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Blogs » Politics » Chen Guangcheng’s Former Prison Evaporates


Chen Guangcheng’s Former Prison Evaporates

Posted: 07 Jun 2012 08:56 PM PDT

The village of , where and his family were held under illegal house arrest, became infamous for its elaborate system of walls, guards, floodlights and cameras designed to keep Chen in and visitors out. This security apparatus gathered substantial economic momentum, one probably reason why it outlived his incarceration; it was reported to remain in place as recently as last week, over a month after the activist's escape, complete with a guard post disguised as a watermelon stand on the road to the village.

Last weekend, overnight, the security presence vanished. From Didi Tang at the Associated Press:

So thorough was the cleanup this past weekend that locals said the cameras trained on Chen home had been removed and the high voltage street lamps dimmed. Two adjoining huts built at the village's entrance to house the guards — and where outsiders trying to visit Chen had been beaten — had been torn down. Even the trash they piled up had been taken away.

"It was as if the whole thing evaporated," said Chen's older brother, Chen Guangfu, who lives in the village with several others in the Chen family. "I feel liberated."

[…] Rights lawyer , a friend of Chen Guangcheng, said local authorities likely got rid of the surveillance to destroy evidence ahead of a promised investigation by the central government.

"If Beijing wants to go through the motion, it can do so" with the absence of evidence, Jiang said. "But if Beijing wants a real investigation, it can still do so because there are plenty of witnesses."

Such an investigation is one of two urgent remaining tasks in Chen's case, argues Ng Tze-wei at the South China Morning Post.

[…] The second is guaranteeing the fair handling of the prosecution of Chen Kegui, the activist's nephew, who was arrested and charged with "killing with intent" after he waved a knife and injured three officers who barged into his house on April 26 in , , after his uncle's escape came to light.

Beijing lawyer Ding Xikui said the last time Chen Kegui's wife heard from him was via text message in the early hours of April 27, when he asked her to help him hire a lawyer. But when Ding and another renowned defence lawyer from Shanghai, Si Weijiang, tried to approach the police bureau in charge of the case, they were told that Chen Kegui had already requested counsel, so neither Ding nor Si could see him.

Assigning government-friendly in sensitive cases has become a common tactic for mainland authorities in recent years – even though it is against the spirit of the law, as it strips the defendant of the right to select a lawyer.

In this case, the appointment of a legal aid lawyer is particularly ridiculous because legal aid exists to protect of the rights of defendants who cannot afford a lawyer. It should be granted only when a defendant can't afford a lawyer, rather than be used as an excuse to prevent a defendant hiring a lawyer of his choice.

While the grip on Dongshigu may finally have relaxed, politics and money continue to drive the expansion of extra-legal security operations against "perceived troublemakers" elsewhere. From Charles Hutzler at the Associated Press:

While China has long been a police state, controls on these non-offenders mark a new expansion of police resources at a time the authoritarian leadership is consumed with keeping its hold over a fast-changing society.

"Social that no one has ever heard of have 10 people watching them," said Nicholas Bequelin, a researcher with . "The task is to identify and nip in the bud any destabilizing factors for the regime."

Mostly unknown outside their communities, the activists are a growing portion of what's called the "targeted population" — a group that also includes criminal suspects and anyone deemed a threat. They are singled out for overwhelming surveillance and by one rights group's count amount to an estimated one in every 1,000 Chinese — or well over a million.


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Wang Lijun to get less than 10 years: Boxun

Posted: 07 Jun 2012 07:29 PM PDT

Wang is said to have struck a deal with the government to forego his own attorney for a lighter sentence. (Photo/CFP)

The former Chongqing police chief Wang Lijun will receive a prison sentence of no more than 10 years for his role in the Bo Xilai political scandal, reports Boxun, a US-based citizen journalism website sourced mostly by anonymous users.

Wang sparked China's biggest political storm in decades when he triggered the downfall of his boss, the former Chongqing party chief Bo Xilai, by attempting to seek asylum at the US consulate in Chengdu and providing American diplomats with evidence of Bo's crimes on Feb. 6. During his 30-hour stay at the consulate, Wang allegedly divulged to US officials evidence of corruption committed by Bo, including covering up his wife's murder of British businessman Neil Heywood. Bo, once tipped to rise to China's highest circle of power, is now detained on unspecified "serious discipline violations" while his wife, Gu Kailai, has been arrested for Heywood's murder. For his part, Wang faces charges of treason.

A Chongqing source said to be close to the government's investigation told Boxun that Wang has reached an agreement with authorities to forgo his right to appoint his own defense lawyer in his upcoming trial. Instead, Wang will accept a government-appointed attorney and in exchange will receive a jail term of less than 10 years, the source said.

The source added that Wang's wife is currently in Beijing, where he is being held, and has been permitted to see him from time to time, while Wang himself has only been allowed to make the occasional phone call to his parents.

Under Chinese law, an individual who colludes with a foreign country or endangers national security faces life imprisonment or a sentence of not less than 10 years. The offender may be sentenced to death if the crime is deemed especially serious.

