Imaginechina

By Yiyi Lu

There has been a long and on-going debate between some Chinese and westerners on whether the western media are biased in their China coverage or not. As defenders of western media rightly point out, negative news and critical commentaries may displease the Chinese, but they do not necessarily amount to biased coverage. Besides, there are plenty of positive stories about China in the western media too.

But the accusation of bias does not seem entirely unfounded. A case in point: Western media’s treatment of Zhang Yimou’s Nanjing massacre film “The Flowers of War.”

When news came out that “Flowers” had failed to win a Golden Globe award and was not even shortlisted for an Oscar nomination in the best foreign-language film category, some Chinese said the result was just what they had expected given that the film had been described as an anti-Japanese propaganda in biased western media reports.

On the issue of China’s dispute with Japan over the presentation of World War II history, there is a clear tendency for many western media reports to employ double standards, underplay the sufferings of the Chinese people during Japanese occupation and turn the coverage of the history dispute into attacks on the Chinese government.

In a post entitled “The Flowers of War Brings out the Worst of Western Media,” Cfensi, a general news blog on Chinese entertainment, comments on some examples of tendentious western media reports about the film:

Jonathan Landreth at the AFP skillfully uses the title “Christian Bale denies his Chinese film is propaganda” followed by the statement that the film is one of “a string of films and TV series from China promoting national unity against an evil Japan.” …he’s excellent at making falsehoods true – first make an arbitrary accusation, then make the accusation’s denial the headline, and finally affirm the accusation as fact without any evidence whatsoever.

Laurie Burkitt and Tom Orlik at the WSJ…complain that “nuanced treatment of the Chinese characters is in stark contrast with portrayal of the Japanese as monochrome monsters.” Do these people not realize the immorality that comes from humanizing (aka: finding excuses) for rapists and mass murderers? Maybe, just maybe, there’s a reason why we don’t expect films with good Japanese soldiers during the Nanking massacres, just like how we don’t expect there to be good Nazis in a Holocaust movie.

While the Cfensi post may be too harsh, the comparison of “Flowers” with Holocaust movies is telling. Numerous Holocaust movies have been made that portray Nazis as evil incarnate, but one does not see western media describing them as anti-German propaganda that “lacks subtlety.” Yet, when Chinese films on the Japanese occupation during World War II come out, western media reports are often quick to deplore their portrayal of Japanese soldiers as “one-dimensional savages” and their “demonization of the Japanese army,” despite acknowledging that the Japanese army had committed many atrocities, including during the Nanjing Massacre.

According to Cfensi, a number of western media outlets, including Variety, Los Angeles Times, The Guardian and CNN, also erroneously claimed that the Flowers of War was partially funded by the Chinese state, implying that the film was state-backed nationalistic propaganda. In fact, it only received a loan from a private Chinese bank.

Accusing “Flowers” of being anti-Japanese propaganda or “one-dimensional” is but the latest manifestation of mainstream western media’s propensity to criticize China when covering the history of China’s fraught relations with Japan. Often, reports on Chinese protests over perceived Japanese attempts to whitewash its militaristic past are turned into warnings about rising Chinese nationalism deliberately fostered and manipulated by the Chinese government. Stories about new Japanese history textbooks that gloss over Japan’s wartime aggression become discussions of problems with China’s own history textbooks.

For example, in April 2005, after protests broke out in China following the approval of new Japanese textbooks that whitewashed Japan’s wartime atrocities, AFP’s coverage contained the following:

While learning materials in [Chinese] mainland high schools take special pains to outline Japanese aggression beginning with the 1874 invasion of Taiwan, China’s involvement in the 1950-53 Korean war is dismissed in one sentence.

The Los Angeles Times said:

China has criticized Japan in recent weeks for whitewashing its militarist history, focusing in particular on a junior high school textbook recently approved by Tokyo.

“Yes, what Japan did in World War II is horrible,” said Sam Crane, Asian studies professor at Williams College in Massachusetts. “But the embarrassing fact for the Communist Party, and one that is not taught in Chinese schools, is that the party itself is responsible for many more deaths of Chinese people than those caused by Japanese militarism.”

And the Financial Times offered its readers the following:

For those seeking graphic if not necessarily balanced accounts of Japanese infamy, there is no better place to look than China…

But China’s schoolbooks, carefully edited to ensure they do not contradict the official historical verdicts of the ruling Communist party, have their own conspicuous absences. Texts for middle and upper school students give great detail about the party’s resistance against Japanese oppression, but gloss over or ignore most of its less glorious moments. The brutal 1989 suppression of pro-democracy protests centred on Beijing’s Tiananmen Square is ignored.

It is not that Chinese history textbooks do not have their own problems, or that western media do not have the right to discuss those problems. But there is an appropriate time and place for such discussions. To attack Chinese schoolbooks in the middle of reports about Japanese attempts to whitewash its history of invasion and occupation of other countries is morally dubious to say the least.

Suppose, when discussing Nazi Germany’s treatment of Jews, western media reports were to say: “Yes, the Jewish people suffered a great deal during World War II, but Israel has also occupied Palestinian territories and killed innocent Palestinian civilians.” They would cause public outrage and may even be accused of trying to make excuses for the Holocaust. Yet, it has been perfectly acceptable for western media to effectively say “Yes, Japan did horrible things to the Chinese, but the Chinese government did horrible things to its own people too.”

Do we take this to mean Japan’s wartime atrocities in China are insignificant? Do the Chinese have no right to criticize Japanese textbooks?

It is one thing for western media to be critical of the Chinese government and the Chinese Communist Party. It’s quite another to let their views of the CCP color their reports on the history row between China and Japan. Using criticisms of the CCP to divert attention away from the suffering of the Chinese people at the hands of Japanese militarists during World War II — and the refusal of some Japanese to fully acknowledge the past — and to do so consistently, this is what I would call biased media coverage.

Yiyi Lu, an expert on Chinese civil society, is currently working on a project to promote open government information in China. She is the author of “Non-Governmental Organisations in China: The Rise of Dependent Autonomy” (Routledge 2008).

Associated Press

Your daily roundup of the best of The Wall Street Journal’s China coverage:

Tibetan Protester Confirmed Killed in China: China confirmed one person was killed and said several others were wounded during clashes Monday with security forces in a restive Tibetan part of western Sichuan province. (Free)

Speeding Dragon, Hidden Debt Pile: China’s nominal growth was 17.5% last year, a blistering pace which makes many of the problems of debt and credit that trouble investors and hang over valuations for Chinese stocks appear more manageable. (Free)

Huawei India Expects Consumer Devices Sales to Grow: The Indian unit of China-based Huawei Technologies Co. expects its revenue from sales of consumer devices to increase 25% this fiscal year, helped by growing demand for products such as smartphones and equipment that help people connect to the Internet, a senior executive said. (Free)

Tension Over a Parade: For more than a decade, thousands of people have converged in Lower Manhattan each January to celebrate the Chinese Lunar New Year in a dazzling parade that sweeps through the streets in a swirl of colors, music, and sinuous giant dragons snaking around corners. But for the past few years one group has been noticeably absent: Falun Gong. (Subscriber Content)

Agence France-Presse/Getty Images

Your daily roundup of the best of The Wall Street Journal’s China coverage:

China Seeks Oil Alternatives: As China forges ahead with long-term efforts to reduce a reliance on its traditional oil suppliers, Premier Wen Jiabao signed billions of dollars in deals with key U.S. allies in the Persian Gulf. (Free)

Shangri-La Joins Effort to Ban Shark Fin Soup: A swell of opposition against shark fin soup gained backing from the luxury Shangri-La Hotel chain just days before Chinese New Year. (Free)

Design Chief Quits Changan Auto: A notable Western-trained designer has resigned from Chongqing Changan Automobile Co. after a year, illustrating Chinese car makers’ difficulties in recruiting and retaining talent as they try to create more-distinctive vehicles to better compete both at home and overseas. (Subscriber Content)

Minsheng Banks on Small Borrowers: One of China’s nonstate lenders has found strong profit in an area long underserved by the nation’s state-run banks but key to its economy: small entrepreneurs. (Subscriber Content)

Associated Press

By Andrew Erickson and Gabe Collins

As policymakers in Washington focus on China’s expanding presence in Africa and growing assertiveness in the South China Sea and Indian Ocean region, Danish diplomatic assistance is opening the gate for China to establish a strategic foothold in the Arctic.

Denmark has made a strategic decision to prioritize its economic relationship with China and is now becoming the key gateway for Beijing’s commercial and strategic entrée into the Arctic. Denmark advocates giving China a seat at the Arctic policy table. Friis Arne Peterson, the Danish ambassador to China, stated in October that China has “natural and legitimate economic and scientific interests in the Arctic.” Copenhagen likewise supports giving China permanent membership on the Arctic Council, the eight-nation forum that includes the five Arctic Ocean coastal states (the U.S., Canada, Denmark, Norway and Russia) as well as Sweden, Iceland and Finland.

Greenland’s substantial deposits of minerals including rare earths, uranium, iron ore, lead, zinc, petroleum, and gemstones make the Arctic island a key bargaining chip as Denmark cultivates Beijing. Copenhagen administers Greenland’s foreign policy and will likely dangle the island’s rich geological potential in front of Beijing as it works to bolster the China-Denmark trade relationship. Indeed, Greenland’s minister for minerals, industry, and labor traveled to China for a trade mission in November that included participation in a major mining and minerals trade show in Tianjin.

Danish exports to China rose 17% and Chinese exports to Denmark rose 25% in 2010, according to figures provided by the Danish embassy in Beijing. Yet Danish exports to China were worth just US$2.6 billion and Chinese exports to Denmark amounted to US$6.9 billion, a small fraction of the volumes traded between China and its primary trade partners. The minerals that lie under Greenland’s snow are the real prize, worth far more in both monetary and strategic terms to China than the imported goods or export market Denmark itself can provide.

Danish diplomacy is literally following the money as some of the country’s policy elites turn away from the U.S. Copenhagen’s largest embassy is in Beijing, and is twice the size of its embassy in Washington. Denmark’s ploy to pull China closer is likely to work: From Beijing’s perspective, having Chinese companies buy several billion dollars per year worth of pharmaceuticals and machinery and doing container shipping business with Maersk is well worth it to gain access to Arctic negotiating tables and Greenland’s minerals.

