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2015 DIGITAL STATSHOT FOR CHINA: THE STATE OF DIGITAL, SOCIAL MEDIA, MOBILE AND eCOMMERCE

The latest report in our series of studies into Digital, Social & Mobile use around the world shows that the pace of digital adoption in China shows few signs of slowing.

You can read the full report in the SlideShare embed above (or download it here), but numbers don’t mean much on their own, so we’ll use this post to dig into the significance of the data and their associated trends for marketers.

China Digital, Social and Mobile By The Numbers

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To get us started though, here are the key data headlines:

• Internet Users: 668 million, a 6% year-on-year increase
• Social Media Users: 659 million – more than the USA and Europe combined
• Unique Mobile Users: 675 million, responsible for 1.3 billion mobile subscriptions
• Mobile Internet Users: 594 million, accounting for 89% of all China’s internet users
• Mobile Social Media Users: 574 million, up 15 million since this time last year

The year-on-year growth rates tell interesting stories too (note that the mobile figures in this slide represent the growth in mobile subscriptions, not unique users):

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We’ll examine each of these in detail in the sections below.

Internet in China

Roughly 100,000 people in China started using the internet every day over the past year – that’s more than one every second.

Much of this growth is being driven by improved mobile access, with close to 90% of the country’s netizens using mobile devices to access the internet. It’s worth noting that this is often in addition to PC-based usage too, but an increasing number of the country’s internet users are mobile-only, especially in rural areas.

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When it comes to the total volume of web traffic, PC-based access still dominates, with 56% of the web pages served to China’s netizens in the past month going to laptop or desktop computers. However, this figure is down 29% year-on-year, while the number of web page requests from mobile devices has jumped 136% to 42%.

These trends suggest that mobile usage will account for more than half of all China’s web activity by early 2016.

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Despite mobile’s promise of ubiquitous internet access, however, internet usage still isn’t evenly distributed in China, and a marked difference remains between urban and rural usage rates. Nearly two-thirds of China’s urban population now uses the internet every month, but barely 3 in 10 of China’s rural citizens are online:

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The good news is that connection speeds are up considerably on last year, with the average fixed-connection access speed up 17% year-on-year according to Akamai. It’s worth noting that the average mobile connection speed is considerably higher than that of fixed connections though, with the average connection in China now considered ‘broadband’ (i.e. 4Mbps or above).

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Social Media in China

The overall number of social media users in China grew more slowly than we expected over the past year, but this is more likely due to a change in behaviour, rather than a waning of interest in social media. 

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It’s also worth noting that social media usage in China is already at a very high level, with the numbers suggesting that 99% of China’s internet community uses social media of some description.

The numbers for individual platforms tell the more interesting story though. QQ, Tencent’s ever-popular instant messaging service, still claims the country’s top position in terms of monthly active users (MAUs), and despite the vast majority of its users residing in China, it also claims the second-place spot in the worldwide rankings behind Facebook (click here to read more about the global picture).

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It’s worth noting that more people sign in to QQ via mobile devices each month than sign in to WeChat, but WeChat offers more varied services and functionality for both users and marketers.

User numbers suggest that QZone still dominates when it comes to traditional ‘social networking’, but WeChat (or Weixin, as it’s know in China) is quickly catching up, and is the platform that most users claim to use on a regular basis (note the difference between ‘use’ and ‘sign in’, the latter being the metric many of the platforms use to measure ‘active’ users).

For those who are still relatively unfamiliar with Chinese social media, Baidu Tieba may be a new discovery. Tieba, or “Post Bar” as the platform calls itself in its English literature, is a community that has grown up around specific areas of user interest related to the searches that people conduct on Baidu, China’s largest search engine.

Meanwhile, readers of our previous China reports (2013, 2014) will notice the absence of Tencent Weibo in this ranking. Tencent stopped publishing monthly active user figures for Tencent Weibo a number of months ago, and we have interpreted this to mean that the company has de-prioritised the platform in favour of its three larger ‘products’, QQ, Qzone and WeChat. Tencent Weibo appears to remain popular with many users though, with 38% of China’s internet users claiming to have used the platform in the past month (see below).

Research from GlobalWebIndex suggests that more than 6 in 10 internet users in China used WeChat in the past month. Sina Weibo comes in second, with 54% of survey respondents claiming to have used the service in the past 30 days.

It’s interesting to note that Facebook, Google+ and Twitter all appear in this list too; they may be officially ‘blocked’ by the Great Firewall, but GlobalWebIndex’s research suggest that a considerable number of China’s netizens are getting round these blocks to access non-Chinese social platforms.

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87% of China’s social media users now access via mobile devices at some point each month, with platforms like WeChat helping to drive overall numbers up 77 million over the past 12 months – a year-on-year increase of 15% that equates to more than 200,000 new users every day, or almost 2.5 new users every second.

At 1 hour and 43 minutes per day, social media accounts for just under half of all the time that people spend online in China. The country’s social media users spend 23% longer using social media than they do watching TV each day, although it’s worth noting that much of this time overlaps, with many TV viewers engaging in ‘second-screen’ social media use at the same time.

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It’s worth noting that use of tablets appears to be down slightly year-on-year though, with 22% fewer web page requests coming from tablet devices in the past month compared to this time one month ago.

Mobile in China

With 675 million unique subscribers in China, almost half the country’s population now owns a mobile phone, and we fully expect to see the country pass this milestone before the end of 2015.

The number of mobile subscriptions in China rose significantly in 2014 too, with three new subscribers every second contributing to annual growth of 94 million – an 8% year-on-year increase.

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The number of mobile subscriptions in China is now very close to the number of people living in the country, which suggest that the average user still maintains close to 2 active connections.

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However, we expect that this ratio will reduce over the coming months as more and more people upgrade from feature phones to smartphones; the main reason why individuals operate more than one mobile contract is to benefit from intra-network deals, but data-powered communications such as chat apps and VOIP are more efficient and effective ways of achieving the same benefits.

Smartphones are clearly the must-have devices in China today, accounting for 90% of new handset sales. They already account for just less than two-thirds of all handsets in active use, and we expect their overall share to increase steadily over the coming months as more people renew their devices.

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When it comes to internet-powered activities on mobile devices, Chinese netizens appear to be particularly interested in checking the weather. 

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China’s mobile users also appear to have embraced m-commerce, with reports suggesting that 20% of the country’s population have made a recent online purchase via their mobile device.

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E-Commerce in China

E-commerce more generally appears to be thriving in China, with almost one in three internet users buying online each month. 

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The country’s consumer e-commerce market was worth more than a quarter of a trillion US dollars in the six months to June 2015, with the year’s biggest shopping event – Singles Day – still to come. Sales on Alibaba’s various sites exceeded US$9 billion in just one day last November, and there’s every chance that number will pass $10 billion on 11th November this year.

Conclusions

So what does all this mean for brands? Here are our three key tips, designed specifically for non-Chinese marketers looking to make sense of the world’s largest consumer market:

China’s Different: it’s obvious that the platforms that dominate in China are markedly different to those that marketers are familiar with elsewhere – even those in their Asian neighbours. However, it’s not just the platforms that are different; the ways that Chinese netizens use social channels is also markedly different, and marketers need to carefully adapt their approaches for China’s cultural and societal idiosyncrasies as much as for its technological differences. One size does not fit all when it comes to China, and marketers would do well to engage the expertise of a partner who understands the ‘how’ as well as the ‘what’.

1-to-1 Social: The numbers in this year’s report highlight the growing popularity of chat apps – a trend that we’ve seen elsewhere in the world too. The growing popularity of chat apps presents a new set of opportunities for marketers, as many of the conversations that take place on these platforms are more private in nature, taking place between individuals and small groups (versus the public environments that Western marketers will know from Facebook and Twitter). In order to take advantage of the ‘intimate’ nature of these one-to-one conversations, however, marketers will need to explore new approaches to social media and content marketing, ensuring that the tactics they employ make it easy for audiences to find and consume content on one platform (e.g. video-sharing services like Youku or Tudou), and then share that content proactively via chat apps. This will require greater emphasis on highly engaging content and organic sharing, rather than an approach that relies on paid media to push mediocre content to the masses.

Social Selling: China’s netizens are already very comfortable buying things online, whether that’s through their PCs or via their mobile devices. The next big opportunity for marketers is to understand how the dynamics of social referral work in China, and use that to move from social engagement to social conversion.

COMMENTARY:  If you have been looking for information on the state of China's growing digital, mobile, social media and e-commerce for 2015, this is a great source thanks to the nice guys at We Are Social. 

Courtesy of an article dated August 18, 2015 appearing in We Are Social

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BRAZILIAN GOVERNMENT ASKS 'LOVE' MOTEL OWNERS TO CONVERT THEIR ROOMS IN PREPARATION FOR WORLD CUP AND OLYMPIC GAMES

An expected shortage of accommodation has seen hotel prices already rocket to over 500 per cent.

World Cup fans heading for Brazil next year could find they are booking into sex motels as government tourism bosses look for ways to tackle the expected shortage in hotel accommodation.

The owners of “love” motels are being asked to convert their traditionally downmarket rooms into mid-market affordable lodgings in response as Ministry of Tourism research shows that hotel prices have already rocketed to over 500 per cent.

Motels rising to the challenge are undergoing fundamental changes including switching off 24-hour erotic channels and installing internet access. Some are even changing the M to the H.

The traditional short-stay accommodation, with drive-in bookings for a few hours at a time, is being standardised in-line with hotel reservations. The aphrodisiac finger-food menu, normally served through a hatch in the room to maintain privacy, is being phased out as the industry dispenses with rudimentary kitchen crew and hires chefs to provide a breakfast menu.

Antonio Morilha, director of the Brazilian Association of Motels (ABMotéis) told The Independent.

“We are trying to establish a new class of motel that provides a quality service and hospitality that rivals traditional hotels.  We are also working on a classification system with stars, similar to what already exists for hotels and we’re waiting for government approval.”

The organisation is also drawing on the services of leading architects to help owners improve their interior look. Out is the typically seedy flock red wallpaper and old-fashioned furniture with round beds and in is a cleaner more sophisticated décor.

Some motels keen to hold on to the signature mirrors-on-the-ceiling look are being advised to think twice if they want to qualify for children on the premises. Brazilian law prohibits minors in these establishments.

