China has pledged to continue reforms to its exchange rate policies at the beginning of high level trade talks with the US.

BBC News
24 May 2010

Speaking at the opening of the talks, President Hu Jintao said he would seek “gradual progress” on reforming the exchange rate of the Chinese yuan.

The US argues China’s currency policy unfairly favours its exporters.

North Korea will also be discussed, following its apparent attack on a South Korean warship.

Although not referring to North Korea directly, President Hu stressed that cooperation was needed to deal with “international hot spots”.

China is North Korea’s closest ally, and has so far refrained from openly criticising its actions.
Yuan ‘undervalued’
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We welcome the fact that China’s leaders have recognised that reform of the exchange rate is an important part of their broader reform agenda

Timothy Geithner US Treasury Secretary S Korea freezes trade with North

Meanwhile the currency is top of the economic agenda.

The US argues that the yuan is deliberately undervalued, giving Chinese exporters an unfair advantage in global markets.

“China will continue to steadily advance the reform of the formation of the… exchange rate mechanism under the principle of independent decision-making, controllability and gradual progress,” President Hu said.     more …

The New York Times
By KEITH BRADSHER
Published: May 16, 2010

HONG KONG — Foreign companies doing business in China are increasingly feeling as if the deck is stacked against them.
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Shiho Fukada for The New York Times

Workers pour liquid into sealed drums at a yellow phosphorus factory in Yunnan Province, China.

China has filed more than a dozen trade cases to limit imports, imposed a series of “buy Chinese” measures and limited exports of some minerals to force multinationals to move factories to China.

Foreign executives in China find themselves increasingly at odds with Chinese officials over these measures, which Westerners view as protectionist and intended to give an edge to Chinese companies. Surveys by Western chambers of commerce of executives show growing disenchantment in the last year and a sense that doing business in China, never easy, is growing harder.     more …

during the President Hu Jintao years, even as China’s economy has raced ahead and a wealthy, sophisticated middle-class has arisen from nowhere, the repression of free speech and other basic freedoms guaranteed by China’s constitution has only increased, consistent with the nearly total lack of political reform during this period.

Asia Times
By John Parker

Although the dispute between the Chinese government and Google continues to evolve, there were signs at the beginning of April that a ceasefire may be taking hold, one that could allow both sides to plausibly claim victory. At the end of March, Google failed to renew its Internet Content Provider (ICP) license in China; since an ICP license is required for all China-registered commercial websites, this effectively sounded the death knell for Google’s simplified-Chinese search engine, google.cn.

All requests for the google.cn website are now redirected to Google’s Hong Kong site, www.google.com.hk. The pullout has obviously damaged Google’s business prospects in China, but it is not clear how much, since the company continues to conduct research and development work in China, as well as serving mainland Chinese customers for the company’s numerous other

products, including mail, translation, online ads, and so on. At the same time, the Mountain View, California-based company could reasonably claim that it had stuck to its well-known “don’t be evil” slogan: the company’s leaders clearly chose principle over profit by pulling out of China, the world’s fastest-growing Internet market.

As for the Chinese government, it sought to force compliance with its policy of censoring the Internet; in this it has succeeded, at least in the short term, since Google’s unwillingness to cooperate with the censorship policy led to the company shutting the door, in spite of its arguably great importance to Chinese Internet users.
As of April 12, the Hong Kong site was freely available.   more …

BBC News
By Chris Hogg
BBC News, at the Boao Forum for Asia, Hainan, China

Allowing the yuan to strengthen against the dollar would hurt the Chinese economy in the short-term, a senior Chinese official has told the BBC.

But Yi Xiaozhun, a vice-minister in the commerce ministry, said he expected the currency to rise in the longer-term.

He accused other countries of trying to force its appreciation now.

There has been speculation that China is preparing to allow the yuan to appreciate before President Hu Jintao arrives in Washington next week.

Mr Yi was speaking at the Boao Forum for Asia, a gathering of senior officials and business figures from across Asia on the southern Chinese island of Hainan.