Greenland is the best geographic entry point for Chinese entities interested in Arctic mineral resources because its government lacks the ability to develop mineral resources independently and because its Danish overseer will likely actively support Chinese investment in the island’s resources. Companies from Russia, the U.S., Canada and Norway already dominate the development of oil, gas and other natural resources within their home countries’ respective territorial zones.

With this politically and geologically favorable backdrop, Greenland’s high mineral production potential will likely attract Chinese interest despite the risk and uncertainty inherent in developing a new mineral source. London Mining aims to produce 15 million tonnes per year of high grade iron ore pellets by 2015 at its Isua project, which includes investment from Sinosteel and China Communications Construction Corp. Greenland Minerals and Energy claims its Kvanefjeld deposit could produce 20% of the global rare earth supply and large amounts of uranium with first production in 2016 (pdf). Kvanefjeld’s potential to influence global prices would make it a project of strategic interest to Chinese companies like Inner Mongolia Baotou Steel Rare Earth, the world’s largest rare earth metals producer.

Chinese firms will not have first-mover advantages in Greenland, as small miners from Australia and the UK dominate the local investment scene. That said, they stand to enjoy active support from the Danish government should they choose to invest on the island. We anticipate that larger companies, including buyers from China, will seek strategic stakes in mining projects initiated by enterprising smaller firms like those mentioned above. It is also very likely that given Greenland’s small population, Chinese firms will import substantial numbers of workers from China to build the power plants, transmission lines, ore processing facilities and other supporting infrastructure for Chinese-invested mines in Greenland.

As in so many other areas, China is entering a new global arena. It remains to be seen whether it will follow existing norms, or attempt to change the system over time. “China has a legitimate right to be interested in and participate in what happens in the Arctic, but it requires that the rules are observed,” Greenland premier Kuupik Kleist said in November. Countries like China “must not believe that they can come and decide about the residents and just take care of the resources in the Arctic, which are regulated by laws, treaties and binding agreements. Those cannot be tampered with.”

It will be interesting to watch how Danish and other regional experts’ perceptions evolve on this issue as China’s Arctic presence increases. According to SIPRI researcher Linda Jakobson, “There is some irony in the statements by Chinese officials calling on the Arctic states to consider the interests of mankind so that all states can share the Arctic. These statements appear to be contrary to China’s long-standing principles of respect for sovereignty and the internal affairs of other states.” (pdf)

In the three Near Seas (Yellow, East China and South China), Beijing promotes an extreme minority perspective on international law at odds with the UN Convention on the Law of the Sea that holds that coastal states have the right to regulate and restrict non-resource-related activities between the 12 nautical mile limit of their territorial waters and the 200 nautical mile limit of their claimed exclusive economic zone, or EEZ. Beyond its own region, by this logic, Beijing must honor similar claims by Arctic states. Canada, for instance, maintains that foreign vessels must obtain permission before transiting its vast northern archipelago.

Transit permission may become important if China continues building its icebreaker fleet and summer passage through the Canadian and Russian Arctic routes becomes increasingly viable. China currently has only one operational icebreaker, the Xuelong, but a new 8,000 tonne vessel is due to enter the fleet in 2014. The likely westbound route from Nuuk in Western Greenland to Qingdao via the Canadian Arctic is around one-half the distance to Qingdao through the Panama Canal, while the likely eastbound route via the Russian Arctic is less than two-thirds the distance to Qingdao via the Cape of Good Hope.

The Great Game for Arctic resources is heating up and China is likely to play an expanding role as Denmark opens the door for Beijing to enter the Arctic on the diplomatic front and on the investment front via mining projects in Greenland.

Andrew Erickson is a professor at the U.S. Naval War College and a research associate at Harvard’s Fairbank Center. Co-founder of China SignPost (洞察中国), he blogs at www.andrewerickson.com. Gabe Collins is a Co-founder of China SignPost and is a J.D. candidate at the University of Michigan Law School.

Xinhua/Zuma Press

Your daily roundup of the best of The Wall Street Journal’s China coverage:

China Turns Predominantly Urban: China has announced that people living in its towns and cities now outnumber those in the countryside, making it a predominantly urban nation for the first time in Chinese civilization. (Free)

Beijing Takes On U.S. Envoy Over Rights: China sharply criticized comments by the U.S. ambassador to Beijing that China’s human-rights record is deteriorating, adding to tensions between the two nations ahead of a sensitive visit by China’s likely next president. (Free)

Web Fills Hole Left by TV in China: Government restrictions are driving young Chinese to turn off their TV sets and turn on their computers. Advertisers and Western studios are right there with them. Ad revenue for Chinese video websites surged 48% in the third quarter from the second. (Subscriber Content)

Chinese Media Aiming High in City: Four major Chinese media companies are expanding their presence in New York City as they lay the groundwork to begin competing on a global stage. (Free)

U.S. Loses High-Tech Jobs As R&D Shifts Toward Asia: The U.S. is rapidly losing high-technology jobs as American companies expand their research-and-development labs in China and elsewhere in Asia. (Subscriber Content)

Your daily roundup of the best of The Wall Street Journal’s coverage:

China Pins Hopes on Public Housing: One of the biggest public-housing projects in history will help determine whether China can remake its real-estate sector fast enough to prevent its economy from flaming out.

China Shifts Foreign-Investment Focus: China has reshuffled a list of key sectors where it wants to attract foreign investment, downgrading traditional industries like autos and putting more emphasis in emerging fields such as new energy sources.

Signs of Strength in Chinese Economy: China’s official Purchasing Managers Index rose to 50.3 in December compared with 49.0 in November, boosted by activity ahead of holidays in China.

China Issues Rules on Web Competition: China’s Ministry of Industry and Information Technology has released new regulations covering competitive practices in the country’s booming Internet industry, saying they will help protect the rights of both companies and users.

Gold Tycoon Rides Crest of Asian Boom: When $2 billion in IPO proceeds landed in his family’s bank account in mid-December, Cheng Yu-Tung emerged as one of the richest men in Asia, with a $16 billion fortune built on the twin commodities that drive China—gold and land.

Fosun Fires Warning at Soho: A fight is brewing between two of China’s biggest property developers as they wrestle for control of a prime commercial real-estate site in the heart of Shanghai.

‘Dim Sum’ Bond Issuance Slows: After exponential growth in the first year of the market for so-called “dim sum” bonds, issuance of these yuan-denominated bonds in Hong Kong slowed dramatically in the fourth quarter of 2011.

Reuters

A woman is reflected in a window of an office in the financial district of Pudong in Shanghai September 22, 2011.

A little more than 20 years ago, a few words from China’s paramount leader Deng Xiaoping set in motion the establishment of a major city extension on Shanghai’s east side, the Pudong New Area.

Leaving little to chance, the government designed a district with the skyline molded on Manhattan, the broad avenues of Paris and the parks of London. To critics, Pudong came to represent the hubris of state-planning, a soulless construction zone – all hardware and no software – with too much government involvement to ever rival the world’s most dynamic financial centers.

Today, Pudong boasts some of the best demographics of any real estate market in mainland China. The district has attracted investment from many of the world’s largest financial firms and emerged as the residential area of choice for many of China’s wealthiest people (see a WSJ story and interactive on the changes)

Below, what commentators said years ago about Pudong – and what they think now:

Huang Qifan, politician

In 1998: “Vigorous attraction of foreign capital is an important way out for such a huge investment requirement.” – as deputy Communist Party Secretary of Shanghai.

His view today: “Pudong had several firsts in China” for foreign investors, including the first bank and insurance branches, bonded trading zone, securities market and department store. “China didn’t at that time have any management experience in those areas…If you say Pudong’s development is of national implication I think that is because a lot of the national strategies were put on the ground in a piloting stage in Pudong. So we provided China a chance to gain experience in those areas.” –as mayor of Chongqing

Milton Friedman, economist

In 2001: “Not a manifestation of the market economy but a statist monument for a dead pharaoh on the level of the pyramids.” He also called Pudong a “Potemkin village.”

The view today: “I think Friedman got it wrong at the time, and would reconsider his position today. Shanghai, and China generally, are a testament to the power of markets. Friedman also would have thought that greater economic liberty in China will lead in time to greater political liberty,” says Lanny Ebenstein, author of “Milton Friedman: A Biography.” (Mr. Friedman died in 2006)

Gordon G. Chang, author of “The Coming Collapse of China”

In 2001: The final chapter of Chang’s book, “Roads to Ruin: How the State Will Fall,” is set inside a newly built tower overlooking the twinkling Pudong skyline. “My father thinks that the Mainland’s future now looks bright. Some of us, however, are not so sure.”

His view today: “I’m definitely in the not-impressed category. You can always get growth when you spend money.”

Joshua Cooper Ramo, commentator

In 1998: “The result is a kind of what-is-wrong-with-this-picture economics,” he says in an essay entitled “The Shanghai Bubble” published in Foreign Policy magazine – as an editor at Time magazine.

The view today: “Pudong is the capital of Chinese exceptionalism. On almost every corner you can see the work of economic tools that Western politicians might dream of these days, tools that have allowed China to snatch success from error over and over in the past 30 plus years of reform.” – now vice chairman at Kissinger Associates Inc.

City Leaders

In 1998: “We’re like poor parents who made their kids’ clothes a few sizes too big.” – Mayor Xu Kuangdi

The view today: “Since Pudong has become an important growth pole for Shanghai’s future development, the comrades in Pudong have to shoulder great responsibilities. We should firmly make development our top priority, analyze in depth the international economic situation, and actively employ all available means to attract enterprises engaging in the modern service industries and advanced manufacturing industries to come to Shanghai to develop.” – Party Secretary Yu Zhengsheng

Sam Crispin, property analyst

In 1997: “We are expecting a snowballing effect of the big shift to Pudong by financial institutions and, if that happens, we should see it shaping up as a financial and economic hub by the end of the century.” (then with First Pacific Davies Savills)

In 1999: “The relatively wealthy daytime population will increase as business in Lujiazui expands and Pudong will then be home to a large proportion of Shanghainese with the highest disposable incomes.” He predicts a 39% vacancy rate.

