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Monday, March 22, 2010

CHINA: Google Shuts China Site in Dispute Over Censorship

A Chinese flag flies next to the Google company logo outside the Google China headquarters in Beijing on Monday.  Liu Jin/Agence France-Presse - Getty Images

March 22, 2010

By MIGUEL HELFT and DAVID BARBOZA

SAN FRANCISCO — Just over two months after threatening to leave China because of censorship and intrusions by Chinese hackers, Google said Monday that it was closing its China-based Internet search service and instead directing Chinese users to a Hong Kong-based uncensored version of its search engine, which may get blocked in mainland China.

In a blog post, Google also said that it would retain much of its existing China operations, including its research and development team and its local sales force. The stunning move represents a powerful slap at Beijing regulators but also a risky ploy in which Google — one of the world’s technology powerhouses — will essentially turn its back on the world’s largest Internet market, with nearly 400 million Web users and growing quickly.

“Figuring out how to make good on our promise to stop censoring search on Google.cn has been hard,” David Drummond, Google’s chief legal officer, wrote in the blog post. “We want as many people in the world as possible to have access to our services, including users in mainland China, yet the Chinese government has been crystal clear throughout our discussions that self-censorship is a non-negotiable legal requirement.”

Mr. Drummond said that Google’s Hong Kong-based search engine would provide mainland China users results in simplified Chinese characters used on the mainland and was “entirely legal.”

“We very much hope that the Chinese government respects our decision,” Mr. Drummond said, “though we are well aware that it could at any time block access to our services.”

While the move may be an crafty attempt by Google to resolve its confrontation with the Communist regime, it appears to have angered officials in China, setting the stage for a possible escalation of the conflict.

The state-controlled Xinhua news agency quoted an unnamed official with the State Council Information Office describing Google's move as "totally wrong."

"Google has violated its written promise it made when entering the Chinese market by stopping filtering its searching service and blaming China in insinuation for alleged hacker attacks," the official said.

Google declined to comment on its discussions with Chinese authorities, but said that it was under the impression that its move would be seen as a viable compromise.

Google’s decision ends a nearly four-year bet by the company’s founders and top executives that Google’s search engine in China, even if censored, would help bring more information to Chinese citizens and loosen the government’s controls on the Internet.

Instead, specialists say, Chinese authorities have tightened their grip on the Internet in recent years. While other multinational companies are not expected to follow suit, some Western executives say Google’s decision is a symbol of a worsening business climate in China for foreign corporations and perhaps an indication that the Chinese government is favoring home-grown companies.

“It is certainly a historic moment,” said Xiao Qiang, director of the China Internet project at the University of California, Berkeley. “The Internet was seen as a catalyst for China being more integrated into the world. The fact that Google cannot exist in China, clearly indicates that China’s path as a rising power is going in a direction different from what the world expected and what many Chinese were hoping for.”

Despite its size and reputation for innovation, Google trails its main Chinese rival, Baidu.com, which was modeled on Google, with 33 percent market share to Baidu’s 63 percent.

The decision to shut down its China-based search engine will have a limited financial impact on Google, which is based in Mountain View, Calif. China accounted for a small fraction of Google’s $23.6 billion in global revenues last year. Still, abandoning a direct search engine presence in the largest Internet market in the world could have long-term repercussions and thwart Google’s ambitions to be a global superpower, analysts say.

Some Western analysts say Chinese regulators could retaliate against Google by blocking its Hong Kong or American search engines entirely, just as it blocks YouTube, Facebook and Twitter.

Supporters of Google have praised the company for taking a principled stand and effectively refusing to operate a censored Web site here, one that limits free speech and deletes information about democracy and human rights issues.

In a statement, Leslie Harris, chief executive of the Washington-based Center for Democracy and Technology, praised Google “for following through on its commitment to protect human rights and for its continued effort to enable China’s people with unfiltered access to robust sources of information from all over the world. Whether the Chinese people will be able to take advantage of Google search now rests squarely with the Chinese government.”

But other specialists said it was a foolish business decision that has unnecessarily embarrassed Beijing and one that could make it difficult for Google to continue operating other parts of its business in China.