A lawyer who wished to remain anonymous told Boxun that Wang's sentence should not exceed 10 years if all he did was enter the US consulate without Chinese authorization and reveal the crimes of other individuals. On the other hand, if during his time at the consulate Wang released information that compromised national security, such as strategic or military details, he would surely face the death penalty, though the sentence could potentially be transmuted for his assistance in the Heywood murder case, into which the British government wants to see a thorough investigation, the lawyer added.

Due to its complexity and political sensitivity, the earliest that the case will enter court is the end of June, Boxun said. Despite earlier reports from Hong Kong media that the trial will begin in Chengdu this month, Boxun said it is more likely to take place in Beijing. The news agency also said that the trial will not be open to the public as it involves matters of national security.

Source: Want China Times

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Life for Bo Xilai, Wang Lijun; death for Gu Kailai: Boxun

Wang Lijun to face treason charges

Wen Jiabao criticized for Bo Xilai comments: Reuters

Verdicts in Bo Xilai affair to be delivered next month: Global Times

Hu Jintao sought Jiang Zemin's advice in Bo Xilai affair
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Another Year, Another Wild Gaokao

Posted: 07 Jun 2012 08:57 PM PDT

Over 9 million Chinese students sat for Thursday's National Higher Education Entrance Exam, or , where AFP's Beh Lih Yi reports that intravenous drips, hormone injections, transmitters and ear pieces only spelled the beginning of the "drastic measures" students took to land one of the 6.85 million university spots up for grabs:

Some of the more affluent parents have rented houses close to the 7,300 exam venues across the country, while so-called "high-flyer rooms" are being offered in the northern port city of Tianjin, according to the state-run China Daily newspaper.

The special hotel rooms — which cost up to 800 yuan ($126) more than an ordinary room — are billed as having previously been rented out to someone who scored high points in the exams.

Rooms with lucky numbers such as six — which symbolises success in Chinese culture, or eight — which represents wealth — are also favourites.

The exam has also given rise to a new and lucrative industry — the gaokao baomu — or "exam nannies" — who are tasked to look after students during the exam period.

"The nannies are well-qualified with at least a college-level degree," said Jennifer Liu, marketing manager at Coleclub — an agency that provides household help and has offered the service since 2009.

Students flocked to test centers across the country, some traveling by train from their village, clean clothes on their backs and their dreams in tow. The Wall Street Journal posted a photoseries capturing exam-day scenes from across the country, and Sina has published a photoseries stretching across the 35 years since the gaokao resumed after its hiatus. Offbeat China reposted the photos with translated captions:

Gaokao is a farewell to youth. After Gaokao, one starts to go through the real ups and downs of life. Summer is the time to harvest memories. Collectively, there seems to be no difference. Yet individually, everyone is so unique. At a time when another generation of youth bid goodbye to their teen years, deep emotions from the old days strike back – it's a journey we all went through, followed by new comers year after year…

The Globe and Mail's Mark MacKinnon reports that copies of the test were allegedly available online for up to $1,000 each despite assertions from the Ministry of that they were kept under armed guard in secure locations. 73,000 students took the exam in Beijing, according to the China Daily, where eager parents waited and some students planning to sit next year's gaokao staked out the exam locations to "get a feel" for the experience:

"I have come to the spot since grade one in junior school to feel the tense atmosphere, and thus to make myself better prepared when it is my turn," said Meng Fanzhao, now in his second year in high school.

"The competition for a prestigious seemed to start when my son went to school when he was 6 years old. Children compete for higher scores to enter a better middle school, then a better high school. And all this preparation is for today's fight," said Zhao Xichen, a father in Shaanxi province, whose child attends gaokao this year.

"I feel my son will be relieved after this final fight, and so will I," Zhao said.

While the gaokao may still generate fierce competition, its appeal – and the draw of Chinese universities – may be waning. The Global Times' Gao Lei writes that students still want to go to college, but are increasingly looking elsewhere:

Students don't believe they can have better prospects if they study in universities in China," said Xiong Bingqi, an education expert. His concern is emphasized by Long Yongtu, former secretary-general of the Boao Forum for Asia, who remarked in a recent speech that China can only become successful in soft power when it becomes a prime destination for higher education.

Although China made spectacular achievements in building its economy since the reform and opening-up drive, its soft power has continued to lag behind, forcing many promising students to look to other countries for further education. Official data released early this year showed that 70 percent of high school students in Beijing prefer to receive higher education overseas as that would make them more competitive.

Even for those already studying in top Chinese universities like Tsinghua, it is the dream of many to go overseas. It's no wonder that there is a joke going round that Chinese universities are actually preparatory courses for top US universities.

China's universities have failed to put up a good fight against competition from the West. While they have been expanding their enrollment quotas to attract more students, the quality of their education has gone in the opposite direction. A lack of innovation and poor management have also obstructed their development.

BBC News spent the past year following students at a high school in Shanghai, one of the first Chinese cities to set limits on homework and mandate minimum exercise requirements for students in an attempt to cultivate a more balanced education based on real learning. Tang Xiangyang, who sat for the exam in 2003, writes for The Economic Observer about the disconnect between some of the questions on today's exam and the real issues facing modern China:

What should the examiners in Guangdong – the epicenter of China's transformation – be expecting?

