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Computers in China to Have Pre-Installed Internet Filtering Software

On May 19, 2009, the Ministry of Industry and Information Technology (MIIT) issued a notice regarding the pre-installation of Internet filtering software. The notice said that, in order to control the low and vulgar contents on the Internet and to protect minors from exposure to the harmful "bad information," all computers manufactured or sold in China after July 1 should have "Green Dam-Youth Escort" software pre-installed. The software provides functions to block sexual content, filter websites deemed improper, control Internet browsing time, and record the web site visiting history.

According to Computer Science and Engineering Division of The University of Michigan’s research, "Green Dam scans text entry fields in various applications for blocked words, including obscenities and politically sensitive phrases (for example, references to Falun Gong). Blacklisted terms are contained in three files…" The researchers "also found what appears to be a word list for a more sophisticated sentence processing algorithm in the unencrypted file FalunWord.lib," which is dominated by Falun Gong related terms and sentences.

Many newspaper and Netizens expressed their angst with MIIT’s forceful imposition of more Internet control. China News Services’ survey on June 11 showed that only 20% of the people supported MIIT’s position. MIIT declared that "(the Green Dam-Youth Escort) software will not monitor user’s Internet behavior, nor was it to collect any user information."

Source:
[1] Miit.gov.cn, June 9, 2009
http://www.miit.gov.cn/n11293472/n11293832/n11293952/12398220.html
[2] Nanfang Daily, June 9, 2009
http://www.nanfangdaily.com.cn/nfjx/200906090005.asp
[3] China News, June 11, 2009
http://www.chinanews.com.cn/it/it-itxw/news/2009/06-11/1729900.shtml
[4] The Computer Science and Engineering Division of the University of Michigan
"Ananlysis of the Green Dam Censorware System"
http://www.cse.umich.edu/~jhalderm/pub/gd/

Chinese Academy of Sciences Releases Technological Roadmap for Next 50 Years

On June 10, the Chinese Academy of Sciences released a strategic research report entitled “Innovation 2050: Scientific Revolution and Future of China.” A technological roadmap for the next 50 years, the report covers 18 key areas including energy, population health, space, the ocean, information, national, and public security.

Over 300 experts from the Chinese Academy of Sciences spent more than a year to develop the report, which clearly defines the focal point for future technology development and lists 22 strategic technology issues which will affect the modernization of China. The roadmap is divided into three phases which will be revised every five years.

Source: Xinhua, June 10, 2009
http://news.xinhuanet.com/politics/2009-06/10/content_11521348.htm

Outlook Weekly: Reflections on the Korean Peninsula

Outlook Weekly, in the 23rd issue of 2009, published an article by Zhu Kechuan, a researcher in Xinhua Research Center for World Affairs, regarding the current situation of the Korean Peninsula. It criticized the U.S., Japan, and South Korea’s approach to North Korea. Zhu argued that right now, the U.S. is falling into the mire of financial crisis and is also facing the hard-to-clean mess of Iraq and Afghanistan. "The U.S. government should think about that; it is not an easy thing to use hegemonism to ‘fix’ another country no matter how big or small and how rich or poor that country is." Zhu also stated, "Japan should also be clear: You can’t cheat the world to wash off the historical responsibility for Korea or take this opportunity to break through the constraint of ‘Peace Constitution’…South Korea should reflect too: What benefits do the government and people get from its changing the policy of national reconciliation since last year?"

Though China is always a strong backer of North Korea, the article also criticized North Korea: "What is the best way to achieve the dream of a ‘strong big country?’ Using ‘super-tough’ to respond to other countries’ ‘tough’ will get North Korea nowhere. Nuclear weapons can indeed scare people, but they still failed to prevent the collapse of the Soviet Union."

Source: Outlook Weekly, 23 rd issue of 2009
http://lw.xinhuanet.com/htm/content_4768.htm

China to Raise Export Tax Rebates for the Seventh Time Since August 2008

The Chinese Ministry of Finance and the State Administration of Taxation announced that, effective June 1, 2009 export tax rebates will be raised for processed farm products, machinery, shoes, glassware, iron and steel products, covering more than 2,600 items. It is the seventh time since August 2008 that China has raised export tax rebates to shore up its exports.

