"Workers removing molten material from a furnace at the Shizuishan Tianhe Ferroalloy Company, at an industrial zone in the Ningxia Hui Autonomous Region. An official there said that it was impossible to squeeze out savings to pay higher electrical rates and that if wages were lowered, 'the workers won’t stay.'”

China  NEWS How are Los Angeles and Beijing alike? 
Terror attack prevention at China Olympics?
Full set of reports on Olympics from Hartford Courant writerreport of China-U.S.A. early round meeting in basketball (Kobe only hits 1 shot from 3-point range);
Air quality updates: 
NYTIMES, China Olympic press conference;
Equestrian events...in Hong Kong;/
Olympic Village open:  http://news.bbc.co.uk/2/hi/asia-pacific/7527446.stm
Olympic preparations;  air quality
video of algae:  http://news.bbc.co.uk/2/hi/in_depth/7485405.stm

"We didn't know" the accused will say, thinking all along that they were...in China!
U.S. Charges Three Chinese Professors and Three Others With Economic Espionage

MAY 19, 2015, 10:54 A.M. E.D.T.

WASHINGTON — The U.S government charged three Chinese professors and three other Chinese nationals with economic espionage and stealing trade secrets from two companies that develop technology often used in military technologies, the Department of Justice said on Tuesday.

The three professors from Tianjin University were charged with stealing source code and other proprietary information from Avago Technologies Ltd. and Skyworks Solutions Inc. Avago has headquarters in San Jose, California and Singapore, and Skyworks is based in Woburn, Massachusetts.

One of the suspects, Professor Hao Zhang, 36, a former Skyworks employee and one of the professors, was arrested on Friday in Los Angeles, where he had just landed on a flight from China, the Justice Department said in a statement...story in full:  http://www.nytimes.com/reuters/2015/05/19/world/asia/19reuters-usa-china-theft.html?hp&action=click&pgtype=Homepage&module=first-column-region&region=top-news&WT.nav=top-news

Maybe they thought they were in...L.A.?
Story in full: 

Algae in Candlewood Lake and in China (shown above), too.


Is the NYTIMES just wishing this is true, or is there really a problem?

China Isn’t Overtaking America
MAY 13, 2014

NEW YORK — A report last month that China’s economy will soon become the world’s largest has sparked worries. Normally calm observers are taking the news as a sign that China is overtaking America as an economic power.

But much as counting warships or troops often provides a misleading measure of military might, tallying up gross domestic product — the figure behind the latest headlines — yields a warped picture of China’s economic rise.

By most meaningful yardsticks, China is still less economically powerful than the United States. The problem with the new numbers starts with how they compare economies’ sizes. The World Bank tables that show China passing the United States compare the two countries using “purchasing power parity,” which measures national incomes in terms of what they can buy at home.

Because domestic spending is dominated by items such as food and housing that aren’t traded internationally, and because most goods and services are cheaper in China than in the United States, this comparison boosts China’s apparent economic strength.

Yet compared using market exchange rates, which measure incomes in terms of what they can buy on international markets (where every country pays the same price), the United States’ economy remains nearly twice as big as China’s. Indeed it is this latter measure that matters most when comparing economic power.

After all, one would never compare two countries’ military strengths on the basis of how well each could suppress a domestic rebellion rather than fight a foreign war, and one should not compare countries’ economic power on the basis of what a worker in each country can buy at home.

When American and Chinese companies bid against each other to acquire resources or companies abroad, what matters is their wealth as measured by the global market. Oil suppliers, for example, don’t care if the $100 they get for a barrel sold to China can buy more rice in a Beijing market than at a shop in New York — they care about what their revenues are worth in the world market.

Similarly, the attractiveness of the Chinese and American markets to foreign firms depends on the profits to be made in international terms, not as measured by purchasing power.

The alarmism about China surpassing America also ignores the critical role of political and institutional strength and flexibility. One wouldn’t compare countries’ arsenals while ignoring their different states of disrepair — yet Chinese G.D.P. numbers ignore severe pollution problems that are driving successful Chinese abroad. Nor would one compare numbers of aircraft or troops without asking about the training, doctrine and organization necessary to mobilize them effectively in combat. China faces real challenges translating its economic resources into international influence.

The need to maintain political stability and the Communist Party’s grip on power constrains what the Chinese government can do to capitalize on the country’s economic heft. The difficulty of getting recalcitrant provincial and local governments to enforce Beijing’s edicts can make it tough for China to take full advantage of its economic power. The Chinese government, for example, has tried to forge packages of infrastructure and resource investment in strategically attractive developing countries, only to have the Chinese companies that would need to implement the schemes refuse to participate.

Certainly, China has its advantages. There are some things that matter for international power — notably military personnel — that can be paid for domestically, making lower Chinese prices (and wages) a meaningful advantage.

The American market may be larger than China’s, but China’s is growing more rapidly, often creating more new opportunities for international firms. And Washington faces political and institutional constraints just like Beijing does. America’s economy can’t compete with a state-dominated behemoth when it comes to rewarding favored partners with economic opportunities. And the United States is less able to direct its outward commerce toward political ends than China is: Beijing is more capable, for example, of persuading Sinopec to pursue geopolitically attractive investments than Washington is of mobilizing ExxonMobil.

Twenty-first century rivalry between the United States and China will be as much about economic might as military power. Judging the economic balance correctly will be as essential a foundation for effective international strategy as proper assessment of the military balance was during the Cold War. Avoiding overreaction in the face of the latest headlines about China’s economic triumph would be a great place to start.


Interesting story about groundwater contamination on a large scale...household hazardous waste the problem here?  Or industrial pollution?


China Cracks Down on Online Opinion Makers
September 10, 2013

HONG KONG — These are bad times to be a Big V in China.

Big V, for verified account, is the widely used moniker for the most influential commentators on China’s growing microblog sites — online celebrities whose millions of fans read, discuss and spread their outpouring of news and opinions, plenty of which chastise or ridicule officials. And the Communist Party has turned against them in the most zealous crackdown on the Internet in years.

Worried about its hold on public opinion, the Chinese government has pursued a propaganda and police offensive against what it calls malicious rumor-mongering online. Police forces across the country have announced the detentions of hundreds of microblog users since last month on charges of concocting and spreading false claims, often politically damaging. For weeks, a torrent of commentaries in the state-run news media have warned popular opinion makers on China’s biggest microblog site, Sina’s Weibo service, to watch their words.

One of the most popular microbloggers, Charles Xue, an American investor of Chinese origin who writes under the name Xue Manzi, was arrested in Beijing on Aug. 23, accused of having sex with a prostitute. He has been paraded on television, contrite in jail clothes. Mr. Xue was due to finish his initial detention by Tuesday, and the police could release him or hold him for extended punishment and investigation, according to Chinese news reports.

But the state news media have already made a point for other outspoken commentators. “The Internet Big V ‘Xue Manzi’ has toppled from the sacred altar,” said the main state-run news agency, Xinhua. “This has sounded a warning bell about the law to all Big V’s on the Internet.”

Officials have described their campaign as urgent surgery to drain toxic lies from the Internet. But critics call that a pretext to tame the entire microblog world, honest as well as dishonest. With more than 500 million registered accounts and about 54 million daily users, Sina Weibo has grown into a raucous forum, instantly spreading news and views on brief messages that can flit past censors.

Big V has become the generic name for influential voices, not all officially verified, on microblogs, especially on Sina’s site. “Weibo” means microblog in Chinese, and other, rival services also use that name.

“We’re only seeing the beginning of this campaign,” said Xiao Qiang, an adjunct professor at the School of Information at the University of California, Berkeley, who studies the Chinese Internet.

“The other Big V’s will be targeted some way or another,” he said. Party leaders, he added, “worry that they have lost control of public opinion on the Chinese Internet. And this round they’ll be much harsher, and the targets will be the more influential people in the Chinese public sphere.”

The campaign is among the efforts of Xi Jinping, the Communist Party leader appointed in November, to reverse the spread of liberal ideas that challenge one-party rule, observers said.

For now, Mr. Xue has become the most lurid trophy in the party’s effort to undermine the credibility of many Big V’s. Chinese television news shows have broadcast outraged reports about his conduct, including one that showed him being arrested and confessing to sexual misdeeds.

Mr. Xue has drawn more than 12 million registered fans to his microblog. Many supporters believe that the police kindled outrage about his sexual behavior because of his sharp criticism of officials. Even Hu Xijin, an ardently pro-party newspaper editor, agreed. “Using sexual scandal, tax evasion and so on to take down political foes is a hidden rule common among governments worldwide,” wrote Mr. Hu in a comment on his Sina Weibo account that was quickly removed.

The rise of microblogs has given prominent commentators a powerful, and potentially lucrative, platform. Their reach is sweeping, even discounting the many fake and dormant accounts among the fan numbers. Sina Weibo lists 347 users — a few of them companies or groups — with more than five million registered fans each; the top five each has more than 50 million. Plenty of the most popular users are entertainment stars; others have turned their online celebrity into its own kind of stardom, with well-paid careers based on media appearances, product endorsements and books.

The attention of a Big V microblogger can transform an otherwise obscure incident — a land dispute in a village, a pollution spill in a river, graft by a small-town official — into a subject of passionate national discussion and a headache for the government. The tone of their commentary varies from earnest outrage to sarcasm to allusive irony; the last is intended to lull censors who prowl for offensive messages.

“Some of them have become more influential than certain state media organs,” said Bill Bishop, who publishes the Sinocism newsletter, closely follows Chinese Internet issues and also contributes to the DealBook blog at The New York Times. “Weibo is so fast, and the velocity and breadth of the transmission of information is just so much greater now than it is in newspapers and even on TV.”

But the explosion of Weibo has also fed a dank undergrowth of scams and fakery. Businesses use bogus “zombie” accounts to spread paid-for messages that give a boost to clients or discredit their rivals. Other operators make money by scrubbing messages that are damaging to businesses or politicians. “There is a lot of pay for play and dirty money going around,” Mr. Bishop said.

The Chinese authorities have said their crackdown is directed at such abuses. The police across the country have announced the arrests of hundreds of other people accused of spreading false rumors online. The police have said said Qin Zhihui, whose online name is Qin Huohuo, admitted to concocting 3,000 false rumors over three years as part of a business to create shock and attention that he could then use to advance himself and his clients.

But the accusations against Mr. Qin and many other arrested microbloggers also have a political edge. Many other rumors called outrageously false by the government have dwelt on the sins of officials: corruption, venality and sexual escapades.

“On Weibo, China appears as if it’s an evil country,” said Wang Wen, a former newspaper editor turned university researcher who urges tightened controls on microblogs. “It’s seriously affecting China’s social stability and political governance.”

Hao Qun, a Chinese novelist who became popular on Weibo under the name Murong Xuecun, said the crackdown was intended to break up online networks of like-minded people whose ideas could challenge the Communist Party.

“They want to sever those relationships and make the relationship on Weibo atomized, just like relations in Chinese society, where everyone is just a solitary atom,” Mr. Hao said. In May, his microblog accounts on Sina and other Chinese services were deleted without any explanation. “I created a lot of sensitive words,” he said.

This week, China’s highest court and prosecution office issued guidelines for defining and punishing online rumors and slander. The rules gave some protection to citizens who accuse officials of corruption, but they also said a slanderous message forwarded more than 500 times or read more than 5,000 times could count as a serious crime and earn convicted offenders up to three years in prison.

China has experienced deep chills on Internet opinion before. In 2011, the Communist Party began a crackdown on dissent, fearful that the uprisings across the Arab world would inspire protests in China. In July of that year, however, the deadly crash of a high-speed train prompted an outpouring of anger on the Internet that eroded the controls. An unexpected incident or scandal could again jolt the Internet back into contentious life, experts and Weibo users said.

“I don’t think these intimidation tactics will work,” said Hung Huang, a magazine publisher with more than eight million followers on Weibo. “People will shut up for a month. Then they’ll come back. Maybe not the same people, but another group of people.”

Amy Qin and Lucy Chen contributed research.

China Issues Plan to Narrow Income Gap
February 5, 2013

HONG KONG — The Chinese government on Tuesday issued a long-awaited plan to narrow the gulf between rich and poor, offering broad vows to lift the incomes of workers and farmers and choke off corrupt wealth but few specific goals to rein in the nation’s wide inequality.

The proposal was mired for months in an internal dispute about whether to aggressively scale back the rising salaries and benefits of some officials working for state-owned business and banks. The document that emerged from the discussions is filled with commitments to deal with that issue and other sources of public concern about the gap between the incomes of residents of dirt-poor villages and those living in privileged urban enclaves.

“There are some stark problems in income distribution that need urgent solving,” said the plan, which was issued on the central government’s Web site. “Chiefly, there remain quite large disparities in urban-rural development and incomes, income allocation is poorly ordered, and there are quite serious problems with invisible and unlawful sources of income.” The document was drafted by the National Development and Reform Commission and other central agencies.

The income distribution plan was one of the initiatives promised by the departing Chinese prime minister, Wen Jiabao, who leaves office in March. But it also underscores the extent to which the country’s new generation of leaders under Xi Jinping has also promised to expand state spending on health care, education and social welfare.

Mr. Xi, who was appointed Communist Party chief in November and is set to become state president in March, has said he wants to accelerate economic changes in the spirit of Deng Xiaoping, who began the process of transforming China into a more modern economy after decades of rule by Mao Zedong. But in the process of introducing market forces in China, such changes have starkly widened income disparities.

Since Mr. Xi took office, Chinese news media have reported on a succession of officials who have been accused of siphoning bribes and public money into their pockets. The income plan, however, does not offer specific new initiatives to reduce corruption.

Beyond a general commitment to eliminate sources of illegal income, the plan says that officials must abide by already announced rules to report earnings and assets to superiors. Many experts, however, have said such rules are ineffective without public disclosure as well.

Average disposable annual income for Chinese urban residents in 2012 was the equivalent of about $4,000, an increase of 9.6 percent after taking inflation into account. Average rural net income was just under $1,300 per person, a rise of 10.7 percent after adjusting for inflation, the Chinese National Bureau of Statistics announced in January.

The bureau also said that in 2012 China’s Gini Coefficient, a widely used index of income inequality, was 0.474, slightly higher than levels of inequality in the United States, where income disparity has widened sharply in recent decades and now stands as one of the highest among advanced industrial nations. But some economists have said China’s measure is actually much higher, when illicit and poorly reported sources of wealth are taken into account.

“Deepening reform of the income distribution system is an extremely arduous and complex task of systemic engineering,” the new plan says. “It cannot be achieved in one step.”

We note that this NYTIMES article reports U.S. claims that 47% of air pollution comes from China now...an excerpt below:

"... In the past three decades, China has adopted a growth-at-any-cost attitude to build its economy, and the resulting environmental damage is now widespread and severe. Analysts say it will take years to clean up the air in northern China, even if serious measures are taken now.

Beijing sits in the middle of an industrial belt of coal-burning factories, and there is little incentive for officials or executives to slow down work there. Traditionally, officials’ performance ratings have been closely tied to economic growth and the maintenance of stability. In recent years, some policy makers have urged that a measure of environmentalism be taken into account.

"The United States Energy Information Administration released a report on Tuesday that said China now accounts for 47 percent of global coal consumption, almost equal to all other countries in the world combined. Coal consumption in China grew by more than 9 percent in 2011, or 325 million tons, which equaled 87 percent of the total global rise in coal use.

The report said the heavy demand for coal use was because of an increase of more than 200 percent in electricity generation since 2000. China’s coal demand growth averaged 9 percent a year from 2000 to 2010. If China were excluded from measurements of global growth during that time, the average annual growth would have been only 1 percent, the report said..."

World's Longest High-Speed Rail Line Opens in China
December 26, 2012

HONG KONG — China began service Wednesday morning on the world’s longest high-speed rail line, covering a distance in eight hours that is about equal to that from New York to Key West, Florida, or from London across Europe to Belgrade.

Bullet trains traveling 300 kilometers an hour, or 186 miles an hour, began regular service between Beijing and Guangzhou, the main metropolis in southeastern China. Older trains still in service on a parallel rail line take 21 hours; Amtrak trains from New York to Miami, a shorter distance, still take nearly 30 hours.

Completion of the Beijing-Guangzhou route is the latest sign that China has resumed rapid construction on one of the world’s largest and most ambitious infrastructure projects, a network of four north-south routes and four east-west routes that span the country.

Lavish spending on the project has helped jump-start the Chinese economy twice: in 2009, during the global financial crisis, and again this autumn, after a brief but sharp economic slowdown over the summer.

The hiring of as many as 100,000 workers per line has kept a lid on unemployment even as private-sector construction has slowed down because of limits on real estate speculation. And the national network has helped reduce toxic air pollution in Chinese cities and curb demand for imported diesel fuel, by freeing up a lot of capacity on older rail lines for goods to be carried by freight trains instead of heavily polluting, costlier trucks.

But the high-speed rail system has also been controversial in China. Debt to finance the construction has reached nearly 4 trillion renminbi, or $640 billion, making it one of the most visible reasons total debt has been surging as a share of economic output in China, and approaching levels in the West.

Each passenger car taken off the older, slower rail lines makes room for three freight cars, because passenger trains have to move so quickly that they force freight trains to stop frequently. But although the high-speed trains have played a big role in allowing sharp increases in freight shipments, the Ministry of Railways has not yet figured out a way to charge large freight shippers, many of them politically influential state-owned enterprises, for part of the cost of the high-speed lines, which haul only passengers.

The high-speed trains are also considerably more expensive than the heavily subsidized older passenger trains. A second-class seat on the new bullet trains from Beijing to Guangzhou costs 865 renminbi, compared with 426 renminbi for the cheapest bunk on one of the older trains, which also have narrow, uncomfortable seats for as little as 251 renminbi.

Worries about the high-speed network peaked in July 2011, when one high-speed train plowed into the back of another near Wenzhou in southeastern China, killing 40 people.

A subsequent investigation blamed flawed signaling equipment for the crash. China had been operating high-speed trains at 350 kilometers an hour, and it cut the top speed to the current rate in response to that crash.

The crash crystallized worries about the haste with which China has built its high-speed rail system. The first line, from Beijing to Tianjin, opened a week before the 2008 Olympics; a little more than four years later, the country now has 9,349 kilometers, or 5,809 miles, of high-speed lines.

China’s aviation system has a good international reputation for safety, and its occasional deadly crashes have not attracted nearly as much attention. Transportation safety experts attribute the public’s fascination with the Wenzhou crash partly to the novelty of the system and partly to a distrust among many Chinese of what is perceived as a homegrown technology, in contrast with the Boeing and Airbus jets flown by Chinese airlines.

Japanese rail executives have complained, however, that the Chinese technology is mostly copied from them, an accusation that Chinese rail executives have strenuously denied.

The main alternative to trains for most Chinese lies in the country’s roads, which have a grim reputation by international standards. Periodic crashes of intercity buses kill dozens of people at a time, while crashes of private cars are frequent in a country where four-fifths of new cars are sold to first-time buyers, often with scant driving experience.

Flights between Beijing and Guangzhou take about three hours and 15 minutes. But air travelers in China need to arrive at least an hour before a flight, compared with 20 minutes for high-speed trains, and the airports tend to be farther from the centers of cities than the high-speed train stations.

Land acquisition is the toughest part of building high-speed rail lines in the West, because the tracks need to be almost perfectly straight, and it has been an issue in China as well. Although local and provincial governments have forced owners to sell land for the tracks themselves, there have been disputes over suddenly valuable land near rail stations, with the result that surprisingly few stores and other commercial venues have sprung up around some high-speed stations through which tens of thousands of travelers move every day.

Zhao Xiangfeng, a farmer in Henan Province, said a plan to build a minimall on his and six other farmers’ land near a station had been shelved indefinitely after he and three of the other farmers refused to lease the land for anything close to what the village leadership offered. He said he worried that local leaders might try strong-arm tactics against the farmers to force them to lease the land and revive the project.

The southern segment of the new high-speed rail line, from Guangzhou as far as Wuhan, has been open for nearly three years and already suffers from heavy congestion, which could limit the number of seats available for travel all the way to Beijing during peak hours. Regular travelers on the route said in interviews that the 800-seat trains are often sold out as many as 10 trains in advance on Monday mornings and Friday afternoons, even though the trains travel as often as every four minutes, and even lunchtime trains at midweek are often full as well.

Mia Li in Beijing contributed research.


That long story here.
Chinese Premier’s Family Disputes Article on Riches
October 27, 2012

HONG KONG — Two lawyers who said they represented the family of Prime Minister Wen Jiabao of China have issued a statement disputing aspects of a New York Times article about the family’s wealth, a rare instance of a powerful Chinese political family responding directly to a foreign media report.

The statement, published in The South China Morning Post on Sunday, said, “The so-called ‘hidden riches’ of Wen Jiabao’s family members in The New York Times’s report” did not exist.

After criticizing several points in the article, the statement hinted at the possibility of future legal action. “We will continue to make clarifications regarding untrue reports by The New York Times, and reserve the right to hold it legally responsible,” the statement said.

The statement reported in The Post, a Hong Kong newspaper, has not been obtained directly by The Times.

The statement was not a sweeping denial of the article. The statement acknowledged that some family members were active in business and that they “are responsible for all their own business activities.”

While the statement disputed that Mr. Wen’s mother had held assets, it did not address the calculation in the article that the family had controlled assets worth at least $2.7 billion.

Eileen Murphy, a spokeswoman for The Times, expressed confidence in the article. “We are standing by our story, which we are incredibly proud of and which is an example of the quality investigative journalism The Times is known for,” she wrote in an e-mail.

The lawyers’ statement represents an unusual move for the family of a senior Chinese leader. When Bloomberg News published an article in late June describing real estate and other assets held by the family of Vice President Xi Jinping, his family did not respond publicly.

The statement published in The Post was attributed to Bai Tao, a partner in the Beijing office of the Jun He Law Firm, and Wang Weidong, the managing partner of the Beijing office of the Grandall Law Firm.

No one answered phone calls to both lawyers’ offices on Sunday, nor did Mr. Wang respond immediately to an e-mail.

The statement denied an anecdote in The Times article that described how one investment in the name of Mr. Wen’s mother, Yang Zhiyun, was worth $120 million five years ago. “The mother of Wen Jiabao, except receiving salary/pension according to the regulation, has never had any income or property,” the statement said.

Corporate registration records reviewed by The Times showed that in 2007 the prime minister’s 90-year-old mother held about $120 million worth of shares in Ping An, an insurance company, through investment vehicles. A signature bearing her name and her government-issued identity card were included in the registration record, which was obtained from government regulatory filings.

The family’s statement also said that some members had not engaged in business while others “were engaged in business activities, but they did not carry out any illegal business activity. They do not hold shares of any companies.”

The statement also said that Mr. Wen had not been involved in those activities. “Wen Jiabao has never played any role in the business activities of his family members, still less has he allowed his family members’ business activities to have any influence on his formulation and execution of policies.”

The Times article did not allege any illegal business activity, and it said that Mr. Wen did not appear to have accumulated assets. The article also said that there was no evidence that Mr. Wen personally intervened to help family members’ investments. The article pointed out that as prime minister in a country where the state plays a large role in the economy, Mr. Wen oversaw many government officials whose decisions could play a large role in the fortunes of businesses and investors.

Hong Lei, the spokesman for China’s foreign ministry, criticized the article on Friday during a briefing, saying that it “smears China and has ulterior motives.”

The Times posted the article in English on Friday, and in Chinese three hours later, after final edits in English were translated. The Chinese government quickly blocked access from mainland Chinese computers to the Chinese-language and English-language Web sites of The Times before the article was posted in Chinese. But many people in China appear to have used virtual private networks to view the article anyway.

The report on the finances of Mr. Wen’s family has also received heavy coverage in the Hong Kong news media, which has extensive reach inside mainland China.

The sun rises behind a construction site, Shenyang, China, Sunday, Dec. 6, 2009. (Associated Press)

Top U.S. admiral cites climate change, not China, as biggest Pacific security threat

The Washington Times
By Cheryl K. Chumley
Monday, March 11, 2013

Navy Admiral Samuel Locklear III is in charge of keeping an eye on North Korea, on the progression of tensions between China and Japan, and on cybersecurity threats from China. But he still thinks the biggest security threat in the Pacific is climate change.

“People are surprised sometimes” by his threat assessment, he said, during an interview reported by The Boston Globe that he gave in Cambridge, Mass. “You have the real potential here in the not-too-distant future of nations displaced by rising sea level. Certainly, weather patterns are more severe than they have been in the past.”

Admiral Locklear said it was more likely that upheaval from global warming would lead to long-term security compromises than anything to do with the military, The Boston Globe reports. He also said that global diplomacies have recognized this threat. The U.S. military is beginning to coordinate with other military forces around the world to look at climate change as the real security threat to nations’ sustainability.

“We have interjected into our multilateral dialogue — even with China and India — the imperative to kind of get military capabilities aligned [for] when the effects of climate change start to impact these massive populations,” he said, in The Boston Globe report. “If it goes bad, you could have hundreds of thousands or millions of people displaced and then security will start to crumble pretty quickly.”

After Protests in China, Plans for Water Discharge Plant Are Abandoned
July 28, 2012

BEIJING — Angry demonstrators entered a government office in the port city of Qidong, near Shanghai, on Saturday, and smashed computers and destroyed furniture to protest a waste discharge plant that they said would pollute the water supply.

In reaction, the local government Web site said on Saturday that plans for the discharge plant, which was to be part of a paper manufacturing plant, had been abandoned.

China’s authorities face a mounting pattern of protests against pollution, and in particular, against industrial plants that local residents can single out during the planning stage or in the early days of construction.

Earlier this month, protesters in the southern town of Shifang in Sichuan Province forced the local government to abandon plans to build a copper refinery after complaints that the waste would contaminate the water supply and pollute the air. In Shifang, the police used tear gas against protesters.

In the northeastern city of Dalian, the authorities were forced to call off the construction of a petrochemical plant last year after demonstrators said the water would poison the city’s population.

In Qidong on Saturday, Reuters reported that about 1,000 protesters marched through the city and that two police officers were badly beaten by demonstrators.

The city sits on the mouth of the Yangtze River, and the local authorities have attracted pharmaceutical companies, chemical fertilizer plants and computer parts factories with tax breaks and other enticements. 

The city is part of the vast Yangtze Delta region that has been an engine of China’s manufacturing power in the past decade. 

Last year, Qidong was connected to Shanghai by a nearly 40-mile-long bridge, making the local economic enterprise zone, established by the local government to attract business, even more appealing to investors.

One of the most profitable industries in Qidong is the exporting of fish, including processed lobster and shrimp to the United States. The city boasts freezers certified by the European Union for the export of fish to Europe.

  Some of the protesters argued that the wastewater plant would discharge effluent into the sea and harm the fishing industry. But most seemed to be concerned about drinking water.

  At an upscale computer store, an employee reached by telephone said most people were worried about how the discharge from the paper plant would affect the water supply.

“The protesters are angry because the pipeline project will affect our water supplies,” she said. “I’m against the project, too.”

 The owner of a drugstore reached by telephone said: “Everybody from the old to the young are against this project. Qidong people are hard-working people. Why should they have the project here?”

 The owner, an elderly woman, said local residents were not consulted about the paper plant or its discharge facilities. “All we know is that somebody from the higher levels decided it’s to be in Qidong,” she said.

Several people reached by phone said the local government sent text messages to residents and storekeepers on Friday night and Saturday asking them not to participate in the demonstration.

U.S. Embassy in China safe haven?  Under protective custody, looks like to us...

Activist, Out of Embassy, Now Says He Wants to Leave China
May 3, 2012

BEIJING — The United States recognized that the blind dissident lawyer, Chen Guangcheng, had changed his position and now wanted to leave China, a senior Obama administration official said on Thursday. His apparent reversal injected new uncertainty into a tense diplomatic situation that had briefly appeared resolved ahead of high-level economic talks here.

As the State Department tried to reassess options for Mr. Chen, who according to American officials had eagerly embraced a plan to remain in China, American diplomats were barred from seeing Mr. Chen at the hospital in central Beijing where he is receiving treatment for an injured foot. Speaking from the hospital, Mr. Chen has told reporters in a series of telephone interviews since being admitted on Wednesday afternoon that he and his family feel insecure in the hands of Chinese authorities, and would like to go to the United States.

“It is clear now in the last 12 to 15 hours they as a family have had a change of heart about whether they want to stay in China,” said the State Department spokeswoman, Victoria Nuland.

What had for a short time looked like a deft achievement by American diplomats on Wednesday appeared to rapidly unravel only hours after Mr. Chen’s release and thrust the dissident’s fate into the center of a diplomatic crisis between China and the United States that the Obama administration had sought to avoid during two days of high-level economic and strategic conference meetings attended here by Secretary of State Hillary Rodham Clinton and Treasury Secretary Timothy F. Geithner. The two cabinet members spoke Thursday, along with the Chinese president, Hu Jintao.

During her speech, Mrs. Clinton urged China to protect human rights, saying “all governments have to answer our citizens’ aspirations for dignity and the rule of law.”

Mr. Chen’s dramatic reversal from wanting to stay in China after his escape nearly two weeks ago from harsh house arrest in easterm China and his six-day stay at the American Embassy left the administration struggling to come up with a new solution that would satisfy Mr. Chen, and be amenable to the Chinese government.

A key question facing the Obama administration will be the reaction of the Chinese government if Mr. Chen insists on leaving China.

If Mr. Chen requested asylum in the United States, he would have to get a passport, and apply for a visa. Another possibility would be Mr. Chen leaving China and going to a third country.

For his part, Mr. Chen suggested leaving the country with Mrs. Clinton. “My fervent hope is that it would be possible for me and my family to leave for the U.S. on Hillary Clinton’s plane,” he said in an interview with the Daily Beast.

The Chinese government, which issued a harsh statement Wednesday criticizing the United States for its handling of Mr. Chen, skirted the issue on Thursday. A Foreign Ministry spokesman, Liu Weimin, said at a regular briefing at the ministry that Mr. Chen was a free person and, as far as he knew, was living in his town in Shandong Province.

The circumstances of Mr. Chen’s departure from the American Embassy on Wednesday were also still in dispute. The American ambassador, Gary Locke, reiterated Thursday that Mr. Chen had not been coerced into leaving the embassy on Wednesday and insisted that the dissident lawyer had left of his free will after a plan had been worked out with the Chinese government that he and his family could relocate to a city close to Beijing where he would pursue his law studies.

On Wednesday evening, American officials said they would do all they could to see Mr. Chen starting early Thursday morning. By not being able to talk to Mr. Chen in person, the administration was unable to determine a precise path forward for him, a senior official said.

Whether the Chinese government was actively preventing American officials from visiting Mr. Chen in the hospital, even during visiting hours that start at 3 p.m. local time on Thursday, was not immediately clear. But the longer the American officials were cut off from personal contact with Mr. Chen the more difficult it could become for the United States to reach a solution that satisfied the Chinese authorities.

American officials spoke to Mr. Chen by telephone Thursday, and met with his wife, Yuan Weijing, at a location near the hospital, the official said.

Blind since the age of 1, Mr. Chen is one of the most high-profile human rights dissidents in China. Mrs. Clinton has mentioned his case in public, and the Chinese authorities are aware that he has managed to attract a wide range of Chinese followers who admire his efforts to stop enforced abortions.

Mr. Chen, 40, served four years in prison on what supporters said were trumped up charges of disrupting traffic and damaging property. After his release in 2010, Mr. Chen was placed under house arrest with his wife and daughter. His eldest son went to school elsewhere and was reunited with Mr. Chen at the hospital on Wednesday.

One explanation for Mr. Chen’s reversal was his meeting with his wife at the hospital Wednesday for the first time since his escape from their home.

In the telephone interviews with reporters, Mr. Chen, said his wife had vividly described threats against her and their two children by security forces surrounding their house in Shandong.

After a harrowing 300-mile journey from his hometown to Beijing, six days sequestered in the American Embassy, and a sudden release into a large Chinese public hospital where he did not have the protection of the American officials he seemed to expect, Mr. Chen was likely traumatized, his steely demeanor in tough times finally punctured.

Mr. Chen had plotted his escape over several months but suffered an immediate setback when he injured his foot after jumping over a fence at night while fleeing his home. By the time he reached Beijing, where he was kept for days in a series of safe houses, his foot was causing severe pain and he hobbled as he walked.

Since his arrival at the hospital, he appears to have been bombarded with advice by telephone from supporters and advisers, many of them apparently angered by the plan for him to remain in China.

His lawyer, Teng Biao, who confirmed Mr. Chen’s change of mind, sent a message via Twitter asking reporters to stop calling Mr. Chen because the family needed rest and “need to make more important calls.”

The American officials who negotiated with the Chinese Foreign Ministry to allow Mr. Chen to stay in China, said they consulted frequently with him about the plan to for him to stay in China, but they did not speak at length to his wife, an American official knowledgeable about the process said. In retrospect, that may have been a mistake, the official said.

In a telephone interview on Thursday, Ms. Yuan said that her husband had left the American Embassy voluntarily, but circumstances had changed after his departure.

Under the original plan, China promised to “guarantee his freedom and rights, and the U.S. made some efforts,” she said. “But after he’s out, the situation has not been optimistic and has not been improved.” She said communications with their extended family had been cut.

“We can’t get in contact with our family,” she said.

An ugly day of american diplomacy

Last Updated: 11:38 PM, May 2, 2012
Posted: 11:10 PM, May 2, 2012

The State Department painted it as an elegant way out of a ballooning crisis involving Chinese dissident Chen Guangcheng — but by day’s end, it looked like a disgraceful performance by US diplomats.

Initial reports had Chen so pleased by the deal that he told Secretary of State Hillary Clinton, “I want to kiss you.”

The agreement Clinton negotiated with Beijing yesterday supposedly allowed Cheng to stay in China and get medical attention, with the authorities guaranteeing his future safety.

But things started unraveling just hours after the compromise was inked.

First, while State claims Chen never wanted to leave China, the dissident said he and his family would rather leave. And it looks like he was all but forced out of the US embassy, where he’d sought asylum.

A quick recap: Chen, a blind man, is a fierce critic of Beijing’s “one child” policy; he’s led lawsuits about the forced abortions and sterilizations it has produced. That activism landed him in jail for seven years, followed by constant harassment of him, his family and allies.

A week ago, he escaped house arrest in Shandong, his home town, and made it to Beijing, where he found shelter at the US embassy — just as Clinton, Treasury Secretary Tim Geithner and other top US officials were headed to today’s annual US-China summit there.

Clinton landed in China yesterday, hoping to deal with extremely tough bilateral issues, starting with all that US debt held by Beijing. Compared to those, as Bogart’s Rick said in “Casablanca,” the troubles of one dissident “amount to a hill of beans.”

Would Beijing have called off the talks if we’d just let Chen stay in the embassy or granted him and his family asylum? We’ll never know: Clinton opted to seek a deal.

The State Department suggested that yesterday’s dramatic deal left all sides satisfied: Chen was escorted to a hospital by our ambassador in Beijing, Gary Locke, and reunited with his family. He thanked Clinton in a phone call.

Then Beijing — while not denying the deal — demanded a US apology, saying America had “interfered in the domestic affairs of China, and the Chinese side will never accept it.”

State claimed this was mere bravado for internal consumption. China is really happy and ready to start negotiating in earnest.

But then Chen gave the Associated Press an interview from his hospital bed — saying that a US official had told him that, if he stayed in the embassy or left for America, China wouldn’t let his family join him. Chen said he was told that “if I don’t leave, they would take my children and family back to Shandong” — and beat his wife.

By the way, that request for a Hillary smooch may have been ill-translated. By some accounts, all Cheng said was “I want to talk to you.”

State denies Chen’s account, and maybe the heroic Chen truly misunderstood the deal. And, hey, China may well end up honoring its supposed vow to stop harassing him.

But that’s an eventuality that America can no longer control.

The only thing we know for sure is that the symbol of opposition to China’s “war on women” is no longer protected by America — and it looks like we tossed him to the wolves.

U.S. Economic Woes Loom Over Biden Visit to China
August 13, 2011

WASHINGTON — Over the winter, officials in China and the United States were trying to turn a new page in relations. In January, during a state visit to Washington by President Hu Jintao, leaders worked hard to dispel the rancor that had been slowly building. Soon after, Vice President Joseph R. Biden Jr. committed to an earlier proposal to meet this summer with his Chinese counterpart, Xi Jinping, who is expected to succeed Mr. Hu next year.

But as Mr. Biden prepares to depart for China on Tuesday, a new uncertainty looms over relations.

Chinese leaders are asking sharp questions about the strength of the American economy and American leadership, because of the government’s struggle to meet its debt obligations and the partisan schisms and political paralysis that turned a problem into a crisis. Mr. Biden postponed his original departure date in July to help hammer out the agreement that forestalled default on some obligations but failed to avert a downgrade of America’s AAA credit rating by Standard & Poor’s. Xinhua, the state news agency, published a commentary demanding that the United States “cure its addiction to debts” and “live within its means.”

The uncertainty about America goes straight to China’s pockets: it holds more than $1.1 trillion in United States Treasury securities, making it the country’s largest foreign creditor. Some ordinary Chinese have publicly criticized the Chinese leadership for investing so much in American government securities.

Europe’s continuing sovereign debt miseries, the specter of a possible double-dip recession in the United States, and the turmoil in global markets last week have only heightened anxiety in China, whose economic growth depends to a large measure on its vast export sector.

Zhu Feng, a professor of international relations at Peking University, said he attended a meeting at the Ministry of Finance last week where officials were wringing their hands.

“The feeling of everyone was that the world economy has just suddenly become very unpredictable,” he said. “No one wants to see the U.S. economy keep going downhill and a new financial crisis. China and the U.S. are very important in keeping the global economy stable.”

As they get to know each other, Mr. Biden and Mr. Xi will no doubt discuss some of the security issues that have divided the two countries — American arms sales to Taiwan, North Korea’s nuclear program and tensions over the South China Sea. But the economic issues have moved to the fore.

“The primary purpose of the trip, which was planned before recent economic problems, was to build the relationship with Xi Jinping,” said Jeffrey A. Bader, who until April was the senior director for East Asian affairs on the National Security Council. “Recent events in the economic sphere have undoubtedly put the U.S. economy and U.S. currency on the agenda.”

Da Wei, deputy director of the Institute of American Studies at the China Institutes of Contemporary International Relations in Beijing, said, “U.S. Treasury debt is the biggest concern since it’s about the safety of China’s financial investment.”

As in the United States, domestic troubles in China have been taking precedence over foreign relations. The efforts of Chinese leaders to maintain social stability have been challenged this summer by ethnic violence in the western region of Xinjiang and a remarkable surge of public criticism over the government’s handling of a deadly high-speed rail crash in Zhejiang Province.

Perhaps most unsettling for the country’s leaders is the creeping rise in the inflation rate; China’s consumer price index went up 6.4 percent year-on-year in June, the steepest rise in three years. Analysts say average inflation for the year is certain to surpass the 4 percent benchmark Chinese leaders had set. Though it may be peaking, “inflation is likely to remain the policy priority well into the fourth quarter,” Alistair Thornton, a China analyst at IHS Global Insight, wrote in a report last week.

Inflation puts China in much more of a policy bind if the West gets mired in another deep slump. In 2008, when the global financial crisis hit, China relied on stimulus spending and loose lending by state banks to pump up infrastructure building and other capital-intensive projects to maintain economic growth. Now, Chinese officials are concerned about rampant spending and are trying to tighten bank lending.

One point of tension between the United States and China has faded into the background in recent months: China’s valuation of its currency. The Obama administration had long pushed China to appreciate its currency to correct trade imbalances and help restructure the world economy. The Chinese government was reluctant to do so, fearing the cost to exports. But an undervalued renminbi contributes to inflation, so China has been slowly letting the renminbi rise against the dollar.

The issue may also be losing some of its weight in American politics. The International Monetary Fund pointed out in a report last month that a stronger renminbi would not necessarily bolster job creation in the United States.

So instead of Mr. Biden pressing the Chinese on their currency, Chinese officials are likely to be pressing him about the stability of the dollar. All the while, they will be trying to gauge the strength of President Obama, having witnessed the difficulties he faced in persuading Republicans in Congress to raise the debt ceiling.

“It always encourages good behavior in China when they think they’re dealing with a strong U.S. president,” said Kenneth G. Lieberthal, a China scholar at the Brookings Institution who served on the National Security Council in the Clinton administration. “It’s hard to see how recent events would have created an impression that he’s a strong leader.”

A "knock-off" train design - results... 
China Train Wreck Raises Questions
July 24, 2011

BEIJING — A train accident in eastern China over the weekend has added to a national sense that safety is taking a back seat to the country’s spectacular infrastructure development.

The wreck on Saturday night killed 35 and injured 210 after a high-speed train lost power for more than 20 minutes and then was rear-ended by another train, according to the Xinhua news agency. Six cars derailed and two fell off a viaduct near the city of Wenzhou.

By Sunday night, rescuers said they did not expect to recover more bodies, although some of the dead were still being identified.

Government officials responded switftly, with President Hu Jintao calling the rescue work a national priority. China’s railway minister, Sheng Guangzu, rushed to the scene to supervise operations. Mr. Sheng took control of the powerful ministry earlier this year after his predecessor and several associates were fired and investigated for corruption.

But China’s vocal online bloggers expressed anger at the priorities highlighted by the rescue.

Photos on the popular Weibo microblogging service showed backhoes burying the wrecked train near the site. Critics said the wreckage needed to be carefully examined for causes of the malfunction, but the railway ministry said that the trains contain valuable national technology and could not be left in the open in case it fell into the wrong hands.  Foreign companies maintain that some crucial technology was stolen from their imported trains. But more importantly to domestic audiences is the perception of a coverup. Initial reports of how the accident occurred are already being partly contradicted by reports in the official media.

The Railway Ministry issued a statement Saturday night that said the first train had been struck by lightning and lost power. It did not explain why the second train was not signaled to stop. In addition, new reports on Xinhua indicate that the first train had started to move by the time it was struck. The ministry has not explained the discrepency.

The wreck is one of several high-profile public transportation accidents in China recently. Early Friday, 41 people died when an overloaded bus caught fire in central China’s Henan province.

Earlier this month, an escalator at a subway station in Beijing collapsed, killing one and injuring 28. Last week alone, four bridges collapsed in various Chinese cities.

Signaling government concern over growing public unease, the government issued a directive Saturday calling for “intensified efforts in preventing major deadly accidents.”

Discussion of accidents in China, however, is haphazard. In an unusually frank editorial in the Communist Party paper, People’s Daily earlier this month, a commentator said China needed “zero tolerance for concealing major accidents.” But the commentator said many disasters are covered up, such as a major oil spill that was hidden from public view for over a month.

The sense that transparency and safety is secondary to other concerns was present in many Weibo postings Sunday. One blogger in particular posted an eloquent appeal for more care and caution in China’s rapid development:

“China, please stop your flying pace, wait for your people, wait for your soul, wait for your morality, wait for your conscience! Don’t let the train run out off track, don’t let the bridges collapse, don’t let the roads become traps, don’t let houses become ruins. Walk slowly, allowing every life to have freedom and dignity. No one should be left behind by our era.”

China’s Treasury Holdings Make U.S. Woes Its Own
July 18, 2011

SHANGHAI — However grim Washington’s debt and deficit negotiations may seem to Americans, the impasse is nearly as disturbing for China.

As the United States’ biggest foreign creditor — holding an estimated $1.5 trillion in American government debt — China has been a vocal critic of what it considers Washington’s politicized profligacy.

“We hope that the U.S. government adopts responsible policies and measures to guarantee the interests of investors,” Hong Lei, a foreign ministry spokesman, said at a news conference late last week.

Beijing might prefer to respond by starting to dump some of its American debt. But in this financial version of the cold war, analysts say, both sides fear mutually assured destruction.

One reason the United States would want to avoid defaulting on its debt is that such a move could alienate China, which is a steady purchaser of Treasury bonds. Beijing, meanwhile, already has too much invested in American debt to do much more but continue to buy, hold and grumble.

It is the ultimate “too big to fail” global relationship, said Andy Rothman, an analyst in Shanghai for the investment bank CLSA.

If Beijing even hinted that it might try to sell part of its American debt, “other countries might sell their dollar assets,” Mr. Rothman said, noting that this would drive down the value of China’s holdings. “It would be financial suicide for China.”

China got into this situation, experts say, by indulging its own economic interests. To bolster what has become the world’s largest export economy, China has focused on policies that encourage domestic savings and hold down the value of its currency. The result: huge trade and current-account surpluses. China has accumulated more than $3 trillion in foreign currency reserves, far more than any other nation.

Most of those reserves are held in dollars, and recycled back to the United States through investments in Treasury bonds and other dollar-denominated securities — even stocks. And while some of China’s foreign exchange reserves are plowed into European and Japanese debt, those bond markets are not big or liquid enough to absorb the bulk of China’s ever-larger foreign holdings.

Beijing has tried to diversify its foreign exchange portfolio by creating a sovereign wealth fund that can invest some of the reserves overseas. The government has also encouraged Chinese companies to expand overseas and to acquire mines and natural resources to fuel China’s hungry economy. But because China has too much foreign money for any other outlet to absorb, the vast majority of its fast-growing reserves continue to be destined for the United States bond market.

“China has no choice but to keep buying,” said Zhang Ming, an expert at the Chinese Academy of Social Sciences, a Beijing research group. “After all, U.S. Treasury bonds are still the largest and most liquid investment product in the world.”

All of which has helped enable America’s own fiscally dubious habits.

The United States’ huge deficits — not only in government spending, but in trade and savings as well — have weakened its economy and strangled consumption. Many economists say that would poison the long-term prospects for the dollar, if it were not still the world’s reserve currency and most reliable safe haven.

Helping maintain that role for the dollar are the staggering debt problems that Europe and Japan are struggling with. With global investors like China having few good options besides United States Treasuries, Washington, despite its current debt-ceiling debacle, can continue to hold down interest rates and wallow in cheap borrowing.

Beijing in recent years has frequently fretted aloud about Washington’s monetary policies. In 2009, shortly after the global financial crisis broke out, China’s prime minister, Wen Jiabao, said his country was “worried” about the safety of its huge cache of United States Treasury holdings. Last year Chinese policy advisers criticized the Federal Reserve for undermining the value of holdings by “printing too much money” with its so-called quantitative easing policies.

But even now, despite Beijing’s scolding about the debt impasse in Washington, China’s options may be limited.

”There’s really nothing different they can do,” said Eswar S. Prasad, a Cornell economics professor and former head of the China division at the International Monetary Fund. “Even if China felt the United States was going off a cliff, there’s no other place for them to put their money.”

Over the long run, many economists say the structural imbalances on both sides of the Chinese-American debt symbiosis could be disastrous. Already, for example, many say that those dynamics helped create the global financial crisis by artificially creating the low interest rates that let housing prices reach bubble-bursting levels.

Now, the United States and China are trying in their different ways to adjust. American policy makers are urging more savings and less consumption. Chinese officials take the opposite tack, promising to encourage more consumption and less saving.

But neither country has made significant headway on these strategies during the last two years. Both sides see these fixes as too costly and detrimental to nearer-term economic goals. America is focused on reviving its economy, while China is intent on cooling its down. And in both countries, achieving the goals involves changing public behavior, which is never easy.

Many economists say China could curb its dependence on dollar-pegged assets by letting the value of its currency rise faster against other world currencies. That would also make its imports less expensive for domestic consumers. But it would also make China’s exports more expensive for global customers, which could hurt Chinese factories and lead to widespread layoffs.

For all that, if China worries about holding too many dollar-denominated assets, which could depreciate over time as the value of its own currency rises, why does it not quietly sell some of them — or at least stop buying more?

Recent United States government surveys have suggested that China began doing just that, beginning to slow its purchases of American debt earlier this year. But analysts warn that those official figures may not be accounting for purchases made through third-party countries on China’s behalf. An intermediary buying American bonds in London at the behest of the Bank of China would not show up in Washington’s tallies.

Many economists, in fact, say they believe China may have actually stepped up its buying of American debt. The evidence is that its trade and current-account surpluses almost certainly mean that it has continued to accumulate huge holdings of dollars.

How might the Beijing-Washington debt standoff be resolved? Mainly, the Americans hope China will ramp up its domestic consumption and perhaps make even more direct investments in the United States. The Chinese, meantime, hope the United States will deal with its huge debt problems and maintain the value of the dollar — and with it the value of China’s dollar-based holdings.

For all the stresses in both directions, the fiscal cold war means “China is increasingly integrated with the future of the U.S.,” said Mr. Rothman, the Shanghai analyst. “But that could be a good thing, for both sides.”

China Raises Interest Rates
July 6, 2011

HONG KONG — China on Wednesday raised interest rates for the fifth time in nine months, the latest in a series of moves aimed at cooling the pace of economic growth and the steep price rises that have accompanied expansion.

The central bank announced that it was raising the key lending and deposit rates in the world’s second-largest economy, after the United States, by a quarter of a percentage point. The increase had been widely expected by analysts.

The central bank said the one-year deposit rate would rise to 3.5 percent, from 3.25 percent, beginning Thursday. The one-year lending rate was raised to 6.56 percent, from 6.31 percent.

Signs that inflation in China has accelerated to levels well above what the Chinese authorities are comfortable with have mounted in recent months and prompted Beijing to step up its efforts at reining in the ample lending that fueled growth and helped fan sharp rises in property prices as well as overall inflation.

Data released last month showed that consumer prices in May had risen 5.5 percent from the same period last year, and economists widely believe that data for June, due next week, will show an even more marked increase, of 6 percent or more.

The rate announcement came just weeks after news of the latest in a long line of instructions by Beijing to the nation’s banks to extend fewer loans — the 12th such move since early 2010.

Beijing’s gradual cutback of lending — by raising reserve-requirement ratios for banks, which reduces the amount of money available for loans — has had the desired effect of moderating the sizzling pace of growth to a level that most economists here believe points to a soft landing for the Chinese economy.

However, many forecasters also believe that Beijing now has little room left to increase reserve-requirement ratios much further or to lift interest rates much more. Another small rate increase may come later in the year, but over all, the current round of tightening may soon have run its course, many believe.

The price rises that have accompanied soaring growth, meanwhile, have so far shown little sign of abating — in part because of sharp increases globally in the costs of raw materials. Natural disasters in China also have helped push up the cost of food.

Inflation levels could ebb somewhat later this year, but are widely expected to remain elevated, presenting Beijing with a headache. The Chinese authorities are intensely aware that soaring household bills could lead to widespread public dissatisfaction.

Moody’s Sees Much Bigger Local Debt in China
July 5, 2011

BEIJING — China’s local government debt may be 3.5 trillion renminbi ($540 billion) larger than auditors estimated, potentially putting banks on the hook for deeper losses that could threaten their credit ratings, the rating agency Moody’s said Tuesday.

China’s mountain of local government debt has long been seen as a major risk by investors. The worry is that slower growth in the world’s second-biggest economy after that of the United States could set off a wave of loan defaults and hobble its banking system.

“Banks’ exposure to local government borrowers is greater than we anticipated,” Yvonne Zhang, a Moody’s analyst, said in a statement.

Unless China comes up with a “clear master plan” to clean up the problem, the credit outlook for Chinese banks could turn negative, Moody’s said.

Moody’s debt tally is near the midpoint of various estimates from Chinese authorities, which used different definitions and accounting methods to compute their debt totals. The varying figures have led to confusion about just how serious the problem could become if heavily indebted local governments default, saddling banks with large loan losses.

Moody’s said it was hard to judge which banks had taken on the most local government debt, but Bank of China and China Citic Bank were among those that had lent more aggressively than their peers during China’s bank lending spree in 2009.

China’s state auditor reported last week that local governments had accumulated 10.7 trillion renminbi of debt, about half of it amassed during a stimulus spending binge as Beijing sought to cushion the blow of the global recession.

Moody’s said the auditor’s report excluded some bank-funded loans because they were not deemed to be “real claims” on local governments. But the rating agency said that those loans posed the greatest risk of delinquency and that banks may face losses.

The warning weighed on Chinese bank shares, which were the biggest drag on the Hang Seng index for the Hong Kong stock market Tuesday. However, the share declines were modest, and analysts expressed confidence that banks could withstand loan losses.

“Even if the worst-case scenario happened, it’s not going to be fatal,” said Victor Feng, an equity strategist at Everbright Securities in Shanghai. “Profits may drop, but banks will not go bankrupt.”

The rating agency said a jump in local government loan defaults could push the nonperforming loan ratio for Chinese banks as high as 12 percent, well above its base-case scenario that envisions losses in the range of 5 percent to 8 percent.

Government figures show the average nonperforming loan ratio was 1.1 percent at the end of March.

Moody’s outlined three scenarios for resolving the debt problem. Most likely, Beijing would work on a case-by-case basis to help local governments to get funding. China might ask banks to absorb losses on loans for which local governments are not liable. Moody’s said this scenario would probably involve a fair amount of debt restructuring by banks.

In the worst-case scenario, Beijing would leave banks and local governments to thrash out the issue on their own. This could hurt investor confidence in China, as there would be no clarity on China’s debt problems and loan disputes could drag on, thereby worsening losses.

The best case would involve Beijing’s stepping in to supply local governments with funding or take on some of their debt, although Moody’s acknowledged that this would raise so-called moral hazard issues of banks’ assuming excessive risk, knowing the government would always come to their rescue.

Reuters reported on May 31 that China’s regulators planned to shift 2 trillion to 3 trillion renminbi of debt off of local governments to ease the default threat.  About half of the debt dates to the 2008 financial crisis, when Beijing unveiled a 4 trillion-renminbi fiscal stimulus package that compelled the local authorities to spend their way back to economic health.  But the legacy of the massive spending is now catching up with China, as maturity dates for the loans, many of which are due in 2013, draw closer.

While most loans were used to build roads and other infrastructure that some analysts argue that China needs, it has also generated some wasteful spending.  Peter Elston, a strategist at Aberdeen Asset Management Asia, said the episode served as a reminder that Chinese banks can be used as instruments of the state, making them less attractive as investment options.

“It is very sad, because it is going to take a very long time for them to convince investors that they are run for the benefit of shareholders and not for the benefit of the broader economy,” Mr. Elston said in an interview in Singapore.

10 June 2011 Last updated at 10:25 ET
Christine Lagarde in Beijing.

Leading candidates to become head of the International Monetary Fund (IMF) are trying to drum up support ahead of the deadline for nominations later.  French Finance Minister Christine Lagarde, favourite for the job, is in Portugal while Mexico's Central Bank Governor Agustin Carstens is in India.

He said India shared Mexico's belief that developing nations should have a louder voice at the IMF.

The post became vacant when Dominique Strauss-Kahn quit last month.  He is currently in New York facing sexual assault charges relating to an alleged attack on a hotel maid.

Drop out

The final selection for his replacement is expected to be announced by 30 June.

Kazakhstan Central Bank Governor Grigory Marchenko is also in the running for the job, but former South African finance minister Trevor Manuel has ruled himself out.  Reports suggested Mr Manuel could be a late entrant into the race, but on Friday he said he had "decided not to avail" himself.

"Today is the closing date and I certainly haven't put my hat in the ring."

Ms Lagarde remains the clear favourite. She was expected to learn the outcome on Friday of an examination by three top French judges of allegations that she abused her authority in 2008 when she granted a large payout to a prominent businessman to settle a legal case.  However, a court has now ruled the decision on whether to pursue the inquiry will be made on 8 July, after the appointment of the new IMF head.

'Done deal'

Ms Lagarde has been in Brazil, India and China this week to try to garner support amongst key developing nations.  She left Beijing for Lisbon on Thursday to take part in the African Development Bank's annual meeting.  Before the departure she said she was "very satisfied" about her meeting with Chinese officials.

"I have a very positive feeling following these talks, but it's up to them to convey their decision," Ms Lagarde told AFP news agency.

Mr Carstens is also continuing his tour - he is visiting India before going to the US next week.  Meanwhile, Mr Marchenko - whose candidacy was put forward by Russia and several other former Soviet republics - said that Ms Lagarde was the favourite to get the job.

"There's a lot of information coming from different sources, which is implying that there's agreement between G8 countries about support for Madame Lagarde," Mr Marchenko told Britain's Daily Telegraph newspaper.

"If countries which together have more than 60% of the vote have agreed to support one candidate, then it's more or less a done deal," he added.

If there are only three candidates for the job, the IMF could announce them imminently. If there are more, it has one week to announce which three will go through to the final shortlist.  Since its creation, the top job at the IMF has gone to a European, while his or her counterpart at the World Bank has been American.  China, India, Brazil and Russia have called for this tradition to come to an end, as their economies are now becoming more important in the global economy.

Correspondents say that while European countries are keen to appoint a European, there's some support for picking a leader from the developing world.

EDITORIAL: The Great Firewall of China
The communists can’t keep 1.3 billion offline forever
7:25 p.m., Tuesday, May 10, 2011

When it comes to the Internet, the People's Republic of China (PRC) would rather be safe than sorry. Beijing is taking new steps to make certain the social networking-fueled contagion of freedom that is sweeping the Arab world will not penetrate mainland China's great firewall.

Rather than risk another Tiananmen Square uprising, the communist government is mobilizing to ensure that spontaneous stirrings of liberty won't take root among its 1.3 billion people. On May 4, Beijing announced the formation of the State Internet Information Office, which centralizes the duties of a dozen other government agencies to rationalize the system and promote "healthy development" in Chinese cyberspace. Officially, the office will secure "the people's right to know, to participate, to express and to supervise," but in practice it will be a one-stop shop for content control and censorship in the Middle Kingdom. The Internet crackdown is a helpful reminder that the world's largest country is still controlled by a Maoist totalitarian cabal.

For decades, the PRC has been in the forefront of Internet censorship, which is simply an extension of all the other forms of thought control Beijing has imposed since the 1940s. Criticism of Mao Zedong or the communist apparatus - words like "democracy," "dictatorship," "corruption" and "dissent" - are all banned. The word "jasmine" was recently added to the list lest anyone use it as a code word for freedom after Tunisia's recent "Jasmine Revolution." Twitter and YouTube are unavailable. The party calls this "promoting harmony," which is a characteristic euphemism used by those who will not tolerate any independent thinking.

The Internet has become much more than a source for information; it's increasingly an avenue for individual interaction. Beijing's new Internet office will monitor and control social networking, online gaming, online chat and video services and any other way people might attempt to commit thoughtcrime. Facebook, currently blocked in China, is reportedly entering into an agreement with the state-approved search engine Baidu to break into that market. This would be a good business opportunity for Facebook, but it should be the going-in premise of any user of the service in China that everything they post will wind up in an Interior Ministry file. Whether this will present an increased privacy and security risk for Facebook's users outside of the People's Republic remains to be seen.

Maoists have reason to fear freedom. The Chinese communists face significant risks as Internet connectivity grows in their country. For every censorship tool deployed or channel of free expression the authorities shut down, Chinese hackers and dissidents find ways to foil the heavy cyberhand of the state. Like other fortifications, the Chinese firewall is defensive; it can be undermined, vaulted or broken. Dissidents post images of text rather than text itself to thwart automatic machine-reading censors. Democracy activists post Chinese characters sideways or backwards, alter or substitute parts of them to frustrate the filters. They spontaneously come up with code names or phrases to discuss forbidden topics or people without attracting attention.

Beijing's censors will have a hard time staying one step ahead of those striving for free expression. The anti-regime website China Digital Times has posted the "Grass-Mud Horse Lexicon" (the name in Chinese is a vulgar play on words), a compilation of "politically-charged terms which represent the [Chinese] netizens' 'resistance discourse.' " For example, because criticism of the PRC is forbidden, dissidents instead excoriate "West Korea." Most online verbiage has similar double-meanings in Chinese. That's why when someone from China posts that all the decisions made by the Communist Party are "great, glorious and correct," you know they mean none of the above.

© Copyright 2011 The Washington Times, LLC. Click here for reprint permission.

China suspends nuclear building plans
By Michael Bristow BBC News, Beijing
17 March 2011 Last updated at 04:11 ET

China has suspended approval for new nuclear power stations following the accident at Japan's Fukushima Daiichi plant.  It will also carry out checks at existing reactors and those under construction.

China is currently building 27 new reactors - about 40% of the total number being built around the world.

The news comes as China grows increasingly worried about the nuclear accident in Japan.

'Top priority'

The decision to temporarily halt approval for nuclear plants came at a meeting of China's State Council, or Cabinet, chaired by Premier Wen Jiabao.

"We will temporarily suspend approval for nuclear power projects, including those that have already begun preliminary work, before nuclear safety regulations are approved," read a statement from the State Council.

