Chinese Military,Political and Social Superthread

[Edward Campbell]

Too many people are reading both too much and too little into what Mead calls "the Bo Lixai fiasco." Too much because it wasn't a fiasco at all, it was, rather, a well executed and quite brutal 'takedown' of a very powerful political figure - I say well executed because, despite the excitement in the twitterverse there was no public disorder, in fact there was damn little public anything; Bo is gone, so are his ideas, China carries on. Too little because Bo's 'takedown' signals that major reforms in governance will happen: I don't know what shape they will take and, despite the rumours being floated in the media about Wen Jiabao's plans for big changes right now, I don't know when they will happen.

My guess is that we will see more open and fair elections for officials in small centres - villages, neighbourhoods and so on; more important, I suspect we will see major reforms in how Party members are recruited, selected, retained, developed and promoted: the goal, I think, is to return to centuries, even millennia of Chinese tradition and have a government of mandarins who are selected based on talent and promoted based on merit.

The Chines economy and the body politic will have ups and downs over the next few decades - maybe patches as rough as those in America, but maybe not because the Chinese political system might be better suited to weathering storms. But there is no turning back: Bo was wrong, Mao is dead, the aim is to produce generations of Zhou Enlais. That may be the form of government best suited to China's culture and history.

 

[GAP]

The economic diversity within the country, coupled with a massive shift in communication technology has to be giving the government huge nightmares.....no longer can they easily divide & conquer, or even divide.

The influx into the cities and the high wages compared to rural areas is getting around and the people will be demanding a level playing field.....I wouldn't want to be the guy trying to solve that riddle....

 

[a_majoor]

While these events may be quite significant either individually or collectively, I am a bit unclear if these are really the shocke the author thinks. Since much of the current Chinese government's ability to paper over the cracks comes from sustained economic growth, I'd suggest the mismatch in various economic indicators (some of which are upthread) paint a different picture than the "official" measurements. If the facade comes crashing down, either by accident or design (my guess would be the popping of the construction bubble), then we will see real revolution in the streets. The long term issue not mentioned here is demographics, which will exacerbate existing problems as Chinese society accomodates new social strains caused by the one child policy.

http://www.forbes.com/sites/paulroderickgregory/2012/04/29/four-shocks-that-could-change-china/print/

Four Shocks That Could Change China
The Chinese flag flutters in Tiananmen Square,...

(Image credit: AFP/Getty Images via @daylife)

In the past four months, the Chinese Communist Party (CPC) has experienced four shocks that could materially affect, if not eventually end, its “leading role” in Chinese society.

First, on December 13 of last year, a mob of villagers forced out local party leaders and the police and took control of the town of Wukan. Enraged by illegal land grabs and police brutality, the villagers installed their own representatives after gaining concessions from national authorities. The Wukan uprising is symbolic of the two hundred thousand mass protests reported for 2010.

Second, on February 27, a key government think tank issued its China 2030 report in conjunction with the World Bank. Rapid growth could only be sustained, the report argued, by giving free rein to the private sector and ending the preferential treatment of the state economy: The role of the government “needs to change fundamentally” from running the state sector to creating a rule of law and the other accoutrements of a market economy. A month later (on March 28), the state council approved a financial reform pilot experiment to legalize private financial institutions and allow private citizens to invest abroad.

China 2030 is an open warning that China’s vaunted state capitalism model cannot sustain growth and usher China to the next level. A faltering economy would pose an imminent threat to the CPC’s claim to its leading role.

Third, on April 10, charismatic regional party leader, Bo Xilai, was fired as party boss of Chongqing and expelled from the Politburo. Bo Xilai embodied the party faction favoring state-led economic development and Maoist ideology. Bo’s status as the son of one of China’s “Eight Immortals” did not save him from charges of political deviation and corruption. Bo’s influential wife was arrested under suspicion of murder of an English business associate.

Fourth, on April 27, blind dissident and noted civil rights lawyer, Chen Guangcheng, evaded the security guards guarding his house in his home village and made it to Beijing, where he gained refuge in the U.S. embassy. Guangcheng’s escape shows the sophistication, dedication, and coordination abilities of the dissident community and is an embarrassment to the CPC and its security forces.

From the relative safety of the U.S. Embassy, Guangcheng can inform the Chinese people of their constitutional rights and the world community of the beatings and torture he and his family suffered on orders from the CPC. The U.S. Embassy can express its concerns over his charges of human rights abuse without directly involving itself in internal Chinese politics.

These four shocks took place against the backdrop of the looming Eighteenth Party Congress. The Congress of 2270 delegates will elect the Central Committee and appoint the coveted standing committee of the Politburo and the party General Secretary, who also holds the title of President.

