China Reform Monitor: No. 811

February 4:

U.S. Ambassador to China Jon M. Huntsman has accompanied thirteen environmental protection companies to Wuhan, Hubei to present their water solutions to an audience of 150 Chinese government officials, project owners, and potential business partners. The program was the first outreach effort of the newly established American Water Working Group and was hosted by the Wuhan chapter of the China Council for the Promotion of International Trade. It also included a tour of Sha Hu Wastewater Treatment Plant, which uses the technology of three U.S. companies and a meeting with Wuhan Mayor Ruan Chengfa. Huntsman pointed out that both countries efforts to develop new environmental technology would also promote bilateral business and trade cooperation, the official Zhongguo Xinwen She and the U.S. Consulate in Wuhan report.

February 13:

The case of Li Zhuang, the first Chinese lawyer convicted of coaching his client, mobster Gong Gangmo, to lie, has exposed the conflicts among China's powerful “princelings” (defined as having a parent who held the rank of vice-minister or above). Bo Xilai, Chongqing Party chief, Politburo member, and son of CPC revolutionary Bo Yibo, authorized Li's arrest, the Sydney Morning Herald reports. Bo is conducting a risky war against organized crime that has morphed into a crusade against party corruption. Bo is attacking his peers, perhaps in the hope of forcing his own promotion into the nine-member Politburo standing committee at the 17th Party Congress in 2012. A suspicious campaign of character assassination against Bo appeared in the China Youth Daily immediately after Li's arrest. It hinted at the power behind the lawyer that Bo arrested: Fu Yang, the son of another CPC another revolutionary hero, Peng Zhen.

[Editor’s Note: Modern China belongs to the children of the revolution. All three officers appointed last year to the rank of full general in the People's Liberation Army were children of senior party leaders. Xi Jinping, who many expect to be the next president, is the son of a revolutionary hero. Eight or nine of the 25-member Politburo are princelings. It is no stretch to say the fathers of Kang Da's three founding principals ran China's entire political-security and judicial systems in the 1980s.]

February 17:

The China-ASEAN Free Trade Area (CAFTA), which started this year, has been greeted with consternation in Southeast Asia. A preliminary agreement signed in 2002 gave ASEAN producers early access to Chinese markets, but many were unsatisfied. In 2005, when tariffs on 200 vegetables and fruits were abolished, Thailand expected to export tropical fruit to China and import winter fruit at zero tariff rates. In reality, cheap Chinese imports decimated Thai farmers and Chinese officials either refused to lower tariffs or left the Thai produce to rot in warehouses. In Vietnam, cheap Chinese shoes have damaged its shoe industry. In Indonesia, cheap, often smuggled, clothes, toys and electronic goods, have hurt local manufacturers leading Jakarta to request a two-year delay in tariff reductions for 228 items. The statistics bear out the anecdotes: from 2000 to 2008, China-ASEAN trade grew sixfold to $198 billion, while ASEAN's trade deficit widened five times to $21.6 billion. ASEAN's FDI in China was $52 billion in 2008 compared to only $2.8 billion China's FDI in ASEAN, Singapore’s Straits Times reports.

February 18:

Online attacks against Google and dozens of other American corporations have been traced to Shanghai Jiaotong University and the Lanxiang Vocational School, in Jinan, Shandong. Jiaotong has one of China’s top computer science programs and Lanxiang has military ties. The attacks, which stole trade secrets and human rights activists’ emails, seem to have begun last April. Lanxiang, a large vocational school established with military support, trains some military computer scientists. A company with close ties to Baidu, Google’s Chinese competitor, operates its computer network. Hackers accessed the companies’ servers through a flaw in Microsoft’s Internet Explorer that gave them access to internal corporate servers before circulating malware in e-mails likely to be opened by colleagues. The malware allowed the intruders to control the victim’s computer. The true culprits are unlikely to be found since China regularly employs volunteer “patriotic hackers” for such tasks, the New York Times reports.

[Editor’s Note: A report on Chinese cyber-spying prepared for the congressionally-mandated U.S.-China Economic Security Review Commission in October 2009 by Northrop Grumman identified six regions in China with military efforts to engage in such attacks. Jinan, site of Lanxiang vocational school, was one of them.]