"Safety is our top priority in developing nuclear power plants."

It went on to say that China's medium and long-term nuclear plans would be "adjusted and improved".

China currently gets only about 2% of its electricity from nuclear power from 13 reactors, but it has launched an ambitious project to drastically increase those figures.  It is currently building more reactors than any other country in the world.  According to the World Nuclear Association, China wants to build a total of 110 nuclear reactors over the next few years.

This is part of a plan to develop other energy sources - such as wind and solar power - to reduce the country's dependence on coal, which currently supplies about three-quarters of its energy needs.  China also recently announced that it had developed its own technology to reprocess spent nuclear fuel, which could be used to run these new power plants.  Yang Fuqiang, an energy and climate change expert, said the government's latest move showed it was being responsible.

"There are many nuclear power stations under construction at the moment - that's risky. We have to go back and check each one," he said.

"If there is an accident it will be worse than in Japan because many of the new plants are near high-population areas so we need to be careful."

China's State Council has assured people that the country will not be affected by the radioactive leaks.  But shoppers have been buying up vast quantities of salt in many parts of the country, partly in the belief that it could protect them against radiation.  Potassium iodide, a salt, protects the thyroid gland against radioactive iodine.  Some people also seem to believe future supplies of salt could be contaminated by radiation leaking from the Daiichi nuclear plant, so they are buying up stocks now.

"We need to dispel rumours. Don't let Japan's nuclear crisis become China's salt crisis," said on online commentator.

Pharmacies are also reporting massive demand for medicine that protects against radiation.

U.N. Food Agency Issues Warning on China Drought
February 8, 2011

HONG KONG — The U.N. Food and Agriculture Organization issued an alert Tuesday that a severe drought was threatening the wheat crop in China, the world’s largest wheat producer, and was even resulting in shortages of drinking water for people and livestock.

The state-run news media in China warned Monday that the country’s major agricultural regions were facing their worst drought in 60 years and said Tuesday that Shandong Province, a cornerstone of Chinese grain production, was bracing for its worst drought in 200 years unless substantial precipitation came by the end of this month.

World wheat prices are already surging and have been widely cited as one reason for protests in Egypt and elsewhere in the Arab world. China has been essentially self-sufficient in grain for decades for national security reasons, and any move by China to import large quantities of food in response to the drought could drive international prices even higher, creating serious problems for less affluent countries that rely on imported food.

“China’s grain situation is critical to the rest of the world — if they are forced to go out on the market to procure adequate supplies for their population, it could send huge shock waves through the world’s grain markets,” said Robert S. Zeigler, the director general of the International Rice Research Institute in Los Banos, Philippines.

The Food and Agriculture Organization said that 5.16 million hectares, or 12.75 million acres, of China’s 14 million hectares of wheat fields had been affected by the drought, and that 2.57 million people and 2.79 million head of livestock faced shortages of drinking water.

Chinese state news media are describing the drought in increasingly dire terms. “Minimal rainfall or snow this winter has crippled China’s major agricultural regions, leaving many of them parched,” reported Xinhua, the state-run news agency. “Crop production has fallen sharply, as the worst drought in six decades shows no sign of letting up.”

Xinhua said that Shandong Province, in the heart of the Chinese wheat belt, had received only 1.2 centimeters, or 0.47 inch, of rain since September but did not provide a comparison for normal rainfall for the period.

Relatively few days of subzero temperatures and government irrigation projects have somewhat tempered the effects of the drought so far, the F.A.O. said in its “special alert,” but it went on to caution that extreme cold, with temperatures of 18 degrees below Celsius, could have “devastating” effects. Kisan Gunjal, the F.A.O. food emergency officer in Rome for Asia alerts, said by telephone that if rain came soon and temperatures warmed up, then the wheat crop could still be saved and a bumper crop might even be possible.

Chinese meteorological agencies are warning of frost for each of the next nine nights in the heart of Shandong Province, with temperatures falling as low as minus 6 degrees Celsius (21 Fahrenheit), with very little chance of precipitation in the next 10 days.

Mr. Gunjal said that the special alert on China was the first that the F.A.O. has issued anywhere in the world this year. There was only one last year, expressing “grave concern” about food supplies in the Sahel region of Africa, notably Niger.

President Hu Jintao and Prime Minister Wen Jiabao, China’s top two officials, made separate visits to drought-stricken areas last week, and each called for “all-out efforts” to cope with the water shortage.

Ask international grain trade experts about China and their first reaction is to say that they need to look up how much grain China actually produces and trades. Yet while world food reports barely mention China, partly because many details of the country’s agriculture production and reserves are state secrets, China is actually enormously important to the world’s food supply — especially if something goes wrong.

The heat wave in Russia last summer, combined with floods in Australia in recent months, have drawn worldwide attention to the international wheat market because both countries have historically been big exporters. Soaring wheat prices have been a particular trigger for food-related protests this year, in contrast to three years ago, when rice led food price increases and caused food riots from Haiti to Senegal.

China’s wheat industry exists in almost total isolation from the rest of the world, with virtually no exports or imports until last year, when modest imports began. Yet it is enormous, accounting for one-sixth of global output. The statistical database of the U.N. food agency shows that in 2009, the last year available, China produced almost twice as much wheat as the United States or Russia and more than five times as much as Australia.

The ground in the country is so dry at the moment that from Beijing south through the provinces of Hebei, Henan and Shandong to Jiangsu Province, just north of Shanghai, the trees and houses are coated with topsoil that has blown off parched fields.

China’s national obsession with self-sufficiency in food includes corn as well, another crop that is grown and consumed entirely in China with minimal imports or exports. Little known outside of China, the country’s corn industry actually grows one-fifth of the world’s corn, according to F.A.O. statistics. China’s corn crop is mostly in the country’s northern provinces, where the drought is worst now.

Mr. Gunjal said that the success or failure of the corn crop, as well as the rice crop, would depend mostly on rainfall this coming spring and summer, not the shortage of rain this winter.

Winters tend to be naturally dry in southern China, the world’s largest rice-producing region. But this winter is drier than most. Hong Kong received 53 percent of its usual rainfall in December, and 22 percent of its usual rainfall in January, according to the Hong Kong Observatory.

With $2.85 trillion in foreign exchange reserves, nearly three times the reserves of Japan, the country with the second-largest reserves, China has ample buying power to prevent any recurrence of the periodic famines that killed millions of Chinese as recently as the early 1960s.

“They can buy whatever they need to buy, and they can outbid anyone,” Mr. Zeigler said. China’s self-sufficiency in grain prevented world food prices from moving even higher when they spiked three years ago, he said.

China had about 55 million tons of wheat in stockpiles as of last summer, Mr. Gunjal said. That is equal to about half the annual harvest.

China is already the world’s largest importer of soybeans, which are oilseeds, not a grain.

China buys soybeans mainly for use as animal feed, because the Chinese diet is shifting toward more meat.

US pomp meant to improve tone of China relations
16 January 2011

BEIJING – Chinese leader Hu Jintao is being feted in Washington this week with a lavish state banquet at the White House and other pomp usually reserved for close friends and allies — all intended to improve the tone of relations between a risen, more assertive and prosperous China and the U.S. superpower in a tenuous economic recovery.

The shaky trust between the United States and China has been eroding recently because of an array of issues — currency policies and trade barriers, nuclear proliferation and North Korea, and both sides seem to recognize the need to recalibrate relations.

The U.S. is one of China's biggest markets, with $380 billion in annual trade largely in Beijing's favor. Washington increasingly needs Beijing's help in managing world troubles, from piracy off Africa to Iran's nuclear program and reinvigorating the world economy.

"It is absolutely critical for the two sides to be setting a tone that says 'hang on a second, we are committed to an effective, positive relationship,'" said Center for Strategic and International Studies scholar Charles Freeman, a former trade negotiator in the George W. Bush administration.

The state banquet President Barack Obama is hosting will be Hu's first. In the days before his visit, senior officials from both countries have spoken publicly in favor of better ties.

Secretary of State Hillary Rodham Clinton said in a speech Friday that the countries needed to manage their conflicts but their shared interests were so entwined as to constitute entanglement.

"History teaches us that the rise of new powers often ushers in periods of conflict and uncertainty," Clinton said. "Indeed, on both sides of the Pacific, we do see trepidation about the rise of China and the future of the U.S.-China relationship. We both have much more to gain from cooperation than from conflict."

Chinese officials have emphasized what they see as common concerns while acknowledging the complexity of the relationship.

"When the relationship is strained we need to bear in mind the larger picture and not allow any individual issue to disrupt our overall cooperation," Vice Foreign Minister Cui Tiankai said in a speech Friday.

Such maxims, however, don't apply to issues China defines as its "core interests," including Taiwan, Tibet, and the overarching authority of the Communist Party. That's a condition Hu's visit won't change.

Hu, whose four-day trip starts Tuesday, is expected to talk up China's intended peaceful rise in a speech to business leaders and opinion-makers in Washington on Thursday and to highlight the benefits of China's market and investment when visiting Chicago.

Aware of China's plummeting image in American opinion, Chinese Foreign Ministry functionaries have in recent weeks been looking for ways to make the usually stiff Hu, and China as a country, appear more human, something akin to reformist patriarch Deng Xiaoping's donning a 10-gallon hat in Houston in 1979 just after the opening of diplomatic relations.

For the protocol-obsessed Chinese leadership, a highlight of the visit will be Wednesday's state banquet — an honor denied Hu on his last trip to the White House in 2006. President George W. Bush thought state banquets should be reserved for allies and like-minded powers and instead gave Hu a lunch. Even worse, a member of Falun Gong, the spiritual movement banned by China, disrupted Hu and Bush's joint appearance, and an announcer incorrectly called China "The Republic of China," the formal name of democratically ruled Taiwan.

In this visit, no major agreements are expected. Talks over a joint statement ran aground until last-minute negotiations in Beijing last week. But the shared recognition to put things right and the bumpy relations of the last year augur for a better outcome.

The recent disputes make the summit more necessary than ever, said Shi Yinhong, professor of international relations at Beijing's Renmin University.

"If you look back to relations over the last year, any progress is significant," he said.

A successful visit also stands to raise Hu's standing domestically as he heads toward retirement late next year and seeks to place his political proteges in positions of influence. "A demonstration that Hu can handle the U.S. well and show that China is now well respected by Washington should help Hu to consolidate his legacy," said Oxford University China scholar Steve Tsang.

Still more difficult will be stopping the larger drift in relations amid the countries' changing fortunes. Beijing feels its economic, military and diplomatic strength entitles it to more deference while Washington tries to shore up its superpower authority, forging alliances and ties with other countries amid the changing global order.

While the U.S. is weighted down by high unemployment, massive budget deficits and sluggish growth, China has roared ahead, with the economy expanding 9.6 percent in the third quarter of last year.

China now holds the world's largest foreign currency reserves at $2.85 trillion and a major chunk of U.S. government debt. At current rates, economists estimate China will overtake the U.S. as the world's largest economy within 20 years, possibly by the end of this decade. That transition could be bumpy, with China's authoritarian one-party communist political system and sense of historical grievance setting it at odds with the democratic West.

Feeling its oats, Beijing has largely rebuffed U.S. appeals for help in reining in bellicose North Korea, curbing Iran's nuclear program and faster appreciation of China's currency and dismantling of trade barriers. Chinese officials and the nationalistic state-run media have criticized Washington's renewed attention to Japan, South Korea and Southeast Asia, its arms sales to Taiwan and its continued naval patrols in the Yellow and South China seas as attempts to constrain China's influence in its backyard.

Chinese officials have accused the U.S. of orchestrating the awarding of the Nobel Peace Prize to imprisoned Chinese dissident Liu Xiaobo. And just last week, Chinese military commanders greeted U.S. Defense Secretary Robert Gates' offer for closer military dialogue by sending a prototype for a new stealth fighter on its first test-flight.

In recent months, about the only thing the two seem to have agreed on is that the U.S. and China did not have enough common ground to form a Group of 2, or "G-2", to solve the world's troubles.

The U.S.-China relationship "is as important as any bilateral relationship in the world," Clinton said Friday. "But there is no such thing as a G-2. Both of our countries reject that concept."

China vows lending control to tame inflation
Mon Dec 27,2010 6:33 am ET

BEIJING (Reuters) – China's central bank took aim at inflation once again on Monday by saying it will control lending and money growth in the world's second-biggest economy to head off price pressures and asset bubbles.

In a statement on the central bank's website (www.pbc.gov.cn), Hu Xiaolian, a deputy governor, said China had been normalizing policy and will explore new ways to manage excess cash, which is seen as a major driver behind 28-month high inflation.

Her remarks reinforced statements from China's top leaders that the task of taming inflation will be a priority for Beijing next year.

"An implementation of prudent monetary policy is helpful in strengthening the management of inflationary expectations and in fending off asset bubbles," Hu said.

On Saturday -- Christmas Day -- the central bank surprised investors with a 25-basis-point rate rise in benchmark deposit and lending rates, its second increase in just over two months.

Hu reiterated the central bank's determination to drain excess cash from the financial system by using all tools at its disposal: interest rates, reserve requirement ratios, open market operations and more.

"We will explore new tools ... to keep a good control on the gate of liquidity," she said, but did not indicate what these might be.

A steady stream of anti-inflation talk from the Chinese central bank has led many investors to bet on more rate increases in 2011.

A Reuters poll showed investors see the benchmark one-year deposit rate rising to 3.25 percent by the end of next year, from 2.75 percent now.

The specter of more tightening cast a pall over Chinese stocks on Monday, though investors abroad were more sanguine, in part due to confidence that China's steady tightening is a sign of solid growth in its vast economy.

In a separate statement, the monetary policy committee within the central bank noted China's economic resilience, but with a touch of caution.

"The improving trend in our economy is solidifying and the financial system is working smoothly," the committee said after a quarterly meeting.

"But it is still a pressing task to manage credit, money and liquidity as well as cut financial risks," it said.

The committee has no decision-making powers within the central bank. The central bank in turn has no autonomy over monetary policy and any move on interest rates has to be approved by the highest echelons of power within the government.

China to Tighten Monetary Policy Next Year
December 3, 2010

BEIJING — China’s top leaders announced Friday that the country will tighten monetary policy next year, a sign that the leaders are increasingly concerned about inflation and an overheated economy even as other nations, including the United States, continue to grapple with a global recession.

The announcement was made in an article by Xinhua, China’s official news agency. It reported that the Politburo, the elite nine-member team at the top of the party hierarchy, had decided that China’s monetary policy should shift “from relatively loose to prudent next year.” The article also said China “will continue its proactive fiscal policy,” meaning that investment spending would not be severely curbed.

China’s economy has continued to grow rapidly, bolstered in part by an enormous government stimulus package and liberal lending by state banks following the onset of the global financial crisis in late 2008. The move to rein in liquidity and bank lending, presumably through interest rate increases and other means, indicates that Chinese leaders feel confident enough in prospects for future growth that they can afford to cool down the economy.

The Xinhua article did not discuss the implications of a tighter monetary policy for the value of the renminbi. But one reason China's monetary policy has been loose for the last several years has been the central bank's large-scale issuance of renminbi so as to buy dollars.

This currency market intervention has kept the renminbi weak and has made Chinese exports more competitive in foreign markets while making foreign goods more expensive in China. The United States, Europe and some developing countries have become increasingly concerned by what some politicians say is the transfer of jobs and economic growth to China that the relative weakness of the renminbi has caused, and the Obama administration in particular has been putting pressure on China to let the renminbi appreciate.

So, to the extent that tightening the money supply might mean less dollar buying by China's central bank, the new policy could strengthen the renminbi somewhat against the dollar and other major currencies  --  the effect China's monetary critics have been seeking. But analysts do not expect the shift in monetary policy to lead to significant currency appreciation.

The government reported that the consumer price index, an indicator of inflation, rose 4.4 percent in October from the same month in 2009. The increase was the largest in 25 months and higher than what policy makers in Beijing are comfortable with. The government wants the average throughout all of 2010 to be no higher than 3 percent; in May, the index nudged up to 3.1 percent over May 2009 and has been gradually rising since.

Some analysts say the government will raise interest rates throughout 2011 to curb spending.

In October, the government slightly raised a benchmark lending rate, apparently to slow real estate speculation. The property market in China has been booming. Rising property prices, along with the government stimulus money and loose bank lending, have spurred new developments across the country, from the windswept plains of Inner Mongolia to the tropical southern island of Hainan. Some analysts say this has resulted in a dangerous bubble in the real estate market, while others argue that the capacity will be put to good use.

A record $560 billion of residential property was sold in 2009, an increase of 80 percent over 2008, according to government statistics.

Some officials in the central government have indicated they recognize there is a risk to loose bank lending and presumably want to slow it. Victor Shih, an associate professor at Northwestern University, has estimated that state banks have lent $1.6 trillion to companies owned by local governments, and that a significant portion of this is likely to pile up as bad loans, posing a risk to state banks.

Low wages have helped to hold down inflation. But those wages, coupled with the hot property market, mean that migrant workers from the interior of China are less tolerant of poor work conditions on the coasts, where many of China’s export manufacturing factories are located. Many workers are now choosing to stay closer to home in the interior provinces.

China Daily, an official English-language newspaper, reported on Monday that two large manufacturing hubs, the Pearl River Delta and the Yangtze River Delta, are experiencing severe worker shortages. The Pearl River Delta could be short by as many as 900,000 workers, the newspaper reported, citing a recent survey by the human resources department of Guangdong Province.

Keith Bradsher contributed reporting from Hong Kong.

China to play role in General Motors IPO
13 November 2010

DETROIT – Among the banks helping General Motors with its initial public stock offering next week are two identified by initials only: ICBC and CICC.

Americans uncomfortable with U.S. government ownership of General Motors may want to hear more: One of those banks is the Industrial and Commercial Bank of China, one of China's four big central government banks. The other, China International Capital Corp., is a joint venture run primarily by Central Huijin Investment Ltd., an arm of the state, and Morgan Stanley.

This is the first time Chinese government banks have participated in a major U.S.-issued IPO, according to IPO tracking firm Dealogic. The banks are listed as co-managers in the offering, meaning they will sell a portion of the new shares.

Chinese automaker SAIC, GM's partner in China, is finalizing plans to buy a roughly 1 percent stake, worth about $500 million, in GM's IPO, the Wall Street Journal reported Friday. SAIC is owned by the Shanghai city government.

Other foreign investors that are interested include several sovereign wealth funds located in the Middle East and Asia. The Journal says those funds, which manage the finances of royal families and some nations, could invest $1 billion in GM's IPO.  There could be political backlash for President Barack Obama, who has spent the past week in Asia addressing economic issues, like currency exchange differences between the U.S. and China. Obama has argued that China artificially deflates its currency, the yuan, in an attempt to make its exports cheaper.

Many Americans were unhappy when the U.S. bailed out GM, calling the company "Government Motors."

GM 's Nov. 18 stock offering will reduce the U.S. Treasury's stake in the company from 61 percent to 43 percent, and will help payback the more than $50 billion that taxpayers invested in GM to keep it from collapsing. More stock offerings will happen in the next year or so, letting the government fully divest from the automaker.

"It's a very political topic, but what Americans need to remember is that General Motors is an international company," says Rebecca Lindland, an analyst with IHS Automotive. "If we want to get our money back, we need to understand that they have to do business on a global basis."

The U.S. Treasury has been clear that international investors are welcome to invest in GM, and many outside the U.S. are considering taking stakes in the company.

"We expect that a large and diverse group of institutional investors will be offered an opportunity to participate, with no single investor or group of investors receiving a disproportionate share or unusual treatment," the Treasury said in a recent statement.

The U.S. has become a popular haven for Chinese investors, second only to Australia in attracting Chinese stock investments, says Derek Scissors, a research fellow at conservative think-tank The Heritage Foundation. The first half of 2010 was a record year for China, Scissors says. China has sunk $45 billion into investments and engineering projects worldwide. About $1.6 billion of those investments came to the U.S.

In China, businesses operate with the funding and blessing of the government, says Tim Dunne, director of global automotive operations for J.D. Power and Associates. The government behaves like an interested shareholder, ensuring companies have competent management and ensuring the companies boost economic growth in their regions.

Many Chinese automakers are looking for a way into the U.S. market, he says. China is the largest car market in the world, but the U.S. is the most profitable, he says.

"The amount of money changing hands here is much greater," he says. The average selling price of a car in the U.S. is $27,500, compared with about $17,000 in China. "Multiply that over millions of vehicles, and it's quite a difference."

SAIC and GM already have a long-standing partnership in China -- GM could not sell cars in China without partnering with a local business -- and it's unclear what size stake SAIC may take in GM. The deal would need Chinese government approval.

Chris Theodore, president of consulting firm Theodore & Associates, says SAIC's investment in GM is likely an attempt to strengthen its ties with the automaker. Theodore, who was part of a group that tried to take over Volvo before it was sold to China's Geely group, says SAIC isn't the kind of company that can branch out into U.S. sales. Most of its models use GM technology and are essentially GM cars.

"They rely on GM for a lot of their profitability," Theodore says.

Michael Maduell, president of the Sovereign Wealth Fund Institute, a California-based group that watches sovereign wealth fund investments, says global investors are looking at the U.S. because they believe the overall market is undervalued. Other potential investors in GM include Abu Dhabi's Mubadala and Singapore's Temasek, which are both known for actively investing in companies, Maduell says.

Investors are "looking at emerging markets, like China and India, but all those assets are overvalued," Maduell says. "America still has a lot of fantastic investment opportunities in real estate and small- to mid-cap stocks."

China: Boom or bust? (2)
Robert Peston | 07:42 UK time, Wednesday, 10 November 2010

Although it's been a trip of 18 hour working days, and hurried noodles at midnight in a 24-hour cafe which (thank goodness) shows live football (though I would have preferred to have missed Flappyarmski v Andy Carroll), I'll miss China and Beijing.

It's a cliche, I know, but it's nonetheless true that it's impossible to take your eyes off the scale of change here, or be unimpressed by it.

Which is why China optimists remain convinced that for all the structural challenges still facing this country - the widening gap between rich and poor, a rapidly ageing population, the tension between growth and environmental protection, and (the theme of much of my work on this trip) growth still too dependent on investment rather than domestic consumption - these challenges will in time be overcome.

Along the way, however, this is a country which has a propensity to take adverse trends close to the brink of disaster.  The pumping up of a residential property bubble, as illustrated by such phenomena as the creation of the peopleless city (see my note on Kangbashi), appears to be one such trend.  This bubble is a consequence of the enrichment of a new and growing middle class facing huge restrictions on where they can invest their money.

With interest rates so low and restrictions on investing abroad, buying new apartments is one of the few investments available to the new monied class.  But here's the thing that appears odd to westerners: many of these property investors prefer to buy these apartments and leave them empty rather than rent them out. 

Which is why all over China, as manifested in Kangbashi in extreme form, residential property developments have been sold, but yet remain largely unoccupied.  What will jar in buy-to-let obsessed Britain is that large numbers of apartments can remain vacant in a country where urbanisation, the migration of many millions of impoverished peasants to cities, is one of the so-called mega-trends.

The explanation, according to a Tsinghua University economist, Patrick Chovanec - corroborated by locals - is that Chinese people regard apartments as they would cars: brand new is good and top price; used is bad and lower price.  Apparently, the moment someone moves into a property, its price falls, because it's no longer pristine.  So property investors have little desire or incentive to rent out their properties, because to do so would be to cut the re-sale value. Better to keep them empty in the hope that a rising market will deliver capital gains.

Which means there's nowhere to live for those who have only the means to rent rather than buy - and large (but unquantified) numbers of homes are empty.  In a country where hundreds of millions still live in poverty, this feels like something of a social tragedy, as well as a classic market failure.  There is no hard data on the number of these vacant properties. The best way to gauge it is to travel around almost any urban area and see how few lights are on in new developments (not many).

I am sure that the Chinese authorities would deny that this property bubble is a major social or economic problem. But they have recognised it exists by making it more expensive to borrow to purchase multiple homes.

The good news is that this bubble isn't a banking risk in the sense that it would be in the UK or US. Many, but not all, of these properties have been bought for cash. So if the bubble is popped, there shouldn't be enormous losses for banks that undermine their solvency.

But of course, if the cycle of rising asset prices were to go dramatically into reverse - and there are signs that the froth has already come off the property market - that would cause problems for developers and investors, which could then impair the quality of bank loans.  Anyone who says they know this is a huge accident waiting to happen is going on hunch because - as I say - there is something of a fog around this market.

But it would be myopic or dim to deny that a bubble - and potentially a highly dangerous one - is the inevitable consequence of a historically unprecedented mass movement of personal enrichment combined with severe restrictions on how and where the newly enriched can invest their cash.

Fast train, big dam show China's engineering might
26 October 2010

HANGZHOU, China – China rolled out its fastest train yet on Tuesday and announced that the Three Gorges Dam, the world's biggest hydroelectric project, is now generating electricity at maximum capacity — engineering triumphs that signal the nation's growing ambitions as its economy booms.

The successes demonstrate how, after decades of acquiring technology from the west, Beijing has begun to push the limits of its new capabilities, setting the bar higher on mega-projects as it seeks to promote the image of a powerful, modern China. But many of these initiatives have come at great human and environmental cost, and some have questioned whether the country fosters a sufficiently innovative spirit to compete on the next level.

Still in the works: more nuclear power plants, a gargantuan project to pump river water from the fertile south to the arid north, and a $32.5 billion, 820-mile (1,300-kilometer) Beijing-to-Shanghai high-speed railway that is scheduled to open in 2012.

"We are now much faster," Railway Ministry spokesman Wang Yongping said at Tuesday's inauguration of the super-fast line from Shanghai's western suburb of Hongqiao to the resort city of Hangzhou. "Now other countries are hoping to cooperate with us."

The train will cruise at a top speed of 220 mph (350 kph), making the 125-mile (200-kilometer) trip in 45 minutes.

China already has the world's longest high-speed rail network and aims to more than double its length to 10,000 miles (16,000 kilometers) by 2020.

Chinese companies are also vying for projects overseas, including in the U.S., which leads the world in freight railway technology but has almost no high-speed rail expertise. That's a mark of how well and quickly the technology has been adopted by Chinese companies, who have traditionally only been able to compete on price in bidding for railway and other basic infrastructure projects in the developing world.

The Three Gorges Dam has been more controversial, though the government has relentlessly touted the $23 billion project as the best way to end centuries of floods along the mighty Yangtze and provide energy to fuel the country's economic boom.

The water level in the vast reservoir behind it hit its peak height of 574 feet (175 meters) at 9 a.m. on Tuesday, according to project operator, the China Three Gorges Project Corp. The previous record was 567 feet (172.8 meters), set in 2008, the year the generators began operating.

In the future, the water level will be adjusted depending on flood-control needs but kept within 100 feet (30 meters) of the maximum.

While raising the water level increases the electricity production of the dam, some geologists have warned that damming up too much water in the reservoir carries a heightened risk of landslides, earthquakes and prolonged damage to the river's ecology. As officials attempted to raise water levels in the reservoir last fall, at least one town had to evacuate dozens of residents after a hairline crack appeared on the slopes above homes.

In addition, millions have been displaced and great swaths of productive farmland sacrificed for dam and projects like it.

Company chairman Cao Guangjing called Tuesday's feat a "historical milestone." He said annual power generation will reach 84.7 billion kilowatt hours, enabling "the project to fulfill its functions of flood control, power generation, navigation and water diversion to the full."

Average economic growth rates of more than 9 percent per year over the past two decades have laid the foundation for rapid progress in a growing number of fields, including launching three manned space flights since 2003 and building a railway across the Tibetan plateau from Beijing to Lhasa. The 2008 Beijing Olympics and this year's mammoth Shanghai World Expo have demonstrated a growing managerial sophistication as well as ability to build infrastructure on an enormous scale.

But while the tremendous growth has enabled China to build big, some wonder if it can build smart — and become a source of true innovation.

Science and technology research in the country tends to be heavily topdown, laden with a stifling government bureaucracy. Many of China's best scholars and scientists depart for greener pastures abroad, while other top minds are pushed into administrative roles, leaving them little time for research.

Although China holds the patents on the technology, design and equipment used by the CRH380 train, some in the industry question the degree to which China is justified in claiming the latest technology as its own.

"Everybody knows that a lot of the core technology is European," Michael Clausecker, director general of Unife, the Association of the European Rail Industry, said in a recent interview.

And despite the obvious benefits high-speed railways bring, the replacement of slower lines with more expensive high-speed trains has prompted complaints from passengers reluctant to pay higher fares, especially on shorter routes.

China surprises with first rate rise since 2007
By Aileen Wang and David Stanway
19 October 2010

BEIJING (Reuters) – China's central bank surprised on Tuesday with its first increase of interest rates in nearly three years, a move that reflects its concern about rising asset prices and stubborn inflation.

It said it was raising benchmark rates by 25 basis points, taking one-year deposit rates to 2.5 percent and one-year lending rates to 5.56 percent.  The impact was felt by global markets across the board. Oil prices fell, stock markets turned negative in Europe and the dollar rose as investors were caught off guard by the tightening step.

"The interest rate rise is entirely outside of market expectations," said Zhu Jiangfang, chief economist at CITIC Securities in Beijing.

"The recent rise in headline inflation has put the real rate into negative territory. And I think that's why the central bank needs to raise interest rates in such a hasty way," he said.

Although announced by the People's Bank of China, the decision to increase rates would have received approval from the highest echelons of Chinese power, with Premier Wen Jiabao likely signing off on it.  Once a consensus has been forged in Beijing to raise or cut rates, past experience shows that moves often come in bunches.  In the view of some, it is about time for China to embark on a more aggressive tightening cycle. To date, it has relied on lending restrictions and banks' reserve requirements to keep growth from boiling over.

"Fundamentally, policy rates are just too low for an economy that's growing around 10 percent. To avoid bigger distortions, China needs to start moving rates to more appropriate levels," said Rob Subbaraman, an economist with Nomura in Hong Kong.

"China's economy looks as though it's decoupling from other major economies, and its policies should as well," he said.


A number of leading economists, including some advisers to the central bank, have urged an increase in deposit rates to keep savers' returns in positive territory.  China reported consumer inflation of 3.5 percent in the year to August and economists expect that the pace climbed to 3.6 percent in September.  Still, the increase in rates is surprising given that several top leaders have recently expressed confidence that inflation is under control, and have said that higher rates would potentially suck in speculative capital from abroad.

"They did it now likely because Thursday's GDP and CPI data is too strong for them," said Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong.

China is due to report third-quarter GDP and a suite of economic data for September on Thursday. The consensus forecast is that economic growth slowed to 9.5 percent year-on-year last quarter, down from 10.3 percent in the second quarter.  Economists polled by Reuters last month had expected an extended period of interest rate stability in China, with no increase until the second quarter of 2011.  Propelled in part by these expectations of low rates, Chinese asset prices have shown signs of taking off.

The Shanghai stock index, a laggard for much of this year, has jumped nearly 16 percent in the past nine trading days. And despite a months-long campaign to clamp down on the real estate market, housing inflation has started to perk up again.

"This is a bucket of cold water for the market," said Zhang Yuheng, an analyst with Capital Securities in Shanghai. "The hike itself is not a big one, but the psychological impact is big as the expectations for more rate hikes will appear."

Don’t Blame China, Blame Congress
October 4, 2010 4:00 A.M.

Most members of Congress appear to know two things about China’s relationship with the United States: We buy a lot of their stuff, and they buy a lot of our debt. A few members even seem to understand the connection between the two: Put simply, China takes the money it makes selling us cheaply manufactured goods and lends it back to us at a low rate of interest. But most members of the House either don’t understand that connection or don’t care, because they passed a bill last week aimed at raising the price of the products we buy from China, on the theory that doing so would bring manufacturing jobs back to the United States. Would it?

In a word, no. Advocates of this policy have, wittingly or not, bought into a myth about why we import so much stuff from China. According to the myth, China is outcompeting us on the manufacturing front because it keeps its currency, the renminbi, artificially undervalued, thus making its exports cheaper in dollar terms than they should be. But how do these advocates know what the renminbi should be worth? Well, they know it should be worth more than it is: China’s decision to recycle the dollars we spend on their exports — using those dollars to buy U.S. Treasury bonds — keeps the value of the renminbi low and stable relative to the dollar. If the Chinese followed the more conventional approach of converting those dollars into their own currency, then its value would appreciate because of the increase in demand for renminbi. This would — theoretically — make the stuff we import from China more expensive in dollar terms and the stuff we sell to them relatively cheaper.

This would — again, theoretically — create jobs in the United States, because the Chinese would buy more of our exports and, less plausibly, corporations would source more of their low-value-added manufacturing in the United States. The theory breaks down, however, when one considers that what we buy from China and what we sell to China are very different things. Consider the facts: Over the last decade, as U.S. manufacturing employment fell, U.S. manufacturing output went up, indicating a shift from low-value-added to high-value-added manufacturing. Unemployment remained low as workers migrated to the service sector, while low-value-added manufacturing moved overseas — not just to China, but to other developing countries where lower costs vis-à-vis U.S. manufacturers offered a comparative advantage. If China’s currency policy has given it any trade advantage at all, it has mostly been an advantage over other low-wage countries that export to the United States.

A crackdown on China would be a full-employment plan for other developing countries: Unless we hit them all with tariffs, it would probably not create a single low-skilled job here. It might destroy a few, however, as retailers would be forced to make costly adjustments and establish new lines of trade with Vietnam and Bangladesh. How about exports? Here the case is a bit more plausible, but only a bit: Demand for the kind of high-value-added manufactured products that the Chinese buy from us — airplanes from Boeing, construction equipment from Caterpillar — will not be much affected. The manufacturers of those products are much more worried about the possibility of a trade war with China than they are about the value of the renminbi: Just ask them.

Meanwhile, the effects of actually enacting sweeping tariffs on Chinese imports are unknowable: If China decided to defy the sanctions and refused to let its exchange rate float, then we suspect the Chinese government would impose retaliatory countermeasures, leading to widespread layoffs at the aforementioned U.S. exporting concerns. If, on the other hand, China succumbed to the pressure to let its currency appreciate, then its own export-oriented businesses would be forced to cut back as they lost business to manufacturers in other low-wage countries. It’s hard to imagine that the consequences for China — social upheaval, economic ruin, and rampant speculation as financiers took advantage of the suddenly floating exchange rate — would be good for a United States interested in international economic accord and global stability. The consequences could be more pedestrian, though contrary to the intentions of Congress: The Cato Institute’s Dan Ikenson has pointed out that the Chinese let the renminbi appreciate by over 20 percent between 2005 and 2008, and the U.S. trade deficit with China continued to increase.

All this is to say nothing of what might happen to the other side of the equation: What happens to long-term interest rates if China stops lending us our own money back? This question raises another one: At a time when the Federal Reserve has more than doubled its balance sheet — when the dollar is taking a beating and the gold price is spiking as the central bank contemplates further monetary easing — what right does the United States have to call anyone else a currency manipulator? Having discovered that we cannot borrow and spend and print our way out of our own past policy mistakes (and lacking the political will to give the private sector room to breathe by cutting spending and taxes), the U.S. government is desperate for something else to boost the economy, and a growing number of policymakers appear to have decided that we must export our way out of the crisis. Thus our ultimatum to the Chinese: Save us at your own expense, or else! That is a disgraceful admission of weakness, and a fitting coda for one of the worst Congresses in recent memory.

Steelworkers Accuse China of Violating Trade Rules
September 9, 2010

HONG KONG — The United Steelworkers union plans to file a legal case with the Obama administration on Thursday, accusing China of violating World Trade Organization rules by subsidizing exports of clean energy equipment, the union’s president and his advisers said.

The filing, more than 5,000 pages long and 18 inches thick, contends that the central government in Beijing and China’s provincial governments have used land grants, low-interest loans and dozens of other measures that violate W.T.O. rules.

The union says the violations have helped Chinese companies expand their share of the world market for wind turbines, solar panels, nuclear power plants and other clean energy equipment, at the expense of jobs in the United States and elsewhere. The filing asks the Obama administration to begin formal proceedings at the W.T.O. in Geneva to force China to repeal the subsidies.

“Unless China’s policies are urgently addressed, the U.S. may never get a fair shot at making the green technologies of the future,” the filing says.

Trade lawyers in Washington have been saying for months that China’s export subsidies for clean energy were so extensive that sooner or later, they expected a trade case to be filed. But multinational companies and trade associations in the clean energy business, as in many other industries, have been wary of doing so, fearing Chinese officials’ reputation for retaliating against joint ventures in their country and potentially denying market access to any company that takes sides against China.

With clean energy a stated priority of the Obama administration, as a jobs generator and for environmental reasons, the union says it hopes to gain support for its case by injecting the trade issue into the autumn Congressional campaigns.

It is filing the case under a 1974 American trade law that sets an initial deadline of 45 days for the administration to respond, which would be Oct. 24, a week and a half before the elections. The administration is allowed under the law to announce that it is extending the deadline — although any such delay could have political ramifications just before the elections.

“Once we file the case, we’re going to take it to the rest of the public,” said Leo W. Gerard, president of the 850,000-member Steelworkers union. “We’re going to mobilize around this.”

The filing of the trade case comes at a time of mounting trade and currency frictions with China. Friday morning in Beijing (late Thursday night in New York) China is expected to announce that in August it ran another especially large trade surplus, possibly exceeding $25 billion.

President Obama imposed steep tariffs a year ago on tire imports from China, a decision that China is itself now challenging before a W.T.O. panel, which is expected to give an initial ruling this month. The Commerce Department has separately granted dozens of requests to impose tariffs on very narrow categories of imports from China, like steel wire strands for pre-stressed concrete, after finding evidence that they were subsidized, or dumped, in the American market.

But special tariffs and other import restrictions still cover less than 3 percent of American imports from China. Unions and many Congressional Democrats have contended that the administration should be more assertive in forcing China to honor previous free trade commitments. But the United States government has long depended on companies to gather commercial information for trade cases, which companies have been hesitant to do.

China’s manufacture of solar panels, wind power turbines and other clean energy products — with the strong support of its government, through land grants and low-interest loans — has turned that nation into the global leader in those markets. China has more than one million jobs in all clean energy industries combined.

Meanwhile, American and other Western manufacturers of solar and wind power equipment have struggled to compete. Some American clean energy companies have scaled back production and laid off workers, while moving operations to China.

Mr. Obama called in his State of the Union address in January for the United States to become a leader in green energy instead of relinquishing the industry to foreign competitors, including China. But China continues to gain market share in practically every category of clean energy technologies, including solar panels and high-speed trains.

“This has the potential to be the tipping point on whether there can be long-term economic renewal in America,” Mr. Gerard said.

The United Steelworkers union represents employees in a wide range of energy-related jobs, including manufacturers who make the steel for wind turbine towers and nuclear reactors, and glassworkers who make solar panels and various kinds of incandescent and halogen light bulbs. The union also represents workers involved in the assembly of wind turbine towers and those who make gears, valves, engines and other components of clean energy equipment. All those job categories have had increased competition from China and other countries in recent years.

Another big American union, the International Brotherhood of Electrical Workers, with more than 700,000 members, is also involved in the installation of many clean energy systems, although the Steelworkers have not invited it or other unions to participate in their case.

The Chinese mission to the W.T.O., part of China’s commerce ministry, declined to respond this week to a series of faxed questions on whether China subsidizes clean energy exports. Those questions were submitted by The New York Times last week, in reporting for another article, before it learned of the United Steelworkers’ case.

China’s commerce ministry in Beijing has not responded to similar questions The Times first submitted in early June.

Chinese energy-policy makers, though, have said that developing a strong energy industry is a national priority that contributes to Chinese energy security. They say China is helping to address global warming by rapidly increasing its output of renewable energy equipment.

Besides Chinese government assistance to clean energy exporters in the form of free or discounted land for manufacturing plants and low-cost loans, the Steelworkers say China has broken W.T.O. rules by tightly restricting the export of so-called rare earth elements needed for the manufacture of wind turbines, solar panels and energy-saving compact fluorescent bulbs.

The filing also accuses the Chinese government of forcing foreign clean energy companies to license their technology to local partners as a condition of entry to the Chinese market.

Premier trade law firms in Washington like Dewey LeBoeuf have been gathering extensive files since early spring in preparation for possible cases by the clean energy industry.

In the 1980s, many big American companies like Kodak and industrial groups like the semiconductor industry were willing to give legal backing and financial support for trade cases against Japan, when it was still an ascending industrial power. But these days, when facing China, multinationals have been reluctant to file similar cases.

The difference is that China, unlike Japan in the ’80s, has encouraged the opening of many foreign-owned factories, making multinationals loath to file trade cases that could alienate Chinese officials and make it harder to do business there.

One of the world’s largest manufacturers of solar panels, SolarWorld of Germany, is an exception in that it is willing to criticize China. It has not moved its European or American operations to China — at least not yet — because the company has a corporate philosophy of manufacturing solar panels in the markets where it sells them.

“China is cordoning off its own solar market to fend off international competition while arming its industry with bottomless piles of subsidies and boundless lines of credit,” said Frank A. Asbeck, the chairman and chief executive of SolarWorld.

The German solar industry association has retained a law firm to review whether to file a trade case against Chinese exporters of solar panels, said Mr. Asbeck, a member of the association’s board.

In the United States, the solar industry has been largely quiet on trade actions and has not retained a law firm to advise it on the feasibility of a trade case.

So while there have been months of back-channel discussions in the United States among lawyers, administration officials and corporate executives about China’s clean energy policies, those discussions have not led to the filing of any trade cases.

Section 301 of the 1974 trade law, the provision cited by the steelworkers’ union, gives legal standing to unions as well as corporations to file trade cases. The law provided the legal basis for threats of unilateral American trade restrictions in many confrontations with Japan and South Korea through the 1980s and early 1990s.

Currently, the Steelworkers is one of the few big unions with the legal resources to challenge China — and it has nothing to fear but the loss of further jobs in the United States.

Stewart & Stewart, a Washington law firm known for filing antidumping cases at the Commerce Department, prepared the legal brief for the union. The union’s trade strategist for the case is Michael R. Wessel, best known as the trade adviser for many years to the former House Democratic leader Richard A. Gephardt, who ran for president in 1988 on a platform calling for a more assertive American trade strategy

Lead Poisoning in China: The Hidden Scourge

June 15, 2011

MENGXI VILLAGE, China — On a chilly evening early last month, a mob of more than 200 people gathered in this tiny eastern China village at the entrance to the Zhejiang Haijiu Battery Factory, a maker of lead-acid batteries for motorcycles and electric bikes. They shouldered through an outer brick wall, swept into the factory office and, in an outpouring of pure fury, smashed the cabinets, desks and computers inside.

News had spread that workers and villagers had been poisoned by lead emissions from the factory, which had operated for six years despite flagrant environmental violations. But the truth was even worse: 233 adults and 99 children were ultimately found to have concentrations of lead in their blood, up to seven times the level deemed safe by the Chinese government.

One of them was 3-year-old Han Tiantian, who lived just across the road from the plant. Her father, Han Zongyuan, a factory worker, said he learned in March that she had absorbed enough lead to irreversibly diminish her intellectual capacity and harm her nervous system.

“At the moment I heard the doctor say that, my heart was shattered,” Mr. Han said in an interview last week. “We wanted this child to have everything. That’s why we worked this hard. That’s why we poisoned ourselves at this factory. Now it turns out the child is poisoned too. I have no words to describe how I feel.”

Such scenes of heartbreak and anger have been repeated across China in recent months with the discovery of case after case of mass lead poisoning — together with instances in which local governments tried to cover them up.

In the past two and a half years, thousands of workers, villagers and children in at least 9 of mainland China’s 31 province-level regions have been found to be suffering from toxic levels of lead exposure, mostly caused by pollution from battery factories and metal smelters. The cases underscore a pattern of government neglect seen in industry after industry as China strives for headlong growth with only embryonic safeguards.

Chasing the political dividends of economic development, local officials regularly overlook environmental contamination, worker safety and dangers to public health until forced to confront them by episodes like the Haijiu factory riot.

A report by Human Rights Watch released Wednesday states that some local officials have reacted to mass poisonings by arbitrarily limiting lead testing, withholding and possibly manipulating test results, denying proper treatment to children and adults and trying to silence parents and activists.

“What we are trying to underscore is how little has been done to address the massive impact of lead pollution in China,” Joe Amon, the organization’s health and human rights director, said in an interview. “It really has affected a whole generation of kids.”

In more developed nations, where lead pollution has been tightly regulated for decades, a pattern of lead poisoning like China’s would most likely be deemed a public-health emergency.

High levels can damage the brain, kidney, liver, nerves and stomach and, in extreme cases, cause death. Children are particularly susceptible because they absorb lead more easily than adults.

“No blood lead level has been found to be safe for a child,” Dr. Mary Jean Brown, chief of the lead poisoning prevention branch of the Centers for Disease Control and Prevention, said in an interview last week.

Here, Chinese leaders have acknowledged that lead contamination is a grave issue and have raised the priority of reducing heavy-metal pollution in the government’s latest five-year plan, presented in March. But despite efforts to step up enforcement, including suspending production last month at a number of battery factories, the government’s response remains faltering.

At a meeting last month of China’s State Council, after yet another disclosure of mass poisoning, Prime Minister Wen Jiabao scolded Environmental Minister Zhou Shengxian for the lack of progress, according to an individual with high-level government ties who spoke on the condition of anonymity.

The government has not ordered a nationwide survey of children’s blood lead levels, so the number of children who are at risk is purely a matter of guesswork. Mass poisonings like that at the Haijiu factory typically come to light only after suspicious parents seek hospital tests, then alert neighbors or co-workers to the alarming results.

The few published studies point to a huge problem. One 2001 research paper called lead poisoning one of the most common pediatric health problems in China. A 2006 review of existing data suggested that one-third of Chinese children suffer from elevated blood lead levels.

The state Health Ministry said in 2006 that a nationwide test for children was unnecessary because their blood lead levels had been falling. But since then, a new source of lead pollution — factories that produce lead-acid batteries for electric bikes, motorcycles and cars — has emerged with a vengeance.

The industry has grown by 20 percent a year for the past five or six years, and is expected to expand further, according to Wang Jingzhong, vice director of the China Battery Industry Association. China now has some 2,000 factories and 1,000 battery-recycling plants. For regulators, Mr. Wang said, “It is a chaotic situation.”

Enforcement is spotty at best. Shen Yulin, the environmental protection director for Deqing County, where the Haijiu factory is located, said 65 inspectors were responsible for a region of nearly 400 square miles, with more than 2,000 factories.

Haijiu breezed through six years of inspections, even though many workers say they were repeatedly hospitalized for lead poisoning. Only after last month’s protest did authorities criticize the plant for a host of violations and order the plant closed and production lines razed.

At a press conference this month, Li Ganjie, the vice minister for environmental protection, said that every suspected case of lead poisoning is fully investigated and that “the people involved, whether they are children or adults, are well-tested and treated.”

Interviews over the past month with 20 families in Henan and Zhejiang Provinces indicate otherwise. Near Jiyuan City, in Henan Province, nearly 1,000 children from 10 villages were found to have elevated blood lead levels in 2009. Government officials ordered the children treated, families relocated and the smelters cleaned up.

But a recent visitor found children still playing in the streets of one village literally in the shadow of a privately-owned lead smelter that nightly belches plumes of dark smoke. In interviews, their parents and grandparents said that local hospitals now refuse to administer new blood lead level tests, even if the families pay out of their own pockets.

“The children are not healthy. We don’t know how sick they are, and we can’t find out,” said one 66-year-old villager whose two grandsons were found to have blood lead levels two and three times above the norm when tested in 2009.

Local officials appeared determined to suppress such complaints. Within a few hours of a visitor’s arrival this month, Jiyuan City’s propaganda chief appeared with three carloads of plainclothes officers, bringing all reporting and interviewing to a screeching halt.

That would not surprise Ye Cai’e, who lives near the Suji battery factory in Zhejiang Province, 200 miles southeast of Mengxi. After tests showed 53 children and 120 adults suffered from excessive lead levels, Ms. Ye said that local officials said: “Whoever makes noise will not receive compensation or medical treatment.”

Migrant workers and their families were also left out of the program, villagers said. Yang Fufen, 40, said her 2-year-old son tested at more than three times the allowable blood lead level in March, but has received no medical attention, apparently because her legal residence is elsewhere.

At the Haijiu Battery Factory, which exports to the United States, regulation of lead emissions was not so much lax as nonexistent.

The factory’s opening in 2005 brought more than 1,000 jobs. Local authorities allowed the plant to expand to within a rice paddy of the village. They also ignored the breakdown of ventilation equipment and the building of a hostel for workers and their spouses and children on factory grounds.

Workers say managers simply slowed down production lines when inspectors came. One worker said he had watched a supervisor cover a device that tests for lead emissions in the air with his cap, then whisk the inspectors away for tea.

It did not take long for problems to surface. Workers said they repeatedly had tested above the occupational limit for blood lead levels and were sent to the local hospital, where drugs were injected intravenously to reduce the level and toxicity of lead in their bodies.

Zhou Zuyin, 42, said he was hospitalized for treatment of lead poisoning every year for four years, returning each time to his job of smoothing the edges of lead sheets. Even after a test revealed liver damage, he said, “The factory said it was normal.”

He said his biggest worry now is his 13-year-old son’s health. A blood test showed the boy had nearly double what China considers a safe lead level. “He is getting more and more scared,” Mr. Zhou said. “I don’t know what to say to him. I just feel totally powerless.”

Zhao Guogeng, vice president of Zhejiang Haijiu Battery Co., said the company is covering the medical bills of lead victims. Authorities said the factory’s legal representative has been arrested and eight officials disciplined. “This will never happen again,” Zhang Linhua, spokesman for Deqing County, declared last Thursday.

Maybe not there. But not three days later came a dispatch from a town 55 miles southeast of Mengxi Village: 103 children and 26 adults were found to be severely poisoned by lead pollution from tinfoil processing plants, according to China’s official Xinhua news agency. Moderately poisoned: 494.

Chiyin Sim contributed reporting from Mengxi and Jonathan Ansfield contributed reporting from Beijing. Mia Li, Shao Heng and Adam Century contributed research from Beijing.

China overtakes Japan in 2Q as world's No. 2 economy amid slowdown in recovery
Hartford Courant
TOMOKO A. HOSAKA, Associated Press Writer
10:18 AM EDT, August 16, 2010

TOKYO (AP) — Japan lost its place as the world's No. 2 economy to China in the second quarter as receding global growth sapped momentum and stunted a shaky recovery.

Gross domestic product grew at an annualized rate of just 0.4 percent, the government said Monday, far below the annualized 4.4 percent expansion in the first quarter and adding to evidence the global recovery is facing strong headwinds.

The figures underscore China's emergence as an economic power that is changing everything from the global balance of military and financial power to how cars are designed. It is already the biggest exporter, auto buyer and steel producer, and its global influence is expanding.

World stock markets mostly fell Monday on Japan's second-quarter figures. Japan's benchmark Nikkei 225 stock index fell 0.6 percent, hovering close to a 13-month low. In Europe, the FTSE 100 index of leading British shares was down 0.6 percent while France's CAC-40 fell 1 percent. Germany's DAX, however, was up 0.1 percent.

In early morning trading on Wall Street, the Dow Jones industrial average fell 60.02, or 0.6 percent, to 10,242.83.

China has been a major force behind the world's emergence from deep recession, delivering much-needed juice to the U.S., Japan and Europe. Tokyo's latest numbers, however, suggest that Chinese demand alone may not be enough for Japan or other economic giants.

"Japan is the canary in the gold mine because it depends very much on demand in Asia and China, and this demand is cooling quite a bit," said Martin Schulz, senior economist at Fujitsu Research Institute in Tokyo. "This is a warning sign for all major economies that just focusing on overseas demand won't be sufficient."

China has surpassed Japan in quarterly GDP figures before, but this time it's unlikely to relinquish the lead.

China's economy will almost certainly be bigger than Japan's at the end of 2010 because of the huge difference in each country's growth rates. China is growing at about 10 percent a year, while Japan's economy is forecast to grow between 2 to 3 percent this year. The gap between the size of the two economies at the end of last year was already narrow.

Japan's nominal GDP, which isn't adjusted for price and seasonal variations, was worth $1.286 trillion in the April-to-June quarter compared with $1.335 trillion for China. The figures are converted into dollars based on an average exchange rate for the quarter.

Faced with feeble growth, Japan's government is considering fresh stimulus measures to support the economy, likely including ways to boost consumer spending on eco-friendly products, Kyodo News agency said late Monday, quoting unnamed government sources.

Japan has held the No. 2 spot after the U.S. since 1968, when it overtook West Germany. From the ashes of World War II, the country rose to become a global manufacturing and financial powerhouse. But its so-called "economic miracle" turned into a massive real estate bubble in the 1980s before imploding in 1991.

What followed was a decade of stagnant growth and economic malaise from which the country never really recovered. Prime Minister Naoto Kan now faces a long list of daunting problems: a rapidly aging and shrinking population, persistently weak domestic demand, deflation, a strong yen and slowing growth in key export markets.

In contrast, China's growth has been spectacular, its voracious appetite fueling demand for resources, machinery and products from the developing world as well as rich economies like Japan and Australia. China is Japan's top trading partner.

China's rise has produced glaring contradictions. The wealth gap between an elite who profited most from three decades of reform and its poor majority is so extreme that China has dozens of billionaires while average income for the rest of its 1.3 billion people is among the world's lowest.

Japan's people still are among the world's richest, with a per capita income of $37,800 last year, compared with China's $3,600. So are Americans at $42,240, their economy still by far the biggest.

"We should be concerned about per capita GDP," said Kyohei Morita, chief economist at Barclays Capital in Tokyo. China overtaking Japan "is just symbolic," he said. "It's nothing more than that."

But the symbolism may be exactly the "wake-up call" Japanese leaders need, said Schulz of the Fujitsu Research Institute. "Japan is always strangely inward looking," he said. "And nobody is doing anything about it."

Japan's people appear resigned to the power shift. A national poll conducted earlier this year by the Asahi, one of Japan's biggest newspapers, showed a roughly equal split between those that believed Japan's fall to No. 3 posed a major problem and those who did not. More than half of the 2,347 respondents said Japan does not need to be a global superpower.

The country's annualized growth in the second quarter was also sharply below expectations of 2.3 percent in a Kyodo news agency survey of analysts. On a quarterly basis, Japan's GDP — or the total value of the nation's goods and services — grew 0.1 percent from the January-March period, the Cabinet Office said.

Consumer spending, which accounts for about 60 percent of GDP, was flat from the previous quarter, the figures showed. Capital spending by companies rose 0.5 percent, while public investment fell 3.4 percent.

The outlook for the third quarter is uncertain. Private consumption appears to be solid so far, helped in part by unusually hot weather, said Masamichi Adachi, senior economist at JP Morgan Securities Japan. But the slowing global economy is weakening exports and production.

A stronger yen, which hit a 15-year high against the dollar last week, also poses a major risk for the country's export-driven economy. Yen appreciation reduces the value of repatriated profits for companies like Toyota Motor Corp. and Sony Corp. and makes their products more expensive abroad.

The currency worries led Finance Minister Yoshihiko Noda to say last week that he is closely monitoring foreign exchange rates. Bank of Japan Gov. Masaaki Shirakawa released a similar statement to try to calm markets.

Yuan gains but China warns it won't fix economy
21 June 2010

SHANGHAI – China followed through Monday on its pledge to allow greater flexibility in exchange rates, but said an appreciation in its currency alone could not rebalance world growth as it urged world leaders to carry out more fundamental reforms.

By late Monday, the yuan was trading at about 6.8012 to the U.S. dollar in the spot market, strengthening from 6.8272 on Friday — as the central bank delivered on its weekend promise to give up the dollar peg imposed two years ago to help Chinese exporters cope with the global downturn.  For the past two years, Beijing has kept the yuan trading in a much narrower band around 6.83 to $1.  But analysts said the move was mainly aimed at countering criticism of Beijing's currency policies ahead of this weekend's summit of the Group of 20 leading economies and would not result in any significant shifts in exchange rates. The yuan is still subject to a 0.5 percent daily trading range, limiting potential volatility.

"The yuan will gain very soon, but definitely not much. It was more of a strategic maneuver to silence outside criticism," said Qian Qimin, a market analyst at Shenyin Wanguo Securities, in Shanghai.

The central bank said plans to allow greater currency flexibility were in line with China's own needs and would help Beijing fight inflation, encourage manufacturers to improve efficiency and reduce the country's reliance on exports as a key driver for growth.  China's economy surged 11.9 percent in the first quarter of this year and exports jumped by nearly 50 percent over a year earlier in May, despite expectations that Europe's debt crisis would hit demand in the 27-nation European Union, China's biggest trading partner.

"The large trade surplus gives the government confidence and room to loosen controls over the exchange rate," Qian said, since a stronger yuan would make Chinese exports more expensive.

The announcement by the People's Bank of China that it would revert to relying on a basket of currencies that includes the U.S. dollar to determine the exchange rate, rather than the dollar alone, reflects a return to policies in force before the global financial crisis walloped Chinese manufacturers in 2008, putting millions of workers out of their jobs.

But while it has pledged to keep moving gradually toward more market-based exchange rates, Beijing still insists that its policy of keeping the currency stable is crucial for economic recovery, ruling out any significant one-off revaluations.

"The official announcement should be interpreted first and foremost as an important signal towards a more flexible exchange rate, rather than a significant revaluation of the Chinese yuan," UBS economist Wang Tao said in a report on the change.

China let the yuan to rise by about 20 percent beginning in 2005, but halted its rise in 2008. The government sets the rate each day before the start of trading and retains powerful tools to control its movement.  Many countries have slammed Beijing for this policy, complaining that an undervalued yuan unfairly drives down the price of Chinese products and makes them impossible to compete with.  China has sought to deflect this criticism, noting that the causes of the global crisis lay well beyond its door, and a commentary Monday by the official Xinhua News Agency said the G-20 leaders must focus on more urgent global reforms.

"If they cannot make good use of the coming G20 summit to press ahead with the much-needed overhaul of the global financial system, the international community will soon find to its disappointment that its leaders look only for red herrings, rather than real solutions, at a time when true leadership is badly needed," it said.

Regional markets gained Monday, as investors relieved of uncertainty over China's currency policy bought airlines and other heavyweight shares.

"The markets were boosted because investors are becoming less risk averse than before. They are more aggressive," said Ben Kwong Man Bun, chief strategist for KGI Securities in Hong Kong.

While foreign manufacturers have welcomed the relief a stronger yuan would bring, exporters in China, already operating on razor-thin margins, were less pleased.

"The exchange rate problem is one we would have to face sooner or later. That is a fact we have to accept," said Bai Ming, deputy general manager of Zhejiang Mingfeng Car Accesories Co., which exports car covers to the Americas, Europe and South Korea.

Bai, whose factory employs 950 people, said his company's export orders were outpacing his capacity to meet them. But with labor and other costs rising, the company will have to find a ways to stay competitive.

"What we are trying to do is to raise productivity and save costs. We cannot just sit back and wait," he said.

Open house Sunday for new Mandarin language school in Weston
Weston FORUM
Written by Aline Weiller
Saturday, 05 June 2010 00:00

Grace Brennan, director of Happy Panda Mandarin School, will host an open house on Sunday, June 6.
A native of China, Grace Brennan has announced the opening of Happy Panda Mandarin School, a language instruction program based in her Weston home. Ms. Brennan recently launched her school and is hosting an open house on Sunday, June 6, from 2 to 4.

Ms. Brennan grew up in Shanghai, where she was a national fencing champion at age 12. She moved to the United States in the mid-90s to attend San Mateo College, where she majored in business and studied English as a second language.

She later returned to Shanghai and began a career in real estate management, then met her American husband, Jason, who worked in Hong Kong. They married and stayed overseas until their 2004 return to the States.

Now a mother of three, Ms. Brennan wants to bring both her native tongue and China’s culture to her family and beyond.

“My children are my inspiration and have fueled my passion to teach Mandarin Chinese and share my cultural traditions,” she said.

During her time in Fairfield County, Ms. Brennan has noticed a demand for Mandarin Chinese due in part to the presence of families with parents or adopted children of Chinese origin. And so, the Happy Panda Mandarin School was born.

Ms. Brennan’s school incorporates aspects of Chinese culture such as history and cooking. “You will leave Happy Panda knowing about the Great Wall of China, how to paint with Asian writing brushes, and using chopsticks. Our program goes beyond teaching the national language,” said Ms. Brennan. “I want students to feel a true connection to China.”

