history - Dutch state security misled China with fake party

A former employeeof the former Dutch state security (Binnenlandse Veiligheidsdienst or BVD, Frits Hoekstra,) has disclosed that his department has run a China-funded maoist-leninist party, that greatly misled China. The Dutch daily NRC Handelsblad interviewed him on a book he will publish very soon.
The BVD has set up between 1970 and 1980 the so-called Marxist-Leninist Partij Nederland (MLPN) to monitor maoist movement in the Netherlands and tried to figure out how China was trying to recruit students and scientists. The effort was so successful, the party that was dominated by BVD-employees even secured funding from China, through Albania. The article did not disclose any figures.
The party had an own printer, called for strikes and held regular meetings. A strict maintained cell-structure prevented key members to know more than three other members. China saw in the party for years the most trustworthy representative of the Maoist ideology. The BVD concluded on the basis of her research that Maoists in Holland were very loud, but also very small.” The CIA-station in the Netherlands was kept informed about the project.

internet - Filters cause capacity shortage
A new trend is emerging at the internet in China, where filters of the censors increasingly cause capacity problems and cause a general slowdown of the traffic. While connectivity is still much better than in the early years of the internet, a deterioration is notable, especially when working on more complicated operation like wiki's or weblogs, or while downloading larger files.An early sign of those capacity problems was revealed when the creative engineers of Tencent in Shenzhen tried to shift the capacity problems of their servers to the PC's of the users of their QQ chatservice. I have been investigating regularly complaints of people that certain sites were blocked, and have found in the past week a new pattern while investigating those complaints. Signals seem to stop at the level of the filters, initially suggesting a block. But then the signals continues again to its destination. By that time the computer of the user might have given up.It is only a theory but a plausible one - otherwise I would not tell you. It does mean that as the volume of data over the internet soars, filters cause a general slowdown. In that way the filters do something they are not supposed to do: they hurt the economy.

sport - Grand Prix crazy ready to take off

Against all odds the Shanghai F1 is going to be the major event it was meant to be. Hotels are all booked out - a week ahead of the holiday. Bars were packed and media are present in large numbers. I noted several groups of journalists - they do look different from other people - roaming the streets last night trying to get more stories out of this booming city.Calls and reports from people from different part of the country who are now here in Shanghai. A friend from Dalian reported yesterday after visiting the circuit that 400 Renminbi caps were sold like hot cakes. When people even do not wait for the cheaper copycats to be on the market, big things are going to happen.

Community – Neighbor Jiang Zemin moves in


We had already expected grandpa Jiang two years ago. While Western newspapers speculated about a fierce power struggle between Jiang Zemin and Hu Jintao, frenetic building activities at the new Jiang-residence at Hengshan Park at least suggested that there would be a realistic option of Jiang moving to Shanghai and enjoying his retirement.
That would mean nervous policemen, more traffic jams, since an ex-president seldom comes alone. But things remained quiet as Jiang Zemin held his position as chairman of the Central Military Committee.
But now he seems to have moved in, at least, it was very hard to draw another conclusion. Shortly before seven in the evening nervous policemen were clearing the road at the top of Hengshan Road. A motorcade of half a dozen cars with military numbers came from the direction of Hongqiao airport, surrounded by police cars that drove more aggressively than is common in Shanghai. That is of course no official confirmation, but that would be hard to get anyway.
At least grandpa Jiang is on time to watch the F1 here in Shanghai. We do not really expect a housewarming party, but it would be kinda nice.

censorship - Google's fake arguments


Simon World gives here some links to the discussion on Google helping to filter the internet in China, and Andrea does here.
The discussion regarding large companies helping China to filter the internet has flared up again, after Google defended the way its new Chinese search engine works in the New Scientist. Mostly corporate supporters of the Chinese censor try do their activities in silence.
"In order to create the best possible news search experience for our users, we sometimes decide not to include some sites, for a variety of reasons," Google says a statement published in the New Scientist. "These sources were not included because their sites are inaccessible."
That sounds logical at first sight: why should our Chinese search engine show results the users cannot access anyway. Unfortunately, the argument falls short in China, where the situation is slightly more complicated. Most internet users know how to get around the official internet blocks, that is part of an almost daily routine. So, blocking information on the Google search engine is a real act of censorship. It would be better, not only to show all result, but add a banner to the blocked sites saying “proxy needed”.

video blog - Less thoughts on Friday morning

Thanks for the kind emails I got after I was not able to do my video blog last week(see the box at your right hand side). It looks that this week the same is going to happen: too much other work is killing me. Hope to give it some thought during the October Holiday; I have been discussing in using the system to distribute different kind of documentaries, but that is still very early in the process. I will let you know when the broadcast resumes.