Party Congresses do not take place until their orchestration is complete. There is no exact date set for the Congress, other than late 2012. In the USSR, Stalin waited to hold party congresses until all his ducks were lined up in a row. The CPC apparently has some more finishing touches to complete.

USSR power struggles occurred when an aged leader died. Deng Xiaoping insisted on mandatory term limits to spare China geriatric and unstable leaders, bereft of new ideas and prone to irrationalities (such as Mao and his Cultural Revolution). Two of the four shocks show that regular turnover breeds regular power struggles. China 2030 and the Bo Xilai case are manifestations of the ongoing power struggle that is taking place amidst a background of civil unrest.

Public acceptance of the party’s leading role requires belief in the image of party harmony and unity. Why give all power to a monopoly party torn apart by competing factions?  Perhaps Bo Xilai has the answers, not Hu Jintao and Wen Jiabao? Stalin and his successors went to extraordinary lengths to conceal factional disputes. Bo Xilai’s public humiliation serves as a warning to his sympathizers but at the price of revealing the party’s confusion and disunity.

Bo Xilai’s demotion was not supposed to happen in this way. Bo Xilai’s assignment to the backwater Chongqing was intended to put him out to a quiet pasture. Term-limited leaders feared his ambition, his  “leftist Chongqing model.” Bo Xilai’s enforcer’s spectacular flight to the U.S. Consulate and Bo’s wife’s arrest on murder charges lent drama, but other excuses would have been found to get rid of him.

Bo Xilai’s removal on the eve of a party congress is nothing new. The party boss of Shanghai was sentenced to eighteen years in prison on charges of financial fraud and corruption to clear the way for the current leadership prior to the Seventeenth Party Congress. A similar fate awaits Bo Xilai and many of his followers – a worse fate perhaps awaits his wife.

The CPC’s social compact calls for the party to orchestrate rapid growth and rising living standards in return for public acceptance of its political monopoly and repression of doubters and dissidents. China 2030 and the Bo Xilai case make clear that the party’s factions disagree on how to fulfill this compact. Bo Xilai’s sinking forces stand for the “state advance, private sector retreat” policy of a close alliance between state enterprises and banks and the party. China 2030 and its “liberal” supporters propose to privatize or otherwise rationalize state enterprise, break the state banking monopoly, and place the private sector on an equal footing.

Dismantling or weakening China’s national “Chongqing model” is more easily said than done, as the expression goes. In an understated tone, China 2030 warns that it will “require strong leadership and commitment, steady implementation with a determined will… that will ensure public support…and oversight of the reform process.” In more direct language: Any attack on China’s state-party alliance will be met with the stiffest of resistance by vested-interest groups.

China 2030 requires a delicate balancing act by its “liberal” supporters. They, like their “conservative” opponents, have freely fed at the trough of China’s state capitalism. Even the most conscientious, such as the revered premier “Grandpa” Wen, have not restrained their children, friends, and relatives from amassing huge fortunes. Those less sensitive collect their tributes directly. Party connections have made poor China a land of 115 billionaires.

That the liberals are prepared to break with the state capitalism model so admired in the West suggests they know something we do not.

Few Western observers understand that China’s growth comes from the private sector, not from the national champions run by party-affiliated state capitalists.  Starting from virtually zero in 1980, private enterprise has grown to at least half of GDP. The private sector has grown at least three times faster than the state sector. Studies show that private enterprises are at least twice as productive as state enterprises despite enormous handicaps from Chinese officialdom.

The Wukan uprising helps explain why CPC liberals, who themselves have financially benefited from state capitalism,  embrace China 2030. They fear the backlash of ordinary people who experience the demands for bribes, arbitrary treatment, illegal land grabs, denials of licenses, and other demeaning harassment inflicted on them by indifferent officials, who appear to be immune from punishment.

Public outrage and a new inspiring voice speaking from the U.S. embassy create a tinderbox that a spark could ignite. For the CPC, dissident Guangcheng’s escape could not have come at a worse time.

The public revelations of the Bo Xilai case add fuel to China’s tinderbox. Earlier, ordinary Chinese believed that corruption was a local affair. Their mayor or police chief may be corrupt but at least the stalwart party leaders in Beijing want the best for the country. Just as the victims of Stalin’s Great Terror appealed to Stalin to save them, the villagers of Wukan placed their trust in higher party officials. Now they learn through the internet and even Politburo members are as crooked as the local officials who just shook them down.

The CPC leaders may simply be paying lip service to China 2030 to cement their power base.  But if they are serious, how in the world can they implement this “radical” change in course?

