Originally posted on National Post | News:
PYONGYANG, North Korea — As the world watches to see what North Korea’s next move will be in a high-stakes game of brinksmanship with the United States, residents of its capital aren’t hunkering down in bunkers and preparing for the worst. Instead, they are out on the streets en masse getting ready for the birthday of national founder Kim Il Sung — the biggest holiday of the year.
The festivities leading up to Kim’s birthday come amid fears that North Korea may be planning to test launch a new missile in retaliation for what it claims are provocative war games by U.S. and South Korean troops just across the Korean border.
In Pyongyang on Friday, thousands of schoolchildren were amassed at Kim Il Sung Stadium for the induction of second-graders from around the country into the Korean Children’s Union, one of the first steps into North Korea’s political structure. They…
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Originally posted on National Post | News:
GENEVA — The United Nations’ top human rights body unanimously approved Thursday a formal probe into North Korea for possible crimes against humanity, despite warnings of “serious consequences” from the reclusive nation.
Pyongyang slammed the move as an “act of political fraud” after North Korean representative So Se Pyong told the council there would be “serious consequences” if they went ahead with an investigation, according to the CNN.
He told the council North Koreans are “happy with pride and honour that they have one of the best systems for promotion and protection of human rights in the world.”
The 47-nation UN Human Rights Council signed off on the resolution backed by the U.S., Japan and the European Union that authorizes an investigation into what U.N. officials describe as suspected widespread and systematic violations of human rights in North Korea.
Japan’s ambassador, Takashi Okada, denounced the abduction of…
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(Reuters) – South Korea’s new president Park Geun-hye urged North Korea on Monday to abandon its nuclear ambitions, and to stop wasting its scarce resources on arms, less than two weeks after the country carried out its third nuclear test.
In her inauguration speech, the country’s first female president, also called on South Koreans to help revive the nation’s export-dependent economy whose trade is threatened by neighboring Japan’s weak yen policy.
Park, the 61-year-old daughter of South Korea’s former military ruler Park Chung-hee, met with the father of North Korea’s current ruler in 2002 and offered the impoverished and isolated neighbor aid and trade if it abandoned its nuclear program.
I am always looking at the long term trends and this is reflected in my investment advice. The approach is to be invested in equities during economic recovery/expansion and then move towards 5yr Treasuries during the period of economic contraction. I do this using existing decades-long historical economic and market cycle data which is readily available. Underlying these cycles is a longer term inflation cycle and global development patterns of which China has been one of the most prominent the past 15yrs in its global impact. At the moment inflation is in a downtrend and China is beginning to transition due to the emergence of a middle class.
Reversal of the China Effect/Emergence of US as a Global Powerhouse Once Again
It has been ~15yrs since China became a favored low cost manufacturing location and end-customer target for many international firms. The end result was a shift of manufacturing performed elsewhere to China causing non-Chinese manufacturing to feel the brunt of this change. In the US the counter-response has been a visible shift to “Lean Manufacturing” first developed by the Japanese to regain global competitiveness. The effect can be seen in the chart below of US Manufacturing Employment which displays the first significant upturn since 1998. A 532,000 increase since December 2009! The chart also notes when key US businesses began to embrace “Lean” practices. The term “Re-Shoring” has been coined for this phenomena.
The net/net of “Lean” manufacturing which takes different forms in different businesses is that management takes the position that employees are the most valuable resource they have in running a business efficiently and in generating new more productive business processes. There is a dramatic difference between a “Lean” business today and one of 50yrs ago in which management directed employees not only how to make needed products but also dictated with rigid mindset the numbers per minute for peak efficiency. Robert McNamara, known as one of the “Wiz Kids”, applied the fad of the day, Systems Analysis, to direct output at Ford and later did the same as Secretary of Defense during the Vietnam War. Employees responded by joining unions for protection from mind-numbing regulation and forcing businesses to be less productive. Unions have been much maligned by investors, but history supports unionization as a protective shield from the misperceived actions of management which at one time thought of human beings as easily replaceable cogs in the corporate machine. Today’s more enlightened CEOs have embraced “Lean” achieving wide ranging benefits to all concerned.
