Sunday, April 28, 2013

China Goes Gold Crazy. Why Now?

A picture shows 1-kilogram gold bars at the ma...
Image credit: AFP/Getty Images via @daylife
Spurred by a sudden drop in prices, Asians in the last two weeks have gone on a gold-buying binge.  The Indians, the world’s largest net importers of the yellow metal, have been snapping it up of course, and so have the Japanese, now concerned about a falling yen and rising inflation.  Hong Kong residents descended on the stores, but none have been so enthusiastic in stocking up on the commodity as Chinese from the Mainland.

Mainland Chinese purchasers have been ferocious.  First, they emptied stores in their own country.  Caibai, Beijing’s largest gold merchant, had a queue 30 feet out the door on the morning of the 19th.  “So many people in line,” remarked a customer in Nanjing, where one person splashed out 2.9 million yuan on ten gold bars each weighing a kilogram.  Retailers ran out of stock in Guangzhou.  The China Gold Association reported that on the 15th and 16th retail sales of gold tripled across China.  Daily sales soared to five times the usual level at one retail chain.

Volume on the Shanghai Gold Exchange, considered a proxy for the metal’s demand in China, surged, setting consecutive records of 30.4 metric tons on the 19th and 43.3 tons on the 22nd.  The previous record was 22.0 tons on February 18 of this year.

As Chinese emptied the shelves in their own country, they also went south and swarmed shops in Hong Kong, sometimes in groups.  Chow Tai Fook, the world’s largest jeweler by market capitalization, said some stores popular with Mainland Chinese ran out of gold bars and that demand had not been as strong since the late 1980s.

Demand for “9999” bullion—99.99% pure gold—was five times normal according to Haywood Cheung Tak-hay, president of the Chinese Gold & Silver Exchange Society.  His organization effectively ran out of holdings as members tried to meet supply shortfalls.  “In terms of volume, I haven’t seen this gold rush for over 20 years,” Cheung told the Financial Times.  “Older members who have been in the business for 50 years haven’t seen such a thing.”

What’s behind the unprecedented surge in buying?  Obviously, the Chinese took advantage of a dip in prices—the deepest since 1983—but they kept on buying as the commodity clawed back some of its losses.  

Unlike the Japanese, they cannot be worried about a plunging currency.  Nor can the Chinese be troubled by climbing prices.  For one thing, the consumer price index has been signaling lower Chinese inflation in the months ahead.  In March, the CPI increased just 2.1% from a year earlier, compared to a 3.2% rise in February.  Of special importance were food prices, up 2.7% last month versus a 6.0% spurt the month before.  In Q1, prices increased just 2.4%, about the same rate as the previous quarter. 

Although Beijing’s CPI undoubtedly understates inflation, it nonetheless shows a general weakening of price pressure, something mirrored in the continually falling producer price index.  Because China is still a manufacturing-based economy, the fall in the PPI means the country is actually suffering deflation.  Producer prices fell 1.6% in both January and February and 1.9% in March.
A tumbling PPI is due in part to weakening commodity prices, but global prices are falling largely because of the stumbling Chinese economy.  And that brings us full circle because gold prices plunged on the 15th in part because China’s National Bureau of Statistics had reported that Q1 GDP growth came in at 7.7%, well below consensus estimates of 8.0%.  

Moreover, the global sell-down on the 15th—stocks took a beating too—would have been worse had analysts focused on Chinese electricity statistics, manufacturing indexes, and corporate results, all pointing to an economy growing not at 7.7% but in the low single digits. 
It’s probably not a coincidence that the Chinese were the biggest buyers of gold in the last two weeks and, aside from North Korea, China has the most fragile economy in East Asia at the moment.  The concern about the economy is evident throughout Chinese society. 

Especially at the top.  On Thursday, Chinese state media reported that the Politburo Standing Committee convened a special meeting to consider the economy.  Normally, the body takes up economic matters only at fixed times, the beginning, the middle, and the end of a year.  The last time it met to discuss the economy in an April was in 2004.

No wonder the Chinese are now stockpiling shiny yellow ingots, coins, and bracelets.

Heroin With Chinese Connections

Punjab drugs racket has Chinese connection too

Chandigarh, April 1 (IANS)

Having busted an international drugs racket worth millions of dollars operating from Punjab, police said Monday that there is a Chinese connection to the crime.The drugs racket has already been linked to the UK, the Netherlands, Canada, and Afghanistan-Pakistan.

Police said five Chinese associates had visited Chandigarh in 2010 for a quality check of methamphetamine, a substance known as “Ice” in rave party circles, and pseudophedrine, which is used as raw material in the manufacture of Ice.“The identity of the Chinese visitors has been established; further action is being taken,” a police spokesman said here Monday.

