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Publicity Department Directives to Launch Nationwide Publicity Campaign Prior to 19th National Congress

According to Guangming Daily, on May 16, the Publicity Department held a meeting in Beijing and issued directives to launch a nationwide publicity campaign prior to the 19th National Congress. The directives requested that all parties “increase the depth of the media campaign to the full extent; mobilize large scale media events, exhibits and forums, as well as produce TV documentaries in order to showcase the achievements that the Party and the country have made; to launch education, arts, and cultural programs to present a harmonious and upright social environment; actively to produce publicity content that targets foreign countries that are able to tell China and the Party’s stories well, and to present confidence and positive energy to the world.”

Source: Guangming Daily, May 17, 2017
http://news.gmw.cn/2017-05/17/content_24499987.htm

Business Daily: WannaCry Virus Disrupted PetroChina Gas Stations

On May 13 and May 14, Business Daily reported that a large number of PetroChina’s gas stations suffered major business disruptions due to the spread of the WannaCry virus. Over 20,000 gas stations in the PetroChina chain lost their Internet connection for more than 35 hours. Only 80 percent of the stations recovered after 35 hours. The impact of WannaCry spread across many provinces. Major cities such as Beijing, Shanghai, Hangzhou, Chongqing, Chengdu, Wuhan, Xiamen and Nanjing were affected. The stations could still pump gas. However, payment cards and Internet payment methods could not function. Basic cash transactions became the only settlement mechanism. After PetroChina identified the spreading trend within its network, the company proactively cut off the uplink connections of its stations in order to contain the damage. The biggest impact was actually one day ago (May 12) and a massive number of attacks of WannaCry “carpet bombed” many Chinese colleges and universities. PetroChina once had the highest market value in the world (surpassing ExxonMobil). Now it is in second place.

Source: Business Daily, May 15, 2017
http://www.nbd.com.cn/articles/2017-05-15/1105575.html

China News: Former Director of the National Bureau of Statistics Was Accused of Corruption

China News recently reported that Wang Bao’an, former Director of the National Bureau of Statistics, was accused of corruption in court. The prosecution filed the suit against Wang for illegally accepting bribery money totaling over RMB 154 million yuan (around US$22.3 million) between 1994 and 2016. During this period, Wang worked in the State Administration of Taxation, the Ministry of Finance, the Province of Heilongjiang, as well as the National Bureau of Statistics. Wang was accused of wrongdoing in the processes of obtaining government project approval, government procurement bidding, and internal promotion, in exchange for personal financial gain. Sometimes Wang accepted money indirectly via his relatives. Wang pleaded guilty in court immediately and would not appeal. The court will sentence him at a later time.

Source: China News, May 11, 2017
http://www.chinanews.com/sh/2017/05-11/8221288.shtml

The Chinese Government’s Influence on the U.S. Media Landscape

On May 4, 2017, the U.S.-China Economic and Security Review Commission (USCC) held a hearing, “China’s Information Controls, Global Media Influence, and Cyber Warfare Stategy.” Sarah Cook from Freedom House provided testimony outlining the Chinese Communist Party’s (CCP’s) strategies in spreading its propaganda overseas. Although her report was in English and not Chinese, her findings are important, so Chinascope has included them in a briefing.

The CCP’s Propaganda efforts have taken three primary forms:

1) Aggressive attempts to expand state-run media outlets’ reach and influence inside the United States. These efforts have included high-profile initiatives like Xinhua news agency’s advertisements in Time Square, the appearance of China Daily newspaper boxes on streets in major U.S. cities, and the launch of China Central Television (CCTV) America—recently rebranded as China Global Television Network (CGTN) America. In the Chinese-language media sphere, this effort has been going on for over 20 years, resulting in CCTV being accessible to over 90 million households in the United States and a series of free pro-Beijing newspapers displacing the earlier dominance of Taiwan and Hong Kong-affiliated papers.

2) Insinuating state-media content into mainstream media or other existing dissemination channels. Chinese officials and state-media reports have referred to this strategy as “borrowing the boat to reach the sea” (借船出海). This phrase refers to disseminating Chinese state-media content via the pages, frequencies, or screen-time of privately owned media outlets that have developed their own local audiences. This strategy has a long history of use in the Chinese-language environment, such as via the provision of Xinhua newswire content for free. In recent years, its robust expansion to English-language media has garnered much attention and public debate. One of the most prominent examples has been the emergence of China Watch—a paid insert sponsored by the state-run China Daily—that has appeared both in print and online in prominent U.S. papers like the New York Times, Washington Post, and Wall Street Journal. In November 2015, a Reuters investigation revealed that programming from the state funded China Radio International (CRI) was appearing on stations in 15 U.S. cities, including Washington DC, via intermediaries of a privately owned media group.