Mikhail Gorbachev’s USSR of 1987 commends itself as a historical parallel with the same ingredients. Gorbachev had warnings that the planning system had failed. He was pestered by dissidents such as Andrei Sakharov. He was aware of official corruption, albeit at a much lower scale than today’s China. His KGB brutally suppressed the occasional riot, but Gorbachev knew that higher bread prices could bring people to the street. As a reformer, he was opposed by conservative party heavy weights who wanted the system continued. Gorbachev succeeded in destroying state planning and inadvertently the party, but his economic reform failed and the USSR collapsed.

Clearly CPC leaders are not fighting for power to preside over collapse. They intend to strengthen their power by elevating the more-productive private sector while somehow convincing the party elite to sacrifice wealth “for the good of the country.” Such appeals usually fall flat.

We are inept at foreseeing big changes, such as the Soviet collapse or the Arab Spring.  Major changes often fail by narrow margins. China might be democratic today if Tiananmen Square had played out differently. Vladimir Putin might not be president of Russia today if the December weather had been warmer or if his police had killed demonstrators at Bolotnaya Square.

The leaders of the CPC are trying to avoid a constellation of events that increase the likelihood of dramatic change. The CPC leadership understands that it could happen, and they are afraid.

Paul Roderick Gregory’s latest book,  ”Politics, Murder, and Love in Stalin’s Kremlin: The Story of Nikolai Bukharin and Anna Larina, ” can be found at amazon.com.

 

[Edward Campbell]

People forget that there are three 'Chinas:'

1. The modern, rich, fully capitalist and almost exclusively (more than, say, Canada) private sector China which is on the East coast;

2. The growing, emerging middle income, 'mixed' public/private  China which is in the central provinces; and

3. The poor, still backwards and almost exclusivelt public sector China in the West.

In some respects China parallels our own development which had a great deal of public sector involvment - think the railways, which although "private" were publicly funded and the equally important Trans Canada microwave system which was build by a public/provate mix. The difference is that we did these things sequentially and China is doing them all at once, albeit on a geographic basis.

I think some of the conflicting data is a result of:

1. The three coexisting levels of development; and

2. The nature of the Chinese federation that gives a lot of autonomy to the provinces.

 

[a_majoor]

I think some of the conflicting data is a result of:

1. The three coexisting levels of development; and

2. The nature of the Chinese federation that gives a lot of autonomy to the provinces.

Frankly, I really hope so, since a burst Chinese bubble will have unpredictable consequences throughout the world (most of them not good for us).

 

[a_majoor]

The most difficult thing about this story is the ever changing narrative. What the hell actually happened here?

http://thehill.com/blogs/global-affairs/china/225369-chinese-dissident-become-political-headache-for-obama

Chinese dissident becomes political headache for Obama
By Julian Pecquet and Amie Parnes - 05/03/12 05:45 PM ET

Chen Guangcheng’s daring escape to the U.S. embassy turned into a major political headache for President Obama on Thursday as Republicans accused the administration of naively handing the blind human rights activist back to Chinese authorities.

The administration as early as Wednesday hoped to have scored a diplomatic coup with a deal that appeared to salvage high-stakes negotiations with China on Syria and global trade.

By Thursday, however, the political storyline had flipped 180 degrees, with the administration desperately pushing back against the impression that it had abandoned the blind dissident to Chinese authorities and betrayed American values in the process.

Presumptive GOP presidential nominee Mitt Romney said it was apparent “our embassy failed to put in place the kind of verifiable measures that would have assured the safety of Mr. Chen and his family.”

“If these reports are true, this is a dark day for freedom and it’s a day of shame for the Obama Administration,” Romney said.

House Republicans vowed to get answers from the Obama administration.

“Next week,” Rep. Chris Smith (R-N.J.) said during an emergency hearing of the Congressional-Executive Commission on China, “I will look to convene another hearing of this commission on Chen in order to take testimony from the Obama administration witnesses and to get some answers.”

Chen arrived at the embassy last week, just days before Secretary of State Hillary Clinton and Treasury Secretary Tim Geithner were to meet with Chinese officials for the U.S.-China Economic and Strategic Dialogue that started Thursday.

Embassy officials say Chen left the embassy of his own volition to be reunited with his family and get treated for injuries sustained during his escape from house arrest. He now says U.S. diplomats pressured him to leave and that Chinese officials threatened his family.

White House press secretary Jay Carney pushed back at that suggestion on Thursday, insisting U.S. officials put no pressure on the dissident and that Chen did not ask for asylum while at the U.S. embassy.

“All of our actions have been aimed at putting Mr. Chen in the best possible position to achieve his goals,” Carney said.

He noted that Chen has now changed his view on where he wants to be, and Carney said the U.S. is looking to take the next steps based on Chen’s goals.

The situation on the ground in China is far from clear.

U.S. diplomats have not been able to see Chen since dropping him off at a Chinese hospital on Wednesday, Chen told the executive committee via telephone. In that surprise call, Chen again expressed his wish for a face-to-face meeting with Secretary of State Hillary Clinton.