No further details of the Chinese men have been disclosed so far, pending investigation.Since the first seizure of over 28 kg heroin March 7, Punjab Police claimed to have seized huge quantities of drugs, including lifestyle drugs used in parties, from various places. Based on international prices for these drugs, police said the haul was valued at Rs.484 crore.

The Fatehgarh Sahib district police had Sunday recovered 10 kg of “Ice” and 230 kg of pseudophedrine.The latest seizures were made from Panchkula (near Chandigarh), Patiala and Sangrur.Police say international boxer Vijender Singh consumed heroin 12 times from December 2012 to February 2013, while his colleague Ram Singh took it five times.

About Vijender, the spokesman said: “During investigation, it was established that boxers Ram Singh and Vijender Singh took heroin from (arrested Canada-based drug dealer) Anoop Singh Kahlon and Rocky for personal consumption between December 2012 and February 2013.“As per investigations conducted so far, Vijender Singh consumed the drug about 12 times and Ram Singh about five times. However, they did not actively connive with the smugglers in their activities and nothing was recovered from them – as such both of them are not being arrested in the case at this stage,” the spokesman said.

Ram Singh, a constable, has been dismissed from the police department since it was established that he frequented the smugglers and procured heroin from them.Vijender Singh is a deputy superintendent of police (under training) with Haryana Police.

About the seizures, the spokesman said: “Both the manufactured Ice and the raw material were being exported to Britain, Canada and Holland by this group of narcotic smugglers through Kulwant Singh, a British national, who was arrested in this case from Delhi on March 19.“The total wholesale price of these seizures in the international market is Rs.121 crore and the international retail price approximately Rs. 484 crore, according to the figures provided by Kahlon and Kulwant Singh,” he added.

The Fatehgarh Sahib police had earlier (March 7), recovered over 28 kg heroin, worth Rs.130 crore in the international market, from Kahlon’s possession and had arrested him. The drug haul was made from Kahlon’s flat in Zirakpur, near Chandigarh, and his car.

Police also found an SUV, registered in the name of Vijender Singh’s wife Archana, parked outside Kahlon’s flat. Kahlon reportedly told the police that Vijender and fellow boxer Ram Singh were his “clients”.Punjab Police has already questioned Vijender in connection with the drugs racket. The boxer has, so far, refused to give his blood and hair samples to police.

“Fifteen people, including two Canadian citizens and one Briton, have been arrested so far in this case, whereas more than 25 others in the network are absconding. Police parties have been dispatched to UP, Delhi and Mumbai, apart from several places in Punjab for further investigation and to apprehend the absconders,” the spokesman said.

Among those booked in the drugs haul case were a serving sub-inspector of police, Sarabjit Singh. A retired DSP of the Uttar Pradesh Police, Kirpal Singh, who now runs a pharmaceutical factory in Meerut, has also been arrested. Police said his son is absconding.

Nineteen police officials who were part of a team that busted the international drugs racket have been promoted by Punjab Police.

Saturday, April 27, 2013

Bird Flu Advances

H7N9 bird flu spreads to central China's Hunan

27 Apr 2013

China's deadly outbreak of H7N9 bird flu has spread to the central province of Hunan, local health authorities said Saturday, the third announcement in three days of a case in a new location.
A hen for sale at a poultry market in Huaibei, China's Anhui province. (AFP Photo)

A 64-year-old woman in Shaoyang City, who developed a fever four days after coming into contact with poultry, was confirmed to have the virus, the Xinhua state news agency reported.

It follows the first confirmed cases in the eastern province of Jiangxi on Thursday and the southeastern province of Fujian on Friday.
More than 110 people in mainland China have been confirmed with H7N9, with 23 deaths, since the government announced on March 31 that the virus had been found in humans. Most cases have been confined to eastern China. The island of Taiwan has also reported one case.

A Chinese expert earlier this week warned of the possibility of more cases in a wider geographical area.
"Until the source of H7N9 avian influenza is... brought under effective control, sporadic cases might continue to appear," said Liang Wannian of China's National Health and Family Planning Commission.

Poultry has been confirmed as the source of the H7N9 flu among humans, but experts fear the prospect of such a virus mutating into a form easily transmissible between humans, which could then have the potential to trigger a pandemic.

Revenge Of The Nerds

Made in China: The Revenge of the Nerds

The nerds are running the show in today's China. In the twenty years since Deng Xiaoping's reforms kicked in, the composition of the Chinese leadership has shifted markedly in favor of technocrats -- that is, individuals holding actual or putative political office who majored in natural sciences or engineering in college.

The Maoist Reds who dominated politics during the Cultural Revolution have long since been eclipsed by resurgent Experts. These techno-intellectuals' were once themselves targeted by the Gang of Four and zealous Red Guards because of their suspect class backgrounds, allegedly elitist attitudes, and affiliations with the "capitalist roaders," Liu Shaoqi and Deng himself. But now they hold sway in the Politburo, the Central Committee, the National People's Congress, and even provincial, municipal, and county governments. It's no exaggeration to describe the current regime as a technocracy. Yes, China is the land of Nerd Empowerment.