In 2005: He determined it would be easier to teach his daughter to ride a bicycle in Pudong than the lanes of old Shanghai, and moved his family there.

The view today: “A lot of the commentary frankly was quite similar to the ideas that are being bandied about for the property market today. A lot of the reasoning is quite similar – who’s going to occupy all those buildings?” In Pudong, he says, “people underestimated the depth of demand,” from domestic companies and households. Now with PricewaterhouseCoopers LLC.

Construction Crane, symbol

In 1996: After the mayor boasted that 18% of the world’s construction cranes were at work in Shanghai, international media widely reported – and exaggerated – the statistic. Reports described the crane as China’s national bird. The figure on how many cranes were working in Shanghai got rounded up to “a fifth,” “a quarter” and, in more than one publication, “half” the world’s total. Crane counting became a tool of financial analysts who decided that too many was a leading economic indicator of economic froth, such as in Dubai in recent years.

The view today: “I have also heard lots of figures about very high percentages of the world’s ‘construction cranes’ being in Shanghai. I tend to dismiss them as complete rubbish,” says Chris Sleight, the London-based editor of International Construction magazine. He explains that in the building industry construction crane is a vague term, and no one counts crane production, their deployment or their retirement.

Wendy Yao, resident

In 1994: Though she grew up within sight of Pudong, she had hardly visited until a client dispatched her to check out space atop the yet-uncompleted Pearl Oriental Tower for a restaurant. “It’s too early,” she advised.

In 2004: When a client considered investing in a shopping mall in Pudong adjacent to the Pearl tower, she “still didn’t have a good impression of it.”

In 2009: After her own financial industry job moved to Pudong, she bought a large apartment on the riverside with a wrap-around balcony and views of the twinkling skyline.

In 2011: “You no longer feel it’s inconvenient to live in Pudong. The life is pretty easy here.”

– James T. Areddy. Follow him on Twitter @jamestareddy

Westinghouse Electric Company

Your round-up of the best of The Wall Street Journal’s China coverage from over the weekend:

China’s Nuclear Fears Could Lift U.S. Firms: A new emphasis on safety in nuclear power would likely mean a greater reliance on Western reactor technology and plant-management methods—and on Western providers of nuclear equipment and services. (Free)

Coke Says China Juice Drinks Aren’t Toxic: Coca-Cola said it has found no product quality issue with its Minute Maid Pulpy Super Milky juice drinks in China after a child who drank from a bottle died and three others fell sick. (Subscriber content)

China Unicom, China Telecom Ask Regulator to Halt Probe: China’s two major fixed-line network operators separately pledged to address problems they found and asked regulators to suspend an antitrust investigation. (Free)

China’s Central Bank Calls Property Market ‘Turning Point’: China’s central bank acknowledged for the first time that the country’s housing prices have reached a turning point, following a decline in property investment, land transaction volumes and prices. (Free)

Associated Press/U.S. Navy

A U.S. Navy satellite launched in Kodiak, Alaska, in September.

The commander of U.S. military space operations says he lacks sufficient data to determine who interfered with two U.S. government satellites through a ground station in Norway, as revealed in a report on China sent to the U.S. Congress on Wednesday.

“The best information that I have is that we cannot attribute those two occurrences,” the Reuters news agency quoted General Robert Kehler, commander of the U.S. Strategic Command, as saying in a teleconference.

“I guess I would agree that we don’t have sufficient detail,” he said.

Gen. Kehler was speaking on the same day that Australian authorities said they had not consulted the U.S. before allowing China to use a ground station in Western Australia that is run by a Swedish state-owned company and is also used by NASA.

The bipartisan U.S.-China Economic Security and Review Commission, which was created by Congress, said in its 2011 annual report that at least two U.S. environment-monitoring satellites were interfered with four or more times in 2007 and 2008.

It didn’t say how, but earlier drafts of the report that were made public said the interfence was conducted through the Svalbard ground station in Spitsbergen, Norway. The ground station is owned and run by Kongsberg Satellite Services, which is owned 50/50 by a Norwegian state company and a private Norwegian defense company.  Kongsberg Satellite Services has denied there was any such interference through its ground station.

The 12-member commission said in the report released on Wednesday that the interference had not been traced directly to China, but that the techniques used “appear consistent with authoritative Chinese military writings” that have advocated disabling an enemy’s satellite control facilities on the ground in a conflict.

“If executed successfully, such interference has the potential to pose numerous threats, particularly if achieved against satellites with more sensitive functions. For example, access to a satellite’s controls could allow an attacker to damage or destroy the satellite. The attacker could also deny or degrade as well as forge or otherwise manipulate the satellite’s transmission,” it said.

The report also said that China’s military continued to play a central role in civil space activities, and directly controlled the manned space program, noting that “ground-based infrastructure enables all space operations.”

It recommended that Congress mandate that the Pentagon and other government space operators to assess and report on their “preparedness for potential Chinese counterspace activities.”

“To the extent that commercial entities provide essential services, assessments should also cover their systems,” it said.

China has maintained that its space ambitions are peaceful and that it  is often a victim itself of such intrusions.

China’s embassy in Washington said in response that it was “obvious that the commission is entrusted with the mission of vilifying China’s image and spreading China threat theory by patching up unwarranted allegations against China,” according to Reuters.

“We urge the commission to stop issuing such reports for the good of increasing mutual trust between our two countries while China will continue to play a responsible role in both the realistic and the virtual worlds,” the agency quoted Wang Baodong, the embassy spokesman, as saying in an email.

– Jeremy Page

Amelia’s Marketplace

Amelia Heaton-Renshaw decided to open a food business after relocating to Shanghai five years ago.

An engineer drives from England to Mongolia, stops in China, starts building racecars and abandons that career to make…strawberry jam?

For Amelia Heaton-Renshaw, that implausible yarn is the true story of her two-year-old Shanghai business, Amelia’s Marketplace, which bills itself as the city’s “jam and chutney hotline.”

She’s one of four expat foodies behind Pantry — a tiny storefront off West Nanjing Road, one of Shanghai’s busiest shopping streets. The shop is bringing hard-to-find treats to homesick Westerners and, they hope, a new audience of Chinese eaters. All of them discovered an entrepreneurial bent once they arrived in Shanghai.

“Baking isn’t my passion. Cookies are,” said Lexie Comstock, a 23-year-old American who sells chocolate-chip, oatmeal-raisin and other varieties from her shop, Strictly Cookies. “I think they are the absolute best dessert and should be part of everyone’s life.”

She arrived in Shanghai in August 2010 and opened the store two months later. “In America,” she said, “people are realistic, yes, but also pessimistic. Here, we have a more reckless attitude.”

Christine Asuncion, who runs Spread the Bagel, moved to Shanghai in 2008 to study Chinese, later working at an outsourcing firm. When she started her bagel operation, her oven could only accommodate two at a time.

“You should’ve seen the first bagels that came out of that oven,” she said. Now she churns out 200 a day from her one-bedroom apartment.

Continue reading on Scene

BirdAbroad

Suddenly, one of the most famous Apple stores in the world is one that not only isn’t a real Apple Store, but apparently isn’t even an authorized Apple reseller.

As noted earlier on China Real Time, the fake Apple Store, located in the southwestern Chinese city of Kunming, was spotted by an expatriate blogger in the city who uses the handle BirdAbroad. It has since gotten widespread international attention for the remarkable lengths to which its proprietors seem to have gone to mimic the look and feel of a real Apple Store.

Trying to reach the store’s owners has been tough. Repeated calls to the manager on Thursday went unanswered. But a store employee reached by phone confirmed that the store is not an authorized Apple reseller. The salesman said products in the store are genuine Apple products sold at the same prices as those advertised on Apple’s website.

BirdAbroad said in a post Wednesday that store staff she spoke to appeared to believe they were employees of Apple. The staffer reached by phone was under no such illusion. “It doesn’t make much of a difference for us whether we’re authorized or not,” he said. “I just care that what I sell every day are authentic Apple products, and that our customers don’t come back to me to complain about the quality of the products.”

The store is one of many unofficial resellers with Apple products on display around China. BirdAbroad’s post said there were two other Apple retailers around the corner from the featured fake store, one of which has a misspelled sign calling itself “Apple Stoer.” Many of the Apple products carried by resellers are purchased from the company’s retail outlets in China, while others are bought overseas and smuggled in. In some cases, the products on offer are second-hand or even knock-offs. It’s unclear where the Kunming fake Apple Store sources its products,

“I think in Yunnan, our store should be one of the best in terms of scale and the level of professionalism,” the Kunming salesman said. The Kunming store’s winding staircase, blue employee t-shirts and official looking name tags help give it the look and feel of one of Apple’s iconic Apple Stores, of which there are only four in China—two in Beijing, and two in Shanghai. While valuable as retail channels, Apple’s highly stylized stores are also an important marketing tool, analysts say.

Now that it has undoubtedly gotten Apple’s attention, one option for the Kunming store could be to apply to be part of Apple’s network of authorized resellers. But it’s unclear how kindly Apple would respond to such a request under the circumstances. Matters relating to Apple’s intellectual property are not usually taken lightly, as illustrated last year by a police probe into an iPhone 4 prototype purchased by technology website Gizmodo before the device’s launch, and this year by prison terms handed down to three people in Shenzhen after police discovered they had collaborated to steal pre-release photos of the iPad 2 in order to make accessories for it.

An Apple spokeswoman declined to comment.

Official Apple resellers, labeled as “Apple Shops” on the company’s website, are granted authorized status after going through an application process for certification to sell or provide specific Apple products and technical support services.

Photos of the authorized resellers’ stores on Apple’s website show that some of its official resellers also nod to Apple’s trademark, minimalist look and feel, and also feature giant posters of Apple products. But there are guidelines, including on how to use the company’s logos. One authorized Apple reseller in Beijing said Thursday that his store’s design and the placement of Apple’s logos are all “done according to Apple’s requirements.”