Children four and older are eligible for the school, private lessons are available for adults, and enrollment is year-round. Classes are 90 minutes long and are offered on Mondays, Wednesdays, and Fridays, 4-5:30. The school’s summer hours, 10-11:30 a.m., will begin Monday, June 28. Ms. Brennan will work to accommodate adults seeking lessons at a different time slot

Beginning, intermediate and advanced levels of instruction are offered and the curriculum spans three months.

The Happy Panda Mandarin School is at 188 Davis Hill Road. For additional information or to register, call Grace Brennan at 203-227-8088 or e-mail grace.brennan@yahoo.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

A horse of a different color...or is it a Trojan donkey?

Cyberattack on Google Said to Hit Password System
April 19, 2010

Ever since Google disclosed in January that Internet intruders had stolen information from its computers, the exact nature and extent of the theft has been a closely guarded company secret. But a person with direct knowledge of the investigation now says that the losses included one of Google’s crown jewels, a password system that controls access by millions of users worldwide to almost all of the company’s Web services, including e-mail and business applications.

The program, code named Gaia for the Greek goddess of the earth, was attacked in a lightning raid taking less than two days last December, the person said. Described publicly only once at a technical conference four years ago, the software is intended to enable users and employees to sign in with their password just once to operate a range of services.

The intruders do not appear to have stolen passwords of Gmail users, and the company quickly started making significant changes to the security of its networks after the intrusions. But the theft leaves open the possibility, however faint, that the intruders may find weaknesses that Google might not even be aware of, independent computer experts said.

The new details seem likely to increase the debate about the security and privacy of vast computing systems such as Google’s that now centralize the personal information of millions of individuals and businesses. Because vast amounts of digital information are stored in one place, popularly referred to as “cloud” computing, a single breach can lead to disastrous losses.

The theft began with an instant message sent to a Google employee in China who was using Microsoft’s Messenger program, according to the person with knowledge of the internal inquiry, who spoke on the condition that he not be identified.

By clicking on a link and connecting to a “poisoned” Web site, the employee inadvertently permitted the intruders to gain access to his (or her) personal computer and then to the computers of a critical group of software developers at Google’s headquarters in Mountain View, Calif. Ultimately, the intruders were able to gain control of a software repository used by the development team.

The details surrounding the theft of the software have been a closely guarded secret by the company. Google first publicly disclosed the theft in a Jan. 12 posting on the company’s Web site, which stated that the company was changing its policy toward China in the wake of the theft of unidentified “intellectual property” and the apparent compromise of the e-mail accounts of two human rights advocates in China.

The accusations became a significant source of tension between the United States and China, leading Secretary of State Hillary Rodham Clinton to urge China to conduct a “transparent” inquiry into the attack. In March, after difficult discussions with the Chinese government, Google said it would move its mainland Chinese-language Web site and begin rerouting search queries to its Hong Kong-based site.

Company executives on Monday declined to comment about the new details of the case, saying they had dealt with the security issues raised by the theft of the company’s intellectual property in their initial statement in January.

Google executives have also said privately that the company had been far more transparent about the intrusions than any of the more than two dozen other companies that were compromised, the vast majority of which have not acknowledged the attacks.

Google continues to use the Gaia system, now known as Single Sign-On. Hours after announcing the intrusions, Google said it would activate a new layer of encryption for Gmail service. The company also tightened the security of its data centers and further secured the communications links between its services and the computers of its users.

Several technical experts said that because Google had quickly learned of the theft of the software, it was unclear what the consequences of the theft had been. One of the most alarming possibilities is that the attackers might have intended to insert a Trojan horse — a secret back door — into the Gaia program and install it in dozens of Google’s global data centers to establish clandestine entry points. But the independent security specialists emphasized that such an undertaking would have been remarkably difficult, particularly because Google’s security specialists had been alerted to the theft of the program.

However, having access to the original programmer’s instructions, or source code, could also provide technically skilled hackers with knowledge about subtle security vulnerabilities in the Gaia code that may have eluded Google’s engineers.

“If you can get to the software repository where the bugs are housed before they are patched, that’s the pot of gold at the end of the rainbow,” said George Kurtz, chief technology officer for McAfee Inc., a software security company that was one of the companies that analyzed the illicit software used in the intrusions at Google and at other companies last year.

Rodney Joffe, a vice president at Neustar, a developer of Internet infrastructure services, said, “It’s obviously a real issue if you can understand how the system works.” Understanding the algorithms on which the software is based might be of great value to an attacker looking for weak points in the system, he said.

When Google first announced the thefts, the company said it had evidence that the intrusions had come from China. The attacks have been traced to computers at two campuses in China, but investigators acknowledge that the true origin may have been concealed, a quintessential problem of cyberattacks.

Several people involved in the investigation of break-ins at more than two dozen other technology firms said that while there were similarities between the attacks on the companies, there were also significant differences, like the use of different types of software in intrusions. At one high-profile Silicon Valley company, investigators found evidence of intrusions going back more than two years, according to the person involved in Google’s inquiry.

In Google’s case, the intruders seemed to have precise intelligence about the names of the Gaia software developers, and they first tried to access their work computers and then used a set of sophisticated techniques to gain access to the repositories where the source code for the program was stored.

They then transferred the stolen software to computers owned by Rackspace, a Texas company. Rackspace, which had no knowledge of the transaction, offers Web-hosting services. It is not known where the software was sent from there. The intruders had access to an internal Google corporate directory known as Moma, which holds information about the work activities of each Google employee, and they may have used it to find specific employees.

Report: China hackers stole key Google program
20 April 2010

NEW YORK – Computer hackers stole a program that controlled access to most of Google Inc.'s services when they attacked the Internet company late last year, according to a report published late Monday.

The story in The New York Times provided more details about an intrusion that provoked a politically charged showdown between Google and China's government over Internet censorship and computer security.

The Times said it obtained the information from an unnamed person with direct knowledge of the investigation into the break-in that Google has traced to China.

Google declined to comment specifically on the Times' story. A spokeswoman reiterated Google's previous assertions that the attacks on the company didn't obtain any personal information from its users' e-mail accounts.

The stolen password system was called Gaia, a reference to the Greek goddess of earth, according to the Times. Besides e-mail, Gaia also governed access to the online services that Google sells to businesses, government agencies and schools.

Without providing specifics, Google acknowledged some of its intellectual property had been stolen when it announced the hacking attacks in January. The heist prompted Google to tighten its computer security.

At least 20 other companies were targeted in similar attacks, according to Google.

The breach incensed Google so much that the company decided to protest the country's laws dictating the censorship of Internet search results deemed to be subversive or pornographic by the government. Google started censoring in China four years ago when it set up a search engine inside of the country to gain better access to the world's largest Web audience.

After unsuccessfully trying to negotiate a compromise with China's ruling party, Google last month began to shift search requests from mainland China to Hong Kong, where online censorship isn't required.

China May inflation rises, industrial growth slows
By JOE McDONALD, AP Business Writer
Fri Jun 11, 3:20 am ET

BEIJING – China's inflation rose in May amid signs its rebound from the global slump is slowing, adding to pressure on Beijing to keep growth on track and control politically sensitive prices.

Consumer prices rose 3.1 percent from a year earlier, up from April's 2.8 percent rate, the National Bureau of Statistics said Friday. Growth in investment and factory output slowed but still was at double-digit levels.

Rising inflation has prompted concern Beijing might hike interest rates or take other steps to cool growth that hit 11.9 percent in the first quarter. That could affect the United States, Europe and others that look to China, the world's No. 3 economy, to help drive demand for their iron ore, factory machinery and other exports.

A statistics bureau spokesman rejected suggestions China might face "stagflation" — a damaging mix of rising prices and slowing growth. He said inflation pressure was easing and the communist government can hit its target of holding full-year inflation to 3 percent.

"There is no problem of stagnation," said the spokesman, Sheng Laiyun, at a news conference. He said the economy's "three driving forces" — trade, investment and consumer spending — "are still rising."

Analysts expect China's rapid expansion to slow as the initial impact of its 4 trillion yuan ($586 billion) stimulus wanes. The World Bank's forecast for full-year growth is 9.5 percent.

Slower growth could complicate efforts to control prices because the standard tool of rate hikes might further chill economic activity.

"In the second half of the year, growth is going to be slightly disappointing, inflation is going to be slightly too high," said Tom Orlik, an analyst in Beijing for Stone & McCarthy Research Associates. "That clearly puts the Chinese government in a policy quandary."

May exports surged by nearly 50 percent over a year earlier but analysts expect trade to weaken as Europe's debt crisis cuts demand in the 27-nation European Union, China's biggest trading partner.

May inflation was driven by a 6.1 percent rise in food costs, a sensitive issue in a country where some families spend half their incomes on food. Wholesale inflation accelerated to 7.1 percent from April's 6.8 percent rate, suggesting shoppers might face higher prices as retailers pass on rising costs.

May growth in investment in factories and other fixed assets — seen as an indicator of future growth — slipped from April's 26.1 percent expansion to 25.9 percent, the statistics bureau reported. Growth in industrial output declined for a third month, falling to 16.5 percent from the previous month's 18.8 percent expansion.

Investment growth has been dampened by government curbs aimed at cooling a credit boom and surging housing costs. Regulators also want to block overspending on industries such as steel in which production capacity already exceeds demand.

Total lending by Chinese banks in May shrank by 17 percent from April's level to 639.4 billion yuan, ($93.6 billion), the central bank reported.

Financial markets have been rattled by concerns the government might further tighten access to credit. China's main stock index has shed 4 percent since May 25.

Two monthly surveys of industrial activity released earlier showed Chinese manufacturing growth slowing in May on sluggish new orders.

In a positive sign, growth in retail sales accelerated slightly in May to 18.7 percent from April's 18.5 percent rate.

Spotlight Complicates China Steps on Currency
April 13, 2010

HONG KONG — Even as China’s leaders appear to have reached a consensus that the nation’s currency policy must change, the timing of any shift has been complicated by surging nationalism, a media frenzy in China over the issue and visits by top officials on each side to Beijing and Washington in recent days.

China has spent several trillion renminbi over the past 21 months to prevent its currency from rising against the U.S. dollar. American lawmakers have become increasingly critical of the policy, complaining that it keeps Chinese exports artificially cheap.

The Chinese news media, which have far more freedom to report on economic issues than political ones, have framed the currency issue mainly in terms of protecting Chinese sovereignty. That has prompted a series of assurances by Chinese officials over the past four days that China will not be pushed by foreign pressure into doing anything against its own interests.  President Hu Jintao told President Barack Obama in Washington on Monday that China would set its currency policy according to its own social and economic development needs, according to Xinhua, the official China news agency.

Xinhua, the People’s Daily newspaper and Chinese state television all gave prominent coverage to what they described as an assurance by Mr. Obama to Mr. Hu that the United States respected Chinese sovereignty regarding the currency. White House officials confirmed that the two leaders had talked about the currency but provided few details.

Mr. Hu’s visit to Washington followed a brief trip by the U.S. Treasury secretary, Timothy Geithner, to Beijing last week, which drew considerable attention to the currency issue even though he tried to keep a low profile. Mr. Geithner flew into the airport, met with Vice Premier Wang Qishan at the airport VIP lounge and quickly left without making any public statements.

U.S. officials have been concerned that public opinion in China against revaluing the currency may make it harder for the government to act. Robert Hormats, the U.S. undersecretary of state for economic, energy and agricultural affairs, said during a visit to China over the weekend that a flurry of public discussion about the renminbi late last week had proved “counterproductive.”

Over the weekend, blogs in China lit up over the issue. One writer, who identified himself as Xiang Songzuo, said Saturday that the American motive in seeking revaluation was “to create an economic bubble and financial crisis in China and to attack the progress China has made toward industrialization, urbanization and modernization.”

Although allowing the renminbi to appreciate would make Chinese-made goods more expensive overseas, many economists, both in China and in the West, say revaluation would be in China’s interest. Appreciation of the currency would help control inflation, limit China’s need to purchase low-yielding U.S. Treasury bonds and free China to raise interest rates to halt an emerging real estate bubble.

Investment bank economists are generally skeptical that China will change its currency policy before June, and possibly not until even later. People close to Chinese policy makers say that officials would prefer to do it much sooner, but that it became impossible to act in the days before Mr. Hu’s visit to Washington, as the issue suddenly drew broad public attention.  Mr. Hu’s trip to Washington for a nuclear security summit meeting has made any immediate policy shift more difficult, added these people, who asked not to be identified by name because of the financial and diplomatic sensitivity of the issue.

An official close to Chinese currency policy makers said that Mr. Geithner’s visit had also made it harder to handle the issue quietly.

Several people close to Chinese policy makers said that the matter had been made complicated by an article last week in The New York Times, of which the International Herald Tribune is the global edition. That article stirred news media interest by reporting that Chinese officials were very close to announcing a shift in currency policy and might even act before Mr. Hu’s Washington visit if no glitch emerged.

The problem for Chinese officials is that the sovereignty issue re-emerged just as they had finally reached consensus that it was in China’s economic interest to make the exchange rate more flexible and allow the renminbi to appreciate gradually against the dollar, people with knowledge of the Chinese policy development said.

The course of the Chinese policy debate can be tracked in public comments by Commerce Ministry officials.  Through the National People’s Congress in Beijing in mid-March and in the following weeks, senior Commerce Ministry officials had led a chorus of criticism of the United States and vowed steadfast resistance to any change in the value of the renminbi. The Commerce Ministry is very closely aligned with exporters, even measuring its success by how quickly exports increase.

On March 21, Commerce Minister Chen Deming warned that China would post a trade deficit for the month, its first in nearly six years, and said that pressuring China to change its currency policy was “irrational” in light of the trade gap.  China’s vice commerce minister, Zhong Shan, visited Washington three days later and said that appreciation of the renminbi was “not a good recipe for solving problems.” The ministry even distributed to journalists the cellphone numbers of Chinese academic experts on trade and currency policy, in an attempt to influence public opinion in China and abroad.

But the Commerce Ministry did an about-face at the end of last week. Shortly before the customs agency disclosed Saturday that China did indeed run a $7.2 billion deficit in March, Mr. Chen declared that the deficit was “only a blip on the radar and will in no way hamper the country’s strong economic growth.” He added that China would resume trade surpluses in the months ahead.

Zhou Xiaochuan, the governor of China’s central bank, also seemed to lend support to the idea of a stronger currency when he said over the weekend that fighting inflation was the central bank’s top priority. A weak currency tends to fan inflation, by making imported goods more expensive.

Geithner to visit Beijing amid currency dispute
By AIJAZ ANSARI, Associated Press Writer
April 7, 2010

MUMBAI, India – U.S. Treasury Secretary Timothy Geithner will visit Beijing for talks with a Chinese vice premier for economic affairs on Thursday, Geithner's spokesman said, in a sign the two sides are moving toward settling a dispute over China's currency controls.

Geithner will meet with Vice Premier Wang Qishan, spokesman Andrew Williams said Wednesday, as the Treasury secretary ended a two-day visit to India.

"The secretary and the vice premier have been working together to find an opportunity to meet for some time," Williams told reporters in Mumbai, the Indian financial capital.

Williams gave no details of the agenda, but the decision to hold such a high-level encounter suggested Washington and Beijing are moving toward settling the currency dispute, which has threatened to overshadow cooperation on the global economy, Iran's nuclear program and other issues.

Washington and other Chinese trading partners are pressing Beijing to ease exchange rate controls that they say keep its yuan undervalued, giving China's exporters an unfair price advantage and swelling its multibillion-dollar trade surplus. Some American lawmakers want punitive tariffs on Chinese imports if Beijing fails to act.

In another sign of warming ties, Chinese President Hu Jintao is due to hold talks with President Barack Obama during an April 12-13 visit to Washington for a nuclear security summit.

"After a time of disturbance and unpleasantness, Chinese-U.S. relations are entering a track of getting closer to one another," said Liu Jiangyong, a professor at the Institute of International Studies at Beijing's Tsinghua University. "I hope the Geithner visit could promote understanding."

The Obama administration delayed a report to Congress due April 15 in which it had the option of citing Beijing as a currency manipulator, a designation that could lead to a World Trade Organization complaint and possible trade sanctions. The White House denied the delay had anything to do with seeking Chinese support for penalties over Iran's nuclear program.

Obama vowed in February to press for an end to exchange rate systems that he said depress the value of currencies and harm U.S. companies.

Chinese Premier Wen Jiabao, the country's top economic official, and others have publicly rejected foreign pressure over the yuan, and Wen said in March the currency was not undervalued.

But economists expect Beijing to allow the yuan to rise some time this year in order to ease strains in its own economy. A stronger yuan would increase the buying power of Chinese consumers, helping to increase domestic consumption and reducing reliance on exports.

Beijing tied the yuan to the dollar for decades but broke that link in 2005 and allowed it to rise by about 20 percent through late 2008. The government slammed on the brakes after the crisis hit and has held its currency steady against the greenback to help exporters compete as a plunge in global demand wiped out millions of Chinese factory jobs.

The United States and Europe downplayed currency complaints as they worked together with Beijing to revive global growth. But facing pressure to create jobs, they and governments as farflung as Brazil have renewed demands for China to act.

On Tuesday, a Chinese foreign ministry spokeswoman, Jiang Yu, said Beijing never has manipulated the yuan's exchange rate for profit.

On his India trip, Geithner met with Prime Minister Manmohan Singh and his counterpart, Finance Minister Pranab Mukherjee and entrepreneurs and chief executives of leading companies.

Mukherjee and Geithner presided over the first meeting of the U.S.-India Economic and Financial Partnership to promote trade and investment. The initiative is part of the Obama administration's efforts to forge closer relations with India, a fast-growing economy, the most populous democracy and a stable ally in a complex region.

China trims holdings of Treasury securities
By MARTIN CRUTSINGER, AP Economics Writer Martin
15 March 2010

WASHINGTON – China retained its spot as the biggest foreign holder of U.S. Treasury debt in January even as it trimmed its holdings for a third straight month. The string of declines underscored worries that the U.S. government could face much higher interest rates to finance soaring budget deficits.

The Treasury Department said Monday that China's holdings dipped by $5.8 billion to $889 billion in January compared with December. Japan, the second-largest foreign holder of U.S. government debt, also trimmed its holdings but by a much smaller $300 million, to $765.4 billion.

Net foreign purchases of long-term securities, a category that includes both government and corporate debt, totaled $19.1 billion in January, as net purchases of private corporate bonds fell by $24.8 billion, the biggest drop on record.

A month ago, Treasury initially reported that China had cut its holdings so sharply that it had lost its top spot as America's largest foreign creditor, a position it had held since its holdings overtook Japan in September 2008.

However, 10 days later, Treasury released its annual update of the figures. The revised data showed that China, while reducing its holdings, still retained the top spot. Treasury revises the data based on more detailed readings of the statistics, which do a better job of sorting out actual ownership of the bonds. This review determined, for example, that some bonds credited to Britain because they were purchased there were actually purchased on behalf of Chinese investors.

The decline in Chinese holdings is coming at a time of increased tensions between the two nations. Chinese Premier Wen Jiabao on Sunday rejected American pressure on China to allow its currency to rise in value against the dollar, saying such efforts amounted to a kind of trade protectionism.

A group of 130 House members sent a letter to the administration on Monday urging the Treasury Department to cite China as a currency manipulator in a report that is scheduled to be released next month. The group also called on the Commerce Department to impose trade sanctions on China on the basis that its currency system was an unfair trade practice.

"If the administration fails to act on this issue it will hold back our economic recovery and hurt the ability of American small businesses and manufacturers to increase their production, keep their doors open and create jobs," said Rep. Mike Michaud, D-Maine, one of the signers of the letter.

Treasury spokeswoman Natalie Wyeth said Treasury was still reviewing the congressional letter. She said there would be no direct response to Wen's comments beyond President Barack Obama's comments in a trade speech last week. Obama said that China would make an "essential contribution" to rebalancing the global economy by moving to a more market-oriented currency regime.

The Obama administration is hoping China will resume allowing its currency to rise in value against the dollar as a way of trimming the huge trade gap between the two nations. The United States ran a deficit of $226.8 billion with China last year, the largest deficit recorded with any country. A cheaper dollar would make American products less expensive in China while making Chinese goods more expensive for American consumers.

Treasury's latest report on international capital flows showed that foreign holdings of Treasury securities increased by $17 billion in January to $3.71 trillion.

While China and Japan decreased their holdings, oil exporting countries boosted their holdings to $218.4 billion, up from $207.4 billion in December, and holdings of Treasury securities in Great Britain rose to $206 billion, up from $178.1 billion.

Rick McDonald, an economist at Action Economics, said the January report reflected a normalization of purchasing activities following a two-year credit crisis in which investors had flocked to the safety of U.S. securities in the wake of severe turmoil in global financial markets.

Julian Jessop, chief international economist at Capital Economics, said the Treasury report just affirmed market information in January that showed the dollar rising in value against most currencies with Treasury interest rates falling. Jessop said this pattern did not support concerns that foreigners were losing their appetite for U.S. bonds.

Strong foreign demand for U.S. Treasury debt helps to keep the interest rates that the government pays for that debt from rising. However, there are other factors that influence U.S. interest rates beyond foreign demand, including decisions by the Federal Reserve.

Fed policymakers have kept a key short-term interest rate at a record low of zero to 0.25 percent for more than a year and many economists believe that the Fed will continue to pledge to keep rates exceptionally low as a way to boost the economy when they conclude their regular meeting on Tuesday.

The federal budget deficit hit an all-time high of $1.4 trillion in 2009, and the Obama administration is projecting that this year's deficit will climb even higher to $1.56 trillion. But the administration is also pledging to get the deficits under control once the economy has resumed sustained growth.

Chinese Leader Firmly Defends Currency and Trade Policies
March 14, 2010

BEIJING — Premier Wen Jiabao sharply defended China’s currency and trade policies on Sunday against what he called foreign “finger-pointing,” charging instead that the developed world seeks to force unfair changes in those policies “just for the purposes of increasing their own exports.”

Mr. Wen’s remarks, which echoed a rebuke on Thursday by one of China’s central bankers, were perhaps the sharpest yet in a brewing disagreement between Beijing and Washington over the two nations’ economic positions.

In a more than two hour news conference at the close of China’s annual legislative session, Mr. Wen repeated that China will keep its currency, the renminbi, “basically stable” despite calls by the United States and other developed nations to let its value increase.

He also repeated the concerns he voiced a year ago, at China’s last legislative session, that the United States is failing to rebuild its own economy and maintain the value of the dollar. Protecting the dollar, which dropped sharply since the global crisis began in late 2008, is a matter of “national credibility” for the United States, he said.

“Any fluctuation in the value of the U.S. currency is a big concern for us,” he said. “I hope the United States will take concrete steps to reassure investors. It is not only in the interests of the investors, but also the United States itself.”

Chinese leaders fear that the United States’ vast budget deficits will lead to inflation that effectively devalues the dollar, and thus the value of China’s vast foreign-currency reserves. Those reserves exceeded $2.4 trillion at the end of 2009, with nearly $900 billion of that in dollar-denominated Treasury bills.

Mr. Wen’s most pointed remarks, however, were aimed at critics of China’s economic policies, led by the United States. Those critics accuse China of keeping the value of its currency artificially low, so that its exports will remain cheap compared to other nations’ competing products. That boosts China’s economy, but at the expense of other trading partners, they say.

China has pegged the renminbi to the declining value of the dollar since the economic crisis began in late 2008. Were it to let the market judge the renminbi’s value, critics say, the currency — and the cost of Chinese products — would rise.

In Sunday’s news conference, Mr. Wen bluntly rejected that view. Instead, in remarks that seemed aimed at the United States, he accused unnamed competitors of trying to bail out their own slumping economies by hamstringing the Chinese juggernaut.

“I understand some economies want to increase their exports,” he said, “but what I don’t understand is the practice of depreciating one’s own currency and attempting to force other countries to appreciate their own currencies, just for the purpose of increasing their own exports.”

That amounts to trade protectionism, he said, and “all countries should be fully alarmed by such developments.”

Some economic analysts were struck by the comments.

“I think it’s my first time hearing government officials saying that. Basically, Premier Wen said it’s a kind of protectionism to ask other countries to appreciate their currency and depreciate their own currency,” Shen Minggao, the chief China economist for Citibank in Hong Kong, said in a telephone interview. “In that sense, it’s a new understanding of currency policies.”

Mr. Wen argued that the renminbi is not unfairly valued, citing government calculations that suggested that, measured in real terms, China’s currency had actually risen in value at the height of the economic crisis.

One leading Chinese economist, Bai Chong-En of Beijing’s Tsinghua University, said in an interview on Sunday that for a broad range of technical reasons, he does not believe that the renminbi is seriously undervalued. But he also suggested that Western jawboning to revalue the currency is having the opposite effect.

“The greater the outside pressure, the more difficult it is for the Chinese government to raise the exchange rate, and the more difficult it is for the Chinese people to accept a revaluation of the Chinese currency,” he said. “People don’t like to be forced to change things. They have be willing to do it.”

In his wide-ranging news conference, which drew on both Chinese and foreign questioners, Mr. Wen repeated some boilerplate government positions — China is an underdeveloped nation that will need a century or more to reach advanced status, he said — and a few new ones.

Addressing a chorus of complaints by foreign investors, he said China will “put in place institutional arrangements to level the playing ground” for foreign companies in China, and promised to personally meet with foreign business leaders during his final years in office. Some of China’s economic stimulus measures, such as subsidizing purchases of new automobiles and home appliances, applied to products by foreign as well as domestic manufacturers, he noted.

He also said that he had been excluded from a crucial meeting of world leaders at last year’s Copenhagen conference on climate change, and had not deliberately skipped the meeting, as some at the conference charged. Mr. Wen’s absence from that session, which was attended by President Obama and other leaders, has been touted by critics as a symbol of China’s intransigence on climate issues at the conference, which ended without reaching many of its key goals.

“Why was China not notified of this meeting? So far no one has given us any explanation about it, and it still is a mystery,” he said.

Mr. Wen’s news conference was broadcast nationally, but in Beijing, that reply and several following minutes of the broadcast were abruptly cut off by what was described as a loss of the television signal.

Li Bibo contributed research in Beijing.

Economy the focus as China political session ends
By CARA ANNA, Associated Press Writer
13 March 2010

BEIJING – Mao Zedong's grandson couldn't have put it more simply. China's biggest challenge? "Economic development," he said, as the nation's most public political meetings end with sweeping goals to expand growth — and help more Chinese enjoy it.

Mao's grandson, Mao Xinyu, and thousands of other delegates have sat patiently through more than a week of what's essentially a display of political unity: the annual sessions of the national legislature and a government advisory body that end Sunday. But the issues behind the speeches — employment, social security, corruption — are grindingly real.

The world's third-largest economy may have escaped the worst of the global financial crisis by ordering $1.4 trillion in bank lending and government stimulus, but major problems remain for the country's 1.3 billion people.

Before its closing Sunday, the National People's Congress will approve a budget with a more than 10 percent boost in spending to fuel the economic recovery, with more money for low-cost housing, extending pension coverage and other social programs. Premier Wen Jiabao, the country's top economic official, will hold a rare news conference.

The priorities continue Wen and President Hu Jintao's yearslong efforts to spread the benefits of economic growth more broadly across a rapidly changing society. This year, inflation is a challenge. Property prices are soaring. The rich-poor gap is increasing and increasingly contentious. Millions of migrant workers and farmers go without basic government aid.

Any of those issues could lead to social unrest — one of the ruling Communist Party's biggest fears. This year's session had the usual heavy police presence in Beijing, with dozens of activists reportedly harassed or detained.

Other economic problems worry the international business community. Consumer demand in China remains anemic, and generous bank lending may be creating bubbles in stock and real estate prices.

China's own state-controlled media has shown signs of being more assertive on issues important to the public.

Just before this year's meetings started, more than a dozen newspapers published a rare joint editorial demanding changes to the outdated household registration system that essentially labels each person as urban or rural. It has kept millions of people from the countryside who work in cities from getting basic government aid.

The editorial's co-author, however, was quickly punished and apparently lost his job.

The media also leapt on an incident that happened on the sidelines of the meetings, when the governor of the central province of Hubei angrily called a Beijing reporter's question "senseless" and reportedly took away her tape recorder.

The story spread quickly online and people asked whether the governor, Li Hongzhong, should apologize.

The debate "has strong echoes of the inability of communist states in Eastern Europe to control the media as social and economic liberalization took hold," said Bruce Gilley, a China politics expert at Portland State University.

In one gesture aimed at narrowing the rural-urban gap at the root of several issues, Sunday's session is expected to pass an amendment to the election law to improve representation for rural areas. At the moment, one rural delegate to the National People's Congress represents four times as many people as an urban one.

Such a change is mostly symbolic. National and local legislatures generally adopt decisions made behind closed doors by Communist Party leaders.

China Shows Little Patience for U.S. Currency Pressure
February 5, 2010

BEIJING — A senior Chinese official said on Thursday that China would not bow to pressure from the United States to revalue its currency, which President Obama says is kept at an artificially low level to give China an unfair advantage in selling its exports.

The official, Ma Zhaoxu, a Foreign Ministry spokesman, said at a regular news conference here that “wrongful accusations and pressure will not help solve this issue.”

Mr. Ma was reacting to remarks on trade that Mr. Obama made on Wednesday when he met with Democratic senators in Washington. Mr. Obama stopped short of saying China manipulates its currency, but his words on China’s economic policies were harsh — the United States, he said, has “to make sure our goods are not artificially inflated in price and their goods are not artificially deflated in price; that puts us at a huge competitive disadvantage.”

Economists agree with that assessment. They say that the Chinese currency, the renminbi, is undervalued by 25 to 40 percent compared to the dollar and other currencies. The gap is wider than at any time since July 2005, when the Chinese government, under pressure from the Bush administration, decided to the do away with the renminbi’s peg to the dollar and allow the currency to float in a narrow band against the dollar and other currencies.

The renminbi appreciated 21 percent, but since July 2008 it has remained at the same value — today, one dollar equals about 6.83 renminbi, also called the yuan.

“Judging from the international balance of payments and the currency market’s supply and demand, the value of the renminbi is getting to a reasonable and balanced level,” Mr. Ma said on Thursday.

The sharp exchange over China’s currency is only the latest symptom of rising tensions in American relations with China. Internet censorship, hacking attacks directed at American companies, arms sales to Taiwan and the pending visit of the Dalai Lama to Washington have all cropped up in the last month as points of conflict. China is exhibiting a brash sense of confidence as its economy continues to boom while much of the world remains mired in a recession.

On economics, Chinese officials now regularly lecture their American counterparts on the need to maintain the value of the American dollar. China, which has more than $2.4 trillion in foreign exchange reserves, is the largest holder of American debt. On Wednesday, Xinhua, the official state news agency, .the official state news agency said Chinese economists are concerned that the American government, suffering from a record budget deficit, could print more dollars and issue more bonds, eroding the value of the dollar.

The finger-wagging from the American side is almost certain to intensify too. With mid-term elections this fall, Mr. Obama is under pressure to alleviate the high unemployment rate in the United States. Mr. Obama said last week in his State of the Union speech that he hoped to double American exports within five years.

In China, the export industry is a large employer in the coastal regions and draws hordes of migrant workers from interior provinces. Exports have slowed considerably since the global financial crisis began, and Chinese leaders and economists have been saying that domestic consumption should become a larger part of the economy.

Last year, the Chinese economy grew by 8.7 percent, surpassing the 8 percent benchmark set by the government and indicating that China was managing to push through the global recession with little damage. A large driver of the growth was domestic spending — the Chinese government announced in November 2008 a stimulus package worth $585 billion.

But the spending, along with in-flows of foreign currency through private investments and speculation, what some economists call “hot money,” is fueling inflation. The consumer price index in the fourth quarter of 2009 was 1.9 percent. Fears of an overheated economy could lead the Chinese government to revalue the renminbi later this year to help contain inflation.

In late January, Jim O’Neill, the chief economist at Goldman Sachs, told Bloomberg News that he expected the Chinese government to make a one-off revaluation of the renminbi, letting it appreciate by at least five percent before the end of 2010. He said the revaluation will happen suddenly, without any warning from Chinese leaders.

Reopening the battle with Beijing over its currency may pay political dividends for Mr. Obama at a time of double-digit unemployment and growing fears that China is stealing American jobs. But experts say the president will have even less leverage over Beijing than President George W. Bush did. Mr. Bush prodded China for years to adjust its exchange rate with little success.

China, they say, is determined to reignite its export machine after a global recession that sapped demand for Chinese goods. A cheap currency is vital to that goal. And as indicated by Mr. Ma’s statement on Thursday, China’s leaders have grown impatient with lectures on economic policy from their chief debtor, the United States.

“It will be like water off a duck’s back,” said Nicholas R. Lardy, a China expert at the Peterson Institute for International Economics. “They’re puzzled by the criticism. They think they should be praised for keeping their currency stable at a time of global turmoil.”

Criticizing China’s policy, however, is likely to worsen a relationship already frayed by irritants on both sides.

In two weeks, Mr. Obama is expected to meet with the Dalai Lama, the Tibetan spiritual leader, over the objections of the Chinese, who condemn him as a subversive. The administration forged ahead with sales of weapons to Taiwan, drawing an angry blast from Beijing, which regards Taiwan as a breakaway province. Secretary of State Hillary Rodham Clinton criticized China for censoring the Internet, in the wake of Google’s allegations about hacking.

For its part, the United States is frustrated that the Chinese will not back tougher sanctions against Iran over its nuclear program. And China has resisted American initiatives on climate change policy, turning the recent climate meeting in Copenhagen into a diplomatic drama.

The administration has struggled to prevent the ill will from any single issue from contaminating the broader relationship. “We can’t pick the timing of when an issue becomes important,” said a senior official, who spoke on the condition of anonymity because of the delicacy of the matter.

Exchange rates are an arcane subject, harder to explain than a meeting with the Dalai Lama. But they influence easy-to-understand issues like the competitiveness of American exports and job security.

“The currency issue has the potential to become a very hot political issue,” said Kenneth G. Lieberthal, who worked on China policy in the Clinton White House. “We’re in significant danger of hitting a very rough patch in trade relations, in the latter part of this year.”

China: Low US interest rates threaten recovery
November 15, 2009

BEIJING – China's top bank regulator said Sunday the weakening U.S. dollar and low interest rates are spurring speculation in stocks and property, distorting global asset prices and threatening the global economic recovery.

The situation poses an "insurmountable risk to the recovery of the world economy," Liu Mingkang, chairman of the China Banking Regulatory Commission, warned just hours before President Barack Obama was due to arrive in China.

Speaking at a conference in Beijing, Liu said the declining U.S. dollar and reassurances by officials that interest rates will remain low were encouraging a "massive" U.S. dollar carry trade — the practice of borrowing money at low rates in one currency to invest in assets in another currency that offer a higher return.

The carry trade is "dealing a serious blow to global asset prices and fueling speculation in the stock and real estate markets," he said, according to a transcript of a speech he made at a financial forum in Beijing, posted on the Web site of Hong Kong's pro-Beijing Phoenix TV.

The U.S. dollar has declined steadily since spring despite statements of support from American officials. China is the largest foreign holder of U.S. debt, mostly in the form of Treasury securities, which have declined in value as a result of the dollar's weakness.

At the same time, record-low U.S. interest rates, intended to encourage lending to businesses struggling to recover from the recession, are spurring investors to transfer funds out of the safety of low-yield dollar-denominated investments such as Treasury securities and into higher-yielding assets like stocks, commodities and emerging-market currencies.

Strong flows of such funds into China's markets, where share prices have surged by more than 70 percent this year, and property have raised worries over a possible bubble in asset prices that might later implode, causing financial problems.

China’s Role as Lender Alters Dynamics for Obama’s Visit

November 15, 2009

When President Obama visits China for the first time on Sunday, he will, in many ways, be assuming the role of profligate spender coming to pay his respects to his banker.

That stark fact — China is the largest foreign lender to the United States — has changed the core of the relationship between the United States and the only country with a reasonable chance of challenging its status as the world’s sole superpower.

The result: unlike his immediate predecessors, who publicly pushed and prodded China to follow the Western model and become more open politically and economically, Mr. Obama will be spending less time exhorting Beijing and more time reassuring it.

In a July meeting, Chinese officials asked their American counterparts detailed questions about the health care legislation making its way through Congress. The president’s budget director, Peter R. Orszag, answered most of their questions. But the Chinese were not particularly interested in the public option or universal care for all Americans.

“They wanted to know, in painstaking detail, how the health care plan would affect the deficit,” one participant in the conversation recalled. Chinese officials expect that they will help finance whatever Congress and the White House settle on, mostly through buying Treasury debt, and like any banker, they wanted evidence that the United States had a plan to pay them back.

It is a long way from the days when President George W. Bush hectored China about currency manipulation, or when President Bill Clinton exhorted the Chinese to improve human rights.

Mr. Obama has struck a mollifying note with China. He pointedly singled out the emerging dynamic at play between the United States and China during a wide-ranging speech in Tokyo on Saturday that was meant to outline a new American relationship with Asia.

“The United States does not seek to contain China,” Mr. Obama said. “On the contrary, the rise of a strong, prosperous China can be a source of strength for the community of nations.”

He alluded to human rights but did not get specific. “We will not agree on every issue,” he said, “and the United States will never waver in speaking up for the fundamental values that we hold dear — and that includes respect for the religion and cultures of all people.”

White House officials have been working for months to make sure that Mr. Obama’s three-day visit to Shanghai and Beijing conveys a conciliatory image. For instance, in June, the White House told the Dalai Lama that while Mr. Obama would meet him at some point, he would not do so in October, when the Tibetan spiritual leader visited Washington, because it was too close to Mr. Obama’s visit to China.

Greeting the Dalai Lama, whom China condemns as a separatist, weeks before Mr. Obama’s first presidential trip to the country could alienate Beijing, administration officials said. Every president since George H. W. Bush in 1991 has met the Dalai Lama when he visited Washington, usually in private encounters at the White House, although in 2007 George W. Bush became the first president to welcome him publicly, bestowing the Congressional Gold Medal on him at the Capitol. Mr. Obama met the Dalai Lama as a senator.

Similarly, while he was campaigning for the presidency, Mr. Obama several times accused China of manipulating its currency, an allegation that the current Treasury secretary, Timothy F. Geithner, repeated during his confirmation hearings. But in April, the Treasury Department retreated from that criticism, issuing a report that said China was not manipulating its currency to increase its exports.

While American officials said privately that they remained frustrated that China’s currency policies lowered the cost of Chinese goods and made American products more expensive in foreign markets, they said that they were relieved that China was fighting the global recession with an enormous fiscal stimulus program to spur domestic growth, and added that now was not the time to antagonize Beijing.

China is not viewed as a trouble spot for the United States. But this administration, like its predecessor, has had difficulty grappling with a rising power that seems eager to avoid direct clashes with the United States but affects its interests in many areas, including currency policy, nuclear proliferation, climate change and military spending.

In that regard, two members of Mr. Obama’s foreign policy team said that the United States’ interactions with the Chinese had been far too narrow in past years, focusing on counterterrorism and North Korea. Too little was done, they said, to address China’s energy and environmental policies, or its expansion of influence in Southeast Asia, South Asia and Africa, where China has invested heavily and used billions of dollars in aid to advance its political influence.

One hint of the Obama administration’s new approach came in a speech this fall by James B. Steinberg, the deputy secretary of state, who has deep roots in China policy. He argued that China needed to adopt a policy of “strategic reassurance” to the rest of the world, a phrase that appeared intended to be the successor to the framework of the Bush era, when China was urged to embrace a role as a “responsible stakeholder.”

“Strategic reassurance rests on a core, if tacit, bargain,” Mr. Steinberg said. “Just as we and our allies must make clear that we are prepared to welcome China’s ‘arrival,’ ” he argued, the Chinese “must reassure the rest of the world that its development and growing global role will not come at the expense of security and well-being of others.”

The Chinese reaction has been mixed, at best. The official China Daily newspaper ran a column just before Mr. Obama’s arrival suggesting that the United States needed to provide some assurance of its own — to “respect China’s sovereignty and territorial integrity,” code words for entirely backing away from the issues of how China deals with Taiwan and Tibet.

In the United States, the phrase “strategic reassurance” has been attacked by conservative commentators, who argue that any reassurance that the United States provides to China would be an acknowledgment of a decline in American power.

In an op-ed article in The Washington Post, the analysts Robert Kagan and Dan Blumenthal argued that the policy had echoes of Europe “ceding the Western Hemisphere to American hegemony” a century ago. “Lingering behind this concept is an assumption of America’s inevitable decline,” they wrote. White House officials shot back, insisting that it is China that needs to do the reassurance, not the United States.

In China, Mr. Obama will meet with local political leaders and will host an American-style town hall meeting with students in Shanghai. He will then spend two days in Beijing meeting with President Hu Jintao.

It seems unlikely that Mr. Obama will get the same celebrity-type reception in Beijing that he received in Cairo, Ghana, Paris and London. China seems mostly immune to the Obama fever that swept other parts of the world, and the Chinese are growing more confident that their country has the wherewithal to compete with the United States on the world stage, analysts say.

“Obama is still a positive guy, and all over the world most people think he’s more energetic, more sincere, than Bush, more a reformist,” said Shi Yinhong, a professor and an expert on United States-China relations at People’s University in Beijing. “But in China, Obama’s popularity is less than in Europe, than Japan or Southeast Asia.” In China, he said, “there is no worship of Obama.”

For instance, during the Bush and Clinton years, China might release a few political dissidents on the eve of a visit by the president as a good-will gesture. This time, American officials say, they do not expect any similar gestures, although they say that Mr. Obama will raise human rights issues privately with Mr. Hu.

“This time China will agree to have a human rights dialogue with the U.S. on some cases,” Mr. Shi said, but “the arguments have changed compared to the past. Now we say, ‘We are a different country, we have our own system, our own culture.’ ”

China formally launches Nasdaq-style board
Fri Oct 23, 2009 7:31 am ET

SHANGHAI (AFP) – China on Friday raised the curtain on its long-awaited Nasdaq-style board, ChiNext, in a key step towards setting up a multi-tier capital market and giving a boost to small and medium-sized firms.

Gold confetti rained down on a red ticker reading "Formally launched" in Chinese as the theme from the movie "Superman" blared in a hotel in the southern boomtown of Shenzhen, where ChiNext trade will begin on October 30.

The new board will propel the development of high-growth start-ups, especially high-tech firms, Shang Fulin, chairman of the China Securities Regulatory Commission, said in a ceremony broadcast live on television.

"The launch of the growth enterprise board is an important step towards implementing the national strategy on promoting innovation," Shang said.

Shares in 28 start-ups, ranging from software developers to medical device producers, will be on offer next week on the board run by the Shenzhen Stock Exchange.

A total of 188 firms from across China have applied to list on ChiNext, according to Shang.

China's economic planning agency, the National Development and Reform Commission, first proposed establishing a Nasdaq-style second board more than a decade ago, but the plan was shelved after the Internet bubble popped in 2000.

Regulators hope the new market will help fuel start-ups and other companies with high-growth potential in the world's third-largest economy, just as the Nasdaq has in the United States.

But there have also been worries that the new board, which attracted strong interest from investors, may divert funds from the main indices and drag stock prices down.

Shang said investors must participate in the growth enterprise market in a "rational" way, recognising that start-up stocks have high-growth potential but are also characterised by unstable financial results.

"The growth enterprise market faces relatively higher risks of irrational and speculative trading and market manipulation," he said.

"The Shenzhen bourse... must closely monitor the debut session trading to prevent excessive speculation."

The bourse has said if prices move up or down 80 percent during the first day, trading will be suspended until the final three minutes of the session.

For more background, click here.

Typhoon Pummels China and Taiwan
August 11, 2009

BEIJING — Rain deluged China’s east coast on Monday hours after Typhoon Morakot slammed into the region south of Shanghai, packing winds up to 73 miles an hour, destroying hundreds of homes and forcing one million people to flee.

Chinese officials reported that three people were killed. The Associated Press quoted a Taiwanese police official, however, as saying an estimated 400 people remain unaccounted for in a mountainous village engulfed by a mudslide caused by the typhoon.

The official identified the village as Shiao Lin, in the south of the island, and said about 100 people had been plucked to safety by military helicopter, The A.P. said. Taiwan’s official death toll from Morakot stands at 15. Another 55 — not including the people in Shiao Lin — are listed as missing.

Taiwan was battered by the typhoon on Saturday, and its Central Weather Bureau said the downpours broke records across the island for the most rainfall in 24 hours, causing the worst flooding in a half-century.

The island was swamped by a staggering 83 inches of rain, according to the weather bureau. In southeastern Taitung County, a six-story hotel collapsed into a river, but officials said all 300 guests were safe because the building had been evacuated.

More than 170,000 people remained without power on Monday, the government said. In China, one of the reported dead was a 4-year-old child in Wenzhou, a city of nearly 1.4 million people in Zhejiang Province, where officials said the storm had leveled nearly 1,500 homes. The child was among five people buried when the winds collapsed five adjacent houses.

The weakened storm was still churning over Wenzhou on Monday morning. Skies there had cleared, but heavy rain was predicted later. “I’m living in the center of town, which is not so bad,” one woman, Yang Weiwei, said from Wenzhou in a telephone interview. “However, some parts of the city are in a mess.”

On Sunday, the authorities said the storm had whipped up waves as high as 26 feet in the East China Sea and in the strait between mainland China and Taiwan, which was battered by the typhoon on Saturday.

In Japan on Monday, at least nine people were killed, and nine others were missing after Typhoon Etau slammed the western part of the country, bringing heavy rain that led to floods and landslides, The A.P. reported. On Sunday evening, an earthquake with a preliminary magnitude of 6.9 rattled Tokyo and eastern Japan, according to the Japan Meteorological Agency.

Typhoon Morakot, the eighth of the season, hit the Chinese mainland at 4:20 p.m. on Sunday at Xiapu County, in northern Fujian Province. China’s state-run Xinhua news service said more than 490,000 people had been moved to safety in Fujian, and 48,000 boats summoned back to harbor.

In Zhejiang Province, between Fujian and Shanghai, 505,000 others were evacuated and 35,000 boats called in.

Both provinces are manufacturing centers with large port cities. Shanghai, just north of the typhoon’s landfall, was spared the worst winds but canceled airline flights and lowered river reservoirs to prepare for flooding. Trees were uprooted and some snapped apart in Fujian Province, Xinhua reported, and farmers struggled with nets to recapture fish flushed out of fish farms.

Xinhua said relief teams were distributing food and water to rural villagers who had been stranded by high waters. By Sunday night, meteorologists reported that the typhoon had degraded close to tropical storm status, with 74-mile-an-hour winds.

Morakot, which means emerald in Thai, had struck the Philippines earlier, killing 21 people, including a French tourist and 2 Belgian tourists, according to officials there. Seven others were reported missing.

The government reported that more than 83,000 Philippines residents were affected by floodwaters and landslides, and 22,000 had been evacuated.

Afghan Plane Turned Back

BEIJING (AP) — An Afghan plane bound for the restive western Chinese region of Xinjiang was sent back to Afghanistan after a bomb threat, the Chinese news media said Sunday.

The airline, Kam Air, said the plane left Kabul, Afghanistan’s capital, and was crossing Kyrgyzstan on its way to Urumqi, Xinjiang, when it was told to turn back. The Xinhua News Agency said that there had been a bomb threat and that the Urumqi airport authorities had been told not to let the plane land.

The deputy chief of Kam Air, Feda Mohammad Fedawi, said there had been no bomb threat. He said that Kyrgyz authorities told the crew that China would not allow the plane into its airspace, and that the plane, with 160 passengers aboard, was diverted to Kandahar.

There was no immediate way to explain the differing accounts.

Page last updated at 15:18 GMT, Tuesday, 28 July 2009 16:18 UK
US Treasury Secretary Timothy Geithner (L) greets Chinese vice premier Wang Qishan
China and US say they have found common ground but differences remain

Economy dominates US-China talks
US and Chinese officials, meeting in Washington, are to discuss the need for emerging economies to have more say in the world's financial system.

US Treasury Secretary Timothy Geithner is meeting Chinese Vice Premier Wang Qishan for a second day of high-level talks between the two countries.

They will also discuss the world trade system and ways to cooperate to prevent a repeat of the economic crisis.

China also expressed concern about the dollar's role in the financial system.

Mr Geithner said the two countries were committed to building a strong and stable financial system that would lead to more balanced global growth.

"Today, we will discuss governance reforms to help the IFIs (international financial institutions) be more representative of dynamic emerging economies, as well as strengthen their capacity to prevent future crises," he added.

China has long called for greater say at the International Monetary Fund and other bodies.

The two will also discuss ways to prevent the financial crisis leading to a rise in protectionism.

"We call on China and the United States to refrain from taking any protectionist measures," Mr Wang said before the talks re-convened behind closed doors.

Secretary Hillary Clinton was leading a separate set of discussions at the State Department that were expected to focus on North Korea.

The two-day Strategic and Economic Dialogue, as the talks are known, will conclude later with a news conference.


While the two sides appear to have found common ground in public, analysts say that differences remain.

In particular, China is worried about the value of the US dollar.

It holds huge amounts of US debt - more than $800bn (£486bn) of US Treasury securities alone.

It fears Mr Obama's stimulus spending will stoke inflation in the United States, eroding the value of the dollar and making the US debt China holds worth a lot less.

"As a major reserve currency-issuing country in the world, the US should properly balance and properly handle the impact of the dollar supply on the domestic economy and the world economy as a whole," Mr Wang said.

Meanwhile, US manufacturers complain they cannot compete fairly with their Chinese competitors, accusing Beijing of deliberately devaluing its currency to make its exports seem cheaper.


Prior to pre-election economic melt-down...

Obama: US-China Relations to Shape 21st Century (link to I-BBC version of how the financial crisis happened)

July 27, 2009, Filed at 11:13 a.m. ET

WASHINGTON (AP) -- President Barack Obama, opening two days of high-level talks with China, said the discussions could lay the groundwork for a new era of ''sustained cooperation, not confrontation'' in a relationship likely to shape the 21st century.  Obama said that Washington and Beijing needed to forge closer ties to address a host of challenges from lifting the global economy out of a deep recession to nuclear proliferation and global climate change.

''I believe that we are poised to make steady progress on some of the most important issues of our times,'' the president told diplomats from both countries assembled in the vast hall of the Ronald Reagan Building.

Obama said he was under ''no illusions that the United States and China will agree on every issue'' but he said closer cooperation in important areas was critical for the world.

''The relationship between the United States and China will shape the 21st century, which makes it as important as any bilateral relationship in the world,'' Obama said.

The discussions in Washington represent the continuation of a dialogue begun by the Bush administration, which focused on economic tensions between the two nations. Obama chose to expand the talks to include foreign policy issues as well as economic disputes over trade and currency values.

Secretary of State Hillary Rodham Clinton, welcoming the Chinese, said the two nations were ''laying brick by brick the foundation for a stronger relationship.''

Treasury Secretary Timothy Geithner and Vice Premier Wang Qishan, China's top economic policymaker, both spoke of hopeful signs that the global economy was beginning to emerge from its worst financial crisis since the Great Depression.  Geithner said that the so far successful efforts of the two economic superpowers to move quickly to deal with the downturns with massive stimulus programs marked a historic turning point in the relationship of the two nations.

Speaking through a translator, Wang said that ''at present the world economy is at a critical moment of moving out of crisis and toward recovery.''

State Councilor Dai Bingguo said that the two countries were trying to build better relations despite their very different social systems, cultures, ideologies and histories.

''We are actually all in the same big boat that has been hit by fierce wind and huge waves,'' Dai said of the global economic and other crises.

Obama said that the United States and China have a shared interest in clean and secure energy sources.  As the world's largest energy consumers, Obama said that neither country profits from a dependence on foreign oil. He also said neither country will be able to combat climate change unless they work together.  However, the discussions this week were not expected to bridge wide differences between the two nations on climate change and officials cautioned against expecting any major breakthroughs in other areas either. U.S. officials said they hoped the talks would set a positive framework for future talks.

The administration did praise China for the help it has provided in the nuclear standoff with North Korea.

With the global economy trying to emerge from a deep recession, the United States and China have enormous stakes in resolving tensions in such areas as America's huge trade deficit with China and the Chinese government's unease over America's soaring budget deficits.

Three years ago, then-Treasury Secretary Henry Paulson used the initial U.S.-China talks to press Beijing to let its currency, the yuan, rise in value against the dollar to make it cheaper for Chinese to buy U.S. goods. U.S. manufacturers blame an undervalued yuan for record U.S. trade deficits with China -- and, in part, for a decline in U.S. jobs.

The U.S. efforts have yielded mixed results. The yuan, after rising in value about 22 percent since 2005, has scarcely budged in the past year. Beijing had begun to fear that a stronger yuan could threaten its exports. Chinese exports already were under pressure from the global recession.

But the Obama administration intends to remain focused on the trade gap, telling Beijing that it can't rely on U.S. consumers to pull the global economy out of recession this time. In part, that's because U.S. household savings rates are rising, shrinking consumer spending in this country.

For the United States, suffering from a 9.5 percent unemployment rate, the ultimate goal is to help put more Americans to work.

While the U.S. trade deficit with China has narrowed slightly this year, it is still the largest imbalance with any country. Critics in Congress say that unless China does much more in the currency area, they will seek to pass legislation to impose economic sanctions on Beijing, a move that could spark a trade war between the two nations.

For their part, Chinese officials are making clear they want further explanations of what the administration plans to do about the soaring U.S. budget deficits. China, the largest foreign holder of U.S. Treasury debt -- $801.5 billion -- wants to know that those holdings are safe and won't be jeopardized in case of future inflation.

Geithner said in his opening remarks that the United States was moving to repair its financial system and overhaul how financial companies are regulated. He said the administration was also determined to deal with a budget deficit projected to hit $1.84 trillion this year, more than four times the previous high.

''We are committed to taking the necessary steps to bringing our fiscal deficits down to a more sustainable level,'' he said.

RIOT UNIVERSAL SYMBOL OF UNREST (unless inside a stadium, then it is called soccer or "football")
Chinese use technique developed in the U.S.A. in the 1960's - URBAN RENEWAL - to get rid of "blight"

Needle Attacks And Rumors Spread In China's Xinjiang

September 10, 2009

Filed at 10:22 p.m. ET

BEIJING (Reuters) - Mysterious needle attacks have spread to new cities in China's restive far-western region of Xinjiang, the China Daily said on Friday, although once again the assaults appear to be a mix of real and imagined.  Nearly 600 people in Urumqi, the capital of Xinjiang, home to the native Muslim Uighurs, have said they were stabbed with needles over the last two weeks, leading to mass demonstrations by Han Chinese against a government they said could not guarantee their safety.

Nine suspects were detained in the cities of Hotan, Altay and Kashgar, the China Daily said.

The pattern of real and imagined attacks appears to be continuing. Of nine reported attacks in Hotan, three were actually pricked, while in Altay, four of five reported attacks were false alarms and in Kashgar, three of five were false alarms, the paper said, citing local officials.  Officials and state media blamed the attacks in Urumqi on separatists bent on destroying ethnic unity.  On July 5, a demonstration by Uighurs turned into a riot in which 197 people, mostly Han Chinese, were killed. Han Chinese launched revenge attacks two days later.

Since then, Urumqi has been cut off from Internet access, international phone calls, and most text messaging, to avoid a repeat of the violence. The result is that rumors reign supreme.  A police text message was the spark that ignited the rash of reports in the divided city of Urumqi. Five people died in unrest last week and tens of thousands poured into the streets to demand the ouster of the powerful regional Party Secretary, Wang Lequan.

"Recently, several residents were attacked by hypodermic syringes. Local police security departments have also uncovered a case in which assailants used syringes to attack passers-by," read the text message, sent to Urumqi residents on August 31.

"Please don't panic over the incident, and inform police officers if you find any suspects."

Panic they did.

By September 4, 513 people had turned up at police stations to report they had been jabbed, stabbed or pricked. They were tested for HIV, hepatitis and sexually transmitted diseases, adding to fears that the attacks would spread AIDS. At least another 77 attacks have since been reported.

On Sept 3, Han Chinese crowded into People's Square demanding Wang's resignation for not ensuring their safety during the July riots, or against the mystery stabbers. The five died on Sept 3, when crowds beat up a Uighur man accused of jabbing a woman, and then attacked the ambulance ferrying him to hospital.

New orders punishing rumor-mongers and forbidding citizens from beating up suspects imply that the city government is trying to dampen the firestorm it started.  Most of the stabbings appear to be simple hysteria. Only 106 victims had shown signs of jabs, bumps or rashes as of Sept 4.  Some were pricked by sewing needles or pins, not syringes, doctors said. Other marks might be insect bites.

Authorities have revealed details of four crimes that appear to have prompted the syringe warning.

On August 28, a 19-year-old Uighur followed a fruit seller home and stuck a pin in her buttocks.

On August 29, two Uighur drug addicts, a man and woman aged 22 and 34, used a syringe to mug a cabbie, stealing 710 yuan ($100).

On August 31, a Uighur addict used a syringe with heroin in it to fend off arresting officers, some of whom were injured.

Authorities have not explained how the crimes by junkies and molesters comprise an organized plot.  It is possible that those who were actually pricked, many on crowded buses, were targets of people seeking revenge or trying to stir up hatred, or just bored people looking for drama.

China's Restive West Descends Into Mob Violence
Filed at 7:40 a.m. ET
July 7, 2009

URUMQI, China (AP) -- Scattered mobs of Muslim Uighurs and Han Chinese roamed the streets and beat passers-by Tuesday as the capital of China's Xinjiang region degenerated into communal violence, prompting the government to impose a curfew in the aftermath of a riot that killed at least 156 people.

Members of the Muslim Uighur ethnic group attacked people near the Urumqi's railway station, and women in headscarves protested the arrests of husbands and sons in another part of the city. Meanwhile, for much of the afternoon, a mob of 1,000 mostly young Han Chinese holding clubs and chanting ''Defend the Country'' tore through streets trying to get to a Uighur neighborhood until they were repulsed by police firing tear gas.

Panic and anger bubbled up amid the suspicion. In some neighborhoods, Han Chinese -- China's majority ethnic group -- armed themselves with pieces of lumber and shovels to defend themselves. People bought up bottled water out of fear, as one resident said, that ''the Uighurs might poison the water.''

The outbursts happened despite swarms of paramilitary and riot police enforcing a dragnet that state media said led to the arrest more than 1,400 participants in Sunday's riot, the worst ethnic violence in the often tense region in decades.

Trying to control the message, the government has slowed mobile phone and Internet services, blocked Twitter -- whose servers are overseas -- and censored Chinese social networking and news sites and accused Uighurs living in exile of inciting Sunday's riot. State media coverage, however, carried graphic footage and pictures of the unrest --showing mainly Han Chinese victims and stoking the anger.

The violence is a further embarrassment for a Chinese leadership preparing for the 60th anniversary of communist rule in October and calling for the creation of a ''harmonious society'' to celebrate. Years of rapid development have failed to smooth over the ethnic fault lines in Xinjiang, where the Uighurs (pronounced WEE-gers) have watched growing numbers of Han Chinese move in.

Wang Lequan, Xinjiang's Communist Party secretary, declared a curfew in all but name, imposing traffic restrictions and ordering people off the streets from 9 p.m. to 8 a.m. Wednesday ''to avoid further chaos.''

''It is needed for the overall situation. I hope people pay great attention and act immediately,'' he said in an announcement broadcast on Xinjiang television.

Sunday's riot started as a peaceful demonstration by Uighurs over a deadly fight at a factory in eastern China between Han Chinese and Uighur workers. It then spiraled out of control, as mainly Uighur groups beat people and set fire to vehicles and shops belonging to Han Chinese.

After retreating from the tear gas, some among the Han Chinese mob were met by Urumqi's Communist Party leader Li Zhi, who climbed atop a police vehicle and started chanting with the crowd. Li pumped his fists, beat his chest, and urged the crowd to strike down Rebiya Kadeer, a 62-year-old Uighur leader exiled in the United States whom Chinese leaders accuse of being behind the riots.

''Those Muslims killed so many of our people. We just can't let that happen,'' said one man in the crowd, surnamed Liu. He carried a long wooden stick and said the Han Chinese were forced to take up arms. People walked by with bloodshot eyes from the tear gas.

To the east, on Xingfu road, Han Chinese residents stoned a car with two Uighurs inside until it crashed, pulling one passenger out and beating him until police arrived, residents said.