Take a look at the seven members of the current Standing Committee of the 15th Central Committee. The Big Three in the Chinese oligarchy were all trained as electrical engineers: President Jiang Zemin at Shanghai's Jiatong University, Li Peng in the Soviet Union, and Premier Zhu Rongji at Beijing's prestigious Tsinghua University. Hu Jintao graduated from Tsinghua in hydroelectric engineering. Wei Jianxing studied mechanical engineering at the Dalian Engineering Institute. Vice Premier Li Lanqing earned his degree in automotive engineering from Fudan University. Of the seven, only Li Ruihuan did not graduate from a four-year institute with an engineering degree. But he did earn a college certificate by taking night classes at the Beijing Spare-time Architecture Engineering Institute.

How did this happen? At a basic level, you might say that technocratic politics is a natural fit with the Chinese political culture, steeped as it is in the Confucian tradition. From time immemorial, statecraft and scholarship have been intertwined in the Chinese mind. Beginning as early as the Han Dynasty (206 BC--AD 220) officials were selected in ostensibly meritocratic civil service examinations, in which they were tested on their knowledge of and familiarity with the Confucian canon. "Let those who labor with their heads rule over those who labor with their hands," Mencius said, codifying an attitude that remains ingrained in the Chinese approach to leadership.

New wine filled this old bottle during the late 19th and early 20th centuries, as a bureaucracy predicated on Confucian learning proved inadequate to the challenges of modernity. Supplanting Confucianism, at least among the cognoscenti, was the belief system that they thought lay at the heart of Western wealth and power: Science. By the time of the May Fourth Movement (which centered on the student demonstrations of May 4, 1919), science -- or, more accurately, scientism -- had become a secular religion among China's forward-thinking New Youth. It was in large part the supposedly scientific basis of Marxism-Leninism that led many of the May Fourth youth to embrace that ideology. (Ironically, it was in the name of Marxism-Leninism that China's scientists suffered their darkest hour, during the Cultural Revolution.)

May Fourth Movement

After the Maoist madness abated and Deng Xiaoping inaugurated the opening and reforms that began in late 1978, scientific and technical intellectuals were among the first to be rehabilitated. Realizing that they were the key to the Four Modernizations embraced by the reformers, concerted efforts were made to bring the "experts" back into the fold.

During the 1980s, technocracy as a concept was much talked about, especially in the context of so-called "Neo-Authoritarianism" -- the principle at the heart of the "Asian Developmental Model" that South Korea, Singapore, and Taiwan had pursued with apparent success. The basic beliefs and assumptions of the technocrats were laid out quite plainly: Social and economic problems were akin to engineering problems and could be understood, addressed, and eventually solved as such. Qian Xuesen, a protégé of Theodore von Karman and the father of the Chinese space program, taught at MIT in 1940s and returned to China in 1955. He became a Central Committee member and Vice Chairman of the National Committee of the Chinese People's Political Consultative Conference. In the early 1980s Qian proposed that by the year 2000, all cadres should be college graduates, that all leaders at county and bureau level should hold masters degrees, and all full or deputy ministers and provincial governors should hold PhDs. Qian also likened the government to the design department in an aerospace engineering outfit: He said it should be mainly composed of scientists and engineers.

The open hostility to religion that Beijing exhibits at times -- most notably in its obsessive drive to stamp out the "evil cult" of Falun Gong -- has pre-Marxist roots. Scientism underlies the post-Mao technocracy, and it is the orthodoxy against which heresies are measured.

Read more:,9171,165453,00.html#ixzz2RgkmqpyY

Ooops Nasty

Delaware restaurant Padi faces criticism after posting racial slurs about customers online
By  | Shine On 
Manager Aaron Kwan says he wasn't behind the offensive posts. (Delaware Online)Manager Aaron Kwan says he wasn't behind the offensive posts. (Delaware Online)Padi restaurant in Hockessin, Del. has come under fire for posting pictures of three customers and their receipts, showing little or no tips, on their Instagram account.

The offensive postings, which included insulting and racist hashtags, appeared on restaurant manager Aaron Kwan's Instagram account using the screen name fumanchu85 and the restaurant's Facebook page, reports  

Since news of the story broke in mid-April, the social media accounts have seemingly been removed, but were said to include hashtags such as #deuchbag #cheap #jew #indian #hillbillies.An example from the Instagram account includes a photo of a $53.80 bill with a $5.20 tip from a customer with an Indian surname.  Fumanchu85 wrote: "What do you expect from a last name like that?" along with several racist hashtags.