–Loretta Chao and Sue Feng

BirdAbroad

Apple may have opened only four stores in two cities in China so far, but unbeknownst to the company, they are already expanding elsewhere in country.

A blogger in Kunming posted photos on Wednesday of a local store which, from a distance, looked just like one of the consumer electronics giants’ iconic full-service retail stores. It featured a glass exterior, pale wood display tables, a winding staircase and giant posters displaying the iPad 2 and other Apple products, plus a neatly organized accessories wall.

“This was a total Apple store ripoff—a brilliant one,” the blogger, BirdAbroad, wrote. She called it “the best ripoff store we had ever seen.” Photos show employees in blue shirts and Apple-emblazoned name tags similar to those worn by Apple Store employees in Beijing and Shanghai.

It’s unclear whether the store was opened by an authorized Apple reseller, of which the company has more than 10 in Kunming, or another retailer selling Apple products. But its address was not listed among official resellers on the company’s website and Apple currently only has Apple Stores in prime locations in Beijing and Shanghai in China. It wouldn’t be the first time the company has inspired fakes in China, however, where knock-off iPhones and iPads are on display throughout sprawling electronics markets.

Apple, which is in the midst of a plan to expand its presence in China including negotiations with the nation’s largest mobile operator China Mobile, is set to open two more stores, one each in Shanghai and Hong Kong, in the coming months. It has not announced plans to make Southwestern Kunming its next stop. Growing demand for its products over the past two years have drawn a flood of customers to its existing stores, prompting executives to hunt for bigger spaces to build their next locations.

A spokeswoman for Apple in China declined to comment on the store sightings.

Apple relies on a network of authorized resellers to get its products to Chinese consumers around the country, but its own Apple Stores are a key part of the company’s marketing strategy. Apple has historically taken its time in planning out new locations, perhaps for good reason—as convincing as the fake Kunming store was, the blogger observed that “some things were just not right: the stairs were poorly made. The walls hadn’t been painted properly,” perhaps justifying Apple’s slow pace.

Still, employees of the fake store apparently thought they worked for the Cupertino, Calif., company anyway. “Being the curious types that we are, we struck up some conversation with these salespeople,” the blogger wrote. They, “hand to God, all genuinely think they work for Apple.”

– Loretta Chao. Follow her on Twitter @lorettac

In the lead-up to the 90th anniversary of the founding of the Chinese Communist Party, Chinese media have increased their reportage on model Party members and officials. Typically, model officials are presented as paragons of virtue: They carry on working when they are terminally ill and suffering physical pain. They volunteer to work in poor, remote areas with low living standards and are separated from their families for years. And they manage to substantially raise local incomes within a fairly short time.

It is unfortunate this portrayal of good Communist officials has not changed much in decades, despite the epic transformation China has undergone.

Today, Chinese officials do not generally enjoy a favorable public image, as evidenced by numerous political jokes in circulation that make officials the targets of ridicule. While exemplary individuals do exist, few officials live up to such standards of public-spiritedness and self-sacrifice. And given the complexity of the challenges facing contemporary China, even virtuous and capable officials may find it impossible to solve entrenched problems.

In other words, the Party cannot hope to improve public perception of its cadres by sticking to old-fashioned propaganda. It will have to come up with better ideas.

A couple of months ago, China Youth Daily provided an example of how a “good official” story for the new era might be written with a report about Chen Jiashun, deputy director of the Labor Bureau of Zhanyi County in Yunnan Province. A rural county in underdeveloped western China, Zhanyi had decided that it needed to export labor services to the industrialized eastern coast in order to boost its economy. Mr. Chen was therefore sent to the eastern province of Zhejiang by the Zhanyi government to find employment for the county’s laborers.

Initially, many rural laborers from Zhanyi found working conditions in Zhejiang factories too harsh and quit after a short while. Chen realized that labor practices varied from factory to factory, according to the newspaper. To encourage Zhanyi migrants to stay, he needed to find them good employers who maintained high labor standards. Chen disguised himself as an ordinary migrant laborer and worked in different factories, often for a few weeks each time, enabling him to weed out bad employers and send Zhanyi migrants only to those who treated employees decently. Through his undercover work, the report said, Chen managed to find stable employment for thousands of Zhanyi laborers.

The newspaper’s telling of Chen’s story is refreshing because it relays the tale of an official who has served the people well but does not portray him as up to the nines. The report reveals, for example, that Chen never wanted to leave his hometown to work in Zhejiang: He was ordered to take up the job, and every year he had asked to be transferred back home. To placate him, the Zhanyi government later sent his wife to Zhejiang to work as his assistant, so they could be reunited.

More importantly, in praising the work of Chen, the article also manages to expose the uneven enforcement of labor standards in one of China’s major manufacturing bases. Although Chen is a deputy director of a government labor bureau, apparently it is beyond his power to improve labor conditions in Zhejiang factories. His only recourse is to do what regular people do: look for employers who treat their workers fairly.

It is not just low-ranking officials who, unable to solve a problem, can only do their best to mitigate its negative effects. Even those at the top of the government are constantly grappling with difficult challenges they may not be able to overcome during their tenure. To win Party officials more sympathy and support from the public, the propaganda system’s portrayal of good officials needs to show more intellectual depth and reflect social reality more closely. If state-run media wants to improve the image of Party cadres, it needs to do so, not by carrying on writing hagiographies, but by presenting good officials as decent individuals who are making a genuine effort to tackle complex problems.

The Party has often urged its members to “advance with the times.” Its propaganda system needs to do the same. Only by discussing problems frankly can it more convincingly present the hard work, dedication and achievements of those good officials of China. The media should try to produce more stories in the style of the article on Mr. Chen, and apply this style of reporting to higher-ranking officials too.

Walker & Company

As China’s influence intensifies across the world, interest in the study of its official language is also growing. Fluency in Mandarin – long the world’s most commonly spoken language – has become an increasingly desirable skill in both business and diplomatic circles, with roughly 1,600 American public and private schools now offering Mandarin classes. Recently, the language has even been dubbed “the new English” by those confident in its future. But as author Deborah Fallows found out, knowledge of Chinese is advantageous in more than just a political or economic sense.

A Harvard graduate with a PhD in linguistics, Fallows and her husband lived in China for three years, during which she undertook to learn as much as she could about the native tongue. “Dreaming in Chinese: Lessons in Life, Love, and Language” documents her efforts to acclimate to Mandarin as well as what the language revealed to her about Chinese history, etiquette, social identity and even romance.

The book was first released in the US in late 2010, and a paperback version scheduled to come out in September of this year. China Real Time caught up with Ms. Fallows by email and asked her about how studying Mandarin compares with studying other languages, what native speakers think of her book and whether or not Chinese speakers love their language more than English speakers.

As a linguist, you must have studied a lot of languages. How did studying Mandarin compare?

No contest: Mandarin is both the most difficult and the most challenging language I’ve studied. I have studied lots of languages in my life, starting with French, Latin, and German in high school. During linguistics courses in college and graduate school, I studied more – a Bantu language, Swedish, and others, [although] in academic linguistics, you spend more studying about the language — its structure, sound system, semantics, evolution, things like that.

Mandarin was completely different, in all the linguistic ways mentioned above, from any other language I spent any time on.  The good news: very little grammar. The bad news: tones, a sound system with lots of new and barely distinguishable sounds. It took me about 18 months of regular study before I got traction and felt I wasn’t re-learning the same thing every week.

So, functionally, it was a real challenge. But linguistically, it grew more and more fascinating. I kept running into things where I’d think: Languages are not supposed to do this! Why are there so many homonyms, when the point of language is to clarify, not obstruct. Why tones? Why so many compound words? I could go on.

Most books on China approach the country through more traditional lenses: economics, politics, media, etc. Does the language approach reveal aspects of the country that others miss?

The books about China I have enjoyed most and learned most from are those that narrow in on China with a small lens. None of these books pretends to cover the panorama of China, but each of them brings an insight into China from the special experience of the writer. Because of my background in linguistics, I found that the language was my way in to the country and culture

Early on, I would be surprised at the abruptness of many short exchanges I was having with people. On my side, I always wanted to tack on some equivalent of Sorry, or Thanks, or some words like could, should, would – all those softeners that make a message less severe. I learned soon enough that it was the nature of the Chinese language that mainly drove home the impression of abruptness. Compared to most other languages, Chinese goes very short on the usual softeners and is a very spare language. Seeing that blend of language and culture can help put impressions or situations into context.

That is the kind of way language can help understand culture. But as a discipline, language doesn’t have a particular lock on the advantage; art, architecture, cuisine, dance — they can all do the same thing.

A common complaint from Americans studying Mandarin is etiquette reversal. Commenting on someone’s weight isn’t considered rude, for example, while – as you’ve mentioned — using courtesies like “please” and “thank you” are rare. How do you deal with such a linguistic about-face?

This is interesting.  I realized pretty early on how much more often I was saying my pleases and thank yous in China – much more often than I heard coming from the Chinese. It was hard to NOT do it!

It’s one thing to learn the language, then it’s another thing to learn the social and cultural conventions for when, where, and how often to use the actual words. And then it’s a final step to really believe it and practice it!

How can you suddenly leave off the pleases when you have lived a life where please and thank you are drummed into you from the get go? Or how can you not be taken aback when asked about your earnings, your rent, your age, or asked which of your children you like best?

This is part of the non-classroom learning that makes living within another language fun.

Have you had any feedback on the book from fluent Mandarin speakers? What’s been their reaction?

Oh, this has been one of the best rewards of writing this book. I have found that the Mandarin speakers are first of all really pleased that someone is interested in their language. I shouldn’t have been surprised at that; hearing a newcomer’s reaction offers a chance to consider your language in a different light.

And second, many Chinese speakers have brought their own stories and experiences to illustrate some of the language points I talk about in the book. When talking about “I love you,” people’s stories come spilling out about how their mothers never told them, as children, that they loved them. And only now do they realize how unusual that might be.

One Chinese woman told me an involved story about her childhood experience with a western missionary couple. The couple took her and some school friends on a picnic, [during which] the husband asked his wife to “please” pass the water. The schoolgirls were shocked – horrified – that this husband would ask his wife for something in such a formal way. This woman had carried this memory for probably six decades, and her story came spilling out, vividly and personally, like it had happened yesterday.

