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LTN: For Seven Consecutive Years China Ranked Worst Abuser of Online Freedom in the World ; Taiwan Is Number One in Asia-Pacific

Major Taiwanese news network Liberty Times Network (LTN) recently reported that the U.S. human rights organization Freedom House just released its annual Freedom on the Net Report. For the seventh consecutive year China has been ranked as the country with the worst Internet freedom in the world. Meanwhile, Taiwan was included in the appraisal for the first time. It ranked the fifth out of 70 countries,  taking the top spot in the Asia-Pacific region. Freedom House’s evaluation criteria include three indicators: obstacles to access, limits on content, and violations of user rights. China has been ranked at the bottom of the list for seven consecutive years, behind Cuba, Myanmar and Iran. The Chinese government remains the world’s worst online freedom violator. The Report pointed out that now, in 2021, one of the most censored topics in China is still content related to the Covid-19 virus. China’s official media, its official social media accounts, and other government-related accounts are flooding cyberspace with false claims on the dangers of U.S. vaccines as well as the source of the coronavirus. The highest ranked countries are Iceland and Estonia; Canada and Costa Rica are tied for the third place.

Sources: LTN, September 21, 2021

world’s worst abuser of internet freedom for the seventh consecutive year

Xiaomi Cellphones Found to Have Security Issues

Well-known Chinese news site Sohu (NASDAQ: SOHU) recently reported that, in July, the Baltic State of Lithuania allowed Taiwan to set up a “representative office” under the name “Taiwan,” leading to a sudden escalation of diplomatic tension between the two countries, Lithuania and China. Now the Ministry of National Defense of Lithuania released an investigation report, claiming that content censorship “features” have been found in mobile phones produced by some Chinese companies like Xiaomi. The Ministry even advised consumers to avoid buying Chinese mobile phones or to trash them if they currently own such equipment. The National Cyber Security Center of the Ministry of Defense of Lithuania indicated that Xiaomi’s flagship phones have built-in detection and censorship functions which can be turned on remotely. Xiaomi’s encrypted mobile phone usage data is transmitted to a server in Singapore. Similar loopholes have also been found on one Huawei model. According to Deutsche Welle Chinese Edition, the German Federal Office for Information Security (BSI) confirmed that, based on the Lithuania Report, it has launched an investigation into allegations of security vulnerabilities in Chinese mobile phones such as Xiaomi.

(1) Sohu, September 22, 2021
(2) DW Chinese, September 25, 2021

Power and Production Restrictions Impact an Expanded List of Publicly Traded Companies

Shanghai Securities News recently reported that the Chinese government’s “dual energy consumption control” policy has been implemented across the country. In many provinces, the government has introduced intense restrictions on the consumption of electrical power and on manufacturing production; high energy consumption companies have received production restriction notices. These companies and related industrial chains have all been affected. On the upstream side, the prices of raw materials such as steel, cement, aluminum, and yellow phosphorus have risen due to limited production which stimulates short supply. The prices of some products have been setting record highs. On the downstream side, in addition to the ripple effects of price increases raising production costs, the supply cycle has begun to lengthen and the pressure on order delivery has increased. This round of electricity and production restrictions may force many high-energy small-and-medium-sized companies either to withdraw from the market or to transform and upgrade. The New Energy industry chain, including many photovoltaic industrial manufacturers as well as the vehicle battery industry, have also been affected by the power curtailment. Tens of the publicly traded companies issued announcements on the impact of the new government policies; some have had to pause production.

Source: Shanghai Securities News, September 24, 2021

Local Governments Face Fiscal Constraint as Land Sales Slow Down

Since Beijing introduced policies to curb the overheated housing market, land sale activities have also been slowing down. This is happening in Hangzhou, Shenyang, and Hefei where, last week, there was a significant drop in transactions involving the sale of land. According to statistics, in June and July of this year, nearly 500 parcels of land that were for sale in small to mid-sized cities, had no buyers. If this trend continues, local governments, which have been relying on land sales as part of their fiscal income, will face financial constraints.

Since the 1990s, China has embarked on large-scale construction in urban areas. Most of the land resources have come from rural areas. Local governments have benefited the most from it. In 2020, local governments received 8.4 trillion yuan (US$1.3 trillion) from selling land, up 16 percent from a year earlier. However, in June, all local governments were required to transfer the power for collecting land sales revenue to the tax authorities under the State Taxation Administration (STA). This has allowed the central government to take control over local finance.

