with thanks to Danny Kaye’s rendering of the song “Wonderful, Wonderful Copenhagen,” from the movie musical “Hans Christian Andersen,” the senior director of business development, Peter Romer Hansen, called the decision to send the mermaid “a brilliant idea.”
“What could we have sent?” he went on, in the kind of lyricism Danes fall into when discussing the mermaid.

“Could it have been a Danish hot dog? A Lego block? The crown jewels?”
“And finally, she is great in her smallness,” he said. “She is tiny, but her longing to go out to see the world is wonderful.”
To fill the seaside gap left by the mermaid’s departure, the Danes have invited Ai Weiwei, the artist and political activist based in Beijing, to produce a video installation on the site that will broadcast scenes from the Danish pavilion in far-off Shanghai.

The artist has vexed the Chinese government with his own investigation of casualties among school pupils during the Sichuan earthquake in 2008, whose results he posted regularly on his blog until it was recently shut down by Beijing.
For the time being, the mermaid’s spot in the harbor is vacant.

“For three weeks now it’s been empty,” said Ms. Lunkvist. No sign has been posted to indicate the statue’s whereabouts. “Tourists say to me, ‘Where’s the mermaid?”‘
A municipal inspector, Eva Gjolbo, rides her bike along the shore, checking the licenses of harborside merchants, like Ms. Lunkvist, who hawk souvenirs or snacks to visitors. But now Ms. Lunkvist is alone.
“It’s a fun idea, certainly,” Ms. Gjolbo said. “As long as she gets back in one piece.”

Critics see red over China's 'copycat' culture at Shanghai Expo

China pavilion resembles Canada's at Expo '67
BY AILEEN MCCABE
Call it coincidence or just another example of China's "shanzhai culture," but people are starting to notice the signature Chinese pavilion at Expo 2010 bears more than a passing resemblance to the Canadian pavilion at Montreal's Expo '67.
The number of shanzhai or copycat products that come out of China is legend, but everyone naturally expected a national project like the Shanghai Expo, which opens Saturday, to be a notable exception.
The trouble started more than a week ago when Expo organizers were confronted with suspicions a high-profile promotional song advertising the World's Fair featuring action hero/singer Jackie Chan and a host of other Chinese stars, 2010 Waiting for You, borrowed freely from a 13-year-old Japanese tune, Stay the Way You Are, by Mayo Okamoto.
Expo organizers did not actually admit plagiarism, but they hastily pulled the song from the airwaves because of "copyright issues," according to their website.
The next potential shanzhai problem came to light at a news conference late last week when a U.S. reporter noted the similarity between the Expo mascot Haibao and Gumby, the title character in a cartoon series that ran on North American television for 35 years, starting in 1957.
One member of the Haibao design team denied any hint of plagiarism, telling the Global Times newspaper he'd never heard of Gumby until this ruckus began.
But once again, Expo organizers didn't exactly deny the shanzhai effect.
"Haibao was unveiled a long time ago," Xu Wei, an Expo spokesperson said.

"If anyone thinks that it violates some sort of copyright, then why is the issue only being addressed now?"
Questions about the design of the giant red Chinese pavilion were raised at the same news conference by the same U.S. reporter, but she compared it to the Japanese pavilion at the 1992 World's Fair in Seville, Spain.
The resemblance she noted is definitely there, but once again Xu dismissed the shanzhai idea. The only similarity is that both pavilions used an ancient Asian style of design, he said.
People with longer memories are now taking a new look at the Canadian pavilion at Montreal's Expo '67, and noting its obvious similarity with the China pavilion, too.
Asian influence again? Not likely.
Built by Roderick Robbie and called Katimavik -- meeting place, in Inuit -- the Canada pavilion has for more than 40 years been considered quintessentially Canadian.

In Shanghai, Hiding Bootlegs Before the World Visits

A store selling bootleg DVDs and CDs in Shanghai, China.

China ordered shops to stash away their pirated goods during the World Expo.

A hidden back room selling bootlegs located at the back of the store.

By DAVID BARBOZA

SHANGHAI — The latest mystery in Shanghai, complete with sliding bookshelves, secret passageways and contraband goods, is this: Why are all the popular DVDs and CDs missing from this city’s shops?
But it’s a mystery easily solved.