One of the themes that runs through the book is becoming more local or, as you put it, one of the lăobăixìng. Does someone have to immerse themselves in culture to achieve fluency in a language?

Some people can read fluently in a foreign language without ever having spoken a word. Some naturally-gifted linguists can speak nearly like natives without having been to the country where the language is spoken. And I have watched my mother, an American, and my sister’s mother-in-law, an Italian – neither able to speak the other’s language – “chat” away for hours  about all manner of things with all kinds of gestures and knowing glances, without much language at all.

So who knows what fluency really is. If language is all about communicating, then anything and everything you do to communicate helps, be it studying the language or trying to understand the culture. We do what we can. Goodwill can go a long way toward making up for grammatical mistakes or forgotten vocabulary.

There’s an interesting linguistic battle going on in Taiwan right now over the use of traditional versus simplified Chinese characters that brings to mind the long-running debate about the value of the character system – are characters holding China back?

China has been unusually engaged in language planning.  In the early 20^th century, language was examined along with so many other things in society. Should there be a national language?  What about a standard pronunciation? Phonetic systems came and went, Mao introduced simplified characters, and the battles over simplified v. traditional characters rage on.

As a more aural than visual person, I find characters incredibly difficult. But I’m not alone! Many of my Chinese friends say even they get rusty with characters if they don’t keep up with them. As hard as I find them to learn, and as inefficient as the system might seem, I also deeply appreciate the value of the history tied up in the characters.

The good news, I would argue, is that the (often maligned) pinyin system does a great service in bridging the gap to modern times. It helps with all things digital, and it helps make Mandarin accessible to foreign language learners around the world. So, it seems to be that this two-party system works pretty well overall.

You write in the book that “the typical Chinese person [seems] keenly invested in his [or her] own language.” Are you suggesting that Chinese people have a deeper appreciation or love for their language in comparison to, say, English speakers?

I’ll crawl out on a limb and say, Yes, I do think the Chinese have a deeper appreciation and love for their language than English speakers do.

Why? Time and energy spent on language education: Mastering character writing is a lot harder for kids than mastering printing and cursive. And the history, culture, and story-telling that are wrapped into characters are certainly more engaging than learning the rules of English writing and spelling. So, perhaps Chinese kids get hooked on their language from the start.

Also, the thread of Chinese language history compared to English. Mandarin has resisted the influence of foreign languages while English has given and taken from lots of languages around the world.  The Norman Conquest in 1066 implanted English with half of its modern vocabulary from French.  No such thing in Chinese.  Perhaps a more straight-line history of the language makes it more accessible.

China’s government has gotten into the Mandarin teaching game in a big way with its global network of Confucius Institutes. Should people be concerned about learning Chinese from a government sponsored?

I’ve been to a Confucius Institute program in Indiana. I’ve visited their spectacular new headquarters in Beijing. I’ve heard people voice the concern you raised. I’ve heard people enthusiastically praise the programs in their communities; they appreciate the sponsorship, the native-speaker teachers of Mandarin, and the cultural programs brought to the town.

As for the “communist agenda” and propaganda, I think people should be aware of the content of the courses and the context of all classrooms where their young children study (and older students should take that responsibility on themselves) – be it science, history, religion, or foreign language.  Critical awareness of Chinese language teaching is no particular exception.

– Melissa Powers

WSJ Highlights:

• Chinese firms face an army of researchers on the lookout for bogus claims.
• Beijing and London announce business deals worth $2.2 billion.
• China unearths $1.65 trillion in local debt, fueling bad debt fears.

Elsewhere:

• Beijing tax authorities stick artist Ai Weiwei with a nearly $2 million tax bill (AP).
• Confusion reins as Sudan’s Omar al-Bashir arrives a day late in Beijing (LA Times).
• Taiwan welcomes its first group of independent Chinese tourists (BBC).
• Top Chinese video site Youku says it has signed a movie-streaming deal with Warner Bros. (LA Times).
• Digital river: Will fights over usage undermine the Yellow River success story? (Guardian).
• Worse than you think: Northwestern University’s Victor Shih argues China’s recent audit might underestimate local debt by as much as 9 trillion yuan (beyondbrics).

Just Because:

• First humans, now: China begins a once-in-a-decade panda census.

– compiled by Josh Chin. Follow him on Twitter @joshchin

Sanrio

A promotional image associated with a new Hello Kitty theme park to be built in Anji in China’s Zhejiang Province. The characters read: “I will have a new home in Anji!”

China plans a theme park to celebrate Hello Kitty, the cutesy cat with no mouth but a cult-like following.

Japan’s Sanrio Co. this week announced a partnership with a Chinese property company, Shanghai Insight Holdings (Group) Co., to build the first Hello Kitty theme park outside of Japan.

The 60 hectare, $215 million park, due to open in 2014 south of Shanghai, appears in marketing materials to resemble the two Sanrio “Purolands” in Japan that feature Tic Tac Castle, Kitty’s House, Wisdom Tree and a Character Boat Ride, plus hotels and restaurants.

Hello Kitty, “born” in England as White Kitty in November 1974, is a bobtail cat and one of the world’s most ubiquitous cartoon characters. She officially came to China in 2003 and quickly became a center point for what Chinese youth refer to as “kawaii culture,” for the Japanese word for cute.

Hello Kitty’s popularity in China can be seen as a counterpoint to Sino-Japanese political tensions by demonstrating the population’s embrace of Japanese style, from Sony cameras to Toyota cars.

And of course, like much else, Hello Kitty is actually made in China, or at least many of the 50,000 products licensed with its image are. Hello Kitty appears on clothes, laptops, furniture and even cars.

When he made a visit to Japan last June, Chinese Premier Wen Jiabao was presented with a Made-in-China Hello Kitty doll wearing a kimono.

The China theme park will be located in the Zhejiang province city of Anji, a short drive from Shanghai. Before the news about the Hello Kitty theme park, greeted with enthusiasm on the Chinese Internet, Anji was best known for its thick bamboo forests and as a shooting location for the star-studded 2000 film “Crouching Tiger, Hidden Dragon.”

Cutesy theme parks are a popular entertainment option in China, where spending power gravitates toward familiar themes. Walt Disney Co. recently broke ground on its first mainland China park in Shanghai while Belgium’s International Merchandising, Promotion Services S.A. has built a Smurf amusement park in Chengdu

Not all efforts to capitalize on cute have done well: Mattel Inc.’s Shanghai Barbie store, essentially a quasi theme park featuring the leggy doll, closed this year.

Nor is China’s cute market limited to the plastic or plush. One of the country’s best-loved purveyors of adorableness is the Chengdu Panda Base, in southwestern Sichuan Province, where visitors can pay extra to hold an actual baby panda.

In an interview, Sheng Kan, the marketing manager for Shanghai Insight, the company that will build the Hello Kitty park, shed little light on the plans, which were announced to local media in China earlier this week. But he waved off comparisons with the planned Shanghai Disneyland saying “We hope to create a harmonious and cozy feeling.”

One analyst also sees a difference. “Disney might attract families with children under 15 while Hello Kitty’s targets are likelier to be young ladies and young couples,” according to Hu Xiaoying, a tourism analyst at property firm E-house (China) Holdings Co.

“The new Hello Kitty park will be styled like a museum to introduce Kitty culture. ”

– Bai Lin

Sanrio

A promotional image associated with a new Hello Kitty theme park to be built in Anji in China’s Zhejiang Province. The characters read: “I will have a new home in Anji!”

China plans a theme park to celebrate Hello Kitty, the cutesy cat with no mouth but a cult-like following.

Japan’s Sanrio Co. this week announced a partnership with a Chinese property company, Shanghai Insight Holdings (Group) Co., to build the first Hello Kitty theme park outside of Japan.

The 60 hectare, $215 million park, due to open in 2014 south of Shanghai, appears in marketing materials to resemble the two Sanrio “Purolands” in Japan that feature Tic Tac Castle, Kitty’s House, Wisdom Tree and a Character Boat Ride, plus hotels and restaurants.

Hello Kitty, “born” in England as White Kitty in November 1974, is a bobtail cat and one of the world’s most ubiquitous cartoon characters. She officially came to China in 2003 and quickly became a center point for what Chinese youth refer to as “kawaii culture,” for the Japanese word for cute.

Hello Kitty’s popularity in China can be seen as a counterpoint to Sino-Japanese political tensions by demonstrating the population’s embrace of Japanese style, from Sony cameras to Toyota cars.

And of course, like much else, Hello Kitty is actually made in China, or at least many of the 50,000 products licensed with its image are. Hello Kitty appears on clothes, laptops, furniture and even cars.

When he made a visit to Japan last June, Chinese Premier Wen Jiabao was presented with a Made-in-China Hello Kitty doll wearing a kimono.

The China theme park will be located in the Zhejiang province city of Anji, a short drive from Shanghai. Before the news about the Hello Kitty theme park, greeted with enthusiasm on the Chinese Internet, Anji was best known for its thick bamboo forests and as a shooting location for the star-studded 2000 film “Crouching Tiger, Hidden Dragon.”

Cutesy theme parks are a popular entertainment option in China, where spending power gravitates toward familiar themes. Walt Disney Co. recently broke ground on its first mainland China park in Shanghai while Belgium’s International Merchandising, Promotion Services S.A. has built a Smurf amusement park in Chengdu

Not all efforts to capitalize on cute have done well: Mattel Inc.’s Shanghai Barbie store, essentially a quasi theme park featuring the leggy doll, closed this year.

Nor is China’s cute market limited to the plastic or plush. One of the country’s best-loved purveyors of adorableness is the Chengdu Panda Base, in southwestern Sichuan Province, where visitors can pay extra to hold an actual baby panda.

In an interview, Sheng Kan, the marketing manager for Shanghai Insight, the company that will build the Hello Kitty park, shed little light on the plans, which were announced to local media in China earlier this week. But he waved off comparisons with the planned Shanghai Disneyland saying “We hope to create a harmonious and cozy feeling.”