In China, many students and professionals say they are extremely disappointed by Google’s decision to close its Chinese language Web site. They are about to lose access to the company’s vast resources, they say.

Last January, when Google initially threatened to leave China, many young people there placed wreaths at the company headquarters in Beijing as a sign of mourning.

At that time, Google said it had grown frustrated with complying with government censorship rules and that hackers based in China had stolen some of the company’s source code and even broken into the Gmail accounts of Chinese human rights advocates.

The attacks were aimed at Google and more than 20 other American companies, the company said. While Google did not say the attacks were government sponsored, the company said it had enough information about the attacks to justify its threat to leave China.

People, inside and outside of Google, investigating the attacks have since put the number of companies that were targets at more than 30, and have traced the attacks to two universities in China: Shanghai Jiao Tong University and the Lanxiang Vocational School.

The universities and the Chinese government have denied any involvement in the attacks.

At the time of its announcement, Google said that its decision might well result in its having to shut down its China-based search engine, Google.cn, or leaving the country. In subsequent days, however, Google said that it hoped to preserve as much of its business in China as possible. In addition to its search engine, the company has a staff of about 600 that includes highly paid engineers and sales people, and a fledgling mobile phone business.

After serving Chinese users through its search engine based in the United States, Google decided to enter the Chinese market in 2006 with a local search engine under an arrangement with the government that required it to purge search results on banned topics.

But since then, Google has struggled to comply with Chinese censorship rules and failed to gain significant market share from Baidu.com, a Chinese site that was modeled on Google.

The decision to enter China, was also hotly debated in the company, and Google has come under criticism for cooperating with China’s censors. Not surprisingly, when the company said it would no longer abide by China’s censorship rules, human rights groups hailed the announcement, saying that Google’s stand should be a model for other American companies.

The decision to scale back its operations in China will have only a limited financial impact on Google in the short term. Google does not break down revenue by country, but people familiar with the company’s business in China said that its quarterly sales were in the vicinity of $150 million in the most recent quarter, which ended Dec. 31. Globally, it had $6.67 billion in revenue in the same period. Much of Google’s revenue in China comes from ads that Chinese companies place on Google’s sites in the United States and elsewhere. What’s more, ads that Google used to place on its China-based search engine will now be placed on the Hong Kong site, so as long as the site is unblocked in mainland China, Google will continue to earn revenue from them.

But the fallout from the decision could affect Google over the long term, as the Chinese Internet market continues to grow quickly.

Google is not the first American Internet company to stumble here. Nearly every major American brand has arrived with high hopes only to be stunted by government rules or fierce competition from Chinese rivals.

After struggling to compete in China, Yahoo sold its Chinese operations to Alibaba Group, a local company; Ebay and Amazon never got traction; and Microsoft’s MSN instant messaging service badly trails rival Tencent.

Google’s departure could present an opportunity for Baidu, whose stock has soared since the confrontation between Google and China began. It could also give a chance to Microsoft, a perennial underdog in Internet search, to make inroads into the Chinese market. Microsoft’s search engine, Bing, has a very small share of the market.

Many analysts say the government has favored and aided Chinese Internet start-ups, but that those businesses have also out maneuvered American companies.

Inside Google, the decision to pull out is widely believed to have been championed by Sergey Brin, a co-founder, who was born in the Soviet Union and is particularly sensitive to the issue of censorship. The decision by Google to enter China in 2006 was hotly debated internally, with Mr. Brin advising against it, while fellow co-founder, Larry Page, and chief executive, Eric E. Schmidt arguing for it.

Early this year, company executives acknowledged that their bet that Google could help open China had failed.

“We were looking at an environment that is more difficult than it was when we started,” David Drummond, Google’s chief legal officer said in January. “Far from our presence helping to open things up, it seems that things are getting tighter for open expression and freedom.”

David Barboza reported from Shanghai and Miguel Helft from San Francisco.