Elsewhere in the city Tuesday, about 200 people, mostly women in traditional headscarves, took to the streets in another neighborhood, wailing for the release of their sons and husbands in the crackdown and confronting lines of paramilitary police. The women said police came through their neighborhood Monday night and strip-searched men to check for cuts and other signs of fighting before hauling them away.

''My husband was detained at gunpoint. They were hitting people, they were stripping people naked. My husband was scared so he locked the door, but the police broke down the door and took him away,'' said a woman, who gave her name as Aynir. She said about 300 people were arrested in the market in the southern section of town.

The protesters briefly scuffled with paramilitary police, who pushed them back with long sticks before both sides retreated.

Foreign reporters on a government-run tour of the riot's aftermath witnessed the protest and without their presence, the incident might have gone unreported given the media controls.  Groups of 10 or so Uighur men with bricks and knives attacked Han Chinese passers-by and shop-owners midday outside the city's southern railway station, until police ran them off, witnesses said.

''They were using everything for weapons, like bricks, sticks and cleavers,'' said a Mr. Ma, an employee at the Dicos fast-food restaurant nearby. ''Whenever the rioters saw someone on the street, they would ask 'are you a Uighur?' If they kept silent or couldn't answer in the Uighur language, they would get beaten or killed.''

It was not immediately clear if anyone was killed in those reported attacks.

Li, the Communist Party official, told a news conference that more than 1,000 people had been detained as of early Tuesday and suggested more arrests were under way. ''The number is changing all the time. We will let those who did not commit serious crimes go back to their work units.''

The official Xinhua News Agency said earlier Tuesday that 1,434 suspects had been arrested, and that checkpoints had been set up to stop rioters from escaping.  Officials at the news conference said they could not give a breakdown of how many of the dead were Uighurs and how many were Han Chinese.

Sunday's riot started as a peaceful demonstration by 1,000 to 3,000 people protesting the June 25 deaths of Uighur factory workers killed in a brawl in the southern Chinese city of Shaoguan. Xinhua said two died. Messages circulating on Internet sites popular with Uighurs put the figure higher, raising tensions in Xinjiang.

In a sign the government was trying to address communal grievances, Xinhua announced Tuesday that 13 people had been arrested over the factory fight, including three from Xinjiang. Two others were arrested for spreading rumors on the Internet that Xinjiang employees had raped two female workers, the report said, citing a local police deputy director.

The disturbances in Xinjiang carry reminders of the widespread anti-Chinese protests that shook Tibet last year and have left large parts of western China living with police checkpoints and tightened security. Like the Tibetans, Uighur unrest has not been muted by rapid economic development, though the government publicly is unwilling to address ethnic tensions.

Riots Break Out in Western China Amid Ethnic Tension
July 6, 2009

BEIJING — At least 1,000 rioters clashed with the police on Sunday in a regional capital in western China after days of rising tensions between Muslim Uighurs and Han Chinese, according to witnesses and photographs of the riot.

The rioting broke out Sunday afternoon in a large market area of Urumqi, the capital of the vast, restive desert region of Xinjiang, and lasted for several hours before riot police officers and paramilitary or military troops locked down the Uighur quarter of the city. The rioters threw stones at the police and set vehicles on fire, sending plumes of smoke into the sky, while police officers used firehoses and batons to beat back rioters and detain Uighurs who appeared to be leaders of the protest, witnesses said.

At least three Han Chinese were killed in the rioting and 20 people were injured, according to Xinhua, the official news agency. Dozens of Uighur men were led into nearby police stations with their hands behind their backs and shirts pulled over their heads, one witness said. Early Monday, the local government announced a curfew banning all traffic in the city until 8 p.m.

The riot was the largest ethnic clash in China since the Tibetan uprising of March 2008, and perhaps the biggest protest in Xinjiang in years. Like the Tibetan unrest, it highlighted the deep-seated frustrations felt by some ethnic minorities in western China over the policies of the Communist Party.

Many Uighurs, a Turkic-speaking Muslim group, resent rule by the Han Chinese, and Chinese security forces have tried to keep oil-rich Xinjiang under tight control since the 1990s, when cities there were struck by waves of protests, riots and bombings. Last summer, attacks on security forces took place in several cities in Xinjiang; the Chinese government blamed separatist groups.

Uighurs taking part in the riot on Sunday were furious over an ethnic brawl between Uighur and Han workers that broke out on June 26 in a toy factory in Guangdong and that resulted in the deaths of two Uighurs. A total of 116 people were injured. The police later arrested an ex-employee of the factory who had ignited the brawl by starting a rumor that six Uighur men had raped two Han women at the work site, Xinhua reported.

There was also a rumor going around on Sunday in Urumqi that a Han man had killed a Uighur earlier that day in the city, said Adam Grode, an English teacher and former Fulbright scholar living in the neighborhood where the rioting took place.

“This is just crazy,” Mr. Grode said in a telephone interview on Sunday night. “There was a lot of tear gas in the streets, and I almost couldn’t get back to my apartment. There’s a huge police presence.”

Rumors of Uighurs attacking Han Chinese spread quickly through parts of Urumqi, adding to the panic. A worker at Texas Restaurant, a few hundred yards from the site of the rioting, said her manager urged the restaurant workers to stay inside. “My boss went home in the evening and called us saying he had heard that Uighurs were beating Han Chinese, so we’d better stay in the restaurant,” said the worker, a woman who gave only her surname, Wang.

Xinhua reported few details of the riot on Sunday night. It said that “an unknown number of people gathered Sunday afternoon” in Urumqi, “attacking passers-by and setting fire to vehicles.”

Uighurs are the largest ethnic group in Xinjiang but are a minority in Urumqi, where Han Chinese make up more than 70 percent of the two million or so people. The Chinese government has encouraged Han migration to the city and other parts of Xinjiang, fueling resentment among the Uighurs. Urumqi is a deeply segregated city, with Han Chinese there rarely venturing into the Uighur quarter and often warning visitors to stay away from the area.

The Uighur neighborhood is centered in a warren of narrow alleyways, food markets and a large shopping area called the Grand Bazaar or the Erdaoqiao Market, where the rioting reached its peak on Sunday.

Mr. Grode, who lives in an apartment there, said he went outside when he first heard commotion around 6 p.m. He saw hundreds of Uighurs in the streets; that quickly swelled to more than 1,000, he said. When public buses stopped at the scene, Uighurs riding inside opened the windows and joined the crowd in shouting slogans.

Police officers soon arrived. Around 7 p.m., protesters began hurling rocks, vegetables and other goods from the market at the police, Mr. Grode said. Traffic had ground to a halt, and some rioters threw stones at bus windows.

An hour later, as the riot surged toward the center of the market, troops in green uniforms and full riot gear showed up, as did armored vehicles. Chinese government officials often deploy the People’s Armed Police, a paramilitary force, to quell riots. The troops shot off tear gas canisters and might have fired other projectiles too, Mr. Grode said.

By midnight, he said, some of the armored vehicles had begun to leave, but bursts of gunfire could still be heard.

China Web Controversy Highlights Public Role
Filed at 8:54 a.m. ET
July 1, 2009

BEIJING (AP) -- Beijing's retreat on its latest Internet-censorship effort highlights the rise of China's increasingly tech-savvy, vocal public as a factor in the authoritarian government's decisions.  China gave in late Tuesday to complaints by Web users, manufacturers and foreign governments and postponed a plan to require producers to supply a government-endorsed filtering software known as ''Green Dam'' with every personal computer sold in China.

''We think this is a result of the efforts of all the parties, but we think public opinion played an even more important role than the others,'' said Edward Yu, president of Analysys International, an Internet research company in Beijing.

The retreat marks another significant shift for a Communist Party that is used to being the final voice in official decisions but is learning to accommodate a public that is growing more assertive as living standards rise.
One of the more vocal campaigners against the filtering software, avant-garde artist Ai Weiwei, threw a party at a Beijing restaurant Wednesday to celebrate. Guests wore T-shirts with slogans cursing Green Dam and the ''GFW'' or Great Firewall, the nickname of the government's extensive system to monitor and filter Internet traffic.

Ai said he wanted July 1 declared Internet Day as ''a reminder that no one should violate the right to free access to the Internet.''

Though the Chinese leadership remains as determined as ever to crush challenges to its authority, it also knows that staying in power means keeping in touch with public attitudes and key interest groups.  The government polls relentlessly if quietly. It monitors comments on the Internet from China's nearly 300 million Web users. Sometimes the government alters decisions -- like it did with Green Dam.

''This is a milestone in the growing role the broader public has in forming policy decisions,'' said David Wolf, president of Wolf Group Asia, a technology marketing consultant in Beijing. ''The Chinese government is getting very comfortable with listening to voices online and saying, `There's our feedback'.''

Beijing's initial order -- made public last month -- would have required manufacturers to pre-install or include filtering software with every PC. Authorities said it was needed to protect children from obscene and violent material.  The order, however, threatened to take censorship to a new level of intrusiveness. It touched off an outcry among Internet users, many of whom represent the privileged educated elite. Analysts who examined the software said it also would block political material the government dislikes.

In announcing the delay of its order, the Ministry of Industry and Information Technology did not say whether Green Dam might be revived at a later date.

In celebrating, some Web activists warned the victory was temporary.

''It's not as if they have dropped their censorship program but I do think it will be much harder for them to roll out Green Dam now because over this past half-year censorship and fighting censorship have become part of youth consciousness,'' said Zuo La, 28, a blogger from the southern city of Changsha who uses the online name Zola.

''Even some middle and high school students know about censorship now and are really annoyed by the controls,'' Zuo said.

Industry analysts expect Beijing may try to mollify users by developing a less obvious system.

''They certainly will not give up on the effort to filter the Internet,'' said Duncan Clark, chairman of BDA China Ltd., a Beijing technology research firm. ''But they're sensitive to mass disquiet.''

Aside from not considering the public reaction, Beijing bungled the Green Dam roll-out by rushing the software into service and failing to give adequate notice to computer-makers.

''The response of the public in China was a clear indication that somebody didn't do their homework,'' James Zimmerman, a partner in Beijing for the law firm Squire Sanders & Dempsey, said in an e-mail. ''The government knows that voices of discontent are alive and well in China, and the government needs to do a better job at harnessing these voices rather than ignoring them during the rule-making process.''

The Internet's role in publicizing complaints and focusing government attention has been gaining momentum.  A waitress who was accused of fatally stabbing a party official to fend off his demands for sex became a folk hero after a flood of supportive postings appeared online. Last month, a court convicted the 21-year-old woman, Deng Yujiao, but spared her punishment in an apparent effort to mollify the public.

Green Dam was announced amid a series of official efforts to tighten Internet controls ahead of the politically sensitive 60th anniversary in October of the 1949 founding of the communist government.  Earlier this year, Web sites were ordered to review their content to make sure they had no pornographic or politically unpalatable material.  The government also has scrapped or modified technology regulations after complaints by industry and China's trading partners.

In April, the government said it was postponing for a year a requirement for foreign suppliers of computer security technology to reveal how their products work. That came after industry groups and the U.S. government objected.

China, Russia Call For Talks on Iran, North Korea
Filed at 8:34 a.m. ET
June 17, 2009

MOSCOW (Reuters) - The presidents of Russia and China on Wednesday called for a diplomatic push to resolve tensions over the nuclear programs of Iran and North Korea after wide-ranging talks in Moscow.

In a joint statement Chinese President Hu Jintao and Russia's Dmitry Medvedev also made a thinly veiled attack on the United States, saying no country should base its defense on expanding military alliances and building missile defenses.  Medvedev also said the two sides had agreed a record $100 billion in energy deals, although it was not clear how much of this figure represented previously announced agreements.

"Russia and China assert that the regulation of the situation around the Iranian nuclear program is possible only by political and diplomatic methods," the statement said.

"The heads of state expressed their serious concerns in relation to the situation on the Korean peninsula... and call for the speedy restarting of six-sided talks," it said.

Hu came to Russia for a state visit which included two summits of developing world countries covering global trade, security and greater representation for emerging market powers on the world stage.

"Russia and China consider international security indivisible and all-encompassing," the joint statement said.

"The security of certain countries cannot be ensured at the expense of the security of others, including through the expansion of military political alliances and the creation of global and regional missile-defense systems."

Earlier on Wednesday Hu met Russian Prime Minister Vladimir Putin and praised efforts by Russia and China to pool their influence on the world stage.

"We have enacted effective strategic cooperation, which allows us...to assert our joint forces and provide the necessary contribution to achieving peace and stability in the world," Hu said, according to a Russian translation of his comments.

Hu invited Putin to visit Beijing in October. The two leaders know each other well, having met several times when Putin was president of Russia from 2000-2008.  After the meeting with Putin, Hu laid a wreath at the tomb of Russia's unknown soldier at the foot of the Kremlin walls.

Coinciding with Hu's visit, Russia's Economic Development Ministry released figures showing that in the first months of 2009, China had become Russia's biggest trading partner, overtaking Germany and the Netherlands.

(Reporting by Denis Dyomkin and Toni Vorobyova; writing by Conor Humphries; editing by Philippa Fletcher)

China Charges 4 Rio Tinto Employees; Spying Allegations Are in Question

August 12, 2009

SHANGHAI — China formally charged an Australian citizen and three other employees of the British-Australian mining giant Rio Tinto late Tuesday with commercial bribery and trade secrets infringement in a case that has rocked the global steel industry and created a diplomatic uproar.

But a brief statement on the case, reported by the official Xinhua news agency, did not mention the much more serious charges of espionage that Beijing had earlier alleged and that had frayed relations between China and Australia in recent weeks. It was unclear if the Chinese government included those charges in its more detailed filing on the case or had backed away from them under international pressure.

The case has generated significant anxiety among foreign corporations and investors worried that China could stifle business by pressing state secrets charges against executives.

In the statement released through Xinhua, prosecutors said the four Rio Tinto employees had used “improper means” to obtain commercial secrets from China’s government-controlled iron and steel industry. Although commercial bribery is a criminal charge, the sentence for anyone convicted of the crime is significantly shorter than those for states secrets violations.

The announcement came more than a month after the four employees were detained in Shanghai and accused of stealing state secrets from China’s steel industry and harming the nation’s economic interests. It followed weeks of diplomatic pressure from the Australian government, which had complained about a lack of transparency in the case.

After the detentions, Prime Minister Kevin Rudd of Australia had cautioned China to deal fairly, openly and judiciously with the employees because the world would be watching how it handled the case. Australian government officials did not reply early Wednesday to requests for comment on the statement of the charges.

If China indeed chose not to charge the employees with violating the country’s state secrets law, it would drastically alter the case because legal scholars say that prosecutions under that law are not transparent and are notoriously difficult to defend against.

Jerome A. Cohen, a professor of law at New York University and a expert on China’s legal system, said the language used in the prosecutor’s announcement was unclear but suggested that Beijing might have chosen to downgrade the charges.

“It doesn’t sound like they are doing this under the state secrets law,” Mr. Cohen said after being read the Xinhua statement. “They may be trying to lower the temperature in the world by getting it out of the state secrets context.”

The detentions of the four employees, including three Chinese citizens, had stunned many multinational companies doing business in the country because the government had invoked its murky espionage law in a case that many legal experts said involved allegations that sounded like commercial bribery rather than spying.

The accusations in the case have also caused turmoil in China’s steel industry, the world’s largest, and disrupted the country’s already contentious annual iron-ore negotiations with some of the world’s biggest producers, including Rio Tinto.

A spokesman at Rio Tinto’s headquarters in London said late Tuesday that the company was not yet aware that the charges had been filed.

In recent weeks Rio Tinto has strongly denied any wrongdoing in the case and insisted that the company had no evidence that its employees, including Stern Hu, a Chinese-born Australian citizen, had ever engaged in bribery or wrongdoing.

Mr. Hu, the general manager of Rio Tinto’s Shanghai office and the company’s top iron ore salesman in China, is believed to be one of the highest ranking foreign executives ever charged with commercial bribery and trade secrets infringement involving a state-controlled industry.

China Backs Off Accusations Against Mining Giant
August 11, 2009

SHANGHAI — China appeared on Monday to step away from accusations made over the weekend that the British-Australian mining giant Rio Tinto had engaged in commercial espionage against China for six years that cost the country about $100 billion.

The accusations were published late Saturday or early Sunday on baomi.org, a Web site affiliated with China’s State Secrets bureau, but on Monday, the Web site was down for part of the day, and when it resumed operating, the article was no longer posted.

Since late June, after China broke off acrimonious iron ore negotiations with Rio Tinto and other big mining companies, its state-controlled media and Web sites have published a series of damaging reports about Rio Tinto, bribery and corruption in China’s steel and iron ore industry. The negotiations have recently resumed.

The author of the baomi.org article, Jiang Ruqin, is an official with the State Secrets bureau. In an interview on Monday with the Bloomberg and Dow Jones news agencies, he said that he had not been assigned to write the article, but was expressing his own opinion. “I just wanted to write the article because this situation’s impact is really big,” he said. “It affects the country’s economic security.”

Mr. Jiang said his main accusation — that because of Rio’s spying, China’s steel industry was overcharged by about $100 billion — came from China Central Television, another propaganda arm of the Chinese government.

A call to Mr. Jiang’s office was not returned Monday afternoon.

An official at the propaganda department of the state secrets agency, the National Administration for the Protection of State Secrets, told Dow Jones Newswires on Monday that the agency had not authorized anyone to release comments on the case.

The step back added another twist to a case that has strained relations between China and Australia and created chaos and fear in China’s steel and iron ore industry.

Last month, the Shanghai branch of the secrets bureau detained four Rio Tinto employees, including a Chinese-born Australian citizen, on suspicions of stealing confidential documents from the country’s huge government-controlled steel industry.

Rio Tinto has strongly denied any wrongdoing in the case and insisted that its employees follow strict ethics policies.

The Australian government has been pressing China for more transparency in the case and for a speedy resolution.

The reports accusing Rio Tinto of illegal business practices here have appeared in China’s official propaganda publications, including Xinhua and China Daily, the country’s largest English-language daily. The baomi.org Web site and another site affiliated with the State Secrets bureau have also released information.

China’s state-runs news media is often used to deliver government messages. But analysts have cautioned before that because of warring factions within the government, that information can sometimes be confusing.

China Accuses Rio Tinto of Long-Term Conspiracy
August 10, 2009

SHANGHAI — China said Sunday that it had evidence showing that for at least six years, employees working for the British-Australian mining giant Rio Tinto had engaged in commercial espionage, costing the country about $120 billion.

The sensational allegation was published on a Web site affiliated with China’s State Secrets Bureau, which detained four Rio Tinto employees, including an Australian citizen, in Shanghai last month on suspicions of espionage and stealing state secrets from the country’s huge, government-controlled steel industry. The comments marked the first time that China had suggested that the case involved a long-running conspiracy.

The case has strained China’s relations with Australia and rocked China’s steel industry, which purchases billions of dollars’ worth of iron ore every year from Rio Tinto and other huge mining companies.

The detentions have also thrown China’s annual negotiations with the world’s biggest iron ore producers into chaos at a time when demand for iron ore and steel is soaring in China because of an economic recovery. Iron ore is a key ingredient in steel.

Multinational corporations operating in China have also grown concerned because there could be serious risks for executives gathering information or doing business with state-owned Chinese companies.

Rio Tinto officials could not be reached Sunday for comment. But the company has strongly denied any wrongdoing in the case. The British-Australian company BHP Billiton, the world’s biggest mining company and also a major supplier of iron ore, declined to comment.

The new allegations, published by the National Administration for the Protection of State Secrets in China, named only Rio Tinto but suggested that all foreign iron ore suppliers had benefited from fraud committed by Rio Tinto employees.

The major iron ore producers generally follow the same benchmark price set during annual negotiations. The article offered very few details but said evidence China had found on Rio Tinto computers showed that the company had gathered extensive intelligence on China’s steel industry and that the information it acquired had given the company an edge in setting annual benchmark prices for iron ore over the past six years.

“The computer data Rio Tinto staff held showed that they have gained extensive, detailed inside information on the steel industry,” the article said, “and were definitely spying on China’s economic interests and security.”

The price of iron ore has skyrocketed in China during that period; it peaked in 2008 at more than $200 a ton. But analysts have generally attributed the price increase to soaring demand from China’s fast-growing steel industry, which is now the world’s largest.

China, however, contends that the price was manipulated, costing the government-controlled steel industry an additional $120 billion.

In earlier statements, China had accused Rio Tinto employees of stealing confidential information by bribing Chinese steel mill executives. Australian officials said recently that the four Rio employees had been detained largely because of their role in this year’s iron ore negotiations.

Legal scholars have expressed surprise that China detained the four Rio Tinto employees on state secrets suspicions rather than for commercial spying. Under Chinese law, violating state secrets is much more serious and very difficult to defend against, partly because much of the evidence is not made public.

China has not yet charged any of the four employees, including three Chinese citizens. But Australian officials have been pressing China for transparency in the case and to expedite the process because Stern Hu, an Australian citizen, is being held without formal charges and has not even been allowed a visit by a lawyer or family member.

China Holds Rio Tinto Executive on Spying Charges
July 9, 2009

BEIJING — An Australian executive of Rio Tinto, one of the world’s biggest mining companies and a major player in the Chinese market, is being held by Chinese officials on suspicion of stealing state secrets, an Australian government official said Wednesday.

Australia’s foreign affairs minister, Stephen Smith, made the announcement to journalists in Perth, Australia, a day after Rio Tinto said that four workers from its Shanghai office had been held by the police since Sunday and that the company did not know why. Last month, the company decided to scrap a planned $19.5 billion investment by Chinalco, a state-owned Chinese company.

Public security officials in Shanghai and China’s Foreign Ministry declined to comment on the case. China has not issued any statement about the employees of Rio, an Anglo-Australian company.

Mr. Smith said that Stern Hu, an Australian citizen and general manager of Rio Tinto’s iron ore business in China, was being held on espionage charges and could also face criminal charges. He said he did not believe the case was related to commercial matters or to the scrapped deal.. Mr. Hu and the other three workers being held all worked in the company’s sales and marketing division.

Australian diplomats in Shanghai were urgently seeking access to Mr. Hu, Mr. Smith said.

The Sydney Morning Herald in Australia reported Wednesday that the three other Rio workers being held in Shanghai were Chinese citizens. Chinese courts can impose severe penalties, including death, in espionage cases, particularly on Chinese citizens.

The case adds a strange twist to developments in the steel and iron ore business in China in the last year.

China is in the midst of tough negotiations with Australian iron ore producers and is seeking a reduction from prices of last year before agreeing to buy large supplies of the ore, a main component in producing steel, which China desperately needs to build its cities.

The Chinalco-Rio Tinto deal, which would effectively have expanded Chinalco’s stake of 9.3 percent in Rio to 18.5 percent, had drawn stiff political opposition in Australia, where mineral riches have fueled prosperity and where some have begun to fear China’s power in the region. Institutional investors had also expressed skepticism about the agreement, with some calling it a sweetheart deal for the Chinese government.

BHP Billiton, another Anglo-Australian mining giant, agreed to form a series of ventures with Rio Tinto after the China deal was broken off. Rio Tinto investors were also given an opportunity to make additional investments in the company to help Rio strengthen its balance sheet.

Some Chinese officials later reacted strongly to Rio Tinto’s decision to back out of the deal, suggesting that Rio Tinto and BHP Billiton could have near monopoly power over iron ore production.

In its statement Tuesday, Rio Tinto said: “It appears four employees from Rio Tinto’s Shanghai office have been detained for questioning by Chinese authorities in Shanghai. The reasons for these actions are unclear. Rio Tinto intends to cooperate fully with any investigation the Chinese authorities may wish to undertake and has sought clarification on what has occurred.”

The statement continued, “Rio Tinto is concerned about the employees’ well-being and is doing everything possible to help them and support their families.”

On Wednesday, The Shanghai Securities News said the case could involve commercial bribery. That article was posted on the web site of Xinhua, China’s official news agency.

Mr. Smith, the foreign affairs minister, said Mr. Hu was a longtime Rio employee who had worked in China for many years. His wife is also an Australian citizen.

In his remarks to journalists Wednesday, Mr. Smith said: “The Australian government was very surprised by both the detention and the reason for the detention given by the Chinese authorities.”

Mining Giant Scraps China Deal
June 6, 2009

SHANGHAI — The Chinese government’s largest investment in a Western company, a proposed $19.5 billion stake in the Australian-British mining giant Rio Tinto Group, collapsed Friday, dealing a blow to China’s global corporate ambitions and its efforts to gain clout in the natural resources market.

The board of Rio Tinto announced the decision after meeting in London on Thursday, saying the company had ended the deal struck in February to sell the stake to the Chinese state-owned Aluminum Corp. of China, also known as Chinalco.

The board said in a statement Friday that it would instead raise about $20 billion by issuing new stock and forming a joint venture with its longtime rival, the Anglo-Australian mining giant BHP Billiton.

The China deal, which would effectively have expanded Chinalco’s stake of 9.3 percent in Rio to 18.5 percent, had drawn stiff political opposition in Australia, where mineral riches have fueled prosperity and where some have begun to fear China’s power in the region. Institutional investors had also expressed skepticism about the agreement, with some calling it a sweetheart deal for the Chinese government.

Chinalco said it regretted the decision and had worked hard to try to revise the deal to reflect changed market conditions, as well as the response from shareholders and regulators.

“As a result, we are very disappointed with this outcome,” Chinalco’s president, Xiong Weiping, said in a statement.

In its statement, Rio Tinto said that it had agreed to raise $5.8 billion through a venture with BHP Billiton and that it planned to raise $15.2 billion more through a stock offering. Rio agreed to pay Chinalco a $195 million breakup fee.

In Australia and elsewhere, the Rio-Chinalco deal has been viewed as a corporate landmark, a crucial test of whether the West’s shareholder-driven capitalism could mesh with a Chinese model that is ultimately under state control.

The collapse of the deal will rank alongside the failure by a Chinese company in an attempt to take over Unocal, the American oil company, in 2005. It will provide new evidence that Chinese attempts to extend its global corporate reach are often limited by nationalistic reactions abroad.

The Unocal deal collapsed amid furious debate in the United States about the wisdom of selling strategic assets to China and over China’s human rights record.

Until recently, Rio and Chinalco had strongly defended the investment, which would have made the Chinese government Rio’s single biggest shareholder by far and given it an advisory role in the company’s operations. Chinalco would also have gained substantial stakes in individual mines in several countries.

In return, Rio would have received a sorely needed injection of cash to retire a portion of its $39 billion in debt, amassed mostly in an ill-timed 2007 purchase of the Canadian aluminum maker Alcan. Rio would have formed a strategic partnership with Chinalco that company officials say would have given it greater access to Chinese customers and opportunities to search for ores in China.

The deal was struck at the depths of the collapse in global commodities and stock markets last year. The share price for Rio had been severely depressed, not only by falling commodity prices but also by a costly defense against a proposed and potentially lucrative takeover by BHP Billiton.

But the tentative agreement came under increasing fire as the global downturn waned, raising metals prices and Rio’s stock price considerably from their earlier lows. Last February, shares in Rio Tinto sold for $26.31 in London. On Friday, they were at $48.01 in early trading.

Institutional shareholders complained that Rio should raise money through a new stock issue instead of selling a dominant stake to the Chinese government, which they argued had an interest in keeping the price of ores as low as possible.

Chinalco insisted that it was independent of the Chinese government, and Australian regulators ruled that the Chinese would not be able to affect the price of iron ore, one of Rio’s main products, even with the proposed stake in the company.

But those declarations failed to sway some critics, who argued that Chinalco’s proposed investment followed the government’s declared strategy of diversifying its global investments in resources as a way of hedging against price increases. The Chinese are such large consumers of some metals, like iron ore, that they already have some say over prices.

Opposition politicians in Australia savaged the deal, calling it evidence that Prime Minister Kevin Rudd, a Mandarin-speaking former envoy to Beijing, was too cozy with the Chinese government. A television commercial nationally broadcast in the past week showed scenes of the Chinese Army’s 1989 assault on pro-democracy demonstrators in Tiananmen Square and charged that Mr. Rudd “bears gifts to the Chinese military regime by allowing control of strategic mineral resources in Australia.”

A Nationals senator, Barnaby Joyce, one of the Australian politicians who opposed the Rio-Chinalco deal, said the falling out was “great for the Australian people.”

“We do not have the complications of the Communist Peoples’ Republic of China’s government owning the wealth of Australia, in the ground in Australia,” Mr. Joyce told the Australian Broadcasting Corp. on Friday.

Mr. Rudd said the country was still open to further Chinese investment, but that future bids would be weighed against Australian national interests. He said that politics were not responsible for the collapse of the deal.

As the debate over the Rio investment grew louder, Chinese officials complained about what they called protectionism and nationalism. The Australian Foreign Investment Review Board, which scrutinizes deals that involve big stakes in Australian companies, was expected to rule on the Chinalco investment this month or early next month.

The proposed investment was seen as another sign of China’s growing global clout and its need for the ingredients that help produce the steel used in the country’s fast-paced building boom. Chinese companies have been on the prowl around the world over the past few years, striking supply contracts and buying corporate stakes that secure long-term access to oil, iron ore, rare earth metals and other natural resources.

The Chinese have also made major investments in recent years in real estate, agriculture and international finance. Just in the past week, the Chinese sovereign wealth fund agreed to spend more than $1 billion to increase its already significant stake in Morgan Stanley, the Wall Street investment bank.

Under the Rio deal, Chinalco had offered $7.2 billion to purchase convertible bonds in Rio Tinto and $12.3 billion in cash for stakes in Rio’s aluminum, iron ore and copper assets in the United States, Australia and Chile. The bonds could have been converted to stock.

Uneasy Engagement: Australia, Nourishing China’s Economic Engine, Questions Ties
June 3, 2009

SYDNEY, Australia — If outlanders tend to associate Australia with kangaroos, broad-brim leather hats and an opera house, many Australians are different. They think of iron ore and bauxite, copper and coal, nickel, gold and uranium, a trove of mineral riches that is their nation’s birthright and the bedrock of its prosperity.

Which explains much of the breast-beating that has ensued since the Chinese announced plans this year to buy a big chunk of it.

Since three state owned Chinese companies said they would buy stakes in Australia’s storied mining industry totaling $22 billion — as much as China’s entire investment here in the last three years — some of this nation’s 21.3 million people have reacted with aggrieved nationalism.

The government of Prime Minister Kevin Rudd, which generally favors the sales, has been savaged as naïvely cozy with China, a view some in his own military appear to share. Opposition politicians have flogged the specter of an Australian future more or less as a giant open-pit mine in which the locals toil, but Beijing takes the profits.

“It’s the Communist People’s Republic of China, 100 percent Communist-owned, buying up sections of the country and minerals in the ground which they will then sell to the Communist People’s Republic of China,” said Barnaby Joyce, who is a leader of the National Party in Parliament. “And we’re going to live off the commission on the way through. They’ll try to make sure we get as little as possible.”

But a few months after the first of the deals was announced, a sharp initial backlash has given way to a more subtle queasiness over whether Australia’s place in the region, anomalous but secure for so long, is about to be altered by the new Chinese giant looming over its horizon.

Nor is Australia alone. From the Philippines to Vietnam, China’s neighbors are recalculating the benefits — and potential deficits — of life in the shadow of a newly dominant nation.

Australia has always been the West’s outpost in the East, the British penal colony with American spunk and European joie de vivre. But seemingly overnight, China has become Australia’s biggest trading partner, one of its biggest tourism customers, the largest single buyer of its government debt, a major buyer of farmland and real estate.

China’s hunger for steel gobbles up half of Australia’s iron ore exports, and its textile factories buy more than half of Australia’s wool. Over 120,000 Chinese students throng to Australian schools and universities.

Although China’s purchases remain dwarfed by cumulative investments of the Americans and the British, they are growing much faster.

And suddenly, Australians are stepping back, realizing that their new best friend is someone they really do not know very well, much less trust.

“The momentum has shifted from being broadly receptive to these deals to having a hard think at this,” said Alan DuPont, who heads the Center for International Security Studies at the University of Sydney. “This is not just about China and Australia. It’s about how the world sees China playing its role in the future as a great power.”

Surviving Corporate Invasions

This is not a new question. More than a century ago, Australians fretted about becoming vassals of the resource-hungry British Empire; then, in the mid-1900s, they feared becoming an American subsidiary. When Japan Inc. began snapping up companies in the 1970s, suspicion of Tokyo ran rampant.

The British and Americans proved good corporate citizens, however, and Japan’s expansion faded amid economic problems. Now, Australians are asking whether China will be different.

In one way, it assuredly is. Western companies, if at one time equally ravenous for Australia’s resources, are not direct appendages of their national governments. The dominant shareholder in major Chinese resources companies is the Chinese government.

China has 115,000 state owned companies; the cream are more than 150 giants controlled by the central government. Those corporations — in mining, steel, finance, communications and other crucial areas — seek to make profits much as Western companies do. Government boards audit them, appoint their top executives and evaluate their performance, but in general, the companies insist, Communist Party leaders do not meddle in business strategy.

Even if that is true, China has long insisted on maintaining state control over companies in crucial industries, blurring the line between national and corporate interests.

Take steel. China makes more steel than any other nation, but it is highly dependent on iron ore imports to keep its mills humming. That raises suspicions that China may want big stakes in mining companies now to help ensure stable prices in the future.

But if China works to keep iron ore prices stable, that might benefit steel producers more than it does Australian mining companies. That concern has only grown in recent months, as China’s largest steel producers have rejected as insufficient offers of lower prices from Australian mining companies.

There is also the question of whether China’s stake in strategic industries — like its investment in United States Treasury bonds — could one day morph from a business deal to an instrument of diplomatic influence.

The Chinese bids for parts of the three Australian mining companies — Fortescue Metals, Oz Minerals and Rio Tinto Ltd. — have been raptly watched for Australia’s answers. So far, they are mixed.

The smallest deal, an $840 million bid for part of Fortescue, a struggling iron ore miner, won Australian regulators’ quick approval. But Australia’s foreign investments review board, the central gatekeeper for overseas purchases, vetoed part of a $1.8 billion bid for Oz, the world’s second largest zinc miner. The reason: Australia’s military raised the prospect of Chinese espionage at an Oz mine not far from an aerospace test site. A pared-down deal was approved after the suspect mine, the core of Oz Minerals’ assets, was excised from the deal.

But it is the proposed purchase by the Aluminum Company of China, or Chinalco, of $19.5 billion in Rio Tinto stock, bonds and mining rights — China’s biggest investment in a foreign company — that has caused the most angst.

Chinalco, which bought 9.3 percent of Rio Tinto in 2008, proposed taking a larger stake after the global economic collapse drove Rio into financial straits. If approved, the new investment would give China an 18.5 percent share of the world’s third largest mining company.

Chinalco unequivocally asserts its independence. “Chinalco operates as a commercial entity, at arm’s length from Chinese political processes,” the company’s Australian spokesman said in a written response to questions.

Many Australian experts agree. Modern Chinese corporations are state-run in name only, Ross Garnaut, an economist, former Australian ambassador to Beijing and himself the head of a gold-mining company, said in an interview. In practice, he said, they are just like their Western counterparts — fiercely competitive, and focused on profit.

“You don’t know anything about the dynamics of relations between major corporations in China if you think a major aluminum company like Chinalco would sacrifice its profits to increase profits for one of its rivals in the steel industry,” he said. Even Australia’s antitrust regulators have concluded that the Chinese would be unable to influence the price of iron ore, a crucial Rio Tinto product, were the Rio deal to go through.

Intentions Arouse Suspicions

Yet other experts have a much different view of China’s intentions. Paul Glasson, a Shanghai-based Australian who brokers deals between Chinese and Australian businesses, notes that China’s domestic reserves can meet demand for fewer than half of 45 strategic minerals. By 2020, it will have sufficient supplies of only six.

“In a nation of 1.3 billion people, with the complex issues they face, with such resource deprivation, would it be wise for the government to abdicate that responsibility to S.O.E.’s?” he asked, using the abbreviation for state owned enterprises. “Claiming the head doesn’t know what the body is doing just makes the situation difficult.”

Mr. Glasson says state ownership actually brings advantages — among them, deep pockets and a focus beyond the next quarterly statement — that any merger partner might find attractive. But Beijing’s denial of a role in its state owned companies, he said, is creating a credibility problem.

In fact, Chinalco would be very much a junior partner if the Rio deal were to go through, with just two seats on a 17-seat board of directors. Chinalco would have to recuse itself from any Rio issues that posed a conflict of interest.

Chinalco would also not be able to guarantee a supply of ore to other Chinese companies, although the companies envision new efforts to market iron and aluminum ore inside China.

Shareholders at Rio’s annual meeting in April were unimpressed. They denounced the proposed deal as a fire sale of assets to a government buyer whose interests were starkly at odds with their own. As if to underscore the point, Rio’s share price has risen sharply since the Chinalco agreement was announced, suggesting that Chinalco shrewdly struck a deal at the nadir of the financial crisis. With every gain in Rio’s stock price, the Chinalco deal looks less attractive.

Some institutional investors have suggested that they will oppose the bid, which requires shareholder approval, even if regulators approve it this year. And that seems in some question.

Allies of Prime Minister Rudd argue that increased Chinese investment pumps money into Australia’s economy and opens new trade opportunities. But Mr. Rudd’s opponents say he does Beijing’s bidding. Among a drip of well-timed news leaks were claims that Chinese spies sought to hack into Mr. Rudd’s laptop during last year’s Olympic Games, and that his defense minister had failed to disclose gifts from a Chinese friend with ties to Beijing’s military establishment.

Those allegations have been flying even as the Australian military has become more focused on China as a potential rival. A newly issued defense strategy proposes the biggest Australian military buildup since World War II, driven in part by a forecast of rising Chinese economic and military power, and a slow American fade in the Pacific.

And recently, a wealthy Australian businessman began a television advertising blitz opposing the Rio-Chinalco deal, featuring Mr. Joyce, an opposition leader. The theme — that Australia is selling its mineral wealth to a “foreign government” that may not have Australians’ interest foremost — is unlikely to affect regulators’ deliberations. But it stokes a larger disquiet of which Mr. Rudd’s government is acutely aware.

Mr. Rudd, a Mandarin-speaking ex-diplomat in Beijing, has not helped his cause: after an unannounced meeting with China’s propaganda minister in Canberra, Australia’s capital, he lobbied for a greater Chinese role in global finance at the Group of 20 economic meeting in London, leading critics to dub him China’s “roving ambassador.”

Mr. Rudd shrugged off the gibes, but seemed stung: in London, his staff quietly asked that he not be seated next to Beijing’s ambassador to Australia during a television broadcast (the request was refused).

Australia’s foreign investments board has given itself an additional 60 days to consider the Chinalco-Rio deal. But hopes that some of Australians’ unease might ebb during that breather took a hit in May, when another state owned Chinese company, China Nonferrous Metal Mining Group, proposed a $184 million purchase of 51.6 percent of another miner, Lynas Corporation.

Lynas, which mines rare-earth minerals, also has been left short of cash by the global economic crisis. Critics were quick to note that China Nonferrous operates huge nickel and iron ore mines in Myanmar, widely denounced as one of the world’s most repressive nations, and has extensive gold-mining operations in North Korea.

“So Lynas would become part of a group which makes hay in Burma. Can the government live with that?” The Australian, one of the nation’s major newspapers, asked. “What are the rules about ethical investments?”

The executives at Chinalco, which also has operations in Myanmar, might be expected to rue the bad timing of China Nonferrous. On the other hand, it could be promoted as evidence that the government does not stage-manage corporate strategy.

But at least one Chinalco executive no longer has those worries. The company’s chairman, Xiao Yaqing, the architect of both the 2008 and 2009 purchases of Rio assets, left the company in March after being promoted — to deputy head of the State Council, the team of cabinet ministers that sets policy for all China.

CHINA STIMULUS PACKAGE? Out with the old, historic neighborhoods, in with the high density new - dated before it is ever built!

To Protect an Ancient City, China Moves to Raze It
May 28, 2009

KASHGAR, China — A thousand years ago, the northern and southern branches of the Silk Road converged at this oasis town near the western edge of the Taklamakan Desert. Traders from Delhi and Samarkand, wearied by frigid treks through the world’s most daunting mountain ranges, unloaded their pack horses here and sold saffron and lutes along the city’s cramped streets. Chinese traders, their camels laden with silk and porcelain, did the same.

The traders are now joined by tourists exploring the donkey-cart alleys and mud-and-straw buildings once window-shopped, then sacked, by Tamerlane and Genghis Khan.

Now, Kashgar is about to be sacked again.

Nine hundred families already have been moved from Kashgar’s Old City, “the best-preserved example of a traditional Islamic city to be found anywhere in central Asia,” as the architect and historian George Michell wrote in the 2008 book “Kashgar: Oasis City on China’s Old Silk Road.”

Over the next few years, city officials say, they will demolish at least 85 percent of this warren of picturesque, if run-down homes and shops. Many of its 13,000 families, Muslims from a Turkic ethnic group called the Uighurs (pronounced WEE-gurs), will be moved.

In its place will rise a new Old City, a mix of midrise apartments, plazas, alleys widened into avenues and reproductions of ancient Islamic architecture “to preserve the Uighur culture,” Kashgar’s vice mayor, Xu Jianrong, said in a phone interview.

Demolition is deemed an urgent necessity because an earthquake could strike at any time, collapsing centuries-old buildings and killing thousands. “The entire Kashgar area is in a special area in danger of earthquakes,” Mr. Xu said. “I ask you: What country’s government would not protect its citizens from the dangers of natural disaster?”

Critics fret about a different disaster.

“From a cultural and historical perspective, this plan of theirs is stupid,” said Wu Lili, the managing director of the Beijing Cultural Protection Center, a nongovernmental group devoted to historic preservation. “From the perspective of the locals, it’s cruel.”

Urban reconstruction during China’s long boom has razed many old city centers, including most of the ancient alleyways and courtyard homes of the capital, Beijing.

Kashgar, though, is not a typical Chinese city. Chinese security officials consider it a breeding ground for a small but resilient movement of Uighur separatists who Beijing claims have ties to international jihadis. So redevelopment of this ancient center of Islamic culture comes with a tinge of forced conformity.

Chinese officials have offered somewhat befuddling explanations for their plans. Mr. Xu calls Kashgar “a prime example of rich cultural history and at the same time a major tourism city in China.” Yet the demolition plan would reduce to rubble Kashgar’s principal tourist attraction, a magnet for many of the million-plus people who visit each year.

China supports an international plan to designate major Silk Road landmarks as United Nations World Heritage sites — a powerful draw for tourists, and a powerful incentive for governments to preserve historical areas.  But Kashgar is missing from China’s list of proposed sites. One foreign official who refused to be identified for fear of damaging relations with Beijing said the Old City project had unusually strong backing high in the government.

The project, said to cost $440 million, began abruptly this year, soon after China’s central government said it would spend $584 billion on public works to combat the global financial crisis.  It would complete a piecemeal dismantling of old Kashgar that began decades ago. The city wall, a 25-foot-thick earthen berm nearly 35 feet high, has largely been torn down. In the 1980s, the city paved the surrounding moat to create a ring highway. Then it opened a main street through the old town center.

Still, much of the Old City remains as it was and has always been. From atop 40 vest-pocket mosques, muezzins still cast calls to prayer down the narrow lanes: no loudspeakers here. Hundreds of artisans still hammer copper pots, carve wood, hone scimitars and hawk everything from fresh-baked flatbread to dried toads to Islamic prayer hats.

And tens of thousands of Uighurs still live here behind hand-carved poplar doors, many in tumbledown rentals, others in two-story homes that vault over the alleys and open on courtyards filled with roses and cloth banners.

The city says the Uighur residents have been consulted at every step of planning. Residents mostly say they are summoned to meetings at which eviction timetables and compensation sums are announced.

Although the city offers the displaced residents the opportunity to build new homes on the sites of their old ones, some also complain that the proposed compensation does not pay for the cost of rebuilding.

“My family built this house 500 years ago,” said a beefy 56-year-old man with a white crew cut, who called himself Hajji, as his wife served tea inside their two-story Old City house. “It was made of mud. It’s been improved over the years, but there has been no change to the rooms.”

In Uighur style, the home has few furnishings. Tapestries hang from the walls, and carpets cover the floors and raised areas used for sleeping and entertaining. The winter room has a pot-bellied coal stove; the garage has been converted into a shop from which the family sells sweets and trinkets. Nine rooms downstairs, and seven up, the home has sprawled over the centuries into a mansion by Kashgar standards.

But Hajji and his wife lost their life’s savings caring for a sick child, and the city’s payment to demolish their home will not cover rebuilding it. Their option is to move to a distant apartment, which will force them to close their shop, their only source of income.

“The house belongs to us,” said Hajji’s wife, who refused to give her name. “In this kind of house, many, many generations can live, one by one. But if we move to an apartment, every 50 or 70 years, that apartment is torn down again.

“This is the biggest problem in our lives. How can our children inherit an apartment?”

Building inspectors have deemed most of the oldest homes unsafe, including all mud-and-straw structures, the earliest form of construction. They will be leveled and, in many cases, rebuilt in an earthquake-resistant Uighur style, the city promises.

But three of the Old City’s seven sectors are judged unfit for Uighur architecture and will be rebuilt with decidedly generic apartment buildings. Two thousand other homes will be razed to build public plazas and schools. Poor residents, who live in the smallest homes, already are being permanently moved to boxy, concrete public housing on Kashgar’s outskirts.

What will remain of old Kashgar is unclear. Mr. Xu said that “important buildings and areas of the Old City have already been included in the country’s special preservation list” and would not be disturbed.

No archaeologists monitor the razings, he said, because the government already knows everything about old Kashgar.

Kashgar officials do have good reason to worry about earthquakes. Last October, a 6.8 magnitude quake struck barely 100 miles away. In 1902, an 8.0-magnitude quake, one of the 20th century’s biggest, killed 667 residents.

Some residents say they also prefer a more modern environment. The thousand-year-old design that gives the Old City its charm often precludes basics like garbage pickup, sewers and fire hydrants.

In Mr. Xu’s view, demolition will give the Uighurs a better life and spare them from disaster in one fell swoop.

All that said, there is a certain aura of forcible eviction about the demolition, an urgency that fear of earthquakes does not completely explain. The city is offering cash bonuses to residents who move out early — about $30 for those who vacate within 20 days; $15 if they move in a month. Homes are razed as soon as they become empty, giving some alleys a gap-tooth look.

On Kashgar television, a nightly 15-minute infomercial hawks the project like ginsu knives, mixing dire statistics on seismic activity with scenes of happy Uighurs dancing in front of their new concrete apartments.

“Never has such a great event, such a major event happened to Kashgar,” the announcer intones. He boasts that the new buildings “will be difficult to match in the world” and that citizens will “completely experience the care and warmth of the party” toward the Uighur ethnic minority.

The infomercial also notes that Communist Party officials from Kashgar to Beijing are so edgy over the prospect of an earthquake “that it is disturbing their rest.”

China has actually bought Treasury bonds at an accelerating pace over the last year, but the borrowing needs of the United States government have grown even faster. Prime Minister Wen Jiabao of China, right, and President Obama.  Sec'y of the Treasury leaves lunch early with banking industry to practice using chop sticks.

Treasury: Geither Will Discuss Deficits With China
May 28, 2009Filed at 11:43 a.m. ET

WASHINGTON (AP) -- A Treasury official says Secretary Timothy Geithner will discuss the Obama administration's efforts to deal with record U.S. budget deficits in talks next week with top Chinese officials.

The senior Treasury official said that Geithner would stress to the Chinese that the administration was committed to bringing down the deficits once the country has emerged from the current recession and financial crisis. Officials in China, the largest foreign holder of U.S. Treasury securities.

The Treasury official briefed reporters on talks Geithner will hold next Monday and Tuesday in Beijing under ground rules that prohibited use of his name in advance of the meeting.

Speaker Pelosi Dodges Human Rights on China Visit

May 25, 2009
Filed at 9:48 a.m. ET

SHANGHAI (AP) -- U.S. House Speaker Nancy Pelosi, long a fierce critic of Beijing, toured China's financial capital on Monday but stayed clear of human rights issues, though her presence emboldened protesters.

Pelosi's silence -- at least in public -- is especially notable since her visit comes a week ahead of the 20th anniversary of the 1989 crackdown on the Tiananmen Square democracy protests. During a 1991 visit to Beijing, she unfurled a banner that read ''To those who died for democracy in China'' in the square.

The apparent shift in her approach dovetails with President Barack Obama's new emphasis on engagement with Beijing, rather than confrontation over its human rights record. Visits by Pelosi and other senior U.S. figures have been aimed at highlighting cooperation between the two countries on a slew of issues.

The leading Democratic lawmaker's reputation as a strong human rights defender galvanized petitioners in Beijing, where several hundreds gathered Monday morning near the capital's South Railway Station to air their grievances. Dozens of police stood guard and most protesters were kept at bay behind police lines.

While many complaints were about individual cases, photos posted on the Chinese-language Web site Boxun.com, a U.S.-hosted Web site banned in China, showed one group of demonstrators holding up a black-and-white cloth banner that said: ''Welcome Pelosi. Pay close attention to human rights. SOS.''

In the past, Pelosi has been seen as an ardent supporter of China's oppressed. When Tibetans staged protests against Chinese rule last year, Pelosi visited their exiled spiritual leader, the Dalai Lama.  Pelosi did speak out on North Korea's nuclear program after Pyongyang announced that it had successfully carried out an underground nuclear test, weeks after threatening to restart its rogue atomic program.

''If today's announcement is true, these tests would be a clear violation of United Nations Security Council Resolution 1718, which requires that North Korea not conduct any further nuclear tests. Such action by North Korea is unacceptable and cause for great alarm,'' Pelosi said in a written statement.

Pelosi said she and other members of her delegation planned to urge Chinese leaders to use their influence to get the North to return to six-nation talks aimed at ending its nuclear program.  The lawmaker arrived over the weekend accompanied by a delegation of four Democrats and one Republican, all members of the House Select Committee on Energy Independence and Global Warming.  The main focus of their visit is on the shared goal of promoting clean energy and combatting climate change.

Pelosi met Monday with Shanghai Mayor Han Zheng. The two exchanged pleasantries but made no substantive remarks before reporters. The delegation will later meet in Beijing with President Hu Jintao and other leaders.

U.S. Senate Foreign Relations Committee chairman and Democrat Sen. John Kerry is also in China, and Treasury Secretary Timothy Geithner will arrive next week. He is expected to reassure Beijing about the strength of the U.S. dollar and thus the value of China's vast holdings of U.S. Treasury notes.

China Grows More Picky About Debt
May 21, 2009

HONG KONG — Leaders in both Washington and Beijing have been fretting openly about the mutual dependence — some would say codependence — created by China’s vast holdings of United States bonds. But beyond the talk, the relationship is already changing with surprising speed.

China is growing more picky about which American debt it is willing to finance, and is changing laws to make it easier for Chinese companies to invest abroad the billions of dollars they take in each year by exporting to America. For its part, the United States is becoming relatively less dependent on Chinese financing.

China has actually bought Treasury bonds at an accelerating pace over the last year — notwithstanding Chinese officials’ complaints about American profligacy. But the borrowing needs of the United States government have grown even faster. So China represents a rapidly shrinking share of overall purchases of Treasury securities. “China’s demand for Treasuries has increased over the past year, but it hasn’t increased at anything like the pace of the Treasury’s sale of new Treasury bonds,” said Brad W. Setser, a specialist in Chinese financial flows at the Council on Foreign Relations.

Americans and investors elsewhere are buying Treasuries instead. They are saving more and have been shifting out of other investments — including equities until the past two months — and into Treasuries.

China bought less than a sixth of the Treasuries issued in the 12 months through March. Less than two years ago, by contrast, Chinese purchases of Treasuries, which included purchases in the secondary market as well as newly issued securities, briefly exceeded the entire borrowing needs of the United States.

Financial statistics released by both countries in recent days show that China paradoxically stepped up its lending to the American government over the winter even as it virtually stopped putting fresh money into dollars.

This combination is possible because China has been exchanging one dollar-denominated asset for another — selling the debt of government-sponsored enterprises like Fannie Mae and Freddie Mac in a hurry to buy Treasuries. While this has been clear for months, new data shows that China is also trading long-term Treasuries for short-term notes, highlighting Beijing’s concerns that inflation will erode the dollar’s value in the long run as America amasses record debt.

So China’s rising purchases of Treasuries do not represent the confident bet on America’s future that they might seem to be on the surface. For instance, China does not appear to be dumping euros or yen to buy Treasuries, economists said.

That said, recent Chinese and American data suggest that an astounding 82 percent of China’s $2 trillion in foreign reserves is in dollars, according to calculations by Standard Chartered.

The development has caught the attention of the leaders of both countries.

“The long-term deficit and debt that we have accumulated is unsustainable — we can’t keep on just borrowing from China,” President Obama said last Thursday.

Wen Jiabao, prime minister of China, also has expressed concern.

“We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried,” Mr. Wen said earlier this year.

China now earns more than $50 billion a year in interest from the United States, Mr. Setser at the Council on Foreign Relations calculated.

China’s leaders were able to buy more Treasuries in recent months without buying more dollars because they have abruptly turned their back on the market for securities issued by government-sponsored enterprises.

China was the world’s biggest buyer of these securities a year ago, splashing out more than $10 billion a month.

But in the 12 months through March, it actually had net sales of $7 billion, and ramped up purchases of Treasuries instead.

China has also changed which Treasuries it buys. It has done so in ways calculated to reduce its exposure to inflation or other problems in the United States. As recently as a year ago, China actively bought long-dated bonds, seeking the extra yield they could bring compared to Treasury securities with short maturities, of which China bought virtually none.

But in each month since November, China has been buying more Treasury bills, with a maturity of a year or less, than Treasuries with longer maturities. This gives China the option of cashing out its positions in a hurry, by not rolling over its investments into new Treasury bills as they come due should inflation in the United States start rising and make Treasury securities less attractive.

The big question now for policy makers and economists alike lies in whether the Chinese government’s purchases of American securities will rise or fall in the coming months.

Two big forces are at work — but they are pushing Chinese investments in opposite directions and might cancel each other out.

The first big shift is that Chinese foreign exchange reserves might start growing again, after shrinking early this year.

A senior Chinese economic policy maker, Xu Lin, expressed concern here on Monday that the reserves might grow faster if speculators started pushing more foreign exchange into China in the months ahead.

China is strongly opposed to any significant appreciation or depreciation of its currency, Mr. Xu said at a press conference. But if international investors conclude that the Chinese economy has stabilized ahead of economies elsewhere, they may start pumping more money into the Chinese economy, he said.

To keep its currency at the same level, the Chinese government buys foreign currency flowing into the country in excess of China’s needs. If overseas demand for Chinese exports recovers, then China’s trade surplus could start widening again as well. This would also tend to fatten Chinese reserves.

But the countervailing trend is that the Chinese government is trying to foster channels for foreign currency to be pumped out of the country without the involvement of the central bank. The government has been buying a wider range of assets and encouraging the private sector to invest more money overseas.

“That’s part of a strategic move by the authorities to diversify,” said Wensheng Peng, the head of China research at Barclays Capital. “The reserves growth should accelerate because of inflows, but it will not be as large as what we observed in 2007 and the first half of 2008.”

The State Administration of Foreign Exchange, which is part of the central bank, issued draft regulations on Monday that would make it considerably easier for private companies to raise dollars in China to spend on overseas investments — a step that would lessen the need for the Chinese government to buy up those dollars.

This spring China has also been stepping up its purchases of commodities, which are usually bought in dollars. Iron ore has been piling up on Chinese docks, government stockpiles of crude oil and grain are being expanded and stockpiles are being started for products like gasoline, diesel and sugar.

After six years of silence, China unexpectedly disclosed last month that it had been gradually buying gold from domestic producers. The country’s reserves had climbed from 600 tons in 2003 to 1,054 tons, worth $31.8 billion at prices late Wednesday.

The disclosure, which produced a frisson of excitement in gold markets, may have been aimed at reassuring a domestic audience that the Chinese government was not putting all the nation’s savings into American dollars. But the actual investment was tiny compared with China’s foreign exchange reserves — and showed that China was accumulating gold at a much slower rate than foreign currency.

A person in periodic contact with China’s central bank, who insisted on anonymity to preserve his access, said that a Chinese central banker complained to him last year that “we have so much money and there’s so little gold, we can’t buy much without driving up the price.”

China Reports Dolphins Foiled Pirate Attack
By Robert Mackey
April 15, 2009, 4:01 pm

According to a report from China’s official news agency Xinhua, “thousands of dolphins” recently prevented an attack on Chinese merchant ships by Somali pirates in the Gulf of Aden. Xinhua’s Web site published the photograph above, and three others, which first appeared on the Web site of China Radio International on Monday.

It has to be said that none of the photographs actually shows the boats said to contain Somali pirates being blocked by the dolphins, but Xinhua reported news of the dolphin intervention as fact. Xinhua’s English-language report, about a group of merchant ships escorted through the dangerous waters by vessels from the Chinese navy, contains some translation errors, but describes the efforts of the newest members of the anti-piracy coalition in glowing, even poetic, detail:

"The Chinese merchant ships escorted by a China’s fleet sailed on the Gulf of Aden when they met some suspected pirate ships. Thousands of dolphins suddenly leaped out of water between pirates and merchants when the pirate ships headed for the China’s.

"The suspected pirates ships stopped and then turned away. The pirates could only lament their littleness befor the vast number of dolphins. The spectacular scene continued for a while."

Xinhua does not suggest that the cetacean force may have been part of a classified military program, but given that we know that the United States military has at least tried to train dolphins to work for the government, The Lede is not yet willing to rule out the possibility...

China’s Leader Says He Is ‘Worried’ Over U.S. Treasuries

March 14, 2009

BEIJING — The Chinese prime minister, Wen Jiabao, expressed unusually blunt concern on Friday about the safety of China’s $1 trillion investment in American government debt, the world’s largest such holding, and urged the Obama administration to provide assurances that its investment would keep its value in the face of a global financial crisis.

Speaking at a news conference at the end of the Chinese parliament’s annual session, Mr. Wen said he was “worried” about China’s holdings of Treasury bonds and other debt, and that China was watching United States economic developments closely.

“President Obama and his new government have adopted a series of measures to deal with the financial crisis. We have expectations as to the effects of these measures,” Mr. Wen said. “We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.”

He called on the United States to “maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.”

But he stopped short of any threat to reduce purchases of American bonds, much less sell any of them. Still, it is rare for any world leader to raise questions about the strength of United States treasuries.

It Mr. Wen raised the concerns at a session in which he praised China’s comparatively healthy economy and said that his government would take whatever steps were needed to end the country’s economic slump. He also predicted that the world economy would improve in 2010.

Mr. Wen’s remarks appeared to have been aimed partly at a domestic audience that is increasingly worried about the global economic turndown, and partly at the United States, which appears to be moving toward a “Buy American” strategy in its economic stimulus plans. His confident performance underscored the growing financial and geopolitical importance of China, one of the few countries to retain massive spending power despite slowing growth. It has the world’s largest reserves of foreign exchange, estimated at $2 trillion, the product of years of double-digit growth.

Economists say half of that money has been invested in United States Treasury notes and other government-backed debt. Some has also been deployed in major investment projects intended to prop up flagging growth at home.

The bulk of China’s investment in the United States consists of bonds issued by the Treasury and government-sponsored enterprises and purchased by the State Administration of Foreign Exchange, which is part of the People’s Bank of China.

China was the biggest single winner when the Bush administration put Fannie Mae and Freddie Mac into conservatorship late last summer and extended an explicit Treasury guarantee to the bonds issued by both of these government-sponsored enterprises. China’s holdings of the two enterprises’ bonds, estimated by credit rating agencies at $340 billion then, suddenly leaped in value by billions of dollars in a single day with the sharp narrowing then of the discount at which Fannie’s and Freddie’s bonds had previously traded with respect to Treasury bonds.

The Chinese government is in a difficult position on its American investments. If the United States government borrows less and engages in less fiscal stimulus, this could help prevent interest rates from rising in the United States and would preserve the value of China’s existing bond holdings.

But less government spending in the United States could also mean a slower recovery for the American economy and reduced American demand for Chinese goods. The United States imported 17.4 percent less from China in the first two months of this year compared to the same period last year, contributing to a record drop in Chinese exports that is braking the entire Chinese economy.

Some of China’s most controversial investments on the other side of the Pacific Ocean, judging by comments in Internet chat rooms, have been the purchases of shares in American financial institutions in 2007 by the China Investment Corporation, the country’s sovereign wealth fund, which was bankrolled nearly two years ago with $200 billion from its foreign reserves.