Today’s “Lean” approach, when it works well, empowers employees as the most important aspect in the production process. Employees can stop a production line if they believe that the quality of the product is impaired and they get rewarded for it. They get rewarded for their individual contributions to quality and productivity improvements suggested. As part of the incentive process, employees receive a base wage with which they and the corporation can survive during economic downturns with minimal layoffs, but then participate heavily in profit sharing during good times. The overall effect is that corporations keep their workforces and skillsets intact during difficult periods and employees do not suffer the wrenching trials of layoffs which often include loss of healthcare benefits, loss of one’s home when union benefits stop, loss of one’s work friends as those who kept their jobs suffer survivor guilt and avoid contact. “Lean” processes are a holistic approach towards employees across the entire business cycle and are designed to maximize business productivity and employee engagement while minimizing work related accidents, warranty costs and layoffs. A key feature is variable compensation which is high during profitable years and falls to a living wage during difficult years. It is “Lean” processes which have taken hold in the US and made many companies globally competitive in spite of very low competing wages in newly developing countries. This is why the US has begun to see a surprising net increase in manufacturing employment in my opinion.
While the US has been embracing “Lean”, China has been building its wealth and a middle class without the costs of environmental protection of water, air, food and other key societal needs. Not addressing the impact of pollution has permitted Chinese based manufacturing to underprice its true costs of production. There have been a series of articles the past several months which indicate that China will tract the US in its efforts to deal with the typical pollution as demanded by its growing middle class-see WSJ excerpt below. The wealth created from years of pollution has now begun to create its own backlash. The history of an emerging middle classes globally is always the same. Once one has wealth enough to afford a modest home, a car and other accoutrements of success, one turns to improve one’s environment, i.e. the air one breathes, the water one drinks and etc. One expects government to regulate so that one’s children will have a safer environment to grow-up in than their parents. Besides improved environmental and food regulations, the middle class expects a more even handed less corrupt legal system to insure all are treated with fairness. This is what is happening in China today and theUS began its efforts in 1975 with the introduction of the catalytic converter, Wikipedia.org-Catalytic Converter The US has already had 40yrs to incorporate efficient environmental controls in almost all areas which needed modifications. China, the global favorite manufacturer, is now being forced to address many issues demanded by an emerging middle class. China in my estimation is entering a period in which it will lose some of its manufacturing prowess to the US due to rising costs. China is not alone in ignoring its growing middle class needs while it captured a share of global manufacturing. All developing countries have similarly ignored these costs. The next decade or so should see a continued reversal of global manufacturing in favor of the US.
CHINA MEDIA BULLETIN
Freedom House’s biweekly update of press freedom and censorship news related to the People’s Republic of China
Issue No. 80: February 7, 2013
* State media grapple with skepticism over economic data
* Regulator bans TV ads for luxury ‘gifts’
* ‘Surveillance state’ breeds distrust in Chinese society
* Uighur scholar barred from leaving for U.S.
* More U.S. news outlets report China-based hacking
Photo of the Week: Digital Divide
Credit: Tea Leaf Nation (Data from CNNIC)
The China Media Bulletin needs your support to ensure its future and improve its online database. Please donate here and enter “China Media Bulletin” as the designation code.
Announcement: Beginning with this issue, the China Media Bulletin will be switching to a biweekly format, meaning Issue No. 81 will be dated February 21. The plan is to supplement the CMB with more special features and other unique China-related analysis, though we may return to a weekly schedule in the future. Feedback is welcome.(http://saccsivdotcom.wordpress.com/2012/10/28/china-starts-formal-criminal-probe-into-politician-bo-xilai/)
The editors would also like to take this opportunity to wish all our readers and donors a happy Year of the Snake!