View New York Times Article

VLADIVOSTOK, RUSSIA: “Eagle's Nest Hill” (Orlinoye Gnezdo Hill)

View of the Port of Vladivostok from Eagle's Next Hill

You can get the best view of Vladivostok from the top of “Eagle's Nest” (Orlinoye Gnezdo) Hill.  It is the highest point in the city (214 m, or 702 feet). From this sweeping panoramic view, you can see Golden Horn, Amursky and Ussuriisky Bays, Russian Island, the commercial port, the fishing port, the docks, and the sea terminals.

The nickname “Eagle's Nest” comes from when the first settlers climbed to the top of the hill and found an eagle's nest with the younglings inside.

There are several ways to get to the top of the hill.   It’s about a 20 minute walk on foot through the city’s hilly terrain.  The easier way is to take the funicular railway from the Pushkinsky Theatre building.  The funicular railway was built in 1962 and spans downtown’s Sukhanov street.

Once at the top, the best viewpoint is located near the Far Eastern State Technical University building. The night view of the lights of Vladivostok is quite beautiful.

CHINA: Chinese shrug shoulders at possible Google pull-out

A man cycles past a Google logo in front of its China headquarters building in Beijing March 21, 2010. REUTERS/Christina Hu

A man cycles past a Google logo in front of its China headquarters building in Beijing March 21, 2010. Credit: Reuters/Christina Hu

Mon Mar 22, 2010 7:02am EDT

Ben Blanchard and Melanie Lee

BEIJING/SHANGHAI (Reuters) - With speculation swirling that Google Inc will soon announce the closure of its China-based Internet portal, the reaction from some Chinese has been hurry up and leave, or simply: so what?

On Friday, the China Business News reported Google may make an announcement as early as Monday on whether it will pull out of China.

The Financial Times, citing a person familiar with the situation, said the company could say on Monday that it will close its Chinese search engine.

Google has not formally unveiled any such plans.

Two months since Google said it would no longer agree to abide by Beijing's censorship rules even if that meant shutting down its Google.cn site, some Chinese Internet users and state newspapers are baying for the company to pull out.

The burst of angry Chinese comments suggested that, in spite of the widespread popularity of Google amongst educated Chinese, the government is steering state-run media and websites to lump the company together with other recent disputes with Washington that have stirred nationalist rancor in China.

"Get the hell out," wrote one user on the website of the nationalist tabloid the Global Times (www.huanqiu.com), in remarks echoed by other readers.

"Ha ha, I'm going to buy firecrackers to celebrate!" wrote another, in anticipation of the company confirming its departure from the online search market.

Joseph Cheng, a City University of Hong Kong politics professor, said China's ruling Communist Party was deploying nationalism to stifle debate about censorship.

"The criticism of cultural exports, or cultural imperialism, is a kind of defense to justify the Chinese authorities' censorship controls," said Cheng.

"In dealing with the American government, the Chinese authorities will try to emphasize that this is only a commercial dispute and has nothing to do with Sino-American relations," he added.

GOOD RIDDANCE?

A Global Times editorial cited online surveys as showing 80 percent of respondents said they could not care less if Google withdrew from China, the world's largest Internet market with an estimated 384 million users.

The saga was a reminder of the country's need to develop its own technology and not rely on foreigners, the editorial said.

"This is a high-tech competition, and also a competition to uphold the state's sovereignty," the editorial said.

Some bloggers went a step further and accused Google of being in cahoots with U.S. intelligence.

"It is understood that Google is very tight with the CIA," wrote "Xiaogui" on the popular portal sina.com.cn. "Take this opportunity to leave now, you spies."

Though Google has remained mum on the progress of talks, the firm's chief executive said earlier this month that an outcome is expected "soon."

The Google case has spread beyond censorship and hacking and has become a diplomatic knot in Sino-U.S. relations, already being challenged by spats over Taiwan, Tibet and the value of the Chinese currency.

The United States is studying whether it can legally challenge Chinese Internet restrictions, a top U.S. trade official said recently.

Over the weekend, a commentary by the official Xinhua news agency accused Google of pushing a political agenda by "groundlessly accusing the Chinese government" of supporting hacker attacks and by trying to export its own culture, values and ideas.

BLOW TO INNOVATION?

