Doing business in China: July 2008 Archives

By Charles Whelan | Agence France Presse | via UNCENSORED Yahoo! News
July 31, 2008

A defiant China stood firm on controversies swirling around the Olympics on Thursday, hitting back at the United States over human rights criticism and insisting Internet censorship would remain.

China's communist rulers responded sternly to critics following a storm of bad publicity this week surrounding their decision to renege on a pledge of allowing unfettered Internet access to foreign reporters covering the Games.

The decision highlighted long-standing concerns over the Chinese government's attitude towards human rights, and led the White House to intervene by saying China had "nothing to fear" from the Internet.

The Chinese foreign ministry reacted by criticising a meeting US President George W. Bush had with leading Chinese dissidents and describing some US lawmakers who spoke out on China's human rights record as "odious".

"We express strong discontent and firm opposition to this," foreign ministry spokesman Liu Jianchao said about Bush's meeting on Tuesday with the dissidents.

"The US side has rudely interfered in China's internal affairs and sent a seriously wrong message to hostile anti-China forces," he said in a statement on the ministry's website.

Liu also hit out at a resolution by the US Congress that urged Beijing to improve on human rights and stop repression of ethnic minorities.

Liu said the resolution passed Wednesday was an attempt to politicise the Olympics and urged Washington to curb the "odious conduct" of anti-Chinese legislators.

Meanwhile, Olympic organisers said they would not back down on Internet censorship, saying banned sites were in breach of Chinese laws.

>> Read complete report

By Karl Malakunas | Agence France Presse | via UNCENSORED Yahoo! News
July 30, 2008

China plunged into another Olympic controversy on Wednesday as it announced that the thousands of foreign reporters covering the Games would have to endure Internet censorship.

The backflip on allowing unfettered web access was met with apparent surprise and disappointment from the International Olympic Committee (IOC), which had previously hailed the supposed media freedoms the Games had brought to China.

"During the Olympic Games we will provide sufficient access to the Internet for reporters," Beijing Olympic organising committee spokesman Sun Weide said.

However "sufficient access" falls short of the complete Internet freedoms for foreign reporters that China's communist authorities had promised in the run-up to the Games, which begin on August 8.

Sun specified sites linked to the Falungong spiritual movement, which is outlawed in China, as ones that would remain censored for the foreign press at Olympic venues.

He did not identify any others but reporters trying to surf the Internet at the main press centre for the Games on Wednesday found a wide array of sites deemed sensitive by China's rulers to be out-of-bounds.

These included sites belonging to Tibet 's government-in-exile and Amnesty International, as well as those that had information on the 1989 Tiananmen Square massacre in which the military used deadly force to crush democracy protests.

The head of the IOC's press commission, Kevan Gosper, told AFP he would take the matter up with Chinese officials.

"I will speak with the Chinese authorities to advise them of the restraints and to see what their reaction is," he said.

Australian Olympic team chief John Coates, who is also an IOC member, expressed frustration with China's Internet about-face, pointing out that the Chinese authorities had gone back on one of their "key" Olympic promises.

"It certainly is disappointing... I think it's a matter that the IOC will take seriously," Coates told reporters.

In an exclusive interview with AFP two weeks ago, IOC president Jacques Rogge insisted there would be no censorship of the Internet.

"For the first time, foreign media will be able to report freely and publish their work freely in China," he said.

"There will be no censorship on the Internet."

>> Read complete news

By INVESTORS BUSINESS DAILY
July 21, 2008

Energy: Big Oil is easy to kick around -- just ask any Democrat in Congress. But China's threats to Exxon Mobil are in another league. Its bid to use Exxon Mobil as a wedge against its rival Vietnam is a case in point.

What China's doing in the South China Sea these days is not trade, but blackmail to assert regional dominance. On Sunday, the South China Morning Post reported Chinese officials are threatening to exclude Exxon Mobil from doing business in China if it doesn't pull out of an exploration deal with Vietnam's state oil company, PetroVietnam.