According to ABMotéis, the daily charge for motels is half the price of hotels in a similar category. However, analysts predict prices may radically change with the upgrade.

COMMENTARY:    The Shalimar love hotel located in Leblon, a very upscale and swanky neighborhood of Rio de Janeiro, is going family-friendly.  Workers strip mirrored paneling off the ceiling, as another pries up the fiberglass shell of a whirlpool bath. A third man takes a sledgehammer to a life-size statue of Venus de Milo posing topless with a swirl of plaster robes hanging from her waist.

The Shalimar Hotel 'Shalimar' suite (Click Image To Enlarge)

Like about a third of the city’s 180 hotels that rent rooms by the hour, mostly for amorous rendezvous, the Shalimar is trading its oversized round beds and bondage-ready chairs for proper couches, functional desks and other businesslike furnishings. The goal is reinvention as a standard pay-by-the-day tourist hotel.

With the 2014 World Cup soccer tournament in June 2014 and the 2016 Olympic Games arriving in this seaside city (and other cities), local officials are scrambling to solve a chronic hotel bed shortage so severe that during a UN conference here last year, the mayor had to appeal to residents to open their apartments to visitors.

The Shalimar Hotel 'Medieval' suite complete with chains (Click Image To Enlarge)

The plan? Slash property taxes for love hotels, known as “motels” in Portuguese, that agree to tone down the decor and free up 90 percent of their rooms for the tens of thousands of visitors expected to flood the city.

Antonio Cerqueira, a vice president of the Rio chapter of the ABIH hotel owners association, Brazil’s largest, said. 

“Motels have all the know-how to be able to put people from around the world up in style.  What throws people is really just the decoration.”

The Shalimar Hotel 'Ipanema' suite (Click Image To Enlarge)

With only 25,000 beds, or just half the estimated 50,000 needed for the Olympics, authorities here hope to add about another 6,000 beds through motel conversions, Cerqueira said. New hotels with another 14,500 beds are also in the works, he added.

By comparison, the last Olympic city, London, has some 110,000 hotel beds.

Brazil’s love hotels are virtual temples of kitsch and a longtime staple in the world’s largest Catholic country, where young people have tended to remain at home until marriage.

Giant, coin-operated vibrating beds compete for prominence with bubbling baths built for two; mirrors proliferate, covering nearly every surface, and condoms and other sex-related paraphernalia share space in minibars with cans of beer and chocolate bars. A maze of towering walls or dense shrubbery shrouds the motels from prying eyes, with individual, covered parking spots that lead directly into rooms. Many offer remote check-in that doesn’t require looking anyone in the eye. Theme rooms, sexed-up variations on medieval, swinging sixties, or tropical paradise motifs, abound.

Teacher Paula Moura said motels were an institution in Rio’s cultural landscape, and would be sorely missed if they disappeared. She said she used to go at least once a month with her boyfriend.

She said.  

“We’d dress up, look for different ambiances.  Plus you don’t have mirrors like that at home!”

Now that she’s unattached, she likes them because they’re a neutral space, she said.

She said.

“You don’t bring someone you don’t know well into your house, and you don’t expose yourself by going over to their house.”

Removing the sexy flair and giving the rooms a more neutral cast cost $15,000-$25,000 per unit, said Cerqueira, an investment that stands to be partially offset by a 40 percent reduction in city property taxes through 2019.

Motel operators are still in talks with city officials over the finer points, but Cerqueira said he expects the deal to be inked by the end of the month.

Love hotels in Brazil have been on the decline since the 1990s, with most struggling to reach 50 percent occupancy. Conventional Rio hotels regularly hit an 80 percent rate and completely sell out at peak times such as New Year’s and Carnival, said Cerqueira. Plus, because love hotel rooms must be cleaned and sterilized after each occupancy, which generally doesn’t last more than a handful of hours, they’re more expensive to operate than conventional hotels.

Cerqueira said. 

“Mores have been getting more liberal, and young couples who a generation ago would have had no choice but go to a motel are now welcome to stay at home.”

Most motel clients are married couples visiting on a lark, business travelers looking to save money by renting by the hour and the sector’s perennial staple: adulterers.

Decorator Fabiola Brandao has been working her way through the Shalimar renovations room by room over the past four years, revamping 25 of the hotel’s 61 rooms to date.

Brandao said.

“We usually do two or three rooms at a time, and kind of try to block off the area where the work is being done.”

Still, no matter how discreetly workers attempt to work, the banging of jackhammers and pop of nail guns often prove impossible to muffle.

Brandao said.  

“In those circumstances, we say to the client, ‘Can we upgrade you to a better room, with a better view?' And then we send up a complementary bottle of champagne. It usually does the trick.”

She added.  

"The new rooms are the kind of place where you can stay for more than an hour without running away screaming.” 

Toth the renovated and old-style rooms range in price from $34-$190 for a 12-hour rental, the preferred length of stay for business travelers.

The Shalimar’s management is planning to overhaul nearly all the units ahead of the Olympics, leaving but a few theme rooms, like the iron chain-strewn medieval suite.

Motel operators hope the tourist gold rush brought by the World Cup and Olympics will last far after sports fans have left. Despite its world-famous Carnival, the city attracts around 3 million foreign visitors per year, only twice the number of tourists London typically receives in the month of August alone.

Cerqueira said, citing the examples of 1992 host city Barcelona and Sydney, where the 2000 games were held.   

“We’ve seen it happen before that hosting the Olympics really puts a city on the map.  Rio de Janeiro has so much to offer, the beach, the spectacular cityscape, and with everything that’s happening we can only expect for interest to grow. We’ll be ready for it.”

Wow.  LOL.   The fact that Brazil's government is converting love hotels into tasteful accommodations for tourists staying in Brazil during the 2014 World Cup and 2016 Olympics says they have a crisis on their hands.   Anyone contemplating attending the World Cup or Olympics is faced with a serious dilemna.  Never mind that prices for practically everything will easily double or even triple during these events, but not knowing where you might have to stay, or having no choice in the matter, and having to pay sky high prices, is a nightmare situation.  

Courtesy of an article dated October 29, 2013 appearing in The Independent and an article dated February 18, 2013 appearing in The Courier News Online

APPLE CEO TIM COOK SAYS THAT YOUR NEXT iMAC COULD BE MADE IN THE USA BEGINNING IN 2013

Apple CEO Tim Cook visits the Foxconn plant in China as part of the review process to insure working conditions have improved and Apple vendor requirements are being adhered to (Click Image To Enlarge)

When Apple makes headlines for its manufacturing practices, it’s rarely a headline that makes Cupertino look good. The company has come under fire in the past year for its reliance on the manufacturing giant Foxconn, which had a string of suicides at one of its plants, and where there have occasionally been reports of unsafe working conditions. The New York Times, for instance, wrote an investigative report into the “human costs” of the iPad back in January; iPhone manufacture even became the unlikely subject of a controversial, and ultimately discredited, work of quasi-reported theater (see “Mike Daisey, Storyteller,” and “An (Actual!) Look Inside Foxconn”). But for those who thought Apple would continue to exclusively rely on manufacturing abroad, Apple CEO made a surprising announcement on “Rock Center with Brian Williams” today. Starting in 2013, said Cook, a line of Macs would be manufactured in the US. Cook did not elaborate or specify just which line.

The announcement followed recent reports that some of the new iMacs that went on sale last Friday bore the unusual words, “Assembled in USA.” In the past, it has been more typical to see “Assembled in China”–though not uncommon for certain products, like made-to-order Macs.

In a way, Cook’s announcement is not totally surprising; at the All Things D conference in May, he had announced that he wanted a product to be made in the U.S. It would seem like the recent “assembled in USA” lines are a step in that direction, and that Cook is planning to deepen that commitment.

 

A good deal more information about Cook’s thinking in this regard can be found in Bloomberg Businessweek, which published a lengthy interview with Cook this week. Cook pointed out (as he did to Brian Williams) that both the processor and the glass on iPhones and iPads are made in the U.S. (See “Your iPhone’s Brain Might Be from Texas.”) And he clarified that when he says he’d like to “make” Macs in the US, he’s talking about more than assembly:

“It will happen in 2013. We’re really proud of it. We could have quickly maybe done just assembly, but it’s broader because we wanted to do something more substantial. So we’ll literally invest over $100 million. This doesn’t mean that Apple will do it ourselves, but we’ll be working with people, and we’ll be investing our money.”

A follow-up question on whether Apple had a duty to be patriotic elicited a thoughtful response: Cook said that he felt Apple did have a “responsibility to create jobs.” He appeared to outline a philosophy that suggested that Apple had that responsibility, indeed, wherever it sold its products:

“Over 60 percent of our sales are outside the United States. So we have a responsibility to others as well.” 

He chooses a more hollistic way of measuring job creation, which means that he considers a person who makes a living as an iOS developer to have had a job created by Apple, even if that person is working for herself. (Again in its iEconomy series, the Times has shown how making that living is sometimes easier said than done.) The Businessweek interview is required reading in full for anyone interested in Tim Cook, Apple, and the future of American manufacturing.

Meanwhile, Bloomberg also reports that Foxconn itself will be expanding some of its manufacturing operations into North America, due to demand among customers that more products be made domestically.

COMMENTARY:   It will be a very long time before I trust anything that Apple says concerning its manufacturing vendors in China.  For over a decade, under the steady iron hand of then Chief Operating Officer Tim Cook, Apple did everythig to keep the identity of its overseas vendors in China absolutely secret.  Nobody knew who they were until word got out of the numerous plant worker suicides at Foxconn International, the sweatshop conditions endured by its plant workers, and unsafe working environment that hundreds of thousands of Foxconn plant workers were exposed to.  Foxconn is Apple's largest outsourced manufacturer in China, and is responsible for assembling the iPhone, iPod and iPad.  In 2010,when the late Steve Jobs was questioned by Walt Mossberg and Kara Swisherabout from All Things Digital about Foxconn in front of a live audence at a D8 conference in San Francisco, he said,

"Oh, sure, yeah.  We're pretty on top of that.  Foxconn is not a sweatshop.  When you go to this place, um.  It's a factory, but my gosh, they got restuarants, and movie theaters and swimming pools.  For a factory, it's a pretty nice factory."