Do young students enjoy living in a world where milk is poisoned, cooking oil is taken from the gutter, pills are made from used shoes and it's not just the magic mushrooms that are hazardous? If not, what era would they prefer? One from the past, when the air was clean and the water was harmless, or one from the future, which assumes that we can resolve the problems of today?

What about the examiners in Jiangsu?

How will their students resolve the tension between anxiety and patriotism? Perhaps they'll decide that people can't simultaneously love their country and worry about their health and safety.

Finally how would the Jiangxi pupils have deciphered their tongue-twisters? They had to balance their pride at China's economic achievements with their uneasiness at the damaged environment and toxic food.

As hard as the gaokao is, adds Jeremiah Jenne at Jottings from the Granite Studio, "it's nothing" when stacked up against China's imperial civil service examination. And despite all the criticism, senior China Daily writer Liu Shinan writes that the gaokao is still the best way forward for Chinese students:

China's education system may need a fundamental change but we have to admit that the current gaokao system is the only fair way for most children, especially those from unprivileged families, to have a chance of a good future for themselves and their families. This is the reality of this country. With the nation's economic life dominated by those with vested interests, for those children from ordinary families standing out in the grueling gaokao is the only hope they have for a better future. Telling these children not to work so hard and enjoy a more carefree childhood is telling them to give up their dreams. It sounds humane but is unrealistic.

So do not criticize the gaokao before working out a better way for sustainable and straightening out other complicated, more influential matters in China's political and economic lives. Let's forget about all the good and bad of gaokao and wish the kids success.


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Baidu Map speaks some truth

Posted: 07 Jun 2012 12:37 PM PDT

Baidu Map speaks some truth

The following photo has gone viral on Chinese microblogsphere, again receiving heavy criticisms from the public.

It shows the search results of the numbers of the country's welfare organizations against the governmental organs, armed forces and media, triggered by the Baidu Map (It looks the Google Map is being blocked by China now, by the way).

In stark contrast to the considerable amount of toll stations, governments, 5-star hotels, nightclubs, armed forces (under the command of CCP), prisons, police stations, city urban administrative enforcement bureaus and TV stations (state-owned media), the orphanages or poorhouses only have a pitiful amount.

In fact, putting aside netizens' mockery of the mysterious nation building on the so-called "socialist system with Chinese characteristics," the photo is not so correct. For example, if you search "福利院 (the house for old people, orphans and disabled children)" instead of "孤儿院 (the house for the orphans)," you'll have a handful of them with the result.

But anyhow, netizens' reactions to the photo has very well told that the regime is gradually losing the support of its people.

Baidu Map speaks some truth

Pu Zhiqiang: How to Handle the Police

Posted: 07 Jun 2012 07:34 PM PDT

At Slate, William J. Dobson profiles renowned rights lawyer Pu Zhiqiang, a veteran of , signatory and friend of , and defender of figures such as and . The profile is taken from Dobson's book, The Dictator's Learning Curve: Inside the Global Battle for Democracy.

Pu has a powerful presence. With a crew cut and a strong jaw, this rights lawyer is large, and solidly built. His shoulders and limbs seemed to occupy his entire side of the booth. With a cigarette and a wry grin, he speaks in short declarative bursts, with more of a growl than a voice. Of course, the secret police know we are meeting, he told me straight away …. Knowing that they had listened in on the phone call, Pu informed them of our meeting a day earlier, although he tried to allay their concerns. "I told them we set this appointment a long time ago, that it has nothing to do with the thing you care about, the jasmines," says Pu. "If you try to stop me from meeting someone, that's illegal. You can do your job, but you cannot stop me from doing what I'm doing. If you disagree, detain me, take me away."

I had never met Pu, so I was surprised to hear how brazenly he addressed the security officers who tailed him everywhere. What did they say?, I asked. "They didn't say anything," Pu replied, taking a long drag on his cigarette. "I told them without asking them. I meet my friends with their permission? Bullshit."

[…] What struck me most as Pu talked into the night about how he worked the seams of his country's authoritarian system was the way he dealt with the people he knew best: the secret police dispatched to monitor his every move. His tactic, as much as anything, seemed to be to humanize them. They may be on opposite ends of a fundamental disagreement—whether the rule of the is legitimate or not—but that did not erase his interest in dealing with them as people. When I raised this with him, his brawny frame rose in its seat. "I respect them, I respect them. I constantly tell them what the procedures are," Pu replied, stubbing out his fourth cigarette to emphasize the point. "If you come to my office and you want to detain me, OK, then there's a procedure to go through. You need a certificate to do that. They can't provide it, so the result is we have dinner, we drink, we talk with each other. We need to face the secret police. Why not try to change them, if you have the chance to do that?"

This approach of Pu's, similar to Ai Weiwei's, is illustrated by his tweeted account of his three-day detention in October 2010, after the announcement of Liu Xiaobo's Nobel Peace Prize. Pu concludes by saying of his interrogator (from CDT's translation):

Actually [Dong Yansheng, the local Deputy Director in the Domestic Security Department] is not a bad man. He is from the background of criminal police and good at what he does, and basically kind to his buddies and even enemies like me. It is not easy to be in the domestic security police force. He is just in the role of a police officer, so he and I always clash. Once he overcomes his own mental block, I believe we eventually will be friends.