Source: The Central People’s Government of the People’s Republic of China, June 8, 2009
http://big5.gov.cn/gate/big5/www.gov.cn/jrzg/2009-06/08/content_1334929.htm

China Concludes $4.7 billion Oil Deal with Iran

The International Herald Leader under Xinhua reported an Iranian government release that China National Petroleum Corp. (CNPC) and Iran had signed a $4.7 billion dollar contract on June 3 for the upstream development of phase 11 of the South Pars natural gas field. “The aim in implementing the project will be to produce 50 million cubic meters a day of natural gas and other products.” The implementation will begin in three months. Xinhua states that the agreement with CNPC was in response to the French oil company Total’s delays in finalizing negotiations. “Deputy Oil Minister for Production Affairs Seyfollah Jashnsaz expressed that the concluding the agreement fully demonstrates that the sanctions the West has imposed on the Iranian oil and gas industry has failed and has no effect.”

Source: Xinhua, June 8, 2009
http://news.xinhuanet.com/herald/2009-06/08/content_11506744.htm;
See also Islamic Republic News Agency at
http://www.irna.ir/En/View/FullStory/?NewsId=527336&IdLanguage=3

Why Do So Many Wealthy Chinese Emigrate Overseas?

Three decades have passed since China implemented the Reform and Open-up policies. A large number of people have become millionaires. These many wealthy people have enjoyed the most luxurious food, drink, and fun, plus all of the benefits of abundant wealth. Yet, these men of wealth are successively emigrating overseas. What are the reasons? For the answer to this question, we need to analyze the following three aspects:

I. How Did These Millionaires Come into Being?

Mr. Yang Jisheng, once, described in detail in his speech on how these wealthy Chinese came into being. He explained, “China’s Reform policies made the national income gap between the rich and the poor widen significantly. There are normal and abnormal reasons for this disparity. The annual-high-income families in major cities and towns have a great deal of gray income, which is the main reason for the increase in their annual income. The sources of their gray income are listed below:

The Loss of Public Money, Including Government Funds, Social Security and State-Owned Assets:
 
In those instances where the Central Government invested in projects, the funds that were targeted for use in those projects were passed on to each level of the underlying contractors (the middlemen). When the funds actually got to  the projects themselves, what remained was less than 1/3 of the original appropriation.

Corruption exists at all levels of financial institutions. The loan recipients need not only to pay for the regular interest on the loan; but also for the extra fees that go to the pockets of the lending officials. The total amount of extra charges may be as high as 9 percent of the total loan amount. It was estimated in 2006 that the total of all kinds of loans from all the financial institutions in China amounted to 22 trillion yuan (US$3.2 trillion).

 The extra income, “the gray income,” was given to the officials of the national financial institutions. The administrative license to rent or sell land and issue approvals has resulted in a substantial loss of land revenue: In the year 2005, 40.3 acres of government-owned land was rented out, 1/3 of it were auctioned off and the price was much less than with other types of rent: A total value of 540 billion yuan (US$78.9 billion) was lost using this means. [ed: resulting in kickbacks to bank officials and huge windfalls to the “winning” bidder]

Those government officials who have amassed power and influence through nepotism or bribery have made enormous profits from monopolization. Business transactions have been ongoing between powerful government monopoly traders and the general traders who have less power. Those in power in the government control the prices of resources on market. For instance, with regard to land, the government uses administrative means to centralize, amassing land by buying it at a low price, and then selling the land to developers at a high price.

The income to monopolies: According to 2005 data, the mean wage and the extras from regular income of an industry worker in the electric power, telecommunications, petroleum, finance, water, electric power, tobacco and other monopoly industries is 5 to10 times more than the average income of a national everyday worker. Monopoly industries make use of the nation’s resources to further their business interests. The Chinese monopoly industries are basically administrative, or government monopolies.