In China, embarrassments are usually hidden from sight when the world comes visiting, and that is what has happened to a large supply of bootleg DVDs and CDs as Shanghai prepares for the World Expo, which is expected to attract 70 million visitors.
A few weeks ago, government inspectors fanned out across the city and ordered shops selling pirated music and movies to stash away their illegal goods during the expo, a six-month extravaganza that opens May 1.
But shop owners found a novel way to comply — they simply chopped their stores in half.
In a remarkable display of uniformity, nearly every DVD shop in central Shanghai has built a partition that divides the store into two sections: one that sells legal DVDs (often films no one is interested in buying), and a hidden one that sells the illegal titles that everyone wants — Hollywood blockbusters like “Avatar” (for a dollar), Tim Burton’s “Alice in Wonderland” and even Lady Gaga’s latest CD “The Fame.”
Customers entering these shops are now routinely directed toward a slide-away bookshelf that reveals a secret corridor.

And to chants of “movie inside, movie inside,” a young sales clerk will lead them past a series of empty spaces before entering a room stocked with thousands of bootleg copies of popular films, music and television programs.
“This is where everything is now,” said a clerk at Movie World. “We have to do it this way because of the expo.”
The situation is even more bizarre at Oscars Club, a centrally located DVD shop where city officials recently tacked up a large poster showing the expo mascot — a blue Gumby-like character named Haibao — stomping on an illegal DVD. The poster’s slogan reads: “Fight Against Piracy!”
But store clerks don’t hesitate to steer customers into the back room to find illegal copies of “Sherlock Holmes,” “Up in the Air” and HBO’s new series “The Pacific” in Blu-ray disc format.
Intellectual property rights experts say they are outraged by what looks to be a sham crackdown.

And the Motion Picture Association of America, which represents some of Hollywood’s biggest studios, calls the situation troubling.
“Although various senior Chinese officials have made numerous statements in support of intellectual property protection and the fight against piracy, their talk has not been followed by sufficient action,” Mike Ellis, president of the Asia Pacific division, said in a statement last week in response to a reporter’s question.
City officials, however, insist that the recent crackdown has been effective. Since March, more than 3,000 shops have been closed for selling pirated music and movies, they say.
They also strongly deny encouraging stores to build secret rooms.
“That is impossible,” says Zhou Weimin, director of the city’s cultural market administrative enforcement team. “No inspector dares to say that to the store operator. Hinting like that is definitely illegal.”
Mr. Zhou acknowledged that “some stores have adopted a more covert way to run their business,” but he said that this was not a new phenomenon and that they would not get away with it.
As for DVD shop workers, they seem as divided as their stores.
When asked last week what was going on, clerks at Even Better Than Movie World (across the street from its rival Movie World) readily acknowledged to a visitor that they had been told to hide the illegal goods, and that inspectors would pretend not to notice the clandestine backroom operation.
After a few months, they say, the wall will come down and the store will go back to selling illegal DVDs out in the open.
But later, when the same visitor returned, identified himself as a journalist and asked the same question, the clerks pretended there were no secret rooms.
“I don’t know about the existence of that small room,” a clerk at Movie World said last week. Pressed, she said: “I’m not the boss.”
Douglas Clark, a lawyer at Lovells and a specialist in intellectual property rights law in its Shanghai office, says counterfeiting here is rampant. He says the sophistication of the system and the public nature of it are mind-boggling.
“These are not fly-by-night operations,” Mr. Clark said by telephone. “The only way these guys can get away with this is if they’re protected.”
The stores, which are even frequented by American and European customers, are brightly lighted with rows of neatly stocked shelves. And they often brag of a selection that is superior to that found at Blockbuster or on Netflix.
The growing sophistication of the stores — and the speed with which they release new titles (you can already get last year’s complete TV series of “Lost,” “CSI: New York” and “Grey’s Anatomy”) — suggests the pirates have enormous financial influence.
The Chinese government appeared to acknowledge the piracy problem late last week when its National Copyright Administration issued a statement saying many licensed video and audio companies, which include state companies, were making or selling bootleg goods in China.

Still, few here believe there will be a serious crackdown anytime soon.
But there is one development that may at least cut down on the sale of bootleg DVDs.

Many young people say the search for pirated music and movies has moved online to countless Web sites that offer free downloads.
“I don’t even buy DVDs anymore,” said Qi Wen, a 24-year-old travel agent. “I usually watch the movies online or download them to my computer; it’s fast and simple.”