China's foreign ministry has responded with outrage, demanding that the U.S. apologize for harboring Chen.

Observers said the U.S. and China will both be looking for a way out of the diplomatic fight that allows both sides to save face.

“It's hard to play them in a way that makes you look heroic,” said Cal Jillson, a professor of political science at Southern Methodist University. “You want to resolve it in a way that reflects American values of human rights but you don't want it to be a cause celebre because it washes away your ability to deal with other issues. And since China will be the principal bilateral relationship with the United States, it has to be handled carefully.”

Jillson said he expected the situation to quickly be resolved given the two nations' mutual dependence.

The two countries are tied at the hip economically – China is America's second-largest trading partner and is the largest single holder of U.S. government debt – and China's support is needed to get anything done in the UN.

“While human rights are critical interest to the U.S. and we want to see the government treat all its citizens well,” he said, “the administration knows that it's a decades-long work in progress and they have economic issues and other pressing issues that are the first priority.”

Chen's own history is another complicating factor.

The self-taught lawyer was somewhat of a folk hero a decade ago when he fought on behalf of people with disabilities and farmers whose land was confiscated for big developments.

But he incured the government's wrath when he filed a class-action lawsuit against officials who perform involuntary abortions and sterilizations in the name of the country's single-child policy, eventually serving a 51-month prison sentence for disrupting public order.

The policy is a central tenet of the Chinese government, Reggie Littlejohn of Women's Rights Without Frontiers testified at Thursday's hearing, and is completely incompatible with U.S. notions of human rights.

Obama and Clinton have so far declined to address the issue while U.S. diplomats in Beijing seek a resolution. The president is under tremendous pressure however to strike a deal with the Chinese to allow Chen to come to the U.S. now that the activist has asked for asylum for him and his family.

Sens. Lindsey Graham (R-S.C.) and Kelly Ayotte (R-N.H.) - a potential running mate for Romney – promised to introduce a resolution next week “expressing support for Chen and calling on the Chinese government to end the persecution of human rights activists and their families.”

And some conservative Republicans made it clear Thursday that they relish a fight with China.

“America missed an opportunity with Tiananmen (in 1989),” Rep. Frank Wolf (R-Va.) said during Thursday's hearing. “Will this administration too fail to seize the historic moment?”

Democrats insisted the controversy was unlikely to hurt Obama in the fall.

Steve Elmendorf, a veteran presidential campaign aide, said he doesn't see the Chen situation having any “real impact” in November.

“I don't see regular voters paying much attention,” he said. “For people who are in Washington, it's an interesting story and says something about our tension with the Chinese. But I don't think that plays out in Ohio and Michigan and Nevada.”

and

http://www.nationalreview.com/corner/298930/chen-debacle-michael-auslin#

The Chen Debacle
By Michael Auslin
May 3, 2012 6:27 P.M.

The Chen Guangcheng saga gets stranger and stranger, but also is becoming a major diplomatic embarrassment for the Obama administration. What was already a confusing tale of “he said, she said” moved into the realm of near-parody this afternoon, when Chen himself called his U.S. supporter and activist Bob Fu during a congressional hearing, was put on speaker phone, and directly asked to be let out of China. What has particularly spun the case out of control is the growing assertion by many that U.S. officials relayed threats by Beijing toward Chen’s wife to the blind activist, thereby forcing him to accept a deal to leave the U.S. Embassy and remain in China. Within 48 hours of a supposed deal to ensure Chen’s safety in the country, the lawyer’s friends began spreading the word that he had feared for his wife’s life and agreed to leave the embassy, but now wanted to flee the country.

What seemed like a coup by U.S. diplomats has instead become the biggest circus sideshow in Sino-American relations since 1989, when the Chinese massacred hundreds (possibly thousands) of college students demonstrating for freedom in Tiananmen Square, and famed dissident Fang Lizhi took refuge in the U.S. Embassy. Back then, Ambassador James R. Lilley succored Fang for a year before Chinese authorities agreed to let him live in exile in the United States. Given the doubts about who said what to whom, it is imperative that the Obama administration dispel rumors that it may have, even unknowingly, passed official threats to Chen, thereby causing him to take the path of least resistance for both governments (though not, it seems, for himself). Knowing personally some of the diplomats involved in the case, I can only say that they are extraordinarily hard-working public servants who truly desire to do the right thing. But it seems that this is a classic case of Cool Hand Luke syndrome, where “what we have here is a failure to communicate.”