Analysts said if Google withdrew from China, the biggest losers would be its millions of Internet users.

With two research and development centres in China, hundreds of sales staff and engineers working on the Google Android platform and other initiatives, analysts said all may come to a halt if Google decides on a pull out.

"This is not a good thing for Chinese netizens because Google has been the leader in innovation in the search engine field," said Cao Junbo, chief analyst with iResearch, a Beijing-based research firm specializing in technology matters.

Currently, Google offers Google Maps, Gmail and free music downloads to Chinese users, all of which could be in jeopardy if the company walks.

Even Google's mobile platform Android is not safe, as Google products such as search which are embedded into the platform will stop working if Google withdraws, making the platform less desirable to consumers, analysts said.

Google's withdrawal will open up China's $1 billion search market to more local firms, Cao said.

The biggest beneficiary will be domestic search leader Baidu Inc, which already has a sophisticated search advertising display system and a robust sales and customer support team.

Others such as Tencent Holdings, China's most valuable Internet company, may also benefit as the firm runs the country's largest instant messaging platform that it could tap into to expand its search network.

"The biggest gainers of Google leaving will definitely be the local firms," Cao said.

(Additional reporting by Stefanie McIntyre in Hong Kong; Editing by Jerry Norton)

View Reuters Article

CHINA: Rio Tinto Employees Say They Took Bribes in China

Published: March 22, 2010

By DAVID BARBOZA

SHANGHAI — Three employees of Rio Tinto, the British-Australian mining giant, agreed to plead guilty Monday to taking bribes while working for the company in China, stunning confessions on the opening day of their three-day trial here.

The employees, including Stern Hu, an Australian national, admitted to receiving several million dollars of bribes, according to their lawyers. A fourth employee is expected to do the same.

The proceedings were largely closed to the public, but an Australian consular official said that Mr. Hu — the focus of the case — had admitted in court Monday to receiving some of the $1 million in bribes prosecutors accused him of taking while at Rio Tinto.

Mr. Hu and the three Chinese employees were detained last July in a high profile corruption case that at the time rocked the global steel industry and even strained diplomatic relations between China and Australia.

After a nine-month-long detention, Mr. Hu and his three Rio Tinto colleagues are on trial this week at the Shanghai No. 1 Intermediate Court, accused of accepting more than $12 million in bribes and also stealing commercial secrets from Chinese state-owned companies.

Now, according to several lawyers involved in the case, all four Rio employees may eventually plead guilty to accepting bribes.

In a statement after the opening day of the trial Monday, Tom Connor said Mr. Hu made “some admissions” and acknowledged taking some of that money.

Zhang Peihong, a lawyer for another Rio Tinto employee standing trial, Wang Yong, said his client has agreed to plead guilty to accepting about $1 million in bribes — much less than the $10 million he is accused of taking.

A spokesman for Rio Tinto declined comment on Monday.

The guilty pleas, which are expected to be formally entered Tuesday, are a dramatic turnabout in the case. Australian had pressed China for months, demanding a fair and transparent legal process, hinting that the employees may have been framed. Prime Minister Kevin Rudd even warned in recent days that “the world will be watching” the trial.

And for much of the past year, Rio Tinto, one of the world’s biggest producers of iron ore, has strongly defended its workers, saying the company has no evidence they engaged in wrongdoing.

The four Rio Tinto employees were initially accused of espionage, which would have fallen under the country’s tough state secrets law, and of causing China “enormous economic losses.” But in August, the four employees were formally charged with lesser offenses: bribery and stealing commercial secrets.

Monday’s portion of the trial focused only on the bribery issue. On Tuesday or Wednesday, the focus will switch to stealing commercial secrets.

Many Western executives doing business in China worry that the four Rio Tinto employees — Wang Yong, Ge Minqiang, Liu Caikui and Stern Hu — may have been unfairly detained because of business disputes with government-owned companies; and that other foreign executives could be targeted.

The timing of the case seemed ominous. Shortly before the July detentions, China’s steel industry association had complained about the skyrocketing price of iron ore and criticized Rio Tinto and other foreign suppliers for a breakdown in iron ore contract talks.