The region in question is clearly Vietnam's (see map). Exxon Mobil has been doing its homework on this area ever since the U.S. trade embargo was lifted in 1994. But China claims Vietnam's central and southern offshore coastal waters, where the exploration is occurring, is its territory. Though its claim wouldn't hold up in an international court, China seems to believe Vietnam is a wayward stepchild and, thus, China doesn't need to recognize its sovereignty.

Exxon Mobil, as a result, might have to drop the project, leaving Vietnam with no technology to extract its badly needed coastal oil.

BP bailed out on a similar project a year ago after Chinese threats. The result? Less oil on the market and higher prices.

>> Complete Report

By Centro de Medios Independientes Santiago (Chile)
July 20, 2008

Is China about to go burst? What is really behind Chinese finance, politics, trade, politics and society? Has China's ongoing reform altered the nation's political-economic landscape as far as government corruption is concerned? What is the next if this corruption goes deeper? Get the most powerful reports on Chinese politics, government, finance, banking, outsourcing, and tech by insiders.

China's coming collapse: corruption, finance, trade, outsourcing, politics, law, society

Has China's ongoing reform altered the nation's political-economic landscape as far as government corruption is concerned? What is the next if this corruption goes deeper?

A compelling new report says that runaway corruption in China poses a lethal threat to the nation's economic development and "undermines the legitimacy of the ruling Chinese Communist Party."

Evidence from official audits, press articles and law enforcement data, the report says, indicates that "corruption in China is both pervasive and costly."

Bribery, kickbacks, theft and fraud, particularly by government officials, are said to be rampant.

Pei Minxin (裴敏欣) wrote the report issued last month by the Carnegie Endowment of International Peace, based in Washington. Pei is a political scientist educated at the Shanghai International Studies University. He earned his PhD at Harvard and his work has been widely published in the US.

The report asserts that corruption in China "has spillover effects beyond its borders" that hurt US, Japanese and other foreign investors.

"Illicit behavior by local officials could expose Western firms to potentially vast environmental, human rights and financial liabilities," the report says.

Public statements by Chinese President Hu Jintao (胡錦濤), Premier Wen Jiabao (溫家寶) and other senior Chinese officials suggest that China's leaders are well aware of the widespread problem but have been unwilling to curb it.

The report says: "The odds of an average corrupt official going to jail are at most 3 out of 100, making corruption a high-return, low-risk activity."

If Hu comes down too hard on corruption, he risks losing support of the delegates at the recently held party Congress who elected him. Those delegates are drawn largely from party officials at the local and provincial level.

Pei is not alone in assessing corruption in China. George Zhibin Gu ( 顾志斌), an investment banker who was educated at Nanjing University and earned a doctorate at the University of Michigan, has suggested that corruption may destroy China's economy, which has been growing at 8 percent to 10 percent a year. In the West, a 3 percent growth rate is respectable.

Much more systematic analysis and information is contained in Gu's two new books: 1. China and the new world order: how entrepreneurship, globalization, borderless business are reshaping China and the world; 2. Chin's global reach: markets, multinationals, globlization. Gu is based in Guangdong, China. His two books contain field investigations and a number of interviews with Chinese officials, business managers, farmers, scholars and researchers. There are surprising findings throughout the work.

Moreover, China's Xinhua news agency frequently details specific instances of corruption. Last week, the Chinese government was reported to have banned fire department officials from receiving sexual favors from companies seeking their protection.

Scrutinized through a wide-angle lens, corruption is just at the forefront of the internal ills that jeopardize China's economic and political strength. Unemployment and under-employment, in which a worker has only one or two days of work a week, may be over 25 percent. Paradoxically, China has begun to experience shortages of the skilled labor needed for its expanding industries. Economic progress has been uneven, with coastal cities leaving the rural interior far behind.

"Corruption in China is concentrated in the sectors with extensive state involvement," the Pei report says.