What pissed me off about the Steve Jobs interview is how Jobs discounted the Foxconn suicides, comparing them on a percentage basis to the suicide rates in the U.S.  Jesus, what a heartless punkass.  I didn't hear a single comment of remorse or condolesences to the loved ones and families of those who committed suicide.  His comments were without any emotion, almost unremorseless.  That interview is below:

  

I have written nearly a dozen blog posts relating to Foxconn International, and through my efforts and the news media in general, Apple is finally taking actions and measures to improve working conditions and tightened controls at all of its outsourced overseas vendors.  If you haven't already done so, I encourage you to read all my blog posts about Foxconn International:  October 12, 2011, October 15, 2011, November 7, 2011,  January 31, 2012,  March 3, 2012, March 29, 2012, March 30, 2012, April 2, 2012, August 14, 2012, September 25, 2012, and November 16, 2012.  

In a blog post dated November 16, 2012, I reported that Foxconn International had plans to replace 1.2 million plant workers in China with production robots.  This process has already begun, with 30,000 robots expected to be installed by the end of 2012, and another 200,000 robots to be installed in 2013.  Having said this, it would not surprise me if Apple automates the prouction of an iMac using robots in order to keep costs down.  If Tim Cook is serious about proucting an iMac in the U.S., I wonder if Apple will be a job creator, or job destroyer. 

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Courtesy of an article dated December 6, 2012 appearing in MIT Technology Review

PROVIEW TAIWAN SUES APPLE OVER "IPAD" TRADEMARK IN CHINA AND HOW APPLE SNOOKERED PROVIEW TO ACQUIRE THE IPAD TRADEMARK

 

Here's how Apple (AAPL) allegedly got Proview International Holdings to sell them the iPad trademark 35 days before Steve Jobs unveiled the device at a San Francisco press conference.

• Apple hired a British firm called Farncombe International and its managing director, Graham Robinson, to be its secret agent.
• Robinson created a British shell company called IP Application Development Limited ("IPAD Ltd.").
• Using the alias Jonathan Hargreaves, Robinson opened talks in Taiwan with Proview, concealing the fact that he was negotiating on Apple's behalf.
• Asked why he wanted the trademark, Robinson said it was an acronym for IP Application Development.
• Asked what business IPAD Ltd. was in, Robinson was evasive:  He said.  "I'm sure you can understand that we are not ready to publicize what the company's business is, since we have not yet made any public announcements."
• He further stated, apparently in an e-mail, that "the company will not compete with Proview."

These details -- some familiar, some fresh -- come from a Proview press release issued Monday. It describes an amended complaint filed in a California federal court that is charging Apple with "fraud by intentional misrepresentation, fraud by concealment, fraudulent inducement, and unfair competition."

Reached for comment, Apple denied none of the details in the complaint. Rather, it issued the same statement it's been giving out for nearly a week:

"We bought Proview's worldwide rights to the iPad trademark in 10 different countries several years ago. Proview refuses to honor their agreement with Apple in China and a Hong Kong court has sided with Apple in this matter. Our case is still pending in mainland China."

The irony is that Proview is trying to get a U.S. court to nullify an agreement that it claims in Chinese courts never existed -- namely the one that Apple says sold them the rights to the iPad trademark in mainland China.

Proview's press release has answer for that:

"The legal questions and remedies in the China and U.S. lawsuits are separate and distinct and have no bearing on one another."

COMMENTARY:   That's what I call "cutting it close," and very sneaky on Apple's part to acquire the iPad trademark through a third-party.  

Apple unveiled the iPad tablet on January 27, 2010, which would put iPad, Ltd's negotiations to acquire the iPad trademark from Proview right around December 22, 2009.  If Apple had been unsuccessful in acquiring the "iPad" tradename from Proview, what would Apple have named its new "magical" tablet?   

However, I am still a bit confused, because on January 20, 2010, The Jesus Tablet blog reported that Fujitsu owned the trademark "iPad" and that would either prohibit or discourage Apple from using the mark.  What has not been reported is that Apple filed requests with the US Patent & Trademark Office (USPTO) several times in late 2009 to extend the time given to oppose Fujitsu's trademark with the USPTO.  The USPTO granted the request and extended the time to oppose to 2/28/2010 "on behalf of potential opposer Apple Inc."

Apple's 60-Day Request For Extension of Time to Oppost Upon Concent with USPTO of December 23, 2009 (Click Image To Enlarge)

Letter from USPTO dated December 23, 2009 granting Apple a 60-Day Extension of Time to Oppost Upon Consent (Click Image To Enlarge)

As you can clearly see from the above United States Patent and Trademark Office 60-day extention request filing and the letter granting the 60-day extension, Fujitsu owned the "iPad" trademark, not Proview.  

Maybe Fujitsu owned the iPad trademark only in the U.S., not China.  Proview apparently ownes the iPad trademark in China, which is the subject of the lawsuit.  

I assume that Fujitsu granted Apple the iPad trademark.  I have not found proof of this yet.  If Proview wins its lawsuit, then the iPad name could not be used in China, unless it is licensed from Proview, and this could be very costly for Apple.   This is going to get interesting.  Stay tuned for further developments. 

Courtesy of an article dated February 27, 2012 appearing in Fortune Technology

REPUBLICAN REP LAMAR SMITH, AUTHOR OF THE UNPOPULAR "STOP ONLINE PIRACY ACT (SOPA)", REFUSES TO BUCKLE UNDER PRESSURE

(Reuters) - The lawmaker behind a bill to combat online piracy vowed on Thursday to press ahead in the face of fierce criticism from Internet giants such as Google and Facebook.

Republican Representative Lamar Smith told Reuters in a telephone interview.

"It is amazing to me that the opponents apparently don't want to protect American consumers and businesses.  Are they somehow benefitting by directing customers to these foreign websites? Do they profit from selling advertising to these foreign websites? And if they do, they need to be stopped. And I don't mind taking that on."

The Stop Online Piracy Act, which is before the House of Representatives Judiciary Committee chaired by Smith, aims to fight online piracy of pharmaceuticals, music and other consumer products by allowing the Department of Justice to seek federal court injunctions against foreign-based websites.

Smith said Internet counterfeiters cost American consumers, businesses, inventors and workers some $100 billion a year, though critics accuse him of exaggerating.

Under the bill, if a judge agrees that websites offer material that violates U.S. copyright laws, Internet service providers could be required to block access to foreign sites and U.S. online ad networks could be required to stop ads and search engines barred from directly linking to them.

Heavyweights such as Google, Twitter, Facebook, and Reddit oppose the bill, which came under fire at this week's Consumer Electronics Show in Las Vegas.

Reddit chief executive Alexis Ohanian has said it would "cripple the Internet" and pledged to take his social media site dark for one day next week to protest the bill.

Ohanian wrote on his blog.

"This (SOPA) could potentially obliterate the entire tech industry - a job-creating industry."

Smith stressed the bill would only affect websites based outside the United States and criticized opponents for failing to cite specific sections, saying many have failed to read it and were disguising their economic interests with rhetoric about Internet freedom.

Google executive chairman Eric Schmidt told the Economic Club of Washington last month that the bill would "effectively break the Internet" and he compared Smith's efforts to the same type of censorship that Google has experienced in China.

Smith said.

"There are some companies like Google that make money by directing consumers to these illegal websites.  So I don't think they have any real credibility to complain even though they are the primary opponent."

Smith has received numerous awards from conservative organizations for his opposition to efforts to expand the federal government's power.

But the Texas representative says giving Washington sweeping powers over the Internet is necessary to protect free enterprise.

Smith predicted the bill would pass the House. It was about halfway through the process of committee hearings and could go to the House floor in a matter a weeks, he said. The Senate was considering a similar measure.

COMMENTARY:   As a blogger, I can see a situation where my blog could be shutdown by my blogging service because I added an image or article protected by a U.S. copyright, that I borrowed from a foreign website, who is the real violator of the copyright.   Since so much content flows through Google, Facebook and millions of other sites, and there is no way of determining whether the content is copyrighted (who has the time to check?), SOPA could become very damaging to U.S. website owners and bloggers.  This is such a bad law, because in many ways, the fox is already in the chicken coop, and its now an infestation.

Courtesy of an article dated January 12, 2012 appearing in Reuters 

CHINA RAMPS UP ITS MILITARY, RAPIDLY EXPANDING ITS NAVY AND SUBMARINE FLEET, COULD CHALLENGE U.S. MASTERY OF THE SEAS

President Obama bows to Chinese President Hu Jintao at the Nuclear Security Summit in April 2010, after all they are our bank

The USS Gerald R. Ford was supposed to help secure another half century of American naval supremacy. The hulking aircraft carrier taking shape in a dry dock in Newport News, Va., is designed to carry a crew of 4,660 and a formidable arsenal of aircraft and weapons.

But an unforeseen problem cropped up between blueprint and expected delivery in 2015: China is building a new class of ballistic missiles designed to arc through the stratosphere and explode onto the deck of a U.S. carrier, killing sailors and crippling its flight deck.

 

WSJ's Nathan Hodge reports on a new fleet of Chinese ballistic missiles that can strike warships nearly 2,000 miles offshore and are intended to keep U.S. warships. AP Photo/Xinhua, Pu Haiyang

Since 1945, the U.S. has ruled the waters of the western Pacific, thanks in large part to a fleet of 97,000-ton carriers—each one "4.5 acres of mobile, sovereign U.S. territory," as the Navy puts it. For nearly all of those years, China had little choice but to watch American vessels ply the waters off its coast with impunity.

Now China is engaged in a major military buildup. Part of its plan is to force U.S. carriers to stay farther away from its shores, Chinese military analysts say. So the U.S. is adjusting its own game plan. Without either nation saying so, both are quietly engaged in a tit-for-tat military-technology race. At stake is the balance of power in a corner of the seas that its growing rapidly in importance.

Pentagon officials are reluctant to talk publicly about potential conflict with China. Unlike the Soviet Union during the Cold War, Beijing isn't an explicit enemy. During a visit to China last month, Michele Flournoy, the U.S. undersecretary of defense for policy, told a top general in the People's Liberation Army that "the U.S. does not seek to contain China," and that "we do not view China as an adversary," she recalled in a later briefing.

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Nevertheless, U.S. military officials often talk about preparing for a conflict in the Pacific—without mentioning who they might be fighting. The situation resembles a Harry Potter novel in which the characters refuse to utter the name of their adversary, says Andrew Krepinevich, president of the Center for Strategic and Budgetary Assessments, a think tank with close ties to the Pentagon.  He says.  

