06/30/2010 Source: Bloomberg

April 29 (Bloomberg) — China passed amendments to its state secrets law that requires the nation’s telecommunications carriers and internet companies to assist authorities with investigations of leaks.

Transmission of state secrets over public information networks must be stopped immediately once discovered, according to a copy of the amendment distributed at a press briefing in Beijing today. Network operators must also keep records of transmission and report possible leaks to authorities.

The new requirements may be an additional challenge to foreign technology companies in China such as Yahoo! Inc., Microsoft Corp. and Cisco Systems Inc., which have been criticized by U.S. lawmakers who say they help the Chinese government censor information. Google Inc. shut its China search site in March after saying it was no longer willing to censor content as required by Chinese law.

“Foreign companies may have some difficulties with these requirements on an ethics front,” said Edward Yu, chief executive officer of research company Analysys International. “It won’t have much of an impact on Chinese companies and users because it’s something they don’t have a choice about it.”

Changes to the law are aimed at making people, companies and organizations more responsible for protecting state secrets, according to the amendments that were passed by Chinese legislators today.

State-Owned Carriers

All of China’s telecommunications carriers are state-owned. China Mobile Ltd., the nation’s biggest wireless carrier with 539 million users, has more subscribers than the combined populations of the U.S. and Japan. China had 384 million Web users at the end of 2009, the most of any nation, according to the China Internet Network Information Center.

The amendments passed today also require network operators to keep records of transmissions and report possible leaks of state secrets to authorities. They must also delete information from networks upon government request.

“In my opinion, it is likely that we will witness an actual tightening of the state’s grip on information,” Flora Sapio, a lecturer on Chinese legal institutions at the University of Naples L’Orientale, wrote in an e-mail. “Given the broad definition of state secrets, another consequence may be a restriction of privacy rights in the name of security.”

The amendment’s definition state secrets includes items that damage the country in fields ranging from defense and diplomacy to “national economic and development” projects and technology. The government also has the power to label anything else a state secret, it said.

State Secrets

“State secrets without protection are not allowed to be spread on the public internet,” Du Yongsheng, deputy director of the National Administration for Protection of State Secrets, said at today’s briefing in Beijing. “This is a universal regulation all over the world.”

Google began redirecting traffic from its Chinese home page to its unfiltered Hong Kong site last month, after saying in January that the company would stop censoring search results. The Mountain View, California-based company opened its Google.cn Web site in China in 2006, agreeing to exclude links to content banned by the government.

China censors pornographic, gambling and political content by shutting locally based sites and blocking access to foreign ones such including those of Facebook Inc. and Google’s Youtube. The government control content in traditional media through state ownership of all newspapers, television and radio stations.

Former Yahoo Chief Executive Officer Jerry Yang apologized to the mother of an imprisoned Chinese dissident during a 2007 Congressional hearing looking into the company’s decision to give Chinese officials the man’s e-mail records. Executives from Yahoo, Google, Microsoft and Cisco were called to testify in 2006 before U.S. lawmakers on their activities in China.

Yahoo, which sold its Chinese business to Alibaba Group Holding Ltd. in 2005, is “committed to protecting our users’ right to freedom of expression and privacy,” said Dana Lengkeek, a spokeswoman for Yahoo.

Robert J. Allan was a panelist at the 2010 Directors’ College at Stanford Law School, an intensive program for directors and senior executives of publicly traded firms.

The event, which was held June 20-22, 2010, examined issues related to corporate governance, strategy and compliance, including the board’s role in setting business strategy, executive compensation, techniques for controlling legal liability, the challenge posed by activist investors and changes in the rules governing the election of corporate directors. Mr. Allan spoke on the Foreign Corrupt Practices Act as it relates to China and discussed protocols and procedures that companies can use to help ensure compliance with both the FCPA and Chinese Anti-Bribery Laws.

For more information, please visit the event website:
http://blogs.law.stanford.edu/directorscollege/about/

06/08/2010 Source: People’s Daily

Computer crimes in China have been increasing in recent years, said a white paper titled “The Internet in China” issued on Tuesday.

The white paper, issued by the Information Office of the State Council,said the tendency of the combination of various traditional crimes and computer crimes has become gradually more obvious.

“Online fraud, online theft and other forms of crimes which encroach on the property of others are increasing rapidly,” said the paper. “Crimes such as producing and spreading computer viruses, and computer and network hacking are increasing.”

“Criminal activities such as disseminating obscenity, pornography and gambling are still pressing problems,” the paper added.

According to the paper, public security departments dealt with 142 computer crime cases in 1998, 29,000 in 2007, 35,000 in 2008 and 48,000 in 2009.

In order to effectively combat computer crimes, the Chinese laws stipulate that criminal activities conducted by making use of the Internet or against the Internet shall be investigated and dealt with in accordance with the Criminal Law or other relevant laws.

“China is one of the countries suffering most from hacking, ” said the paper.

According to incomplete statistics, more than 1 million IP addresses in China were controlled from overseas in 2009, 42,000 websites were distorted by hackers, and 18 million Chinese computers were infected by the Conficker virus every month, about 30 percent of the computers infected globally, said the paper.