Source: Radio Free Asia, September 20, 2021

Party Branches Established in China’s Film and Television Production Center

Hengdian World Studios in Zhejiang Province is China’s film and television production center; it is also known as China’s Hollywood. Temporary Chinese Communist Party (CCP) branch offices have been established in 11 cast teams that are currently filming TV and movie dramas. One of the party branches consists of the party members from the production, photography, editing, sound and explosion visual effects departments. Each of the 11 teams will conduct a regular study session on the party’s history and an understanding of the recent cultural and entertainment industry rectification directives from the central administration. Their goal is to further strengthen the party’s  leadership, plan party building activities and recruit more party members.

Source: China News, September 21, 2021

Kyodo News: 31 Japanese Universities Stepped Up Vetting of International Students to Prevent Technology Leaks

The Japanese government is tightening its control over sensitive technology leaks through international students. Universities in Japan will need to come up with measures to face the challenge. Kyoto News recently conducted a survey of 56 private or public universities that have either an affiliation with Chinese universities that have ties with the military or that have a large number of foreign students. Among them, 31 universities have implemented or are considering stricter identity checks on international students who are majoring in sensitive technology studies.

The results showed that only 24 universities would implement or consider implementing the vetting of students who signed an agreement not to take controlled technology out of Japan. Also, only a few universities disclosed whether they have received any foreign funding. All of these are indications that there is a lack of effective responses to the risk of technology leaks.

The Japanese government announced in June that it would strengthen export controls over sensitive technology and adopt a licensing program for universities that receive research funding from foreign governments or allow foreign students to access technologies.

Surveys show that more than half of the universities have or are considering increased identity checks on past academic qualifications, work resumes, and other areas of concern. Ten universities have asked their international students to answer whether they intend to join military-related organizations, and 14 universities now validate the details of financial support from foreign institutions.

The Japanese government is also urging the control of Japanese scholars to get them to take part in joint overseas research. According to the survey, less than 30 percent of the universities have a filing mechanism to report the joint research. There are currently 14 universities that have Confucius Institutes. One university said it was considering a restructure of its operations.

As of last May, the number of international students in Japan was about 280,000. China is the largest by nationality, accounting for more than 40 percent of the total.

Source: Kyodo News, September 7, 2021

Beijing Plans to Lead the World in Human Rights Work

Although the world recognizes that the Chinese Communist Party (CCP) has a poor record on human rights, the CCP does not view it that way. In its “National Human Rights Action Plan (2021 to 2025)” published on September 9, the CCP states that it plans to be active in helping the world manage human rights.

The plan listed the following as some of its goals for creating and implementing its action plan: “To participate actively in global human rights governance; to deepen (China’s) involvement in the work of the United Nations human rights mechanisms; to promote the construction of a fairer, more equitable, reasonable, and inclusive global human rights governance system; and jointly to build a community with a shared future for mankind.”

Source: People’s Daily, September 9, 2021

China’s Central Bank Governor: Large Fintech Firms May Lead to Market Monopoly

Yi Gang, the Governor of China’s central bank, recently pointed out that the “winner-take-all” attribute of large fintech firms could lead to market monopoly. Yi noted that there are more than 4,000 small and medium-sized banks in China. He expressed concern about the banks increased reliance on large technology companies.

As China recently took a heavy-handed approach toward fintech giants such as Alibaba and Tencent, the website of the People’s Bank of China released Yi’s speech on September 14th at a Sino-German video conference on financial technology .

Yi noted that China’s rapid development in fintech has also highlighted a number of problems. These include the payment institutions entering into the financial sector and offering a variety of financial products such as insurance and microfinance. They thereby add to the chances of cross-product and cross-market contagion of financial risks.

Yi said Chinese regulatory authorities will bring all financial activities under financial supervision and make sure that financial businesses must be licensed. China also requires that payment methods be divorced from other financial products. In addition, Yi vowed to strengthen anti-monopoly efforts and promote large Internet companies to protect consumers’ choice of payment methods.

Yi also noted that the development of fintech will have an impact on the traditional banking industry. “Small and medium-sized banks are facing greater challenges. With limited resources of their own, small and medium-sized banks can only rely on the technology and platforms provided by large IT companies for customer maintenance, credit analysis and risk control.”

Source: People’s Bank of China, September 18, 2021