This offensive post was posted on Aaron Kwan's Instagram account. This offensive post was posted on Aaron Kwan's Instagram account.Another example includes a photo of a bill from a customer showing that the patron apparently left no tip on a $42.55 bill.

Fumanchu85 wrote: "#cheapass ... #jews #disrespect #jerk ... #hillbillies #cheap Didn’t tip a single dollar."Also see: Conflict Kitchen restaurant only serves food from countries the U.S. is at odds with.

Kwan denies that he made the offending posts, which span over a four month period, and suggests the perhaps one of six other employees who also have access to those social media accounts, made the posts.After being questioned by a reporter, Kwan said he couldn't remember if he posted the offensive material."Um, I don’t recall that. I have to look through that. I mean, I have the right to take all of this down. It’s not me, probably."

Kwan is the nephew of restaurant owner, Eve Teoh, who claims she believes it was not him who posted the offensive material. Yet she has put Kwan on an unpaid leave for an indefinite period of time.“We sincerely apologize for those actions, and want the community to know that those actions and opinions are not consistent with our beliefs and values, nor are they welcome at our restaurant," Teoh says in an open letter for customers.

"Those responsible for insulting our customers and members of the community will be held accountable, and that we are taking steps to insure that this type of behavior never happens again," the letter continues.

Also see: Restaurant slams customers that don't show up on Twitter

This isn't the first time a restaurant has come under fire for attacking customers through social media.A top L.A. restaurant recently slammed customers for not showing up for dinner reservations on the company Twitter account. The tweets were posted by the owner of the acclaimed Beverly Hills restaurant Red Medicine.And customers are not immune to making bad judgement calls involving social media either.

Back in 2011, a patron was kicked out of Down House restaurant in Houston for posting a derogatory tweet about one of the staff members while she was there. The owner saw the tweet from home and called the restaurant to ask her to leave.

Thursday, April 25, 2013

Hua Jun Zhao Accused of Economic Spying for China

Wisconsin Researcher Accused of Economic Spying for China

A Medical College of Wisconsin researcher was charged with economic espionage for stealing a patented cancer-research compound to give to a university in China.
Hua Jun Zhao, 42, may have stolen the compound from a Medical College office in Milwaukee and taken steps to deliver it to Zhejiang University, according to a Federal Bureau of Investigation agent’s affidavit in support of a criminal complaint dated March 29.

  Hua Jun Zhao

 Hua Jun Zhao may have stolen the cancer-research compound from an office at the Medical College of Wisconsin and taken steps to deliver it to Zhejiang University in China. Source: Milwaukee County Sheriff's Office via Bloomberg
A copy of the complaint against Zhao was obtained today from the office of Milwaukee U.S. Attorney James L. Santelle.
“There is probable cause to believe that Hua Jun Zhao has committed the crime of economic espionage,” FBI Special Agent Gerald Shinneman wrote in his nine-page affidavit.

Zhao joins a Motorola Inc. engineer and a researcher at Dow AgroSciences LLC who, in separate cases, have been accused by the U.S. of economic espionage or stealing on behalf of Chinese entities.
Zhao is in the Milwaukee County Jail and no bail has been set, said Fran McLaughlin, a spokeswoman for the Milwaukee County Sheriff’s Department.

Hearing Set

Dean Puschnig, a spokesman for Santelle, declined to comment on the status of Zhao’s case. Theft of trade secrets to benefit a foreign government is punishable by as long as 15 years imprisonment. A preliminary hearing for Zhao is set for April 11 before Magistrate Judge Patricia Gorence in Milwaukee.

Juval Scott, a federal public defender representing Zhao, said in a phone interview today that her office had no information beyond what is contained in the criminal complaint.

“We’re looking forward to discovery,” Scott said. “This is an unusual case. Nationwide there have only been a few cases.”
Hanjuan Jin, a former Motorola software engineer, last year was sentenced to four years in prison for stealing trade secrets from the company. While accused of planning to share that information with a company that had ties to the Chinese military, she was acquitted of economic espionage.

A former Dow AgroSciences researcher, Kexue Huang, was sentenced to seven years and three months in federal prison in 2011 after pleading guilty in two consolidated cases to stealing trade secrets to benefit a Chinese university.

Three Bottles

Zhao had been conducting pharmacology research at the university as an assistant to Dr. Marshall Anderson, according to Shinneman’s affidavit.
On Feb. 22, Anderson reported to university security that three bottles of a powdery compound identified only as C-25, for which he held the patent, had disappeared from his office, the FBI agent said. The vials were worth about $8,000, Shinneman said.

A review of security video showed Zhao was the only person to enter or leave Anderson’s office around the time the bottles disappeared, according to the affidavit.
University security also learned Zhao had been in China from December to February and stated on his resume that he was an assistant professor at Zhejiang University, Shinneman said.
Zhao also claimed on the website ResearchGate that he had discovered a cancer-fighting compound and wanted to bring it to China, the FBI agent said.