BROADCAST / PRINT MEDIA NEWS
State media grapple with skepticism over economic data
China’s state media have been struggling to cope with growing skepticism about official economic data, whose accuracy has long been questioned due to their lack of transparency and independent verification (see CMB No. 62). On January 18, for the first time in over a decade, the National Bureau of Statistics (NBS) announced the country’s Gini coefficient, an indicator of income inequality on a scale of 0 (perfectly equal) to 1 (utterly unequal). The figure reportedly reached 0.474 in 2012—higher than the warning level of 0.4 set by the United Nations. Although the official Xinhua news agency touted the data release as a demonstration of the government’s resolve to bridge the gap between rich and poor, the official numbers were met with surprise and doubt by international analysts and members of the Chinese public. In a February 4 article that first appeared on the Chinese website of the Wall Street Journal, a think-tank researcher argued that while the income estimates for the poor were probably accurate, those for the rich were likely too low due to wealthy people’s refusal to complete surveys or their tendency to exclude illicit income. Also on February 4, the Communist Party mouthpiece People’s Daily acknowledged shortcomings in the Gini coefficient calculation and the need to improve the methodology. However, the article sought to downplay an earlier study by Southwestern University of Finance and Economics in Sichuan Province that had estimated China’s Gini coefficient for 2010 at 0.61, maintaining that it had relied on a smaller sample than the NBS analysis and was therefore less reliable. Separately on February 4, the state-run Guangming Daily reported that the NBS’s gross domestic product (GDP) figure for 2012 was 5.76 trillion yuan ($922 billion) lower than the sum of the year’s provincial GDP statistics, apparently reflecting fraudulent reporting by local officials. The perennial gap between central and provincial GDP figures, now equivalent to the total economic output of Guangdong Province, has grown rapidly in recent years, from 2.68 trillion yuan in 2009.
* Washington Post 2/4/2013: China’s economic data draw sharp scrutiny from experts analyzing global trends
* Xinhua 1/22/2013: Gini coefficient release highlights China’s resolve to bridge wealth gap
* Caixin Online 2/4/2013: The real problem with those Gini numbers
* China Digital Times 2/5/2013: Government proposal aims to narrow economic divide
* People’s Daily 2/4/2013 (in Chinese): Which Gini figures are more off the chart?
* China Scope 2/4/2013: Discrepancy between local and central governments GDP statistics
Regulator bans TV ads for luxury ‘gifts’
In keeping with Communist Party leader Xi Jinping’s pledges to tackle ostentatious corruption within the leadership, and in the wake of recent graft scandals uncovered by netizens, the State Administration of Radio, Film, and Television (SARFT) on February 6 issued a ban on television advertisements that seem to pitch products as high-quality bribes (see below). In a statement posted on its website, SARFT said that commercials with slogans such as “a gift to the supervisor”—for items including famous watches, rare stamps, and souvenir gold and silver coins—could foster a “harmful social atmosphere.” The notice claimed that broadcasters had a duty to follow the party’s recent exhortations to avoid displays of luxury and extravagance. While it remained unclear how strictly the regulator would enforce the rule, Reuters reported that shares of Swiss watchmakers Swatch Group and Richemont fell on February 7 in the wake of the news. The market for other luxury goods, including jewelry and high-end liquor, has also reportedly wilted amid the broader antigraft rhetoric.
* Financial Times 2/7/2013: China bans ‘gift’ adverts in graft fight
* Reuters 2/7/2013: Watchmaker shares hit after China bans ads for expensive gifts
* Xinhua 2/6/2013 (in Chinese): State Administration of Radio, Film, and Television demands ban on gift-giving commercials
NEW MEDIA / TECHNOLOGY NEWS
Amid flurry of graft scandals, netizens expose properties scheme
Gong Aiai, a former deputy head of the state-run Shenmu County Rural Commercial Bank in Yulin, Shaanxi Province, was detained on February 4 for “forging documents and government stamps” after an online posting accused her of owning multiple properties worth an estimated 1 billion yuan ($161 million) under false names. According to a January 30 statement on the Ministry of Public Security’s website, seven other individuals, including four police officers, were held on suspicion of helping Gong obtain false identities under China’s hukou household registration system, which gives individuals access to various rights and benefits in a specific location. Gong, who is also a member of the Yulin People’s Congress, was nicknamed “House Sister” by Chinese netizens after the story broke, echoing past scandals in which luxury-loving officials received monikers like “Watch Brother” and “Uncle Properties” (see CMB No. 72). An initial January 16 posting on the popular web portal China.com claimed that Gong bought at least 20 properties in Beijing alone, but subsequent reports counted twice as many. While state media accounts focused on the shocking number of properties Gong allegedly owned, netizens noted that police corruption enabled her to obtain the false identities. “This is the real reason why housing prices in Beijing can’t come down,” a user wrote on his microblog. Similar hukou schemes have been exposed across the country in recent weeks, with various local officials accused of illegally amassing or trading hundreds of properties. New Communist Party leader Xi Jinping has made a series of speeches against graft since taking power in November (see CMB No. 79), apparently emboldening netizens to launch more campaigns against individual officials, which are in turn taken up by mainstream media. In a New York Times interview published on February 5, citizen journalist Zhu Ruifeng said he received numerous tips from whistleblowers as well as donations from wealthy supporters of his anticorruption website. “We used to say that when you have a problem, go to the police,” he said. “Now we say when you have a problem, go to the netizens.”