The China Investment Corporation’s most-publicized deal came in June 2007, when it spent $3 billion on shares of the Blackstone Group, a big private-equity fund, paying $29.605 a share. The stock closed on Thursday at $6.10, for a loss of 80 percent, or $2.4 billion of the initial investment.

A sharp narrowing of China’s trade surplus with the United States may result in reduced Chinese purchases of American bonds in any case. After China announced on Wednesday that its exports had plunged a record 25.7 percent in February, investment bank economists predicted that China’s trade surplus could fall by as much as half from last year, to around $155 billion. That would leave China with fewer dollars with which to buy foreign bonds, particularly as the pace of investment flows into China has also slowed sharply.

During her visit to China last month, Secretary of State Hillary Rodham Clinton publicly assured Beijing that its American holdings remained a reliable investment. On Friday, Mr. Wen neither detailed his concerns about their safety nor said what sorts of new assurances he expected the United States to deliver.

But economists have cited several possible threats, led by the prospect that the dollar’s value will depreciate over time, lowering the value of China’s holdings.

“In the short run, the dollar is appreciating” because global investors see the American currency as a safe haven at a time of crisis, Bai Chong-En, who heads the economics department at Tsinghua University in Beijing, said in a telephone interview. “But we don’t know what’s going to happen in the long run. If the American stimulus package is financed mainly by borrowing, then that may affect the future value of Treasury securities.”

Some specialists also say that high inflation could erode the dollar’s value. Finally, some believe that China’s investment in American debt is now so vast that, should it need foreign exchange in some emergency, it would be unable to sell its Treasury securities without flooding the market and driving down their price.

“The only possibility, really, is that China will have to hold these bonds until maturity,” said Shen Minggao, the chief economist at Caijing, a Beijing-based business magazine. “If you start to sell those bonds, the market may collapse.”

At Friday’s news conference, Mr. Wen said he believed that China’s economic problems were less severe than in many Western nations because, he said, China’s banks remain relatively healthy. While the United States and Europe are battling both a recession and financial-system collapse, he said, “we haven’t had to use money to fill a financial hole.”

But he also conceded that it would be difficult to meet the government’s 2009 goal of an 8 percent growth in G.D.P., a rate that government experts have repeatedly said was needed to create sufficient new jobs and reduce the chance of social unrest.

China has lost millions of jobs in recent months, including at least 20 million factory and construction jobs once held by migrant laborers.

He also defended the government’s own four trillion yuan, or $585 billion, stimulus program, saying it had been “misunderstood” by some who questioned whether the package was completely new or partly composed of older projects for which money had already been allotted.

He said that the national government’s 1.18 trillion yuan, or $173 billion, contribution to the plan was a new investment in “public welfare, technological innovation, environmental protection and infrastructure projects. The remainder of the package is to be financed by local governments, banks and private investors.

That two-year investment should be sufficient to help China’s recovery, he said, but “we have prepared enough ammunition and we can launch new economic stimulus policies at any time.”

Mr. Wen’s two-hour news conference — by tradition, his only meeting with the media each year — was dominated by questions about the economy. But he also sidestepped a question about North Korea’s apparent plans to launch a new missile capable of delivering a warhead to parts of the United States, saying only that “the most important thing is to resolve the key issues affecting the six-party talks” over rolling back North Korea’s nuclear-weapons program.

Mr. Wen also rejected suggestions that the massive Chinese military presence in Tibet and ethnic Tibetan parts of China — parts of which are under a virtual lockdown this month, the 50th anniversary of a failed uprising against the Beijing government — indicated that China’s policies toward Tibet were flawed.

“The general situation in Tibet is stable and peaceful,” he said. “The peacefulness of Tibet and its ongoing progress have proven that the policies we have adopted are correct.”

Oliver Weiken/European Pressphoto Agency
The opening ceremony of the Chinese People’s Political Consultative Conference at the Great Hall of the People in Beijing on Tuesday.

China Reports Falling Prices
March 11, 2009

HONG KONG — Most economists still do not expect the Chinese economy to suffer a broad decline in prices this year, but statistics released on Tuesday did provide disturbing whiffs of possible deflation.

Consumer prices were 1.6 percent lower last month than a year earlier, the first decline since December 2002, the National Bureau of Statistics announced in Beijing. February’s result represented a precipitous drop from an inflation rate of 8.7 percent in February of last year, when rising prices were a top priority for the Chinese government.

Producer prices are falling even faster, dragged down mainly by lower prices for oil and other commodities, but also by a glut of factory capacity and a shortage of demand from exporters and Chinese buyers alike. Producer prices were 4.5 percent lower last month than a year earlier, after having shown annual increases of as much as 10 percent as recently as last summer.

There are few signs yet that demand is returning. Commerce Minister Chen Deming warned at a news conference in Beijing on Tuesday that China’s trade had continued to shrink in February -- exact figures are due for release later this week. And he cautioned that, “It’s fair to say in coming months we will see quite a grim picture.”

In yet another possible hint of deflation, an index of real estate prices in 70 Chinese cities also fell in February, inching down 0.3 percent from January and down 1.2 percent from a year ago.

For now, few economists are predicting that deflation will prove a chronic problem. For starters, the Chinese government has been very aggressively expanding the country’s money supply — and China’s state-controlled banks, having suffered few of the losses of their Western counterparts, have been following regulators’ instructions to step up their lending.  The Chinese government also plays a greater role in the market and in prices than many governments in the West. The government is moving to increase the prices at which it buys rice and wheat by 18 percent, for example, which should help peasants’ incomes and halt a decline in food prices that helped to drag down broader price indices in February.

The National Bureau of Statistics took the unusual step of issuing a statement on Tuesday that denied China faced possible deflation. The government agency noted that raw material prices had plunged around the world, a drop that may not be repeated this year, and that the timing of Chinese New Year may have had an effect — it fell in late January this year instead of in February.  Prices were also particularly high for many foods in February of last year because of severe snowstorms that were not repeated this year.

“The fact that the consumer price index and producer price index both declined in February cannot be used to come to a conclusion that deflation has appeared,” the National Bureau of Statistics said.

Prime Minister Wen Jiabao set a target last week of 4 percent inflation this year.  Yet there are many signs that supply exceeds demand for a wide range of goods and services. Hong Kong business leaders warn that most of their mainland factories are not running at full capacity, although only a few percent of 65,000 Hong Kong-owned factories in nearby areas of mainland China have actually closed.

“They may be operating at one-third or half of production” capacity, said Clement Chen, the chairman of the Federation of Hong Kong Industries, while adding that, “We haven’t seen a large number of closures.”

In a possible sign that real estate developers are running into financial difficulty and having to unload new houses and apartments at a faster pace, the real estate index of 70 cities was led downwards by a drop of 1.8 percent in new homes compared to a year ago. Prices of existing homes fell 0.7 percent.

Moody’s Economy.com predicted that real estate prices would continue to fall through this year in China. “In most parts of China, households will likely choose to hold on to their savings for the rest of the year rather than committing themselves to property purchases, especially since the recent decline in prices has been disheartening,” wrote Sherman Chan, an analyst in the company’s Sydney office, in a research note.

The Shanghai A-share stock market shrugged off the decline in consumer, producer and real estate prices, climbing 1.9 percent on Tuesday.

Economy to Dominate Annual Chinese Gathering

March 5, 2009

BEIJING — China’s national Legislature begins its tightly scripted annual meeting on Thursday with an agenda dominated by the ruling Communist Party’s two overriding concerns: riding out the global economic crisis and keeping citizens’ unhappiness with their lot from boiling over into public unrest.

In the nine-day session of the National People’s Congress, about the only suspense involves whether the government will propose to add still more stimulus spending to the $584 billion that China’s leaders already have pledged to help the slumping economy. On Wednesday, Asian and European stocks rose in part on hopes that it would.

Prime Minister Wen Jiabao is to speaking early on Thursday to the 3,000-odd delegates, and is expected by many analysts to set a target for 8 percent growth of China’s gross domestic product in 2009, the same as in previous years. The government has long said that that rate is needed to hold down unemployment and the potential for social unrest. The economy logged a 9 percent rate last year, even after a sharp slowdown in the last quarter.

But a number of experts believe that a 2009 growth rate of 6.5 percent or 7 percent, meager by recent Chinese standards, is increasingly likely. Some financial analysts predicted this week that the government will propose spending vast new amounts to head off a sharper decline, although the consensus view is that new spending, if any, will be more modest.

“The government could enlarge the plan a bit,” Shen Minggao, the chief economist for Caijing, a Chinese business magazine, said in an interview. But he said that fiscal conservatives would be wary of increasing a 2009 budget deficit that already appeared to be headed for a record.

The projected deficit is widely expected to reach 950 billion yuan, or nearly $140 billion, about 3 percent of China’s GDP. The previous record deficit, about 2.6 percent of a far smaller economy, was recorded in 2002.
One certainty is that whatever is proposed will be adopted. The delegates, the handpicked cream of the Communist Party establishment, have little taste for revolt. On Thursday, they will gather in the wedding-cake Great Hall of the People, on Tiananmen Square, for Wen’s two-and-a-half hour overview of China’s domestic and foreign-policy goals. Much of the rest of the session will be spent giving those goals ritual approval.

The lockstep is likely to be especially tight this year, because the government wants to present a united and confident front to a public battered by rising unemployment and falling incomes. The government estimated a month ago that 20 million of the nation’s 130 million migrant workers — the cheap-labor force that powered much of China’s construction and export booms — had lost their jobs.

A signal goal of China’s stimulus program is to ensure that the idle jobless do not become an engine of social unrest. Protests by laid-off or cheated workers are a not-infrequent occurrence, and the government has suggested that demonstrations will increase this year.

Already, the Beijing authorities have rounded up hundreds of would-be petitioners who traveled from other cities to the capital, many hoping to present grievances personally to the National People’s Congress delegates.

But if the National People’s Congress suffers a rubber-stamp image, its deliberations remain likely to illuminate the government’s still-murky plans toward economic and social stability — and, perhaps, a bit of its political calculation as well.

Experts will be watching Wen’s proposals closely to see not only how the proposed 4 trillion yuan stimulus will be spent, but how much is actually genuinely new spending. China’s central government is allotting only about 1.2 trillion yuan , or $175 billion, of the total; the rest is supposed to come from banks, investors and local governments, whose finances are especially opaque.

Most of the money is set to go to infrastructure projects, like roads and dams, that pump money quickly into the economy. But many outside experts and some party figures are calling for more money to be spent directly on people’s basic needs, from medical care to education to poverty, and the need for more social spending is likely to be vigorously debated at the meeting.

The delegates will consider one bill that would pour 850 billion yuan, or about $124 billion, into health care reform, setting up a national health insurance program and overhauling the medical care system. But even that amount would only boost annual health care spending to about 120 yuan, or $20, per person, a sum some analysts say is too little to provide meaningful relief.

“There’s an overinvestment in infrastructure,” Mao Yushi, the respected 80-year-old head of a Beijing research organization, said in an interview this week. “Money should be directed to help small businesses, for employment and social security, for medical insurance.”

In the past, such decisions have been the exclusive purview of party leaders. As this People’s Congress convenes, there are small signs that that is slowly changing.

On Sunday, Wen went on the Internet for nearly two hours to answer questions from Web-surfing citizens, issuing his own call for the government to be more transparent in its dealings. This week, the National Development and Reform Commission — the government body that is directing much of the stimulus spending — announced that it will post details of its spending plans on the Internet.

The delegates themselves also plan to engage in Internet chats with citizens, a Congress spokesman said this week.

Chinese stocks rose the most in four months on Wednesday as investors bet that further economic stimulus measures would be announced and that a wide range of Chinese companies would benefit. The Shanghai stock market gained 6.1 percent on Wednesday.

Reports of New Stimulus in China Lift Shares
March 5, 2009

Stocks rose around the world on Wednesday, as investors reacted to speculation that China may expand its stimulus measures.

Shares increased on reports that Premier Wen Jiabao of China was considering new spending measures on top of the $585 billion plan already proposed. An announcement could come as early as Thursday in China.

In early trading, the Dow Jones industrial average was 75 points or 1.1 percent higher, while the Standard & Poor’s 500-stock index rose 1.3 percent, climbing above 700. The Nasdaq rose 1.6 percent.

Producers of basic materials like steel, chemicals and plastic, which could benefit from government-financed construction projects, rose in early trading in New York. Energy shares also climbed as crude oil prices rose $2.41 to $44.06 a barrel.

The morning’s gains pared two days of losses that dragged two major stock indexes to their lowest levels since 1997. On Monday, the Dow fell below 7,000, and a day later, the S.&P. 500 fell 0.6 percent to dip below 700, taking its 2009 loss to 23 percent.

In afternoon trading, the DJ Euro Stoxx 50 index, a barometer of euro zone blue chips, rose 2.9 percent, while the FTSE 100 index in London increased 2.7 percent. The CAC 40 in Paris was up 2.4 percent and the DAX in Frankfurt 3.3 percent.

Most Asian markets were higher, breaking a three-day losing streak. The Tokyo benchmark Nikkei 225 stock average rose 0.9 percent, while the Hang Seng index in Hong Kong rose 2.5 percent, and the Shanghai Stock Exchange composite index gained 6.1 percent.

The S&P/ASX 200 in Sydney fell 1.6 percent, after a report showed the Australian economy contracted 0.5 percent in the fourth quarter. It was the first such decline in eight years, and came as a surprise to most economists, who had been expecting the country to eke out positive growth in the period.

Investors seemed to shrug off a report by ADP Employer Services that private sector job losses increased in February. Index futures fell slightly after the report, but eventually came back. ADP said private employers cut 697,000 jobs in February compared with a revised 614,000 jobs lost in January. The January job cuts were originally reported at 522,000.

Investors were bracing for another bleak monthly unemployment report to be released on Friday. The national unemployment rate has climbed to 7.6 percent since the recession began in December 2007, and economists expect it to reach 7.9 percent for February.

Market participants were also focused on the interest rate policy meetings Thursday of the European Central Bank and the Bank of England.

The dollar gained against most major currencies. The euro fell to $1.2532 from $1.2562 late Tuesday in New York, while the British pound rose to $1.4105 from $1.4051.

Prices of most government bonds slipped. The yield on the 10-year Treasury, which moves in the opposite direction of the price, ticked up one-tenth of a percent to 2.98 percent.

Question:  how long do you think China will keep propping up our economy?
Geithner Says China Is Manipulating Its Currency
January 23, 2009 - a day ahead, again!

WASHINGTON — Timothy F. Geithner, who took a big step toward confirmation as Treasury secretary on Thursday, told senators that the Obama administration believes China is “manipulating” its currency, suggesting a more confrontational trade stance toward that country than under the Bush administration.

Mr. Geithner’s comment, made in writing to the Senate Finance Committee hours before it voted 18 to 5 to recommend that the full Senate confirm him, is certain to anger the Chinese government and raise fears that it could sell off some of its huge reserves of dollars.

But it remained unclear whether Mr. Geithner was signaling that the new administration would make a legal finding that China is engaging in currency manipulation this spring, when it is required by a 20-year-old law to report to Congress on such issues.

“President Obama backed by the conclusions of a broad range of economists believes that China is manipulating its currency,” Mr. Geithner wrote. That stopped short of a charge that China is manipulating its currency intentionally to gain an unfair trade advantage, as the 1988 trade law requires for an official citation of “manipulation,” which in turn would trigger a United States diplomatic effort to get China to let the value of its currency, the yuan, rise.

Mr. Geithner’s statement was in response to a question submitted by Senator Charles E. Schumer, Democrat of New York, a Finance Committee member who has been among the most vocal China trade critics in Congress. Mr. Schumer welcomed the Geithner reply, saying in a statement, “Change is coming in a lot of places. This new administration has correctly declared the obvious.”

The National Association of Manufacturers, whose members have long pushed administrations of both parties to get tougher with China, likewise was pleased but also cautious given the potential for a U.S.-China confrontation to exacerbate the global economic crisis.

“It has to be done very carefully,” said Frank Vargo, vice president for international economic affairs at the N.A.M. “You know the world has changed a lot with the financial crisis and China has a lot in U.S. Treasuries. This needs to be done in a cooperative, not a confrontational, way.”

The vote came a day after Mr. Geithner endured hours of grilling over his failure to pay thousands of dollars in back taxes. That lapse caused considerable embarrassment for Mr. Geithner, even as some members of the panel said they were willing to accept his word that the failure was an honest mistake.

As president of the Federal Reserve Bank of New York, Mr. Geithner has played a central role in the financial rescue efforts of recent months, and President Obama has described him as the person who will be “the chief economic spokesman for my administration.”

As he awaited the committee vote on Mr. Geithner, the new president was holding a second day of meetings with his economic advisers.

“In the current grave economic circumstances, America’s next Treasury secretary will not have the luxury of being simply at expert or simply a leader,” said Senator Max Baucus, the Montana Democrat who heads the Finance Committee. “Tim Geithner will need to be both.”

Senator Maria Cantwell, Democrat of Washington, said she looked forward to working with the new Treasury chief, and that she hoped he would help put in place “a very strong regulatory framework” to prevent future financial crises like the one gripping the nation now.

Mr. Geithner’s abilities and credentials were never at issue, and even those conservative Republicans who differ with Mr. Geithner ideologically said they were glad to support him.

“I’m not sure he comes from where I come from, but he’s the president’s nominee,” said Senator Mike Crapo, Republican of Idaho.

Senator Orrin G. Hatch, Republican of Utah, said he was sure Mr. Geithner was “a person of great integrity, even though he’s made these mistakes,” an allusion to the back-taxes issue. Mr. Hatch praised Mr. Geithner as “non-ideological, which to me is very important.”

Senator John Cornyn, Republican of Texas, said he was “willing to give Mr. Geithner the benefit of the doubt” on his tax mistakes. But, he added pointedly, he was not willing to give the benefit of the doubt to the so-called “masters of the universe,” apparently meaning the once-mighty Wall Street figures who have borne much of the blame for the current economic troubles.  The other Republicans who endorsed Mr. Geithner were Olympia J. Snowe of Maine and John Ensign of Nevada.

The five senators who voted “no” are all Republicans: Charles E. Grassley of Iowa, Jon Kyl of Arizona, Jim Bunning of Kentucky, Pat Roberts of Kansas and Michael B. Enzi of Wyoming.

Mr. Kyl was Mr. Geithner’s chief antagonist on the tax issue. “He has not been as candid with me or the committee as I think he should have been,” Mr. Kyl said.

Mr. Enzi said, “I’m really disappointed that we’re even voting on this,” adding that past nominees for office have been disqualified for lesser infractions.

Arrests Increased in Chinese Region
January 6, 2009

BEIJING — Authorities in the western Chinese region of Xinjiang approved the arrests of nearly 1,300 people in the first 11 months of last year on suspicion of “endangering state security,” according to a report published Sunday in an official newspaper. That is an extraordinary increase in the arrests on that particular charge compared with the number in 2007 and is drawing scrutiny from human rights groups.

The official newspaper, the Procuratorial Daily, which is published by the Chinese equivalent of the attorney general’s office, said that prosecutors in Xinjiang approved 1,295 arrests of individuals and indicted 1,154 of them. In total, there were 204 cases that were opened. The newspaper article was also posted on a Xinjiang government Web site, lending legitimacy to the statistics.

In 2007, the number of people arrested across all of China on suspicion of endangering state security was 742, according to government statistics. Prosecutors indicted 619 of them.

Of those total numbers, about half were from Xinjiang, said Nicholas Bequelin, a China researcher for Human Rights Watch, citing statistics from the Xinjiang Yearbook, a government publication of regional statistics. So the numbers reported on Sunday by the official newspaper are a vast increase over the numbers from 2007.

“If this is confirmed, this is very alarming because it reflects that the threshold of what constitutes a state security crime was considerably lowered last year, in line with the campaign,” Mr. Bequelin said, referring to a campaign against political crimes and terrorism that the authorities in Xinjiang announced last year ahead of the Beijing Olympics.

Chinese officials have said that elements in Xinjiang, a large region that is the homeland of a Turkic-speaking Muslim people called the Uighurs, are a special threat to the regional and national governments, which are controlled by ethnic Han Chinese.

Many Uighurs chafe at what they call discriminatory policies in Xinjiang, and some advocate for independence. Since 2001, when the Bush administration began its war on terror, Chinese authorities have said they are battling the “three forces” of separatism, terrorism and religious extremism in Xinjiang. Waves of crackdowns have taken place.

In 2008, officials made many announcements of arrests and raids in Xinjiang, especially during the approach of the Beijing Olympics, which took place in August. That month, a series of attacks on security forces unfolded in parts of Xinjiang. Wang Lequan, the regional secretary of the Communist Party, said at a meeting on Aug. 13 that the battle against the “three forces” was a “life or death struggle.”

The charge of endangering state security includes inciting separatism, inciting subversion, stealing state secrets and giving state secrets to foreigners. It can carry the death penalty.

The Duihua Foundation, a nonprofit organization based in San Francisco that advocates for human rights in China, reported early last year that the number of arrests and legal cases in which people were accused of endangering state security has risen across China in recent years.

Government statistics show that of all the regions and provinces in China, Xinjiang has had by far the most number of cases of arrests on charges of endangering state security, Mr. Bequelin said.

Last month, Xinhua, the official state news agency, reported that two Uighur men had been sentenced to death for carrying out an attack on Aug. 4 in the city of Kashgar that ended up killing 17 paramilitary officers and wounding 15 others. But the Xinhua report said the men had been sentenced for murder and illegally producing weapons, not for endangering state security.

As for the statistics published Sunday, “there are a lot of unanswered questions,” Mr. Bequelin said.

“Nobody doubts there are individuals and groups that are advocating the use of anti-state violence, although these people seem to be very low in number and don’t constitute major threats to China’s state security,” he said. “The problem is that it’s impossible to tell from Chinese accounts what proportion of the total are these cases and what are illegitimate cases based on political reasons — people who have expressed dissenting religious and political views.”

The Chinese government maintains strict control over the practice of Islam in Xinjiang. For example, government workers are not allowed to worship at mosques, and the private teaching of the Koran and other religious material is forbidden. According to the law, though, these should not fall under the crime of endangering state security.

Chinese Court Jails 11 in Microsoft Piracy Ring
January 1, 2009

SHANGHAI — A court in southern China convicted 11 people on Wednesday of violating national copyright laws and participating in a sophisticated counterfeiting ring that for years manufactured and distributed pirated Microsoft software throughout the world.  The men were sentenced by a court in the city of Shenzhen to between one-and-a-half to six-and-a-half years in prison, according to court papers released late Wednesday.

Microsoft applauded the sentence in a statement released late Wednesday Beijing time, saying they were the stiffest sentences ever handed down in this type of Chinese copyright infringement case.  Microsoft has called the group part of “the biggest software counterfeiting organization we have ever seen, by far” and estimated its global sales at more than $2 billion.

The case is considered by some legal specialists to be a landmark because it involved a joint anti-piracy effort by the Federal Bureau of Investigation and China’s Ministry of Public Security. Law enforcement officials said it was also notable because the group operated like a multinational corporation, producing and distributing high quality counterfeit software that was created and packaged almost identically to the real products, despite Microsoft’s anti-piracy measures.

The counterfeit goods, like Windows XP and Office 2007, were sold using the Internet and exported from China, mostly shipped to the United States and Europe, where they commanded relatively high prices, investigators say. American and Chinese officials say they broke up the criminal ring in July 2007 with the arrest of 25 people in China, the dismantling of several manufacturing facilities and the confiscation of counterfeit software valued at more than $500 million.

“This is absolutely unprecedented,” David Finn, Microsoft’s associate general counsel for worldwide piracy and counterfeiting issues, said. “The size and scope of the operation is unlike anything we’ve seen before. We found their products in 36 countries.”

A separate trial involving nine suspects in Shanghai has not yet reached a verdict. That group has been accused of counterfeiting Microsoft and Symantec software and distributing it worldwide.  Legal specialists say that software pirates are becoming increasingly sophisticated and that the two court cases show that China is capable of exporting high quality, fully packaged software that could be easily sold as if it were the real thing. Even customs officials have been fooled by the counterfeits, which contained hologram markings and Microsoft’s difficult to replicate “certificates of authenticity,” investigators say.

Counterfeiting experts say the ring appeared to be less interested in selling its products inside of China, where counterfeit Microsoft software can be purchased for as little as $3. They were seeking the higher value export market.  Microsoft says its 75-member anti-piracy team had been tracking the ring since 2001. The F.B.I. began its operation, code-named “Summer Solstice,” in 2005 and cooperated with Chinese officials.

American politicians and corporate executives have been pressing China for years to crack down on piracy and intellectual property rights abuses involving everything from music and film to expensive software products. Software piracy is rampant in China, where about 80 percent of computers are believed to use counterfeit software, according to the Business Software Alliance.

The counterfeiting has caused some friction between American and Chinese officials, but China insists that it has made significant progress in its fight against intellectual property violators. Now, the successful prosecution of one of the biggest software counterfeiting rings is seen by the government as a major breakthrough.  Shenzhen officials declined to comment Wednesday on the court verdict.

Still, while the F.B.I. and Chinese officials say hundreds of millions of dollars worth of material were seized in a variety of international raids, the Shenzhen court found on Wednesday that the suspects on trial there had sold less than $200,000 worth of counterfeit products overseas.

It is unclear whether others pocketed much greater sums or whether many more ringleaders are still at large.  Most of those convicted Wednesday had only completed middle school, according to court documents. But members of the group had access to one of China’s biggest disk manufacturing companies in Shenzhen through the use of phony licenses, court papers said.

The counterfeit Microsoft software was produced using manufacturing equipment that costs millions of dollars, investigators said, and appeared in English, German, Italian, Korean, Spanish as well as other languages. The Chinese government found warehouses filled with molding machines, guilding machines, sealing machines and air compressors.

3 Chinese Ships to Leave Friday for Somalia
Filed at 8:40 a.m. ET

December 23, 2008

BEIJING (AP) -- Chinese warships on a mission to protect their country's vessels and crews from pirate attacks off Somalia will depart Friday, armed with special forces, helicopters and plans to share information with other countries working in the area.

The operation, China's first major naval mission abroad, will include destroyers Haikou and Wuhan as well as a large supply ship, said Rear Adm. Xiao Xinnian, Deputy Chief of Staff of the People's Liberation Army Navy. On board will be two helicopters and traditional weapons such as missiles and cannons.

''In light of the peculiarity of this operation, we have also dispatched some special forces ... these special forces will also carry some light weapons that correspond with the specific features and needs of this operation,'' Xiao said at a news conference Tuesday, without giving additional details.

Though the purpose of the mission was to protect Chinese ships and crews, Beijing has called for stepped up cooperation in anti-piracy efforts. China announced it was sending warships to the area after the U.N. Security Council authorized nations to conduct land and air attacks on pirate bases.

''During the escort operation, Chinese ships are ready and willing to strengthen information and intelligence sharing as well as (conduct) humanitarian rescue operations with vessels of relevant countries according to the situation on the ground,'' said Senior Col. Huang Xueping, spokesman of the Ministry of National Defense.

A Communist Party newspaper has said the mission would initially last three months, but Huang did not give an exact length, saying the duration would depend on the U.N. mandate and conditions in the area. The ships will depart Friday from the island province of Hainan in southern China.

A German Navy frigate, meanwhile, sailed out of Djibouti's harbor Tuesday to protect civilian ships in the region from Somali-based pirates.

The Karlsruhe, with some 240 sailors on board as well as speedboats and a helicopter, set off after lawmakers in Berlin last week approved Germany's participation in a one-year, European Union-led anti-piracy mission.

''There may be combat situations, and in this respect it would of course be a combat deployment,'' Defense Minister Franz Josef Jung said.

Piracy has taken an increasing toll on international shipping, especially in the Gulf of Aden, one of the world's busiest sea lanes. Pirates have made an estimated $30 million hijacking ships for ransom this year, seizing more than 40 vessels off Somalia's 1,880-mile (3,000-kilometer) coastline.  The shipping route now plagued by pirates is important to Germany, the world's largest exporter. Many of its goods are sent abroad by sea and the Gulf of Aden, which leads to the Suez Canal, is the quickest route from Europe to Asia.

China to the Rescue? Not!
December 21, 2008

Hong Kong

I had no idea that many of those oil paintings that hang in hotel rooms and starter homes across America are actually produced by just one Chinese village, Dafen, north of Hong Kong. And I had no idea that Dafen’s artist colony — the world’s leading center for mass-produced artwork and knockoffs of masterpieces — had been devastated by the bursting of the U.S. housing bubble. I should have, though.

“American property owners and hotels were usually the biggest consumers of Dafen’s works,” Zhou Xiaohong, deputy head of the Art Industry Association of Dafen, told Hong Kong’s Sunday Morning Post. “The more houses built in the United States, the more walls that needed our paintings. Now our business has frozen following the crash of the Western property market.”

Dafen is just one of a million Chinese and American enterprises that constitute the most important economic engine in the world today — what historian Niall Ferguson calls “Chimerica,” the de facto partnership between Chinese savers and producers and U.S. spenders and borrowers. That 30-year-old partnership is about to undergo a radical restructuring as a result of the current economic crisis, and the global economy will be highly impacted by the outcome.

After all, it was China’s willingness to hold the dollars and Treasury bills it had earned from exporting to America that helped keep U.S. interest rates low, giving Americans the money they needed to keep buying shoes, flat-screen TVs and paintings from China, as well as homes in America. Americans then borrowed against those homes to consume even more — one reason we enjoyed rising wealth without rising incomes.

This division of labor not only nourished our respective economies, but also shaped our politics. It enabled China’s ruling Communist Party to say to its people: “We will guarantee you ever-higher standards of living and in return you will stay out of politics and let us rule.” So China’s leaders could enjoy double-digit growth without political reform. And it enabled successive U.S. administrations, particularly the current one, to tell Americans: “You can have guns and butter — subprime mortgages with nothing down and nothing to pay for two years, ever-higher consumption and two wars, without tax increases!”

It all worked — until it didn’t.

With unemployment now soaring across the U.S., said Stephen Roach, the chairman of Morgan Stanley Asia, Americans — “the most over-extended consumer in world history” — can no longer buy so many Chinese exports. We need to save more, invest more, consume less and throw out most of our credit cards to bail ourselves out of this crisis.

But as that happens, we need China to take our discarded credit cards and distribute them to its own people so they can buy more of what China produces and more imports from the rest of the world. That’s the only way Beijing can sustain the minimum 8 percent growth it needs to maintain the political bargain between China’s leaders and led — not to mention pick up some of the slack in the global economy from America’s slowdown.

However, if I’ve learned one thing here, it’s just how hard doing that will be. China’s whole system and culture nourish saving, not spending, and changing that will require a huge “cultural and structural” shift, said Fred Hu, chairman for Greater China for Goldman Sachs.

In China, for instance, to buy a home you have to put at least 20 percent down, and the average is 40 percent. If you try to walk away from the mortgage, the bank will come after your personal assets. Moreover, China can’t just shift production from the U.S. market to its own consumers. Not many Chinese villagers want to buy $400 tennis shoes or Christmas tree ornaments.

Also, China has no real Social Security, health insurance or unemployment insurance. Without that social safety net, it’s hard to see how Chinese don’t end up saving most of their stimulus. “You open up the newspaper every day and you hear about this factory shutting down or that supplier going belly up,” said Willie Fung, whose company, Top Form International, is the world’s leading bra maker. “You can never be too careful in this financial climate.”

As such, “the world should not have a false hope that China can cushion the global downturn,” by stimulating its domestic demand in a big way, said Frank Gong, head of China research for JPMorgan Chase. “The best thing China can do is keep its own economy stable.”

It’s good advice. China is not going to rescue us or the world economy. We’re going to have to get out of this crisis the old-fashioned way: by digging inside ourselves and getting back to basics — improving U.S. productivity, saving more, studying harder and inventing more stuff to export. The days of phony prosperity — I borrow cheap money from China to build a house and then borrow on that house to buy cheap paintings from China to decorate my walls and everybody is a winner — are over.

China Subway Tunnel Collapses; 1 Dead, 16 Missing
Published: November 15, 2008
Filed at 9:07 a.m. ET

BEIJING (AP) -- A subway tunnel under construction in eastern China collapsed Saturday, trapping workers and creating a huge crater into which more than 10 vehicles plunged, a local official said. At least one person died and 16 were missing, state media reported.

A 65-foot (20-meter) -wide section of road over the construction site collapsed in the eastern city of Hangzhou, said a city official who gave only his surname, Zheng, as is customary. He said at least 10 vehicles had fallen into the crater.

Nineteen people were hospitalized, the official Xinhua News Agency said.

Water from a nearby river was seeping into the tunnel and had reached a depth of about 16 feet (five meters), Xinhua said. About 2,000 rescuers were struggling to pump out the water and search for the trapped people, who were believed to be mostly construction workers, it said.

Five scuba divers were searching for people inside the vehicles, the news agency said.

Witnesses said 27 people aboard a bus that fell into the crater managed to escape, it said.

A rescue spokesman said one person was killed and 16 were missing, Xinhua said.

It said the exact number of people trapped underground was still not known.

The 43-mile (68.8-kilometer) subway project is being built at a cost of $5.1 billion as is due to be completed in 2011, Xinhua said.

Attack in China Kills 16 Border Patrol Officers
Published: August 5, 2008

BEIJING — Two men armed with knives and explosives ambushed a military police unit in China’s majority Muslim northwest Monday morning, killing 16 officers and wounding 16 others before being arrested, according to the state media.

The assault, the deadliest terrorist attack in China since the early 1990s, took place 2,100 miles from Beijing, but just four days before the start of the Olympics, adding to security concerns in the capital as hundreds of thousands of foreign athletes, journalists and spectators begin to arrive.

China, anxious to avert any possibility of terrorist attack during the Games, has girded Beijing with soldiers, missile launchers and sidewalk cameras. The heavy surveillance did not prevent a small protest near Tiananmen Square on Monday by people who said they had not been compensated after their homes were demolished for a redevelopment project, but a swarm of police officers rapidly broke it up.

Security officials say they remain confident the events will take place without incident.

“We are prepared to deal with any kind of security threat and we are confident we will have a safe and peaceful Olympic Games,” said Sun Weide, a spokesman for the Beijing Organizing Committee.

The assault took place at dawn in the oasis city of Kashgar, as a brigade of border patrol officers jogged outside their barracks near the city center.

Officials suggested the attackers were associated with a murky separatist movement seeking independence for China’s Uighur minority, a Turkic-speaking Muslim people who dominate the Xinjiang Uighur Autonomous Region. Details were reported by Xinhua, the official news agency, and could not be independently verified Monday.

According to those accounts, two men driving a dump truck rammed their vehicle into the jogging soldiers, killing or wounding 10. The attackers jumped out of the truck, stabbing the soldiers with knives, and then lobbed homemade bombs at the barracks, although they exploded outside the compound, Xinhua said. The police arrested the attackers, whom they described as Uighurs, 28 and 33 years old, but did not release their names. Xinhua said the arm of one man was badly injured when an explosive device detonated in his hand. The police later discovered another 10 such devices and what it described as a “home-made gun” in the dump truck.

Images reportedly taken from local Kashgar television and briefly posted on the Internet showed bodies shrouded in white sheets or on stretchers. The attack, however, received no mention on the evening news in Beijing.

In recent years, China has waged an increasingly muscular battle against those it describes as radical Muslims. The East Turkestan Islamic Movement, a group listed as a terrorist organization by the United States and China, is blamed for much of the violence in Xinjiang. The attacks, as recounted by the Chinese government, often involve bombings targeting police stations, public buses, factories and oil pipelines.

Human rights advocates say the official accounts are often exaggerated to justify wide-ranging crackdowns on Uighur advocates of all stripes. Dilxat Raxit, a spokesman for the World Uyghur Congress, an exile group based in Germany, said the Chinese government had been systematically repressing the culture and religion of Xinjiang residents, and that such policies were radicalizing a growing number of people. “These policies are forcing more Uighurs to turn to more militant protest,” he said.

Chinese security strategists have cited groups like the East Turkestan Islamic Movement as the greatest threat to the Olympics. At a news conference last week, officials said a crackdown on Uighur separatists this year had led to the arrest of 82 people who they said were plotting to disrupt the Games through acts of terrorism.

Last month, the authorities executed two men and meted out heavy sentences to 15 others who they said were members of the East Turkestan Islamic Movement. The men were seized during a raid on what officials said was as a terrorist training camp. Also last month, the police raided an apartment in Urumqi, the capital of Xinjiang, and shot dead five men who they said were planning a “holy war” against the region’s ethnic Han population.

The official media has publicized other acts in recent months, including what the authorities said was a thwarted attack by three airline passengers who were planning to crash a Beijing-bound plane. The suspects were armed with containers of gasoline, according to Xinhua.

As in previous cases, the authorities presented little evidence to back up their claims. Yitzhak Shichor, a professor of East Asian studies at the University of Haifa in Israel who specializes in the East Turkestan Islamic Movement, voiced doubt that the attack Monday in Kashgar had been an act of terrorism. He said he thought the government was trying to continue its vilification of the group, which if it exists at all, does not have the manpower or weaponry to carry out a sophisticated attack. “I am very skeptical of this kind of information that comes only from Chinese sources,” he said.

But Li Wei, a counterterrorism expert at the China Institutes of Contemporary International Relations, disagreed, saying he thought the attack bore the hallmarks of Uighur separatists determined to grab the spotlight at a time when all the world is focusing on China. “They are trying to use the international media to make some noise, to let more people know them and create panic in society,” he said.

Trade Talks Broke Down Over Chinese Shift on Food
Published: July 31, 2008

HONG KONG — China and India have seldom shared the same views on free trade in recent years, but they ended up on the same side at the collapse of world trade talks in Geneva on Tuesday because China made an abrupt about-face.

Growing worries in China about food security now appear to have overridden the country’s previous commitment to free trade — a commitment that has served it well until now as the country with the world’s second-largest trade surplus after Germany.

Since joining the World Trade Organization in November 2001, China has been a strong and outspoken defender of free-trade principles. It has been especially critical of the United States, for example, for invoking so-called “safeguard” rules to prevent an increase of Chinese textile imports that threatened to put American manufacturers out of business.

But this week, China allied itself with Indian negotiators in insisting on safeguard rules for agriculture. China and India insisted that developing countries be allowed to impose prohibitively high tariffs on food imports from affluent countries to halt increases in imports that might put farmers in poor countries out of business.

The United States and other food exporters refused to accept the Chinese and Indian position on food safeguards, and talks broke down.

In an editorial Wednesday, the official newspaper China Daily denounced the draft text that had been under negotiation. “This proposal would put the livelihoods of vulnerable farmers of the developing world in danger due to cheap farms imports from the rich world,” the editorial said.

By contrast, the Chinese Commerce Ministry had denounced the American use of textile safeguards in 2003 by saying that it was contrary to international principles on “free trade, transparency and nondiscrimination.”

The strong Chinese stance on farm goods comes at a time of rapidly rising worry in Beijing about food security.

Food prices have soared around the globe in recent months, particularly for rice, and many countries with a food surplus have imposed limits on exports to retain supplies for their own populations. China has become increasingly focused on making sure that its farmers can continue to produce most of the food needed for the 1.3 billion people in that country, and leery of having to rely on imports.

President Hu Jintao of China made this point when he met with leaders from the Group of 8 nations in Japan on July 9. According to a Chinese government statement issued afterward, “Hu said China attaches great importance to agriculture and especially the food issue,” and he noted that China “pursues a food-security policy of relying on domestic supply, ensuring basic self-sufficiency and striking a balance through appropriate import and export.”

Chinese officials have put increasingly stringent limits on the paving over of farmland for factories, office towers and residential projects. They have also held domestic grain prices well below international levels through heavy subsidies, to the point that Chinese officials have been aggressively chasing smugglers who try to buy cheap Chinese rice and other grain and ship it to neighboring countries for resale.

Until now, China and India have had divergent vested interests in international trade negotiations because they joined the World Trade Organization under very different circumstances and are covered by remarkably different trade rules.

The world’s major trading powers forced China to lower or eliminate most of its trade barriers in exchange for letting it into the trade group in November 2001. China accepted this deal because its membership forced other countries to eliminate quotas and cut tariffs on Chinese exports _ — and these exports have been soaring ever since.

Since China has relatively few trade barriers to defend, and since its exports are highly competitive in many industries, it has tended until now to favor open markets.

By contrast, India still has some of the world’s highest barriers to imports.

India was one of the 23 founding members in 1947 of the trade group’s predecessor, the General Agreement on Tariffs and Trade. Since then, it has successfully argued that developing countries already in the global trading system should be allowed to keep much higher trade barriers to imports than affluent countries.

Kamal Nath, the Indian minister of commerce and industry, and the top Indian trade negotiator, said in a recent interview that developing countries needed to be able to protect their own food supplies. “Every country must first ensure its own food security,” he said.

Mr. Nath also contended that developing countries’ farmers have too often faced unfair competition from industrialized countries — a point that China repeated this week. The United States and the European Union agreed to accept some limits on their farm subsidies in negotiations this week, but their reductions were much more limited than developing countries wanted.

Western manufacturers facing competition from China have sometimes contended that China indirectly subsidizes its exports by controlling currency markets on a massive scale to hold down the value of its currency. China has accumulated $1.8 trillion in foreign exchange reserves through these controls, most of it in the past five years.

But currency market activities are not covered by World Trade Organization rules, and China has begun to allow gradual appreciation of its currency since 2005 — although it continues to put heavy limits on this appreciation.

There is a long history of countries’ endorsing free trade in manufactured goods while opposing free trade in farm products. The United States and Western European nations created the current international trading system after World War II and dismantled many trade barriers for industrial products but did relatively little for farm trade until the completion of the Uruguay Round talks in 1993.

A seemingly obscure technical issue had the unlikely but crucial effect of helping to bring China and India together in an unbreakable partnership this week on the issue of food safeguards.

Negotiators had agreed that developing countries could impose some safeguard tariffs to restrict farm imports in case of a sudden rise. But there was no agreement on how high these extra tariffs could go.

Reducing agricultural tariffs has been an important part of the global talks. Food-exporting nations argued that in imposing safeguard tariffs, developing countries could only let their tariffs bounce back up to current levels — in other words, they could revoke whatever tariff reductions they endorse in the current trade talks and no more.

China, with support from India, demanded the allowance of safeguard tariffs that would actually be higher than prevailing tariffs now — a demand that the United States and other food exporters found unacceptable.

In Changing Face of Beijing, a Look at the New China
Published: July 13, 2008

BEIJING — If Westerners feel dazed and confused upon exiting the plane at the new international airport terminal here, it’s understandable. It’s not just the grandeur of the space. It’s the inescapable feeling that you’re passing through a portal to another world, one whose fierce embrace of change has left Western nations in the dust.

The sensation is comparable to the epiphany that Adolf Loos, the Viennese architect, experienced when he stepped off a steamship in New York Harbor more than a century ago. He had crossed a threshold into the future; Europe, he realized, was now culturally obsolete.

Designed by Norman Foster, Beijing’s glittering air terminal is joined by a remarkable list of other new monuments here: Paul Andreu’s egg-shaped National Theater; Herzog & de Meuron’s National Stadium, known as the bird’s nest; PTW’s National Aquatics Center, with its pillowy translucent exterior; and Rem Koolhaas’s headquarters for the CCTV television authority, whose slanting, interconnected forms are among the most imaginative architectural feats in recent memory.

Critics have incessantly described these high-profile projects as bullish expressions of the nation’s budding global primacy. Yet these buildings are not simply blunt expressions of power. Like the great monuments of 16th-century Rome or 19th-century Paris, China’s new architecture exudes an aura that has as much to do with intellectual ferment as economic clout.

Each building, in its own way, embodies an intense struggle over the meaning of public space in the new China. And although at times terrifying in their aggressive scale, they also reflect the country’s effort to give shape to an emerging national identity.

Mr. Foster’s airport terminal, the world’s largest, is the purest expression of China’s embrace of the Modernist creed. Its swooping form, which suggests two boomerangs placed side by side, has been compared to a dragon. Yet its real precedent is Tempelhof Airport in Berlin, a monument to air travel conceived by Albert Speer in the 1930s as a gateway to a new Europe. Both are part of a vision of a mobile society, one that extends back through Grand Central Terminal to the great train halls of Paris.

Like Tempelhof, the Beijing air terminal boasts a sweeping concourse that evokes the glamour of air travel while enclosing a surprisingly intimate interior. But Mr. Foster pushes the ideal of mobility to a new extreme. Guided by twinkling lights embedded in the terminal’s ceiling, arriving visitors glide up ramped floors and across broad pedestrian bridges before spilling out onto the elevated concourse. From there they can disperse along a fluid network of roads, trains, subways, canals and parks whose tentacles extend out through the region.

This sprawling web has completely reshaped Beijing since the city was awarded the Olympic Games seven years ago. It is impossible not to think of the enormous public works projects built in the United States at midcentury, when faith in technology’s promise seemed boundless. Who would have guessed then that this faith would crumble for Americans, paving the way for a post-Katrina New Orleans just as the dream was being reborn in 21st-century China at 10 times the scale?

Soaring Art, Deadening Frame

Yet your sense of marvel at China’s transformation is easily deflated on the drive from the airport. A banal landscape of ugly new towers flanks both sides. Many of those towers are sealed off in gated compounds, a reflection of the widening disparity between affluent and poor. Although most of them were built in the run-up to the Olympics, the poor quality of construction makes them look decrepit and decades old.

It’s the flip side of China’s Modernist embrace: tabula rasa planning of the sort that also tainted the Modernist movement in Europe and the United States in the postwar years. China’s architectural experiment thus brims with both promise and misery. Everything, it seems, is possible here, from utopian triumphs of the imagination to soul-sapping expressions of a disregard for individual lives.

These tensions and contradictions are encoded in Mr. Andreu’s National Theater, just west of Tiananmen Square. Topped by an elliptical titanium-and-glass dome and surrounded by a shallow reflecting pool, the theater complex stands along the Avenue of Eternal Peace, the great east-west corridor that borders Tiananmen Gate.

Lining the avenue are many of the Socialist landmarks built for the 10th anniversary of China’s 1949 revolution, from the Great Hall of the People to the Beijing Railway Station and the Revolutionary Museum. The theater is one of the few major cultural monuments to rise in this historic core since Mao’s mausoleum was built opposite the Forbidden Palace three decades ago.

“It is a place that is very calm,” he said. “It is a building that you cannot touch. I didn’t want to remove the mystery. You arrive through trees to the edge of the water. But you can also penetrate it. I wanted people to understand that this is for them.”

Yet the building’s symmetrical layout and monolithic scale invite other interpretations. The isolation imposed by the surrounding reflecting pool is reinforced by the entry sequence: visitors must descend a grand staircase into the earth before passing under the pool and re-emerging in the cavernous dome. It’s as if the theater were connected to the city by a gigantic umbilical cord.

The entry passage suggests more haunting comparisons. Yan Meng, a Chinese architect who grew up in Beijing in the aftermath of the Cultural Revolution, told me that in the 1970s and ’80s Tiananmen Square was in many ways the city’s social heart. “There were fewer cars, it was more accessible,” he said as we drove past the square one afternoon. “You would see people playing cards and flying kites.”

After the Tiananmen Square protests and the government’s violent crackdown in 1989, the city added pedestrian barriers around the square. Today it can be reached only through underpasses patrolled by security forces, an experience that is more bleak than intimidating. Once you emerge, the square feels like a tourist zone; the Chinese are there mostly to buy and sell cheap souvenirs.

Mr. Yan suggests that the National Theater’s circuitous entry echoes the clampdown on public life after the 1989 massacre. “It no longer belongs to anyone,” he said of the square. “It is about control.”

Pushing What’s Possible

But some of the most imposing architectural symbols of China’s rising stature reflect a more enlightened reading of how the future might unfold. At their most self-aware, they probe the edges of the possible.

The Olympic Stadium and the National Aquatics Center lie 10 miles north of the city center along its ancient ceremonial axis, putting them on par with the Forbidden City and Mao’s mausoleum in national importance. Of the two, Jacques Herzog and Pierre de Meuron’s stadium is the more photographed and familiar symbol of the Games. Its huge elliptical form is enveloped in a dense latticework of steel columns.

The columns, which twist and bend as they rise, are conceived as a gigantic work of public sculpture. Their outward thrust suggests they are straining to contain the activity inside. That intensity is strangely magnified when the building is empty, as if trembling in anticipation of a mass event.

Yet a conflict over the stadium’s future underscores tensions over how the new China will be defined. The stadium is in the center of a sprawling park surrounded by regimented rows of housing towers. After the Games, Mr. Herzog and Mr. de Meuron hope to transform the building into a vast public forum and a visual anchor for the community.

The government prefers to build a fence around it, which would eliminate the parklike openness that is one of its most attractive features. A local developer has proposed creating a subterranean shopping mall at one end of the structure, further undermining the design’s public spirit.

“The building is made to be open,” Mr. Herzog said. “It is a work of public sculpture.” Still, as the architect, all he can do is press for flexibility. “Even if they put up a fence, they can take it down again one day in the future,” he said hopefully.

Mr. Koolhaas faces similar strains in his headquarters for CCTV, the state television authority, several miles to the south in Beijing’s new business district. Long negotiations have unfolded over how much public access will be allowed: to the architect’s distress, CCTV’s directors have threatened to close off two public roads that cut through the site. An enormous plaza will also be restricted to the company’s employees.

A year away from completion, the CCTV building has already attracted huge global attention and some controversy. Some have condemned Mr. Koolhaas for accepting the commission, likening it to participating in the 1931-33 competition for a Palace of the Soviets in Stalinist Russia. Essentially, they argue, he has designed a monument to a vast propaganda machine.

But the project is a formidable challenge to all of our expectations of what a monumental building should be. Like Mr. Herzog and Mr. de Meuron, Mr. Koolhaas is part of a generation of architects, now in their late 50s and early 60s, whose early careers were shaped in opposition to the oppressive formal purity of mainstream Modernism. They fashioned asymmetrical forms to break down the movement’s monolithic scale and make room for outcasts and misfits. The problem they face now is how to adjust that language for clients that include authoritarian governments and multinational corporations.

In his design for the CCTV headquarters, Mr. Koolhaas begins by obliterating any trace of the human scale from the exteriors. There are no conventional windows, no clear indication of where the floors begin and end. The forms completely distort your perspective of the building; it seems to flatten out from some vantage points and bear down on you from others.

As a result it is almost impossible to get a fix on the building’s scale. Seen through the surrounding skyline of generic glass-and-steel towers, it sometimes seems to shrink to the size of a child’s toy. From other angles it seems to be under a Herculean strain, as if fighting to support the enormous weight of the cantilevered floors above.

This is not just a game. Mr. Koolhaas has set out to express the elasticity of the new global culture, and in the process explore ways architecture can bridge the gap between the intimate scale of the individual life and the whirling tide of mass society. The image of authority he conveys is pointedly ambiguous. Imposing at one moment, shy and retiring the next, the building’s unstable forms say as much about collective anxieties as they do about centralized power.

He has carved out ample space for places of social exchange. The interior of the building is conceived as an endless loop of public activities, with cafes, viewing decks and galleries extending up through one leg of the structure and back down through the other, where it connects to an underground subway.

The architect sees the dividing line between public and private spheres as an active battleground, one that is constantly shifting and readjusting as society’s norms change and evolve. For now, however, it is not the architect who will determine the degree of openness at CCTV but the company’s government-appointed board of directors.

It remains to be seen where this will lead. For centuries, architects have aspired to create buildings that enlighten or transform civilization, only to see them remain isolated splendors, with little impact on society at large. That may prove to be the case in China, too.

But there is no question that its role as a great laboratory for architectural ideas will endure for years to come. One wonders if the West will ever catch up.

The New, New City
Published: June 8, 2008

“Don’t tell anyone,” Rem Koolhaas said to me several years ago as we headed down the F.D.R. Drive in New York, “but the 20th-century city is over. It has nothing new to teach us anymore. Our job is simply to maintain it.” Koolhaas’s viewpoint is widely shared by close observers of the evolution of cities. But not even Koolhaas, it seems, was completely prepared for what would come next.

In both China and the Persian Gulf, cities comparable in size to New York have sprouted up almost overnight...full story here.

Agency Calls for ‘Energy Revolution’
Published: June 7, 2008

BRUSSELS — The International Energy Agency, a group that advises industrialized countries, said Friday in a report that investments of at least $45 trillion might be needed over the next half-century to prevent energy shortages and greenhouse gas emissions from slowing economic growth.

Nobuo Tanaka, the agency’s executive director, called for “immediate policy action and technological transition on an unprecedented scale.”

Mr. Tanaka said the world would “essentially require a new global energy revolution which would completely transform the way we produce and use energy.”

The report sends a strong warning that the combination of growing demand for energy in countries like China and India, the dangers of climate change and the scarcity of resources are going to require huge shifts in the global economy. Countries will have to overcome objections to building nuclear power plants and to storing large amounts of carbon dioxide underground or beneath the ocean floor.

The report also described emissions-cutting pathways that broadly match the advice of some leading scientists who have recommended cutting emissions in half by 2050 as a way of avoiding devastating climate change. Environment ministers from the Group of 8 industrialized countries have backed a 50 percent target. The ministers said governments should endorse that target at a G-8 summit in July.

Among the International Energy Agency’s chief messages is that current policies are unsustainable with carbon dioxide emissions expected to rise 130 percent and demand for oil expected to rise 70 percent by 2050. Tanaka warned that oil demand could be five times the current production of Saudi Arabia by that time.

A crucial problem is that the rising cost of oil and gas is prompting a switch to coal, particularly in India and China. Coal is cheap and plentiful but its increasing use is contributing to the accelerating growth in emissions of carbon dioxide.

The International Energy Agency offers advice on energy policy to its 27 member nations, including the United States, Canada, Japan, Australia, New Zealand, South Korea and most of Europe. It recommended taking measures now that would ensure that carbon emissions are down to at least present-day levels by mid-century by, among other strategies, using energy efficiency measures and reducing emissions from power generation.

The agency also mapped out a second situation aimed at bringing emissions to half their current levels by mid-century by emphasizing technologies and strategies for “weaning the world off oil.” The agency estimated the cost of that process at $45 trillion, or 1.1 percent of annual global output, over the period to 2050. Investments of $100 billion to $200 billion would be needed each year over the next 10 years, rising to $1 trillion to $2 trillion each year in the coming decades.

To reach the goal of halving emissions, it said, among the most important measures would be equipping more than 50 gas and coal power plants each year with equipment to capture and sequester carbon dioxide. There would also be a need for 32 new nuclear plants each year, while the number of wind turbines would need to increase by 17,500 a year.

Other strategies included accelerating the development of solar electricity and so-called second-generation biofuels that do not compete with food for farmland.  The report acknowledged that numerous objections to these technologies would need to be overcome, in particular local opposition to building nuclear power plants and long-term nuclear waste repositories.

But the most difficult and costly step, it said, would be reducing carbon emissions from transportation at a time when the use of cars, airplanes and ships would still be growing rapidly but few technologies would exist to limit emissions from those sources.

Even so, Mr. Tanaka sounded an optimistic note, saying that although a global energy technology revolution “will be a tough challenge” it was “both necessary and achievable.”


Quake in arid northwest China kills at least 75
Stamford Advocate
Updated 11:04 am, Monday, July 22, 2013

BEIJING (AP) — A strong earthquake that shook an arid, hilly farming area in northwest China sparked landslides and destroyed or damaged thousands of brick-and-mud homes Monday, killing at least 75 people and injuring more than 400, the government said.

The quake near the city of Dingxi in Gansu province toppled brick walls and telephone lines, shattered mud-and-tile-roofed houses and sent cascades of dirt and rock down hillsides that blocked roads and slowed rescue efforts by crews trying to reach remote areas.

Hospitals set up aid stations in parking lots to accommodate large numbers of injured, while hundreds of paramilitary People's Armed Police fanned out to search for victims in the region of terraced farmland where the quake struck about 1,200 kilometers (760 miles) west of Beijing.

"I saw the bulb hanging from the ceiling start swinging wildly around. I woke my two friends and we ran into the bathroom to hide," said arts student Li Jingui, 21, who was on the fourth floor of a school dormitory in Dingxi when the shaking started.

"After the strongest tremors were over, we were worried that there would be aftershocks so we packed our stuff and ran out into a large clearing," Li said in a telephone interview.

In addition to the 75 confirmed dead, there were 14 people missing and 459 injured, the central government's China Earthquake Administration said.

Damage was worst in Min county in Dingxi's rural southern portion, where scores of homes were damaged and telephone and electricity services knocked out, Dingxi Mayor Tang Xiaoming told state broadcaster CCTV. All but three of the deaths, all the missing and most of the injured were in Min, a likely result of shoddy construction.

Residents said the shaking lasted about one minute, but wasn't strong enough to cause major damage in urban areas, where buildings are more solidly built.

"You could see the chandeliers wobble and the windows vibrating and making noise, but there aren't any cracks in the walls. Shop assistants all poured out onto the streets when the shaking began," said a front desk clerk at the Wuyang Hotel in the Zhang County seat about 40 kilometers (25 miles) from the epicenter. The clerk surnamed Bao refrained from identifying herself further, as is common among ordinary Chinese.

Tremors were felt in the provincial capital of Lanzhou 177 kilometers (110 miles) north, and as far away as Xi'an, 400 kilometers (250 miles) to the east.

The government's earthquake monitoring center said the initial quake at 7:45 a.m. (2345 GMT Sunday) was magnitude-6.6 and subsequent tremors included a magnitude-5.6.

The quake was shallow, which can be more destructive. The center said it struck about 20 kilometers (12.4 miles) beneath the surface, while the Gansu provincial earthquake administration said it was just 6 kilometers (3.7 miles) deep. The U.S. Geological Survey measured the magnitude of the initial quake as 5.9 and the depth at 10 kilometers (6 miles).

Initial measurements of an earthquake can vary widely, especially if different monitoring equipment is used.

Su Wei, leader of a 120-member rescue team from the paramilitary People's Armed Police, told state broadcaster CCTV that they were on their way to the epicenter, but progress was being slowed by mud and rock slides blocking the road.

The Chinese Red Cross said it was shipping 200 tents, 1,000 sets of household items, and 2,000 jackets to the area and sending teams from both Lanzhou and Beijing to help with relief work and assess further needs.

Heavy rain is expected in the area later in the week, raising the need for shelter and increasing the chance of further landslides.

Almost 2,000 homes were either destroyed or heavily damaged, with thousands more suffering partial damage, according to the Dingxi government website. It said 14,066 households were without power and five county and township roads had been cut.

Gansu province, a region of mountains, desert and pastureland with a population of 26 million, is one of China's more lightly populated provinces, although the New Jersey-sized area of Dingxi has a greater concentration of farms in rolling hills terraced for crops and fruit trees. Dingxi has a total population of about 2.7 million.

China's worst earthquake in recent years was a 7.9-magnitude temblor that struck the southwestern province of Sichuan in 2008, leaving 90,000 people dead or missing.

Strong, Deadly Quake in China Evokes Bitter Memories of 2008
April 20, 2013

QIONGLAI, China — The earthquake that shook Sichuan Province on Saturday struck at 8 a.m., when people were rising a little later than usual, and when schools and universities were closed.

“We were just getting up and getting dressed in our dormitory when the building shook and I looked outside from our seventh-floor window and saw a row of houses collapsed,” said Xu Yan, 22, a student at the Agricultural University in Ya’an City, in a telephone interview. “I have never flown down the stairs so fast.”

China’s Ministry of Civil Affairs, which has a role in disaster relief, said on its Web site that as of 9 p.m. Beijing time, the known death toll from the earthquake in Sichuan Province was 157, with most of the dead in Ya’an. The ministry also said that about 5,700 people had been injured.

A reporter from the daily newspaper in Ya’an said on China’s Sina Weibo, a Twitter-like service, that residents in Lushan County, which is part of the greater Ya’an area, needed tents, blankets, bottled water, food and medicine.

The Ministry of Civil Affairs said that it had gathered more than 60,000 tents for residents unable to return to their homes, but that they would not reach the area until Sunday. Ya’an, which sits on a basin on the edge of the Tibetan plateau, has a population of 1.5 million.

For residents of Lushan County, the epicenter of Saturday’s earthquake, the events evoked eerie memories of a devastating earthquake almost five years ago in May 2008 when more than 70,000 people were killed in Chengdu, about 70 miles east of Lushan.