This raises serious questions about how close U.S. and Chinese officials are to creating a working relationship that can deal effectively with crisis. Daily Sino-American ties seem to work fairly smoothly, even if there is serious dissatisfaction on both sides over issues such as currency, general human rights, and of course security. But the test of a relationship is how well it puts into place mechanisms to effectively deal with disagreements and crises. Given the areas on which Washington and Beijing significantly disagree, and the large number of small confrontations in the past, we do not seem to be maturing this most vital of relationships. Unlike during the Cold War, when the Soviet Union and the United States ultmately came to a basic understanding of how to manage crises so that they did not spiral out of control, the U.S. and China are light-years away from reaching that level of stability.

This should be of great concern to those who see the United States and China on increasingly divergent courses, which, perhaps paradoxically, increases the chance for misunderstanding and mano-a-mano stand-offs like the one now occuring over Chen. Those who think that Chen’s saga is a one-time event that was unforeseen are likely to be unpleasantly surprised.

 

[Edward Campbell]

Chinese "dissidents" and "democracy activists" are a dime a dozen, and publicizing them and their causes is becoming a growth industry.

Over the years I have made fun of the late Pierre Trudeau for making his "name" by opposing Maurice Duplessis; I have suggested that my late Aunt Anges' pet cat could have penned a credible critique of Duplessis, so far from our mainstrem Canadian values was he. It is the same for human rights in China; China is not the worst place in the world for rights, it's not even in the bottom dozen, but it's somewhere in the bottom 25%: rights are neither respected nor protected - not "liberal" rights, certainly, and not even "conservative" rights. The government, writ large, at all levels, is capricious; it does as it pleases and citizens, like the devil, take the hindmost.

Chen is a legitimate "activist" but he is also a normal, provincial man who is unskilled in the ways of diplomacy. He appears to believe the last and loudest voice he hears. He is, with some good reason, I am certain, afraid for live and limb - his own and his family's. He has wavered with each passing breeze, and who is to blame him for being unsure of himself and his future?

The Chinese want him gone; they will, happily "sell" him to America; he has, however made real problems fo the Americans: neither Clinton nor Geithner got to make the points they wanted in Beijing - points for American TV in an election year, Chen "sucked all the oxygen out of the room." While he will be welcomed in a US university as a visiting scholar, he must not expect any official help in his campaign for "liberty" in China because he is, now, an embarrassment.

 

[Edward Campbell]

I'm just watching the 6:00AM world news from here in Asia (Kuala Lumpur), flicking back and forth between CNN International, BBC and the local English language service ~ this thing could not have worked out better for China and Mitt Romney if the Chinese and the Romney campaign had engineered it themselves. The eitire story is Chen, Chen, CHEN! The partisan political "messages" that Clinton wanted to deliver to America from Beijing were not heard at all ~ the US media would not ask the 'right' questions. I'm sure she said some of what she wanted to say in her prepared statement but it was all overshadowed by the Chen fiasco (and this time I agree "fiasco" is the right word). I doubt the Chinese did engineer this ... but it was sure convenient for them. I think, given the tone and tenor of the comments here, in KL, and in HK, that Obama's Asia strategy is not getting off to a good, strong, public start.

 

[FlyingDutchman]

Shared with the usual...

http://kotaku.com/5908143/idiot-calls-in-bomb-threat-to-imitate-video-game

Idiot Calls in Bomb Threat to Imitate Video Game
Bomb threats are never fun; they scare the living daylights out of people and create massive delays at airports. One Chinese gamer, thought it would be fun to imitate the plot of a video game and decided to issue a false bomb threat against Shanghai's Pudong International Airport.


On the evening of April 27, the suspect called in the bomb threat demanding 1 million RMB ($158,541 USD). According to the police reports, the suspect had told the airport that he had planted bombs on the Shanghai to Chengdu China Airlines flight. The flight had not yet departed and was still at the gate.

According to the airport recording, the suspect enjoyed toying with authorities saying things such as: "As long as the touch of a button of my remote control, this aircraft is finished" and "Do you want my account, I will not give you the account, how do you give me money then?"

The airport immediately re-screened the passengers and luggage, reassigning the plane and designation. The whole process took over 5 hours, leaving many travelers upset and irate.

After the suspect was apprehended by the police, it was reported that his motivation for the hoax was to imitate a dialogue he heard in a video game. News reports did not disclose which game inspired him.

The suspect is now in detention awaiting trial for disseminating false information and making a terrorist threat.

:facepalm:

 

[The Bread Guy]

For the China watchers who lurk, here's a recent U.S. Congressional Research report (PDF) giving what a "China's Political System 101" - this from the executive summary:

.... The report opens with a brief overview of China’s leading political institutions. They include the Communist Party and its military, the People’s Liberation Army; the State, led by the State Council, to which the Party delegates day-to-day administration of the country; and the National People’s Congress (NPC), China’s unicameral legislature. The NPC is meant to oversee the State Presidency, the State Council, the Supreme People’s Court, the Supreme People’s Procuratorate (China’s public prosecutor’s office), and the military. In practice, the legislature is controlled by the Communist Party and is able to exercise little oversight over any of those institutions.