"You can't say China's a threat.  You can't say China's a competitor."

China Unveils New "Carrier-Killer" Anti-Ship Ballistic Missle

Beijing's interest in developing anticarrier missiles is believed to date to the Taiwan Strait crisis of 1996. The Chinese government, hoping to dissuade voters in Taiwan from re-electing a president considered pro-independence, conducted a series of missile tests, firing weapons into the waters off the island. President Bill Clinton sent two carrier battle groups, signaling that Washington was ready to defend Taiwan—a strategic setback for China.

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China's state media has said its new missile, called the DF-21D, was built to strike a moving ship up to about 1,700 miles away. U.S. defense analysts say the missile is designed to thwart our defenses in two key ways:  

• Come in at an angle too high for U.S. defenses against sea-skimming cruise missiles. 
• Com in too low for defenses against other ballistic missiles.

Flight path of China's DF-21D ASBM (Click Image To Enlarge)

Even if U.S. systems were able to shoot down one or two, some experts say, China could overwhelm the defenses by targeting a carrier with several missiles at the same time.

As such, the new missile—China says it isn't currently deployed—could push U.S. carriers farther from Chinese shores, making it more difficult for American fighter jets to penetrate its airspace or to establish air superiority in a conflict near China's borders.

Comparative Range of China's DF-21D missle at 2700KM (Blue) and 1500KM (Yellow) ranges(Click Image To Enlarge)

U.S. Response To New China Threat

In response, our military is developing:

• The Navy is testing long-range pilotless, drone aircraft that can hover 70,000 feet above aircraft carriers and allows fleet commanders to track suspicious vessels across vast expanses of sea.  A prototype of the as-yet-unnamed drone, referred to as the Broad Area Maritime Surveillance (BAMS) system, is in action with the Navy’s 5th Fleet in the Pacific and, according to one naval expert, could help keep tabs on any Iranian threats to shipping in the Persian Gulf.
• The Air Force wants a fleet of pilotless bombers capable of cruising over vast stretches of the Pacific.  The Air Force presently has an extensive arsenal of medium-range pilotless drones, including the MQ-1 Predator and MQ-9 Reaper, and used in both Iraq and Afghanistan.  Now on the Pentagon wish list is a proposed fleet of 80 to 100 nuclear-capable bombers that could operate with or without a pilot in the cockpit. Pentagon weapons acquisition chief Ashton Carter met separately with representatives of Northrop, Boeing Co. and Lockheed Martin Corp., Pentagon spokeswoman Cheryl Irwin said. These companies are expected to vie for the estimated $55-billion contract that is expected to provide jobs and decades of work for Southern California’s aerospace industry. 

China Also Presents A Cyberspace Threat 

The gamesmanship extends into cyberspace. U.S. officials worry that, in the event of a conflict, China would try to attack the satellite networks that control drones, as well as military networks within the U.S. The outcome of any conflict, they believe, could turn in part on who can jam the other's electronics or hack their computer networks more quickly and effectively.

 

In May 26, 2011, at a recent press conference held by the Defense Ministry, Geng Yansheng, spokesman of China's Defense Ministry, explained the role of "China's Blue Team," a team of hackers created to twart cyberattacks.  He said.   

"At present, Internet safety has become an international issue. It not only affects our civil societies but also the military. China is also a victim of Internet attacks. Right now our Internet protection system is still relatively weak. Improving Internet safety is one of the most prominent tasks of our military training. The purpose of the "Cyber Blue Team" is to improve our ability to safeguard Internet security." 

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The Defense Ministry also emphasized that the "Cyber Blue Team" are not hackers and that the International community should not misunderstand the purpose of it. "Cyber Blue Team" is just a nickname used within the military training routines and is not an actual unit within the PLA.

China's Cyber Blue Team busy hacking (Click Image To Enlarge)

Sizing up China's electronic-warfare capabilities is more difficult. China has invested heavily in cybertechnologies, and U.S. defense officials have said Chinese hackers, potentially working with some state support, have attacked American defense networks. China has repeatedly denied any state involvement.

How China Plans To Control The Seas Through "Anti-Access, Area Denial" Technologies 

Throughout history, control of the seas has been a prerequisite for any country that wants to be considered a world power. China's military buildup has included a significant naval expansion. China now has 29 Song Class electric submarines armed with antiship cruise missiles, compared with just eight in 2002, according to Rand Corp., another think tank with ties to the military. In August, China conducted a sea trial of the "Varyag", its first aircraft carrier —a vessel that isn't yet fully operational.

 

At one time, military planners saw Taiwan as the main point of potential friction between China and the U.S. Today, there are more possible flash points. Tensions have grown between Japan and China over islands each nation claims in the East China Sea. Large quantities of oil and gas are believed to lie under the South China Sea, and China, Vietnam, the Philippines and other nations have been asserting conflicting territorial claims on it. Last year, Vietnam claimed China had harassed one of its research vessels, and China demanded that Vietnam halt oil-exploration activities in disputed waters.

A few years ago, the U.S. military might have responded to any flare-up by sending one or more of its 11 aircraft carriers to calm allies and deter Beijing. Now, the People's Liberation Army, in addition to the missiles it has under development, has submarines capable of attacking the most visible instrument of U.S. military power.

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Eric Heginbotham, who specializes in East Asian security at Rand says. 

"This is a rapidly emerging development.  As late as 1995 or 2000, the threat to carriers was really minimal. Now, it is fairly significant. There is a whole complex of new threats emerging."

The Chinese military embarked on a military modernization effort designed to blunt U.S. power in the Pacific by developing what U.S. military strategists dubbed "anti-access, area denial" technologies.

Adm. Gary Roughead, the recently retired U.S. chief of naval operations, last year said. 

"Warfare is about anti-access.  You could go back and look at the Pacific campaigns in World War II, [when] the Japanese were trying to deny us access into the western Pacific."

In 2004, Chinese President Hu Jintao unveiled a new military doctrine calling for the armed forces to undertake "new historic missions" to safeguard China's "national interests." Chinese military officers and experts said those interests included securing international shipping lanes and access to foreign oil and safeguarding Chinese citizens working overseas.

At first, China's buildup was slow. Then some headline-grabbing advances set off alarms in Washington. In a 2007 test, China shot down one of its older weather satellites, demonstrating its ability to potentially destroy U.S. military satellites that enable warships and aircraft to communicate and to target bases on the Chinese mainland.

The Pentagon responded with a largely classified effort to protect U.S. satellites from weapons such as missiles or lasers. A year after China's antisatellite test, the U.S. demonstrated its own capabilities by blowing up a dead spy satellite with a modified ballistic-missile interceptor.

Last year, the arms race accelerated. In January, just hours before then U.S. Defense Secretary Robert Gates sat down with Chinese President Hu to mend frayed relations, China conducted the first test flight of a new, radar-evading fighter jet. The plane, called the Chendu J-20 (see video below), might allow China to launch air attacks much farther afield—possibly as far as U.S. military bases in Japan and Guam.

 

The aircraft carrier China launched in August was built from a hull bought from Ukraine. The Pentagon expects China to begin working on its own version, which could become operational after 2015—not long after the USS Gerald R. Ford enters service.

American military planners are even more worried about the modernization of China's submarine fleet. The newer vessels can stay submerged longer and operate more quietly than China's earlier versions. In 2006, a Chinese Song class submarine appeared in the midst of a group of American ships, undetected until it rose to the surface.

China's "Han" Type-091 Nuclear Attack Submarine (SSN)

China's "Xia" Type-092 Nuclear Ballistic Missile Submarine (SSBN)

China's "Yuan" Type-093 Nuclear Attack Submarine (SSN)

China's Type-094 Nuclear Ballistic Missile Submarine (SSBN)

China's Type-094 Nuclear Ballistic Missile Submarine (SSBN) is now under construction

China's Song Class Type-039 and 041 electric submarines (SS) carry cruise missiles

China's technological advances have been accompanied by a shift in rhetoric by parts of its military. Hawkish Chinese military officers and analysts have long accused the U.S. of trying to contain China within the "first island chain" that includes Japan and the Philippines, both of which have mutual defense treaties with the U.S., and Taiwan, which the U.S. is bound by law to help defend. They now talk about pushing the U.S. back as far as Hawaii and enabling China's navy to operate freely in the western Pacific, the Indian Ocean and beyond.

Maj. Gen. Luo Yuan, one of China's most outspoken military commentators, told a conference in September.

"The U.S. has four major allies within the first island chain, and is trying to starve the Chinese dragon into a Chinese worm." 

The Pentagon Conducts War Games

China's beefed up military still is a long way from having the muscle to defeat the U.S. Navy head-to-head. For now, U.S. officials say, the Chinese strategy is to delay the arrival of U.S. military forces long enough to take control of contested islands or waters.

Publicly, Pentagon leaders such as Mr. Gates and Adm. Mike Mullen, former chairman of the Joint Chiefs of Staff, have said the U.S. would like to cultivate closer military-to-military ties with China.

Privately, China has been the focus of planning. In 2008, the U.S. military held a series of war games, called Pacific Vision, which tested its ability to counter a "near-peer competitor" in the Pacific. That phrase is widely understood within the military to be shorthand for China.

Retired Air Force Gen. Carrol "Howie" Chandler, who helped conduct the war games says. 

"My whole impetus was to look at the whole western Pacific.  And it was no secret that the Chinese were making investments to overcome our advantages in the Pacific."

Those games tested the ability of the U.S. to exercise air power in the region, both from land bases and from aircraft carriers. People familiar with the exercises say they informed strategic thinking about potential conflict with China. A formal game plan, called AirSea Battle, now is in the works to develop better ways to fight in the Pacific and to counter China's new weapons, Pentagon officials say.

U.S. Navy Developing New Weapons And Expanding Bases

The Navy is developing new weapons for its aircraft carriers and new aircraft to fly off them. On the new Ford carrier, the catapult that launches jets off the deck will be electromagnetic, not steam-powered, allowing for quicker takeoffs.

The carrier-capable drones under development, which will allow U.S. carriers to be effective when farther offshore, are considered a breakthrough. Rear Adm. William Shannon, who heads the Navy's office for unmanned aircraft and strike weapons, compared the drone's debut flight last year to a pioneering flight by Eugene Ely, who made the first successful landing on a naval vessel in 1911. "I look at this demonstration flight…as ushering us into the second 100 years of naval aviation," he said.