That includes construction of dams, roads and electrical grids. The sales of land or granting user rights are susceptible, as are financial services and heavily regulated industries.

"The absence of a competitive political process and a free press in China makes these high risk sectors even more susceptible to fraud, theft, kickbacks and bribery," the report says.

Pei cites a study done last year asserting that about half of those engaged in corruption were involved in infrastructure projects or land transactions.

Even so, the report says: "Beijing punishes only a very small proportion of party members or government officials tainted by corruption."

US, Japanese and other foreign investors may be put at a competitive disadvantage by rivals who engage in illegal practices to win business in China, the report says.

"Corruption puts Western firms' intellectual property rights particularly at risk because unscrupulous local officials routinely protect Chinese counterfeiters in exchange for bribes," it says.

While the report doesn't say so, US firms that pay bribes may violate the US Foreign Corruption Practices Act of 1977 that forbids kickbacks and bribery abroad, no matter what the customs of other nations.

The report also says: "Corruption in China affects other countries through the spread of cross-border crimes such as drug trafficking, human smuggling and money laundering."

But what is really behind China's deadly corruption? Pei is short on this deeper issue, but George Zhibin Gu in his books pinpoints on the root-causes: "unlimited bureaucratic power, which is based on cults and terror, is the root-cause of this ongoing China's corruption. And as long as this bureaucratic power remains in place, corruption can hardly be contained in any practical way."

>> Original Source

By Michael Bristow | BBC World News
July 16, 2008

A Beijing family are refusing to move from their city centre home, despite a court order threatening to throw them out.

Family members say they are not being offered enough compensation for the home they bought 60 years ago.

Their campaign is attracting large crowds, who gather at the tumble-down shack in the heart of historic Beijing. It could pose a problem for officials, who want to avoid embarrassing incidents ahead of the Olympic Games.

Yu Pingju, one of 14 family members who live in the house, said it was bought before the Communists took power in China in 1949.

Until recently, it was also the family's workplace; they sold roast chestnuts, peanuts and other snacks from the roadside home.

But then they were told to move as part of a plan to tidy up the neighbourhood, which is near many of the city's main tourist attractions.

All other residents appear to have moved on, allowing the area to be spruced up. But the Yus refused to accept the 340,000 yuan ($49,900, £24,800) compensation.

"In Beijing you can't even buy something the size of a toilet for that," said 40-year-old Ms Yu, as she stood with her arms folded outside her home.

Officials who administer the district have obtained a court order, which says the family had to move out by 13 July. But they are still there.

"I'm not going - I've got nowhere to go to. We are going to defend our house with our lives," said Ms Yu.

'No say'

The Yus' Beijing home is one of many "nail houses" that have sprung up over China, particularly since the introduction of a property law last year.

These are homes whose owners have refused to leave to make way for redevelopment.

As part of their campaign, the family have plastered their shack with flags and slogans. One says simply: "This is my home."

They have also put up posters of Chinese leaders because they believe they could help them resolve the issue.

"If they knew about this problem, they would look after us. They would care and sympathise with us," said Ms Yu.

The colourful home has now become something of an attraction, grabbing the attention of passers-by and those who live in the district.

One local said: "In Beijing, house demolition often ends up with forced eviction. Ordinary people don't have a say."

This poses a problem for Beijing officials, who will want to resolve the issue without being too heavy-handed.

By Sylvia Westall - REUTERS | International Herald Tribune
July 14, 2008

GIENGEN AN DER BRENZ, Germany: Wafts of golden fluff whirl in the air as Irene Basan wedges a bundle of material onto a spike and gently turns it inside out, right ear, left ear, then a snout, to reveal a Steiff teddy bear head.

She has been making Steiff toys by hand for 18 years in Giengen, the tiny south German town where the maker of collectible teddy bears - some worth hundreds of thousands of euros - was founded over 125 years ago.

Chasing lower costs, Steiff outsourced around a fifth of its production to China in 2003 but has now decided to come back because of concerns about quality and staff turnover.