The detentions also came just after Rio Tinto scrapped plans to accept a $19.5 billion investment from Chinalco, one of China’s biggest state-owned mining groups.

Beijing has insisted this is a criminal case and has pressed Australian officials and others to avoid “politicizing” the case.

Yet because Australia is one of the leading suppliers of iron ore to China — iron ore worth billions of dollars and intended for this country’s booming steel industry — the case has become a concern for the top leaders of both countries.

Legal experts say the July detentions and initial allegations that the four Rio Tinto employees were stealing state secrets also suggested the government may have been using the case to punish Rio Tinto.

Western executives were alarmed because in the days after the detentions were announced last July, a spokesman for the foreign ministry dubbed the group spies, and China’s state-owned media published articles saying it was actually the Rio Tinto employees who were bribing government officials to get access to sensitive documents.

Yet in the nine months since the four were detained, the authorities here have announced no other arrests of steel industry officials for bribing Rio Tinto employees or trading in government secrets.

Indeed, prosecutors here reduced the charges to bribery and stealing commercial trade secrets after Australian and even American officials said they were concerned about the case and what it would mean for foreign executives working here.

Since then Australian officials and Rio Tinto executives have been more cautious in their remarks about the case.

Last week, Rio Tinto said that it had formed a joint venture with Chinalco, the Chinese state-owned company, to develop a huge iron ore project in Africa. And on Monday, Rio Tinto’s chief executive, Tom Albanese, spoke at the China Development Forum in Beijing, and pledged to work with China to find mineral resources in China and overseas.

Chen Xiaoduan contributed research.

View New York Times Article

RUSSIA: On this day: 22 March

Nadezhda Krupskaya 

Nadezhda Krupskaya

On March 22 1924, Nadezhda Krupskaya, Vladimir Lenin’s wife, released the notes of an address by Lenin to the Bolshevik party. The piece that Krupskaya presented was a part of the legendary “Lenin’s will”. This document still shrouded in mystery contained Lenin’s ideas about the future of the country and his private opinions about each member of the Politburo. This information could have undermined the position of the first people of the country, particularly Stalin, so it was deliberately kept secret and only made public after Stalin’s death.

After a series of strokes, starting in 1922, Lenin felt the end was drawing near, so, he rushed to put all his incomplete works on paper as a guideline for the rest of the party to follow after he was gone.

It was the political situation Lenin was most worried about. The fierce battles that raged between the Party and the opposition could one day lead to war, and Lenin urged the party members to seek compromise and to be wise while choosing his successor. His major concern was about Stalin and Trotsky*. Trotsky was very unpopular with the old Bolsheviks, and particularly Stalin, who strongly disapproved of his breakaway to the Menshevik wing (a milder and more liberal variation of socialists) and placed little confidence in him.


Stalin’s confrontation with Trotsky worried Lenin. In his notes, he described Stalin as rude and incapable of restoring peace in the party. These characteristics were later exploited in the process of Stalin’s “dethronement” by Nikita Khrushchev. According to him, Lenin never wanted to hand the steering wheel over to Stalin. It wasn’t personal dislike that drove Lenin to do so, but his desire for the party to function properly.


Some other measures that he proposed also speak in favor of this hypothesis. Lenin made a series of comments about a possible cabinet reshuffle and adding new blood to the party. His plan was to attract ordinary people, like workers or peasants with no political background, to the party’s administration, to clean it of corruption. Needless to say, this measure was never considered. Impossible to be implemented by the majority of the party members, the will was set aside and soon forgotten, until Khrushchev opened his Stalin dethronement campaign.

*Leo Trotsky – a leader of the international communist revolutionary movement, Marxism ideologist; one of the brewers of the October Socialist revolution in 1917, founder of the Red Army; People’s Commissar of Foreign Affairs and later People’s Commissar of Defense. In 1923 Trotsky became the head of the opposition; in 1927 he was removed from office and exiled. He was assassinated by a Soviet Secret Service agent in Mexico in 1940.

http://rt.com/Russia_Now/2010-03-22.html