The Air Force wants a longer-range bomber for use over the Pacific. Navy and Air Force fighter jets have relatively short ranges. Without midair refueling, today's carrier planes have an effective range of about 575 miles.

China's subs, fighter planes and guided missiles will likely force carriers to stay farther than that from its coast, U.S. military strategists say.

Andrew Hoehn, a vice president at Rand says.

"The ability to operate from long distances will be fundamental to our future strategy in the Pacific.  You have to have a long-range bomber. In terms of Air Force priorities, I cannot think of a larger one."

The U.S. also is considering new land bases to disperse its forces throughout the region. President Barack Obama recently announced the U.S. would use new bases in Australia, including a major port in Darwin. Many of the bases aren't expected to have a permanent American presence, but in the event of a conflict, the U.S. would be able to base aircraft there.

In light of China's military advances and shrinking U.S. defense budgets, some U.S. military officers have begun wondering whether the time has come to rethink the nation's strategic reliance on aircraft carriers like the USS Ford. A successful attack on a carrier could jeopardize the lives of as many as 5,000 sailors—more than all the troops killed in action in Iraq.

Navy Captain Henry Hendrix and retired Marine Corps Lt. Col. Noel Williams wrote in an article in the naval journal Proceedings last year. 

"The Gerald R. Ford is just the first of her class.  She should also be the last."

COMMENTARY:  In two blog posts dated February 7, 2011, July 16, 2011 and November 8, 2011 and have extensively covered the new cyberspace threat posted by China, including the U.S. USCYBERCOM or CYBERCOM and its Chinese counterpart "Blue Cyber Team." In 2011, President Barack Obama established cyberattack rules of engagement and could respond to such an attack by an attack of its own, including the use of military weapons.

China has just finished test flying its new Chendu J-20 stealth fighter jet, so not much is known about the new Chinese stealth fighter specifications and capabilities, but it is believed that the America's F-22 and new F-35 stealth fighters are more than a match.  However, the J-20's stealth capabilities, larger armament payload and longer range could present a serious threat U.S. bases in South Korea, Taiwan and Japan.  

China's navy is growing rapidly, and includes submarines (both conventional and nuclear), surface combat ships, coastal warfare, amphibious warfare and minewarfare vessels.  U.S. military experts estimate there are approximately 63 submarines in its fleet, of which 10 are nuclear.  They include two classes of nuclear attack submarines (SSN)--Type 091 and 093.  China also has two classes of nuclear ballistic missle submarines (SSBN)--Type 092 and 093.  China is also building a newer, larger nuclear ballistic missle submarine (SSBN), the Type 095.   Here's an estimate of China's latest naval inventory.

China's Naval Inventory

The following chart may help explain why the U.S. Naval Pacific Fleet is supporting Taiwan and patrolling the East and South China Seas.

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Obama's bow to China's President not withstanding, the U.S. is not sitting on its butt while China ramps up its military.  We have the largest naval fleet of any country, largest air force, largest nuclear arsenal, both day (F-22 and F-35) and night stealth fighters (F-117), and stealth bombers (B-2).  

The U.S. Navy is the largest in the world; its battle fleet tonnage is greater than that of the next 13 largest navies combined, including China's.   The U.S. Navy also has the world's largest carrier fleet, with 11 in service, one under construction (two planned), and one in reserve.  The service had 328,516 personnel on active duty and 101,689 in the Navy Reserve in January 2011. It operates 286 ships in active service and more than 3,700 aircraft. 

Our nuclear submarine fleet numbers 71, giving us a 7-to-1 superiority in nuclear submarines.  We have 12 super aircraft carriers to China's lone "little" aircraft carrier.  The U.S. is also developing a fleet of very fast Littoral ships that can operate off costal waters and can be used in different missions, an electronic rail gun that can shoot a projectile 100 miles with precise accuracy (and shoot down China's DF-21 carrier-killer missile), and we are working on numerous secret aircraft and military weapons systems that very few people know about.  

The U.S. also has the world's largest, and most sophisticated fleet of unmanned drones, many of them being used in combat over the skys of Afghanistan and Pakistan.  The U.S. is now testing two unmanned, long-range, nuclear-capable bombers. When completed, that bomber fleet will number 80-100.    

Obama's bow to China's president not withstanding, the U.S. is not intimidated by China, and I don't see us losing our mastery of the seas anytime soon.  We will just have to learn to co-exist.  Do you honestly believe they would jeopardize their entire economy, risk a war and everything they have built, over the little island of Taiwan?  China also holds over $1 trillion of U.S. debt and I am sure they would like to be paid at some time.

Courtesy of an article dated January 4, 2011 appearing in The Wall Street Journal 

 

 

 

 

 

 

NORTH KOREA';S RUTHLESS AND RECLUSIVE DICTATOR KIM JONG-IL IS DEAD FROM A HEART ATTACK AT 69 YRS OF AGE

A Nation In Mourning

North Korea displayed the body of ruler Kim Jong Il in a glass coffin surrounded by red flowers Tuesday, and his young heir was one of the first to pay respects — a strong indication that a smooth leadership transition was under way.

As the country mourned for a second day with high-level visits to Kim's body at a memorial palace and public gatherings of weeping citizens, state media fed a budding personality cult around his youngest known son and anointed heir, Kim Jong Un, hailing him as a "lighthouse of hope."

Kim's body was wrapped in red cloth and surrounded by blossoms of his namesake flowers, red "kimjongilia." As solemn music played, Kim Jong Un — believed to be in his late 20s — entered the hall to view his father's bier, surrounded by military honor guards. He observed a moment of solemn silence, then circled the bier, followed by other officials.

Kim Jung Un (fourth from right) bows to his deceased father

Outside one of the capital's main performance centers, mourners carried wreaths and flowers toward a portrait of Kim Jong Il. Groups were allowed to grieve in front of the portrait for a few minutes at a time.

U Son Hui, a Pyongyang resident, told The Associated Press. 

"We will change today's sorrow into strength and courage and work harder for a powerful and prosperous nation, as our general wanted, under the leadership of the new General Kim Jong Un." 

The announcement Monday of Kim's death over the weekend raised acute concerns in the region over the possibility of a power struggle between the untested son and rivals, in a country pursuing nuclear weapons and known for its unpredictability and secrecy.

Mourners cry as they meet the body of North Korean leader Kim Jong il

But there have been no signs of unrest or discord in Pyongyang's somber streets.

With the country in an 11-day period of official mourning, flags were flown at half-staff at all military units, factories, businesses, farms and public buildings. The streets of Pyongyang were quiet, but throngs of people gathered at landmarks honoring Kim.

Kim's bier was decorated by a wreath from Kim Jong Un along with various medals and orders. The body was laid out in the Kumsusan Memorial Palace, a mausoleum where the embalmed body of Kim's father — national founder Kim Il Sung — has been on display in a glass sarcophagus since his death in 1994.

The Dictator:  Kim Jong-il

Kim Jong Il, the dictator who used fear and isolation to maintain power in North Korea and his nuclear weapons to menace his neighbors and threaten the U.S., has died, North Korean state television reported early Monday.

His death opens a new and potentially dangerous period of transition and instability for North Korea and northeast Asia. Mr. Kim in September 2010 tapped the youngest of his three sons, Kim Jong Eun, to succeed him, and North Korean state television on Monday said the younger Mr. Kim will lead the country.

 

North Korea's transition of power will be closely watched by the world as the country prepares for leadership under Kim Jong Eun. The WSJ's Deborah Kan and Seoul reporter Evan Ramstad discuss what this could mean for stability in the secretive nation.

Mr. Kim, who was 69 or 70 years old, according to varying accounts, died during a train ride on Saturday, a weeping television announcer said. He was believed to have been in ill health since suffering a stroke in 2008, and North Korean media said he experienced an "advanced acute myorcardial infarction," or heart attack.

South Korean shares tumbled along with other Asian markets in early trading Monday on concerns about potential instability in the region. South Korea's Kospi Composite down 3.1% in late-morning trading after initially dropping 4.4%. South Korea's currency, the won, fell sharply against the dollar.

 

Asia Today: North Korea's reclusive leader Kim Jong Il has died according to North Korean TV reports. The WSJ's Deborah Kan and reporter Alex Frangos talk about what this means for the secretive nation.

White House Press Secretary Jay Carney said late Sunday that the administration is "closely monitoring" reports of Mr. Kim's death, that President Barack Obama had been notified and that U.S. officials are in close touch with South Korea and Japan.

"We remain committed to stability on the Korean peninsula, and to the freedom and security of our allies," Mr. Carney said.

South Korea put its military on "high alert" and President Lee Myung-bak convened a meeting of the national security council after the news of Mr. Kim's death, the Associated Press reported.

The son of North Korea's founder, Kim Jong Il ruled the reclusive country for nearly two decades. See highlights from his life and career in this timeline. (Click Image To View Interactive Chart)

In Tokyo, Japanese Prime Minister Yoshihiko Noda called an emergency meeting of his National Security group to assess the situation. Japan has been among the countries most worried about North Korea's military ambitions and nuclear tests.

Defense Minister Yasuo Ichikawa said on the way into the session on Monday.

"I've issued instructions (to the defense ministry) to do everything to establish an alert, monitoring stance." 

Meanwhile, roughly 20 minutes before its daily noon newscast, state broadcaster China Central Television broke in with a special report on Mr. Kim's death. It was a three-minute bare-bones account that echoed the facts from North Korea's official media, plus a chronology of the major events of his life, intercut with stock footage. Several minutes later, it aired the program again.

The state-run Xinhua news agency offered a similar just-the-facts report.

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Kim Jong-il Rises To Power

Mr. Kim took power after the death in July 1994 of his father, Kim Il Sung, who founded North Korea in 1948. The country, a declining communist industrial power when he took control, fell into abject poverty under his rule. However, Mr. Kim continued to command attention and relevance in the world by building nuclear weapons and selling other arms.

He staked his legitimacy on his father's 46-year rule. Kim Jong Il never called himself president of North Korea. Instead, he bestowed on his father after death the title of "eternal president," while he took lesser titles such as chairman of national defense and general secretary of the main political party.

Mr. Kim suffered a stroke-like illness in August 2008 and was incapacitated for two months, forcing him to begin to groom a successor.