Saturday’s quake had a preliminary magnitude of 7.0, according to the Chinese authorities. The United States Geological Survey said that the earthquake occurred on the Longmenshan fault line, the same one responsible for the 7.9 magnitude quake in 2008. But more than 12 hours after the initial temblor, the impact seemed to be far less severe.

Chinese radio quoted an unnamed official saying, “We have a basic grasp of the overall disaster situation, and there won’t be thousands or tens of thousands of fatalities.”

Even so, Prime Minister Li Keqiang, probably mindful of the widespread criticism of the rescue efforts in 2008, flew to Lushan County and visited local hospitals.

“The current most urgent issue is grasping the first 24 hours after the quake’s occurrence, the golden time for saving lives, to take scientific rescue measures and save people’s lives,” Xinhua, the state news agency, quoted Mr. Li as saying.

More than 7,000 soldiers and armed police personnel were sent to the region, and the authorities also sent 1,400 provincial rescue workers, 180 doctors from a national emergency response team, 120 “professional rescue vehicles” and 6 search-and-rescue dogs. Volunteers were also mobilized from other parts of the country, and as a precaution, 80,000 inmates were evacuated from prisons in the affected area.

Rescue efforts were hampered by landslides, and officials expressed concern over two barrier lakes that had formed after debris blocked two waterways.

The tremors were felt in Chengdu, one of China’s biggest cities and the capital of Sichuan Province. Residents described water spilling out of home aquariums and big objects, like home water dispensers, falling to the floor.

Yang Yubing, an executive at a sculpture factory in Baoxing County, one of the hardest-hit areas, said he was visiting Chengdu, when he felt the tremors. He immediately left on a seven-hour drive to his home in Baoxing.

But emergency workers stopped him when he got close to his apartment, Mr. Yang said. “They said five or six kilometers of roads were collapsed,” he said in a telephone interview. “We are all living in temporary tents in the school.” Badly injured people were transported to hospitals by helicopter, he said.

In the town of Longmen, another hard-hit area, a resident, Zhang Yen, said 90 percent of the buildings had collapsed.

“About 100 people died around here,” Ms. Zhang said in a telephone interview. “Rescue crews have not yet arrived. There is no water or electricity.”

Xinhua quoted a hospital official who said scores of injured people were sprawled in front of the county hospital on Saturday afternoon. Firefighters in Lushan pulled 27 survivors from collapsed buildings, Xinhua said.

The 2008 quake raised questions about poorly constructed schools that collapsed and killed thousands of students.

That earthquake prompted an extensive official relief effort, and a passionate outpouring of volunteer help. But some quake-stricken residents and observers faulted the government for sending rescue efforts to the wrong places, or failing to muster the equipment needed to lift victims from under slabs of concrete and brick. Instead, many troops and rescuers clambered over the rubble with sticks and spades.

This time, the government appears intent on avoiding any accusations of laggardness, even if the quake was less destructive than the one in 2008. In one notable gesture, CCTV, the state broadcaster, posted photographs online of Mr. Li and other senior leaders sitting on a plane bound for Sichuan. State news media also said Mr. Li and President Xi Jinping had convened an emergency meeting earlier in the day to coordinate rescue efforts.

In 2008, officials restricted independent reporting on the disaster, but Ran Wang, a businessman, said he hoped officials would allow greater transparency this time. “No censorship, no cover-ups or control so the right of the people and society to be informed during natural disasters is respected,” he wrote on his microblog account.

The Longmenshan fault line, which runs between the Tibetan plateau and Sichuan Basin, is seismically active. Twelve earthquakes with a magnitude of 5.0 or greater have occurred along the fault line since 1900, said Jiang Haikun, an official with the China Earthquake Administration.

Sichuan Province is also one of China’s best-known habitats for pandas, and at the Bifengxia Scenic Reserve, about six miles north of Ya’an City, workers said that 20 pandas in the park were safe. “We inspected the panda area after the quake, and they were unaffected,” said Chen Yong, the media relations officer of the reserve.

Andrew Jacobs contributed reporting from Beijing, and Chris Buckley from Hong Kong. Patrick Zhou contributed research from Qionglai, and Bree Feng from Beijing.

7 September 2012 Last updated at 12:02 ET
Earthquakes shake south-west China's Yunnan

A series of earthquakes has hit south-west China, leaving at least 64 people dead and 715 injured, state-run media say.  The quakes struck the border of Yunnan and Guizhou provinces, with the largest felt at 11:19 Beijing time (03:19 GMT), Xinhua news agency said.

The US Geological Survey registered the two strongest of the series of quakes at 5.6 magnitude.

The quakes affected mostly mountainous areas that saw landslides, reports say.  Premier Wen Jiabao is making his way to the area, according to Xinhua.  Zhang Junwei, a spokesman from the Yunnan seismological bureau, told the Associated Press (AP) agency that most of the deaths were from Yunnan's Yiliang county.

"The casualty number is still being compiled. I don't know what was like for the other towns, but my town got hit badly," another government official in Yiliang told AP.

No deaths have been reported in Guizhou so far.  Aid agencies say they are concerned about the plight of children in the two provinces following the quakes.

"We are especially worried about those who may have been separated from their parents, as more aftershocks are expected to hit the area," Save the Children in China Country Director Pia MacRae said.

'Roads blocked'

The death toll may rise further, especially in areas affected by landslides, Xinhua says.

"Roads are blocked and rescuers have to climb the mountains to reach hard-hit villages," Li Fuchun, head of Yunnan's Luozehe town, was quoted as saying.

Xinhua reported that at least 100,000 people have been evacuated and earlier reports said that more than 20,000 houses were damaged.  Mobile and regular phone service in the area was experiencing disruption, according to reports.  Hundreds of local residents had gathered on streets littered with bricks and rocks, television footage from state-run broadcaster CCTV showed.

Users of the Twitter-like wesbite Weibo reported people rushing out of shaking office buildings, and photos posted online also showed streets strewn with rubble.

Hotel staff in the city of Zhaotong in Yunnan told the BBC that the quake shook the building, knocking things from tables and shelves, reports the BBC's John Sudworth.  They said that people had been asked to leave their rooms and traffic had stopped in the streets, but there are no signs of panic, our correspondent adds.  Local officials said teams had been sent to distribute tents and blankets to those affected.

The largest of the quakes was also felt in the neighbouring province of Sichuan, where a 7.8 magnitude quake in 2008 left tens of thousands dead.

Photo above shows  town being flooded. 
Watch I-BBC video of demolition of structures and draining of "lakes" hereHomeless.  More trouble in Sichuan Province.

People stand amid rubble caused by a landslide in Xiaohe on 13 
July 2010
In Xiaohe, Yunnan, officials said the side of a mountain collapsed

Deadly landslides hit south-west China
Page last updated at 08:44 GMT, Tuesday, 13 July 2010 09:44 UK

At least 17 people have been killed and dozens more are missing after a series of landslides in south-west China, state media says.

The landslides, which were triggered by days of heavy rain, struck three rural communities in Sichuan and Yunnan provinces.

Four people were killed and 42 others were missing after one landslide in Xiaohe in Yunnan's Zhaotong city.

In Sichuan, two separate landslides left 13 people dead and two missing.

Meanwhile further to the west in Qinghai province, 10,000 people have been evacuated from the area around an overflowing reservoir.

Teams are trying to dig a channel to drain the reservoir, which has been filled far beyond capacity by recent heavy rain.

It is the latest in a spate of weather-related incidents to hit China. Although seasonal, the rains are particularly heavy this year and disruption is severe.

At least 43 people had died and 18 were missing after heavy rains along the Yangtze River in central and eastern China since 8 July, state media said.

Reservoir fears

In Xiaohe in Yunnan, an official said that the side of a mountain crashed down on houses.


"The township is located in a river valley surrounded by mountains, people were buried in their homes," the government official, who asked not to be named, told AFP news agency.

The other two landslides struck Yandai village in Garze and Sima village in Luzhou city.

Search teams were working at all three sites, Xinhua news agency said, and relief supplies had been sent to Xiaohe.

In Qinghai, soldiers were using bulldozers to cut a channel to drain water from the Wenquan reservoir, Xinhua reported.

If it bursts, the reservoir could damage the nearby Qinghai-Tibet railway, along with the city of Golmud's power and water plants, the agency said.

Some parts of the city are reportedly already under 2m of water.

Xinhua said the soldiers hoped to start draining the reservoir within the day.

Six die in China bridge landslide
Page last updated at 16:25 GMT, Saturday, 25 July 2009 17:25 UK

At least six people have been killed in a landslide in the Chinese province of Sichuan.

The landslide also destroyed a bridge that is a major link to areas where reconstruction work is being carried out after last year's earthquake.

Falling rocks dislodged by heavy rain smashed into the bridge in Wenchuan county, sending vehicles plunging into the river.

Rescue officials warned that the number of dead might rise.

The China Daily newspaper said more than 10,000 vehicles crossed the bridge each day and it was a lifeline for the reconstruction effort.

Wenchuan was the epicentre of the earthquake last May in which more than 85,000 people lost their lives.

Thousands Camp in Tents After 6.0 Quake in China
Filed at 8:36 a.m. ET
July 11, 2009

GUANTUNXIANG, China (AP) -- Thousands camped in tents in southwestern China on Saturday after a magnitude-6.0 earthquake destroyed thousands of homes, killed one person and injured 320, state media reported.

At the epicenter of Thursday's quake in Yao'an county, nearly 22,000 people took shelter in some 3,000 tents, and emergency crews rushed in quilts, rice, cooking oil and other supplies, the official Xinhua News Agency said.

The quake displaced some 250,000 people, the report said, sharply revising downward an initial estimate of 400,000. Xinhua, which cited a deputy governor of Yunnan province where the quake occurred, did not give a reason for the discrepancy. A duty officer at the provincial government offices declined to comment, saying the media office was closed for the weekend.

Yao'an, a hilly area, sustained the worst damage, accounting for nearly half the people displaced.

In Guantunxiang, one of the hardest-hit villages, Li Fashun's house was reduced to a pile of red bricks.

''I don't think I'll be able to rebuild my house because I'm not strong enough to make enough money,'' the 56-year-old farmer told an AP Television News reporter Saturday.

Elsewhere, several Chinese soldiers wearing fatigues sifted through a collapsed building as a woman recovered a live chicken from the rubble. Nearby, another three soldiers carrying hoes walked in single file, their leader holding a flagpole displaying the red Chinese national flag. Three stray pigs sniffed through another big heap of rubble.

Xinhua previously reported that 18,000 homes were destroyed and another 75,000 were damaged in Yao'an and five neighboring counties. A disaster relief official said late Friday that other collapsed homes may be found in more mountainous and sparsely populated areas.

People often leave even undamaged houses after earthquakes because they are afraid to sleep indoors while aftershocks continue to shake the area. Those who did not sleep in tents went to stay with relatives, Xinhua said.

Yunnan is part of a quake-prone region bordered on the north by Sichuan province, where a magnitude-7.9 quake last year left almost 90,000 people dead or missing.

In 1988, a magnitude-7.1 quake in Yunnan near Myanmar killed 930 people. More than 15,000 people died after a magnitude-7.7 quake in the province in 1970, though authorities at the time covered up information on casualties and damage amid the chaos of the Cultural Revolution.

400, 000 Leave Their Homes After Quake in China
Filed at 9:32 a.m. ET

July 10, 2009

BEIJING (AP) -- More than 400,000 people have left their homes after an earthquake rocked southwestern China, killing one person and destroying thousands of houses, state media said Friday.

Thursday's magnitude-6.0 temblor, centered in Yunnan province's Yao'an county, also injured 325 others, 24 seriously, the Xinhua News Agency said.

Yunnan Television showed displaced residents sleeping outdoors in makeshift beds made up of brightly colored quilts. Others packed into emergency tents, bundles of provisions and clothing in tow. Often people leave even undamaged houses after earthquakes because they are afraid to sleep indoors while aftershocks continue to shake the area.

Piles of rubble from damaged houses made of brick and clay were scattered on the ground in the footage. At a hospital, nurses gave intravenous drips to the elderly.

Eight aftershocks have followed Thursday's quake, with the latest registering a 5.2-magnitude Friday evening, Xinhua said. There were no immediate reports of casualties.

An official at Yao'an's disaster relief command center said late Friday that rescuers at the scene were still assessing the damage, but he did not expect the death toll to rise. More collapsed homes, however, may be discovered in the mountainous, sparsely populated area, he said. He hung up without giving his name or any more details.

So far, Xinhua said that about 18,000 homes have been destroyed and another 75,000 were damaged, Xinhua said.

It said China's civil affairs ministry has ordered the immediate delivery of 5,000 tents and other relief materials. The provincial civil affairs department has already allocated 4,000 tents, 3,000 quilts and other relief materials to Yao'an.

More than 1,000 police and soldiers have been dispatched to the disaster zone, Xinhua said.

''By using simple tools and even their bare hands, the soldiers and militia have saved at least seven residents including two children,'' Xinhua said.

China allocated 38 million yuan ($5.56 million) to the quake-hit area.

Yunnan is a quake-prone, mountainous region that lies on China's southern border with Thailand and Myanmar. It also borders Sichuan province, where a magnitude-7.9 quake last year left almost 90,000 people dead or missing.

In 1988, a 7.1-magnitude quake in Yunnan near Myanmar killed 930 people. More than 15,000 people died after a magnitude-7.7 earthquake in the province in 1970, though authorities at the time covered up information on casualties and damage amid the chaos of the Cultural Revolution.

Link to previous year's floods here.

Three Gorges Dam Is Said to Hurt Areas Downstream
June 2, 2011

CHONGQING, China — A Chinese official says the planners of the Three Gorges Dam failed to properly gauge its effects on lakes and other bodies of water downstream, according to a report on Thursday in Shanghai Daily, an English-language newspaper.

As a result, the dam has contributed to lower water levels in two of China’s largest freshwater lakes, raising the threat to them during long droughts, the report said. Large areas of central and southern China are suffering from the worst drought in 50 years, and the levels have plummeted in the Yangtze River and other bodies of water, including here in Chongqing.

Wang Jingquan, the official quoted by the newspaper, said water levels in the two lakes — Dongting in Hunan Province and Poyang in Jiangxi Province — had fallen in part because of the storage of water in the reservoir behind the dam, which is on the Yangtze.

In addition, the dam has had an impact on fish breeding and the growth of plants in the lower reaches of the Yangtze, said Mr. Wang, who works in a flood control and drought relief office that is linked to the Yangtze River Water Resources Committee. He said proper discharge from the reservoir would help the lakes.

“We failed to think of all the impacts that the dam might bring about when designing the dam, but its advantages should outweigh the disadvantages,” he said, according to Shanghai Daily, which cited Xinmin Evening News. The dam provided 84 billion kilowatt-hours of electricity last year.

Mr. Wang’s statements are the latest by an official and come as Chinese news organizations are increasingly discussing the impact of the dam as the drought drags on. Two weeks ago, senior Chinese officials admitted that there were “urgent problems” associated with the dam, the world’s largest hydroelectric project. The admission came in a vague statement from the State Council, China’s cabinet. “Although the Three Gorges project provides huge comprehensive benefits, urgent problems must be resolved regarding the smooth relocation of residents, ecological protection and geological disaster prevention,” the Council said.

Plans for the 600-foot-high dam were criticized at an early stage, but the Chinese government pressed ahead. Besides the ecological impact, the dam displaced 1.4 million people when the water levels upstream were raised.

The central government is also trying to deal with concerns over another ambitious water project, the South-North Water Diversion, which would siphon water from the Yangtze to Beijing and other northern cities. The drought in the regions along the middle and lower reaches of the Yangtze has underscored worries about channeling the river’s water to the north.

Cities are turning to increasingly desperate measures to combat the drought’s effects. The island city of Zhoushan in Zhejiang Province started water rationing on Wednesday, according to Xinhua, the state news agency. Residents have been told they can use running water for only five hours a day because the city can no longer depend on 20 of its 29 reservoirs. From January to May, rainfall in Zhoushan was the lowest on record, Xinhua said.

On Thursday, Xinhua said that rainfall along the middle and lower reaches of the Yangtze was down 40 percent to 60 percent from the average, with the totals being lower than at any time since 1951. The report cited data from the State Flood Control and Drought Relief Headquarters.

In Jiangsu Province’s Sushui County, fish and clams are dying, and crab-breeding farms are parched and cracked, Xinhua said. At Honghu Lake, fish spawning has been affected, said Zeng Xiaodong, leader of the Honghu marshland management office. “The drought has done considerable damage to the ecological environment of Honghu Lake,” he said.

19 May 2011 Last updated at 03:18 ET
China acknowledges Three Gorges dam 'problems'
By Michael Bristow BBC News, Beijing

China has admitted that the Three Gorges Dam has created a range of major problems that need solving quickly.  Top leaders say the project has led to environmental problems and issues involving relocating 1.3m people.  The Three Gorges is the world's largest dam and could have cost up to $40bn. This appears to be the first time that central government leaders have admitted to problems with the project.

The admission came in a statement from top government body, the State Council.  The statement initially praised the scheme's achievements, saying it had helped alleviate flooding, improve navigation and generate electricity.  But it went on: "There are urgent problems that need to be addressed, such as stabilising and improving living conditions for relocated people, protecting the environment, and preventing geological disasters."


China's revolutionary leader Mao Zedong dreamed of building the Three Gorges Dam. Construction started in 1994.  The dam was completed in 2006, with the reservoir reaching its full height last year after submerging 13 cities, 140 towns and 1,350 villages.  Local leaders and campaign groups have for some time complained about problems associated with the project.

At a government-organised conference in 2007, local officials warned of "environmental catastrophe".

One problem appears to have been caused by fluctuations in the water level of the vast reservoir, which stretches for 660km (360 miles). This causes frequent landslides.  The government said more also needs to be done to help those forced to move because of the construction.  They need more jobs, better transport facilities and improved social security benefits, said the State Council, chaired by Premier Wen Jiabao.

Known problems

The Three Gorges was a contentious scheme even before it was approved.

A third of the members sitting in China's normally compliant parliament voted against the plan or abstained.  Perhaps in a tacit acknowledgement of the problems, there were no major celebrations when the reservoir reached its full height last year.  In this latest statement, the State Council said it knew about some of the problems even before work started 17 years ago.

It says others arose while the dam was being built and some have happened since, because of "new demands as the social and economical situation developed".

The task now was to begin sorting out some of these problems, said the government.

Dams in the US...
Possible Link Between Dam and China Quake

February 6, 2009

BEIJING — Nearly nine months after a devastating earthquake in Sichuan Province, China, left 80,000 people dead or missing, a growing number of American and Chinese scientists are suggesting that the calamity was triggered by a four-year-old reservoir built close to the earthquake’s geological fault line.

A Columbia University scientist who studied the quake has said that it may have been triggered by the weight of 320 million tons of water in the Zipingpu Reservoir less than a mile from a well-known major fault. His conclusions, presented to the American Geophysical Union in December, coincide with a new finding by Chinese geophysicists that the dam caused significant seismic changes before the earthquake.

Scientists emphasize that the link between the dam and the failure of the fault has not been conclusively proved, and that even if the dam acted as a trigger, it would only have hastened a quake that would have occurred at some point.

Nonetheless, any suggestion that a government project played a role in one of the biggest natural disasters in recent Chinese history is likely to be politically explosive.

The issue of government accountability and responsiveness has boiled over in China in the past year. The grieving parents of thousands of schoolchildren killed in the disaster have already made the 7.9-magnitude earthquake a political issue, charging that children died needlessly in unsafe school buildings approved by negligent or corrupt officials.

More public anger erupted last year when the government failed to prevent the sale of tainted milk powder that sickened nearly 300,000 children and killed six.

“Any kind of government-related disaster presently is very, very damaging and politically extremely sensitive,” said Cheng Li, the China research director at the Brookings Institution.

If it is proved that the earthquake “was related to a man-made situation and not just a natural disaster, the government will be very uncomfortable with that kind of report because of the whole issue of government accountability,” Mr. Li said.

Questions about the Zipingpu Dam are especially delicate because China is building many major hydroelectric dams in the southwest, a region which has abundant water resources but is considered prone to earthquakes.

In a petition to the government in July, a group of environmentalists and scholars said the fact that government scientists had underestimated the risk of the May earthquake raised questions about a host of other dams built in the same valley and along five other major rivers, according to an article published by Probe International, an environmental advocacy group. Chinese authorities have steadfastly dismissed any notion that reservoir-building in Sichuan Province placed citizens at any added risk, and they have blocked some Web sites of environmental groups that suggest that dangers have been overlooked.

In a December article in the Chinese magazine Science Times, two scientists from the Chinese Academy of Sciences strongly denied that the dam played any role in the earthquake. “The earthquake research community outside and inside China has widely accepted the notion that the May 12 Wenchuan earthquake was a huge natural disaster caused by massive crustal movement, because no reservoir triggered-quake with a magnitude eight has ever occurred in history,” said Pan Jiazheng, an expert in hydroengineering, according to a translation published by Probe International.

Scientists generally agree that a reservoir, no matter how big, cannot by itself cause an earthquake. But Leonardo Seeber, a senior scientist with the Lamont-Doherty Earth Observatory of Columbia University, said the impact of so much water could hasten an earthquake’s occurrence if geological conditions for a quake already existed. He said the best known example was a 1967 earthquake triggered by the Koyna Dam in a remote area of India, with a magnitude of about 6.5 and a death toll of about 180 people.

Mr. Seeber said that while the link between the Sichuan earthquake and the Zipingpu Dam was not yet proved, work by Christian Klose, a Columbia University researcher specializing in geophysical hazards, suggested the stress caused by the water’s weight might have hastened the quake by a few hundred years.

“It would have occurred anyway,” Mr. Seeber said. “But of course the people who were affected might think the timing is an important difference.”

Mr. Klose estimated that the weight of the water in the Zipingpu reservoir amounted to 25 times the natural stress that tectonic movements exert in a year. The added pressure, he wrote in an abstract to an unpublished study, “resulted in the Beichaun fault coming close to failure.”

Fifty stories tall and big enough to hold more than one billion cubic meters of water, the Zipingpu Dam astride the Minjiang River was billed as one of China’s biggest water control projects.

Officials said the $750 million project, part of a grand plan to develop regions in China’s south and west, would generate 760,000 kilowatts of electricity, irrigate more farmland, help control flooding and provide more water to industries and residents of nearby Chengdu, a city of more than 10 million.

Almost as soon as construction got under way in 2001, one expert, Li Youcai, voiced fears that officials were underplaying the risk of a major earthquake in the region, but government officials rejected his argument, according to an article published last year on China Dialogue, a Web site devoted to environmental news.

Officials allowed the reservoir to fill with water in late 2004. Fan Xiao, a chief engineer with the Sichuan Geology and Mineral Bureau, said that from late 2004 to late 2005, the data showed 730 minor earthquakes, with magnitudes of 3 or less.

When the major earthquake struck last May, it originated 3.4 miles from the reservoir. The rupture in the Earth’s crust stretched for 185 miles, initially moving in a direction that Mr. Klose said was consistent with the pressure from the water’s weight.

Mr. Fan, the chief engineer for the regional geology investigation team, told reporters soon afterward that he believed that the reservoir influenced the timing, magnitude and location of the earthquake.

“The main lesson is that in building these kinds of projects we need to give more consideration to scientific planning and not simply consider the electricity or water or the economic interests,” Mr. Fan said.

The debate reignited in December when two scientists with the China Earthquake Administration and three other researchers published a study in the Chinese journal Seismology and Geology. They concluded only that the weight of the reservoir’s water and diffusion of water from the reservoir below the Earth’s surface “clearly affected the local seismicity” over a period of nearly four years before the fault ruptured.

The Chinese researchers called for further study to see whether the reservoir helped trigger the earthquake. One of them, Du Fang, with the Sichuan Earthquake Administration, said Thursday that it was impossible to know whether the reservoir influenced the earthquake without more research. “The possibility exists,” she said.

Ms. Du said she and other scientists were free to research the issue fully. “We scientists are free to research the topic we proposed, as long as it is worth studying,” she said. “I don’t feel any restrictions on access to the data from the government.”

China Concedes Building Flaws in Quake
Published: September 4, 2008

BEIJING — A Chinese government committee said Thursday that a rush to build schools during the country’s recent economic boom might have led to shoddy construction that resulted in the deaths of thousands of students during a devastating earthquake in May.

The statement by Ma Zongjin, the chairman of an official committee of experts assessing damage from the May 12 earthquake, is the first time that a representative of the Chinese government has acknowledged that poor construction may have led to the collapses. Until now, officials in Beijing and in southwest China’s Sichuan Province, which suffered the most damage, had said the sheer force of the 7.9-magnitude quake caused the collapses.

The school collapses have become the most politically sensitive issue to emerge in the aftermath of the earthquake. This summer, grieving parents held street protests to challenge local governments and demand that officials conduct proper investigations into construction quality. Local officials felt so threatened by the parents that they ordered riot police to break up protests — officers even dragged away crying mothers — and offered the parents compensation money in exchange for them dropping their demands.

Many schools in the earthquake zone crumbled while buildings around them remained standing. According to some estimates, as many as 7,000 classrooms collapsed and up to 10,000 students may have died. In all, nearly 70,000 people died in the quake and 18,000 are considered missing; officials now say those still missing are almost certainly dead. The quake was the deadliest natural disaster in China in more than three decades.

At a news conference in Beijing on Thursday, Mr. Ma said more than 1,000 schools suffered from at least one of two major problems: they were built on the fault line and collapsed like many other buildings around them, or they were poorly built.

This second problem “is the construction quality of the building itself — its structure is not completely sound or its materials are not very strong, which is possible,” Mr. Ma said. “Recently, we’ve built school buildings relatively fast, so some construction problems might exist.”

Mr. Ma also acknowledged how important the issue had become to the public, and said the government had sent 2,000 experts to the quake zone to examine the schools.

“This is an issue people are paying attention to,” he said. “First, the parents of schoolchildren are paying a lot of attention, as well as education departments. And even people across the entire country are very much paying attention to this issue.”

When the teams from the central government showed up in the quake zone, some local officials wanted to exaggerate to them the intensity of the earthquake so that poor construction or corruption would not be blamed for building collapses, Mr. Ma said. Some officials also wanted to report greater financial losses in their areas than what had actually occurred to get more aid money, he added.

Shi Peijun, vice chairman of the earthquake committee, said at the news conference that the total direct financial loss from the earthquake was $123 billion.

Mr. Ma did not give any further details on the findings of the experts or say when the government would release a final report. The purpose of the news conference was to update reporters on recovery efforts. Mr. Ma did not mention the school collapses until asked about them.

It is well-known that construction firms and other companies often cut corners in China’s rapidly growing economy. But it is rare for government officials to admit to reporters not only that the problem exists, but that it could have fatal consequences, as Mr. Ma did. If properly conducted, further investigations into school construction could implicate local governments, which ordered up the buildings and are supposed to have inspectors who ensure compliance with codes.

Some Chinese news organizations are once again taking a more aggressive approach to the issue of the school collapses, even though the central government ordered the news media to stop any such reporting. Xinhua, the state news agency, reported Mr. Ma’s comments on Thursday and said the large number of student deaths had “aroused wide suspicion and anger over shoddy construction and sub-standard materials allegedly used to build schools.”

An article in the latest issue of Caijing, a news magazine that sometimes criticizes official views, questioned why the government had still not released a tally of the students who died in the quake.

Mr. Shi said at the news conference that officials were still classifying the dead and that the final numbers would be released.

Despite Mr. Ma’s admission that poor construction might have been at fault in the school collapses, grieving parents or families of survivors will have a hard time suing construction companies or local governments, a well-known civil lawyer said in an interview on Thursday.
The lawyer, Pu Zhiqiang, said he would advise parents not to file a lawsuit because few if any courts would accept it. Even if the case were to go to trial, he said, the plaintiffs would have to gather substantial evidence to establish the culpability of the government or the construction company.

Over the summer, local governments in Sichuan Province began offering angry parents cash payments if the parents promised in writing not to raise the issue of school construction. The governments acted as if they were corporations seeking to settle embarrassing lawsuits. The compensation amounts varied by government but were roughly the same - parents whose children died in a school collapse in the town of Hanwang said in July that they were offered the equivalent of $8,800 in cash and a per-parent pension of nearly $5,600.

Many parents signed but said they were still furious at the local governments for not carrying out any proper investigations. Around the same time, several governments began bulldozing the remnants of collapsed schools, closing the door on any chance to collect further evidence.

Three parents or relatives of children who died in separate school collapses on May 12 said in telephone interviews on Thursday that local governments had yet to issue any findings.

One woman, Huang Lianfen, the aunt of an 18-year-old boy who died in Hanwang, said parents met with local officials last month to demand more compensation. But the officials refused to give more money and said the collapse of Dongqi Middle School was solely due to the earthquake.

China Daily, the official English-language newspaper, reported Thursday that 21 tremors of magnitude-5 or higher have struck China in the first eight months of this year. On average, the country experiences 18 such quakes per year, the report said. The latest tremor hit the provinces of Sichuan and Yunnan on Saturday, killing at least 32 people and leaving about 1.2 million people homeless.

U.S.'S Rice to Travel to Quake - Hit Chengdu, China
Published: June 19, 2008
Filed at 1:14 p.m. ET

WASHINGTON (Reuters) - U.S. Secretary of State Condoleezza Rice will travel this month to Chengdu, China, the capital of Sichuan province that was struck by a massive earthquake in May, the State Department said.

Rice will visit Chengdu June 29 as part of an Asian trip that will also include stops in Japan, Seoul and Beijing, State Department spokesman Tom Casey said.

Rice would be the highest-ranking U.S. official to have visited Chengdu since the earthquake. Casey said she would express the "condolences of the American people" for the disaster, which killed more than 70,000 people in China.

Strong Aftershock Rocks China Lake, Creates Landslides
By Cara Anna , Associated Press    
Published on 6/9/2008 

Qinglian, China - A magnitude 5.0 aftershock shook a brimming, earthquake-formed lake and sent landslides tumbling down surrounding mountains Sunday, underscoring the persistent threat of flooding to more than 1 million weary refugees downstream.

No new evacuations were ordered and the lake's dam of unstable mud and rocks did not collapse, said Hu Peng, a media officer at the disaster relief headquarters of the lake. He had no additional details.

More than 250,000 people downstream have been evacuated in recent weeks.

The effect of the 20-second temblor on Tangjiashan lake, as it is known, was not clear and its dam was under surveillance, said the state-run Xinhua News Agency, which had a reporter at the site. A diversion channel draining the lake appeared to be operating smoothly following the aftershock and a rainstorm about the same time, the agency said.

The temblor was centered about seven miles northwest of the lake, according to data reported by the U.S. Geological Survey. It set off landslides on nearby mountains, Xinhua said, without indicating whether any rubble landed in the lake and pushed water levels even higher.

One evacuee in a mountainside tent camp about 25 miles downstream said the situation remained stable.

”We felt the aftershock but it wasn't anything bad. We're numb to this by now,” said Yu Taichun, a doctor living with about 2,500 people on Taohua Mountain, overlooking the riverside town of Qinglian.

The Tangjiashan lake was formed when rubble from a landslide set off by the deadly May 12 earthquake blocked the flow of the Tongkou River. Despite a hastily dug diversion channel that began draining the lake early Saturday, water levels have continued rising dangerously.

Soldiers blew up wooden houses, boulders and other debris Sunday to speed the flow of water into the spillway. Other troops were deepening the channel and digging on a second spillway.

Managing Tangjiashan lake has become a priority for the government as it works to head off another catastrophe even as it cares for millions left homeless from the quake. More than 1.3 million people live downriver from the lake.

The death toll from the quake climbed Sunday to 69,136, with 17,686 people still missing.

The Tangjiashan lake is the largest of more than 30 created by last month's quake, which was centered in Sichuan province. Government experts quoted by state media have played down the threat of imminent flooding, though a variety of factors could set off a dam collapse: rain, aftershocks, landslides, increased leakage from the barrier.  

Photo from I-BBC

Chinese Battle Against Time to Drain Quake Lake
Published: May 30, 2008
Filed at 7:31 a.m. ET

MIANYANG, China (Reuters) - China's struggle to overcome earthquake devastation was compounded by confusion after an official denied a report that 1.3 million people would evacuate from a city threatened by a swelling "quake lake."

The landslide-blocked river at Tangjiashan in southwest China's Sichuan province is the most pressing danger after an earthquake devastated the region on May 12.  The official death toll from the quake is 68,858 and is sure to rise with 18,618 missing, and there is widespread worry that more than 30 landslide-blocked rivers could burst through and bring more havoc by flooding downstream towns and reservoirs.  The official Xinhua news agency said Tan Li, Communist Party Secretary of Mianyang in the quake zone, ordered 1.3 million people living downstream from Tangjiashan to "evacuate to higher ground."

But Zhou Hua, a Mianyang city official who is a spokesman for the lake relief effort, told Reuters the report was inaccurate.

"There is a virtual training exercise scheduled for tomorrow to test our contingency plan to move that many people," he said. "But there is no public participation, and we see no reason at all to actually implement the plan at this stage."

In villages outside Mianyang city there were no immediate signs of either mass panic or exodus.

"The government and the army are working on it and won't let it burst," said Jin Dongsheng, a farmer in Qingyi town near the city. He and about 3,000 town residents had been moved about half an hour's walk uphill from homes close the river bank.

Xinhua's Chinese-language service later also said there was merely a training exercise planned in Mianyang, a city of 5.3 million people including many in rural areas.  At the unstable Tangjiashan lake, hundreds of troops have removed more than a third of the earth for a channel intended to ease pressure from the rising waters, Zhou said.  Up to 190,000 residents downstream had moved to higher ground, usually hillsides close to where they were living before, to avoid a surge if the blockage suddenly gave way, he said.

Xinhua said the water level was nearly 23 meters (75 feet) below the lowest point of the barrier, which experts have said could give way quickly once breached. Troops have also built escape paths in the event that happens.  A Chinese meteorological authority official, Zhai Panmao, said the authority did not expect heavy rain in the area in the next 10 days.

"We've adopted extremely important measures and are opening up a breach and so on," he said of the Tangjiashan build-up. "We have full confidence in solving this problem."

Post-quake reconstruction work has only begun, with many displaced people facing a cramped, sweltering summer in tents.  The government has received 35.28 billion yuan ($5.09 billion) in donations of cash and relief goods from home and abroad to date, officials said.  But some aid pledged has yet to be received, and a deputy head of the Ministry of Civil Affairs disaster relief office, Pang Chenmin, warned tardy donors they could be publicly shamed.

"The aid ought to be given to the recipient as promised and in a timely manner. If it needs to be delayed for a day or two, they can coordinate with the relevant department," Pang told a news conference in Beijing.

"But if it is not given, the recipient has the right to go after payment, and inform the public in an appropriate way," Pang said, without elaborating.

Japan had shelved plans for its military to fly tents and blankets to China, a Japanese government official said on Friday, after messages on Chinese Internet sites recalled Tokyo's World War Two atrocities in the country.


Meanwhile, an official investigator pinpointed the poor design and construction of at least one of the many schools that collapsed during the quake, killing thousands of children.  Domestic media reports compiled by Reuters put the combined toll from deaths of children and teachers in the rubble of schools at more than 9,000. The Chinese public has been outraged by the disproportionate number.  An official investigator said one the schools that crumpled, the Juyuan Middle School, where hundreds of children died, was fatally weakened by poor design and materials.

"There were certainly problems with site selection, the building's structure and structural features, the construction and materials," Chen Baosheng, an expert from Tongji University in Shanghai, told the Southern Weekend.

The number of prospective orphans in the quake area has dropped dramatically as more children were reunited with their parents, Xinhua quoted local officials as saying.  There were about 1,000 "unclaimed children" in Sichuan as of Wednesday, down from more than 8,000 immediately after the earthquake, Xinhua said, adding civil affairs authorities had been overwhelmed by calls seeking to adopt those quake orphans.

Officials in China rush to evacuate 80,000 
By AUDRA ANG, Associated Press Writer 
Posted on May 27, 9:04 AM EDT

MIANYANG, China (AP) -- Chinese officials rushed Tuesday to evacuate another 80,000 people in the path of potential floodwaters building up behind a quake-spawned dam as soldiers carved a channel to try to drain away the threat.  The official Xinhua News Agency reported emergency workers would try to complete the evacuation by midnight Tuesday, taking the number of people moved out of the threatened valley to almost 160,000, from more than 30 townships.

The Tangjiashan lake in northern Sichuan province, formed when a massive landslide blocked a river, is one of dozens of fragile dams created during the earthquake that pose a new destructive threat in the disaster zone.  Soldiers hauled explosives through the mountains to reach the area, and the official Chinese Daily said Tuesday on its Web site they were "preparing to dynamite the barrier." State television showed live footage of heavy earth-moving equipment being used to carve out a 200-yard channel to drain the water.

"We are prepared to get rid of the trees by chopping and explosion. After that, the second batch of equipment will be moved in," Liu Ning, chief engineer at the Ministry of Water Resources, was quoted as saying on CCTV.

The lake is swelling behind a landslide near Beichuan, one of the towns hit hardest by the May 12 tremor that devastated Sichuan.

The number of deaths from the quake has climbed further toward an expected toll of 80,000 or more. The Cabinet said Tuesday that 67,183 people were confirmed killed - up by about 2,000 from a day earlier - and 20,790 were still missing.  Also Tuesday, health officials said higher-than-normal rates of stomach pains and fever had been reported among the millions of quake survivors, but that no major disease outbreaks had occurred.

Some 5 million people were left homeless by the quake, and many of them are living in tents or makeshift communities that are clustered throughout the disaster zone.  Qi Xiaoqiu, the director of disease prevention at the health ministry, said the quake had knocked out much of the region's health infrastructure, but 12 field hospitals had been erected and tens of thousands of health professionals were working in the zone.

"With the destruction by the quake, the living and sanitary conditions have worsened for the local population," Qi told reporters in Beijing. "Their physical conditions are weakened (and they are) more vulnerable to disease."

Diseases such as tuberculosis, hepatitis and diarrhea remained a threat, but so far no outbreaks had been reported, he said.

About 1,800 soldiers clambered up mountain paths to reach Tangjiashan with plans to dig and blast their way through the debris and drain the water, Xinhua reported. It did not say when the blasting operation would take place.  The Tangjiashan lake is one of dozens created when the magnitude 7.9 quake sent millions of tons of earth and rock tumbling into some of the region's narrow valleys. Some rising floodwaters have already swallowed villages.  Tangjiashan now holds 34 billion gallons of water and was rising by more than three feet every 24 hours, Liu said.

Xinhua said troops were working around the clock to remove at least 1.8 million cubic feet of debris to build the channel, which would not be completed before June 5.  Pressure is building behind the dams as rivers and streams feed into the newly formed lakes. Officials fear the loose soil and debris walls of the dams could crumble easily, especially once the water level reaches the top and begins cascading over.

Adding to the threat, thunderstorms were forecast for parts of Sichuan this week - a foretaste of the coming summer rainy season that accounts for more than 70 percent of the two feet of rain that falls on the area each year.  Also in northern Sichuan in Qingchuan county, 1,300 people have been evacuated from Guanzhuang because of landslide worries. Local official Li Guoping said plans were being drawn up to evacuate all 23,000 people in the area if needed.  He said landslides that blocked rivers had formed 10 lakes, but only three had the potential to be dangerous if there were heavy rains.

"I worry about the start of the rainy season," Li said.

Aftershocks have rumbled across the region since the major quake - including one Tuesday measured by the U.S. Geological Survey at magnitude 5.7 - adding to jitters among survivors and in some cases causing more damage. No damage or injuries were reported from Tuesday's tremor.  A major temblor Sunday knocked down thousands of buildings that had survived the initial quake, and killed eight people.  One quake expert said Tuesday that aftershocks in the area could continue for several months.

"Judging from previous earthquakes of a similar magnitude, this time the aftershocks may last for two or three months," He Yongnian, a former deputy director of China Seismological Bureau, was quoted as saying by Xinhua.

The aftershocks were likely to grow weaker as time passed, he said.

Bereft Chinese Families May Have Second Child
Published: May 27, 2008

BEIJING — As the death toll in southwest China rose to more than 65,000, a provincial planning authority on Monday said that families who had lost their only child in the earthquake could apply for a certificate to have another child, in what it said was a clarification of the existing policy.

As many as 10,000 of those killed in the May 12 earthquake were children, adding to the tragedy in a country where most families are allowed to have only one.

Many children lost their lives in the scores of schools that collapsed, and that issue has become a simmering controversy for the government, as grieving parents say their children might have lived had the schools been better constructed.

On Sunday afternoon, a powerful aftershock hit a poor, mountainous region of Sichuan Province, toppling thousands of buildings and injuring hundreds, and the death toll from that aftershock rose Monday to eight, with 1,000 injured, the official Xinhua news agency reported.

The United States Geological Survey measured the tremor at a magnitude of 6.0. It struck at 4:21 p.m. in Qingchuan County, a remote area of northern Sichuan, on the border of Gansu Province.

An official in Guangyuan City, east of Qingchuan, told Xinhua that the aftershock had caused thousands of homes to collapse. It damaged roads, toppled old buildings and caused several fires in one town, Xinhua reported.

Meanwhile, state media reported that rescuers were preparing Monday to dynamite and drain a lake caused by landslides. On Sunday, Xinhua reported that 1,600 soldiers were marching to lake created by landslides in Tangjiashan, with orders to blast away at the debris behind which water had been rising for days. Helicopters have not been able to land troops in the region because of bad weather.

The water in the lake, two miles upstream from devastated Beichuan County, rose by about six feet on Saturday, raising the possibility of flash flooding that could threaten the lives of 70,000 people downstream, state media said.

Also on Sunday, state television reported that rescuers had saved an 80-year-old man who had lived for nearly two weeks in a collapsed building.

The rescue, made on Friday, was trumpeted in the state-run media, but with the likelihood of finding more survivors dwindling, Chinese officials are shifting the relief effort toward finding shelter for millions of refugees. The government has said the earthquake left five million people homeless, although one official in Sichuan Province said the number could be as high as 11 million, according to a report on Sunday from Xinhua.

Meanwhile, a senior official in Beijing warned that 69 dams in the earthquake-stricken region could present “dangerous situations” and risked some danger of collapsing. To ease pressure on the dams, many reservoirs in the region have been drained.

On Saturday, in his second visit to the devastated areas since the earthquake struck on May 12, China’s prime minister, Wen Jiabao, said the government was on alert for secondary disasters, particularly, as in the case with Tangjiashan, possible flashfloods from so-called quake lakes. At an impromptu news conference at a tent camp in Yingxiu, near the earthquake’s epicenter, on Saturday, Mr. Wen said that the government’s efforts were shifting from rescuing people buried under fallen buildings to caring for the homeless.

Speaking through a megaphone, he said that tents had been transported to disaster areas from other provinces, but that there was a severe shortage, official news reports said.

In the city of Dujiangyan, thousands of people are now sleeping in blue disaster tents set up in rows on the open-air track of a college campus. A local restaurant chain serves hot meals everyday. Doctors with the Chinese Red Cross prepare stews of medicinal herbs for the ailing. Last week, volunteers from a hair salon gave refugees free haircuts.

Zhou Dezheng, 58, a retired architect, has been staying in a government-issued tent with his family and two others. “We are better off than refugees in most countries,” he said in an interview last week. “We have tents. We have food.”

Many buildings in Dujiangyan, like Mr. Zhou’s home, cracked but did not collapse. Virtually every apartment building in the city of 100,000 is now empty. Sitting beside his tent in the yellow glow of a flashlight last week, Mr. Zhou said, “I am afraid to go home.”

But in hundreds of villages in the surrounding countryside, many families have not received sturdy steel-framed tents. Instead, they must make do with makeshift shelters made from bamboo poles and tarpaulins. Late last week, several farmers who hiked out of the mountainous Hongkou Township, west of Dujiangyan, said there was not enough food and drinking water there.

QUAKE STATISTICS - Up to Sunday 25 May:
62,664 people dead
358,816 injured
23,775 still missing
More than 5.4 million homeless
638,305 rescued and resettled
More than 8,000 aftershocks, biggest 6.0
69 dams faced danger of collapse, 310 in dangerous state and another 1,424 facing moderate risks
Source: Chinese government

Rainstorms Flood China’s Sichuan Province, Killing Dozens
July 10, 2013

BEIJING — Rainstorms that are said to be the worst in five decades have flooded large areas of southwest China, washing out bridges, triggering a landslide that buried dozens of people, and destroying a memorial to victims of the devastating 2008 earthquake in Sichuan Province that flattened large parts of the same area. The state news media reported Wednesday that heavy rains, which began last weekend, have killed more than 50 people across China and disrupted two million lives.

The worst flooding, in mountainous areas of Sichuan that include some of China’s most spectacular scenery, highlights the challenges of encouraging construction in places that are prone to heavy downpours and seismic activity. Some experts, citing frequent earthquakes and soil erosion caused by deforestation, have argued against the continued development of towns and cities along the Min, Fu and Jian Rivers, which snake through the steep canyons of the region.

The worst damage appeared to be in the city of Dujiangyan, where a rain-soaked mountainside gave way on Wednesday, burying 11 homes and as many as 40 people. Xinhua, the state news agency, said that rescue workers and sniffer dogs from Chengdu, the provincial capital, were rushing to the area, which only recently recovered from the 2008 earthquake. The earthquake left 87,000 dead or missing. On Wednesday evening, the state broadcaster CCTV reported that landslides had also trapped hundreds of people inside a tunnel along the mountain highway that connects Dujiangyan to Wenchuan.

On Tuesday, a bridge across the Tongkou River collapsed, sending six vehicles into the water, the state news media reported. At least 12 people are still missing and presumed dead.

Flooding completely submerged the county seat of Beichuan, once a bustling city of 20,000 that was destroyed by the earthquake five years ago. The state news media said that 23 feet of water had inundated a recently opened museum to earthquake victims. Survivors have long since been moved to a new town center, and officials set aside about 10 square miles as a memorial.

The Oriental Morning Post, a newspaper based in Shanghai, urged the government to better protect the memorial area, which contains the buried remains of hundreds of people whose bodies were never recovered from the rubble.

“If we don’t take effective measures,” the editorial said, “in another 10 or 20 years the ruins might not be there at all.”

To the north, in Shanxi Province, 12 workers were killed Tuesday night when a violent rainstorm caused the collapse of an unfinished coal mine workshop they were building, according to People’s Daily, citing a statement from the city government of Jinzhong, where the accident occurred. The collapse happened amid heavy rain that has drenched much of northern China, including the capital, Beijing, for much of the week.

Mia Li contributed research.

From across the pond...I-BBC. 
Page last updated at 12:00 GMT, Sunday, 25 May 2008 13:00 UK
China quake zone braced for rain 
There are fears that lakes created by the earthquake could burst.

China's earthquake zone has been warned to prepare for heavy rains which could hamper further relief efforts.  There are concerns that construction of temporary shelters for five million homeless could be delayed, while water levels in dams and lakes remain high.  A 5.8 magnitude aftershock hit the area on Sunday, and was felt in Beijing, though there were no reports of damage.

State TV said one person was killed, several hundred were injured, and 70,000 homes were destroyed.  It was one of the strongest of about 8,000 aftershocks detected since the 7.9 quake on 12 May.

The tremor thought to be the biggest, measuring 6.0, came six days after the quake and killed three people and injured more than 1,000.  Earlier a survivor was pulled from the rubble in Mianzhu, more than 11 days after the quake, state TV said.

Eighty-year-old Xiao Zhihu, who was partially paralysed before the quake, was trapped under a pillar of his house.  He had been fed by his wife while trapped and was in a stable condition, the reports said.

Government officials said the death toll had now risen to 62,664, and few more survivors are expected to be found.  Rescuers are still searching for 24 miners trapped underground by the earthquake in three mines, but it is not known whether they are still alive.

Premier Wen Jiabao has said the final death toll could be more than 80,000.

More than five million buildings collapsed in the earthquake and more than five million people are homeless, officials say.

Dam fears

Sunday's aftershock sent residents of the provincial capital Chengdu running out into the streets.  It was centred on Qingchuan, some way to the north of the epicentre of the main earthquake.  Rains are expected later on Sunday and on Monday, which forecasters said would be torrential in some areas and could cause mudslides.

There is also continuing concern over the state of dams in the region, and a number of new lakes formed by the force of the earthquake.

China's Water Ministry said 69 dams were at one time in danger of bursting, although steps have been taken to reduce the risk.  More than 300 more were affected by the earthquake, it added, saying many had been drained or had their water levels reduced.  There have been no reports of any dams breaking.

Thirty-four lakes were created in the province when landslides blocked rivers, Xinhua news agency said.

Eight held more than three million cubic metres of water and a lake at Tangjiashan, less than 3km (two miles) from Beichuan town, had doubled in size in four days.  Troops carrying explosives are heading for the lake to dig a sluice channel to allow a controlled release of water and prevent it from bursting.  

State TV: China quake death toll could hit 50,000 
By WILLIAM FOREMAN, Associated Press Writer 
Posted on May 15, 7:53 AM EDT

LUOSHUI TOWN, China (AP) -- China warned the death toll from this week's earthquake could soar to some 50,000, while the government issued a rare public appeal Thursday for rescue equipment as it struggled to cope with the disaster. Rescue workers broke through key roads to the epicenter in the race to find survivors.

More than 72 hours after the quake rattled central China, rescuers appeared to shift from poring through downed buildings for survivors to the grim duty of searching for bodies - with 10 million directly affected by Monday's temblor.

The official death toll reached at least 19,500 in Sichuan province alone where Monday's quake was centered, vice governor Li Chengyun told a news conference in the provincial capital of Chengdu. The figure was up from nearly 15,000 confirmed dead the day before.

But the State Council, the country's Cabinet, said the number could rise to some 50,000, state TV reported.

In Luoshui town - on the road to an industrial zone in Shifang city where two chemical plants collapsed, burying hundreds of people - troops used a mechanical shovel to dig a pit on a hilltop to bury the dead. Two bodies wrapped in white sheets lie near the pit.

Police and militia in Dujiangyan pulverized rubble with cranes and backhoes while crews used shovels to pick around larger pieces of debris. On one sidestreet, about a dozen bodies were laid on a sidewalk, while incense sticks placed in a pile of sand sent smoke into the air as a tribute and to dull the stench of death.

The bodies were later lifted onto a flatbed truck, joining some half-dozen corpses. Ambulances sped past, sirens wailing, filled with survivors. Workers asked those left homeless to sign up for temporary housing, although it was unclear where they would live.

Some key roads to other towns in the worst affected areas were cleared Thursday, and rescue workers were able to begin moving heavy equipment in for the first time. Previously, soldiers riding to isolated mountain villages on helicopters and small boats had been forced to dig for survivors with their hands.

Plans for the Defense Ministry to deploy 101 more helicopters underscored worries that the death toll would continue to skyrocket as time runs out to find survivors. Nearly 26,000 people remained buried in collapsed buildings.

Not all hope of finding survivors was lost. After more than three days trapped under debris, a 22-year-old woman was pulled to safety in Dujiangyan. Covered in dust and peering out through a small opening, she was shown waving on state television shortly before being rescued.

"I was confident that you were coming to rescue me. I'm alive. I'm so happy," the unnamed woman said on CCTV.

One earthquake expert said the time for rescues was growing short.

"Within 72 hours after the disaster is the critical period. Generally, the sooner the rescue of the buried, the better," the chief engineer of Shijiazhuang Bureau of Seismology, Liang Guiping, told state TV.

The government issued a rare appeal to the Chinese public calling for donations of rescue equipment including hammers, shovels, demolition tools and rubber boats. The plea on the Ministry of Information Industry's Web Site said, for example, that 100 cranes were needed.

The public request is emblematic of China's relative openness in dealing with the tragedy, as compared to past crises.

"This is only a beginning of this battle, and a long way lies ahead of us," Vice Health Minister Gao Qiang told reporters in Beijing.

No outbreaks of disease had struck refugees, who were being immunized against some illnesses, Gao said. Workers were seeking to ensure safety of drinking water and removing corpses to prevent the spread of bacteria.

After days of refusing foreign relief workers, China accepted an offer from Japan to send a rescue team, Foreign Ministry spokesman Qin Gang said in an announcement posted on the ministry Web site. Tawan's Red Cross said rival China also agreed to accept a 20-person emergency relief team from the island.

Taiwan is also sending a cargo plane to Chengdu with tents and medical supplies. The Air Macau plane will make a brief stop in Macau.

Taiwan and China, which split during civil war in 1949, have banned regular direct links and other formal contacts as political disputes persist.

The International Federation of Red Cross and Red Crescent Societies also issued an emergency appeal for medical help, food, water and tents.

Gu Qinghui, the federation's disaster management director for East Asia who visited Beichuan county near the epicenter, said more than 4 million homes were shattered across the quake area.

"The whole county has been destroyed. Basically there is no Beichuan county anymore," Gu said in Beijing, adding the death toll was sure to rise.

Forty-four counties and districts in Sichuan were severely hit, with about half of the 20 million people living there directly affected, Xinhua said.

Roads were cleared to two key areas that bore the brunt of the quake's force, with workers making it to the border of Wenchuan county at the epicenter and also through to hard-hit Beichuan county, Xinhua reported. Communication cables were also reconnected to Wenchuan.

The Chengdu Military Area Command also planned to airdrop 50,000 packets of food, 5,000 cotton-padded quilts and clothes there, part of the military rescue operation that has grown to include more than 116,000 soldiers and police.

Dujiangyan city was clogged with buses and trucks decked out with banners from companies saying they were offering aid to disaster victims. One tour bus was stuffed full of water bottles, cartons of biscuits and instant noodles.

Public donations so far have totaled $125 million in both cash and goods.

NBA star Yao Ming, China's most famous athlete, was planning to donate $285,000 to the relief effort, agent Erik Zhang said.

"My thoughts are with everyone back in my home country of China during this very dark and emotional time," Yao said in a statement from Houston, where he is recovering from a broken left foot with hopes of competing in the Beijing Olympics this August.

As the rescue effort gathered momentum, the depth of the problem of tens of thousands homeless stretched government resources.

North of Chengdu in Deyang, the largest town near the devastated areas of Hanwang and Mianyang, thousands of people have streamed into the city hospital since Monday, mostly with head or bone injuries.

Patients heavily wrapped in bandages and with cuts and bruises were huddled in canvas tents in the hospital's parking lot.

"Our doctors have worked continuously since Monday and people keep coming in. We have to keep strengthening our measures to keep up," said Luo Mingxuan, the Communist Party secretary of the hospital.

There were piles of donated clothing for survivors at the hospital and stands for them to make free telephone calls. Handwritten notes with names of the injured were posted on a board in front of the hospital's emergency section, where ambulances arrived every few minutes.

A group of 33 American, British and French tourists were airlifted from Wolong, site of the world's most famous panda preserve, to the provincial capital of Chengdu on Thursday morning, Xinhua reported. All were in good health, Xinhua said.
China Attacks Pelosi Over Tibet Remarks 
By CARA ANNA, Associated Press Writer 
Posted on Mar 23, 10:49 AM EDT

CHENGDU, China (AP) -- China attacked House Speaker Nancy Pelosi Sunday for her recent meeting with the Dalai Lama, accusing her and other "human rights police" of double standards and ignoring the truth about the unrest in Tibet.

China also again accused the Dalai Lama, the exiled Tibetan spiritual leader, of orchestrating anti-government riots in Tibet and neighboring provinces this month in a bid to mar the Beijing Summer Olympics and overthrow the area's communist leaders.

Pelosi's visit to the Dalai Lama in Dharmsala, India, on Friday was the first by a major foreign official since the protests broke out. The Democratic leader said if people don't speak out against China's oppression in Tibet, "we have lost all moral authority to speak on behalf of human rights anywhere in the world."

China's official Xinhua New Agency published commentary Sunday accusing Pelosi of ignoring the violence caused by the Tibetan rioters.

"'Human rights police' like Pelosi are habitually bad tempered and ungenerous when it comes to China, refusing to check their facts and find out the truth of the case," it said.

"Her views are like so many other politicians and western media. Beneath the double standards lies their intention to serve the interest groups behind them, who want to contain or smear China," it said.

The Chinese government has sought to portray itself and Chinese businesses as the victims of the riots.

China's reported death toll from the protests in the Tibetan capital Lhasa earlier this month is 22. Tibet's exiled government says 99 Tibetans have been killed.

Xinhua said Sunday that 94 people had been injured in four counties and one city in Gansu province in riots on March 15-16. The report also said 19 rioters had surrendered in Gannan, a prefecture in Gansu, but it did not give any details.

The violence has turned into a public relations disaster for China ahead of the August Olympics, which it had been hoping to use to bolster its international image.

The Chinese government over the weekend was trying to give its own version of the events while clamping down on information coming from Tibet and neighboring provinces. The government said through official media that formerly restive areas were under control and again accused the Dalai Lama, a Nobel Peace Prize winner, of trying to harm China's image ahead of the summer games.

"The Dalai clique is scheming to take the Beijing Olympics hostage to force the Chinese government to make concessions to Tibet independence," said the People's Daily, the main mouthpiece of the Communist Party.

The Dalai Lama called the accusations against him "baseless," asserting that he supported China's hosting of the summer games.

"I always support (that) the Olympics should ... take place in Beijing ... so that more than 1 billion human beings, that means Chinese, they feel proud of it," he said Sunday in New Delhi, India.

The official lighting of the Olympic torch is set for Monday in Greece, and some 1,000 police will surround Ancient Olympia to keep away pro-Tibetan protesters from the ceremony. The torch is scheduled to travel through 20 countries before the Beijing Olympics open on Aug. 8.

One of Thailand's six torchbearers withdrew Sunday in protest. Environmentalist Narisa Chakrabongse said in an open letter that she decided against taking part in the relay to "send a strong message to China that the world community could not accept its actions."

Despite the media restrictions by the Chinese government, some information was leaking out. An American backpacker who traveled to Chengdu, the capital of western Sichuan province, said he had seen soldiers or paramilitary troops in Deqen in northwest Yunnan province, which borders Tibet.

"What was an empty parking lot by the library was full of military trucks and people practicing with shields. I saw hundreds of soldiers," said the backpacker, who would give only his first name, Ralpha.

There have been no reported protests in Yunnan.

Monks at the Gedan Song Zan Monastery outside of Zhongdian in northwest Yunnan prayed Sunday for peace and an end to the recent unrest among ethnic Tibetan populations in China. The monks, who characterized themselves as both Tibetan and Chinese, said they felt that the upheaval and riots had helped no one.

The government has insisted that stability has returned to the troubled areas. State broadcaster China Central Television said Sunday that electricity and telecommunications had been restored in Lhasa.

China oil imports soar; refinery pact with Chad
By William Spain, MarketWatch
Last Update: 12:10 PM ET Oct 7, 2007

CHICAGO (MarketWatch) -- China's net imports of crude oil in the first eight months of 2007 soared more than 18% as demand for petroleum products to fuel the country's fast-growing economy continued to increase.

China brought in 110.4 million tons of crude oil while exporting exported 2.18 million tons, according to a Sunday report from official news agency Xinhua, citing data from the General Administration of Customs (GAC).

Meanwhile, domestic output of crude hit 124.7 million tons in the same period, up 1.3%. Refined oil imports hit 24.28 million tons, exceeding exports by 14 million tons. China produced 39.9 million tons of gasoline, up 8.8%, 7.68 million tons of kerosene, up 17.5% and 81.5 million tons of diesel oil, a 6.3% rise, Xinhau said.
China is now the world's second largest consumer of oil, after the U.S.

Earlier, the news agency reported that the China National Petroleum Corporation (CNPC) is planning to invest in a joint venture refinery in the African nation of Chad. A subsidiary of CNPC has signed an agreement with the Chadian government to jointly invest in the refinery, to be built north of N'Djamena, the capital.

The Chinese will be in charge of all engineering construction and use their own design specifications, manufacturing standards and equipment. CNPC is not yet saying how much it will invest or when. Land-locked Chad has been producing oil since 2003 and has found 13 oil fields to date but has no refineries and has to import gasoline and other petroleum products.

E C O N O M I C    P I C T U R E

Gas leak kills 25 at mine in China
The Associated Press
Updated: 05/30/2009 07:27:44 AM EDT

BEIJING—A gas leak killed 25 miners and 20 others remained trapped underground Saturday at a coal mine in China's southwestern city of Chongqing, the official Xinhua News Agency said.
Rescuers are working to release those trapped, the news agency said. The cause of the accident is still being investigated.

There were 131 people working in the Tonghua mine when the accident happened at 11 a.m. (0300GMT), but 86 escaped safely, the report said.