China’s commerce ministry is close to the country’s exporters, and reports suggest its officials have been lobbying hard against those inside the Chinese government who say the value yuan should now be allowed to rise.

Politicised debate

China, in effect, pegged its currency to the weakening US dollar in late 2008 when the effects of the global economic crisis started to be felt here .

That has given the country’s exporters an unfair advantage ever since, critics say, because when the value of the yuan is artificially low, their goods appear cheaper.

Some American politicians and academics… have politicised this argument
Yi Xiaozhun, Chinese commercy ministry vice-minister

Mr Yi says the crisis is not yet over, and so an increase in the value of the yuan now would hurt China’s economy.

He argues the biggest headache for China is that this is no longer simply an economic problem but has become the focus of relations between the two countries.

“Some American politicians and academics, because of hardship at home, have politicised this argument,” he says.

“They are blaming other countries, including China, for their own problems. This is unreasonable.”

The vice commerce minister refuses to be drawn on what is the appropriate exchange rate for the yuan and the dollar.     more …

Editor’s note: Google announced this week that it would move its Chinese search engine to Hong Kong and stop censoring search results to suit China’s leaders. In China, the government has sought to control how Chinese media portray Google’s decision. Below we reprint the government’s instructions to domestic news Web sites. The instructions were obtained and translated by China Digital Times, a bilingual aggregator of news and analysis run by the Berkeley China Internet Project.  more …

The Obama administration should support U.S. businesses that do the same.

The Wall Street Journal
March 24, 2010
By JOHN BOLTON

Google’s decision to stop censoring searches on its China-based servers, rerouting search requests instead to its uncensored Hong Kong facilities, is historic. Google has shown itself unwilling simply to be on the receiving end of whatever Beijing dishes out—and highlighted the growing importance of Hong Kong and Taiwan in shaping the decisions that foreign businesses in China must make.

When an enterprise of Google’s global dimensions and visibility reverses course in China and is no longer a passive, compliant subject of government diktats, it sends a message to enterprises world-wide: You can do the same. Submissive participation in the mainland Chinese market is neither inevitable nor unavoidable. Do not fear to assert your interests, and those of your present and potential Chinese customers.

For the most part, foreign companies doing business in mainland China previously assumed that their risks lay on the side of not complying with Beijing’s orders, however burdensome or threatening to profits or property interests, physical or intellectual. Leaving the Chinese market was unthinkable, and defying or contesting Beijing’s directions just as unthinkable.

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Bloomberg News

Outside the Hong Kong Exchange
DeSwaan
DeSwaan

Of course, as Google could envision, bucking this conventional wisdom is hardly risk free. Google may be mistaken about its own commercial interests and have to climb down in the near future—Chinese authorities are already filtering results from Google’s Hong Kong search engine for mainland users. Beijing’s rapid and angry response shows it fully understands the dimensions of this clash, and it may yet win, forcing Google back into censoring searches, or pushing it entirely from the mainland for being uppity.

The company announced starkly that “the Chinese government has been crystal clear throughout our discussions that self-censorship is a non-negotiable legal requirement.” That position shows how aggressively Beijing’s current leadership will act to control domestic information flows, and foreign businesses generally.    more …

Asia Times
Mar 18, 2010
By Peter J Brown

For the first time in well over a decade, China has limited rising spending on defense to a less than double-digit increase. In early March, Beijing announced that the 2010 defense budget would total approximately 532 billion yuan (US$78 billion), with the 7.5% increase representing half the 14.9% rise approved in 2009.

China is accustomed to being accused of not providing accurate information. Jia Yong, a member of the National Committee of the Chinese People’s Political Consultative Conference National Committee (CPPCC), recently described these allegations as “groundless”.

Japan has consistently expressed concerns about China’s military spending. In light of Chinese President Hu Jintao’s 2008 promise that China “would not spark an arms race with its neighbors or pose a military threat”, Asia Times Online asked
several experts to assess the impact of the new defense budget on Japan. We put the question to them twice in somewhat different statements.

An immediate response came from Michael Green, Japan Chair and a senior adviser at the Center for Strategic and International Studies in Washington, DC.