One analyst also sees a difference. “Disney might attract families with children under 15 while Hello Kitty’s targets are likelier to be young ladies and young couples,” according to Hu Xiaoying, a tourism analyst at property firm E-house (China) Holdings Co.

“The new Hello Kitty park will be styled like a museum to introduce Kitty culture. ”

– Bai Lin

WSJ Highlights:

• As automakers gear up for the Shanghai auto show, a top Chinese official warns of slower growth in the country’s car market. (Daimler’s CEO, meanwhile, has a much rosier outlook.)
• A forthcoming documentary about artist Ai Weiwei takes on new meaning in the wake of his detention by Chinese authorities.
• The head of China’s sovereign wealth fund sees stormy weather ahead for the global economy.
• Opinion: As Chinese state media step up operations abroad, Gordon Crovitz laments how VOA is losing its voice in China.

News Items:

• China’s top court saw a significant increase in intellectual property cases last year, a new report shows. (AP)
• Australia’s prime minister Julia Gillard says she plans to raise human rights with Chinese leaders on her upcoming visit to Beijing. (The Australian)
• A man stabs six then slashes his own throat in the far western Chinese city of Kashgar. (BBC)

Tech Watch:

• Milestone approaching: With China having long ago passed the U.S. in number of Internet users, Computerworld reports China is now poised to become the world’s largest market for PCs.
• Social stock: Renren, China’s answer to Facebook, announces an impending IPO. (Dow Jones Newswires).

Just Because:

• A new report out of Hong Kong shows Chinese luxury goods buyers are young, rich…and have little taste.

–compiled by Josh Chin. Follow him on Twitter @joshchin

WSJ Highlights:

• As automakers gear up for the Shanghai auto show, a top Chinese official warns of slower growth in the country’s car market. (Daimler’s CEO, meanwhile, has a much rosier outlook.)
• A forthcoming documentary about artist Ai Weiwei takes on new meaning in the wake of his detention by Chinese authorities.
• The head of China’s sovereign wealth fund sees stormy weather ahead for the global economy.
• Opinion: As Chinese state media step up operations abroad, Gordon Crovitz laments how VOA is losing its voice in China.

News Items:

• China’s top court saw a significant increase in intellectual property cases last year, a new report shows. (AP)
• Australia’s prime minister Julia Gillard says she plans to raise human rights with Chinese leaders on her upcoming visit to Beijing. (The Australian)
• A man stabs six then slashes his own throat in the far western Chinese city of Kashgar. (BBC)

Tech Watch:

• Milestone approaching: With China having long ago passed the U.S. in number of Internet users, Computerworld reports China is now poised to become the world’s largest market for PCs.
• Social stock: Renren, China’s answer to Facebook, announces an impending IPO. (Dow Jones Newswires).

Just Because:

• A new report out of Hong Kong shows Chinese luxury goods buyers are young, rich…and have little taste.

–compiled by Josh Chin. Follow him on Twitter @joshchin

On the surface, it certainly seems like China’s Communist Party bosses have given up on reform. Nearly everywhere one looks here, the leadership in Beijing hammers away with hard-line politics, rebuffing even the half-chance of a challenge. Chinese officials have dodged the Jasmine Revolution, decapitating any efforts at organizing resistance. Activists and rights lawyers are regularly detained in custody, usually for lengthier terms than before. The filtering of the Internet has become more draconian, with email services often interrupted and a wider range of sites under lockdown.

State power is celebrated. Civil society is stuck in the quicksand. The only sort of reform is less lenience.

No one should be stunned. The leadership of Hu Jintao never promised Western-style democracy, and its political practices before taking power were conservative. Mr. Hu and his colleagues have always aimed at strengthening Party rule, not subverting it. They have succeeded in making sure that the Chinese State is far stronger than Chinese society.

But what happens next?

Many officials at the top seem to think that stifling opposition is sustainable. They may be right; but they’re also getting set to start their exit in 2012. And what matters to many of their successors is that the party learns to make better public policy.

Xi Jinping, the likely heir to Mr. Hu, appears to agree. Last month, Mr. Xi gave a major speech (in Chinese here) at the Central Party School that was hailed in the party media. Mr. Xi railed against bureaucratic waste and inefficiency, arguing that too many cadres pursued vanity projects for promotion, instead of looking at what worked for their locality. He saved his most savage comments for the numbing process of meetings and documentation that accompanies so much of policy-making in China, and which Mr. Xi said wasted valuable time and resources.

Given the chance to step away from Mr. Hu’s hard line after so many victories, Mr. Xi has thus far chosen to stay the uncompromising course. Many officials in Beijing agree that tighter social controls and a bit of administrative tinkering are the best strategies. They see that discontent and dissent at the street level have been largely defeated. They watch as the embryonic middle class in China remains languid and compliant, often disposed to protect a party that has made many of them comfortable.

Mr. Xi and his allies should be on safe ground.

But the political soil could be shifting. There are bureaucrats and officials in China who are far from satisfied with the sluggish pace and conservative direction of governance. Some cadres resent the growing attacks on their work by party leaders on the make. Still others are tired of anti-corruption campaigns that smash the small but allow the large to retain their loot.

Likewise, there are unhappy provincial and local-level cadres who feel under siege. They find themselves pressed more recently to follow central directives without question. Many also feel pushed by a public regularly resentful of their power. And some cadres see the constant barrage of political slogans as more party platitudes for a China that now in fact needs more than just higher incomes and a heavier ideology.

These officials have been content to let the conservative wing of the party push and punish. Now, these same cadres would like to see more reform, instead of more overreaction. They are already the proponents of experiments in transparency, accountability, and public supervision, in provinces as diverse as Jiangxi and Jiangsu. Some would like those tryouts to be extended and expanded. And they have to be looking for Mr. Xi and his allies to emerge as transformational leaders, who want to explore alternatives to the present way of doing political business.

Whether Mr. Xi or any of his comrades wish to explore that route is not clear. But they may have to start to be, for the desire by some in the Party for a return to real reform is not going away. The coming challenge for the Communist Party is not how it handles revolt, but what does it really want to do with reform.

George Lange

Alan Paul

By Alan Paul

I have watched the uproar over the Tiger Mom debate with growing annoyance that one simple question remains unasked: Where are the dads?

I am a father of three who has been on the frontline of parenting for years, thanks to my wife’s demanding career and my own freelance lifestyle. I refuse to cede the entire discussion about proper child-rearing to mothers, Tiger or otherwise.

When my kids were 2, 4 and 7, our family of five moved from suburban New Jersey to Beijing.

Our 3½ years in China give me an unusual insight into what author Amy Chua claims is not only the best way of parenting but also the Chinese way.

During our first weeks in Beijing, we attended a talent show at our children’s British school and watched Chinese students ascend the stage and play Chopin etudes and Beethoven symphonies, while their Western counterparts ambled up and proudly played the ABCs under their flapping arms. It was enough to make anyone pause and ponder the way we are raising our kids.

Continue reading on Ideas Market

European Pressphoto Agency

China’s government, often at odds with Tokyo, offered support to Japan after Friday’s powerful earthquake, with Premier Wen Jiabao expressing “deep sympathy and solicitude to the Japanese government and the people” and telling his counterpart, Japanese Prime Minister Naoto Kan, that China is willing to offer whatever aid is necessary.

Chen Jianmin, director of the China Earthquake Administration, said its International Rescue Team has put its members, equipment, materials and medicines in place and ready to depart for Japan, after the 8.9-magnitude earthquake struck off the Japanese coast, triggering a major tsunami and leaving dozens dead and displaced tens of thousands of people. “We are highly concerned about the earthquake in Japan and its consequences such as fires and building damages,” the state-run Xinhua news agency quoted Mr. Chen as saying.

China is dealing with the aftermath of its own deadly earthquake, a 5.8-magnitude quake that struck its southwestern Yunnan province on Thursday, killing at least 25 people, injured 250, and destroyed some 18,000 houses.

China and Japan are closely linked economically, but their ties are often buffeted by lingering anger in China over Japan’s brutal occupation during World War II. The initial public reaction to Japan’s earthquake—the country’s worst in at least 300 years–was mixed, with postings on Sina Weibo, the most active of China’s Twitter-like microblogging services, including expressions of sympathy mixed with some nationalistic gloating.

“It’s great an earthquake has finally hit the Japanese dwarves,” commented a Sina Weibo user writing under the name Liaoning Taxue Wuhen. “Best if it disappears from the map. Wishing Chinese exchange students peace and safety.” Added user weldon999: “Ha ha ha, saved us more than a few missiles!!!”

Others, however, expressed admiration for the orderly way in which Japan seemed to be handling the disaster. Responding to a photo of Tokyo residents standing in orderly groups in the street after the earthquake hit, Sina user awaybaby wrote: “When Chinese people can get to this level, that’s when we’ll be able to become a global power.”

Some Internet users also criticized China’s government for failing to make a response more quickly. Xinhua carried offers of help from foreign leaders including Russian President Dmitry Medvedev and the foreign ministers of Germany and Turkey before it reported Beijing’s first official statement–although the Commerce Ministry had quickly urged issued a notice urging Chinese companies with operations in Japan to ensure their staff were safe.

The Beijing Red Cross Blue Sky Rescue Team, a group under the government-backed Red Cross Society of China, moved more quickly, saying a few hours after the earthquake that it was preparing a team to travel to Japan. Qiu Lili, a team leader for the group, said it had received offers to help from 10 of its volunteers. Mr. Qiu’s group already has sent seven volunteers to Yunnan to help with Thursday’s quake.

An earthquake has been an occasion for China and Japan to set aside their differences before. After the 2008 earthquake that crippled China’s southwestern Sichuan Province and killed at least 68,000 people, Japan’s Self Defense Forces–as the country’s military is known–was the first foreign aid and rescue team allowed into China. Japanese corporations donated to aid efforts as well. Appliance-maker Panasonic, for example, contributed more than 10 million yuan to relief efforts in the aftermath of Sichuan quake, Xinhua reported at the time.