No other details were immediately available.

China's mining industry remains the world's deadliest, despite government promises to improve mining safety.

Most accidents are blamed on corruption, poor regulation, and cutting corners on safety to feed the growing economy's insatiable demand for coal.

Rapid Declines in Manufacturing Spread Global Anxiety
March 20, 2009

Since it was founded by his great-grandfather in 1880, Carl Martin Welcker’s company in Cologne, Germany, has mirrored the fortunes of manufacturing, not just in Europe but around the world.

That is still true today. In a pattern familiar to industrial businesses in Europe, Asia and the United States, Mr. Welcker says his company, Schütte, which makes the machines that churn out 80 percent of the world’s spark plugs, is facing “a tragedy.”

Orders are down 50 percent from a year ago, and Mr. Welcker is cutting costs and contemplating layoffs to prevent Schütte from falling into the red.  That manufacturing is in decline is hardly surprising, but the depth and speed of the plunge are striking and, most worrisome for economists, a self-reinforcing trend not unlike the cascading bust that led to the Great Depression.

In Europe, for example, where manufacturing accounts for nearly a fifth of gross domestic product, industrial production is down 12 percent from a year ago. In Brazil, it has fallen 15 percent; in Taiwan, a staggering 43 percent.  Even in China, which has become the workshop of the world, production growth has slowed, with exports falling more than 25 percent and millions of factory workers being laid off.  In the United States, until recently a relative bright spot for manufacturing despite the steady erosion of blue-collar jobs, industrial output fell 11 percent in February from a year ago, according to statistics released Monday by the Federal Reserve.

“Manufacturing has fallen off the cliff, and it’s certainly the biggest decline since the Second World War,” said Dirk Schumacher, senior European economist with Goldman Sachs in Frankfurt.

The pattern of manufacturing and trade ominously recalls how the financial crisis of 1929 grew into the Great Depression: tightening credit and consumer fear reduced demand for manufactured goods in one country after another, creating a downward spiral that reduced global trade.

“Plunging manufacturing suggests that as bad as things were in the fourth quarter, they are at least as bad now,” said Robert J. Barbera, chief economist at ITG, a New York research and trading business. “This is a classic adverse feedback loop. It won’t quickly correct itself.”

That means more workers can expect to lose their jobs around the world in coming months as manufacturers continue to cut production, especially as global trade contracts.  In fact, trade is shrinking even faster than production. Germany’s exports down are 20 percent from a year ago, Japan’s have plunged 46 percent, and in the United States, exports fell at an annualized rate of 23.6 percent in the fourth quarter of 2008.

Mr. Welcker says he has never seen anything like it. For parallels, he has to hark back to the Great Depression and World War II, when Schütte’s factory was destroyed.

After focusing on Germany and Europe in the decades after the war, Schütte thrived recently as globalization opened new markets in Eastern Europe and Asia. In the last five years, Schütte’s sales soared to about 100 million euros ($131 million) from 58 million.  The sudden reversal in global manufacturing suggests that Americans should not expect economic relief from abroad soon, despite a slightly more optimistic mood on Wall Street lately and President Obama’s call for more stimulus spending by foreign governments.

While manufacturing equals about 14 percent of gross domestic product in the United States, it totals 18 percent worldwide, and accounts for 33 percent of G.D.P. in China, according to the World Bank.

That means that China, Brazil, India and other fast-growing emerging market countries that have escaped the worst of the fallout from the credit crisis will increasingly suffer, dragging down demand in more advanced Western economies even as government-led stimulus packages kick in.

The damping effect works both ways.  Despite the misperception that America no longer makes anything, falling demand for goods made in the United States, including jet engines, locomotives, medical equipment, pharmaceuticals and some high-tech products, will hurt American growth prospects.

“Manufacturing makes up about two-thirds of U.S. exports, and contributed more to G.D.P. growth over the last 20 years than any other sector of the U.S. economy,” said David Huether, chief economist for the National Association of Manufacturers in Washington. “Our share of global manufacturing output has remained steady at 20 to 23 percent over the past decade.”

Elsewhere, even relatively healthy industrial companies like Toyota are also slashing production, which contributed to Japan’s huge export decline.  Toyota halted work at its 12 auto plants in Japan beyond its normal break in February and March. It also cut its production forecast for the year ending March 31 by 20 percent, to slightly more than seven million vehicles, and has warned that it will post a net loss of 350 billion yen ($3.6 billion), its first in decades.

In Europe, new figures for January manufacturing are due Friday, and they are expected to show that the decline is still worsening.

Although the problems of manufacturers supplying the auto industry and other so-called big iron manufacturers of products like locomotives, jet engines and power turbines have gotten the most attention, makers of a variety of other products, including handicrafts, clothes and jewelry, are suffering too.  India’s manufacturing sector, which accounts for about 16 percent of G.D.P., recently recorded its first quarterly production decline in more than a decade.

Since last April, handicraft exports have fallen by 55 percent to $1.35 billion, and textile makers estimate they have slashed half a million jobs. Banks, meanwhile, are restructuring loans for diamond makers and polishers.  And despite tax cuts and a $64 million stimulus package announced in February, Indian textile makers are pushing for more government help.

“We’re competing with countries like Bangladesh, where wages are lower,” said Rakesh Vaid, the chairman of Usha Fabs, a Delhi textile manufacturer. “We’re competing with China where the currency is well managed, and Vietnam where the industry is getting strong support from the government.”

At Schütte, which has 550 workers and is emblematic of Germany’s bedrock Mittelstand sector of family-run businesses, perilous times are part of the company’s history.  Mr. Welcker recalls family tales of trucks filled with cash to pay workers during the hyperinflation of the Weimar era, and how after G.I.’s crossed the Rhine in 1945 near where his factory stands today, “not one stone stood atop another.”

Today, he is thankful the situation is nothing like those days. “But the speed of the decline in orders,” he said, “is the worst we’ve ever seen.”

China Fears Tremors as Jobs Vanish From Coast

February 23, 2009

TANJIA, China — Tan Tianying might not look like a troublemaker, but she and millions of other workers like her have government leaders fretting about the country’s stability.

A shy, delicately built seamstress who makes aprons and coveralls in Guangzhou, Ms. Tan, 24, is part of an army of migrants, 130 million strong, who have flocked to cities for jobs, but whose prospects for continued employment are increasingly dim.

As the global economic crisis deepens and the demand for Chinese exports slackens, manufacturing jobs in the Pearl River Delta and all along the once-booming coast are disappearing at a stunning pace. Over the last few months, more than 20 million migrant workers have been cast into the ranks of the unemployed, depriving impoverished towns like Tanjia of the much-needed income the workers sent home.

Since December, hundreds of employees at Ms. Tan’s uniform factory have been let go and wages have been cut by a third as orders from the United States dry up. Last year, 2,400 factories in and around Guangzhou closed.

“I hope I still have a job,” Ms. Tan said this month, a few hours before leaving Tanjia on a train for the 10-hour ride that in recent years has carried away most of the town’s working-age residents. “I don’t want to go back to being a poor farmer.”

In a nation obsessed with social harmony, the well-being of China’s mobile work force has become the top priority for a government that has long seen its fortunes tied to those of the country’s 800 million rural dwellers. Mao’s revolution, after all, was fueled by embittered peasants, and it has not gone unnoticed in Beijing that decades of heady growth has fed a widening gap between urban residents and those who live in the rural interior.

Although the government has not released updated information about rural unrest, officials have been strategizing about how best to keep large protests and riots from spreading, should the dispossessed grow unruly.
This week, more than 3,000 public security directors from across the country are gathering in the capital to learn how to neutralize rallies and strikes before they blossom into so-called mass incidents. At a meeting of the Chinese cabinet last month, Prime Minister Wen Jiabao told government leaders they should prepare for rough times ahead. “The country’s employment situation is extremely grim,” he said.

To ameliorate the hardship of idled migrants, the central government has announced a series of initiatives that include vocational training, an expansion of rural health care and crop subsidies to ensure that those who return to the land can make a living despite a slump in agricultural prices. A $585 billion stimulus package introduced in November, much of it weighted toward labor-intensive construction projects, is also expected to absorb some of the newly unemployed.

But here in Tanjia and the surrounding countryside of northeast Hunan Province, most people say they have yet to see much in the way of government largess. As the Lunar New Year came to an end two weeks ago, many migrants who had come home for the holidays were anxious to return south, where they hoped to reclaim their old jobs or find new ones.

About 40 percent of the town’s 2,000 residents work outside the province, and their remittances have been a lifeline for the children and elderly people who remain behind. Much of that money has been spent on motorcycles, high school educations and new homes, some trimmed with Corinthian columns and ceramic dragons, that are the brick-and-mortar embodiment of this newfound prosperity.

Ms. Tan’s family home, like those of her neighbors, is a work in progress. Since 2005, her mother, father and brother, all migrant workers, have poured $15,000 into the two-story house, but they still need another $9,000 for appliances, fixtures and a white tiled facade. “We have no savings,” said her father, Tan Liangsheng, 52, a haggard-looking man who recently lost his job as a construction worker. “All our hard work and bitterness is invested in this house.”

Just behind him sat the mud-brick structure where the extended Tan clan used to live.

In some ways, Tanjia’s residents are luckier than most. Unlike China’s drought-stricken north and its chronically arid west, Hunan Province is well watered and blessed with a temperate climate that allows farmers to grow food much of the year.

Still, with 64 million people squeezed into an area the size of Kansas, most people make do with tiny plots of land; in Tanjia the average size is a tenth of an acre. “Maybe we won’t starve to death, but life would become very difficult if everyone came back home,” said Long Feng, 29, who works at a car repair shop in Shenzhen, not far from the Hong Kong border.

In Zhuzhou, the nearest city of any consequence, government officials are not very concerned about a surge in jobless farmers.

Chen Shuxian, director of Zhuzhou’s employment center, said he was more worried about the 3.7 million people who live in and around his booming city, people who have become accustomed to relatively comfortable lives. “They have cellphone bills and rent to pay,” he said. “The migrants don’t have a lot of expectations and they can always fall back on the land and their family savings.”

Such sentiments are common in China, where rural laborers are often viewed as dime-a-dozen workhorses capable of enduring enormous hardship. He Xuefeng, a professor who studies rural life, said many manufacturers believed the most productive workers were spent by 40.

“As workers grow older, they can’t work as quickly or accurately, so they are naturally eliminated,” said Mr. He, who teaches at Huazhong University of Science and Technology in Hubei Province. “The financial crisis will simply speed up that process by two or three years and force them to return home earlier.”

After he lost his job at a glass factory in Guangzhou last year, Wang Liming, 39, returned to his home on the outskirts of Zhuzhou thinking he could find employment nearby. Things turned more dire after his wife lost her job just before the New Year festivities.

He acknowledged that there was work to be had in Zhuzhou, but those jobs generally pay less than $100 a month, about half what a semiskilled assembly line position pays in Guangzhou.

“I couldn’t even afford my daughter’s high school tuition on that kind of salary,” he said, standing in front of his home, a half-built box that lacks windows and a refrigerator.

A gruff, chain-smoking man, Mr. Wang said the decade he spent in the south turned him off to agricultural work. “I hate working the fields,” he said as his neighbors nodded in agreement. Even if they wanted to, he and his fellow villagers could not make much money from farming: some of the best patches of land have been swallowed up by Zhuzhou’s rapid development, including the electric generating plant that dominates the view from his front door.

Asked about his plans, Mr. Wang shook his head, glanced at his cellphone and said he was waiting for friends in Guangzhou to call him about a job. “I’m just hoping the phone rings,” he said.

Zhang Jing contributed research.

Joblessness Up Among China’s Migrants
February 3, 2009

BEIJING — China’s government offered a telling indicator Monday of the slowdown in its once-galloping economy, announcing that more than one in seven rural migrant workers had been laid off or are unable to find work, twice as many as estimated just five weeks ago.

The new statistics followed a hint on Sunday by Prime Minister Wen Jiabao that the government might have to expand a recently announced $585 billion stimulus plan to deal “preemptively” with growing economic problems.

About 20 million out of China’s total estimated 130 million migrant workers — whose cheap labor underpins China’s manufacturing sector — have been forced to return to rural areas because of lack of work, according to a survey conducted by the Agriculture Ministry that was cited at a briefing.

In late December, employment officials estimated that at least 10 million migrant workers had lost their jobs in the third quarter of 2008 as waves of factories and businesses shut their doors.

The specter of millions more unemployed clearly has the Chinese government worried. The government has not released annual figures on social unrest — what it terms “mass incidents” — for several years, but foreign media reports suggest growing protests as unemployment spreads. A January article in Outlook Weekly, a magazine published by the government news agency Xinhua, predicted a record year for mass protests. “It is fair to say that the Chinese government takes very seriously the issue of employment of migrant workers,” said Chen Xiwen, a senior rural planning official who released the joblessness estimate at Monday’s briefing. “Guaranteeing employment and livelihood is to guarantee social stability,” he said.

Mr. Chen advised government officials to actively intervene to head off protests, rather than “shy away from coming out and let public security departments and police go to the front lines.” The military called upon its forces Sunday to exercise strict obedience to command in the face of challenges to social stability.

In a joint report issued Sunday, China’s cabinet and the Communist Party’s Central Committee warned 2009 will be “possibly the toughest year” since the Asian economic bubble burst in the late 1990s for economic growth and rural development, according to Xinhua. The report promised increased government aid to rural areas, including expanded subsidies to farmers, greater access to loans and more funding from Beijing for rural development projects.

Mr. Wen told The Financial Times on Sunday that China might enhance its $585 billion stimulus plan, announced only three months ago. It aimed to pump up economic activity enough to ensure 8 percent overall growth this year. China has pegged 8 percent growth as the minimal level desired to absorb surplus labor and ensure social stability.

“We may take further new, timely and decisive measures. All these measures have to be taken preemptively before an economic retreat,” Mr. Wen said in the interview.

Statistics suggest the retreat is already well under way. Growth slumped to 6.8 percent in the last quarter of 2008. Its annual rate of 9 percent for all of 2008, while still rapid compared to that of more developed economies, was the lowest in seven years.

Factories Shut, China Workers Are Suffering
November 14, 2008

CHANG’AN, China — Wang Denggui, father of three, arrived more than a year ago in the palm-lined streets of this southern town with a single goal: toil in a factory to save for his children’s school tuition.

But the plans of Mr. Wang and thousands of co-workers unraveled at noon on Nov. 1, when the Taiwanese chairman of their ailing shoe factory climbed over a factory wall to flee the country and his debts. That left several American shoe companies with unfilled orders and 2,000 workers without jobs.

“He just ran without telling anyone,” Mr. Wang said.

For decades, the steamy Pearl River Delta area of southern Guangdong Province served as a primary engine for China’s astounding economic growth. But an export slowdown that began earlier this year and that has been magnified by the global financial crisis of recent months is contributing to the shutdown of tens of thousands of small and mid-size factories here and in other coastal regions, forcing laborers to scramble for other jobs or return home to the countryside.

Furthermore, the slowdown inhibits China’s ability to work with other nations in alleviating the worldwide crisis.

The Pearl River Delta, known as the world’s factory, powered an export industry that pushed China’s annual growth rate into the double digits and provided work for migrants from interior provinces with poor farmland. But circumstances have changed quickly. The slowdown in exports contributed to the closing of at least 67,000 factories across China in the first half of the year, according to government statistics. Labor disputes and protests over lost back wages have surged, igniting fear in local officials.

After the shutdown of their shoe factory, called Weixu in Chinese and China Top Industries in English, Mr. Wang and some co-workers took to the streets in protest, demanding two months of back pay, or $440 on average. The government called in the riot police. Seven workers were thrown in jail and six were beaten, including Mr. Wang, he said.

“I plan to return home once I get my money,” Mr. Wang said as he stood outside the factory on Tuesday, showing the bloody shin wound that he said resulted from a blow from a metal baton. (The police declined to comment.) “I’m over 50 years old, and I won’t be able to find work. I’ll just retire.”

Under pressure from Beijing to maintain social stability, local officials are also trying to tamp down unrest by doling out back wages. Here in Chang’an, after the worker protest, the government shelled out more than $1 million to pay back wages to most of the workers at the shoe factory. (Mr. Wang and some other laborers say they are still without back pay.)

The slowdown in exports has accelerated a major shift in the nature of Chinese manufacturing: small factories that were already being pinched by rising costs of labor, transportation and raw materials, as well as by the appreciating yuan, are closing en masse. That is especially the case in these towns scattered around the city of Dongguan, known for churning out low-end products. Soon the labor-intensive factories that rely solely on migrant work could disappear from southern China, and foreign companies could contract with similar factories in Vietnam and other countries where costs are lower.

“There’s very serious damage being done down there, I don’t deny it, and I think it’ll get worse because we haven’t seen the full impact of the economic downturn in Europe,” said Arthur Kroeber, managing director of Dragonomics, an economic research and advisory firm based in Beijing. “I think next year we might see export growth in the country as a whole go down to 0 percent.”

The export sector is still growing but has slowed considerably; year-on-year growth was at 9 percent in October compared with 26 percent in September 2007, Mr. Kroeber said.

The social problems arising from the slowdown have stirred anxiety in the top leadership of the Communist Party, whose legitimacy is based on maintaining economic growth. Prime Minister Wen Jiabao is pushing for policies that will increase domestic consumer consumption to wean China off its reliance on exports. Last Sunday, the government unveiled a stimulus package worth $586 billion over the next two years — the largest ever announced in China — to help create jobs, mostly by building new transportation infrastructure.

Foreign governments expecting China to take the lead in addressing the global crisis will be disappointed, say analysts and scholars. Chinese officials say they are focused on trying to ease domestic problems and keeping the country’s annual growth rate above 8 percent, which they see as vital to generating enough new jobs. Some analysts say economic expansion could drop to as little as 5.8 percent in the fourth quarter this year, down from about 11 percent in 2007.

“I think China foresees that it’ll need to spend a lot of money to get itself out of the current domestic situation,” said Victor Shih, an assistant professor of political science at Northwestern University who studies the political economy of China. “On the global financial crisis, China will not take a leading role.”

The mass layoffs have led to a profound change in the movements this year of migrant workers like Mr. Wang who spend virtually the entire year away from home. Many are heading home early for the Chinese New Year, in late January, and say they might not return to work in the coastal regions. A worker in the railway station in Guangzhou said that from Oct. 11 to Oct. 27, there were 1.17 million passengers on trains leaving the station, an increase of 129,000 over the same period last year. There have been reports of a similar jump in other regions.

Once in the interior, the workers will have less incentive than in the past to return to the coastal provinces. Rising grain prices have made farming more profitable. The Chinese government announced a rural land reform policy last month that could spur some farmers to stay on their land and make better use of it.

A growing number of factories have opened in the interior provinces as well. Wages are still lower than on the coast, but have risen quickly in recent years.

In Zhangmutou, a town here in the Dongguan area, many of the 7,000 workers who lost their jobs when a Hong Kong-owned toy factory called Smart Union shut down last month have returned home. Li Dongmei, a former human resources employee, said her two older brothers who worked in the factory had taken the 20-hour bus ride home to Hunan Province. Ms. Li, though, still lives across from the abandoned factory building because she is eight months pregnant.

“This place isn’t too stable economically,” Ms. Li, 25, said as she sat on a terrace outside her cramped apartment. “Guangdong isn’t so good anymore.”

As was the case with the Weixu shoe factory, Smart Union closed without any notice, and hundreds of angry workers poured into the streets to demand that the local government pay them back wages. Many such factories were run by Taiwanese or Hong Kong managers who fled the mainland. Chinese police and courts have limited reach in Hong Kong, which has a separate legal system, and they have almost no ability to prosecute people in Taiwan, which is treated as a renegade province and does not have formal political or diplomatic relations with the mainland.

The wave of factory shutdowns is taking place at a time when migrant workers are more aware than ever of their legal rights and know how to put pressure on local governments. Two national labor laws were enacted in January that, among other things, require companies to pay severance and give out more long-term labor contracts. The laws could lead to more labor disputes and protests, said Mary Gallagher, director of the Center for Chinese Studies at the University of Michigan.

“Increasingly, the migrant workers know their rights,” she said.

Here in Chang’an, nearly 200 workers showed up outside the south gate of the four-story Weixu factory on Tuesday to demand from the government severance payments that generally ranged from $1,500 to $3,700 each. They signed their names on a list and put a red fingerprint stamp next to each signature.

“No one’s gotten this subsidy yet,” said a woman from Qinghai Province who spoke on condition of anonymity because local officials had scolded her for talking to a local newspaper. “The government has been helpful in giving us our back pay, but it hasn’t been helpful in paying the subsidy.”

The Taiwanese chairman of the shoe factory, Zhuang Jiaying, did not return calls seeking comment. The collapse of the factory started a domino effect: Related businesses, like a smaller factory that put labels on Weixu’s shoe boxes, have also failed. Hundreds of additional laborers have lost their jobs, and more than 200 creditors have yet to collect millions of dollars, said Yang Qiusheng, the manager of the factory that handled the labels.

“I had to fire people who had worked for me for a long time,” he said. “When I see this shoe factory, this enterprise, I feel very sad and sorry. I never thought it would end like this.”

China's economic muscle 'shrinks'

China's economy, the world's second largest, is not as big as was thought, a report by the World Bank has claimed.

According to the bank, previous calculations have overestimated the size of China's economy by about 40%.

The revelation came after the bank updated the way it calculated the country's gross domestic product (GDP).

The bank said the findings meant China would not become the world's biggest economy in 2012 as forecast. It also meant China was poorer than estimated.

This in turn would influence future aid and investment plans, the World Bank said.

China gains extra aid from international institutions and has asked for help in climate change talks because of its status as a developing country.

Adjusting figures

Source: World Bank

Based on the World Bank's new research, China's economy is now worth some $5.33 trillion (£2.64trillion). Despite the drop in size, the economy was still the world's second largest, the bank said.

The US, at $12 trillion, is the world's largest economy.

The method used for the calculations is called "purchasing power parity", and corrects for differences in prices, which are lower in China than in Western countries, for the same goods.

However, the figures show that average incomes in China are still just 10% of those in the US. China averages $4,091 per person, while average income in the US is $41,000.

Based on current exchange rates, China's economy is only half as big, at $2.24 trillion.

Source: World Bank

In previous years, economists have tried to adjust their figures to take into account local prices in developing nations because they were often significantly lower than those in more industrialised countries.

However, the bank said that many of the prices which were being used were out of date and gave distorted GDP figures.

This time it has used updated prices to create more accurate figures.

Global shift

In its report, the World Bank found that five nations - the US, China, Japan, Germany and India - accounted for nearly half of the world's total GDP.

But they were not amongst the five most expensive places to live, with that honour going to Iceland, Denmark, Switzerland, Norway and Ireland.

In Africa, the main drivers of growth were South Africa, Egypt, Nigeria, Morocco and Sudan, which accounted for almost two-thirds of the continent's output.

U.S. and China make deals but not on currency
By Paul Eckert and Glenn Somerville
May 23, 2007

WASHINGTON (Reuters) - The United States and China on Wednesday announced deals to increase flights to China and ease U.S. entry into its financial sector but made no headway on the thorny issue of speeding up Chinese currency reforms.

After two days of top-level economic talks, U.S. Treasury Secretary Henry Paulson claimed "tangible results" while China's Vice Premier Wu Yi said relations between the two countries were "complicated" and needed careful handling.

"The China-U.S. economic and trade relationship is one of the most complicated in today's world," Wu said. "It calls for direct consultation and dialogue between us, instead of easy resort to threat or sanctions."

Paulson is under pressure to push China more forcefully into letting its yuan currency rise in value to try to shrink a record U.S. trade deficit, and he said Chinese authorities know they need to do so for their own benefit.

After the talks, Wu, who led 15 cabinet members to Washington for the second round of talks under a "strategic economic dialogue" initiated last year, headed for Capitol Hill where lawmakers are eyeing legislation to impose tariffs on Chinese imports unless Beijing lets the yuan apprecia

In July 2005, China abandoned an 11-year-old practice of holding the yuan fixed against the dollar and revalued it by 2.1 percent. Since then it has risen only a further 6 percent, frustrating U.S. legislators who claim an undervalued currency makes Chinese products unfairly inexpensive.

"The Chinese clearly see the need, and have stated the principle of greater renminbi flexibility," Paulson told a closing news conference, referring to the yuan in the way Chinese officials most often do.


The most significant deal announced on Wednesday was one that commits China to remove a bar on new foreign securities firms and resume issuing licenses for securities companies, including joint ventures, in the second half of 2007.

Paulson, who chaired Goldman Sachs before becoming Treasury chief last July, has made gaining greater access to the Chinese financial sector a key objective. He visited Shanghai earlier this year to stress the need for China to develop its capital markets to accommodate a more-flexible currency.

In closed-door discussions on Tuesday and Wednesday, the two sides also agreed on a new aviation pact that U.S. transportation officials said will more than double the number of passenger flights between the two countries by 2012.

In the wake of reports about toxic toothpaste and contaminated pet food imports from China, U.S. officials said they stressed the safety of food and medicine imports was a "top concern" and that these discussions were being extended.


China remains an emerging-market economy only partly driven by free-market forces, but its cheap labor force and exporting prowess have enabled it to become the world's fourth-largest economy, behind the United States, Japan and Germany.

In the process, Chinese citizens have flocked to trade in stocks of fast-growing companies, raising concerns about a potential "bubble" in prices. Paulson declined to respond to a reporter's question on whether he thought Chinese stock values were inflated, saying he never comments on the topic.

If Chinese stocks were to collapse, the spillover could be felt worldwide, including in U.S. stock markets where prices are flying high.

Speaking via satellite to a conference in Madrid on Wednesday, former U.S.        Federal Reserve Chairman        Alan Greenspan predicted a "dramatic" drop in the Chinese stock market.

"It is clearly unsustainable," Greenspan said. "There is going to be a dramatic contraction at some point."

Paulson said Chinese officials agreed with the United States that their economy had to be "rebalanced" to take on a greater role as a global consumer and cut Beijing's reliance on exports for growth.

That would help reduce a U.S. trade deficit with China that hit an all-time high of $233 billion last year and ease tensions over China's economic success.

The U.S. Treasury chief called the aviation and other agreements reached in Washington "signposts on the long-term strategic road" which build confidence that the two countries are on the right track in their dealings with one another.

Paulson said he and Wu considered it their duty to "iron out differences and keep the economic relationship on an even keel, even during times of tension."

US hears blunt trade warning from China

May 22, 2007

WASHINGTON - The United States and China opened a new round of high-level economic talks on Tuesday with the leader of China's delegation bluntly saying that any effort to politicize economic differences between the two nations was not acceptable.
The Bush administration was pushing for concrete results to show to an increasingly restive Congress, where lawmakers blame America's soaring trade deficits and the loss of one in six manufacturing jobs since 2000 in part on China's trade practices in such areas as currency manipulation and copyright piracy.

But in opening remarks delivered in an ornate government auditorium decked out in flags from both nations, Chinese Vice Premier Wu Yi cautioned the United States against pursuing a blame-game.

"We should not easily blame the other side for our own domestic problems," Wu said, speaking through an interpreter. "Confrontation does no good at all to problem-solving."

Wu, who gained a reputation for tough speaking when she was China's top trade negotiator, said that both sides should "firmly oppose trade protectionism." She said that any effort to "politicize" the economic relationship between the two nations would be "absolutely unacceptable."

Wu and her delegation were scheduled to meet behind closed doors on Thursday with key leaders of Congress, including House Speaker Nancy Pelosi (news, bio, voting record), who has been a vocal critic of China's human rights policies. Lawmakers are pushing a variety of bills that would impose economic sanctions on China in the wake of a trade deficit with China that last year hit $232.5 billion, accounting for one-third of America's total record deficit of $765.3 billion.

Treasury Secretary Henry Paulson created the Strategic Economic Dialogue last year as a way to get the country's top policymakers together twice a year to achieve results that will ease trade tensions. The first meeting was held in Beijing last December.

Breakthroughs at this meeting were expected in the area of cutting tariffs on sales of American energy technology products and services in China and increasing U.S. airline passenger and cargo flights to China.

However, success in another area — getting China to boost the stake that American firms can own in Chinese financial service companies — seemed less certain. The current cap on foreign ownership of Chinese banks is 25 percent.

The two sides were also expected to review the issue of food safety, highlighted by the deaths of pets after eating pet food made with tainted wheat gluten that had been imported from China.

American manufacturers contend that China is manipulating its currency to keep it undervalued against the dollar by as much as 40 percent, making Chinese goods cheaper in the U.S. market and American products more expensive in China.

But there was no expectation of further progress in this area after China's surprise announcement last Friday that it was slightly widening the range its currency could move against the dollar in a single day from 0.3 percent to 0.5 percent. Critics were unimpressed by the small widening of the currency band.

Paulson was leading a U.S. delegation that includes top officials from 11 Cabinet-level agencies and        Federal Reserve Chairman Ben Bernanke. Wu's team includes 14 Cabinet ministers and Zhou Xiaochuan, head of China's central bank.

There were reports that China considered calling off this round of talks after the Bush administration, in an effort to pre-empt tougher actions in Congress, imposed penalty tariffs on Chinese paper products in a fight over government subsidies, and filed cases against China before the        World Trade Organization complaining about lax enforcement of copyright protections for American movies, music and other products.

China in recent days has made a number of moves in an effort to defuse American unhappiness. In addition to announcing the slight change in its currency band, China earlier in the month said it would purchase $4.3 billion in American high-technology products and in recent days announced that it would invest $3 billion of its $1.2 trillion in foreign currency reserves in Blackstone Group LP, the second-largest U.S. private equity firm.

Beijing can't live without its migrants ...Without them, the city's service industry will grind to a halt as nine in 10 workers are migrants from other parts of China
By Xie Hong

BEIJING cannot do without its migrant workforce.  The capital's service industry, in particular,  will grind to a halt without them.  It is easy to understand why.

Nine in 10 workers in the service industry come from other parts of China, such as Hebei, Henan, Sichuan, Anhui and Liaoning.  The latest census figures show that there are more than two million such migrant workers serving the capital's 13 million residents.  They are to be found working as cleaners, waiters, hotel employees,  construction workers, security guards and domestic helpers.

The Beijing Daily quoted a Labour and Social Security Bureau official as saying there are 400,000 migrant workers in the service industry.

'These migrant workers account for 90 per cent of the service industry workforce in Beijing,' Mr Feng Yongqi said.  Beijingers are not troubled by this migrant invasion.  In fact, many residents say they welcome it.  Mr Shan Yong, a manager in his 30s, paid what is perhaps the best compliment when he said that the migrant workers have made great contributions to the city's development.

'Beijingers would not be leading such a comfortable life if not for the services of these migrant workers,' he told The Straits Times.  However, when festive seasons such as the Chinese New Year come round, the mass exodus of migrant workers back to their hometowns leaves employers and residents at a loss.  One such employer is Madam Ma Yuxiang, a retiree in her 60s.

She is looking for a temporary replacement for her maid, who will be taking a three-week break during the Chinese New Year to visit her family in Anhui province.

Madam Ma told The Straits Times: 'I am quite happy with my maid, who has been working for me the past three years.  'The only problem is that it's not easy to find a replacement when she goes home during the Chinese New Year period.'

She is willing to pay 600 yuan (S$130) - nearly double her maid's monthly salary.  But she has yet to find a suitable helper.  Meanwhile, another group of migrants has been making its way to Beijing.  Unlike their counterparts who have no education and low skills, these so-called 'new migrants' are young and well-educated.  Last year, the city government registered an influx of 16,000 fresh graduates, up 45 per cent from the previous year.

These new migrants have gained a foothold in high-tech companies working as computer programmers, software engineers and also as managers.  The influx of these talents has raised the quality of the migrant workforce.  Nearly 35 per cent of the migrant workers now have received at least high school education, compared with just 10 per cent a decade ago.

Even Chinese economist Mao Yushi has hailed the importance of the migrant workforce.  The Chinese capital's economic activities would be halted without these workers, he said.

Exploring 'Gendercide'

Novelist explores the tragic killing of girls in China
By Nadia Ghattas and Yvonne Marcotte
Epoch Times New York Staff
May 01, 2007

The world is just beginning to understand the terrible reality of China's one child policy. The U.S. State Department's 2006 Report on Human Rights Practices in China shed light on the width and depth of the problem: "The male-female birth ratio for first births was 118.58 to 100 (compared with norms of between 103 and 107 to 100), and in some parts of the country, the ratio was even more skewed."

In his article "573,000 Orphans in China," Joshua Zhong reported on the miserable situation of abandoned children, despite the efforts of the Chinese Communist leadership's call to "create a more harmonious society."

Novelist Talia Carner recently responded to an Epoch Times email interview about researching her novel, China Doll and the tragedy of female infanticide in China. On her website, the writer states, "What I discovered was that in China there is gendercide defined by singling out baby girls for death vs infanticide which is gender neutral..."

For more information, please attend the LWV of Weston "Betty Hill International Forum 2007."

Friday, 27 December, 2002, 11:39 GMT - I-BBC

China approves water-transfer project; Work has started despite serious reservations

The Chinese Government has given the final go-ahead to what is expected to be one of the world's largest water-transfer projects.

Authorities plan to build three entirely man-made waterways to get water from China's Yangtze River to the country's arid north.  The project, which was formally launched by the Chinese prime minister Zhu Rongji on Friday, has been under discussion for decades.  It has been held up by serious doubts over its environmental impact, and the potential for corruption.

The project means that by the year 2010, people in Beijing may be washing in water from the Yangtze river, delivered from more than 1,000 kilometres (625 miles) away.  The massive, communist-style project will cost the Chinese Government $60bn and force nearly 400,000 people to move out of the way.

Authorities say they have no choice. Officials in Beijing say that they are facing a water crisis. They have to feed one fifth of the world's population with just a fraction of its arable land and clean water.  Northern China is desperately dry. Many farmers around Beijing now have to dig wells a kilometre deep to get water.

Problems predicted

More than 400 cities face water shortages and officials say that could spark civil unrest.  But critics accuse the government of trying to tame nature and of ignoring environmental risks.

They argue that the new, man-made waterways will deliver contaminated water to the north - polluted by industry and agriculture - and cause flooding.  A BBC correspondent in Shanghai says critics are worried because, given the fuzzy dividing lines between government and big business in China, the billions of dollars going into the scheme could provide fuel for kickbacks on an equally monumental scale.

According to China's official Xinhua news agency, the project actually consists of three canals running about 1,300 km through the country's eastern, middle and western parts.  The canals will be built in three stages and link up the country's four major rivers, the Yangtze River, Yellow River, Huaihe and Haihe.

Xinhua said that when the project was completed it would be able to deliver 44.8 billion cubic meters of water into the north each year, about the annual volume of water into the Yellow River.

Fears on Animal Feed Widen Food Inquiry in China
Published: October 31, 2008

SHANGHAI — Chinese regulators said Friday that they were widening their investigation into contaminated food amid growing signs that the toxic industrial chemical melamine has leached into the nation’s animal feed supplies, posing health risks to consumers throughout the world.

The announcement came after food safety tests earlier this week found that eggs produced in three provinces in China were contaminated with melamine, which is blamed for causing kidney stones and renal failure in infants. The tests have led to recalls of eggs and to consumer warnings.

The reports are another serious blow to China’s agriculture industry, which is already struggling to cope with its worst food-safety scandal in decades after melamine-tainted milk supplies sickened over 50,000 children, caused at least four deaths and led to global recalls of goods produced with Chinese dairy products earlier this fall.

The milk crisis is fueling worldwide concerns about food from China. In Hong Kong, food safety officials announced this week that they would begin testing a broader variety of foods for melamine, including vegetables, flour and meat products. On the mainland, Shanghai and other cities are moving aggressively to test a wide variety of food products for melamine, including fish and livestock feed, according to the state-run news media, which in recent days has carried multiple reports on melamine in animal feed.

In the United States, worried consumers frantically sent e-mail messages to one another on Thursday and Friday about the possibility of melamine-tainted Halloween treats following a spate of news reports that some candies and chocolates made in China or made with Chinese ingredients had tested positive for high levels of melamine or had been destroyed in recent weeks as a cautionary measure.

On a list by the Food and Drug Administration of products that may be tainted with melamine, White Rabbit Candies were the only item that might be handed out on Halloween. Earlier this month, the Canadian Food Inspection Agency recalled 30-ounce containers of Sherwood Brands Pirate’s Gold Milk Chocolate Coins.

A spokeswoman for the F.D.A. said that the agency was constantly adjusting a nationwide sampling of products being tested for melamine as new potential threats were brought to its attention. The F.D.A. and state and local authorities have been sampling products in Asian food markets across the United States since mid-September for traces of melamine.

“Thus far, most of F.D.A.’s testing of milk and milk-derived ingredients and products from China focused on human foods, but have included animal feeds as well,” said the spokeswoman, Stephanie Kwisnek. “The F.D.A. is currently re-evaluating its overall approach to keeping these products out of the U.S. market.”

Asian food safety experts warned consumers not to grow too alarmed over the finding of tainted eggs because they contained much lower concentrations of melamine than the powdered baby formula that caused such widespread problems in China.

Hong Kong food safety officials said a child would have to eat about two dozen of the eggs in a single day to become ill.

Still, if eggs, milk and animal feed are tainted, there is the specter of an even wider array of foods that could come under scrutiny, including pork, chicken, bread, cakes, seafood and candy.

China is also one of the world’s largest exporters of food and food ingredients, including meats, seafood, beverages and vitamins.

Melamine was banned as an animal feed additive in China in July 2007. And last year, United States regulators put tough restrictions on the amount of melamine allowed in food products.

But interviews on Friday and over the past year with several Chinese chemical dealers who sell melamine suggested that melamine scrap, the substantially cheaper waste left over after producing melamine, continued to be added to animal and fish feed.

“I heard some melamine dealers still sell to animal feed producers,” said Qin Huaizhen, manager at the Gaocheng Kaishun Chemical Company in the city of Shijiazhuang, though he insisted that he had never done so. “In Shandong Province, many animal feed manufacturers buy melamine scrap.”

Two other melamine dealers in eastern and southern China said that only after the recent dairy scandal did government regulators begin to closely monitor the sale of melamine to animal feed producers.

Kidney experts said there had been very little research into how melamine disrupts kidney function. Dr. Fredric L. Coe, a professor of medicine at the University of Chicago, said that melamine is likely to be concentrated in the kidneys in the form of crystals that the body cannot dissolve. Those crystals clog many of the kidney’s nearly one million nephrons, which are tiny filtering units, Dr. Coe said. Urination slows or ceases, and patients suffer acute kidney failure, he said.

Some food safety experts are perplexed as to how melamine was allowed to seep into China’s food supplies after melamine-tainted pet-food exports from China were blamed last year for sickening dogs and cats in the United States, touching off international trade and food safety disputes between the countries.

“A year ago, everybody should have been in a complete panic about it and done something then,” said Marion Nestle, a professor of food studies and public health at New York University and the author of “Pet Food Politics: The Chihuahua in the Coal Mine.” “Someone should have required that melamine not be in any food product.”

The pet food case led to a vast recall in the United States and in other parts of the world, and it also incited a lengthy food safety crackdown in China, with regulators boasting that they had closed down thousands of illegal or substandard food factories and slaughterhouses.

Still, the Chinese government never made clear last year or even this year how extensively it had tested its own food and feed supply for melamine, even though melamine dealers acknowledged that it was common to sell melamine scrap to food and feed producers.

In the case of the tainted dairy, Chinese investigators have arrested dozens of suspects and have accused a group of rogue milk and melamine dealers of intentionally adding melamine to milk supplies as cheap filler in order to save money.

High-ranking government officials, including the head of the nation’s quality watchdog, have been fired in the wake of the recalls, and Beijing has acknowledged that “lax regulation” contributed to the scandal.

Similarly, last year, regulators in Beijing largely blamed a pair of small exporters for the pet food debacle. Regulators said the exporters had shipped feed or feed ingredients contaminated with melamine in order to save money and to cheat the buyers.

Beijing also insisted its food safety problems were exaggerated, perhaps partly as a protectionist ploy to slow the boom in Chinese imports.

But several farmers and melamine scrap dealers said in interviews last year that melamine had been used for years in animal feed, particularly fish feed. Many melamine producers said they believed that melamine scrap was nontoxic and would not be harmful to animals or humans.

Melamine dealers say the government crackdown on the sale to feed producers occurred only this year, after Sanlu Group announced that its powdered infant milk formula was tainted with melamine. That announcement, which came in September, set off a nationwide recall and government announcements that other major dairy brands were also selling melamine-contaminated milk.

“Before the Sanlu scandal, we were not banned from selling melamine to anyone” Niu Qinglin, manager of the Hebei Jinglong Fengli Chemical Company, said in a telephone interview on Friday. “I had heard melamine dealers sell melamine to animal feed companies and food companies. It was common before the Sanlu scandal.”

Mr. Niu said, however, that he never sold melamine or melamine scrap to food or feed producers. And he noted that regulators had moved in on the trade. “Now,” he said, “the government regulates that melamine cannot be sold to any animal feed manufacturers or food processing companies.”


Far From Beijing’s Reach, Officials Bend Energy Rules
Chang W. Lee/The New York Times
Published: November 24, 2007

QINGTONGXIA, China — When the central government in Beijing announced an ambitious nationwide campaign to reduce energy consumption two years ago, officials in this western regional capital got right to work: not to comply, but to engineer creative schemes to evade the requirements.

The energy campaign required local officials to raise electricity prices as a way of discouraging the growth of large energy-consuming industries and forcing the least efficient of these users out of business. Instead, fearing the impact on the local economy, the regional government brokered a special deal for the Qingtongxia Aluminum Group, which accounts for 20 percent of this region’s industrial consumption and roughly 10 percent of its gross domestic product.

Local officials arranged for the company to be removed from the national electrical grid and supplied directly by the local company, exempting it from expensive fees, according to an electricity company official who asked not to be named, an official of the aluminum company and the official Web site of the nearby city of Shizuishan. As a result, Qingtongxia continued to get its power at the lowest price available.

It was a cat-and-mouse game grimly familiar to Chinese officials, who have a long tradition of spearheading ambitious nationwide campaigns that are all too often thwarted at the local level, partly because local priorities clash with national ones.

Concerned about China’s roaring economic engine consuming too much energy, national officials aimed to cut energy use by 20 percent per dollar of output within five years. China’s energy consumption has more than quadrupled since 1980.

The environmental toll is staggering. The country is already the world’s largest user of coal, the dirtiest type of energy. China’s coal consumption alone is projected to double in the next 20 years, according to the International Energy Agency.

Beijing has so fixated on the 20 percent goal that it has become the centerpiece of its overall strategy to reduce pollution in addition to consumption, as well as its main talking point in diplomatic negotiations to curb the output of gases that cause global warming. The target has elicited support among environmentalists in China and abroad. They regard it as ambitious given the explosion of heavy industry in China, which consumes vast amounts of electricity and, as it expands, makes the overall economy less energy efficient.

Drive to Conserve Sputters

Even so, the drive has mostly sputtered. According to official estimates, which in China are often overly generous, the country saved only 1.23 percent of energy per unit of output last year. In the first half of 2007, the authorities claim to have achieved 2.4 percent, double the previous year’s rate. Energy experts say they believe that the savings will increase over time, but to meet the goal of a 20 percent reduction by 2010, the country will have to reduce energy per unit of output by 4 percent a year on average, so the chances of achieving it look increasingly slim.

Officials in Beijing, faced with the likelihood that they will fall short of their target, have issued uncharacteristically scathing assessments of the performance of some local leaders, and they have vowed to use more of their powers to bring wayward officials into line. In May, China’s premier, Wen Jiabao, complained bitterly. “Understanding is not adequate, responsibilities are unclear, measures are not complementary, policies are incomplete, investment doesn’t arrive, and coordination is ineffective,” he said of efforts to cut energy consumption. “If these problems are not turned around, it will be difficult to achieve any obvious progress.”

More recently, Zhang Lijun, a deputy director of the State Environmental Protection Administration, warned that China was likely to miss its targets for emissions controls for the current five-year plan, which ends in 2010. “We haven’t spotted any substantial indicators of a slowdown in the expansion of energy-intensive sectors,” Mr. Zhang said.

The struggle to meet the target highlights the challenge of making China greener at a time when China’s top leaders have continued to emphasize breakneck growth, even as they worry about its costs. Officials at all levels arguably still face greater risks to their careers if they allow economic performance, job creation or tax revenue to lag than if they fail to curb pollution. Slower growth also means fewer opportunities for friends and relatives of people in power to cash in on the country’s boom.

The tug of war between localities and the central government also shows the limits of China’s ability to impose change on a vast, unruly country by edict, while exposing the weaknesses of a one-size-fits-all approach to reform in a country where regional economic disparities are rapidly growing.

In the Ningxia Hui Autonomous Region, the western region where Qingtongxia is, the drive to save energy ran up against the local obsession with economic growth. For years, the province was left out of the economic boom that transformed China’s coastal cities. In the late 1990s, China initiated a “Develop the West” campaign, encouraging regions like Ningxia to catch up with other areas. Now the state’s priorities are beginning to move away from unrestrained growth, just as Ningxia was beginning to move toward it.

Ningxia depends on its metallurgy industry to bring a prosperity that has long eluded its residents. It is one of the few advantages in this landlocked area. Coal is plentiful here, and planners were quick to seize on the idea of using it to generate the prodigious amounts of electricity needed to smelt metals. Now, the shift in policy directions from Beijing threatens that ambition.

“It’s such a simple theory to say that everyone knows you make more profit growing bananas than potatoes,” said an executive of one metal working factory who used a farming analogy to question the central government’s energy reforms. “But how can you force people to grow bananas on land where only potatoes will grow? Ningxia is a land of potatoes, and it is our natural resources and environment that determine everything.”

Conscious of Lagging Growth

Publicly, regional and company officials say they must heed the central government’s command. “If the policy was issued at the national level, then it must have been taken after careful consideration,” said Ding Jiangtao, deputy director of Qingtongxia’s aluminum smelter.

But in practice, local officials are acutely conscious of their lagging growth. Zhang Jianping, the deputy director of the Electricity Bureau of the Ningxia Economy Commission, which is in charge of carrying out the energy reforms, said: “As a less developed region, Ningxia needs time to progress and develop. We’re working hard to close the gap between us and the other provinces.”

In Ningxia, signs of this gap are everywhere. Even the regional capital, Yinchuan, has an unfinished look and feel to it, with broad ceremonial avenues, but little of the traffic and bustle common in the country’s east. The countryside is all arid farmland, occasionally relieved by low-slung mountains. Here and there, the government has created industrial zones, hoping to incite a takeoff. Most, however, consist of little more than grimy grids of streets where coal dust hangs thick in the air.

Even before the national energy consumption campaign began in 2005, Ningxia officials worked to get around environmental regulations that could hinder growth. Although Beijing issued rules in 2002 trying to limit the number of new coal-burning power plants, Ningxia has built at least three that either did not have the required permission, or failed to meet new environmental standards, according to the State Environmental Protection Administration.

Even after the national government canceled exemptions to special consumption fees that used to be available to companies like Qingtongxia in 2004, the local government extended them for another year, obtaining huge savings for its metal industries. As recently as 2005, regional officials continued to argue that the exemptions should remain.

Local officials have long permitted big companies like Qingtongxia to undercut even officially established energy prices. The lowest officially permitted electricity price in Ningxia, usually reserved for the most efficient of big industrial energy users, is 5.3 cents per kilowatt hour. But until this past May, Qingtongxia had managed to win itself a rate of 4.8 cents per kilowatt hour.

The central government tried to shame the provinces into complying. This April, Beijing cited 14 provinces it said had failed to comply with the new efficiency rules. Among them was the Ningxia region, whose energy intensity, or rate of power consumption per unit of gross domestic product, is the country’s highest. Beijing’s new guidelines called upon each of China’s provinces to draw up a list of its most wasteful industries and to put into effect a new pricing schedule for electric power that penalizes the least efficient users.

But Mr. Zhang, the deputy director of Ningxia’s electricity bureau, claimed he had never heard that Ningxia was cited for violations. Mr. Zhang also said he was unsure whether any list of big energy wasting industries had yet been drawn up. “We’ve actively improved our work and we need the media to understand us,” he said.

An official at the Ningxia Power Company who spoke on the condition of anonymity said many of the region’s strategic metal working industries had been spared Beijing’s mandated price rises until as recently as this May, nearly two years after they were announced. “That favorable price wasn’t approved by the state,” the official of one company said flatly. “It was a regional policy.”

Getting Around the Rules

Although it has protected its biggest energy users, the Ningxia government has begun to go after smaller industrial power consumers, imposing higher electricity prices and forcing some companies out of business. At the Lanshan industrial zone, a grid of old-line coal and metal working factories, managers of small and medium-size factories complained that they were being seriously hurt by higher electricity prices.

“There is no way for me to squeeze out any savings to offset the higher price of electricity,” said an official at the Shizuishan Tianhe Ferroalloy Company, where workers removed large vats of molten material from a giant furnace by hand. “The equipment we have determines the amount of electricity you consume each month, and our wages are already set. If I lower them, the workers won’t stay.”

The chairman of the company, Dai Zhanyin, said there was no use complaining. Unlike the situation at a big company like Qingtongxia, he said, “no one will care about your loss.”

Others among the relatively small players, however, have found the region’s new energy savings regulations easy to get around. At another metal working plant, where iron ore is forged into bread loaf-shaped lumps of steel, Di Duoxing, the chairman of Shizuishan City Hepu Mining Industrial Company, said the small size of his furnace had won him a place on the list of inefficient energy consumers and put him in line for sharply increased electricity prices.

Mr. Di struck on an idea, though. Using a single hand-operated press, his factory produces a small number of bricks from recycled materials recovered from his steel foundry. “When I went to pay the electricity bill I protested that I was a producer of recycled bricks, and they suspended the price increase,” Mr. Di said. “But as far as I know, the rest of the silicon-iron producers have already been subjected to the new price.”

Chinese environmentalists say to make such campaigns work, the government will have to penalize localities that fail to comply. “To get reforms implemented, two things have to be done,” said Lin Boqiang, director of the China Energy Research Institute at Xiamen University. “One is to rate the local government’s performance on compliance, and if they don’t comply telling people they have to go. The other is introducing financially meaningful penalties. We haven’t seen either of these yet.”


In China, Farming Fish in Toxic Waters: http://www.nytimes.com/2007/12/15/world/asia/15fish.html?hp
Published: December 15, 2007

FUQING, China — Here in southern China, beneath the looming mountains of Fujian Province, lie dozens of enormous ponds filled with murky brown water and teeming with eels, shrimp and tilapia, much of it destined for markets in Japan and the West.

Fuqing is one of the centers of a booming industry that over two decades has transformed this country into the biggest producer and exporter of seafood in the world, and the fastest-growing supplier to the United States.

But that growth is threatened by the two most glaring environmental weaknesses in China: acute water shortages and water supplies contaminated by sewage, industrial waste and agricultural runoff that includes pesticides. The fish farms, in turn, are discharging wastewater that further pollutes the water supply.

“Our waters here are filthy,” said Ye Chao, an eel and shrimp farmer who has 20 giant ponds in western Fuqing. “There are simply too many aquaculture farms in this area. They’re all discharging water here, fouling up other farms.”

Farmers have coped with the toxic waters by mixing illegal veterinary drugs and pesticides into fish feed, which helps keep their stocks alive yet leaves poisonous and carcinogenic residues in seafood, posing health threats to consumers.

Environmental degradation, in other words, has become a food safety problem, and scientists say the long-term risks of consuming contaminated seafood could lead to higher rates of cancer and liver disease and other afflictions.

No one is more vulnerable to these health risks than the Chinese, because most of the seafood in China stays at home. But foreign importers are also worried. In recent years, the European Union and Japan have imposed temporary bans on Chinese seafood because of illegal drug residues. The United States blocked imports of several types of fish this year after inspectors detected traces of illegal drugs linked to cancer.

This week, officials from the United States and China signed an agreement in Beijing to improve oversight of Chinese fish farms as part of a larger deal on food and drug safety.

Yet regulators in both countries are struggling to keep contaminated seafood out of the market. China has shut down seafood companies accused of violating the law and blacklisted others, while United States regulators are concentrating on Chinese seafood for special inspections.

Fuqing (pronounced foo-CHING) is at the top of the list this year for refused shipments of seafood from China, with 43 rejections through November, according to records kept by the United States Food and Drug Administration. All of those rejections involved the use of illegal veterinary drugs.

By comparison, Thailand, also a major exporter of seafood to the United States, had only two refusals related to illegal veterinary drugs. China as a whole had 210 refusals for illegal drugs.

“For 50 years,” said Wang Wu, a professor at Shanghai Fisheries University, “we’ve blindly emphasized economic growth. The only pursuit has been G.D.P., and now we can see that the water turns dirty and the seafood gets dangerous. Every year, there are food safety and environmental pollution accidents.”

Environmental problems plaguing seafood would appear to be a bad omen for the industry. But with fish stocks in the oceans steadily declining and global demand for seafood soaring, farmed seafood, or aquaculture, is the future. And no country does more of it than China, which produced about 115 billion pounds of seafood last year.

China produces about 70 percent of the farmed fish in the world, harvested at thousands of giant factory-style farms that extend along the entire eastern seaboard of the country. Farmers mass-produce seafood just offshore, but mostly on land, and in lakes, ponds, rivers and reservoirs, or in huge rectangular fish ponds dug into the earth.

“They’ll be a major supplier not just to the U.S., but to the world,” said Richard Stavis, the chairman of Stavis Seafoods, an American company that imports Chinese catfish, tilapia and frog legs.

China began emerging as a seafood power in the 1990s as rapid economic growth became the top priority in the country. But environmental experts say that headlong pursuit of higher gross domestic product has devastated Chinese water quality and endangered the country’s food supply. In Guangdong Province in southern China, fish contaminated with toxic chemicals like DDT are already creating health problems.

“There are heavy metals, mercury and flame retardants in fish samples we’ve tested,” said Ming Hung Wong, a professor of biology at Hong Kong Baptist University. “We’ve got to stop the pollutants entering the food system.”

More than half of the rivers in China are too polluted to serve as a source of drinking water. The biggest lakes in the country regularly succumb to harmful algal blooms. Seafood producers are part of the problem, environmental experts say. Enormous aquaculture farms concentrate fish waste, pesticides and veterinary drugs in their ponds and discharge the contaminated water into rivers, streams and coastal areas, often with no treatment.

“Water is the biggest problem in China,” said Peter Leedham, the business manager at Sino Analytica, an independent food safety testing firm that works with companies that buy from China. “But my feeling is China will deal with it, because it has to. It just won’t be a quick process.”

Fishing for Prosperity

Fuqing is called qiaoxiang, or home, for those who go overseas, because for decades this port city on the East China Sea is where thousands of people fled as stowaways.

In the 1980s, some emigrants began sending home money and ideas at just about the time that investors were arriving from Japan and Taiwan, promising to help the country build fish farms.

“Aquaculture was popular in Japan, so I saw the future,” said Wang Weifu, a longtime eel producer.

Thousands of peasants who had struggled to earn a living harvesting rice and potatoes began carving up huge plots, digging rectangular pits and filling them with water to create fish ponds. Other parts of the country followed, creating fish farms alongside roads, near rivers and streams and in big lakes, ponds and reservoirs.

Today, the mighty Yangtze River is lined with fish farms. Historic Lake Tai is stocked with crab pens. Near Ningde, 90 miles north of here, thousands of people live in a huge bay area, where they float on large wooden rafts, feeding and harvesting caged fish, like the yellow croaker.

The government hoped the building boom would lift millions out of poverty. And it did. There are now more than 4.5 million fish farmers in China, according to the Fishery Bureau.

Lin Bingui, 50, is one of them, a former bricklayer with an easy smile who now manages 20 enormous shrimp and eel ponds in western Fuqing, on reclaimed land with access to a narrow strait of seawater.

“This doesn’t take a lot of technology,” he said while walking into an indoor pond, where he raises baby eels. “You just learn it as you go along.”

The boom did more than create jobs. It made China the only country that produced more seafood from fish farms than from the sea. It also helped feed an increasingly prosperous population, a longstanding challenge in China.

Many growers here struck it rich as well, people like Lin Sunbao, whose 25-year-old son is now studying at Cambridge University in England. “My best years were 1992, ’93, ’94,” he said. “I only had one aqua farm, and I earned over $500,000 a year.”

As early as the mid-1990s, though, serious environmental problems began to emerge after electronics and textile manufacturing plants moved into central Fuqing. Water shortages appeared in the southeastern part of the city, and some fish farmers say their water turned black.

Government records document the environmental ills in the region. The nearby Dongzhang Reservoir, a water source for agriculture and more than 700,000 people, was recently rated level 5, near the bottom of the government scale, unfit for fish farming, swimming or even contact with the human body.

The Long River, the major waterway in Fuqing, has been degraded by waste dumped by paper factories and slaughterhouses. The government this year rated large sections of the river below level 5, or so highly polluted that it is unfit for any use. And nearby coastal waters which are also heavily fish farmed are polluted with oil, lead, mercury and copper, according to the State Environmental Protection Administration in China.

As water quality in Fuqing declined, farmers who often filled their ponds with too much seafood tried to fight off disease and calm stressed fish with an array of powerful, and often illegal, antibiotics and pesticides.

Eel producers, for example, often used nitrofuran to kill bacteria. But that antibiotic has been banned for use in animal husbandry in the United States, Europe, Japan, and even China, because it has caused cancer in laboratory rats.

Importers of Chinese seafood quickly caught on. In recent years, eel shipments to Europe, Japan and the United States have been turned back or destroyed because of residues of banned veterinary drugs. Eel shipments to Japan have dropped 50 percent through August of this year, dealing a heavy blow in Fuqing.

Chinese farmers say they have stopped using the banned medicines, and have suffered a 30 percent decline in survival rates of their fish and other seafood.

“Before 2005, we did use drugs blindly. They were very effective in fighting disease,” said Wang Weifu, chairman of a local eel association, noting that drug residues might still be in the water. “But now we don’t dare because of the regulations.”

Some growers have lashed out at Japan, arguing that it keeps raising the drug residue standard simply to protect its own eel farms against competition. But growers here say buyers from Japan will eventually be forced to purchase eels from China.

“Our market will expand in Russia and Southeast Asia, and the E.U.,” Mr. Wang said. “Also, we see big prospects in the Chinese market. In five or six years, as we transfer our export destinations, Japan will be begging us.”

Retreating From the Coast

The drive about 175 miles west of Fuqing leads into the lush subtropical mountains of Fujian Province, where some of China’s richest bamboo and timber reserves can be found. There, near the city of Sanming, Fuqing eel producers have built a collection of aquaculture farms, huge cement tubs wedged into the mountainside, covered by black tarps and stocked with millions of eels.

“This costs a lot more up here, but we had to do it,” said Zheng Qiuzhen, a longtime Fuqing eel producer who now operates near Sanming. “We had to do something about the water problems.”

In much of the country, seafood growers are leaving crowded coastal areas for less developed regions, where the land is cheaper and there is cleaner water. But they say the overall cost of doing business so far from the coast is higher, given the expense of shipping the fish in oxygenated trucks to the processing plant in Fuqing and their forswearing illegal drugs, which lowers survival rates and increases the growth period of most fish to five years from three years.

“You can’t find many places as beautiful as this, covered by trees and bamboo,” said Lin Sunbao, who moved from Fuqing to Sanming. “We use water from mountain streams. And because our water is better, it’s harder to get disease.”

This is one of the solutions to the water crisis in China: to seek out virgin territory and essentially start the cycle all over again. And that worries scientists, who say aquaculture in China is not just a victim of water pollution but a culprit with a severe environmental legacy.

Industrial fish farming has destroyed mangrove forests in Thailand, Vietnam and China, heavily polluted waterways and radically altered the ecological balance of coastal areas, mostly through the discharge of wastewater. Aquaculture waste contains fish feces, rotting fish feed and residues of pesticides and veterinary drugs as well as other pollutants that were already mixed into the poor quality water supplied to farmers.

Besides algal blooms, some of the biggest lakes in China, like Lake Tai, are suffering from eutrophication nutrient bombs, brought on partly by aquaculture, that can kill fish by depleting the water’s oxygen. The government is forcing aquaculture out of these lakes, and also away from the Long River in Fuqing.

Places like Sanming may not be pristine for long. Heavy industry is moving in, lured by mineral riches and incentives from local governments, which are pushing for development.