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Photo: Suzhou Creek, Shanghai, by Remko Tanis

Posted: 07 Jun 2012 07:03 PM PDT

Suzhou Creek, Shanghai


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What to Make of China’s New Internet Law

Posted: 07 Jun 2012 04:06 PM PDT

Chinese authorities: little emblem, big impact

Chinese Internet regulations are again the talk of the town. Just over a week after Sina Weibo, China's Twitter, began to implement its much-discussed community policing arrangement, China's State Council Information Office has posted a Chinese-language draft of its revised Internet law. Entitled "Methods for Governance of Internet Information Services," the law is much broader and more complex than the one currently in effect.

This new draft law, which descends straight from the highest reaches of Chinese administrative authority, appears to pack a punch. Unlike the law currently on the books, this draft explicitly requires microblogs, blogs, and discussion fora to implement real-name regimes for their users. Currently, only micoblogging sites like Sina and Tencent have this requirement, although it is being slowly and porously implemented.

Strictly speaking, the real-name requirement extends to all "those who provide service allowing Internet users to publish information to the public" (提供由互联网用户向公众发布信息的服务). This could include social networks, sites that allow comments on their articles, or pretty much any platform that allows for user-generated content to be made publicly available.

The draft law also proposes to make life harder for Internet platforms in other ways. It requires more forms, more approvals, and more registrations. It requires that sites store as few as six and as many as twelve months' worth of their activity in daily logs available for inspection, whereas current law requires 60 days' worth. It also explicitly assigns personal (个人) liability to offenders in a way the current law does not.

What the change means, in real life

Despite the look of it, this not a sea change. The current law already assigns criminal liability to any service providers, broadly defined, who disseminate speech fitting any one of nine categories of harm. Moreover, Chinese authorities already exercise Internet control as they see fit, shutting down blogs and forums, occasionally arresting "bad actors," and requiring Weibo, or China's Twitter, to implement real-name registration.

Instead, it's the message behind the law that matters, and the message to China's social media is clear: We can shut you down. Providers of social media platforms will surely sweat when reminded by the State Council that their businesses merely exist at the pleasure of those in power. The law's preamble now lists "protecting national safety and public interest" (维护国家安全和公共利益) as one of its objectives, and adds that which "incites illegal gatherings" (煽动非法聚集) to the category of illegal speech. This signals that Beijing is acutely aware of the potentially destabilizing power of China's blogosphere.

Time to sweat, but not to panic

Beijing, however, is unlikely to pull the rug out from China's social media. It is too useful to Chinese authorities, both as a steam valve for citizen discontent and as a window into public opinion. This may be one reason the law contains significant wiggle room. For example, it requires that public Internet platforms require their users to register with their real names–however, it does not assign platforms responsibility if users somehow find a way around the requirement. This opens the door for foot-dragging in the implementation of any real-name system, a tactic that Sina has already seemingly perfected.

The law also provides that first-time offenders be given a warning, and an unspecified amount of time to correct their mistakes before more severe action is taken. This means Internet companies won't be blindsided by an enforcement action. While the time they are given to "correct" mistakes could be kept short by officials intent on squeezing them, it could also be extended indefinitely.

If this regime sounds vague, that's because it is. Chinese statutory law often contains broad delegations of authority, with words like "should" where a U.S. lawyer, for example, would expect to see "must." Practically speaking, officials in China exercise a great deal of discretion, and law is written to be a grant of authority, not a limitation.

Vague law, uncertain future

Netizens can stay calm, but the masters of the Internet should worry

So what's next for China's blogosphere? The draft law is open for comment until July 6. (For those interested in giving their two cents, you can email the State Council at gxbwz@scio.gov.cn or call them at +86 (010) 5888-0320. God speed.) After it takes effect, barring substantial changes to its wording, microblogging platforms, blogging platforms, and even search engines will have six months to get their troublesome licenses or face being shut down.

None of this will likely cow China's netizens. Rightly convinced China revoles around realpolitik, they tweet away without regard for the letter of laws they have never bothered to read. Even Sina's much-ballyhooed changes to its own user agreement have not appreciably changed Sina users' behavior.

But executives at China's premier online media platforms are surely sleeping restlessly tonight. China's government has just reminded them who is really in charge.

[Fleur (pen name) contributed research to this article.]

[Correction: An earlier version of this article made a mistake about the last day the draft law is open to comment. Thanks to reader Panglei for pointing this out.]

Li Wangyang: I Won’t Retreat Even if I am Beheaded

Posted: 07 Jun 2012 03:54 PM PDT

After labor activist Li Wangyang was found dead in his hospital room, his family and supporters in China and around the world have called for an investigation into his death. While hospital and security officials have said Li killed himself, his family and friends say that is unlikely. From the Guardian:

"We saw that his body was still hanging by the window, and his two feet were clearly still standing on the ground. But they [hospital staff] did not let us get near him … Then they dragged his body away," Zhao Baozhu, Li's brother-in-law, was quoted as saying by Human Rights in China.

As of Thursday afternoon, 2,700 people had signed an online petition, including prominent Chinese artist and activist , scholars, and writers who called for an authorized forensic investigation.