Steiff is one of a small number of German companies that are swimming against the tide and leaving China, despite its lower labor costs and a burgeoning consumer population. With fuel prices at record highs, some cite mounting transport costs.

Production of Steiff toys, which include a distinctive long-limbed bear with a melancholy growl, will come back to Germany and other countries in Europe by the end of 2009.

"A Steiff animal has to look cute, it has to look at you and say, 'Take me in your arms and hug me, I'm here for you, I'm your friend,"' the managing director of Steiff, Martin Frechen, said. "If the symmetry is off and if it looks like it's been run over by a car, it's not what we want. People don't pay for that."

Consisting of around 35 parts and with an average price of Euro 40 to Euro 70, or about $60 to $110, the toys take up to a year to learn to make, and around 80 percent of the work is done by hand.

But with twisted legs, bald patches and open seams, a "cumbersome" number of the Steiff toys made in China had to be rejected, Frechen said, because high staff turnover in a fast-growing economy meant workers did not have long enough to train.

"We don't really fit in over there," he said, pointing out that Steiff's typical orders of around 500 lots were also too small to reap good cost savings in factories more accustomed to mass production.

>> Read complete report

By Jill Drew | The Washington Post
July 10, 2008

A British citizen of Tibetan descent was expelled from China this week as police clear the capital of anyone they believe might draw attention to political tensions during the Olympic Games next month.

Dechen Pemba, 30, who had lived in Beijing since September 2006 studying Mandarin and teaching English, held a work visa valid until November 2008. But on Tuesday morning, seven or eight police officers confronted her as she left her apartment. They forced her back inside, told her to pack a bag and, after searching its contents, escorted her to the airport.

Police also seized her bank account book and demanded her PIN number. They confiscated her cellphone, returning it once she had boarded the flight to London.

"Everyone living in Beijing has noticed the security crackdown, but it sends a worrying signal that they would do this to someone," Pemba said in a phone interview from London. "I think about my Tibetan friends, who don't have the protection of a British passport."

Foreign Ministry spokesman Liu Jianchao said Pemba was not deported because of the Olympics, but because she was involved in "separatist activities" and had admitted breaking Chinese law. He did not specify which law.

Pemba denied the charges. "I am completely shocked at these baseless, fabricated allegations," she said.

>> Continue reading

By James Pomfret | REUTERS | via yahoo!news UK&Ireland
July 07, 2008

A month before the Olympics, China continues to severely breach its pledge to allow full media freedoms, harassing and restricting foreign journalists in Tibet and elsewhere, Human Rights Watch said in a new report on Monday.

"Correspondents face severe difficulties in accessing forbidden zones, geographical areas and topics which the Chinese government considers sensitive and thus off-limits to foreign media," said the HRW report, entitled "China's Forbidden Zones: Shutting out of Tibet and other sensitive stories".

As part of Beijing's bid to host the Games it promised temporary regulations to allow complete media freedoms.

Around 25,000 foreign journalists are expected to cover the Beijing Games. The main press centre for the August 8-24 Games will be opened on Tuesday.

In addition to citing extensive examples of Chinese media abuses and restrictions including a media ban during the Tibet riots in March, the global rights group also criticised the International Olympic Committee (IOC) for not doing more to ensure China lived up to its media and human rights pledges.

"The Chinese government, with the help of the International Olympic Committee, has done its best to impede progress," Sophie Richardson, the Asia advocacy director at HRW, said in a statement.

"(The IOC) has said it prefers quiet diplomacy and in general we don't have a problem with quiet diplomacy ... the problem is when it's so quiet as to be utterly inaudible," Richardson added at a media briefing in Hong Kong.

HRW urged the IOC to establish a 24-hour hotline in Beijing for reporters during the Games to report media violations and to "publicly press the Chinese government to uphold" its temporary media freedom pledge until it expires in October.