“Chinese laws prohibit all forms of hacking,” said the paper, adding that concerns about Internet security of different countries should be fully respected.

06/08/2010 Source: Xinhua

The Chinese government Tuesday published a white paper on its Internet policy, stressing the guarantee of citizens’ freedom of speech on the Internet and more intensive application of it.

The white paper, released by the State Council Information Office, introduced facts of the development and use of the Internet in China, and elaborated on the country’s basic policies on the Internet.

The Chinese government actively advocates and supports the development and application of the Internet across the country, it said, stressing the government’s basic Internet policy: active use, scientific development, law-based administration and ensured security.

By the end of 2009 the number of netizens in China had reached 384 million, 618 times that of 1997 with an annual increase of 31.95 million users.

The Internet had reached 28.9 percent of the total population by the end of 2009, higher than the world average. Its accessibility will be raised to 45 percent of the population in the coming five years, it said.

There were 3.23 million websites running in China last year, which was 2,152 times that of 1997.

Of all the netizens, 346 million used broadband and 233 million used mobile phones to access the Internet. They had moved on from dialing the access numbers to broadband and mobile phones.

“These statistics make China among the top of the developing countries in developing and popularizing the Internet,” the paper said.

The Internet has become an engine promoting the economic development of China. Information technology (IT) including the Internet and its industry has made significant contributions to the rapid growth of the Chinese economy, it said.

In the past 16 years, the average growth rate of the added value of Chinese IT industry grew at over 26.6 percent annually, with its proportion in the national economy increasing from less than 1 percent to 10 percent, according to the paper.

Meanwhile, the Internet has become an indispensable tool in people’s every-day life, it said.

According to a sample survey, in 2009 alone, about 230 million people in China gathered information using search engines, and 240 million communicated through real-time telecommunications devices.

Also, 46 million Chinese people received education with the help of the Internet, 35 million conducted securities trading on the Internet, 15 million sought jobs through the Internet, and 14 million arranged trips via the Internet.

The Chinese government is determined to further promote Internet development and application so that more people can benefit from the Internet, the paper said.

“Chinese citizens fully enjoy freedom of speech on the Internet,” it said, adding that China’s websites attach great importance to providing netizens with opinion expression services.

Over 80 percent of China’s websites provided electronic bulletin service. And there are over 1 million BBSs and some 220 million bloggers in China.

According to a sample survey, over 66 percent of Chinese netizens frequently place postings to discuss various topics, and to fully express their opinions and represent their interests.

“The Internet’s role in supervision is given full play,” the paper said.

Over the past few years, a great number of the problems reported through the Internet have been resolved.

In order to facilitate the public’s reporting of corrupt and degenerate officials and suchlike, the central discipline inspection and supervision authorities, the Supreme People’s Court, the Supreme People’s Procuratorate and other relevant bodies have set up informant websites.

The informant website of the Communist Party of China (CPC) Central Commission for Discipline Inspection and the Ministry of Supervision, and the website of the National Bureau of Corruption Prevention are playing an important role in preventing and punishing corruption and degeneration among officials.

A sample survey found that over 60 percent of netizens had a positive opinion of the fact that the government gives wide scope to the Internet’s role in supervision, and considered it a manifestation of China’s socialist democracy and progress, the paper said.

“The Chinese government believes that the Internet is an important infrastructure facility for the nation. Within Chinese territory the Internet is under the jurisdiction of Chinese sovereignty,” it said, stressing that the Internet sovereignty of China should be respected and protected.

According to the paper, computer crimes in China have been on the increase in recent years.

Public security departments dealt with 142 computer crime cases in 1998, 29,000 in 2007, 35,000 in 2008 and 48,000 in 2009.

“China is one of the countries suffering most from hacking,” it said.

According to incomplete statistics, more than one million IP addresses in China were controlled from overseas in 2009, 42,000 websites were distorted by hackers.

Besides, 18 million Chinese computers are infected by the Conficker virus every month, about 30 percent of the computers infected globally.

National situations and cultural traditions differ among countries, and so concern about Internet security also differs, the paper said.

“Concerns about Internet security of different countries should be fully respected,” it said.

The Chinese government will constantly adjust relevant policies to better match the inherent law and the objective requirements of the development and administration of the Internet, according to the paper.

The 31-page document is divided into six sections: Endeavors to Spur the Development and Application of the Internet, Promoting the Extensive Use of the Internet, Guaranteeing Citizens’ Freedom of Speech on the Internet, Basic Principles and Practices of Internet Administration, Protecting Internet Security, and Active International Exchanges and Cooperation.

06/01/2010 Source: Xinhua

A man killed himself after shooting three judges dead and injuring another three judges in a local court office Tuesday in central China’s Hunan Province, said local authorities.

The incident happened at about 10:05 a.m. at Lingling District People’s Court in Yongzhou City, said the city’s public security department.

The gunman, Zhu Jun, barged into an office on the fourth floor of the court building. He shot the judges in the office before killing himself, police said.

Zhu, 46, was head of the security squad of the China Post branch bureau of Lingling District.