[...] Hong Kong's Information Centre for Human Rights and Democracy said a number of rights , lawyers and citizens had arrived in Shaoyang to assist the family in its bid for justice, but many were unreachable and had probably been detained by authorities.

"It's very difficult to accept the official explanation of events," said Wen Yunchao, a prominent Chinese blogger and journalist now based in Hong Kong who helped initiate the online petition.

The online petition has now gathered thousands of signatures from people inside China and around the world. Human rights groups in Hong Kong also led a rally calling for an investigation into Li's death.

In an interview given a few days before his death, Li talked about his determination to continue his activism. Al Jazeera reports:

[Note: Al Jazeera report contains graphic footage.]

The full interview on Hong Kong Cable TV, with English subtitles, can be seen here:

In the interview, he describes the in prison that reportedly resulted in his loss of hearing and eyesight, and expresses optimism that China will become democratic in the near future. Discussing his own activism, he says: "I won't retreat, even if I am beheaded."


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Mongolian Election: Bumpy Road, but Heading in the Right Direction

Posted: 07 Jun 2012 03:03 PM PDT

Memo #161

By Julian Dierkes (julian.dierkes [at] ubc.ca) and Mendee Jargalsaikhan (mendee [at] interchange.ubc.ca)

Elections are milestones in democratic development. With the closing of nominations on June 6, 2012, the campaign for the Mongolian parliamentary election officially opens. Observers seem pessimistic about Asia's only post-socialist democracy. But the upcoming election promises to be more carefully organized and transparent, and public discussions of corruption will strengthen democracy.

Most Mongolians suspect political leaders of corruption. This perception has cast a dark cloud over Mongolia's potential for economic and political development. Yet, corruption has not been a central topic of election campaigns or public discussions in the past.

Ballot box being emptied for counting in 2009 presidential election

The recent arrest of N Enkhbayar, a former prime minister, chairman of the Ikh Khural and president, and several provincial governors hints at the manipulation of political and judicial processes by all actors involved. The veracity of allegations will be determined by courts. In the meantime, the General Election Commission has rejected Enkhbayar's nomination as a candidate. But the mere fact of public attention to corruption increases the potential for more transparent governance and provides a deterrent.

Under the authority of the General Election Commission, Canadian company Dominion Voting Systems is providing electronic voting machines. 1,839,984 eligible voters will receive biometric identification cards.

The two large, two smaller, and several minor political parties contesting in the election have been required to submit their platforms and to nominate candidates for new proportional representation party lists and majoritarian electoral ridings. Candidates submit stricter conflict of interest declarations that include information on family members' business interests. The separation between elected officials and public servants has been enforced on the basis of recent legislative changes.

Domestic civil society is invited to monitor the election, partly to stave off political violence which occurred after the 2008 parliamentary election.

The road to a further institutionalization of democracy and thus a stable political context for economic development is a bumpy one. With limited policy making capacity, the Mongolian government has to address numerous challenges. But democratic legitimacy is the firmest ground for that road to be built on and the preparations for the upcoming election are pointing in the right direction.

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Rural polling station in 2009 presidential election

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You Really Can Criticize the Government on Social Media

Posted: 07 Jun 2012 12:05 PM PDT

Tea Leaf Nation posts a new report from Harvard researchers which analyses censorship of , and concludes that criticism of the government is tolerated, as long as the tweets do not call for real life action:

As academic papers go, this one is surprisingly readable, offering one very important insight into censorship in Chinese . Here's the money line:

"Contrary to previous understandings, posts with negative, even vitriolic, criticism of the state, its leaders, and its policies are not more likely to be censored. Instead, we show that the censorship program is aimed at curtailing collective action by silencing comments that represent, reinforce, or spur social mobilization, regardless of content."

To put their conclusion even more simply: Chinese netizens can criticize the government all they want, and they won't be censored for that reason alone. What gets the censors' attention is anything which looks like it may actually mobilize netizens to take action in the real world, because the government's most important objective to is to maintain social stability.

Discussion on Weibo is further curtailed by the filtering of keywords in the search function. CDT has a project to track these filtered words which can be seen here.


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Catfight Between China and the US Over Air Quality

Posted: 07 Jun 2012 11:03 AM PDT

The Chinese authority is unhappy about the monitoring of air quality by foreign consulates and embassies, while the U.S suggests China to do the same thing and check upon the air quality in U.S's land. China Beat points out that the cat fight is a competition of "soft power" between the two countries.

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China: Gmail Users Warned of State-Sponsored Attacks

Posted: 07 Jun 2012 09:48 AM PDT

Samuel Wade from China Digital Time translated some Chinese netizens' response to Google warning of state-sponsored attack of their gmail account.

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The Daily Twit (@chinahearsay Twitter feed) – 2012-06-07

Posted: 06 Jun 2012 08:59 PM PDT


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PBOC Cuts Interest Rates as Economy Continues Slide

Posted: 07 Jun 2012 10:12 AM PDT

China's central bank announced a 25 basis point cut to borrowing and lending rates on Thursday, the latest measure taken to stave off a for the economy. From The New York Times:

The interest rate cut was the first by the central bank since December 2008, the last time policy makers in China were deeply worried that they might be behind in responding to an economy slipping downhill faster than they expected. Many economists believe that China's leaders were behind the curve again this year, after two months of near-paralysis on economic policy this spring as the Communist Party wrangled over the fate of one of its own, .