In the aftermath of the Sichuan earthquake, Chinese leaders said Japan’s offers of help would serve to strengthen bilateral ties between the countries. More recently, relations between the countries soured again, most notably over continued territorial disputes in the East China Sea in a long-running dispute involving the Diaoyu islands – which Japan calls the Senkaku islands.

– Brian Spegele, with contributions from Josh Chin. Follow Brian on Twitter @bspegele

WSJ Highlights:

• The Dalai Lama plans to give up his political role in Tibet’s government-in-exile, in an effort to democratize the community and deflect efforts by China to control the succession process.
• Customs data shows China recorded a surprise trade deficit in February.
• The chairman of electronics retail giant Gome stepped down in an apparent victory for the company’s jailed founder.
• Beijing announced plans to pump 1.3 trillion yuan into subsidized housing for low-income families.

News Items:

• An earthquake that struck southwestern Yunnan Province near China’s border with Myanmar on Thursday has killed at least 19 people. (AP)
• South Korea is investigating an alleged sex-for-visas scandal at its consulate in Shanghai. (BBC)
• Barack Obama officially announced his nomination of Commerce Secretary Gary Locke as the next U.S. ambassador to China. (AP)

Digging Deeper:

• What does Libya reveal about the risks of China’s thirst for oil? The Los Angeles Times offers some answers.
• More from the Los Angeles Times: A look at ambassador-to-be Gary Locke’s relationship with China, the issues that might pop up in his confirmation hearing, and what kind of reception he can expect once he arrives in Beijing.

Two Meetings Watch:

• Getting off to a bad start? Highlighting problems with early education in China, A CPPCCC delegate said nine out of 10 kindergarten teachers in Jiangsu province are unlicensed. (China Daily)
• Once Again: answering a question about jailed Nobel laureate Liu Xiaobo, a Chinese legislator says the court had “sufficient legal and factual grounds” for convicting the activist. (Xinhua)

Just Because:

• A video demonstrates how some TV news in China is manufactur… uh, reported.

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In 1999, when Ford bough Volvo, Sweden was shaken. The deal came at a time of corporate exodus from Sweden and as another powerhouse, Swedish drug maker Astra, was being merged into British Zeneca. In an analysis of the Ford-Volvo deal at the time in Swedish daily Dagens Nyheter, Bengt Carlsson wrote, “Didn’t it just get even colder? … If British Zeneca buys Sweden’s stomach Astra [famous for ulcer medication], it’s the heart that goes now.”

With Geely’s deal for Volvo, the soul-searching is starting anew. The main concern is of course jobs, and whether Geely will keep a manufacturing base in Sweden. Also, some voices denounce any deal-making with a company tied to the Chinese government.

A sampling of Swedish media comments shows that in Sweden Volvo is still not just any company — and Geely is not any buyer.

Auto-market columnist Robert Collin writes in evening paper Aftonbladet Monday:

Eleven years ago I thought American Ford would be a good owner for Volvo. I was wrong. … The Americans, who resemble Swedes when you look at them, turned out to have a completely different cultural outlook.

He says that when he asked Geely Chairman Li Shufu at the deal signing Sunday how long he aims to keep manufacturing in Sweden, Li told him, “a long time,” saying Geely wants Volvo to stay close to its markets. Collin sees this as a sincere answer, and a good sign:

No nonsense about emotions, nostalgia or image. No obsequious talk to persuade Swedes in doubt. Only sheer economics. … I give the new East India Company a solid chance. This can all turn out really well.

Meanwhile, much of mainstream media is attempting to put the advantages of a new owner for loss-ridden Volvo in perspective, and criticizing Swedish officials’ courting of the Chinese delegation visiting over the weekend.

Dagens Nyheter’s Annika Ström Melin says in a Tuesday editorial that despite Sweden being the first Western European country to recognize the newly-founded People’s Republic of China in May 1950, the two countries are not necessarily the best of friends, and that it had been uncomfortable to hear the “slippery” comments by Maud Olofsson, Sweden’s minister for enterprise and energy, after the Volvo deal was signed, that “We have views on China, something good friends can have.” Ström Melin writes:

Ties between Swedish and Chinese companies and researchers are growing stronger and stronger. The network of contacts that is emerging will hopefully contribute to improvements in the standard of living and a more open and democratic China. Sweden will need deeper knowledge of and contacts with Chinese society, on all levels. The acquisition of Volvo by a Chinese company gives an almost too explicit picture of the emerging new world order.

But Sweden has too often tried to acquiesce to and navigate between the rising superpowers of the world. Enterprise Minister Maud Olofsson needs to promote good relationships between our countries, but she doesn’t have to be good friends with China’s leaders.

Global politics aside, GT, a newspaper based in Gothenburg, Volvo’s home, sees the deal as “the beginning of the end” for Volvo’s future in Sweden. Jan-Erik Berggren writes Tuesday:

The auto market is in China and even if Geely’s Li Shufu makes assurances that he wants Volvo to remain just the way it is, everything indicates that manufacturing and know-how will move east. Not tomorrow, but certainly in, say, three to five years. Not all of Volvo, but enough so that Volvo slowly, slowly becomes more Chinese.

Tuesday in Beijing, Li said Geely is committed to preserving Volvo’s brand identity and likened the relationship between Geely and Volvo to that of brothers, rather than father and son.

– Sofia McFarland

Something has happened to the happy road that foreign companies were seen to be treading in China.

For years, international firms enjoyed the prospect of expanding operations here: happy with cheap labor costs; expanding domestic appetites for foreign goods; as well as the sense that business practiced without reference to political context was both safe and possible. Politics, executives assured themselves and their shareholders, was not any business of foreign business in China.

But this week we are witnessing two instances in which efforts to expand commercial activity in China have run smack against the complex political realities of this country.

The first is Google. After succumbing to the demands of openness with Chinese characteristics, Google pushed back. Their corporate leadership was forced to accept what it refused to believe only a few years ago: that the Internet is not changing China so much as leading forces within the Communist Party are bent on changing the Internet.

Exit Google. This enormous corporate force has discovered that in the tussle between foreign private enterprise and the Party, Beijing always wins.

The second case is less about large institutions than unlucky or unethical individuals: the Shanghai trial of four Rio Tinto employees, accused of trading in state secrets and commercial bribery. The fact that one of the four accused is an Australian citizen but that Canberra’s diplomatic representatives are barred from at least some of the trial proceedings cannot help but chill even the most optimistic of entrepreneurs and risk-takers operating in the commodities trade and minerals industry. The line separating legitimate market research and national security appears to be blurrier than ever. Everyone involved knew that working in the raw materials realm in China was not for the faint-hearted but who knew it would prove so dangerous?

So why is state sovereignty and central power getting in the way of success, perhaps even jeopardizing the presence and operations of many foreign firms in the future here in China? Wasn’t regular interaction with Western firms supposed to inspire Chinese managers and companies to adopt more transparency? Why is it that the same party officialdom that opened doors to foreign investment and manufacture in China are now slamming some of them shut? Why has the government here been so supportive of state-owned enterprises, aiming the stimulus package there, all the while barring foreign firms from bidding on massive government procurement packages? Why does the Minister of Commerce Chen Deming, instead of seeking to assuage the anxieties of entrepreneurs and investors, insist that the United States will lose much more in a trade war than China, thereby stiff-arming foreign private firms who hoped for a more soothing tone?

Part of the answer lies in the hardline policies that have marked the political leadership here for some time. High-level officials in Beijing have never been reluctant to voice the prevailing sense in policy-making circles that China comes first; that Chinese companies are to occupy and hold the economic high-ground; and that economic growth will be steered by the Party. So much of what one sees here is a simple and much-admired Darwinism: the pursuit of Chinese national strength and global reach takes priority over the projections of foreign companies and their shareholders. There’s likely not a single cadre in this system currently who thinks that a soft line sells well in Beijing.

But a larger part of the explanation for Beijing’s assertiveness with foreign firms rests with the political dynamics of modern day China under the leadership of Hu Jintao and Wen Jiabao. Whether companies realize it or not, they are witness to a larger war going on between the central leadership and many regional officials over how to run the national economy.

For much of the Beijing-based bureaucracy, more planning and less input from the provinces is the proper prescription for further growth. Too much is wasted, diverted and stolen, these central officials argue, and recentralization of government power is needed. Indeed, part of the recent emphasis on helping State-owned enterprises here is because some cadres in this camp have back-channel ties to those firms.

But a good deal of the largesse tossed to State firms is because privatization has come to be seen by many in the Party as fracturing political power, allowing too much running room for provincial officials bent on pursuing pet projects for political promotion. Foreign firms are being neglected by much of the central government, but they still have their fans in various regions who see these companies as providing investment, employment, and helping ensure social stability. The problem recently is that provincial cadres cannot provide a lot of protection to international corporations when the political drumbeat is about retrenchment and responding to directives from Beijing.

For now, the Recentralizers have beaten the Decentralizers. Showing Google the door and Rio Tinto the court entrance are the uglier signs of ongoing skirmishing between competing visions of how best to manage national economic affairs. These developments should not have been a shock but it is surprising that many foreign firms forgot that China is a place of many minefields and that it is important to mind their step.

So there was some eye-rolling among the more seasoned Western business executives in Beijing, earlier this year when Bill Gates weighed in on the Google vs. China imbroglio by criticizing Google and offering a sympathetic assessment of the Chinese position in an interview with ABC’s “Good Morning America.” “Bill Gates Bats for China,” read a triumphal headline in the Global Times, a sometimes nationalistic Chinese newspaper.

The charitable explanation was that Gates was expressing a personal view.

Apparently not. It seems that this is now a part of the company’s image-making in China. In an interview published Thursday in the state-run China Daily, Microsoft’s chief research and strategy officer, Craig Mundie, chides Google for its impetuous behavior, and suggests that it should take a more mature approach to China. “I think we feel good enough now (about Microsoft in China). But it is a 20 year (journey) and not just three years (like for Google),” Mundie is quoted as saying. (The parentheses are China Daily’s).

It’s rare to hear open criticism of China among foreigners doing business in the country, which is why Google’s public complaints about hack attacks from China – and its threat to quit the market – were so shocking. A big reason foreign businesses appear so quiescent in the face of mounting challenges is that they’re all competing for government favor: When one trips up, they get trampled on by the rest.