“It is the nature of Chinese deployments and operations rather than the official number that is at issue,” said Green. “But the lower number doesn’t hurt China’s image!”     more …

A Chinese food expert writes a letter exposing malpractice in the industry

Epocjh Times
Mar 14, 2010
By Wang Qian & Yu Lian
Sound of Hope Radio

A food processing industry veteran in China’s Hubei Province had a letter published last week exposing what he regards as severe food safety problems in China.

Published in the Wuhan Daily News on March 7, Li Deshou’s letter has since been widely quoted by many Chinese bloggers. He pointed out that food safety issues are terrible and widespread, and that authorities have to take immediate action.

Mr. Li, Chairman of the Grain Association in Guangshui City and Vice Chairman of the Grain Association in Suizhou City, has been in the food processing industry for 17 years and has been directly involved in selling rice.

He stated that almost all of the rice sold in Wuhan from Suizhou has been polished with soybean oil. “Polishing rice with soybean oil has become a common under-the-table practice for some unethical plants.”

Oil added to rice becomes rancid easily and can therefore cause harm to the human body if eaten. Some unethical processing plants even use industrial oil; the potential consequences of this practice can range from damage to the digestive and neural systems to death, according to Mr. Li’s letter.    more …

BBC News
14 March 2010

Chinese Premier Wen Jiabao takes a question at a news conference at the end of the NPC meeting – 14 March 2010
US arms sales to Taiwan violated China’s sovereignty, Mr Wen said

Chinese Premier Wen Jiabao has rejected criticism that China is keeping its currency undervalued in order to boost exports.

He said keeping the yuan stable was “an important contribution” to global recovery from the economic downturn.

He was speaking at the end of China’s annual parliamentary session.

Mr Wen also said that recent strains in ties with the US were Washington’s fault, citing arms sales to Taiwan and a White House visit by the Dalai Lama.

Speaking to reporters in Beijing, Mr Wen denied China’s currency, the yuan, also known as the renminbi, was undervalued.

US legislators and trade groups say the yuan is kept up to 40% below what its value should be against the US dollar.

Sovereignty ‘violated’

“I don’t think the renminbi is undervalued,” Mr Wen said at Sunday’s news conference in the Great Hall of the People.

“We oppose all countries engaging in mutual finger-pointing or taking strong measures to force other nations to appreciate their currencies.”

The yuan was tied to the dollar until 2005 when it was allowed to rise in value by about 20%    more …

Reuters
Feb 4, 2010
Chris Buckley – Analysis
BEIJING

BEIJING (Reuters) – “Ride on a tiger and it’s hard to climb down,” goes a Chinese saying that is proving apt for Beijing’s quarrels with Washington this year, when swollen ambitions at home are driving China on a harder tack abroad.

Barack Obama  |  China  |  COP15

China’s outrage over U.S. arms sales to Taiwan and President Barack Obama’s planned meeting with the Dalai Lama has shown that, in the wake of the global financial crisis, Beijing is growing pushier in public.

In past decades, a poorer, more cautious China greeted U.S. weapons sales to the disputed island with angry words and little else.

Not now, as China enters the Year of the Tiger in its traditional lunar calendar cycle of talismanic animals.

The Obama administration last week announced plans to ship $6.4 billion of missiles, helicopters and weapons control systems to the self-ruled island Beijing calls its own. China threatened to downgrade cooperation with Washington and for the first time sanction companies involved in such sales.

Beijing this week also condemned Obama’s plan to meet the Dalai Lama, the exiled Tibetan leader reviled by China.

China’s loud ire adds to signs the country is becoming surer about throwing around its political weight, growing along with an economy soon likely to whir past Japan’s as the world’s second biggest, though it will still trail far behind the United States.

Behind this assertiveness are domestic pressures likely to make it harder work for China’s leaders to cool disputes with Washington and other Western capitals.

“There is this paradox of increasing confidence externally and lack of confidence domestically,” said Susan Shirk, a professor specializing in Chinese foreign policy at the University of California, San Diego.

“There’s also what I consider a serious misperception of the country’s economic strength and how that translates in power.”    more ….