And Sanming already has 72 giant eel farms, producing 5,000 tons of seafood a year. Those farms together use about 280 million gallons of water a day and then discharge the wastewater the following day, back into the Sanming environs.

There are efforts to operate aquaculture in a sustainable way. In Norway, for instance, salmon producers use sophisticated technology, including underwater cameras, to monitor water quality and how much fish feed is actually consumed. But nothing like this is being done in China, and specialists like Li Sifa of Shanghai Fisheries University insist that Chinese regulations are too lax and that enforcement efforts are often feeble or nonexistent.

The government has stepped up its inspections of fish farms and seafood processing plants here, alerting workers of the dangers and consequences of using illegal drugs. But the drugs have remained a problem, partly because of poor water quality.

A possible solution to the water woes is to move aquaculture well out to sea, specialists say, with new technology that allows for deepwater fish cages served by automatic feeding machines.

The United States is already considering such a plan, partly as a way to make it less dependent on imports, which now fill 80 percent of its seafood needs. China is also considering adopting what is now being called “open ocean” aquaculture.

Currently, China’s coastal fish farms face many of the same challenges as those on land. Waters there are heavily polluted by oil, lead, mercury, copper and other harsh substances. Veterinary drugs dropped in shoreline waters may easily spread to neighboring aquaculture farms and affect species outside the cages, and while coastal waters are less polluted than those on land, aquaculture farms, with their intensive production cycles, are prone to be polluters.

Still, said An Taicheng of the Chinese Academy of Sciences: “China has to go to the sea because it’s getting harder and harder to find clean water. Every year there are seafood safety problems. One day, no one will dare to eat fish from dirty water, and what will farmers do?”

Who knew how prescient this film was?

Fields of watermelon burst in China farm fiasco
By ALEXA OLESEN, Associated Press
17 May 2011

BEIJING – Watermelons have been bursting by the score in eastern China after farmers gave them overdoses of growth chemicals during wet weather, creating what state media called fields of "land mines."

About 20 farmers around Danyang city in Jiangsu province were affected, losing up to 115 acres (45 hectares) of melon, China Central Television said in an investigative report.

Prices over the past year prompted many farmers to jump into the watermelon market. All of those with exploding melons apparently were first-time users of the growth accelerator forchlorfenuron, though it has been widely available for some time, CCTV said.

Chinese regulations don't forbid the drug, and it is allowed in the U.S. on kiwi fruit and grapes. But the report underscores how farmers in China are abusing both legal and illegal chemicals, with many farms misusing pesticides and fertilizers.

Wang Liangju, a professor with College of Horticulture at Nanjing Agricultural University who has been to Danyang since the problems began to occur, said that forchlorfenuron is safe and effective when used properly.

He told The Associated Press that the drug had been used too late into the season, and that recent heavy rain also raised the risk of the fruit cracking open. But he said the variety of melon also played a role.

"If it had been used on very young fruit, it wouldn't be a problem," Wang said. "Another reason is that the melon they were planting is a thin-rind variety and these kind are actually nicknamed the 'exploding melon' because they tend to split."

Farmer Liu Mingsuo ended up with eight acres (three hectares) of ruined fruit and told CCTV that seeing his crop splitting open was like a knife cutting his heart.

"On May 7, I came out and counted 80 (burst watermelons) but by the afternoon it was 100," Liu said. "Two days later I didn't bother to count anymore."

Intact watermelons were being sold at a wholesale market in nearby Shanghai, the report said, but even those ones showed telltale signs of forchlorfenuron use: fibrous, misshapen fruit with mostly white instead of black seeds.

In March last year, Chinese authorities found that "yard-long" beans from the southern city of Sanya had been treated with the banned pesticide isocarbophos. The tainted beans turned up in several provinces, and the central city of Wuhan announced it destroyed 3.5 tons of the vegetable.

The government also has voiced alarm over the widespread overuse of food additives like dyes and sweeteners that retailers hope will make food more attractive and boost sales.

Though Chinese media remain under strict government control, domestic coverage of food safety scandals has become more aggressive in recent months, an apparent sign that the government has realized it needs help policing the troubled food industry.

The CCTV report on watermelons quoted Feng Shuangqing, a professor at the China Agricultural University, as saying the problem showed that China needs to clarify its farm chemical standards and supervision to protect consumer health.

The broadcaster described the watermelons as "land mines" and said they were exploding by the acre (hectare) in the Danyang area.

Many of farmers resorted to chopping up the fruit and feeding it to fish and pigs, the report said.

China puts nation on alert to try to stop deadly virus 

By CHARLES HUTZLER, Associated Press Writer 
Posted on May 3, 8:12 AM EDT

BEIJING (AP) -- China's Health Ministry issued a nationwide alert Saturday calling for heightened efforts to control a virus that has caused the deaths of 22 children in one city and shows signs of spreading.

Health bureaus around the country must step up monitoring for hand, foot and mouth disease following a "relatively large" outbreak in the central city of Fuyang, the Health Ministry said in notices on its Web site.

The ministry warned that cases were more numerous this year than in recent years, and the peak for transmission would likely come in June and July.

The outbreak is another concern for China's communist government as it gears up to welcome hundreds of thousands of foreigners for this summer's Beijing Olympics. It's also an uncomfortable reminder of the SARS pneumonia outbreak in 2003, which Beijing tried to cover up but then adopted drastic measures to control.

Saturday's warning was prompted by a jump in cases in Fuyang of Enterovirus 71, or EV-71, a type of hand, foot and mouth disease.

Up to Thursday night, 3,321 cases of EV-71 were reported in Fuyang, a fast-growing city in largely rural Anhui province. Besides the 22 deaths, 978 people remain hospitalized, 58 of them in serious or critical condition, the ministry said in a separate statement.

The state-run Xinhua News Agency also reported that preliminary tests showed an 18-month-old boy who died Friday in southeastern Guangdong province was infected with EV-71, and a second suspected death was under investigation. Cases of hand, foot and mouth outbreaks, but not necessarily EV-71, have been reported in at least two other provinces.

"Health bureaus at all levels must recognize the importance and urgency of preventing the spread of infectious diseases," the ministry said in its nationwide order.

Enterovirus 71 is one of several viruses that cause hand, foot and mouth disease, which is characterized by fever, mouth sores and a rash with blisters. It is spread by direct contact with nose and throat discharges, saliva, fluid from blisters, or the stool of infected persons.

The illness mainly strikes children young than 10 and is not related to foot and mouth disease, which infects cattle, sheep and swine.

The nationwide order said preventing the spread of infectious diseases was necessary "to guarantee the smooth staging of the Beijing Olympics and Paralympics and to practically preserve social stability."

The order targeted hand, foot and mouth disease, as well as hepatitis A, measles and other infectious diseases commonly spread in the spring and summer.

Mindful of the SARS experience, the order vowed to punish any person or agency who tried to cover-up or delay disclosure of outbreaks.

State media cited the SARS experience in reports this past week that said people in Fuyang had criticized the government's response as slow, allowing rumors to spread about the outbreak.

A press officer with the World Health Organization said representatives were not available for comment on Saturday. The WHO in a statement on Thursday said that while cases in Fuyang cropped up in early March, they increased sharply starting April 19 but a rapid response from China also steeply decreased the rate of fatalities in the second half of April.

With no vaccine or specific therapy developed for EV-71, the WHO recommended better hygiene, with more frequent hand-washing and disinfecting areas - something that it said China was doing.

State-run television footage showed workers spraying disinfectant around houses in rural areas outside Fuyang and medical teams visiting families with small children.

Since the SARS crisis, the government has increased spending on the detection and monitoring of communicable diseases. The Health Ministry has ordered regular reports on outbreaks of hand, foot and mouth diseases and has sent expert teams to Anhui province to lead treatment and prevention.

Tainted China water sickens 450 
Page last updated at 13:26 GMT, Saturday, 11 October 2008 14:26 UK

About 450 people have fallen ill in southern China after drinking contaminated water, the Xinhua state news agency says.

Four of the sick, in two villages in Guangxi province, have arsenic poisoning. Industrial waste from a metal company has been blamed.  Residents began to show symptoms of facial swelling, vomiting and blurred vision on 3 October.

Last month, tainted milk left more than 50,000 children sick.

Plant closed

Ge Xianmin, head of the Guangxi regional occupational disease prevention and control institute, told Xinhua: "The villagers were slightly poisoned. They can be cured in nine to 15 days with timely treatment."

Health officials said 23 children under the age of seven and 32 people aged over 60 had been kept in hospital for observation, while others were receiving outpatient treatment.  According to local government officials, torrential rain caused waste water containing arsenic from the Jinhai Metallurgy Chemical company to overflow and pollute nearby ponds and wells.

The company - a branch of the state-owned Liuzhou China Tin Company - was closed after the contamination was discovered.  Xinhua said the local government and the company had agreed to share the medical costs of the villagers.

Last month, four children died and more than 50,000 were sickened after they were fed on baby milk powder contaminated with the industrial chemical melamine.  The scandal resulted in a recall of many Chinese milk products.

Where Breathing Is Deadly
Published: May 25, 2008

BADUI, China

Kong Dongmei and Hong Xia in Badui village. Both girls are mentally-retarded, and the villagers blame pollution from a local factory.

China’s biggest health disaster isn’t the terrible Sichuan earthquake this month. It’s the air.

The quake killed at least 60,000 people, generating a response that has been heartwarming and inspiring, with even schoolchildren in China donating to the victims. Yet with little notice, somewhere between 300,000 and 400,000 Chinese die prematurely every year from the effects of outdoor air pollution, according to studies by Chinese and international agencies alike.

In short, roughly as many Chinese die every two months from the air as were killed in the earthquake. And the problem is becoming international: just as Californians can find Chinese-made shoes in their stores, they can now find Chinese-made haze in their skies.

This summer’s Beijing Olympics will showcase the most remarkable economic explosion in history, and also some of the world’s thickest pollution in both air and water. So I’ve returned to the Yellow River in western China’s Gansu Province to an isolated village that has haunted me since I saw it a decade ago.

Badui is known locally as the “village of dunces.” That’s because of the large number of mentally retarded people here — as well as the profusion of birth defects, skin rashes and physical deformities. Residents are sure that the problems result from a nearby fertilizer factory dumping effluent that taints their drinking water.

“Even if you’re afraid, you have to drink,” said Zhou Genger, the mother of a 15-year-old girl who is mentally retarded and has a hunchback. The girl, Kong Dongmei, mumbled unintelligibly, and Ms. Zhou said she had never been able to speak clearly.

Ms. Zhou pulled up the back of her daughter’s shirt, revealing a twisted, disfiguring mass of bones.

A 10-year-old neighbor girl named Hong Xia watched, her eyes filled with wonder at my camera. The neighbors say she, too, is retarded.

None of this is surprising: rural China is full of “cancer villages” caused by pollution from factories. Beijing’s air sometimes has a particulate concentration that is four times the level considered safe by the World Health Organization.

Scientists have tracked clouds of Chinese pollution as they drift over the Pacific and descend on America’s West Coast. The impact on American health is uncertain.

In fairness, China has been better than most other countries in curbing pollution, paying attention to the environment at a much earlier stage of development than the United States, Europe or Japan. Most impressive, in 2004, China embraced tighter fuel economy standards than the Bush administration was willing to accept at the time.

The city of Shanghai charges up to $7,000 for a license plate, thus reducing the number of new vehicles, and China has planted millions of trees and hugely expanded the use of natural gas to reduce emissions. If you look at what China’s leaders are doing, you wish that President Bush were half as green.

But then you peer into the Chinese haze — and despair. The economic boom is raising living standards hugely in many ways, but the toll of the resulting pollution can be brutal. The filth is prompting public protests, but the government has tightly curbed the civil society organizations that could help monitor pollution and keep it in check.

An environmental activist named Wu Lihong warned for years that Lake Tai, China’s third-largest freshwater lake, was endangered by chemical factories along its banks. Mr. Wu was proved right when the lake filled with toxins last summer — shortly after the authorities had sentenced him to three years in prison.

Here in Badui, the picture is as complex as China’s development itself. The government has taken action since my previous visit: the factory supposedly is no longer dumping pollutants, and the villages have been supplied with water that, in theory, is pure. The villagers don’t entirely believe this, but they acknowledge that their health problems have diminished.

Moreover, economic development has reached Badui. It is still poor, with a per-capita income of $100 a year, but there is now a rough dirt road to the village. On my last visit, there was only a footpath.

The road has increased economic opportunities. Farmers have dug ponds to raise fish that are trucked to the markets, but the fish are raised in water taken from the Yellow River just below the fertilizer factory. When I looked in one pond, the first thing I saw was a dead fish.

“We eat the fish ourselves,” said the village leader, Li Yuntang. “We worry about the chemicals, but we have to eat.” He said that as far as he knew, the fish had never been inspected for safety.

Now those fish from this dubious water are sold to unsuspecting residents in the city of Lanzhou. And the complexities and ambiguities about that progress offer a window into the shadings of China’s economic boom.

S U M M E R    O L Y M P I C S   2 0 0 8 :  Internet as sports news source! 

A CITY PLANNER'S DREAM VISUAL:  venues and special views of China Olympic arrangements
Rehearsal for opening night at left - is that Thursday, Friday or Saturday in Weston?   Excitement and other matters, particulate or otherwise, in the air,  in the week prior.  And at the end, record men's marathon record says it all--the air was good enough and the heat not nearly stiffling enough to keep five runners from racing out into the lead in record time...and for the first two runners to demolish the Olympic marathon record!!!   And video news, at right...post-Olympics, of one of the architectural features recently erected (this is a link to terrific NYTIMES pages on Beijing..

I-BBC video at the link above

Fire Engulfs Beijing Hotel Complex
February 10, 2009

BEIJING — A fierce fire engulfed one of the showcase Olympics-era buildings in Beijing on Monday, the last day of celebrations for the lunar new year when the city was ablaze with fireworks.

The building was designed by the Dutch architect Rem Koolhaas and is part of China Central Television’s new headquarters, an angular wonder of modernist architecture that sits astride the city. The CCTV complex was a hugely expensive trophy of Beijing’s pre-Olympics building boom, the result of many billions of dollars the ruling Communist Party devoted to making Beijing a city of the future.

The burning building housed a luxury hotel and cultural center, next to the main CCTV tower. Flames were visible from the ground floor to the top floor of the large building. CCTV estimated that the fire had begun a few minutes before 8:30 p.m., although some local residents said they saw flames as early as 7:45 p.m.

Crowds of onlookers watched the fire burning into the night, the flames reflected in the glass facade of the main CCTV tower, as the police tried to move the spectators away and the air filled with sirens. People watching noted that the timing of the fire — coming at the end of the spring festival — was inauspicious.

It was not immediately clear what had caused the fire but the city had been filled with fireworks for the annual festival. There were also no details about whether there were any injuries, but witnesses at the scene said that workers had been present around the clock and were likely to have been in the building when the fire started.

“Debris is falling and flames are coming out in all directions,” Edie Marshall, a Beijing resident, told Reuters.

The hotel in the building, a 241-room Mandarin Oriental, was due to open this year.

Erik Amir, a senior architect at Mr. Koolhaas’ firm, the Office for Metropolitan Architecture, rushed to the site, The Associated Press reported. “I think it’s really sad that this building is destroyed before it can be opened to the public,” he was quoted as saying.

In Beijing, the main avenues leading east toward the site of the fire were jammed with traffic. The police had set up roadblocks, and cars were being diverted into side lanes. The roadblocks were lifted when convoys of ambulances and police vans pulled up. In taxis, a pre-recorded radio message told drivers and passengers to stay away from the stretch of the Third Ring Road next to the CCTV tower. The message also said that Line 10 of the subway, one of the new lines added before the Beijing Olympics, had been shut down entirely. The eastern stretch of the line runs beneath the Third Ring Road.

At the same time, people were still shooting off fireworks from the sides of the roads, adding to the seeming chaos in the city.

Andrew Jacobs reported from Beijing and Graham Bowley from New York. Edward Wong contributed reporting from Beijing.

Ruling Backs Chinese Gymnasts
October 1, 2008

Filed at 5:12 p.m. ET

China's gold medal gymnasts were old enough to compete in the Beijing Olympics, the sport's governing body said Wednesday, though it still had questions about the team that competed at the 2000 Sydney Games.

Two members of that squad -- Dong Fangxiao and Yang Yun -- remain under scrutiny.

The International Gymnastics Federation said in a statement that it ''does not consider the explanations and evidence provided to date in regards to these athletes as satisfactory.''

Dong got a Beijing Olympics credential with documents that suggest she was only 14 in 2000, said Andre Gueisbuhler, secretary general of the FIG. Her blog also indicates she was underage in Sydney, when China won the bronze medal in the team competition.

Yang, who also won a bronze medal on the uneven bars in 2000, said in a June 2007 interview that aired on state broadcaster China Central Television that she was 14 in Sydney. Gymnasts must turn 16 during the Olympic year to compete.

''I would hope that the whole world in sport realizes that the FIG is serious about these rules and the ethics and moral questions,'' Gueisbuhler said.

Calls to Yang and Dong's mobile phones rang unanswered Wednesday, a national holiday, as did phone calls to the Chinese gymnastics team's media officers.

''We are satisfied with the information provided by FIG, and we now consider the (2008) matter closed,'' said Emmanuelle Moreau, spokeswoman for the International Olympic Committee.

''Clearly they feel that there is more to be looked at for Sydney,'' Moreau added. ''We encourage them to pursue their inquiry and shed some light on these cases. We now rely on them to get to the bottom of that and get back to us.''

Doubts about the ages of China's current gymnasts swirled for months before the Beijing Olympics, with media reports and online records suggesting some girls could be as young as 14. Three days before the games ended, the IOC asked the FIG to look into the matter one last time.

The investigation was expanded after questions were raised about the 2000 team.

''We did not have another choice,'' Gueisbuhler said last week. ''If we want to remain credible, then we have to look into things.''

Underage gymnasts have been a problem since the 1980s, when the minimum age was raised from 14 to 15 to protect young athletes from serious injuries. The minimum age was raised to its current 16 in 1997.

North Korea was barred from the 1993 world championships after FIG officials discovered Kim Gwang Suk, the 1991 gold medalist on uneven bars, was listed as 15 for three years in a row. Romania admitted in 2002 that several gymnasts' ages had been falsified, including Olympic medalists Gina Gogean and Alexandra Marinescu.

''We applaud the serious efforts of the International Gymnastics Federation and International Olympic Committee to conduct an investigation given the level of speculation that existed,'' said Steve Penny, president of USA Gymnastics. ''We believe the continuing investigation regarding the evidence from the Olympic Games in Sydney underscores the importance of maintaining a fair field of play and identifying methods to prevent questions of this nature in the future.''

While it continues to investigate the ages of Dong and Yang, the FIG also is exploring its legal options and what sanctions might be available. The FIG's statute of limitations in disciplinary matters is five years, and 10 years for criminal cases, and the international federation is trying to determine whether Australia or Switzerland would have jurisdiction. If cause is found, the punishment could be as severe as stripping the medals.

''In our statutes, our code of discipline, we have a range of sanctions. It can be from a suspension, it can be taking medals away, it can be taking the rankings away,'' Gueisbuhler said. ''Are we entitled to take action for medals or rankings at the Olympic Games? Or does this fall strictly under the IOC authority? We are looking at this moment at these questions.''

But the medals aren't really the issue, said Dominique Dawes, a member of the U.S. team that finished fourth in Sydney.

''The important issue is them righting a wrong and hopefully prohibiting future Olympians from being underage,'' Dawes said. ''It's really about making sure every athlete is doing things the right way.''

Gueisbuhler said the documents Dong used for her Beijing credential list her birthdate as Jan. 23, 1986, which would have made her 14 -- and too young -- for the Sydney Games. Dong was a national technical official in Beijing, working as the secretary on vault. She was not part of any judging panel.

''If that document is the correct one, that would suggest she was 14 years old at the Sydney Olympic Games,'' Gueisbuhler said.

Dong's birthdate in the FIG database is listed as Jan. 20, 1983.

Dong's blog also says she was born in the Year of the Ox in the Chinese zodiac, which dated from Feb. 20, 1985, to Feb. 8, 1986. Dong has not denied that, but she refused to answer any questions about her age, telling the AP last week, ''I've left the gymnastics team.''

''If the FIG wants to investigate this matter,'' she added, ''I will provide every form of documentation.''

The FIG also has a copy of Yang's 2007 interview, in which she seems to contradict her official birthdate. Yang's birthdate is listed as Dec. 2, 1984.

''At the time I was only 14,'' she said in the CCTV interview, done in Chinese. ''I thought that if I failed this time, I'll do it again next time. There's still hope.''

But Yang, who is engaged to Beijing men's all-around champion Yang Wei, told the AP last week that she had misspoken, declining further comment.

''Everyone has misspoken before. On television shows, there are always slips of the tongue,'' she said, declining to comment further.

The FIG's announcement that it was closing the investigation on the 2008 team was hardly a surprise. China had insisted -- heatedly and repeatedly -- that all the girls were old enough to compete, and that it had the documents to prove it.

China provided the original passports, ID cards and family registers for He Kexin, Yang Yilin, Jiang Yuyuan, Deng Linlin and Li Shanshan, all showing the girls were 16 or would turn 16 this year.

''For the FIG, the age of the Chinese team is well documented and proven,'' Gueisbuhler said.

In August, the AP found registration lists previously posted on the Web site of the General Administration of Sport of China that showed He and Yang were too young to compete. And a Nov. 3 story by the Chinese government's news agency, Xinhua, suggested He was only 14.

''My family and I are pleased with the level of scrutiny the FIG and IOC undertook with this very serious issue,'' said Olympic all-around champion Nastia Liukin, who finished second to He on uneven bars on a tiebreak.

''When the questions arose originally in the press, all anyone in the gymnastics and Olympic communities wanted was closure, which we now have.''

Younger gymnasts are considered to have an advantage because they are more flexible and are likely to have an easier time doing the tough skills the sport requires. They also aren't as likely to have a history of injuries or fear of failure.

China blamed the discrepancies on Web sites and paperwork errors.

''Be it with the age, be it with doping, be it with judges,'' Gueisbuhler said, ''if we believe in fair play in sport and to be a role model for youth and we believe in the values of the Olympic movement, then I think it is our duty to be serious about it and do all we can to ensure these rules are enforced.''

Two Women Sentenced to ‘Re-education’ in China
Published: August 20, 2008

BEIJING — Two elderly Chinese women have been sentenced to a year of “re-education through labor” after they repeatedly sought a permit to demonstrate in one of the official Olympic protest areas, according to family members and human rights advocates.

The women, Wu Dianyuan, 79, and Wang Xiuying, 77, had made five visits to the police this month in an effort to obtain permission to protest what they contended was inadequate compensation for the demolition of their homes in Beijing.

During their final visit on Monday, Public Security officials informed them that they had been given administrative sentences for “disturbing the public order,” according to Li Xuehui, Ms. Wu’s son.

Mr. Li said his mother and Ms. Wang, who used to be neighbors before their homes were demolished to make way for a redevelopment project, were allowed to return home but were told they could be sent to a detention center at any moment. “Can you imagine two old ladies in their 70s being re-educated through labor?” he asked. He said Ms. Wang was nearly blind.

A man who answered the phone at the Public Security Bureau declined to give out information about the case.

At least a half dozen people have been detained by the authorities after they responded to a government announcement late last month designating venues in three city parks as “protest zones” during the Olympics. So far, no demonstrations have taken place.

According to Xinhua, the state news agency, 77 people submitted protest applications, none of which were approved. Xinhua, quoting a Public Security spokesperson, said apart from those detained all but three applicants dropped their requests after their complaints were “properly addressed by relevant authorities or departments through consultations.” The remaining three applications were rejected for incomplete information or for violating Chinese law.

The authorities, however, have refused to explain what happened to applicants who disappeared after they submitted their paperwork. Among these, Gao Chuancai, a farmer from northeast China who was hoping to publicize government corruption, was forcibly escorted back to his hometown last week and remains in custody.

Relatives of another person who was detained, Zhang Wei, a Beijing resident who was also seeking to protest the demolition of her home, were told she would be kept at a detention center for a month. Two rights advocates from southern China have not been heard from since they were seized at the Public Security Bureau’s protest application office in Beijing last week.

Ms. Wu and Ms. Wang were well known to the authorities for their persistent campaign for greater compensation for the demolition of their homes. Mr. Li said his family had given up their home in 2001 with the expectation that they would get a new one in the new development that replaced it. Instead, he said, the family has been forced to live in a ramshackle apartment on the capital’s outskirts.

“I feel very sad and angry because we’re only asking for the basic right of living and it’s been six years, but nobody will do anything to help them,” Mr. Li said.

He said he and Wang’s daughter tried to apply for their own protest permit on Tuesday but the police would not even give them the necessary forms.

The two elderly women were given administrative sentences to what is known as re-education through labor, known as laojiao, which seeks to reform political and religious dissenters and those charged with minor crimes such as prostitution and petty theft. Government officials say that 290,000 people are detained in re-education centers for terms ranging from one to three years, although detentions can be extended for those whose rehabilitation is deemed inadequate.

Human rights advocates have long criticized the system because punishment is handed down by officials without a trial or means of appeal. Last year, the government briefly grappled with revamping the system but backed off in the face of opposition from Public Security officials.

Although it is unlikely that women as old as Ms. Wu and Ms. Wang would be forced into hard labor, many of those sentenced to laojiao often toil in agricultural or factory work and are forced to confess their transgressions.

China to Limit Web Access During Games

Published: July 31, 2008

BEIJING — The Chinese government has confirmed what journalists arriving at the lavishly outfitted media center here have suspected: contrary to previous assurances by Olympic and government officials, the Internet will be censored during the upcoming Games.

The International Olympic Committee quietly agreed to some of the limitations, according to a press official, Kevin Gosper, the Reuters news agency reported. Mr. Gosper told Reuters on Wednesday that he had only just learned of the agreement. Sandrine Tonge, the I.O.C. media relations coordinator, said the organization would press the Chinese authorities to reconsider the limits.

Since the Olympic Village press center opened on Friday, reporters have been unable to access scores of Web pages — among them those that discuss Tibetan succession, Taiwanese independence, the violent crackdown of the protests in Tiananmen Square and the sites of Amnesty International, Radio Free Asia and several Hong Kong newspapers known for their freewheeling political discourse.

A government spokesman initially suggested the problems originated with the site hosts, but on Wednesday, he acknowledged that journalists would not have unfettered Internet use during the Games, which begin Aug. 8.

“It has been our policy to provide the media with convenient and sufficient access to the Internet,” said Sun Weide, the chief spokesman for the Beijing Olympics organizing committee. “I believe our policy will not affect reporters’ coverage of the Olympic Games.”

In the past, both the Chinese government and the International Olympic Committee have suggested that the 20,000 journalists covering the Games would have full Internet access. As recently as two weeks ago, Jacques Rogge, the International Olympic committee president, proclaimed to Agence France-Presse: “For the first time, foreign media will be able to report freely and publish their work freely in China. There will be no censorship on the Internet.”

The revelation that politically sensitive Web pages will be off limits to foreign reporters comes at a time of growing skepticism about other government’s commitment to pledges made when it won the right to stage the Games in 2001: that it would improve its record on human rights and provide athletes with clean air.

Despite a litany of measures that include restricting private vehicles and shuttering factories, Beijing’s skyline in recent days has been shrouded in a thick haze, prompting some hang-wringing over whether the government can deliver on its promise of a “blue skies” Olympics.

In recent months, human rights advocates have accused Beijing of stepping up the detention and surveillance of those it fears could disrupt the Games. On Tuesday, President Bush privately met with five Chinese dissidents at the White House to drive home his dissatisfaction with the pace of change. Mr. Bush, who leaves for the opening ceremony in just over a week, also pressed China’s foreign minister to ease political repression.

Concerns about free access to the Internet in Beijing had intensified Tuesday, when Western journalists working at the Main Press Center in Beijing said they could not get to Amnesty International’s Web site to see the group’s critical report on China’s failure to improve its human rights record ahead of the Olympics.

Jonathan Watts, president of The Foreign Correspondents Club of China, said he was disappointed that Beijing had failed to honor its agreement to temporarily remove the elaborate firewall that prevents ordinary Chinese from fully using the Internet. “Obviously if reporters can’t access all the sites they want to see, they can’t do their jobs,” he said. “Unfortunately such restrictions are normal for reporters in China but the Olympics were supposed to be different.”

A L G A E    -   R O W I N G    V E N U E

To Save Olympic Sailing Races, China Fights Algae
Published: July 1, 2008

BEIJING — With less than six weeks before it plays host to the Olympic sailing regatta, the city of Qingdao, China, has mobilized thousands of people and an armada of small boats to clean up an algal bloom choking the coastline and threatening to impede the competition.

Local officials have begun an intense effort to clean up the algae by mid-July. News reports estimate as many as 20,000 people have either volunteered or been ordered to participate in the operation, while 1,000 boats are scooping algae out of the Yellow Sea. The country’s official news agency, Xinhua, reported that algae currently cover a third of the coastal waters designated for the Olympic competition.

Water quality has been a concern for the Olympic sailing events. Many coastal Chinese cities dump untreated sewage into the sea, and rivers and tributaries emptying into coastal waters are often contaminated with high levels of nitrates from agricultural and industrial runoff. These nitrates contribute to the red tides of algae that often bloom along sections of China’s coastline.

But officials in Qingdao said in recent days that pollution and poor water quality did not have a “substantial link” to the current outbreak, according to Xinhua. Instead, scientists blamed the increased rainfall and warmer waters in the Yellow Sea for the bloom. Algae blooms now affect more than 5,000 square miles of seawater, Xinhua reported.

“We will make all our efforts to finish this job,” said a propaganda official in Qingdao, who asked not to be named because of the political delicacy of the issue. “Now, forces from the entire province have become involved.” He said ships and boats have been dispatched from two other coastal cities, Rizhao and Yantai, to help haul away the algae.

Yuan Zhiping, an official with the Qingdao Olympic Sailing Committee, said Sunday that the government would try to block algae from floating into the Olympic sailing area by installing in the sea a fenced perimeter more than 30 miles long.

“I believe we will make sure the Olympics sailing area is clean by July 15 through our efforts, and make sure the Olympics sailing goes smoothly,” Mr. Yuan said, according to the Shandong News Web site.

Photographs in the Chinese news media showed rickety wooden boats overflowing with green mounds of algae collected from the sea. One photo showed a young boy crouched on a beach beside piles of the leafy glop as a dump truck carried off a large load of it. State news outlets reported that 100,000 tons of algae had already been taken out of the water. Much of it was being transported to farms as feed for pigs and other animals, according to news reports.

Residents of Qingdao and its environs, where about seven million people live, have been anticipating the city’s Olympic moment for years. One local newspaper reported that 11,000 college students had volunteered for cleanup duty over the weekend. Several companies had organized teams of employees to help.

The massive outbreak comes with some sailing teams already in Qingdao preparing for the Olympics. Photographs in the Australian news media showed an Australian team seemingly stuck in a carpet of algae during a training run.

In British news media, a British windsurfer who has been training in Qingdao, Bryony Shaw, said the algae would be an issue if the waters were not cleaned up. “There’s no way you can sail through it,” she said. “If it’s still here in August, it could be a real problem.”

Qingdao’s situation is another challenge for Beijing’s Olympic organizers, who have committed to delivering a clean and healthy environment for the Olympics.

Air quality remains a serious concern in Beijing. On Tuesday, the city will begin removing 300,000 high-polluting vehicles, mostly trucks, from local roads. Later in July, the city will institute temporary restrictions to remove half of all motor vehicles from the streets.

But air quality remains such a large problem that officials are also preparing contingency plans that could force factories across much of northern China to close temporarily if conditions warrant.

A I R    Q U A L I T Y

On Monday Beijing’s air-pollution index rose above the World Health Organization recommended maximum for the first time in four days. (Bernardo De Niz/Bloomberg News)

Beijing Air Thick on Monday
By Juliet Macur
August 4, 2008,  9:50 am

BEIJING – Erinn Smart, a fencer on the U.S. team, saw the thick haze blanketing this city Monday morning and knew it would mean trouble. Soon after, she felt a tickle in her throat, and the inevitable began.

“I have bad allergies, so I started to cough because of the bad air out there,” Smart said, before a training session at Beijing Normal University. “Then someone mentioned to me, ‘Hey, why don’t you just put on your mask?’ But I didn’t want people to see me wearing it and say, ‘Why is she wearing that? She’s a fencer. She competes indoors!’”

While the sky was blue several days last week, it was smoggy and humid here Monday, four days before the opening ceremony for the Beijing Games. Storms are expected in Beijing over the next few days, which could clear away the smog. But some athletes, like Smart, have already felt the effects of the humidity and pollution.

While Olympic organizers had promised blue skies for the Olympics, United States Olympic Committee had planned ahead for this. To filter out the polluted air, they issued specially designed masks to some of U.S. athletes. Convincing athletes to wear those masks is another task altogether.

“It’s been like, ‘Who’s going to start the trend of wearing that mask?’” Smart said. “No one wants to be the first.”

The poor air quality on Monday wasn’t a universal problem for Olympic athletes already in Beijing. Some with asthma, like U.S. weightlifter Carissa Gump, said they felt fine. Going into Beijing, however, Gump said the air quality was a concern.

Gump said she has qualified to use an inhaler to open up her airways while competing internationally. But she did not qualify to use one here at the Olympics, which she said has stricter standards.

At a training session Monday, Gump saw a Thai weight lifter wearing something akin to a dental mask. That raised eyebrows, she said.

“I thought it was funny because the problem here is just the visibility and not really pollution,” Gump said. “When I competed in Thailand last year, I used a nasal spray and allergy medicine, but here, I haven’t had any problems at all.”

Giselle Davies, spokeswoman for the International Olympic Committee, said the inconsistent air quality in the last week likely has been an issue of heavy humidity and not pollution.

If pollution levels are too high on competition day, the I.O.C. has said it would postpone endurance events like cycling or the marathon. Athletes in those events would be more affected by bad air because they would spend more time in it.

Weather story; 
Press Conference in full on three open issues:

Ladies and gentlemen, good morning. I would like to give you an update on behalf of Beijing Olympic Meteorological Service Center (BOMSC). Now we are 5 days away from the opening of the Olympic Games, I think there are 3 issues that interest you, the weather trend in the Olympic Games, who will provide weather services and what are included in the weather information...

Now we provide the information in Chinese, English and French. During the Olympcis, what channels can you gain the weather informaton? The BOCOG and the Olympic family members can get the information through INFO2008 or ftp, fax, telephone, and internet to gain the information.

For the government authorities, we have disseminated information through telephone, fax and many other means, which are basically in Chinese. For the general public, we mainly use TV, radio, newspaper, website, SMS through mobile phones, street displays and warning towers to provide the information in Chinese and English.

For the general public, we add new weather program on TV. For example, there is Olympic Channel on BTV 6, and also we have a weather channel, which will update the information on half-an-hour basis for meteorology Beijing, and it is a special channel for weather information with a wide coverage. Actually, it issues information on the rolling basis...

Beijing Weighs Added Pollution Plans for Olympics       
Published: July 29, 2008

BEIJING — Less than two weeks before the Olympics, Beijing’s skies are so murky and polluted that the authorities are considering emergency measures during the Games beyond the traffic restrictions and factory shutdowns that, so far, have failed to clear the air, state media reported on Monday.

For the past five days, Beijing has been a soupy cauldron of humid, gray skies. Local pollution ratings have exceeded the national standard for acceptable air since last Thursday, despite a temporary air pollution control plan that began on July 20.

Under that plan, officials have used odd-even license plate restrictions — limiting motorists to driving on alternate days, depending on whether the last number on their license plate is odd or even — to reduce daily traffic by two million vehicles, or more than half the city’s total. Production at some factories has also been curtailed in Beijing and outlying areas.

But on Monday, China’s official English-language newspaper, China Daily, ran a front-page story under a boldfaced headline: “Emergency green plan for Games.” The article warned that officials may force far more vehicles off city streets — possibly 90 percent of the city’s total — and temporarily close more factories.

No timetable was announced, but a senior city engineer told China Daily that officials would inform the public as early as possible about the details of the plan. The Olympics’ opening ceremony is on Friday of next week, August 8.

Pollution has been a pressing concern for the Games. Local organizers have promised to hold a Green Olympics, despite air that often ranks among the most polluted in the world. Some Olympic teams, including that of the United States, are providing optional breathing masks for their athletes to protect them from respiratory problems.

Before Monday, Beijing officials had taken a determinedly upbeat approach to the pollution situation. At various news conferences, Beijing officials said pollution levels in July had fallen 20 percent compared with the same period a year ago. They blamed the problems on recent weeks of unusually heavy rains that left behind a humid summer haze. Even though emissions have fallen, pollution was still being trapped in the haze because of a lack of dispersing winds, they said.

“We are very confident about the effectiveness,” Du Shaozhong, a deputy director of Beijing’s environmental bureau, said of the traffic and industrial restrictions during a news conference on Sunday at the new Olympic media center. “We are going to ensure a good air quality during the Games.”

Statistics suggest that the city’s daily air pollution index has improved somewhat compared with 2007. Beijing measures four primary air pollutants through its “Blue Sky” air quality monitoring program. A system of monitoring stations calculates a daily air quality rating on a scale of 1 to 500, with 500 being the worst. The accuracy of the system has been questioned, but Beijing officials have steadfastly defended it.

Under the system, any rating under 101 is considered acceptable. The recent run of bad days began last Thursday with a rating of 113. Friday brought a 109; Saturday a 118; and Sunday a 113. Monday’s rating has not yet been announced.

Even so, these numbers are better than the same month last year when the ratings reached as high as 151 in late July. But such statistical improvements hardly fulfill the expectations that the July pollution control plan would sweep away foul air and render Beijing a city of clear, blue skies at least for the Olympics.

When officials opened the Olympic Village over the weekend, visibility was sharply limited by clotted skies. At a news conference on Friday, a Chinese reporter asked if there were any recommendations to help Olympic visitors discern the difference between polluted skies and cloudy ones.

Zhu Tong, a professor at Peking University who is serving as an air quality adviser to the Beijing Olympics, said unfavorable weather conditions, especially a lack of wind, have prevented the usual patterns for dispersing foul air.

“Usually, stagnant air only stays for three or four days,” Mr. Zhu said in a telephone interview. “But it has been here for more than a week, which means more pollution is accumulating.”

He said officials were discussing more contingency measures, though no decisions had yet been made.

“The air quality is worse than we expected,” he said. He said officials were continuing to examine how to reduce emissions by making the traffic flow more efficient. He also expressed optimism that the current weather pattern would break by Tuesday.

“We believe that once this weather moves out, we have a low chance to see it again,” he said.

Another Chinese newspaper, Science and Technology Daily, reported on Monday that a broader emergency plan for Beijing and surrounding areas had been submitted for final review to the State Environmental Protection Administration and could be announced later this week.

Page last updated at 12:17 GMT, Monday, 14 April 2008 13:17 UK.
Building ban for Beijing Olympics 
All building sites in Beijing will be shut three weeks before the start of the Olympic Games, as the city tries to clear its skies of pollution.  Digging, pouring of concrete and outdoor spray-painting will also be banned under plans announced by the Environmental Protection Bureau.  The move follows mounting concern that athletes may suffer from Beijing's noxious atmosphere.

Olympic chiefs have already voiced concern over the issue.  President of the International Olympic Committee Jacques Rogge had previously warned that he would postpone certain endurance events if pollution levels were excessive.

'Everything possible'

When Beijing bid for the Olympic Games in 2001 it promised to provide a clean environment for the athletes by August 2008, when the Games open.

But the BBC's James Reynolds, in Beijing, says the air in the city is often astonishingly bad and the city authorities have found this promise tough to keep.  Our correspondent says there are days when it is hard to see more than a few blocks away.  So on 20 July all construction sites in Beijing will be shut down - as well as cement manufacturers and concrete mixing plants.

And 19 businesses have been told to cut their emissions by 30%.  Officials say they will announce steps to take cars off the city's roads and have pledged to do "everything possible" to honour their promise to provide a clean atmosphere.

Last Updated: Wednesday, 19 March 2008, 09:43 GMT
Sit-down style toilet
Demand for sit-down toilets is growing, said Mr Yao
China is rushing to install sit-down loos for its 500,000 foreign Olympics visitors, after complaints that venues had only Asian-style squat toilets.

A lack of Western-style facilities was a common complaint after some 30 test events at Games venues, officials said.

"A lot of parties have raised the question of toilets... We have told the venues to improve on this," said Yao Hui, deputy head of venue management.

He said bathroom renovations were already under way at three key venues.

"Most of the Chinese people are used to the squat toilet, but nowadays more and more people demand sit-down toilets," said Mr Yao.

"However, it will take some time for this transition."

The "Water Cube" Aquatic Centre for the Beijing Olympics
The "Water Cube" venue lacked sit-down toilets
He said that the proportion of squat toilets to sit-down facilities would vary depending on the nature of each venue.

But he said most of the lavatories at the 91,000-seat National Stadium - known as the Bird's Nest, the Water Cube and the National Indoor Stadium "should be" sit-down style.

Beijing is said to be spending at least US$40bn on 37 venues for sporting events at the August Olympics, 31 of which are in Beijing.

Too Old and Frail to Re-educate? Not in China
Published: August 20, 2008

BEIJING — In the annals of people who have struggled against Communist Party rule, Wu Dianyuan and Wang Xiuying are unlikely to merit even a footnote.

The two women, both in their late 70s, have never spoken out against China’s authoritarian government. Both walk with the help of a cane, and Ms. Wang is blind in one eye. Their grievance, receiving insufficient compensation when their homes were seized for redevelopment, is perhaps the most common complaint among Chinese displaced during the country’s long streak of fast economic growth.

But the Beijing police still sentenced the two women to an extrajudicial term of “re-education through labor” this week for applying to hold a legal protest in a designated area in Beijing, where officials promised that Chinese could hold demonstrations during the Olympic Games.

They became the most recent examples of people punished for submitting applications to protest. A few would-be demonstrators have simply disappeared, at least for the duration of the Games, squelching already diminished hopes that the influx of foreigners and the prestige of holding the Games would push China’s leaders to relax their tight grip on political expression.

“Can you imagine two old ladies in their 70s being re-educated through labor?” asked Li Xuehui, Ms. Wu’s son, who said the police told the two women that their sentence might remain in suspension if they stayed at home and stopped asking for permission to protest.

“I feel very sad and angry because we’re only asking for the basic right of living and it’s been six years, but nobody will do anything to help,” Mr. Li said.

It is unclear why the police have detained people who sought permission to protest. Some political analysts say the police may be refusing to enforce the government’s order, announced last month, to allow protest zones. Chinese lawyers and human rights advocates also suggested a more cynical motivation — that the authorities were using the possibility of legal demonstrations as a ploy to lure restive citizens into declaring their intention to protest, allowing the police to take action against them.

When the International Olympic Committee awarded the Games to Beijing in 2001, ignoring critics who said China should not be rewarded for repression, its president, Jacques Rogge, offered assurances that the Games would invariably spur China toward greater openness.

But prospects dimmed even before the opening ceremony, when overseas journalists arrived to discover that China’s promise to provide uncensored Internet access was riddled with caveats. The ensuing uproar did persuade the government to unblock some politically sensitive Web sites, but many others, including those that discuss Tibet and the banned spiritual group Falun Gong, remain inaccessible at the Olympic press center.

The announcement that the police had set up protest zones was first greeted as a positive if modest step that could allow Chinese a new channel to voice grievances otherwise ignored by party officials and the state media.

“In order to ensure smooth traffic flow, a nice environment and good social order, we will invite these participants to hold their demonstrations in designated places,” Liu Shaowu, the security director for Beijing’s Olympic organizing committee, said at a news conference. He described the creation of three so-called protest zones and suggested that a simple application process would provide Chinese citizens an avenue for free expression, a right that has long been enshrined in China’s Constitution but in reality is rarely granted.

But with four days left before the closing ceremony, the authorities acknowledge that they have yet to allow a single protest. They claim that most of the people who filed applications had their grievances addressed, obviating the need for a public expression of discontent.

Chinese activists say they are not surprised that the promise proved illusory. Li Fangping, a lawyer who has been arrested and beaten for his dogged representation of rights advocates, said there was no way the government would allow protesters to expose some of China’s most vexing problems, among them systemic corruption, environmental degradation and the forced relocation of hundreds of thousands of residents for projects related to the Olympics.

“For Chinese petitioners, if their protest applications were approved, it would lead to a chain reaction of others seeking to voice their problems as well,” Mr. Li said.

During the past two decades, China has embraced a market economy and shed some of the more onerous restrictions that dictated where people could live, whom they could marry and whether they could leave the country. But with political dissent and religious freedom, the government has been unrelenting.

In theory, the Communist Party allows citizens to lobby the central government on matters of local corruption, the illegal seizure of land and extralegal detentions. In reality, those who arrive at Beijing’s petition office are often met at the door by plainclothes officers who stop them from filing their complaints and then bundle them back to their hometowns. Intimidation, beatings and administrative detentions are often enough to prevent them from trying again.

Daniel A. Bell, who teaches political theory at Tsinghua University in Beijing, suggested that Western political leaders and rights advocates were naïve to think that the Olympics would lead to looser restrictions. Although Chinese have come to enjoy greater freedoms in the past two decades, progress has been largely stalled in the years leading up to the Olympics as officials worked to ensure that nothing would interfere with them.

In recent months, the pressure has only intensified: scores of rights lawyers and political dissenters have been detained, and even the armies of migrant workers who built the Olympic stadiums have been encouraged to leave town, lest their disheveled appearances detract from the image of a clean, modern nation.

“When you have guests coming over for dinner, you clean up the house and tell the children not to argue,” Mr. Bell said.

While the demands of Ms. Wu, 79, and Ms. Wang, 77, the protest applicants, might be seen as harmless, they threatened to expose the systemic problems that bedevil the lives of millions of Chinese. Like many disenchanted citizens, the two women, former neighbors, were seeking to draw attention to a government-backed real estate deal that promised to give them apartments in the new development that replaced their homes not far from Tiananmen Square. Six years later, they are living in ramshackle apartments on the outskirts of the city, and their demands for compensation have gone unanswered.

On Monday, when they returned to the police station to follow up on their protest applications, the women were told they had been sentenced to one year at a labor camp for “disturbing public order.” For the moment, the women have been allowed to return to their homes, but they have been warned that they could be sent to a detention center at any moment, relatives said.

Officials say that they received 77 protest applications but that nearly all of them were dropped after the complaints were “properly addressed by relevant authorities or departments through consultations.”

At a news conference on Wednesday, Wang Wei, the vice president of Beijing’s Olympic organizing committee, was asked about the lack of protests. He said it showed the system was working. “I’m glad to hear that over 70 protest issues have been solved through consultation, dialogue,” he said. “This is a part of Chinese culture.”

But human rights advocates say that instead of pointing the way toward a more open society, the Olympics have put China’s political controls on display.

“Given this moment when the international spotlight is shining on China, when so much of the international media are in Beijing, it’s unfathomable why the authorities are intensifying social control,” said Sharon Hom, the executive director of Human Rights in China. “The truth is they’re sending a clear and disturbing message, one they’re not even trying to hide, which is we’re not even interested in hearing dissenting voices.”

China Orders Highest Alert for Olympics
Published: August 4, 2008

BEIJING — Chinese officials have thrown an almost smothering blanket of security across this capital of 17 million in preparation for the start of the Olympic Games on Friday. Above all else, Chinese leaders say, these Olympics will be “safe.”

They warn that terrorism is a constant threat, particularly from Muslim separatist groups in the Xinjiang region of western China. On Monday morning, Xinhua, the state news agency, reported what appeared to be the deadliest attack against Chinese security forces in recent memory: 16 policemen were killed and 16 others injured when attackers threw two grenades into a police station in the desert oasis town of Kashgar, in the far west, after driving a truck into the station at 8 a.m. Two men were arrested.

Even before that raid, Chinese officials had transformed Beijing into a giant fortress. Surface-to-air missiles take aim at the sky above the Olympic stadiums here. Surveillance cameras mounted on light poles scan sidewalks. Police officers search thousands of cars and trucks entering the city.

Even civilians have been called on to strengthen the motherland: Tens of thousands of middle-age and elderly residents wearing red armbands, reminiscent of the zealous Red Guard youth from decades ago, now patrol neighborhoods looking for even a slightly suspicious act or person.

But human rights advocates accuse the Chinese government of using the pretext of terrorism to silence dissent and clamp down on ethnic minority groups that chafe at rule by ethnic Han Chinese, who dominate the Communist Party leadership. Some security experts say many of the surveillance measures will probably stay in place after the Games, to bolster the reach of the authorities.

To hear Chinese officials tell it, the threats come from a dizzying array of malcontents: groups advocating independence in the western autonomous regions of Xinjiang and Tibet, followers of the banned Falun Gong spiritual movement, Al Qaeda, and unstable individuals.

“I believe that Beijing’s Olympics are now facing real threats from terrorist attacks,” said Li Wei, a counterterrorism expert at the China Institutes of Contemporary International Relations, a research organization that advises the government.

“I think the Olympics are the most important international sports event in four years,” he said, “and it’s the biggest focus of the international media in four years, so this might draw some attention from terrorist groups.”

The specter of terrorism has fallen over every Olympics since the 1972 Summer Games in Munich, when 11 Israeli athletes and coaches were killed by a Palestinian group.

Experts on terrorism say the extensive preparations are among the most comprehensive of any Games and may be enough to discourage any attacks in the capital. But China still faces a risk of terrorist attacks elsewhere during the Games, particularly after the raid on Monday and a recent series of bus bombings outside Beijing.

Terrorism experts inside and outside China say the biggest threat to this Olympics comes from violent separatists from Xinjiang, a region historically dominated by the Uighurs, a Muslim Turkic group, but now governed by Han Chinese.

In the first half of 2008, 82 people were arrested in Xinjiang in connection with terrorist plots aimed at the Olympics, the police say.

Chinese officials say the greatest risk of an attack comes from a shadowy group called the East Turkestan Islamic Movement, or ETIM, which promotes independence for the region’s Uighurs. The State Department listed the group as a terrorist organization in 2002. Scholars of Xinjiang debate the potency and makeup of the group, and some question whether such a group even exists.

Some outside experts say the organization is fairly small and includes a group called the Turkestan Islamic Party, which released a video on July 23 showing a masked man identified as Commander Seyfullah claiming responsibility for recent bus explosions in Kunming and Shanghai that killed five people and wounded at least 26.

Mr. Li and Chinese officials say the explosions were the acts of disgruntled individuals and not terrorist attacks, though several outside terrorism experts suspect the East Turkestan Islamic Movement was involved.

Steve Vickers, a longtime head of Hong Kong criminal intelligence who is now the chief executive of International Risk, an Asian security consulting firm, said “the threat remains moderate but slightly elevated because of the Olympics.”

Although he is one of the experts who say the greatest threat comes from ETIM or offshoots of the group, he said that “the Chinese have been on these people a long time” and have contained them well.

Rohan Gunaratna, head of the International Center for Political Violence and Terrorism Research at Nanyang Technological University in Singapore, said an ETIM attack outside Beijing was likely. Such attacks could be expected to spread fear and disrupt the Olympics.

Mr. Gunaratna estimated that the group has about 40 members based in the mountainous tribal areas of Pakistan who intend to carry out operations. Uighurs trained in Afghanistan before the American invasion in 2001, though their ties with ETIM or other groups are unclear.

ETIM now survives in Pakistan under the protection of Al Qaeda and the Pakistani Taliban, and it has in recent years adopted the ideology of global jihad espoused by Al Qaeda, Mr. Gunaratna said.

He added that China lacked an understanding of these groups and that harsh tactics adopted against the Uighurs would turn more Uighurs into radicals.

Chinese officials are warning of at least one other group fomenting unrest among the Uighur. Xinhua has reported that an international Sunni group called Hizb ut-Tahrir, or Party of Liberation, whose goal is to re-establish an Islamic empire across Asia, was responsible for organizing protests in late March in the western city of Khotan that involved hundreds of people.

The new security measures in Beijing include increasing scrutiny in places where Muslims gather. In late July, after the bombings in Kunming, police officers were seen sitting across from a mosque in the Russian quarter of Beijing. The owner of the Xinjiang Kashgar Restaurant near the main Olympic venue said he shut down Tuesday after repeated visits from officials who cited health concerns. He said several other Muslim restaurants nearby had received similar visits. The owner, a Uighur, spoke on the condition of anonymity for fear that he would be further harassed by the authorities.

Not only Uighurs are being singled out. A British woman of Tibetan ethnicity who was living in Beijing, Dechen Pemba, said she had been taken to the airport last month and deported without warning or reason.

In Xinjiang, an extra layer of security screening has been added to 13 airports, according to Xinhua. Certain liquids, including alcohol, are banned from trains in Xinjiang, and a security inspector has been put on board each of the 4,000 buses in Urumqi, the region’s capital.

Here in Beijing, the city is edging toward war footing. More than 34,000 military personnel and 74 airplanes, 47 helicopters and 33 navy ships have been deployed, said Col. Tian Yixiang, director of the military affairs department in the Olympic security command center.

The Chinese government has also been installing tens of thousands of surveillance cameras on lamp poles and in Internet cafes and bars.

Critics of the measure say the cameras can be used not only to track potential terrorists, but also anyone who opposes the nation’s one-party rule. Western companies like I.B.M., General Electric, Honeywell and United Technologies have been shipping their latest computer tools to automatically analyze video images from thousands of cameras and alert computer operators to patterns that might indicate a threat.

The Security Industry Association, a Washington-based trade group for security companies around the world, said in a study last year that from 2001, when Beijing was awarded the Olympics, China spent as much as $6.5 billion on security in the Beijing area alone. The bulk of the spending is for extensive video monitoring systems that will stay in place after the Games.

“The surveillance system deployed by China for the Olympics, which includes key pieces of Western technology, is the most comprehensive and sophisticated surveillance system ever,” said James C. Mulvenon of the Center for Intelligence Research and Analysis in Washington, a private group that does classified work for the American government.

Largely separate from the Olympics, China is moving to install video monitoring systems in its 600 largest cities, and some are already far along.

Dr. Mulvenon said the sales from foreign companies raised the risk that Western equipment would be used to spy on Chinese dissidents after the Olympics.

“The longer-term implications are less positive,” he said. “Whereas the legacy of previous Olympics was sports stadiums, the legacy of the Beijing Olympics will be a high-tech police state.”

China Says Terrorists Targeted Olympics
Published: March 9, 2008
Filed at 8:38 a.m. ET

BEIJING (AP) -- Chinese police killed alleged terrorists plotting to attack the Beijing Olympics, while a flight crew managed to prevent an apparent attempt to crash a Chinese jetliner in a separate case just last week, officials said Sunday.

Wang Lequan, the top Communist Party official in the western region of Xinjiang, said materials seized in a January raid in the regional capital, Urumqi, had described a plot with a purpose ''specifically to sabotage the staging of the Beijing Olympics.''

''Their goal was very clear,'' Wang told reporters in Beijing.

Wang cited no other evidence and earlier reports on the raid had made no mention of Olympic targets.  Speaking at the same meeting, Xinjiang's governor said a flight crew prevented an apparent attempt to crash a China Southern flight from Urumqi on Friday. Nur Bekri did not specifically label the incident a terrorist act, saying it remained under investigation. No passengers were injured and police were investigating, he said.

China has ratcheted up anti-terror preparations ahead of the August Games, with the nation's top police official last year labeling terrorism the biggest threat facing the event.  Police found guns, homemade bombs, training materials and ''extremist religious ideological materials'' during the Jan. 27 raid in Urumqi, in which two members of the gang were killed and 15 arrested, according to earlier reports.

Chinese forces have for years been battling a low-intensity separatist movement among Xinjiang's Uighurs, a Turkic Muslim people culturally and ethnically distinct from China's Han majority. Iron-fisted Chinese rule has largely suppressed the violence, however, and no major bombing or shooting incidents have been reported in almost a decade.  Wang said the group had been trained by and was following the orders of a Uighur separatist group based in Pakistan and Afghanistan called the East Turkestan Islamic Movement, or ETIM. The group has been labeled a terrorist organization by both the United Nations and the United States. East Turkestan is another name for Xinjiang.

China says its main terror threat comes from ETIM. Although the group is not believed to have more than a few dozen members, terrorism experts say it has become influential among extremist groups using the Internet to raise funds and find recruits.  Wang said security forces would take pro-active measures to crush terrorism, religious extremism, and separatism.

''These guys are fantasizing if they think they can disrupt the Olympics,'' said Wang, known for his hardline stance on crushing dissent. ''They don't have the strength.''

Few details were available about the alleged attempt to crash the China Southern Airlines flight that left Urumqi at 10:35 a.m. on Friday.  Bekri, the governor of the Xinjiang region, indicated that more than one person was involved, but did not specify who was suspected to be behind the attempt, saying it remains under investigation.

''From what we presently know, this was an attempt to crash the plane,'' Bekri said.

Bekri said the crew responded and brought the plane to an emergency landing in the western city of Lanzhou at 12:40 p.m. No passengers were injured and police were investigating, he said.  He said it continued to its original destination, Beijing, after about one hour.  A man who answered the phone at China Southern's Urumqi office said he the incident was under investigation and he had no further details. He hung up without giving his name.

chinA opinion pieces

Not necessasarily ours, however...
China-envy is idiocy
New York Post
Last Updated: 1:41 AM, April 28, 2012
Posted: 11:13 PM, April 27, 2012

New York Times columnist Thomas Friedman likes to muse about how wonderful it would be if the United States could be like China for a day. 

The scandal engulfing former rising star Bo Xilai, the cashiered Communist Party boss of the city of Chongqing, suggests how this magical day might go down.  A popular governor who rose to prominence based on his anti-corruption campaign while illicitly enriching himself would fall from grace. His wife would be accused of murdering a foreign businessman. His security chief, whom he relied upon to run an extensive spying operation on potential foes, would seek asylum at a foreign consulate, fearing for his life.  State and federal security forces would have a standoff outside the consulate. The entire nation would become obsessed with the case, but the government would prevent anyone from searching the Internet for information about it. Everyone would assume that the government would control the political fallout by arranging a nice show trial for the disgraced governor.

Such would be the joys of China-for-a-Day in the Bo Xilai script. The affair doesn’t truly tell us anything new about China. But the lurid details — the body of the allegedly murdered British businessman cremated without an autopsy; Bo’s privileged son partying as a student at Oxford and Harvard — might jolt some China-enviers out of their feverish delusions.

It’s not just Friedman. Andy Stern, the former president of the Service Employees International Union, wrote a Wall Street Journal op-ed titled “China’s Superior Economic Model.” He cited Bo — and his “people-oriented development in Chongqing” — as one of the impressive assets of “Team China.” Ann Lee’s new book. “What the US Can Learn From China,” asks, among other things, “How does the Chinese political system avoid partisan rancor, but achieve genuine political accountability?”

President Obama has used China’s public investments as a prod for adopting similar policies at home and said longingly of one of China’s technological advances, “That used to be us.”

The Bo scandal shows the Chinese system to be as thoroughly rotten as one would expect of a kleptocratic police state. What is unusual is only that it wasn’t kept under wraps.  The country is run by a small number of Mafia-style families jostling with one another for power and profits. China’s power brokers are quasi-feudal lords with networks of cronies grasping all that they can.  The sisters of Bo’s wife, Gu Kailai, controlled a $126 million network of international businesses, according to Bloomberg News. They got rich on the families-and-friends program.

If China’s economic rise has been something to behold during the past three decades, it is not a tribute to the technocratic proficiency of China’s rulers. In China’s mixed system, it is the genuinely private companies that are more economically efficient.

The World Bank writes: “A recent study shows that between 1978 and 2007 total factor productivity growth (a measure of efficiency improvements) in the state sector was a third that of the private sector, which has proved to be the more powerful engine of growth and innovation.”

China’s economic miracle may well stall out before we get the opportunity to emulate its supposed wonders. China can’t convert agricultural workers into manufacturing workers and suppress domestic consumption in the cause of creating an export-driven juggernaut forever.  The World Bank report recommends that China move to the next stage of development by “reforming and restructuring state enterprises and banks, developing the private sector, promoting competition, and deepening reforms in the land, labor, and financial markets.” In other words, it should learn from us.

The existence of China envy is a testament to the allure of 9 percent GDP growth coupled with a few fashionable policies like support for high-speed rail and solar energy. On this basis, Friedman calls China’s rulers a “reasonably enlightened group of people.”

Their spectacular repression, greed and Sopranos-like power struggles notwithstanding.