 I used to call those who made a killing by using government power, “The Red-Cap Businessmen,” since they amassed their profits as a result of power gained from their association with the government. During the Reform and Open-up period, the Four Peak Times of wealth accumulation for “the Red-Cap Businessmen,” were as follows:

1. The First-Peak Time, the State Monopoly and the Initial-Open Period (mainly, the State-monopoly on the import of goods): Before 1994, under the official exchange rate, the currency value of the Renminbi (RMB) was overestimated. Therefore, one earned a great deal of money as he imported goods from overseas and sold them at home. People with a powerful background could get import permits for goods from overseas. The children of prominent officials filled their pockets with import permits. When the import permits changed hands, they became millionaires. They don’t just own villas on the hillside in Hong Kong; they keep race horses and yachts.

2. The Second-Peak Time, the Period of the Double-Track Price System: This occurred from 1984 to 1993. In 1987, the difference in the prices in the Double-Track Price System for goods, capital and foreign exchange reached up to 200 billion yuan (US$29.2 billion), and made up almost 20 percent of the national income for 1997. In 1988, the disparities between the prices in the Double-Track Price System for common goods, capital and foreign exchange reached 356.9 billion yuan (US$52.2 billion,). That income was almost 30 percent of the national income in 1998.
 
3. The Third-Peak Time, the Period of Financial Capital: In the stock market, the amount paid for an the Initial Public Offerings (IPO), the determination of the price for new stocks on the market, and the ability to manipulate the stock market provided those “Red-Cap Businessmen” with huge gains. The ability to lease land and the power to demolish the old, and build the new in the real-estate market, also provided them with abundant opportunities.

4. The Fourth-Peak Time, the Period of the Restructure of the State-owned Assets: After 1997, China began the large-scale restructuring of state-owned assets. In succession, many state-owned enterprises gradually pulled out from those competitive businesses. This provided an unprecedented golden opportunity for the dramatic development of the private economy. In some areas and in some of the enterprises, the restructuring of state-owned assets became a disguised form of carving up of the state-owned assets. Among them, the practice of the Management Buyout (MBO) made many managers of the state-owned enterprises billionaires overnight. “The Red-Cap Businessmen” amassed more wealth than during these Four-Peak Times (some of which often overlapped each other). They have become bolder and have employed brighter and cleverer ways to amass profits. We just don’t know how many billionaires were generated in China during these Four-Peak Times.

From all the above contents in Mr. Yang’s speech, we clearly understand how these wealthy Chinese came into being. They worry that they may not always be able safeguard their property in China, since most of their ill-gotten wealth was acquired from unknown origins. It goes without saying; they’d naturally desire to emigrate abroad.

II. The Changes in International and Domestic Circumstances Drive These Wealthy Chinese to Emigrate Overseas
 
Since the collapse of the former Soviet Union and the dramatic changes that took place in Eastern Europe, the International Communist Movement has been at an all time low. The United States of America led a group of supremacists (elitists), who actively implemented expansionist policies, and ceaselessly provoked armed conflicts around the world to create utter confusion, so the current international situation has been extremely unstable. At home, some groups of corrupt officials, acting in cahoots with the domestic and overseas capitalists, went along with their evil deeds, abusing their power and stealing the public wealth without restraint. They have wasted domestic natural resources, seized and occupied the common people’s properties, undermined the unity of members of the Party and the common people, undermined the unity of the key group and the common people and created dissension in the form of social conflicts and social crises.

Being the mainstream wealthy Chinese, the group of bureaucratic capitalists and the capitalist reps knew clearly that if the situation continued like this, they would get themselves into big trouble or stir up dramatic political changes. They knew clearly that, no matter how the social circumstance varied and no matter whether China would find its way to Capitalism or Socialism, their personal interests would be strongly impacted. Therefore, they refused to go down without a fight and thought of emigrating as soon as possible, rather than staying at home and doing nothing.

III. The Wealthy Chinese’ Own Political, Moral and Psychological Qualities Are the Determining Factor for Them to Emigrate Overseas

Most of the Chinese millionaires are the descendants of aristocratic families of high-ranking officials. Their ancestors, or their fathers, had high-ranking government posts with high political positions in Chinese society. Although during the10 years of the “Cultural Revolution,” their fathers lost out a little bit; yet, the implementation of Reform and Open-up brought them very advantageous political and economic positions. Deng Xiaoping said that the policies allowed some of people to have the priority to become rich. Then, 30 years later, the people who had the priority to become rich were those people who were in favorable positions and gained special advantages.