Plane Tickets

Federal agents, with a search warrant for Zhao’s residence on March 28, found a receipt for a package sent to his wife in China a month earlier, together with plane tickets for a flight from Chicago to China, scheduled to depart today, Shinneman said.

At a detention hearing yesterday in Milwaukee, Assistant U.S. Attorney Tracy M. Johnson told Gorence that Zhao had sold his car prior to his arrest. Johnson told the judge that in addition to his wife, Zhao has a son living in China.
While Zhao may not have known about the case, “he had an inkling there was a problem,” Gorence said at the hearing.

The case is U.S. v. Zhao, 13-mj-00220, U.S. District Court for the Eastern District of Wisconsin (Milwaukee).

To contact the reporters on this story:
Andrew Harris in the Chicago federal courthouse at

Marie Rohde in Milwaukee at

To contact the editor responsible for this story:
Michael Hytha at

Chinese cyber-espionage rising

Chinese cyber-espionage rising, says Verizon annual report

About 20% of the analyzed data breaches appear to involve cyber-espionage, mainly Chinese

By , Network World
April 22, 2013
Network World - Cyber-espionage originating from China has become a top source of data breach incidents, according to an annual report from Verizon.
The report found Chinese spying and theft of sensitive corporate information, such as intellectual property, accounted for about 20% of the 621 data breach cases last year that Verizon analyzed.

The data-breach victims are companies and government agencies around the world that are either Verizon's customers or case information was provided by the U.S. Secret Service and similar law-enforcement agencies in North America, Europe, Asia (though not China) or Latin America. Cyber-espionage from "threat actors in China" is hardly new, says Marc Spitler, senior analyst on Verizon's risk team, but because there are now better ways to track these cyberattacks, a clearer picture is emerging.

ROUNDUP: The year's worst data breaches -- so far 

According to the report, virtually all (96%) of the data-breach incidents categorized as espionage involved China. And 95% of attacks tied to state-affiliated espionage employed phishing as a means of establishing a foothold in their victims' systems.

However, the majority of the incidents involve financial-related cybercrime, including payment-card theft and fraud committed by tampering with ATM machines.
One of the biggest problems stems from theft of payment card information from the merchants' Internet-facing point-of-sale devices, says Spitler, adding, "this is typically a small retailer."

When it comes to vulnerabilities that create risks, the main security failures are related to weak password authentication, processes and configuration, he says. The more advanced attacks that involve sophisticated malware or zero-day attacks occur but aren't as commonplace. That's perhaps because criminals find it easier to "pick the low-hanging fruit."

One question Verizon seeks to address in its annual report is whether a data breach of a company is caused by an outsider, an insider or a "partner," meaning a close business partner with access to a network or holding sensitive information related to another company. The breach might be malicious or accidental.

Accord to the report, "partner actors" constitute only 1% of breaches under review, while "internal actors" who are company insiders accounted for 14%. Those rogue employees were most often involved in the payment chain -- such as cashiers, waiters and bank tellers -- though in larger organizations the chances that systems administrators were the involved in some way in a data breach grows. But the "external actors -- the outsiders who had no trust or privileged access to the corporate network -- accounted for over 90% of the data breaches under review, whether it involved the roughly 80% involving financial crime or the 20% involving cyber-espionage.

In more than three-quarters of the cases, the country origin of the "threat actor" was discernible, according to the report, adding that "motive correlates very highly with country of origin."

"The majority of financially motivated incidents involved actors in either the U.S. or Eastern European countries (e.g., Romania, Bulgaria, and the Russian Federation). A whopping 96% of espionage cases were attributed to threat actors in China and the remaining 4% were unknown. That may mean that other threat groups perform their activities with greater stealth and subterfuge. But it could also mean that China is, in fact, the most active source of national and industrial espionage in the world today."

Ellen Messmer is senior editor at Network World, an IDG publication and website, where she covers news and technology trends related to information security.. Email:

Read more about security in Network World's Security section.

Bird Flu Clues Emerge

Chickens at live markets caused bird flu in humans, Chinese scientists find

Chickens at live markets caused bird flu in humans, Chinese scientists find

FILE - In this April 3, 2013 file photo, chickens are seen at a chicken farm on the outskirts of Shanghai, China. Chinese scientists have for the first time found strong evidence of how humans got infected with a new strain of bird flu: from chickens at a live market. The research was published online Thursday April 25, 2013 in the journal Lancet. (AP Photo/Gillian Wong, File)

LONDON - Chinese scientists have for the first time found strong evidence of how humans became infected with a new strain of bird flu: from chickens at a live market.
Chinese scientists compared swabs from birds at markets in eastern China to virus samples from four patients who caught the new H7N9 virus. The scientists found the virus from one patient was nearly identical to one found in a chicken. The research was published online Thursday in the journal Lancet.