Around 7:30 a.m., Zhu took a submachine gun and two pistols from his subordinate after saying he would have the guns examined by the higher authorities, police said.

Zhu, who had a son, divorced his wife three years ago. He lived with his parents, an initial police investigation showed.

The investigation showed Zhu committed the attack to take revenge on the court.

Zhu’s family and colleagues told police Zhu thought the court unjustly handled the property division when the couple divorced three years ago.

The victims were not involved in Zhu’s divorce case, police said.

Zhu was on sick leave at home for two months and only came back to work three days ago, they said.

06/01/2010 Source: Global Times

The State Council said on its website Monday that it would gradually start to reform property tax policies, but experts said there is still a long way to go before collection of the tax begins.

The State Council said it has approved a proposal from the National and Development and Reform Commission to enhance the reform of China’s fiscal and tax systems. But it did not give a detailed explanation.

The announcement came after a report Monday in the China Securities Journal that Shanghai’s government had submitted a property tax plan to the central government, although there was no agreement on the standard of collection.

However, experts said the policy is more “a deterrent force” to rising housing prices.

“The government is using the policy to restrain the rising housing prices, instead of landing a blow against the market,” Li Xiaogang, director of the foreign investment research center of the Shanghai Academy of Social Sciences, told the Global Times Monday.

Li said designing a property tax would be complex, and the government would have to decide whether to levy taxes on a per-person or per-family basis, as well as how to deal with housing size and value when setting a tax rate.

He added that even if the government implements a property tax, measures to ensure the strong performance of mortgages would remain lacking.

According to figures provided by the Ministry of Land and Resources, new mortgage lending in 84 key cities last year was 774.9 billion yuan ($113.50 billion), up 59.7 percent from 2008. Bank loans for housing development reached 20 percent of total lending in 2009, according to figures from the China Banking Regulatory Commission.

“The later the property tax guides are launched, the less harsh the impact will be,” said Wang Xiao, a CCB International analyst.

05/20/2010 Source: China Daily

China’s currency policy is unlikely to be a major issue at next week’s high-level dialogue between Chinese and the US officials as pushing too hard over yuan appreciation would do little to break the stalemate, a central bank adviser said.

“Despite mounting pressure for a stronger yuan in the past few months, officials from both sides are expected to play down the currency issue during the meeting, leaving more leeway for China to decide the fate of its own currency,” Li Daokui, a member of the central bank’s monetary policy committee, told China Daily on Wednesday.

In the latest round of the Strategic and Economic Dialogue (SED) between China and the United States slated for next week in Beijing, top Chinese officials will meet their American counterparts, led by US Secretary of State Hillary Clinton and Treasury Secretary Timothy Geithner, to discuss issues such as trade and energy cooperation.

China came in for a lot of flak earlier this year over the value of its currency, but Li, who is also a professor at Tsinghua University, said the US now seemed less compelled to press China over yuan appreciation, as it is eyeing a broader cooperation framework with China.

US Commerce Secretary Gary Locke, who will attend next week’s bilateral meeting, is currently leading a US trade mission to China to boost clean energy technology sales, a major area in which the US wants to make a breakthrough in China.

“In this round of high-level talks, the US is expected to set aside its concerns on the yuan for a while, and will strive to seek bigger returns from the world’s largest market for clean energy,” said Sun Lijian, a finance professor at Fudan University.

Li said that as the pressure for yuan appreciation is abating, the Chinese government would reform the currency regime at its own pace without bowing to foreign pressure. But he refused to reveal how the yuan’s exchange rate would move in the near future.

Derek Scissors, a research fellow at the Heritage Foundation in Washington, said the recent sharp decline of the euro against both the dollar and the yuan will push China and the US into being less flexible on currency.

“China will argue that this is a bad time to change policy, which is quite reasonable,” he said.

The euro has dropped some 7 percent against the dollar in the past month on concerns over the European sovereign debt crisis, leading to further volatility on global financial markets.

China has pegged its currency against the dollar since mid-2008 in an effort to protect its exporters from the fallout of the global financial crisis.

Wang Tao, chief China research economist at the UBS Securities, said in a research note that the sovereign debt crisis in Europe has increased uncertainty across the board, which may mean China is more hesitant to let the yuan rise for the moment.

“Provided that financial markets stabilize in the next few weeks, we expect China to start the yuan move within the next couple of months,” she said.

Mark Weisbrot, co-director of the Center for Economic and Policy Research, said that China seemed to have some interest in yuan appreciation in order to “keep inflation from rising too fast”.

“But the declining prognosis for Europe’s economic growth in the near future, a major destination for China’s exports, makes it less likely that China will want to allow appreciation for these purposes,” he added.

Experts said the bilateral meeting would go beyond the currency issue, as China will use the opportunity to urge the US to relax its high-tech export controls and curb trade protectionism, while the US will demand a more favorable business environment for foreign companies, including those from the US.

“How to bolster bilateral trade will be a major topic during the dialogue, and the US will also urge China to create a more open trade and investment environment for US companies,” Cameron Kerry, general counsel of the US Department of Commerce, told China Daily.