China's National Bureau of Statistics is scheduled to release a long list of economic indicators for May on Saturday in Beijing, including industrial production and the consumer price index. Yu Song, an economist in the Beijing office of Goldman Sachs, said that government policy makers are certain to have those figures already.

The decision to cut suggests that the Chinese economy performed poorly last month, he wrote in a research note, and that Prime Minister Wen Jiabao personally ordered policy makers to take action.

The interest rate cut comes amid talk of a fiscal stimulus package meant to boost and promote domestic consumption. From Beijing, however, The Washington Post's Keith B. Richburg writes that Chinese officials are wavering over how to respond to the slowdown in :

The government has taken a few steps to try to coax consumers to spend more. On June 1, the government introduced subsidies of up to $62 to help push consumer sales of energy-efficient air conditioners, flat-panel televisions and other appliances. Separately, the government revived a "cash for clunkers" program, first used during the 2009 stimulus, to help people in rural areas turn in their old cars for newer models.

But economists said those half-steps only delay the more fundamental reforms that are needed. For example, allowing interest rates to float according to the market would give consumers more incentive to invest their money in banks, giving those institutions more capital to lend. Also, the government could make consumer credit easier. And freeing capital controls, including letting foreign firms list on China's stock market, would allow more international investment to flow in.

Such steps would require the Communist Party to do something it has rarely done: give up a modicum of control. But many see the slowdown and the as China's best chance to reform and modernize its economy.

"It's one thing for Hu Jintao and Wen Jiabao to go out on a weak note," Lardy said. "The new guys are assessing the risk of a really serious slowdown, not lasting a few months but a few years. I'm hoping that's going to focus a few minds."


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How Will The CCP Finish Off Bo Xilai?

Posted: 07 Jun 2012 08:05 AM PDT

Christopher Bodeen of the Associated Press details the "knotty choice" facing China's top leaders as they determine not when but how to deliver the knockout blow to former Chongqing mayor – whether by public trial or behind closed closed doors:

Analysts and a veteran party member say leaders are leaning toward a trial. But either way, the challenge is to prevent lurid allegations that Bo abused his power and that his wife was involved in the murder of a British businessman from upsetting a once-a-decade just months away.

"Bo's political life is at an end," said Li Datong, a longtime state media editor forced from a senior editing job for broaching sensitive subjects. "But the party will work to ensure that this goes no bigger and harms their image no more than absolutely possible."

After months of investigation and high-level deliberations, leaders believe a trial will have more public legitimacy, according to analysts and a veteran party member who has been informed of progress in the talks and who spoke on condition of anonymity because of the sensitivity of discussing the party's inner workings.

The Communist Party's internal investigators are working with prosecutors to whittle down the charges to portray Bo's infractions as individual acts unrelated to the system, the party member said.


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Foxconn: A Very Quiet Riot

Posted: 07 Jun 2012 07:24 AM PDT

Over the past day or so several foreign media outlets including Huffington Post, Business Insider and Bloomberg TV have been reporting that dozens of workers at a Foxconn factory in Chengdu were arrested after clashing with security at a dormitory. Some said that "workers with a grudge against the security guards prevented them from catching a thief. Soon up to 1,000 workers were 'throwing trash bins, chairs, pots, bottles and fireworks from the upper floor of the building and destroying public facilities.'"

These outlets cited a single source: Want China Times – a Taiwanese agency which routinely prints stories based on single, unreliable sources (here, here and here, for instance). In this case, WCT cited Molihua – a democracy and human rights advocacy group. Of course, claims that there were 1,000 rioters had to come with evidence. This is it:

Most of the media reporting this story and netizens on Weibo have included this picture with reports of the violence. If you can spot a riot here, you have much better eyes than I do. A couple searches for "Foxconn riots" also bring up this picture:

I can almost hear the crickets chirping.

Bloomberg TV however managed to obtain a much more sensational picture depicting a fire and people in surgical masks:

…but it turns out that picture actually came from an explosion that happened at Foxconn's Chengdu plant over a year ago.

It's now been three days since this supposed riot started and this is all we have. No other pictures, no videos, no interviews from rioters. That's pretty amazing considering "Foxconn riot" is NOT blocked on Weibo and there were allegedly 1,000 people involved.

I got in touch with Foxconn Technology Group and they sent this press release:

We were informed by local law enforcement authorities that late Monday night, several employees of our facility in Chengdu had a disagreement with the owner of a restaurant located in that city. We were also informed that the employees subsequently returned to their off-campus residence, owned and managed by third-party companies, at which time a number of other residents also became involved in the disagreement and local police were called to the scene to restore order. Foxconn is cooperating with local law enforcement authorities on their investigation into this incident.

They didn't list any numbers, but this seems a far cry from what's been previously reported.