Finding definitive proof of how patients were infected is very difficult and experts have so far struggled to find much virus in birds. Despite taking nearly 48,000 samples from animals in live markets, Chinese officials found only 39 positive tests for H7N9. Experts had suspected birds in live markets to be the source of infection but weren't sure if other animals or wild birds might also be responsible.

Health officials have so far refrained from recommending any wide-scale slaughter of poultry to contain the disease, one of the main tools used previously to combat another bird flu strain, H5N1. Unlike that strain, H7N9 doesn't appear to sicken chickens, giving experts fewer signs as to where it might be spreading.

Chinese authorities have shut down live poultry markets in many affected regions, which seems to have slowed down the virus. Still, Taiwan reported its first case earlier this week.
So far, H7N9 has infected more than 100 people in China and killed more than 20.

Read more

Wednesday, April 24, 2013

5 ways to fight back against Chinese cyber attacks

APRIL 24, 2013, AT 8:28 AM

The debate over the Cyber Intelligence Sharing and Protection Act is largely a debate about how Congress will allocate authorities and powers to fight against Chinese cyber-espionage, which siphons off from the U.S. economy as much as $100 billion a year in intellectual property and proprietary information. 

CISPA is controversial because it vaguely defines what a "cyber threat" actually is, immunizes U.S. companies who share personal information with the government, lacks oversight mechanisms to prevent abuse by the government, and militarizes what is, in essence, a law enforcement function — an FBI and Department of Homeland Security function.

That latter objection is based on the Obama administration's intention to fight Chinese crime using a variety of different mechanisms. Importantly, it wants to determine how to fight— it does not want Congress to tell them how and when cyber information must be shared between private companies, the FBI, the CIA or the National Security Agency. 

Still, the White House has not explicitly said that President Obama won't allow some version of 
CIPSA to reach his desk. It has said that personal privacy is not well-protected by CIPSA, but traditionally, the executive branch has used this excuse as a fig-leaf to cover their opposition for other reasons.

So what can the U.S. do to reduce the cyber threat from China?  

1. It can build an electronic wall around the country, forcing all Internet traffic to be 
subject to deep packet inspection; and then, to compare those packets against known 
signatures from China; segregate them; eradicate the malware from them, and then 
let them through. 

As I've written before, this is something the National Security Agency believes it CAN do but 
something that virtually every stakeholder except those inside the government believe would be an awfully hard sell to the American people. 

2. It can require, or encourage, major technology companies that serve as 
Internet gateways for most Americans to boost their own cyber defenses
and then share, with immunity, suspected cyber threats with the government in 
real-time, allowing the NSA to swoop in and solve the problem. This is, incidentally, 
the CISPA approach. 

3. It can secretly share with the big Internet companies the cyber techniques 
and tactics used by Chinese corporations and the military, giving U.S. companies a 
chance to develop cyber counter-measures. It can work in secret with companies to lure 
hackers from China into systems, and then manipulate those hackers into divulging 
attack patterns, which can be reverse-engineered to fortify defenses. Publicly, it can 
enforce its own laws against hacking and set an example for the world to follow. 

4. It can fight back, engaging in tit-for-tat  brinksmanship, hoping to convince 
the Chinese to back off by demonstrating the capacity of U.S. computer network 
operations. Though there is a body of secret law authorizing offensive cyber exploitation 
against China, the Obama administration doesn't want to engage in "war," as 
commonly understood. Less kinetic means include sanctions, property seizures and 
military deception/information operations campaigns.

5. It can provide significant incentives for individuals and corporations to 
protect themselves, allowing free market mechanisms to determine the structure and 
rules of economy-wide computer network defense. For this approach to be effective, 
there has to be a broad understanding of what the threat is, what can and can't be done 
about it, and informal "rules" to shame/encourage those who don't and do participate. 

It can also work with companies that do major business with China to influence Chinese 

policies; it can propose a global treaty that would set clear guidelines and an enforcement 
mechanism. It can, can, can, but there are so many ifs, ands and buts to deal with it that 
they — we — probably won't, not for awhile anyway.

Some combination of all of these approaches is going to be the de facto law of the land, 
even though the community of smart people who debate cyber security still haven't 
agreed on a set of basic propositions, like whether it is possible to determine 
precisely where an attack emanated and what its motive actually was and who can be blamed for it.

But the U.S. is not powerless. And that's the point.

Sunday, April 21, 2013

Land Grab: Bahamas

Chinese farming investment on Abaco

Bahama Pundit | 28 April 2010

BAIC’s Assistant General Manager for agriculture, Arnold Dorsett (in cap) holds the Chinese team’s attention about what elephant grass is. (BIS photo/Gladstone Thurston)
by Larry Smith

MARSH HARBOUR, Abaco—After trumpeting Chinese investment in "a very large agricultural project" on Abaco that would be up and running by September, senior government officials are now backing off the subject.