It won’t happen quite that way in Google’s case. Google is in the highly unusual position of being essentially irreplaceable by a competitor in China. In theory, that should give it more bargaining power. Unfortunately for Google, the issue of censorship in China is non-negotiable, which is why most analysts think that Google.cn, its China-based search engine, is toast.

Still, if Google.cn falls, there will be plenty of Internet companies picking at its carcass. Among them will be Microsoft, which as Mundie points out in the China Daily interview, stands to win business for its Bing search engine, which has struggled to gain traction in China.

However the Google episode pans out, it’s likely to have a lasting impact on the way foreign companies deal with China. Over the years, foreign executives have frequently made the mistake of copying the way that Chinese officials deal with their superiors. The approach is best summed up in the Chinese phrase “pai ma pi” – “slapping the horse’s rear”. The problem with sycophancy isn’t so much that it’s offensive to watch, but that it’s a lousy business strategy. China may enjoy the kowtow, but it doesn’t respect it.

Western diplomats appear to have come to that conclusion. In recent months, they’ve been far more blunt in their language toward China – and ready to act jointly on matters of common concern. In international affairs, divide-and-rule isn’t working so well for China.

Microsoft itself faces daunting challenges in China, not least rampant piracy. On this issue at least, the foreign business community discovered long ago that the most effective approach is collective action – and straight talk.

–Andrew Browne

Update: Before the publication of this post we checked with Microsoft to make sure the China Daily interview gave an accurate description of Mundie’s remarks. After the post was published a spokeswoman for Microsoft insisted that there was no “negative tone or cricitism” by Mundie during the interview.

The spokeswoman said that Mundie was asked what Google could learn from Microsoft’s early days in China. He replied that analogies are difficult because China was different in the 1990s, but it took a long time for Microsoft to “get its situation improved” — 20 years, not three, an apparent reference to Google’s shorter tenure in China.

The revelation that Google would be working with the U.S. National Security Agency to investigate the cyberattacks it announced in January caused some consternation this month. The news seemed at best incongruous with the Internet giant’s stated values of the free flow of information, since companies have been wary of the NSA after it was discovered that the agency engaged in domestic surveillance without a warrant under the George W. Bush administration.

Now, China’s state-run Xinhua news agency has weighed in on the partnership as well, with a lengthy commentary that includes a sampling of quotes from various international analysts and headlines saying that the arrangement is dangerous and smells of hypocrisy.

The commentary by Xinhua — considered to be a mouthpiece of the Chinese government, which itself is known for keeping a close watch on its citizens – turns the table on Google after its charge that it was the victim of cyberattacks that it traced to China and a reminder that two can play at the spooking game. It points out the NSA’s history of intercepting communications: “During the Cold War, the NSA worked with companies like Western Union to intercept and read millions of telegrams. During the War on Terror years, the NSA teamed up with the telecommunications companies to eavesdrop on customers’ phone calls and Internet traffic right from the telco’s switching stations,” the article said — an interesting point, although the story fails to note that this part was taken straight from a Wired story, verbatim.

It does, however, bring up that very article from the American magazine, which ran under the headline “‘Don’t Be Evil’ Meet ‘Spy on Everyone.’” Xinhua goes on to say that “other countries will face severe potential threats,” adding that the NSA’s capabilities are usually limited, but by joining hands with Google with its wealth of information on users and their search histories IT could boost the agency’s information-gathering capabilities.

Xinhua says Google declined to respond to its requests for comment on its investigation into the cyberattacks, and says the company’s promises that it would not leak user information “can hardly convince others, especially when people are facing agencies like the NSA which is notorious for intercepting email and enjoys judicial rights of exemption.”

Others sources, including French and Japanese sources, are mentioned in the article as saying European companies could also become targets of the Google-NSA collaboration, and the commentary ends with a quote from Izumi Harada, chief fellow of the Crisis and Risk Management Society of Japan, saying “Personally, I will no longer use such search engines that cooperate with U.S. intelligence agencies.”

It might be seen as an ironic twist that Xinhua is slinging Big Brother charges at Google, though, as its article takes pains to point out, it is after all just joining a chorus of such accusations.

– Loretta Chao

That’s what bloggers and at least one Chinese news outlet have been saying. According to their reports, which couldn’t be confirmed, China Central Television’s web site was hacked Monday night—purportedly by viewers displeased with its annual Lunar New Year extravaganza two days earlier—causing users trying to access the site to be greeted with a picture of a scantily clad woman rather than CCTV’s usual content (in Chinese here). One Web site that ran the story also included what it said was a screen shot of the attack.

China’s official media have remained silent on the supposed attack. CCTV officials couldn’t be reached for comment on Tuesday (China is in the middle of a weeklong holiday).

CCTV’s annual gala on New Year’s eve—one of the most watched programs in the world’s biggest TV market—has become a lightening rod for dissatisfaction with the broadcaster. Critics say the show is uninspired and boring. Even other parts of the state media have piled on: the English-language China Daily newspaper on Friday, a day before the show, said the nearly 30-year-old tradition “is now outdated, or at best, a nostalgia trip.”

But such criticism was mild compared with what was to follow. Internet bulletin boards lit up over the last couple of days as people complained about the large number of product placements throughout Saturday’s performance, prompting the director to publicly defend his programming decisions. The media report about the supposed hacking of CCTV suggested that discontent over the ads was a likely motive.

All this comes as CCTV is still reeling from the PR effects of the fire that gutted a tower in its glitzy new headquarters complex in Beijing a year ago. The fire was caused by an unauthorized fireworks show put on by CCTV officials. The government said last week that 44 people faced criminal charges for their involvement in that fire while 27 others will receive administrative penalties.

China has been the focal point for debate over internet security in recent months after Google and other western firms said they were victims of a sophisticated cyber attacks that appeared to originate in China. China’s government has denied those allegations, and argued that China itself is the biggest global victim of hacking. According to a report released last year by the National Computer Network Emergency Response Coordination Center of China, hackers in China caused losses of 7.6 billion yuan in 2009.

Most recently Baidu, Google’s main Chinese competitor, had its domain name, which is administered by a U.S. company, disabled for several hours by a cyber attack. Many Internet users cited signs that an Iranian group was behind the attack. Users in China reported seeing a banner for the “Iranian Cyber Army,” complete with an Iranian flag and a shattered Star of David, when they tried to access Baidu’s home page.

If CCTV’s site was hacked, the scale and sophistication falls far short of those against Google or Baidu, with the CCTV outage basically a temporary inconvenience for people looking for updates on the Winter Olympics.

Still, such an attack against CCTV would represent an unusually bold expression of the widespread public disaffection with the centerpiece of China’s propaganda apparatus.

–Dinny McMahon

A few economists are now turning that argument on its head, and proposing that China allow inflation to do the work of currency appreciation. Rather than adjusting the currency upward to make Chinese goods more expensive abroad, authorities should just allow rising wages and other costs to make Chinese goods more expensive, they say. To put it in the language of economists, they think China can get the needed adjustment in the real exchange rate without actually moving the nominal exchange rate.

China is under tremendous pressure from the U.S., Europe and other nations to shrink its huge trade surplus, which some blame for contributing to the financial crisis. A stronger currency could do that by making Chinese goods less competitive. But Premier Wen Jiabao and other government officials have pushed back against outside pressure on the currency. They have kept the yuan, or renminbi, fixed against the dollar since mid-2008, and a big, rapid move is widely seen as unlikely.

Higher inflation could have the same effect—albeit indirectly—and be less contentious politically within China. If average prices in China rise 5% more than in the U.S., and the currency doesn’t move against the U.S. dollar at all, the result is effectively the same as if China revalued the yuan by 5% and the two countries had the same inflation rate. In both cases, Chinese goods have gotten 5% more expensive in U.S. dollar terms, or to put it another way, the real exchange rate has increased 5%.

“It is not clear that nominal renminbi appreciation is necessary,” Xiao Geng, director of the Brookings-Tsinghua Center for Public Policy in Beijing, writes in a recent article. The key, he argues, is to understand that some kinds of inflation are actually desirable.

As a developing country, China is on the road from being a poor nation to being a richer one. As part of that process, everything in China will get more expensive over time: as Chinese incomes and wages rise closer to global levels, it becomes more expensive to produce goods and services, and their price also rises. In other words, some inflation is unavoidable if China is to become more prosperous and its consumers are to spend more.

“Many formerly fast-growing industrializing economies, such as Japan, South Korea, Taiwan, and Hong Kong, kept inflation around 5% to 8% during their fast-growth phases as a way to make nominal wages and general price levels converge towards global standards,” Xiao says.

Arthur Kroeber, managing director of the economic research firm Dragonomics, also thinks the kind of inflation China faces is not fundamentally worrisome. “If inflation arises from rapid wage growth generated by big productivity gains in a flexible labor market, then it amounts to a perfectly normal and healthy adjustment of the real exchange rate,” he writes in a recent article.

“In our opinion allowing more domestic inflation is a better policy than an aggressive exchange-rate adjustment,” Kroeber writes. “Higher inflation is understandably a bit scary, but it is probably the best choice for China in the coming decade.”

Accepting a persistently higher level of inflation in the economy goes against decades of Western central-bank orthodoxy – not to mention the fear, deeply rooted in Chinese political culture, that soaring consumer prices could produce social unrest.

“We tend to see inflation as bad, though in fact the convergence of wages is good. We have to tolerate a reasonable amount of inflation, and learn how to operate in this environment,” Xiao says.

There’s no sign that the Chinese government is convinced by Xiao and Kroeber’s advice. Still, authorities have been adjusting key prices in the economy in recent months: the regulated prices of key inputs like water, electricity and crude oil are going up, and local governments are raising minimum wages.

And heterodox ideas about inflation are getting a broader hearing these days, as the financial crisis pushes many thinkers to re-examine conventional practices. Olivier Blanchard, chief economist of the International Monetary Fund, now thinks that even developed economies probably can tolerate a higher level of inflation they have in the past – with central banks perhaps targeting 4% a year instead of 2%.

–Andrew Batson