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The Successor:  Kim Jong Eun 

In 2009, reports surfaced that Mr. Kim had chosen Kim Jong Eun to carry on the family's regime. Those reports were confirmed in September 2010, when Mr. Kim appointed his son, who is believed to be 27 or 28 years old, a four-star general in the North Korean military and to high-level posts in the ruling political party.

In October 2010, his first public image was released by North Korean state media, showing a striking resemblance to his father and grandfather, Kim Il Sung, the North Korean founder.  

Since the public appointment, Kim Jong Eun has frequently been seen following his ailing father on "on-spot" inspections.

"We must fight with greater resolve to overcome today's crisis, behind comrade Kim Jung Eun's leadership, for another great victory for the Juche revolution," an announcer on North Korean state television said in announcing the elder Mr. Kim's death. Juche is North Korea's state ideology, which emphasizes independence and self-determination.

Kim Jong Il, far right, and Kim Jong Eun, third from right, salute while watching a military parade in September.

Although a succession plan has been laid out, conditions aren't as favorable as they were in 1994 for continuing the family's control. North Korea is much poorer and less stable now. A famine from 1995 to 1997 killed two million to three million North Koreans, aid agencies estimate, and sowed distrust in the government. North Koreans have learned more about the outside world in recent years, thanks to increasing use of cellphones and availability of DVDs.

What Kim Jong-il's Death Means To Rest of World

The potential for instability in North Korea poses difficulties for the rest of the world because the country in recent years made significant progress in the development of nuclear weapons. It conducted tests of nuclear explosives in 2006 and 2009 and is believed to possess a small number of nuclear bombs, though none that can be transported by missiles.

For its neighbors South Korea and China, Mr. Kim's death brings an additional risk: the prospect for a greater outflow of North Koreans into their countries if instability occurs.

When Mr. Kim came to power in 1994, North Korea was still trying to recover from the collapse of its economic sponsor, the Soviet Union. Famine overtook the country, but Mr. Kim relied on his father's formula for controlling North Korea's roughly 24 million people.

North Korean Embassy staff in Beijing lower their national flag on Monday to mourn Kim Jong Il's death.

He limited their access to information, ability to travel and earn wealth. And he maintained a system of gulag-like prison camps, massive in scale and horrific in condition, to instill fear.

China eventually took over as North Korea's main benefactor. Prodded by Beijing, Mr. Kim experimented with economic liberalization in 2002 by allowing some markets to form. But by 2008, Mr. Kim grew fearful that economic freedoms were eroding the power of his regime. He ordered crackdowns that included a confiscation of private savings in late 2009.

Mr. Kim also resisted efforts by China, the U.S. and other countries to persuade him to give up the nuclear-weapons research that his father started in the 1970s. The research climaxed in October 2006 when North Korea first tested a half-megaton nuclear device. It tested a more powerful nuclear explosive in May 2009, leading to stiff sanctions by the United Nations Security Council that further damaged the economy.

In 2010, North Korea revealed progress in turning enriched uranium into a source of fuel for nuclear weapons, further aggravating other countries.

This undated picture released by North Korea's official Korean Central News Agency on Nov. 2 via the Tokyo-based Korean News Service shows Kim Jong Il inspecting Korean People's Army unit 789.

Over the past year, Mr. Kim repeatedly reached out to China for more economic and security assistance and lashed out at the three countries long considered to be North Korea's main enemies: South Korea, Japan and the U.S.

COMMENTARY:   Yesterday, when I heard the news that North Korean dictator Kim Jong Il had died from a heart attack I knew I had to pay my respects with a stupendous blog post.   

Like most Americans, we knew very little about Kim Jong Il, other than what we read about him in the newspapers or seen on television.  So, I view this as a great opportunity to educate myself and you on the little midget dictator.  

Official North Korean Announcement of Kim Jong-il's Death

Thanks to Google Translator, here's the original news release that was run by the state run North Korean newspaper @uriminzokkiri via Twitter announcing the death of Kim Jong Il, and translated into English using Google Translator:

"(December 19, Pyongyang KCNA) -

12:00 o'clock today, the great Leader of Korea Kim Jong-il by comrades want casually demise was a great press release was issued doe.

Lt's General Secretary of the Workers' Party of Korea Democratic People's Republic of KPA lt's Defense Committee, who is the commander in chief, the Great Leader Kim Jong-il was a boy you like the death of his comrades facing the county ten million hyeongeon now is in the grip of grief that can not be.

Perform the transition from a socialist powerful nation-building feats ever open phase, and the revolution of Korea overlapping challenges and triumphantly through the ordeal, and at a time when Kim Jong -minded sport he died of the WPK and the revolution is the maximum loss of 70 million Koreans, liberal world Most of the people is a great sorrow.

Kim Il Sung University in Pyongyang, including height, enshrined in many places in the great President Kim Il Sung statue of a comment bibun Among the nation's parents have lost a great citizen come to the locked gakgyecheung Kim moknotah comrades are singing ohyeol breaks down.

They wash with tears pouring nyeom also without making the pain of loss and sorrow that is struggling with.

"Even if only some time ago with the development of the country Thriving happy life of the people than the fire in order to be energetic activity Burley pontoon Announcing the Great General, that he believed that lest we are not alone. "

"Our country does not she, sir you, sir, leaving the leadership of the revolution, sir, love leaves us only one who thought that life is nice, do not you."

Chest pain and sorrow slicing the sky just like to sit down this vision, people more firmly in the hearts of every one always trying to get somewhere and rakgwan confidence of victory, is the tragic vow.

KPA Military Jeongilguk (Male, 43 years old):

"We follow the leadership of Comrade eun sad turn today's crisis with strength and courage win the naemyeo subject of the revolution to win even more great new haegal eoksege will struggle." 

Who work in Cabinet heoseongcheol (Male, 55 years old), the "eun-minded than his revelation of our revolution today raeil must prevail," he stressed."

NOTE: Neat translation, isn't it.  What a crappy translator Google has, but I am sure you can figure it out.     

North Korea Mourns Kim's Death

The news of the North Korea's leader death has put the 24-million population on the verge of insanity, hyped up by unceasing TV broadcast of mass mourning throughout the country. ­North Korea's national flag is flying at half-mast today on every flagpole in the country.

 

Now that's what I call a whole lot of crying.  Kim Jong-il's son Uen has big shoes to fill.

North Korea's New Leader: Kim Jong-un

Kim Jong-Il's successor is his youngest son, Kim Jong-un. It's time to meet the most powerful twenty-something in the world: an enigmatic basketball fanatic and four-star general with a bad case of fat cheeks and an itchy trigger finger.

In some ways, Kim Jong-un is just your normal millenial:  After a stint away at school in 1998, he moved back home with his parents. Although in Kim's case the school was a Swiss boarding school, and his time back home was spent studying at North Korea's premier military academy and being groomed to succeed his father. Kim Jong-il apparently chose Kim Jong-un to succeed him over his two older brothers because they're seen as too soft and irresponsible to lead.

Unlike most people his age (including his nephew) Kim Jong-un is definitely not on Facebook. Kim has been kept so tightly under wraps—he was enrolled at his Swiss boarding school under a fake identity—that the world didn't really know what he looked like until he was "unveiled" at a military parade last year, a newly-minted four star general.

Kim Jong-Un likes to pass the time playing basketball and video games, and launching sudden military strikes against South Korea. It's thought that Kim Jong-un coordinated the bombardment of a South Korean island and the sinking of a South Korean warship last year to prove his military prowess and cement his role as the Great Successor. But he's not all business: F ormer classmates told the Washington Post Kim was obsessed with basketball, had a stash of expensive Nikes and "spent hours doing meticulous pencil drawings of Chicago Bulls superstar Michael Jordan." His taste for consumer goods has survived: Last year, a train full of televisions and watches thought to be gifts for Kim was derailed on its way way from China.

According to a former cook of Kim Jong-Il's who goes by the name Kenji Fujimoto:

"Dressed in a military outfit, the young Jong-Un glared at me with a menacing look when we shook hands."  

The first time they met, Fujimoto wrote in Kim Jong-Il's Chef:

"I can never forget the look in his eyes which seemed to be saying, 'This one is a despicable Japanese.'"

Kim Jong-un, like his father, is a serious chubster. Maybe he bulked up like Robert De Niro inRaging Bull to look more like his fat grandfather, North Korea's founder Kim Il-Sung, whom he's reportedly purposely styling himself after right down to the flat-top hairstyle. Or maybe it's some unspoken rule among North Korea's regimes that all its leaders have to be exceptionally rotund, to underscore the the millions of its citizens who have starved in famines.

Looks like Jim Jung-un is a real work of art thanks to dad.   Any kid that can move from civilian to four-star general, that is just plain impressive.

President Obama better not count on peace talks with this vicious, cold-blooded, and mean-spirited chubby dictator any time soon. 

The North Korean Military

North Korea has the fourth largest military in the world with 1.1 million military personnel, behind China (2.25 million), U.S. (1.55 million) and India (1.35 million).  South Korea's military ranks #6 with 687,000 personnel in uniform.   North Korea i a military state without equal.  On a per-capita basis, North Korea has more people in the active military than any other country by a wide margin. 

North Korea's annual military budget in 2009 was only $5 billion, compared to $24.5 billion spent by South Korea, and the $800 billion spent by the U.S.     Most of North Korea's armaments are supplied by the Russia and People's Republic of China, but are outdated.

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North Korea is superior to South Korea in the following aspects of their military:

• No of Active Military Personnel:  1.1 million versus 687,000
• Reserve Military Personnel:  4.7 million versus 4.5 million
• Main Battle Tanks:  3,500+ versus 2,750
• Artillery Pieces:  17,900+ versus 10,774
• Air Force Fighters and Attack Aircraft:  540 versus 467 (But So Korea has the more modern aircraft supplied by the U.S.)

South Korea has a big lead in surface naval warships (47 versus 8), but lags behind North Korea in patrol craft (329 versus 79), submarines (63 versus 13) and small landing craft (224 versus 36).    

North Korea's nuclear bomb program is super-secret, but according to the U.S. and IAEA nuclear experts,  the country has sufficient weapons grade uranium to producce between 2 to 3 nuclear bombs and is it is developing long-range ballistic missles to deliver nuclear warheads to Alaska and even Hawaii.  A rogue nation like North Korea, with a nuclear arsenal, run by a much younger dictator like Kim Jong Uen means a big problem for decades to come.   