* Radio Free Asia 2/5/2013: Bank official held for fraud
* New York Times 2/5/2013: Latest corruption scourge in China centers on housing
* Washington Post 2/5/2013: China arrests bank officer accused of amassing vast property holdings under fake identities
* Wall Street Journal 1/31/2013: Police officers detained in ‘house sister’ hukou scandal
* Xinhua 1/18/2013 (in Chinese): Shenmu house sister exposed 20 houses in Beijing; worth 1 billion yuan
* New York Times 2/6/2013: Chinese blogger thrives as muckraker
New usage stats show continued mobile and internet expansion
According to the latest report by China’s Ministry of Industry and Information Technology (MIIT), the country has more than 1.1 billion mobile-telephone users, for a penetration rate of 82.6 percent, meaning China has for the first time broken the 80 percent world average (see CMB No. 59). Beijing and Shanghai ranked first and second among provincial-level administrative units, with 157.2 and 128 mobile phones per hundred people, respectively. Four other provinces—Guangdong, Zhejiang, Fujian, and Inner Mongolia—have a rate higher than 100 percent, suggesting that many residents own more than one device. The report noted a correlation between mobile-phone usage and migrant populations, and predicted that the growth in phone numbers would slow over the next three years as the market becomes saturated. Separately, on January 14, the China Internet Network Information Center (CNNIC) published its annual report on China’s internet usage and infrastructure, finding that there were 564 million internet users in the country in 2012, with a 42.1 percent penetration rate that was spread unevenly over various provinces (see, inter alia, CMB No. 44). Coastal regions generally had a higher penetration rate due to their higher level of economic development. Beijing had a 72 percent rate—similar to those of Hong Kong and Israel—during the year, while Jiangxi, a relatively poor province at some remove from the coast, had a 30 percent rate—below those of countries like Uzbekistan, Bolivia, and Tuvalu. The blog Tea Leaf Nation posted a pair of maps showing the internet penetration rates and gross domestic product (GDP) figures across all of China’s provinces and Taiwan (see link below).
* Tech in Asia 1/31/2013: 82% of Chinese have mobile phones, some provinces have more mobiles than people
* Sina Tech 1/30/2013 (in Chinese): China mobile phone carriers broke past world average, room for growth dwindles
* Tea Leaf Nation 1/22/2013: A map of two Chinas—internet penetration and economic development
* China Internet Network Information Center 1/2013 (in Chinese): Statistical Report on Internet Development in China: January 2013
‘Surveillance state’ breeds distrust in Chinese society
According to a January 29 report by Washington-based National Public Radio (NPR), the Chinese authorities in recent years have installed more than 20 million cameras across the country—including on streets, in classrooms, and at sporting venues—for the stated purpose of maintaining “social stability,” reducing crime, and preventing cheating (see, inter alia, CMB Nos. 28, 51). One analyst estimated that 30 million cameras are now in place, for a ratio of one camera for every 43 citizens. While some Chinese say the cameras make them feel safer, others fear that they are being used to identify and punish outspoken citizens and encourage self-censorship at academic institutions. The overall surveillance system incorporates a variety of eavesdropping technologies, reportedly enabling security agents to use mobile telephones as tracking and listening devices. Shanghai-based human rights lawyer and blogger Li Tiantian told NPR that police had once stopped her from going to a court hearing after they listened in on her call for a cab. In an effort to disrupt her personal life, security agents in 2011 showed her boyfriend video recordings of Li entering hotels with other men (see CMB No. 23). NPR reported in a January 30 companion piece that devices such as audio bugs and hidden cameras have become increasingly common among ordinary citizens as well. Qi Hong, a former journalist from Shandong Province, said he had used bug-detecting equipment to uncover over 300 devices for more than a hundred of his friends. The NPR journalist then purchased his own detection device, reporting that “in just five minutes, I detected bugs in a lamp, several phones, and two fax machines” at a friend’s office. Chinese officials also rely heavily on surveillance technology to gain political and financial advantages over their colleagues. According to the New York Times, ousted Chongqing Communist Party boss Bo Xilai was purged from the leadership in 2012 partly because he allegedly tapped Chinese president Hu Jintao’s phone calls. The case exemplified the distrust that pervades Chinese society and official circles, fueled by a secretive system of governance and the proliferation of spying devices without legal safeguards enforced by impartial courts.
