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China Uncovered the Largest Counterfeit Sports Shoes Case

Well-known Chinese news site Sina recently reported that the Chinese police declared success on resolving the largest case of counterfeiting Nike shoes. The case involved over half a million pairs of shoes, estimated to be worth more than RMB 600 million (around US$88 million). The case started near the end of 2015, when Nike China reported to the police of Anhui Province that it had discovered counterfeit shoes in the markets of the Middle East. Nike suspected the source of these shoes was in Anhui. The investigation that the report triggered eventually led to the discovery that the manufacturer was a factory under the Anhui Feiyu Group, which has two other legal shoe making factories. The factory making the counterfeits operated on a very large scale with a full chain of manufacturing, even including a quality assurance department. It also developed a complete wholesale and distribution network covering both domestic and global markets. The findings in the case revealed a highly professional criminal network. It could not have reached such a large scale without help from various levels of government branches across China.

Source: Sina, May 25, 2017

Epoch Times: How China Spent its Security Maintenance Fund

Epoch Times, the overseas Chinese news media, carried an article which included examples of how China spent its “security maintenance fund.”

1) Based on a source from the public security bureau in Shen Zhen, on April 23, the security bureau allocated 10 million Hong Kong yuan (US$1.28 million) in order to stop a parade that Falun Gong followers in Hong Kong had organized. The money was spent to pay 500 to 600 yuan (US$64 to $77) to each participant and to buy uniforms, banners, and chairs, while more money was paid to those who organized the stopping of the event. One group organizer from Fujian was reported to have received 2 million Hong Kong dollars (USD$260,000) for participating in the April 23 event. The directive issued to the organizers stated that the money came from the “security maintenance fund.” The organizer was told that there is no limit set on measures to persecute Falun Gong followers and all expenses would be reimbursed.

2) Chen Guangcheng, the civil rights activist worked on human rights issues, while the county government in Shandong Province subjected his family to surveillance from August 2005 to August 2012. Three surveillance sites were set up to put Chen under house arrest and 50 to 60 people were at this site 24 hours a day. Meanwhile an additional several hundred people who are cadres of the villages, towns, and the counties, as well as police officers, were involved in Chen’s case. Reports indicated that the authorities spent 30 million yuan (US$4.34 million) a year to monitor Chen. That was the amount in 2008, but it went up to 60 million (US$8.69 million) by 2011. The total does not include the bribery money that officials paid in Shandong Province to the officials in Beijing.

3) Lawyer Zhen Enchong from Shanghai disclosed that, since he was released from prison on June 5, 2006, the authorities in Shanghai spent at least 4.2 million yuan (US$610,000) a year to keep him under house arrest and on harassing his family members.

4) The article quoted a comment from a scholar who stated that behind the large sums “invested” in the “security maintenance fund” were large sums of money spent on corruption. “They mark up the surveillance camera from 1,000 yuan (US$115) to 100,000 yuan (US$14,500) … Large groups of people rely on making money through the “maintaining security” effort.

5) On March 2, Philip Wen, a reporter from Reuters reported that for the past five years, in order to stop a villager from Inner Mongolia from going to Beijing to appeal her case, the authorities spent 330,000 yuan (US$48,000) on the surveillance effort.

6) According to an investigation report that the World Organization to Investigate the Persecution of Falun Gong published, in the first several years of the persecution campaign, which started in 1999, China spent one fourth of its national finances on the persecution effort each year. For example on February 27, 2001, 4 billion yuan (US$580 million) in funding was allocated to install surveillance monitors on buildings. In December 2012, 4.2 billion yuan (US$610 million) was spent to build brainwashing centers. 170,000 to 250,000 yuan (US$25,000 to $36,000) was spent daily just to staff the resources in Tian An Men square to stop Falun Gong followers from petitioning. The report also said that the authorities spent unknown sums of money to award whistle blowers, send spies overseas, and to buy out overseas media and organizations.