media - Journalist Zhao Yan arrested

The outspoken journalist Zhao Yan has been arrested in Shanghai, reports the China Digital News, based on an article in the unlinkable South China Morning Post. Zhao got into problems when a book he wrote on the farmers' rights that first got praized and then was banned.
People who are familiar with the case "found it difficult to pinpoint the exact reason for his detention - 'He has written so many articles that have upset the authorities,' one said - but they hoped the new leadership would continue to operate in an open and sympathetic way."
Zhao arrest is part of a set of incidents over the past weeks, where the government is cracking down on media freedom. China Digital News gives a short overview.

sport - No news from the F1 circuit



China will see this weekend the possible largest marketing event before the Olympic Games in 2008, the F1 in Shanghai. Very timely the Shanghai Foreign Correspondents Club organized a meeting with some of the participant and from the first hand I can report that there is no news.
Everybody know who is going to win, so everybody concentrates on public relations, marketing talk and a general 'feel good' atmosphere. No less than eighthundred journalists will report about this event. Unfortunately, the general manager of the circuit mr. Mao had to join the mayor for another meeting, so we lacked a view from the Chinese perspective.
Most interesting was the staff at the venue, the Ambassy Club at Huai Hai Zhonglu, who acted as being in a permanent panic, as if we were the first guests they ever encountered outside a class room. Well, that might be true.

Why the peg saves the US economy – the WTO column

(very soon at Chinabiz)

Shanghai - When you would ask a Martian economist how to solve the current trade deficit between China and the US, his answer would probably be rather simple. Last year the deficit was almost 125 billion US dollar in the favor of China and this year the balance including July is already at 83 billion US dollar and heading for another record.
Or the US economy should slow down, or the US dollar should devalue to a great degree, or both, the economist from Mars would advice. Actually, not only Martian economists would tell us this, last week at the World Economic Forum in Beijing Jeffrey E. Garten, dean of the Yale School of Management was kind enough to let us choose between those two rather unattractive possibilities. They might be realistic option for Martians, but not for the readers of this column, who according to the latest information mostly do not reside on Mars.

When you have an interest in the Chinese, the US or even the global economy both solutions predict massive instability and disaster at least for China, since both loosing the value of its foreign reserves and a slowdown of the US economy might not be in the short term interest of China. Maybe Garten is right in the long run about the unavoidable shake-out, but we might want to postpone that moment – as long as possible.
At the CLSA investor forum in Hong Kong last week asset manager Marc Faber came with an interesting theory on why keeping the Renminbi pegged to the US dollar might be an evil communist strategy to bring down the US economically, to get China in the top-position as an economic power. Key element of his conspiracy theory is that China will not weaken the US dollar by selling its foreign reserves and change it for another currency as many fear, but will try to keep the US dollar strong.
By buying US assets using its strong foreign reserves, the interest rate in the US will remain low, and the Americans happy. In the end there will be a huge loss on those US dollars and other assets, when the inevitable meltdown comes, argues Faber. “This is a small penalty to pay for the transfer of technology and manufacturing and investments into [China].''

China will have the power to decide when the overvalued US dollar goes down, but you do not need to be a Martian economist to see that this is an economic option equal to starting a nuclear war. I do not see a huge conspiracy here, merely the need for stability or even survival until the inevitable happens.
When China really unpegs its Renminbi and frees its economic system faster, as many short-sighted US manufacturers and labor unions want to improve their short-term competitiveness, the bear might really go on a rampage.

Fons Tuinstra

economy - How China will save the US dollar

A good analysis by 'Comrade' Marc Faber in Bloomberg on why China is not going to dump the US dollar. (thanks for the tip, Simon!) Keeping the value of the US dollar up might be for the time being the only way out for the gloomy solutions for the current trade deficit by the dean of Yale's Management School last week, the melting away of the US dollar, or a major slowdown of America's economy.

trade union - A Japanese employer gets into hot water

Only a few weeks ago I observed that NGO's are booming in China, with perhaps trade unions as an exception - while you see employers' organizations everywhere. And now, there is the first high-profile conflict in the media on a sacked trade union official. Chinabiz summerizes it here, but much of the reporting come from the Asian Labour News.
Much remains unclear, as what the trade union official actually has done to get sacked: might have been something else than trade union activities.

politics - Hu Jintao in "complete control"

The funniest headline on the news that Hu Jintao took over the chairmanship of the military was this one, telling its readers that Hu was now "in complete control". Damned: that might come as a blow for those jaywalkers here in Shanghai.
Fortunately, the China Digital News has founds stories that make more sense.

Much talk, but very little debate - a conference report

Beijing - "Almost everybody tells you here the same story," is the harsh verdicts of a Swiss banker who knows the lively meetings of the World Economic Forum in Davos and was disappointed about the Beijing meeting. "It was not very exciting."

Continue in Chinabiz.

connecting China - Online interview delayed

The announced online interview with Amy Gu on her impressions of last weeks HK elections has been delayed. An upcoming typhoon is battering Hong Kong, so Amy was late and then discovered that the security settings of her account had changed. One of the upcoming evenings she will tell us how she cracked the system. Further announcements will follow.