* NPR 1/29/2013: In China, beware: A camera may be watching you
* NPR 1/30/2013: In China, the government isn’t the only spy game in town
* New York Times 4/25/2012: Ousted Chinese leader is said to have spied on other top officials
Retouched Mao-era photos circulate online
On January 29, a microblog post that included original news photographs from the Mao Zedong era alongside altered versions was circulated on the popular microblogging platform Sina Weibo. The entry, which generated more than 2,200 comments and was reposted over 13,300 times within one day, had first been published by, then removed from, the history section of Chinese web portal ifeng.com. Many of the images were of high-ranking Chinese Communist Party (CCP) officials. In one of the photos, Lin Biao, a former military leader who was condemned for attempting to flee to Moscow in 1971, was removed from a group portrait of party luminaries. In another group picture, everyone was eliminated except for two men—CCP leader Mao Zedong and Soviet leader Joseph Stalin. In a 1927 photo of Chinese intellectuals, writer Lin Yutang, who escaped to Taiwan when the CCP took over China in 1949, was taken out of a version published in 1977. In October 2012, a museum in Guangzhou showcased an exhibition of altered historical photographs, including one taken during the Tiananmen Square crackdown of 1989, to which crowds of people who seem to be welcoming the tanks were added (CMB No. 73). It remains common for state-run media to publish retouched images.
* Global Voices 1/30/2013: Two versions of Mao’s China: History retouched as propaganda
Uighur scholar barred from leaving for U.S.
Ilham Tohti, a prominent Beijing-based Uighur economics professor and founder of the ethnic rights website Uyghur Online, was barred from traveling abroad on February 2. He was detained and held for questioning for more than eight hours at the Beijing Capital Airport when he and his teenage daughter attempted to board a flight to the United States. Tohti had planned to begin a year-long fellowship at Indiana University. While his daughter was eventually allowed to board the plane, Tohti was sent home by the police, who did not provide him with an explanation. The airport denied having any information about the case. The internationally known Uighur scholar is a frequent target of harassment by the Chinese authorities. While the reason for the travel ban remains unclear, it is likely a combination of retaliation for his criticism of government policies in Xinjiang and the authorities’ fear that he could gain prominence as an eloquent advocate for Uighur rights in exile. In October 2012, Tohti was forced to leave Beijing ahead of the November 8–14 Communist Party Congress, during which he was taken to Xinjiang’s capital, Urumqi, and his hometown of Atush (see CMB No. 76).
* Radio Free Asia 2/2/2013: Uyghur scholar taken back home
* Radio Free Asia 2/1/2013: Uyghur scholar, daughter held
* Associated Press 2/3/2013: China bars prominent Uygur scholar from travelling to US
* Front Line Defenders 2/4/2013: China: Uyghur human rights defender Mr Ilham Tohti prevented from leaving country
More U.S. news outlets report China-based hacking
In the wake of the New York Times’ revelation on January 30 that hackers traced to China had infiltrated its computer systems, a string of American media outlets have reported being targeted as well (see CMB No. 79). The Wall Street Journal disclosed on January 31 that hackers had entered its networks through computers in its Beijing office and focused on monitoring its coverage of China, rather than stealing commercially valuable information or subscriber data. Several of the paper’s correspondents were tracked, including Jeremy Page, who wrote articles in November 2012 about the murder of British businessman Neil Heywood and his ties to ousted Chongqing Communist Party chief Bo Xilai. On February 5, the Journal’s owner, Rupert Murdoch, added to the allegations when he wrote on a microblog that “Chinese still hacking us, or were over the weekend.” Bloomberg similarly confirmed on January 31 that there had been attempts to attack its news service following its June exposé on the family wealth of Chinese Communist Party (CCP) leader Xi Jinping. On February 1, the Washington Post reported that a cyberattack launched as early as 2008 had penetrated its main server to retrieve administrative passwords. Mandiant, a Virginia-based computer security company hired by the Times and the Post, said that Chinese hackers had stolen e-mail, contact lists, and files from more than 30 journalists and executives at Western news organizations, and many of their names were stored for repeated attacks. While it has yet to be irrefutably proven that the attacks were sponsored by the Chinese government, monitoring China correspondents’ computers would enable authorities in Beijing to anticipate critical stories and identify Chinese informants, who could face retribution for providing sensitive information. On February 4, the CCP mouthpiece People’s Daily rejected the claims of China-based hacking, calling them a “new justification for America’s strategy of containing China.”
