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China’s Draft Cybersecurity Law Allows Cutting Off Area-wide Internet Access

China’s recently proposed draft cybersecurity law makes it clear that the national Internet information authorities should perform the duties of supervision and management of network security. Once a publication or transmission of information that is prohibited by laws and regulations occurs, the authorities must demand the service provider to stop the transmission network operator, take measures to eliminate the information, and save the relevant records. When the above mentioned information comes from abroad, the authorities must notify the relevant agencies to take technical and other necessary measures to block the dissemination of the information.
The Draft emphasizes real name registration, requiring that Internet service providers should require the users to submit real identity information at the time of signing an agreement or confirmation or service. If the user does not submit real identity information, the service provider is not allowed to provide the related services. Any service provider who does not require users to submit real identity information, or who provides service to users who have not submitted their real identity is subject to a fine between 50,000 yuan (US$8,053) and 500,000 yuan (US$80,530). That provider may also be ordered to suspend all relevant business, stop or close operations, or have its relevant business license revoked.
The Draft classifies the websites or online systems that have a large number of users into the category of critical information infrastructure. It requires that the operator of the critical information infrastructure should collect and store important data such as citizen’s personal information within its borders. Any operator that stores Internet based data overseas, or provides data to overseas organizations or individuals without security assessments is subject to a fine between 50,000 yuan (US$8,053) and 500,000 yuan (US$80,530). It may also be ordered to suspend all relevant business, stop or close its operation, or have its relevant business license revoked. Executives directly responsible and other personnel directly responsible are subject to a fine between 10,000 yuan (US$1,611) and 100,000 yuan (US$16,110).
The Draft makes provisions for Internet security monitoring and an early warning and emergency response system. It requires that, when an Internet security incident occurs, the authorities at government offices above the county level should immediately start the network security emergency response plan and release the public-related warnings and relevant information. The Draft makes provision for Internet control: "For safeguarding national security and maintaining public order, out of the need to deal with major emergency social safety incidents, the State Council or provincial governments under the approval of the State Council can adopt temporary measures including limiting Internet communications in some areas."
Source: People’s Daily Online, July 9, 2015
http://it.people.com.cn/n/2015/0709/c1009-27275737.html

China IPOs Blocked in the Near-Term

Late on July 4, the Shanghai and Shenzhen exchanges announced that 28 planned IPOs of “A Shares” will be delayed, 10 at Shanghai Stock Exchange and 18 at Shenzhen Stock Exchange. On July 3, China Securities Regulatory Commission expressed that, in light of the recent market situation, there would be no new IPOs in the near-term and the number and volume of deals down the line would be greatly reduced. 

This is the ninth "A Share" IPO delay in history.  The previous delays were as follows:
1. July 21 to December 7, 1994 
2. January 19 to June 9, 1995 
3. July 5, 1995, to January 3, 1996 
4. July 31 to November 2, 2001 
5. August 26, 2004, to January 23, 2005 
6. May 25, 2005, to June 2, 2006 
7. September 16, 2008, to July 10, 2009 
8. November 16, 2012, to December 30, 2013 
China’s A shares are generally only available for purchase by mainland citizens; investment from outside mainland China is restricted to select foreign institutions or under mutual market access arrangements between the Shanghai Stock Exchange and the Hong Kong Stock Exchange, subject to aggregate and daily quotas.

Source: The Beijing News, July 5, 2015 
http://epaper.bjnews.com.cn/html/2015-07/05/content_585764.htm

VOA Blog: He Qinglian on Blaming the Stock Market Plunge on a Foreign Conspiracy

Well known economist and sociologist, He Qinglian, who blogs regularly on Voice of America, looked into the theory that has been widely circulated in China that a foreign conspiracy accounted for the crash in China’s stock market causing Beijing to roll out a slew of support measures to stem the stock market slide. 

In her July 5 blog, He Qinglian noted that, over the past year, the total market capitalization of publicly traded companies in the Shanghai and Shenzhen stock exchanges has grow by US$6.7 trillion to US$10.05 trillion, far exceeding that of the Japanese stock market at around US$5.0 trillion. 
One critical step in Beijing’s game plan is to overtake the US equity market cap of US$25 trillion and to have its A shares included in MSCI’s Emerging Market Index (an index created by Morgan Stanley Capital International)US$1.7 trillion in funds worldwide track this index. According to MSCI’s estimate, a decision to include domestic Chinese stocks in the index would have injected an estimated US$400 billion of funds from asset managers, pension funds, and insurers into mainland China’s equity markets over time. 
On the evening of June 9, 2015, MSCI decided against including mainland China’s equity in the gigantic MSCI Emerging Markets Index, citing a number of regulatory matters it has yet to iron out with Chinese securities agencies. 
When refuting speculation that foreign institutions were accountable for the crash of China’s stock market, the author questioned Beijing’s confidence and ability in managing the economy through artificially propelling a bull market, attracting foreign investors to fuel its growth, and counting on Chinese investors’ patriotism to reverse the stock market plunge. 
Source: Voice of America, July 5, 2015 
http://www.voachinese.com/content/heqinglian-blog-china-economy-20150705/2849767.html

Xinhua Exclusive Report Says Western Media Incited Turkish Anti-China Demonstrations

China’s state media Xinhua published an exclusive report to “disclose” information about the recent Turkish demonstrations against the Chinese government. In asking what caused the demonstrations, the report quoted unnamed analysts who “point out that a few Western media have long been distorting China’s ethnic policy and the living status of those in ethnic minority areas. A small group of agitators and their reporting of rumors that [China] banned the ‘Ramadan fast’ in the Xinjiang Autonomous Region have brought about the recent anti-China protests in Turkey.” 

