interesting stories on China discussion

Well, I'm all for this, as China is very much my thing.

Odd story, this. It's kind of a stretch to pick out China as a "surveillance nation" on the basis of 20 million cameras. Britain has 5 million cameras - 1/4 as many as China - for 60 million people (less than 1/20 of the population.

But the international media does like to get on its high horse about China, because it doesn't like countries that aren't democracies. There's plenty wrong with China, but this would be pretty much at the bottom of my list.

I was last in China in December, but not during the pollution wave. I've spoken to a few friends there, and it sounds appalling at the moment.

Cars are certainly part of the problem, but the bigger problem is industrial pollution - the knackered old steelworks just outside Beijing is, I suspect, the single biggest culprit.

One thing worth noting about cars - something I'm sure you'll have noticed on your trip - is that most cars are new, and burn their fuel quite cleanly.

But you're right. There are almost no Priuses. Toyota has several factories in China, but as far as I'm aware, they're not making Priuses (there were plans to make them in Tianjin, but I think these were abandoned). And you're absolutely right - the stop-start traffic in Beijing and Shanghai is perfectly suited to hybrids.

A few Chinese companies have developed hybrids, but they haven't been massive sellers. Chang'an has a few hybrid models, and the BYD F6H is an electric car with a petrol generator, like a Chevy Volt (although BYD beat GM to the draw by a couple of years on that one). But you really don't see many around. There are a lot of government grants available for the development of clean cars, but it's not happening as quickly as one would hope.

 

If we're doing intriguing China stories, this one intrigues me.

Chinese Hackers Infiltrate The New York Times | Security, Hacking

Apparently, the New York Times has been hit by allegedly-Chinese-government hackers since it broke the story of Wen Jiabao's US$ 2.6 billion family fortune. The article suggests that this is a Chinese government move, and that it's revenge for the story.

The general view among those who know about the machinations of the upper levels of the Communist Party is that the original story was fed to the NYT by people in the conservative wing of the Communist Party (Li Peng and his allies in particular). The story was leaked partly as an act of revenge for the arrest of Bo Xilai, and partly to aid the conservative wing as it fought to stack the decks of the new Politburo Standing Committee. And it worked: it made Wen look bad, and it helped the conservative wing get a lot more of its people onto the Standing Committee than anyone had expected.

It's the conservative wing of the Party that tends to support hacking attacks on foreign targets, but the NYT did exactly what the conservative wing wanted it to do, so the conservatives would have no real reason to attack the NYT. The reformist wing of the Party has the motivation to attack the NYT - it damaged them quite badly, and slowed reform in China as a result - but hacking attacks aren't the reformists' MO, and it doesn't have the military support to do that sort of thing in what is essentially an internal battle.

So I'm intrigued. I don't know who is attacking the NYT, or why. Or whether it's really happening. There's something strange going on here.

 

Yes, the Raytheon thing doesn't surprise me at all. An attack on a company that, for whatever reason, is perceived to be threatening China's security, and an attack that gives the Chinese army access to defence technology, makes perfect sense. Lots of countries do that - there was the US cyber-attack on Iran's nuclear facilities a year or two ago, for example, and China is alleged to have engaged in similar attacks on defence establishments and military technology companies in several countries. Most people in the Chinese leadership would see this as dealing with an external threat, directly or indirectly.

What confuses me about the NYT story is that it just doesn't make sense. This is a domestic dispute within China - specifically, between about 20 people who hate each other at the top of the Party - rather than an external threat to China. And within that domestic dispute, one side has the means, but not the motivation, and the other side has the motivation, but not the means or the inclination.

 

That's really not the only way to look at the situation. What you have is a large internet exploitation organization that is not going to take paid vacation while waiting around for some official policy direction. There may be areas off limits, but they will expend effort on the most inviting targets since that is their job. How the results of the attacks pan out should not be used as the reason for the attacks being initiated.

Back in the 1960, the CIA in the US was very loosely controlled and did quite a few dirty tricks and operations that did not have much oversight. The CIA's Bay of Pigs Invasion of Cuba was hardly conceived and directed by the President or Congress. However, they had to take responsibility for the horrible results. Afterword, it was realized that more oversight was needed. I would expect China to repeat a lot of the same temptations that every spy and secret organizations succumb to. Namely, those organizations doing what they were set up to do.

(PS. Your posts are vastly better than nearly any media opinion piece.)

 

The vehicle fleet emission in BJ is dominated by diesel trucks. Most of the cars are young and have catalytic converters. From reports it seems to me that urban air there is rather like San Juan Puerto Rico, where truck oil changes go into the fuel tank, out the stack, and your floor needs mopping the next day. San Juan is way better ventilated though.

Lat time I was in 'the northern capitol' I saw several cars with socks covering the last digit of their license plates. Could not fathom was going to fool anybody (re the driving ban), and nobody in the car had an explanation. Another great photo opportunity missed...