Following the overview, the report introduces a number of distinct features of China’s formal political culture and discusses some of their implications for U.S.-China relations. Those features include the fact that China is led not by one leader, but by a committee of nine; that provincial leaders are powerful players in the system; that the system treats statements by individual leaders as less authoritative than documents approved by committee; and that ideology continues to matter in China, with the Communist Party facing vocal criticism from its left flank each time it moves further away from its Marxist roots. Other themes include the importance of meritocracy as a form of legitimization for one-party rule, and ways in which meritocracy is being undermined; the introduction of an element of predictability into elite Chinese politics through the enforcement of term and age limits for holders of public office; the Chinese system’s penchant for long-term planning; and the system’s heavy emphasis on maintaining political stability. The next section of the report discusses governance challenges in the Chinese political system, from “stove-piping” and bureaucratic competition, to the distorting influence of bureaucratic rank, to factionalism, corruption, and weak rule of law, as highlighted by the case of
the blind legal advocate Chen Guangcheng ....

I learned quite a bit just from the summary - worth the read if you're interested in more (but accessible) detail than just "the Communist Party runs everything".

 

[The Bread Guy]

While much of the evidence is circumstancial, it is interesting to see who benefits from the demise of Nortel:

http://business.financialpost.com/2012/02/25/nortel-hacked-to-pieces/

Nortel hacked to pieces
Jameson Berkow  Feb 25, 2012 – 9:30 AM ET | Last Updated: Feb 25, 2012 11:19 AM ET

Sara D. Davis for National Post

Under mounting pressure to prove China-based hackers had infiltrated the vast global computer network of Nortel Networks Corp. all the way to the chief executive’s terminal, Brian Shields felt he had no choice but to go rogue.

Armed with nearly two decades doing security for the now-defunct Canadian company whose technology still powers telecommunications networks around the world, he had spent a day just before Christmas 2008 digging through the Web browsing history of then CEO Mike Zafirovski, known to colleagues as ‘Mike Z’. Mr. Shields was convinced there were criminals working on behalf of China’s Huawei Technologies Co. Ltd. accessing the CEO’s files, but his hunch hadn’t been enough for his immediate bosses to grant him direct access to the top man’s PC ....

The highlighted company's name is coming up again, this time dealing with Canada....

The former head of U.S. counter-espionage says the Harper government is putting North American security at risk by allowing a giant Chinese technology company to participate in major Canadian telecommunications projects.

In an exclusive interview in Washington, Michelle K. Van Cleave told CBC News the involvement of Huawei Technologies in Canadian telecom networks risks turning the information highway into a freeway for Chinese espionage against both the U.S. and Canada.

Huawei has long argued there is no evidence linking the company to the growing tidal wave of international computer hacking and other forms of espionage originating in China.

Nonetheless, the U.S. and Australia have already blocked Huawei from major telecom projects in those countries, and otherwise made it clear they regard China's largest telecommunications company as a potential security threat.

Van Cleave, who served as top spy-catcher for the Bush administration until 2006, describes Huawei as a potential "stalking horse" for Chinese military and intelligence objectives.

Even Canada's own intelligence agencies have warned the Harper government of the risks of throwing open the door to Chinese telecom companies.

Despite all the warnings, the federal and Ontario governments have rolled out the red carpet to Huawei, officially praising the Chinese company's partnerships in Canadian telecom projects with Telus, Bell, SaskTel and WIND Mobile ....

CBC.ca, 15 May 12

More on the Aussies' concerns here and here, with a U.S. Open Source Centre report on the company (shared by the Federation of American Scientists via their Secrecy News blog) from a while back attached.

 

[Edward Campbell]

We are "putting out the welcome mat" for Huawei and other international telecom companies because:

a. It is good trade/economic policy; and

b. We have signed on to many trade agreements that make our (and US) restrictions on ivestments suspect, at the very least. Unlike the USA we, generally (not always), obey the rules after we sign an agreement - even when it is inconvenient.

Is Huawei likely to be used as a "stalking horse" by Chinese inteligence services? Yes, I guess so. Are e.g. Intel or GM used as a stalking horse by US Intelligence? I suspect the answer is "yes" to that one, too.

 

[Edward Campbell]

There is a large segment of the US military, the US intelligence community and the US militaryt-industrial complex that needs China as a big, scary, malevolent, potential enemy: it is their (the military/intelligence/industrial complex) "rice bowl."