It's too early to say definitively that the original Want China Times report (and all those that based their reports entirely on it) were completely wrong, but I think it is safe to say they jumped the gun. Some outlets even tied the alleged violence to poor working conditions, which is completely unsubstantiated. Huffington Post went so far as to title one piece "Foxconn Workers Riot In Chengdu Over Minor Incident, Leads To Massive Uprising" and listed several unrelated conditions at the factory (They've since printed a retraction).

Foxconn has been the whipping boy of the media for quite some time now. In 2010 some outlets were ticking off suicides as they happened at the company. The estimated 14 suicides that year do indeed sound bad…until you consider there are over 800,000 employees and that that suicide rate is well below China's national average (and the US's for that matter). Both the suicide and rioting over poor working conditions angles fit nicely into the pre-established narrative that Foxconn and its Apple overlord run a repressive sweatshop. Unfortunately for those outlets that perpetuate these angles, there's just not much evidence to support them.

Update 6/8: Reuters published a story this morning which said:

Seven workers at a Foxconn factory in Chengdu went to a restaurant near their dormitory, but began making a ruckus after an argument between the eatery's owner and his wife "affected their meal", said a statement on the Sichuan government website (www.scol.com.cn) released on Thursday.

After the restaurant owner called the police, the workers ran back to their dormitory shouting "they are beating us", upon which around 100 of their colleagues came in and joined the disturbance, throwing bottles, the statement added.


China Issues Draft Revision to Internet Law

Posted: 07 Jun 2012 05:31 AM PDT

China released proposed changes to its Internet law on Thursday that aim to further eliminate anonymity on the Web and expand control over the companies behind the country's boisterous microblogging scene.

In a draft update of the government's "Methods for Governance of Internet Information Services", China is proposing to widen the definition of Internet information service providers to include online forums, blogs and microblogs. (Reuters)

More on this once I've had a chance to take a closer look. At first glance, nothing too startling here. An extension of Real ID, some additional data collection and storage requirements, and an administrative approval. But hey, the government already has a pretty firm control over these guys, particularly the microblog and commercial BBS operators.

Here's a link (Chinese only): 互联网信息服务管理办法(修订草案征求意见稿)


© Stan for China Hearsay, 2012. | Permalink | No comment | Add to del.icio.us
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Foreigners In China

Posted: 07 Jun 2012 04:47 AM PDT

The Xenophobia drama mostly happened in Social Media such as Sina Weibo in China. Dan Harris from China Law Blog quotes from some foreigner bloggers about laowai's everyday life in reality.

Written by Oiwan Lam · comments (0)
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China Due Diligence and AIC Documents – An Update

Posted: 07 Jun 2012 03:14 AM PDT

On Monday, I wrote about an apparent new policy at several offices of the Administration of Industry and Commerce (AIC), which among other things is China's corporate registry. Legal and financial due diligence relies heavily, sometimes solely, on documents filed with AIC by local companies. I was responding to a China Finance blog post by Fredrik Oqvist, who was in turn relying on an IFLR article written by Lucy McNulty. I noted at the time that I wasn't able to confirm the rule changes and actually hoped that this was not a widespread phenomenon.

Unfortunately, it looks like this is not an isolated thing, as the media has confirmed. In addition to some other news out there, Dinny McMahon has two articles (this one is open to everyone; this one is behind the paywall) on the subject in the Wall Street Journal.

My previous post on this topic explained why this rule change is potentially important, but I do have a few other comments. First, and sorry to keep harping on this point of terminology, but it's important to understand the difference between the AIC and SAIC.

This is from one of the WSJ articles:

A Chinese government agency that compiles extensive Chinese corporate records has begun to withhold information that includes financial reports, shareholder changes and assets transfers, according to lawyers, investors and research companies. The State Administration of Industry and Commerce declined to say whether it had moved to limit what it once made public, but the Beijing-branch of the agency said some lawyers in the past had abused the availability of data by selling it.

As I said on Monday, the SAIC is the State-level agency, which has a very broad portfolio. The local AIC offices are the ones that are involved here. Not only do the local AICs act as company regulators and inspectors, but the AICs are also the offices where these documents are deposited and various approvals are issued. All the action happens at street level, at the AICs, not the SAIC.

Now it's quite possible that this rule change has been instituted from on high (i.e. the SAIC), but apparently it has not filtered down to all the local AICs yet. I'm not surprised that the SAIC refused to talk to the WSJ about it, yet the Beijing AIC did comment on the issue. In the past, document access policies varied from office to office, and it sounds like that might still be the case, at least for a while.

Regardless, when discussing these records, they really should be referred to as "AIC files" without that extra "S" in the front, which would suggest some sort of national records systems, which it isn't.

Second, it does appear that the push for restricting access has something to do with information "abuse," which might mean research firms and short sellers. These folks really embarrassed some large and powerful U.S.-listed Chinese companies and, more important, dragged down the prices of pretty much all the other Chinese companies. This made China look bad and even made parts of the government, including the China Securities and Regulatory Commission, look ineffective, even though the CSRC had no specific jurisdiction over those enterprises.

Third, according to the WSJ, the AIC access restrictions dovetail with changes to other means of data collection:

[A] number of firms that investigate Chinese companies on behalf of investors say a broader police crackdown on consumer information has hindered their ability to gather important data.