The group urged Western leaders to speak out against abuses now, while they still had some leverage before the Games.

"I think if there isn't more pressure now, it's going to be very difficult to make any significant changes from the outside directed inward after the Games," Richardson said.

DOMESTIC CURBS

While the reporting encironment has improved for foreign journalists, the country has not relaxed its grip over domestic reporters.

PEN, an association founded to defend freedom of expression, said Sun Lin, a reporter in Nanjing in eastern China for U.S.-based news portal Boxun, was sentenced to four years in prison on June 27 for disturbing social order and illegal possession of firearms.

Authorities also detained or harassed several Chinese dissidents and rights activists to prevent them from meeting U.S. lawmakers visiting China in late June, PEN said in a statement.

The HRW report also documented intimidation of foreign reporters including death threats, the silencing of their Chinese sources as well as beatings of those pursuing sensitive stories.

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By Jim Yardley | The New York Times
July 02, 2008

Two United States representatives who were in Beijing to lobby for the release of more than 700 political prisoners had hoped to have dinner on Sunday with a group of Chinese human rights lawyers. But security agents had a different idea: they detained some of the lawyers and warned the others to stay away.

The detention is the latest example of how Chinese security agents are increasing pressure on dissidents in advance of the Beijing Olympics in August. The governing Communist Party has issued broader orders for local governments to defuse public protests, as a violent demonstration involving an estimated 30,000 people erupted last weekend in southwestern China.

In Beijing, a spokesman for the Foreign Ministry said the representatives, Frank R. Wolf of Virginia and Christopher H. Smith of New Jersey, both Republicans, had overstepped their visas in arranging to meet the lawyers. The legislators, both sharp critics of China, expressed outrage over the interference by security agents.

"The people we were supposed to have dinner with all got stopped," Mr. Smith said in a telephone interview on Tuesday afternoon. "All of the world is watching, and this kind of behavior doesn't bring anything but more scrutiny to their human rights abuses."

Mr. Wolf called on President Bush to boycott the Olympic opening ceremonies if the detained lawyers were not released and if there were "no progress" on releasing 734 political prisoners on a list that the two representatives presented to the Chinese.

Mr. Bush has been invited to the opening ceremonies by President Hu Jintao and has rejected calls that he not attend.

On Tuesday afternoon, Liu Jianchao, the Foreign Ministry spokesman, said the two legislators should not have tried to meet with the lawyers. "They should not intervene in China's internal affairs or conduct something that is harmful to China-U.S. relations," he said during a regular news briefing.

Asked if visiting representatives must get approval from the Chinese government to meet with private citizens, Mr. Liu said: "The two congressmen applied to come to China to get in touch with the United States Consulate. We hope the two U.S. congressmen can respect the country they visit and obey Chinese laws. Regarding the issues on religion and human rights, the exchange between the two countries is more meaningful than meeting private citizens."

The representatives said they came to Beijing to discuss human rights, religious freedom, the Olympics and Darfur. Mr. Smith said they met Monday with the former foreign minister, Li Zhaoxing, and gave him their list of political prisoners. "He took it and said they would look at it," Mr. Smith said. "Our argument is that these people have done nothing wrong."

The guest list at the Sunday night dinner was supposed to include three activist lawyers, Li Baiguang, Teng Biao and Li Heping. They were among this year's winners of the Democracy Award by the National Endowment of Democracy in Washington. Li Baiguang and Li Heping have met with Mr. Bush.

On Sunday afternoon, authorities took Li Baiguang to a Beijing suburb, where he was placed under house arrest, said Chinese Human Rights Defenders, an advocacy group. Mr. Teng, who was also detained this year, was taken to the same Beijing suburb but later returned to his apartment under house arrest.

Another well-known lawyer, Jiang Tianyong, was blocked from leaving his apartment by two Beijing police officers, the advocacy group said. Still another lawyer, Li Fangping, said three police officers were stationed outside his apartment and threatened to follow him wherever he went.

>> Continue reading..