3) Co-opting or partnering with privately owned media to produce and publish content that serves Beijing’s aims: Not all pro-CCP propaganda appearing in U.S. media necessarily originates from writers and editors at Chinese-state run media outlets. Rather, Chinese diplomats and other officials have gone to great lengths to develop “friendly” relations with private media owners and reporters, encouraging them to produce their own content that promotes key narratives favored by Beijing. Outlets and diaspora media owners whose reporting portrays Beijing positively are frequently rewarded with advertising, lucrative contracts for non-media enterprises, joint ventures, and even political appointments. In several instances, Chinese state-media have also purchased small financial stakes in overseas media to solidify such a relationship. Examples of these dynamics are evident in two media entities whose content is disseminated in many parts of the United States. First, the above-mentioned Reuters investigation revealed that only part of the content aired on radio stations owned or leased by CRI’s U.S.-based partner G&E Studio originates from CRI. Other segments are produced by G&E Studio itself in California. Nevertheless, their messaging matches that of Chinese state propaganda. A second example is that of Phoenix TV, the second most widely available Chinese-language television station on cable in the United States. Owned by a former military officer with close ties to Beijing officials, Phoenix TV’s coverage is typically favorable to the CCP.

Censorship and other attempts to suppress the spread of information deemed undesirable by the regime have taken a variety of other, often more subtle forms.

– Direct action by Chinese diplomats, local officials, security forces, and regulators both inside and outside China. These measures obstruct news gathering, prevent the publication of undesirable content, and punish overseas media outlets that fail to heed restrictions.

– Economic “carrots” and “sticks” to induce self-censorship among media owners and their outlets headquartered outside mainland China.

– Indirect pressure applied via proxies—including advertisers, satellite firms, and foreign governments—who take action to prevent or punish the publication of content critical of Beijing.

Source: USCC, May 4, 2017
https://www.uscc.gov/sites/default/files/Sarah%20Cook%20May%204th%202017%20USCC%20testimony.pdf

Caixin News: China Railway Relies on Government Subsidies to Keep its Books in the Black

On April 29, Caixin News disclosed that China Railway Corporation receives subsidized funding in Q4 of each year, which helps to turn its net profit from red to black. According to the article, by the end of the third quarter in 2016, China Railway had lost 5.577 billion yuan (US$810 million), but for the full year of 2016, it reported total revenue of 907.4 billion yuan (US$131 billion), down 0.96 percent from 2015 while the company’s net profit was 1.076 billion yuan (USD$160 million) an increase of 58 percent from 681 million yuan (USD$99 million) in 2015. Meanwhile, the report said that China Railway Corporation carries total debt of 4.72 trillion yuan (US$680 million) up 15.12 percent from 4.10 trillion yuan (US$590 million) with a debt ratio that increased to 65.1 percent.

The following were among the posted comments on the article:
“Can the bottom line count as being profitable?”
“They are the only railway company in the country and still lose money. Who is paying for the loss?”
“A State Owned Enterprise relies on government subsidies. How can it be competitive in the global market?”
“China Shipping Company is the same. They receive subsidized funding from the government. They never show a financial loss”.

Source: Caixin, April 29, 2017
http://companies.caixin.com/2017-04-29/101084870.html

1,846 Top Executives of Publicly Traded Companies Resigned within One Month

Sina published an article which reported that from April 3 to May 3, 1,846 top executives in publicly traded companies in Shanghai and Shen Zheng resigned. Among those 649 left due to restructuring, term limits, health, or retirement reasons and 36 left due to illegal activities. Meanwhile 169 of those who resigned had an annual salary over 1 million yuan (US$140,000). The article quoted comments from a security law expert from the Central University of Finance and Economics who expressed concern over this phenomenon. “When a significant number of top executives resign from publicly traded companies, the stock market fluctuates because of it. Some of those executives sell the stock they own when they leave. This has had a direct effect on the secondary market.”

Source: Sina, May 4, 2017
http://finance.sina.com.cn/roll/2017-05-04/doc-ifyeycte8528547.shtml

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