 

Ah, yes, I see your point here. I'm looking at things at the top, but forgetting to look at it from the bottom. And I do know that a lot of the people in these "internet exploitation organisations" are computer geeks who don't know a great deal about China's internal political machinations: they're more driven by blind patriotism, and some might not have realised that the NYT article was part of an internal power battle at the top of the Party.

It seems unlikely, though, that these teams would be encouraged to continue the attacks. It may be that the government organisations did stop, and the continuing attacks come from freelance hobbyists driven by a genuine sense of patriotism (I am using the polite word for xenophobia here) rather than by orders from above - an awful lot of Chinese hackers fall into this category.

If the government teams were encouraged to continue the attacks, that would suggest a couple of things. First, it may be that the government decided the attacks should continue, because that makes it look like the NYT article was an attack on the Chinese government from outside, and covers up evidence of an internal battle. And second, it shows that the anti-reform faction still has a lot of power - something that was also demonstrated by the make-up of the new Standing Committee.

I'm going to have to look into this. It'd be interesting if the MSS and PLA really do have units that are as out-of-control as those CIA units in the 60s.

Gosh, thank you!

 

China will overcome the USA as the world's largest economy in our lifetimes unless there political system ruins it. The USA will still be the heart of Capital creation and lending.

 

Looks Like LA in the seventies.

 

You wouldn't believe how many luxury cars there are in China on military plates. It used to be that you could pay a bribe to get the plates. There's also no shortage of fake military plates.

They're useful because they can get you access to cities that a normal licence plate won't get you into without paying a fee. And they mean you can park wherever you like. But more than anything, it's a prestige thing.

And it allows you to be a fake general. That's something that comes up a lot in my line of works. Some of my clients are companies that have fallen victim to scams: often, they've invested money in a Chinese company that doesn't exist. "Oh!" they say. "But the guy was so well-connected! He took me to his lovely office in Beijing," [no - his rented serviced office in Beijing: on three occasions with different clients, the same rented serviced office on Wangfujing in Beijing] "and he drove me there in his car which was on military plates because his dad's a General!" [No - he drove you there in a borrowed black Audi on possibly-fake military plates: his dad is a goatherd in Shaanxi.] Last year I had a client who had her roller-coaster stolen by one of these people. Which is just one of those things you never expect to happen.

The Audi exemption is probably specific to Chinese-made A6Ls: they're the default high-level government car in China. They're quite nice, except that the suspension is made of rocks.

Nothing says corruption like a Cayenne on military plates. Hangzhou in particular is full of them.

 

Ah, yes. Back in my youth, I was the token white guy occasionally.

Yes, we do a lot of this sort of thing for investment banks. The NYSE and Nasdaq have done a horrible job on due diligence, and the big 4 global accounting firms sign off on listing documents without ever checking out anything questionable. The Chinese authorities have been singularly unhelpful on this too.

Pretty much the only people who are doing any decent due diligence on US-listed Chinese firms are me (and I do it for investment banks and institutional investors, rather than for the sort of people shown on that story)) and Muddy Waters (who do it because they're short-selling).

Instead of reacting to the spate of Muddy Waters events (Focus Media, Sino Forest, etc, where MW exposes US-listed Chinese companies for the frauds that some of them are) by tightening up corporate controls, the State Administration of Industry and Commerce brilliantly decided that the best thing to do was to restrict access to corporate financial data - they thought that the problem would go away if they hid it. I had something of an argument with the SAIC about this (and, eventually, I won). The problem is the usual one of Chinese political cliques: SAIC thought that hiding the information was the best solution, while the Ministry of Commerce thought that perhaps making due diligence easier might be an idea.

There has been a change in the tide, though. That story was from January this year, and was already a bit out of date: after a nadir in June and July last year, I'm getting a lot more cooperation from the Chinese authorities on this sort of issue now.

 

Chinese car companies - State-owned and private - are on a bit of a mission to acquire technology. And when you've got all those laid-off, highly-experienced people available in Detroit, it's an obvious place to go. Geely (the company that bought Volvo a few years ago) bought a transmission company in Australia. And Shanghai Automotive bought Rover Group in Britain (Chinese quality control has been something of an improvement over British QC, apparently).

This sentence worried me, though:

If you're trying to work out how to put together a good chassis, is Detroit really the place to look? Does China really want to replicate the magnificent handling of the Ford Crown Victoria or the Chrysler Sebring?

Mind you, they are doing the same thing in Germany.

It's worth noting that the Chinese aren't the only ones to have done this. A few years ago, I had a part-time employee in Seoul: he was a student at one of SK's best universities. Before university, he'd had to do national service. He did this for South Korean Military Intelligence. His job was to pretend to work for the Chosun Ilbo (newspaper) as a journalist, in Detroit.