The Chinese are happy to play along. The US Navy, for example, guarantess the freedom of the seas for commerce for everyone, including China. The US leads the "war on terror" which distracts e.g. the Uyghur separatists in Xinjiang Province from their grievances with Beijing and deprives them, the sepratists, of support from other Muslims. It's all good for the Chinese ... so long as the "hawks" in Washington are kept on a tight leash. The Chinese are happy to see a huge, bloated US defence budget - it's money that cannot be spent more productively and, not surprisingly, a lot of it ends up being spent in China!

 

[Brad Sallows]

People who do not treat the software which operates, monitors, and controls their telecommunications and other  infrastructure - energy delivery, water, sewer, etc - as a vital national security interest are fools.  It is stupidity of the first order to allow corporations answerable to the government of a country which manifestly indulges in industrial and other espionage and occasional sabotage to participate in the creation of such software.

 

[a_majoor]

"Nice country you have there; it would be a shame if something happened to it" is a pretty crude instrument for politics, nevertheless this is the suggestion put out there for Australia. I doubt the Australians will be very impressed by this.

http://news.investors.com/article/612687/201205241856/china-muscles-australia-over-defense-and-trade.htm

China Tries To Make Australia An Offer It Can't Refuse

Posted 05/24/2012 06:56 PM ET
 
The Far East: If there were ever any doubts about China's aggressive military intentions in the Pacific, its warning to Australia last week to choose itself a U.S. or Chinese "godfather" ought to remove all of them.

In what can only be construed as a direct threat to a top U.S. ally, Song Xiaojun, a "retired" Chinese general, told the Sydney Morning Herald that "Australia has to find a godfather sooner or later."

"Australia always has to depend on somebody else, whether it is to be the 'son' of the U.S. or 'son' of China," Song said, adding that Australia had best choose China because it all "depends on who is more powerful and based on the strategic environment."

The Chinese statement — which implied Australia is so weak it can't make its own decisions — is false, arrogant and insulting. But above all, it's an effort to drive a wedge between the U.S. and Australia. And it isn't the first time.

Just as Song was implying that China's trading relationship with Australia would now be used as leverage, China's foreign minister told Australia's foreign minister in Beijing that "the time for Cold War alliances has ended."

At the heart of this crude threat is China's fury over the 61-year-old U.S.-Australia alliance and a renewed U.S. effort to focus its naval strength on the Asia-Pacific region to counter a Chinese military buildup that is unsettling the nations of the Pacific Rim.

Two weeks ago, 200 U.S. Marines, the first of a "Fox Company" contingent numbering 2,500, arrived for stationing in Darwin, Australia. U.S. military officials say it's part of a new forward operating base to ensure peace, help out in natural disasters and keep sea lanes open.

China has complained about this, and in recent days made harsh criticisms of the Pentagon's May 18 annual report on "Military and Security Developments Involving the People's Republic Of China" as an "obstacle" to good relations with China.

The U.S. must "respect facts, change its mindset and stop wrongdoing in issuing similar reports year after year," a Chinese foreign ministry spokesman stated.

But the new Marine presence in Australia has been warmly welcomed by Australia's neighbors and is having a soothing psychological effect across the region.

A U.S. naval presence has historically been the springboard that allows Asian tiger states to rise through trade in the aftermath of the Vietnam War.

Taiwan, Vietnam and the Philippines have found themselves targeted and bullied by China, ostensibly over old territorial disputes.

In reality, though, the belligerence is due to a Chinese military buildup and intent to throw its weight around in the region.

The one obstacle keeping China from completely taking over has been the U.S. presence in Australia. That presence may expand to stationing aircraft carriers, establishing long-range listening posts and deploying nuclear-powered attack submarines.

This explains China's new effort to slap around and intimidate the Australians, forcing them to choose between its alliance with the U.S. and its trade with China.

Australia is an interesting target because, in one sense, China needs Australia far more than Australia needs China.

As John Daly of Oilprice.com points out, Australia is one of the few countries that enjoys a trade surplus with China. The $15 billion difference in trade is due to exports of iron and coal, two commodities China cannot live without.

To intimidate a trading partner of such vital supplies seems foolhardy. But it may be that China sees Australia's left-leaning government as unpopular, politically weak and lacking in resolve.

The Chinese may also see President Obama and his administration the same way and therefore responsive to pressure.

That may or may not be true, but it lays to rest all those statements about China having peaceful intentions in the Pacific.

Crudely attempting to make Australia choose between allies and trading partners is not a sign of peaceful intentions, but a warning of worse to come.

 

[Ignatius J. Reilly]

Eerily reminiscent of proponents of that ill-conceived "Great East Asia Co-Prosperity Sphere".

 

[The Bread Guy]

A bit more tea leaf reading to a Parliament Hill audience....