Communist countries are known for their huge military parades.  This video celebrates the 75th anniversary of the ruling North Korean party and shows its military forces on display.  North Korean forces have a very odd way of marching, which has got to hurt after a while. 

  

North Korea Is A Tourist Paradise   

North Korea is apparently a very popular tourist destination, if you are not from the West.  If you are from China or Russia, no problem.  North Korea is a great place to visit, but get used to frequent blackouts in your hotel.   

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But, North Korea is a crazy fucking country. 

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Courtesy of an article dated December 19, 2011 appearing in The Wall Street Journal, an article dated December 19, 2011 appearing in Gawker

 

FINANCIAL PANIC SWEEPS EUROPE AS THE HEAD OF THE IMF WARNS OF A “1930s DEPRESSION”

Are we on the verge of another Great Depression?  Christian Lagarde, the head of the IMF, said this week that if dramatic action is not taken immediately we could actually see conditions "reminiscent of the 1930s depression" and that no country on earth "will be immune to the crisis".  Right now, financial panic is sweeping across Europe, but most Americans are not too concerned about it because they simply don't understand how important the EU is.  The truth is that the EU has a much larger population than the United States does.  The EU has an economy that is nearly as large as the economies of the United States and China combined.  The EU has more Fortune 500 companies that the United States does, and the banking system of Europe is substantially larger than the banking system of the United States.  Anyone out there that believes that a massive financial collapse in Europe would not dramatically affect the rest of the globe is being delusional.  The European debt crisis is one of the biggest stories that we have seen in a long, long time and the coming financial meltdown is going to permanently change the global economy.

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So far, politicians in Europe have held 19 high-level emergency meetings in an attempt to solve this crisis.

All of their efforts have failed.

Right now, this is the situation in Europe....

• Most EU governments are drowning in toxic levels of debt.
• Bond yields have risen dramatically this year and this has caused borrowing costs for most EU members to soar.
• In an attempt to get debt under control, governments all over Europe are implementing brutal austerity measures and this is causing European economies to slow down substantially.
• There is a tremendous lack of confidence in the European financial system at this point and this is causing a massive credit crunch.
• The credit crunch is causing the money supply to drop significantly in almost every nation in the EU.
• Major banks all over Europe are massively overleveraged and are on the verge of failing.

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This is all so similar to what we saw back during the early 1930s.

In fact, things have gotten so bad that prominent world leaders are now using apocalyptic language when describing the situation in Europe.

Just check out what the head of the International Monetary Fund, Christine Lagarde, recently said about Europe.  Speaking at a State Department conference in Washington D.C. this week, Lagarde made the following very shocking statements....

"The world economic outlook at the moment is not particularly rosy. It is quite gloomy"

"There is no economy in the world, whether low-income countries, emerging markets, middle-income countries or super-advanced economies that will be immune to the crisis that we see not only unfolding but escalating"

"It is not a crisis that will be resolved by one group of countries taking action. It is going to be hopefully resolved by all countries, all regions, all categories of countries actually taking action."

"No country or region is immune. All must take action to boost growth. Work must start in the eurozone countries and must continue relentlessly. The risks of inaction include protectionism, isolation and other elements reminiscent of the 1930s depression."

"This is exactly the description of what happened in the 1930s, and what followed is not something we are looking forward to."

But didn't the politicians in Europe recently reach a deal which was supposed to fix all this?

Well, unfortunately the deal basically did nothing to fix the underlying financial problems that Europe is facing.

In fact, global financial markets seem entirely unimpressed by this recent deal.  A recent article by Professor Peter Morici detailed some of the problems with the deal....

Investors are rejecting the euro deal, because the agreement does not effectively meet the funding needs of Italy and other Mediterranean governments, address the weak balance sheets of European commercial banks, or fix the underlying structural flaws in the euro architecture.

The €440 billion European Financial Stability Facility is providing short-term funding—guaranteed by 17 Eurozone member states as a whole—to tide over the more troubled governments.

However, those bailouts impose huge cuts in spending and tax increases. Coupled with austerity plans also adopted by France and other healthier European states, those packages are pushing Europe into a recession that could last several years.

What is even worse is that there are signs that this recent deal is already unraveling.  Some EU nations have decided that they are not sure that they want to go along with the program.

The following comes from a recent article in the Telegraph....

Amid fresh warnings that Europe is triggering a 1930s-style global depression, the German chancellor faced open rebellion against the key plank of her Brussels accord. The leaders of Hungary and the Czech Republic told a joint conference in Budapest they were ready to reject the planned treaty changes and implied move towards a centralised tax system. Czech prime minister Petr Necas said he was “convinced that tax harmonisation would not mean anything good for us”.

In Poland, we are actually seeing people march in the streets to protest against this new agreement....

Poles marched under banners that read: “We want sovereignty, not the euro.” They were protesting against the Brussels deal that could see EU countries, including those outside the eurozone, face penalties for breaking tough centralised spending laws.

So not only does this new deal not address the fundamental problems that Europe is facing, there is also a tremendous amount of doubt about whether or not it will eventually be approved.

Meanwhile, the brutal austerity measures that are being implemented all over Europe are pushing many EU nations into recession.

The EU (led by Germany and France) and the IMF have been pushing financially troubled nations all over Europe to make incredibly deep budget cuts.  But these very deep budget cuts have had a devastating economic impact.

In a recent article, I discussed how brutal austerity measures have already pushed the economy of Greece into a full-blown depression....

Just look at what happened to Greece.  Greece was forced to raise taxes and implement brutal austerity measures.  That caused the economy to slow down and tax revenues to decline and so government debt figures did not improve as much as anticipated.  So Greece was forced to implement even more brutal austerity measures.  Well, that caused the economy to slow down even more and tax revenues declined again.  In Greece this cycle has been repeated several times and now Greece is experiencing a full-blown economic depression.  100,000 businesses have closed and a third of the population is living in poverty.  But now Germany and France intend to impose the "Greek solution" on the rest of Europe.

Right now, the flow of government money is drying up all over Europe and so is the flow of money from the banks.  European banks are shrinking their balance sheets and have dramatically cut back on lending in order to meet new capital requirements that are being imposed upon them.

All of this has created an environment where there is not much credit flowing in Europe at all.  When there is a credit crunch of this magnitude, it causes the money supply to start to shrink.  This is already happening all over Europe as a recent article in the Telegraph noted....

All key measures of the money supply in the eurozone contracted in October with drastic falls across parts of southern Europe, raising the risk of severe recession over coming months.

Right now, we are seeing the money supply in each of the "PIIGS" nations fall at a staggering rate.  The following comes from the same Telegraph article referenced above....

Simon Ward from Henderson Global Investors said "narrow" M1 money – which includes cash and overnight deposits, and signals short-term spending plans – shows an alarming split between North and South.

While real M1 deposits are still holding up in the German bloc, the rate of fall over the last six months (annualised) has been 20.7pc in Greece, 16.3pc in Portugal, 11.8pc in Ireland, and 8.1pc in Spain, and 6.7pc in Italy. The pace of decline in Italy has been accelerating, partly due to capital flight. "This rate of contraction is greater than in early 2008 and implies an even deeper recession, both for Italy and the whole periphery," said Mr Ward.

Those numbers scream "Recession, Recession, Recession".

There may be one glimmer of hope on the horizon.  The Federal Reserve has been lending huge amounts of money to the European Central Bank and the European Central Bank has been lending that money out to European banks.  In turn, the European banks have been using much of that money to buy up European government bonds.  It is a massive Ponzi scheme, but it has stabilized bond yields in Europe for now.  This scheme was described in a recent article by Simone Foxman....

That's because the European Central Bank may have already introduced roundabout measures that will solve some of Europe's big problems—it's making investing in peripheral sovereign debt a huge profit opportunity for banks.

Theoretically, financial institutions will be able coin money by borrowing ultra-cheap from the ECB and buying higher yielding sovereign debt.

Essentially, it appears the ECB might allow European banks to pledge everything but the kitchen sink in return for funds. First, the new policy allows European banks to hold far fewer assets as collateral in exchange for funding from the ECB—freeing up liquidity to the tune of €103 billion ($134 billion). More importantly, relaxing collateral restrictions could also allow European banks to use even somewhat risky sovereign assets as collateral for bond purchases.

But this Ponzi scheme cannot go on indefinitely.  A lot of European banks are already starting to run out of collateral for these loans as one Australian news source recently explained....

"If anyone thinks things are getting better, they simply don't understand how severe the problems are," a London executive at a global bank said. "A major bank could fail within weeks."

Others said many continental banks, including French, Italian and Spanish lenders, were close to running out of the acceptable forms of collateral, such as US Treasury bonds, that could be used to finance short-term loans.

Some have been forced to lend out their gold reserves to maintain access to US dollar funding.

So will the European Central Bank keep lending them money once they are out of collateral?

If they do, the ECB itself could potentially be in a great deal of danger.

The truth is that the ECB is already playing with fire.  So far, the European Central Bank has spent over 274 billion dollars buying up European government bonds in an attempt to keep bond yields down.

How many toxic assets can the ECB buy up before they get into real trouble?

That is a very interesting question.

Meanwhile, the rest of the world is becoming increasingly concerned about the financial panic that is sweeping Europe.

For example, Australian banks have been given one week to perform a stress test that evaluates their ability to survive in the event of a European financial collapse.

Why all the urgency?

Do they know something that we don't?

Just like back in 2008, we are seeing massive problems at some of the largest banks in the world.

On Thursday, Fitch Ratings downgraded a whole bunch of the world's most prominent banks....

The banks included Bank of America, Morgan Stanley and Goldman Sachs, as well as Europe's Barclays, Societe Generale and BNP Paribas.

Germany's Deutsche Bank and Switerzland's Credit Suisse were also downgraded.

The global banking system is a giant house of cards.  There is simply way too much debt, way too much leverage and way too much risk.

On average, major banks across Europe are leveraged 26 to 1.

If the value of the assets held by those banks declines by just 4 percent, they will be wiped out.

Yes, that is how serious things are.

And already we are starting to see major banks fail in Europe.

This week it was revealed that Germany's second largest bank is going to need a bailout.  The following comes from a Sky News report....

Germany's second largest bank, Commerzbank, is reportedly in discussions with the German government about a bailout after regulators said it needed to raise more money to cope with a potential default on its loans to governments.

"Intense talks" have been going on for several days, according to sources who spoke to the news agency Reuters.