Source: Epoch Times, May 6, 2017

RFA: UN Rapporteur Reported Chinese Government Interference

Radio Free Asia (RFA) recently reported that Philip Alston, the United Nations Special Rapporteur on Human Rights, explained to AP about the Chinese government’s interference with his work during his UN mission trip to China last August. The Chinese government warned him not to arrange meetings with anyone through any private channels. He was required to provide the names of the people he planned to meet. At the same time, some of his contacts told him they had been advised to take a vacation during the time of his visit. The police detained one contact for a few hours so he would be unavailable at the meeting time. As a UN Rapporteur, he is supposed to be able to meet with anybody in any UN member country and to protect the information about his sources. Undercover Chinese national security personnel followed Alston for the entire time he was attempting to meet his contacts. The Chinese spokesperson for the Ministry of Foreign Affairs refused to comment on the matter.

Source: RFA, May 3, 2017

LTN: 2017 Press Freedom Index Put Mainland China Near the Bottom

On April 16, major Taiwanese news media, Liberty Times Network (LTN), reported on the 2017 Press Freedom Index that Reporters Without Borders recently released. Taiwan was ranked number 45, a 6-step improvement from last year’s rank. Taiwan’s rank is now at the top of Asia. The five countries at the bottom of the global list are China, Syria, Turkmenistan, Eritrea, and North Korea. According to Reporters Without Borders, the ranking was based on assessments in multiple categories like media diversity, the degree of media independence, and reporter security. Reporters Without Borders pointed out that freedom of the press has never faced such a threatening level as it does today. Even in democratic countries, press freedom is becoming more and more fragile. Reporters Without Borders also announce that the organization is giving up on Hong Kong and decided to move its Asian branch office to Taiwan. In the 2017 report, the top five countries are Norway, Sweden, Finland, Denmark, and the Netherlands. The United States is ranked at 43 and Hong Kong is 73.

Source: Liberty Times Network, April 26, 2017 China’s Pension Fund Individual Accounts Face the Risk of Collapsing recently reported that Tsinghua University just released a study report on China’s Pension Fund Individual Accounts, which are facing more and more serious financial risks. The Tsinghua Report assessment showed the risk level is at Level Three (the top risk level is Four). The Report found that the Pension Fund Individual Accounts currently has “empty accounts” valued at RMB 4.7 trillion (around US$684 billion). The current pension payments are paid out of “accumulated balances” which are only at the level of RMB 3.5 trillion. At the current pace, the Report expects the accumulated balance to be fully consumed in the near future at which point the entire pension system may collapse. The cause of the imbalance was the difficulties that occurred in the national level process of balancing among wealthy and poor regions. The general expectation now is to put hope in the central government to supply money to fill up the black hole. The pension investment funds have not been performing well in the market and spending consistently exceeds income. The Tsinghua Report found that the current model is not sustainable.

Source:, April 25, 2017

Caixin: Social Structure Study Found China’s Middle Class Collapsing

Well-known Chinese financial news media group Caixin recently reported that a recent professional social structure study called, “The Middle Class Transition Tier and The Edge Tier” found that 19.12 percent of China’s population is Middle Class. Of those, 73 percent are very close to the borderline that divides the Middle and the Lower classes. The study was based on a model established under the International Socio-Economic Index of Occupational Status (ISEI). The sample size was 683,291 employed people who are between the ages of 16 and 64. In addition to the Middle Class, China has an Upper Class of 5.62 percent of the population and a Lower Class of 75.25 percent. In the Lower Class, 4.4 percent (of the entire Chinese population) was in the “Transition Tier” that is very close to the Middle Class line, and in the Middle Class, 13.9 percent was in the “Edge Tier” that’s slightly above the same dividing line. The entire population’s 13.9 percent is 73 percent of the Middle Class population. The study also found that the bigger a city is, the more people are in the Middle Class Edge Tier. In cities with more than 10 million residents, 25.35 percent of the city’s population is in the Middle Class Edge Tier.

Source: Caixin, April 17, 2017

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