Canadian Members of Parliament, Senators, and political staffers packed a lunch forum on Parliament Hill to hear about seismic shifts taking place in China, where senior cadres have been purged and leaked documents describe an agreement to dissolve the Chinese Communist Party.

“A hole has been pierced in the black veil that obscures the inner workings of the Chinese leadership,” said democracy activist Sheng Xue, “making political wrangling within the Party visible to the outside world for the first time in the regime’s 60-year rule.”

What has been revealed, noted each of Xue’s three co-panellists, is how a second centre of power created within the regime has become the focal point of contending forces.

PLAC Challenge

That second centre of power is the Political and Legislative Affairs Committee (PLAC), formerly headed by China’s security czar Zhou Yongkang. The PLAC presides over Chinese courts, police, domestic surveillance, and paramilitary police, with a budget that exceeds that of the Chinese military.

Xue, an awarding-winning journalist, was joined at the forum by human rights lawyer and Nobel Peace Prize Nominee David Matas, a member of the Order of Canada.

Matas noted how the PLAC rose in power with the persecution of Falun Gong, a traditional Chinese spiritual practice that became widely popular among China’s Han ethnic majority ....

Epoch Times, 31 May 12

 

[Edward Campbell]

It's important to note that Epoch Times is the "mouthpiece" of Falun Gong and David Matas' nomination for the Nobel prize was for his work as co-author of "BLOODY HARVEST - Revised Report into Allegations of Organ Harvesting of Falun Gong Practitioners in China." Matas is a highly regarded lawyer and scholar but the report of allegations of organ harvesting was just that: a report that said there were allegations but which offered no proof and some scholars said that the report did not bring forth new or independently-obtained testimony and the credibility of much of the key evidence was questionable. Falun Gong is not, in my opinion a cult, as the CCP suggests, nor is it, right now, serious threat to the CCP; but I also do not believe that it is a simple "health club." It is something more than old folks doing Tai Chi in the park; it has a political purpose and it is well funded.

 

[Edward Campbell]

Some interesting rumour mongering, reproduced under the Fair Dealing provisions of the Copyright Act from the Ottawa Citizen:

http://www.ottawacitizen.com/business/Ottawa+inching+closer+free+trade+talks+with+China/6717173/story.html

Ottawa inching closer to free trade talks with China

By Lee Berthiaume, Postmedia News

June 1, 2012

OTTAWA — The Conservative government is expected to announce in the coming days that it has cleared the first hurdle towards free trade talks with China.

Canada and China launched a joint study during Prime Minister Stephen Harper's trip to China in February that is aimed at determining ways to enhance trade and economic activity between the two countries.

The study was to be completed by the end of May, and industry representatives say they have been told the high-level assessment went better than expected.

China has emerged as Canada's second-largest trading partner after the United States and a major source of foreign investment — including $10 billion into Alberta's oilsands and B.C.'s shale gas deposits.

Kathleen Sullivan, executive director of the Canadian Agri-Food Trade Alliance, said members of her association had expected the results of the study to be released last week, but the government seems to be waiting for the right moment.

Whenever the results are released, however, the key question will be what comes next.

"What we're wondering is, based on the results, what then will China and Canada do in terms of next steps?" said Sullivan. "If there's a positive result coming out of this study, and I would assume that there will be, will they then take the next step?"

That next step would be another, more in-depth and comprehensive study assessing whether free trade negotiations are the way to go — or whether another route is more likely to produce economic benefits.

"We understand this study looks at what Canada and China can offer each other, and sets the stage for holding further discussions on how to further grow trade between the two countries," said Jean-Michel Laurin, vice-president of the Canadian Manufacturers and Exporters trade association.

The interest is there from both sides, said trade consultant Peter Clark.

"The Chinese want our resources and are interested in investment, and we want into the Chinese market," he said.

Canada is already engaged in trade talks with the European Union, India and a number of other smaller countries. It also is seeking entry into the Trans-Pacific Partnership trading bloc and is looking to start trade negotiations with Japan and Thailand.

But China is seen as an extremely complicated trading partner — and there is a sense that an all-encompassing free trade agreement may not be the best way to go.

"If your goal is to increase trade with China, how do you even go about doing that? Is a free-trade agreement the vehicle?" asked Sullivan. "I think Canada and industry need to put a lot of thought into what happens next."

[email protected]

Twitter.com/leeberthiaume

© Copyright (c) Postmedia News

History teaches us that in the medium to long term free trade is better, for all partners, than managed trade so, despite the very real reservations that "little Canada" will have - and make no mistake here will be Canadian losers as well as winners - this is a good move ... IF it is real.

 

[GAP]

I keep getting the impression that China would love a free trade deal with Canada, if only to have a back door to the US market. The resources available are a bonus, if not  a driving force. That's going to have to be managed very carefully as the Chinese will promise the world and end up doing what they want....