As for why the demonstrations are worsening to such a level, Xinhua News Agency reporter Zou Yue in Ankara  said that since the holy month of Ramadan began on June 18, a few Turkish media quoted foreign media that said that Xinjiang has banned some Muslims from fasting for ‘Lent.’ Thereafter, related reports were spread on Twitter, Facebook, and other social networking sites. Some Turkish nationalists have posted pictures on social media of so-called ‘Chinese police beating and maiming Uighur women and children.’ The Turkish mainstream media subsequently also made the relevant reports.” “After the incitement of various distorted reports, anti-China sentiment in Turkey increased rapidly.” 

Source: Xinhua, July 6, 2015 
http://news.xinhuanet.com/world/2015-07/06/c_127989266.htm

HK Mingpao: New Poll Showed Impression of Beijing Getting Worse

Mingpao, one of the primary Hong Kong newspapers, recently reported on a poll of Hong Kong residents. The Hong Kong Institute of Asia-Pacific Studies of the Chinese University of Hong Kong, a widely trusted polling organization, administered the poll. It tracked the Hong Kong residents’ level of confidence in the “one nation, two systems” policy and was taken not long after the Hong Kong Legislative Council vetoed the proposed political reform plan that Beijing supported. According to the poll, around 52.4 percent of the people had weakened confidence in Hong Kong’s “high degree of autonomy.” A record high of around 36.2 percent of the HK residents surveyed said they had a bad impression of the central government – the same number was 4.3 percent in 2007. At the same time, only 20.9 percent of the population had a good impression (the same number in 2007 was 58.2 percent). 
Source: Mingpao, June 29, 2015
http://bit.ly/1RYTHos

HSBC PMI Number for Chinese Manufacturing Remains Low

Well-known Chinese news site Sina recently reported that the June HSBC PMI (Purchasing Managers Index) number for the Chinese manufacturing industry remains low, at 49.4. The employment sub-index under the manufacturing PMI reached a six-year low (46.6). Despite the slight recovery of new orders and new export orders, the manufacturing industry continues to cut jobs. Also in the news, the Chinese Mainland’s new media company Caixin Media just announced that, starting August 1, Caixin Media will replace HSBC to sponsor the same PMI number, which has been managed and calculated by the British market study company Markit. Caixin confirmed that there will be no change in the data collection methodology or the formulas. The HSBC PMI is typically lower than the official PMI number that the Chinese government releases. PMI is an indicator of financial activity reflecting purchasing managers’ acquisition of goods and services. A PMI number below 50 typically reflects a decline.
Source: Sina, July 1, 2015
http://finance.sina.com.cn/money/forex/hbfx/20150701/102122561455.shtml

BBC Chinese: Chinese Military Audit Discovered Numerous Financial Issues

BBC Chinese recently reported, based on Chinese media coverage, that the Chinese authorities conducted a wide scale military audit starting in February. They discovered numerous financial problems. The key issues include blocking the proper distribution of military funds, reducing the released funding level, and the misappropriation of funds. Other findings include opening inappropriate bank accounts, spending without a budget, forging invoices, and expanding capital investments without approval. The Chinese military system is one of the key areas for Chinese President Xi Jinping’s anti-corruption movement. In the past couple of years, many high ranking military officials have been captured, including one top level general. In the nineties, the Chinese military was prohibited from engaging in civilian business transactions. However, in recent years, many military officials have, once again, gotten deeply involved in civilian businesses. 
Source: BBC Chinese, July 2, 2015
http://www.bbc.com/zhongwen/simp/china/2015/07/150702_china_army_corruption

China Consumes Half of the Antibiotics in the World

Xinhua reported on a research study that the Guangzhou Institute of Geochemistry, which is part of Chinese Academy of Science, had recently conducted. The study found that the consumption of antibiotics in China was 162,000 tons (147 million Kilograms) in 2013 which accounted for half of the total usage in the world. Of this total, 52 percent was for animal use and 48 percent was for human use. The study also found that over 50,000 tons (45 million Kilograms) of antibiotics was discharged into soil and water each year. The statistics also revealed that China’s average antibiotics consumption per person was 5 to 8 times higher than in Western countries and that antibiotics were found in close to 60 percent of children’s urine samples. The expert stated that the over usage of antibiotics was driven by two factors. One is that doctors like to prescribe antibiotics in order to seek a speedy recovery for their patients and the other is the higher profit margin of antibiotics which can bring economic benefits to the hospital.

Source: Xinhua, July 6, 2015
http://news.xinhuanet.com/fortune/2015-07/06/c_127988141.htm