Chinese experts visited Abaco at least twice recently, with a view to developing vegetable, fruit and livestock production on 5,000 acres of prime land. Published reports say the Chinese are also talking about food processing plants and providing millions of dollars in supplies and equipment to local farmers.

But Agriculture Minister Larry Cartwright and Bahamas Agricultural and Industrial Corporation chief Edison Key both said a few days ago there is nothing to discuss. Their reticence probably has a lot to do with the undercurrent of opposition to the Chinese initiative among Abaco's farmers and environmentalists.

"You just want to write about that so people can jump down my throat," Key told me when I asked whether it was he or the Chinese who had initiated the talks.
I spoke to Key at the All-Abaco Agribusiness Expo in Marsh Harbour over the weekend - a colourful event that provided a good feel for the state of farming on the one island where it has enjoyed some success. It was opened by the prime minister, who acknowledged that while food security was a serious matter, government agricultural aid over the years had produced little value for money.

Although Abaco briefly exported sisal, pineapples and citrus in the 19th century, modern commercial farming began in the early 1950s, with the arrival of a retired American industrialist named James Crockett at a time when thousands of Bahamians were still working on Florida farms because of the lack of opportunities at home. Crockett bought more than 2,000 acres of Crown land near Marsh Harbour to start the Heveatex Plantation in 1956. And a young Edison Key became his diesel mechanic.

Ten years later Owens-Illinois exchanged its logging concession for 20,000 acres of land south of Marsh Harbour that it cleared to grow sugar cane. A processing plant was also built, the remains of which can still be seen near Snake Cay, but after two years of losses the company realized Abaco could not grow a cane crop good enough to produce raw sugar profitably.

By 1978, the cane plantation had reverted to the government, and it is this already prepared land that BAIC is now leasing to local farmers at $25 per acre per year. Also on offer is land north of Treasure Cay that was originally farmed by Edison Key and Morton Sawyer in the 1970s.

"I shipped 600,000 bushels of cucumbers a year to the US in the 70s," Key told me on Saturday, "and we also grew peppers and tomatoes. Then we converted to citrus, which was a year-round crop and less labour intensive. We have the potential to feed this country and to export - but you have to have the labour."

In the late 1980s the original Key-Sawyer farm was renamed Bahama Star. It continued to export limes, grapefruits, oranges and lemons to Florida until the early 2000s, when citrus canker disease forced the industry to shut down. In 2005 all the orchards were destroyed by government order.

This left only a handful of viable farming operations on Abaco, most of which had booths at the agribusiness expo. They include Nick Miaoulis' Neem farm, which packages some 20 different organic products made from the oil and leaves of the 7,000 Neem trees he planted on 120 acres south of Marsh Harbour. Native to South Asia, Neem has proven pharmaceutical properties.

The Abaco Sod Farm has leased 400 acres of the old cane plantation and ships some 100 pallets of grass sod a week to Nassau. Abaco Big Bird produces thousands of chickens for the local and Nassau markets. Mel Wells' Pepperpot Farms plants seven acres of vegetables at a time and also produces honey from 30 beehives. Lightbourne Farms grows hydroponic produce on 10 acres near Spring City. And Pauline Sawyer plants about 50 acres of vegetables that are mostly marketed in Nassau. All told, there are about 20 small farmers that sell to the Abaco market.

Those I spoke to at the expo had serious misgivings about the Chinese, fearing that any large-scale project would flood the local market and put them out of business. But obviously, much of their apprehension is fed by a lack of information. And since top government officials have backed off the subject, clarification is hard to come by.

Initial reports said the Chinese were interested in large-scale farming of vegetables, fruit and livestock. They proposed a processing plant, cannery and abattoir, and said they would give local farmers as much as $8 million dollars in equipment, as well as six 40-foot trailers filled with coconut and pineapple slips, seeds and other supplies.

"The extent to which they will be involved at this point we have not determined, but they are interested in helping in all areas," Edison Key was earlier quoted as saying. One question to be answered is why? Are we talking about an aid programme like the US-led Bahamas Agricultural, Research and Training and Development project on Andros in the 1970s? Or will this be a Chinese-operated commercial farm? Or what?

Well, as I said, those in a position to know are not talking. But we do know there has been recent interest in large-scale land acquisitions in developing countries for farm production as a hedge against rising food prices. The countries acquiring such land include China, South Korea and the Arab Gulf states, all of which have major official reserves derived from oil revenues or trade surpluses.