[ . . . ]

Until recently China has been a sieve of private data with information on vehicle registration, household residency, phone records and even bank account details available to those who knew who to call. Research companies say that such information has become all but impossible to access since April 20, when the Public Security Bureau launched a nationwide campaign against investigations companies.

To be fair, there's a big difference between AIC files and some of this other information. Until the rule change, AIC documents were generally available to licensed attorneys; there was no question that this information was obtained legally. In contrast, a lot of the data collected by investigation firms, many of which are run by ex-cops, is not publicly available. Some of these guys pay money to ex-colleagues for information that is supposed to be secret. I've had foreign clients that rely on this data, and unfortunately they intentionally look the other way on the issue of whether the information was legally obtained by the investigator (this has always bothered me). The PSB crackdown on this sort of thing is long overdue, and referring to this as an "abuse" sounds fair to me.

Fourth, the WSJ notes that the information you could access in an AIC file pre-rule change was actually much more extensive than one could get for closely-held companies in many countries. This is true, but sort of misleading if you don't bother to read through the entire piece.

AIC files are a grab bag of stuff. Some document filings are mandatory, others optional, and many enterprises don't always follow the rules (there are no penalties for failure to file most documents). Moreover, as the late Dr. House was fond of saying, everyone lies. So while a company's AIC file might turn out to contain that one bit of crucial information you need to pull the trigger on a deal, it might also be a huge pile of garbage.

There are reasons why developed countries do not require private countries to file so many documents with company registries or go through annual inspections. For one thing, many countries have sophisticated credit reporting systems, making it easy to check on the solvency of that potential business partner. Additionally, many nations' local or central governments collect and make available information on consumer complaints.

And of course there's litigation. As the WSJ points out:

In Western countries, if something goes wrong with a deal or an investment or a joint venture, the parties involved can turn to a fair and transparent legal system that can force the handing over of internal documents. In China, courts are seldom sympathetic to foreigners and their decisions are heavily influenced by local political and economic considerations. Investors here long ago learnt that it is necessary to do extensive due diligence in advance of any deal to avoid being stuck with a nasty surprise in the future.

That is certainly true for Common Law countries. Not only does this mean that you may not need to perform such thorough due diligence at the outset, but also that if something goes wrong, you do not have to rely on the very small number of documents already in your hands to litigate. Just as an example, I've been involved in numerous trade disputes where the plaintiff's evidence consisted of nothing more than a few emails. Without discovery, those AIC documents can be very important!

By the way, I strongly disagree with the WSJ's characterization of the Chinese legal system as being "seldom sympathetic to foreigners." Yes, local protectionism occurs here, but foreigners get a pretty fair shake in Chinese courts much of the time, and at least the vast majority of the commercial disputes I've seen personally have not been influenced by "local political and economic considerations." Some folks like to extrapolate from famous cases where politics and/or local protectionism was evident, but it's not fair to smear the entire system of commercial litigation with that broad brush.

Fifth, while this new rule change may be designed to shut the door on research firms and short sellers, it may end up doing a lot more. As I mentioned on Monday, AIC files are useful for M&As, licensing, supply agreements, and many other kinds of commercial deals. Some parties will be hurt more than others. If I'm doing an M&A or Joint Venture, for example, I know that I can ask the other party for consent to access their AIC file; if they refuse, the deal is off. For other kinds of deals, though, such as a small supply agreement, it might be problematic to obtain consent. This is just one more thing that will have to be negotiated and could end up being an irritant between the parties to a deal.

And needless to say, if that other party you need information on is an adversary (e.g. a competitor, or IP infringer), you're out of luck.

Last but not least, the big picture. After what happened with the short sellers, the government has decided that less information is better. As someone who never has enough information to advise my clients appropriately, I'm biased. But I honestly believe that more information is the answer. If short sellers or researchers throw unsubstantiated charges out there, these are best dealt by interested parties with access to relevant information that can be used to either verify or rebut those claims.


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Dozens arrested after riot at Foxconn plant in Chengdu

Posted: 06 Jun 2012 06:24 PM PDT

A dorm for Foxconn workers in Chengdu, the site of a clash between workers and security guards on Monday. (Internet photo)

Hundreds of Foxconn employees living in a dormitory at the company's plant in Chengdu in southwestern China clashed with security staff on Monday evening, reportedly taking advantage of a minor disturbance to address prior grievances.

The world's largest electronic contract manufacturer called in the police to calm down the crowd and dozens of those who took part in the disturbance were arrested, according to Molihua, a news website advocating democracy and human rights in China.

The clash broke out at a male dormitory for Foxconn workers in Kaoxinxi district in northwest Chengdu. When two security guards called out to stop a thief, some employees with grudges against the security officers took the chance to hinder them and forced them away.

The situation quickly escalated out of control with up to one thousand workers joining the fray, throwing trash bins, chairs, pots, bottles and fireworks from the upper floors of the bulding to the ground and destroying public facilities.

The dorm administrators reported the case to the local public security bureau, bringing hundreds of police officers to suppress the riot, which ended after two hours.

Foxconn's Chengdu plant in Sichuan province mainly produces liquid crystal displays for electronic products such as Apple's iPhone. An explosion at the factory in May last year killed two workers and injured 16 others.

Source: Want China Times

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