* Wall Street Journal 1/31/2013: Chinese hackers hit U.S. media
* Associated Press 2/6/2013: Rupert Murdoch: Chinese are still hacking The Wall Street Journal
* New York Times 1/31/2013: Wall Street Journal announces that it, too, was hacked by the Chinese
* Washington Post 2/1/2013: Chinese hackers suspected in attack on the Post’s computers
* Agence France-Presse 2/4/2013: China Communist paper rejects hacking allegations
* People’s Daily 2/4/2013 (in Chinese): China denies alleged hacking of New York Times
Human Rights Watch releases annual report, denounced by Xinhua
On January 31, New York–based Human Rights Watch (HRW) released World Report 2013, the latest edition of its annual review of human rights practices in more than 90 countries. According to the China section of the report, government restrictions on freedom of expression continued in 2012. The internet was closely monitored by censors, and at least 27 Chinese journalists were serving prison terms for vaguely defined offenses such as “inciting subversion.” Several foreign journalists were also beaten or harassed, including one who was expelled from the country in May. Security forces maintained a heavy presence in Tibet and Xinjiang, enforcing stringent controls on cultural and political expression. Beyond China’s borders, the authorities successfully barred dissident and exiled writers from international events. On February 4, in response to the report’s release, the official Xinhua news agency rolled out a clutch of similar articles in which Chinese “experts” rejected HRW’s analysis on different topics. In one such piece, a Shanghai-based research director dismissed the respected organization’s claims on freedom of expression as “lame arguments” that amounted to a “political conspiracy.”
* Human Rights Watch 1/31/2013: World Report 2013: China
* Xinhua 2/4/2013: Law abidance prerequisite for freedom of expression: expert
* Xinhua 2/4/2013: Expert defends China’s internet management
Asia Society launches ‘ChinaFile,’ hosts panel of China correspondents
On February 6, the Asia Society’s Center on U.S.-China Relations launched a new online magazine called ChinaFile. Its aim is to aggregate, archive, and publish original news, analysis, and multimedia content related to Chinese politics, media, economics, and culture. To mark the initiative’s debut, the Asia Society in New York hosted a panel discussion featuring six correspondents from the New York Times whose periods covering China ranged from 1946 to the present. The group reflected on changing conditions in the country, the shifting obstacles to reporting there, and the viability of the current political system.
* Asia Society 2/5/2013: Covering China yesterday, today, and tomorrow (complete video)
(CNN) — North Korea’s plans for a new nuclear test, like most things that happen inside the reclusive state, are shrouded in mystery. But that’s not stopping analysts and officials from making some informed guesses about what’s going on.
The North says the “higher level” test is part of its military deterrent in its confrontation with the United States, which it describes as “the sworn enemy of the Korean people.”
Its declaration that it would carry out the test came just two days after the United Nations Security Council voted in favor of imposing broader sanctions on the regime in response to Pyongyang’s long-range rocket launch in December that was widely viewed as a test of ballistic missile technology.
The pattern of events is similar to the lead-up to the previous nuclear tests North Korea carried out in 2006 and 2009.http://saccsivdotcom.wordpress.com/2013/01/31/north-korea-under-martial-law/
Kim Jong Un appears likely to shrug off pressure from most of the international community, including North Korea’s main ally, China, and go ahead with a third test.
“Neither the prospect of stronger sanctions, nor the growing discontent of Russia and China with his behavior, appears to deter North Korea’s young leader,” George Lopez, professor of peace studies at the Kroc Institute, University of Notre Dame, wrote in an opinion article this week for CNN.