These kinds of people are actually the new-money in today’s Chinese society. Their political, moral and psychological qualities are quite inferior and low-grade. During the so-called “Unrest Time,” since they suffered from negative political impact, as a result, they were naturally and especially hostile to and avoided Mao Zi Dong’s revolutionary line. Since they worry very much that Chinese society will be in a turbulent situation as it was previously; therefore, they made use of the power in their hands and the mass media to slander and criticize Mao Zi Dong’s revolutionary line. They have also resisted and suppressed the currently existing model of socialism’s massive collectives. They attempted to change their country into a colony of Capitalism.

However, inside the Chinese Communist Party (CCP), leftists are still a strong force. They have never given up their battle for their viewpoints and principles. They keep waging a blow-for-blow fight against Rightists, and their existence threatens the political and the economic positions of the vested interests.

The force of the leftists and the high-ranking officials of the CCP members have tried their best to safeguard the political characteristics of Chinese Socialism, and to uncover the plot of peaceful evolution (from socialism back to capitalism) that the groups of Imperialists overseas and the Rightists at home have conspired to bring about. The rich Chinese believe that as long as China doesn’t change its socialist state-owned politics, their private property cannot be protected at home. To safeguard their vested interests and their aristocratic positions, they have to choose to emigrate overseas.

The above speech stands only for the personal perspective of the author himself, and thus cannot stand for the perspective of the Global Times.

Endnote:
[1] Website of Global Times, February 17, 2009
http://bbs.huanqiu.com/shidaizhongguo/thread-161424-1-1.html

China Loosening Controls over Domestic Enterprises’ Overseas Purchases

Nanfang Daily reported that China has made policy changes to smooth the process for domestic enterprises to buy properties overseas. There are three check points for such purchases: National Development and Reform Commission (NDRC) – checks on whether the investment is in line with national interests; Ministry of Commerce – checks on trade balance, anti-trust, WTO suit, etc; and State Administration of Foreign Exchange – approves use of foreign currencies. The Ministry of Commerce has relaxed their control.

In 2009, the State Administration of Foreign Exchange published “Foreign Currency Management Regulations on Domestic Enterprises’ Overseas Investments (Draft of Soliciting Opinions),” which changed the funds source verification process from approving before the investment to recording after the investment.

The Ministry of Commerce published “Measures for Overseas Investment Management” in March. The regulations have the following changes: 1. Ministry of Commerce will only review and approve a limited number of large overseas investments. 2. The process is simplified so that most companies only need to submit a form and receive an investment certificate in three working days. 3. The financial viability and feasibility of the investment is left to the company to decide.

Source: Nanfang Daily, June 2, 2009
http://www.nanfangdaily.com.cn/epaper/nfrb/content/20090602/ArticelB03002FM.htm

Behind China’s Largest Overseas Investment

The International Herald Leader published an article on the collapse of Rio Tinto’s controversial deal with China’s state-owned aluminum company, Chinalco. The Chinalco’s deal, valued at $24.3 billion, would have been China’s largest investment in a foreign company. Rio recently announced to would combine its large iron ore operations with BHP Billiton instead. 

The International Herald Leader blamed the scrap of the Chinalco deal on political reasons, mainly western countries’ anti-China mentality. The article stated that many politicians in the Canberra Congress raised the issue as jeopardizing Australia’s national interests. “The loss of the Chinalco Rio deal is not a loss of market competition, but rather a sacrifice resulting from a new form of ‘Cold War’ thought.” 
[Editor’s Notes: After Rio’s deal with Chinalco was announced, Australian businessman Ian Melrose spent $200,000 on television advertising, using images from the 1989 Tiananmen Square Protest to warn that the Chinese government-owned Chinalco should not be allowed to raise its stake in Rio Tinto to 18 per cent thereby increasing its control of Australia’s resources.] 
Source: International Herald Leader, June 8, 2009

http://news.xinhuanet.com/herald/2009-06/08/content_11506794.htm