China already operates a number of 1,000 hectare (2471 acres) Friendship Farms in several African countries that are owned by Chinese state enterprises. In fact, it is estimated that a million Chinese farm labourers are working in Africa, but most products from these farms are marketed locally. And since China is a net food exporter, analysts tend to discount the food security argument as a motive for Chinese agricultural investment overseas.

Chinese companies already have big investments in the Bahamas, especially Hutchison Whampoa, Li Ka-Shing, the Hong Kong-based conglomerate, in Freeport. China is also financing the Baha Mar project on New Providence and eyeing other projects on Grand Bahama. In fact, it is playing a strong role throughout the region as a member of the Caribbean Development Bank and the Inter-American Development Bank, which it joined two years ago with a contribution of $350 billion.

A high-level delegation of Chinese officials and business leaders visited Nassau last year and signed a series of economic deals, including an investment agreement, a multi-million dollar loan to build a highway to Nassau’s international airport, and additional support for the sports stadium now being built by the same Chinese enterprise that is interested in agricultural development on Abaco.

Analysts say China’s strategy in the Caribbean is driven by a desire to invest its huge US currency reserves in projects to ensure regional support for China in multilateral organizations, and to isolate Taiwan on the world stage. But we are left to speculate on such matters, since information is such a scarce commodity in the Bahamas - particularly when it is controlled by the public sector.

"When Owens-Illinois cleared all that land for the sugar plantation in the 60s, the government didn't consult anyone and no-one had anything to say about it," Key told me indignantly. "It's not easy being in government, you know. We have to find jobs for the thousands of kids coming out of school every year or they will eat us. The environmentalists don't create any jobs."

That reference was a response to concerns raised about pollution from unregulated farming projects. Former agricultural officer John Hedden, writing in the Abaconian newspaper, pointed out that "The northern Bahamas holds the total potable water reserves for the whole of the country; and this reserve is non-renewable - when it is destroyed, it is lost for ever. This also applies to our wetlands, our marls and our creek systems. These are all extensions of this one fresh water system and serve to nurture our fisheries.

"With such a large area going into food production, the environment, the land, the fresh water aquifer, the native ecosystems and our unique biodiversity will be threatened. Systems and controls must be put in place. Are we going to allow an unmonitored agricultural enterprise threatening the largest fresh water lens of the island because it will provide a few menial jobs?" he asked.

And the number of jobs that will be created by a potential Chinese investment is another key unknown (pun intended). According to the BAIC chief, all skilled labourers on previous American- or Bahamian-owned commercial farms have been Bahamians. In fact, Key himself is a prime example of one of these who went on to become a successful export farmer. And he is the first to acknowledge that one of the the government's concerns would be the number of Chinese who would be involved in the project.

According to Ejnar Cornish, who heads BAIC's Abaco office, Bahamians should have an open mind and learn as much from the Chinese as they can if the project becomes a reality. "Mr. Key has been working hard to get the Chinese in here because he wants the Bahamas to be able to feed itself," Cornish said. "He has continued to dialogue with Chinese investors and great progress is being made."

Meanwhile, Hedden's view is that for agriculture to create jobs for Bahamians, rather than Haitians or Chinese, we need to encourage entrepeneurship. "The fear is that the Chinese will take advantage of what we have in the short term and leave us with a massive pollution problem from overuse of chemical fertilizers and pesticides. They will put their product on the local market and Bahamian farmers may as well kiss their livelihood goodbye. Market garden and backyard farming is the only answer."

This is similar to the view held by Ian Goodfellow, who runs a successful four-acre market garden farm, restaurant and gourmet shop near the airport in Nassau. He believes that small operations focusing on agricultural tourism are the key to success in the Bahamas. And Keith Campbell, of the agricultural producers association, insists that no foreigners should be allowed to invest in agriculture without significant Bahamian participation.

"All agricultural land that has been previously cleared and tilled should be strictly reserved for use by Bahamians," he wrote recently in the Bahama Journal. "Absolutely no foreign investor should be granted access to this land unless they are part of a joint venture with Bahamians, helping to develop our indigenous food production capacity."

Any Chinese initiative should be modelled on the BARTAD project in Andros, he said, with Bahamian satellite farmers in a cooperative structure tied into a central hub targeting the domestic and export markets.
Despite the incessant talk about agriculture, the Bahamas is hardly an ideal environment. Physical conditions are harsh, rainfall is erratic, irrigation is lacking, crops require heavy inputs of costly fertilizers and pesticides, economies of scale are impossible to achieve, distribution systems are undeveloped, and production relies almost exclusively on immigrant labour.

But there have been some successes in the past, and Edison Key represents one of those successes. So if he is convinced that Chinese - or American - investment in our agricultural sector would be a good thing, he should be prepared to explain and defend it.

Major projects in our small island communities demand full discussion so that any negatives involved can be addressed. And there is certainly no shortage of failed grandiose projects to point to in this regard.