So if Germany's second largest bank is failing, are any banks in Europe safe?

Just like we saw back during the 1930s, we are starting to see a run on banks all over Europe.

In fact, according to a recent Der Spiegel article, a run on Greek banks has been going on for a while now and is rapidly accelerating....

He means that the outflow of funds from Greek bank accounts has been accelerating rapidly. At the start of 2010, savings and time deposits held by private households in Greece totalled €237.7 billion -- by the end of 2011, they had fallen by €49 billion. Since then, the decline has been gaining momentum. Savings fell by a further €5.4 billion in September and by an estimated €8.5 billion in October -- the biggest monthly outflow of funds since the start of the debt crisis in late 2009.

If you can believe it, approximately 20 percent of all bank deposits in Greece have been withdrawn since the start of 2011.

Europe is in a massive amount of trouble.  The euro is dropping like a rock and the European financial system is paralyzed by panic and fear.

It is going to take a miracle to prevent a massive financial collapse from happening in Europe in 2012.

Unfortunately, there do not appear to be any miracles for Europe on the horizon.

COMMENTARY:    This does not look good.  Right now total combined European Union government debt as about the same as the U.S.  ($14.7 trillion as of September 30, 2011) and soon to go up another

This is scary shit. The countries with the most problems of defaulting on their debt include Greece, Italy, Portugal, Ireland and Belgium.  Many European, U.S. and other international banks are holders of that debt.   Greece alone owes $236 billion to various banks in Europe and U.S.  I thought the U.S. debt situation was bad, but at least we can print money to keep things afloat.

Courtesy of an article dated December 16, 2011 appearing in Before Its News

 

 

 

U.S. PROBE OF CHINESE CYBERATTACKERS PINPOINTS HACKERS AND TIES MOST TO MILITARY, U.S. READY TO CONFRONT BEIJING

"President Obie, sir, we've got an all-out cyberattack from the Chinese in progress.  I need your okay for a counter-attack."

WASHINGTON—U.S. intelligence agencies have pinpointed many of the Chinese groups responsible for cyberspying in the U.S., and most are sponsored by the Chinese military, according to people who have been briefed on the investigation.

Armed with this information, the U.S. has begun to lay the groundwork to confront China more directly about cyberspying. Two weeks ago, U.S. officials met with Chinese counterparts and warned China about the diplomatic consequences of economic spying, according to one person familiar with the meeting.

U.S. Air Force personnel work in the Air Force Space Command Network Operations & Security Center at Peterson Air Force Base in Colorado Springs, Colorado in a July 2010 file photo.

The Chinese cyberspying campaign stems largely from a dozen groups connected to China's People's Liberation Army and a half-dozen nonmilitary groups connected to organizations like universities, said those who were briefed on the investigation. Two other groups play a significant role, though investigators haven't determined whether they are connected to the military.

In many cases, the National Security Agency (See my blog post dated April 28, 2011) has determined the identities of individuals working in these groups, which is a critical development that provides the U.S. the option of confronting the Chinese government more directly about the activity or responding with a counterattack, according to former officials briefed on the effort.

James Lewis, a cybersecurity specialist at the Center for Strategic and International Studies who frequently advises the Obama administration said.

"It's actually a small number of groups that do most of the PLA's dirty work.  NSA is pretty confident of their ability to attribute [cyberespionage] to this set of actors."

In early November, the U.S. chief of counterintelligence issued a report that was unusually blunt in accusing China of being the world's "most active and persistent" perpetrator of economic spying. Lawmakers have also become more vocal in calling out China for its widening campaign of cyberespionage.

Still, diplomatic considerations may limit the U.S. interest in taking a more confrontational approach because some U.S. officials are wary of angering China, the largest holder of U.S. debt.

Chinese Foreign Ministry spokesman Liu Weimin said.

"Chinese law clearly prohibits hacking and that the Chinese government cracks down on such behavior and actively participates in international cooperation."

He said.  

"Accusations that China participates in such hacking, or that the Chinese government is behind it, are totally ungrounded." 

Chinese officials regularly dispute U.S. allegations of cyberspying, saying they are the victims, not the perpetrators, of cybercrime and cyberespionage. An NSA spokeswoman declined to comment.

Identifying adversaries has been difficult because it is easy to fake identities and locations in cyberspace. An inability to tie cyberspying activities with precision to a certain actor has in the past limited the U.S.'s ability to respond because it's hard to retaliate or confront an unidentified adversary.

The U.S. government, led by the National Security Agency, has tracked the growing Chinese cyberspying campaign against the U.S. for decades. Past government efforts have had exotic names like "Titan Rain," and "Byzantine Hades."

More recently, NSA and other intelligence agencies have made significant advances in attributing cyberattacks to specific sources—mostly in China's People's Liberation Army—by combining cyberforensics with ongoing intelligence collection through electronic and human spying, Mr. Lewis said.  

The U.S. investigation of China's activities is the latest round of spy-versus-spy in cyberspace.

  

On April 29, 2001, a Chinese jet fighter accidentally collided with a U.S. Navy EP-3 reconnaissance (spy) plane patrolling off the Chinese coast near Hainan Island. The incident setoff a dangerous confrontation between the U.S. and China.  Luckily, 'cooler heads prevailed' and the U.S. plane and its crew were released finally released. 

The activity breaks down into cyberspying efforts by 20 groups with different attack styles that are responsible for most of the cybertheft of U.S. secrets, said the people briefed on the investigation. U.S. intelligence officials have given different classified code names to each group.

U.S. intelligence officials can identify different groups based on a variety of indicators. Those characteristics include the type of cyberattack software they use, different Internet addresses they employ when stealing data, and how attacks are carried out against different targets. In addition to U.S. government agencies, major targets of these groups include U.S. defense contractors, according to former officials.

A Chinese state TV report alludes to attacks on websites in the U.S.

Collectively, these groups employ hundreds of people, according to former officials briefed on the effort. That number is believed to be small compared to the estimated 30,000 to 40,000 censors the Chinese government is believed to employ to patrol the Internet.

The Chinese government is believed to have been behind a number of recent major cyberbreak-ins, including multiple hacks of Google Inc. and the EMC Corp.'s RSA unit, which makes the numerical tokens used by millions of corporate employees to access their network.

A cyberattack revealed this year on Lockheed Martin Corp. is also believed to have been traced to China, and the Chinese are believed to have been responsible for an infiltration a few years ago of the Pentagon's Joint Strike Fighter weapons program, which is also managed by Lockheed.

The counterintelligence report released last month predicted that China's espionage efforts will continue to grow.

COMMENTARY:  In a blog post dated November 6, 2011, I described to you in great detail the "undeclared" cyberwar that exists between China and the U.S.  

There are no jet fighter attacks, intercontinental ballistic missles, special forces on the ground, or shots fired, but in every sense of the word, there is a real war between the U.S. and China.  

This is a different kind of war, a clandestine electronic war, between the world's two greatest economic and military powers.  Most Americans and Chinese citizens are not even aware that this war exists until they read about it in the newspapers or see it on the evening television news.

Neither side will ever openly admit that their secure sytems networks were ever compromised or broken into, or secrets stolen.    

This new form of warfare does use military missles, great naval armadas or air fleets, but uses powerful computers, sophisticated spy and viral software, and some of the brightest hackers in the world.    

Let's look at the American and Chinese Cyber Forces.

USCYBERCOM - THE U.S. FIRST LINE OF DEFENSE

In a blog post dated February 7, 2011, I profiled America's cyberwar first line of defense: USCYBERCOM or  CYBERCOM.

The federal government department entrusted with the job of protecting America against cyber attacks is the United States Cyber Command (USCYBERCOM or CYBERCOM).  

On June 23, 2009, the Secretary of Defense directed the Commander of U.S. Strategic Command (USSTRATCOM) to establish USCYBERCOM. Initial Operational Capability (IOC) was achieved on May 21, 2010.

Secretary of Defense, Robert Gates, and Joint Chiefs of Staff of the the four branches of the U.S. Military salute the establishment of USSTRATCOM and USCYBERCOMMAND on May 21, 2010

U.S. Army General Keith B. Alexander is in charge of CYBERCOM.  General Alexander is also the present Director of the National Security Agency (NSA) and Central Security Service. 

 

The mission of USCYBERCOM is to plan, coordinate, integrate, synchronize, and conduct activities to: direct the operations and defense of specified Department of Defense information networks and; prepare to, and when directed, conduct full-spectrum military cyberspace operations in order to enable actions in all domains, ensure US/Allied freedom of action in cyberspace and deny the same to our adversaries.

USCYBERCOM combines the Department’s full spectrum of cyberspace operations and plans, coordinates, integrates, synchronizes, and conducts activities to:  

• Lead day-to-day defense and protection of Department of Defense (DoD) information networks, 
• Coordinate DoD operations providing support to military missions;. 
• Direct the operations and defense of specified DoD information networks. 
• Prepare to, and when directed, conduct full spectrum military cyberspace operations. 

The command is charged with pulling together existing cyberspace resources, creating synergy that does not currently exist and synchronizing war-fighting effects to defend the information security environment.

USCYBERCOM centralizes command of cyberspace operations, strengthen DoD cyberspace capabilities, and integrate and bolster DoD’s cyber expertise.  Consequently, USCYBERCOM improves DoD’s capabilities to ensure resilient, reliable information and communication networks, counter cyberspace threats, and assure access to cyberspace.  USCYBERCOM’s efforts also support the Armed Services’ ability to confidently conduct high-tempo, effective operations as well as protect command and control systems and the cyberspace infrastructure supporting weapons system platforms from disruptions, intrusions and attacks.

USCYBERCOM is a sub-unified command subordinate to USSTRATCOM. Service Elements include the four key branches of the U.S. military:

• U.S. Army – Army Cyber Command (ARCYBER)
• U.S. Air Force – 24th USAF
• U.S. Navy – Fleet Cyber Command (FLTCYBERCOM)
• U.S. Marine Corp – Marine Forces Cyber Command (MARFORCYBER)

CYBER BLUE TEAM - CHINA'S FIRST LINE OF DEFENSE

In a blog post dated July 16, 2011, I profiled China's cyberwar first line of defense: CYBER BLUE TEAM.

China's Blue Cyber Team busy hacking somebody's network

China's military has set up an elite Internet security task force tasked with fending off cyber attacks, state media reported May 27, denying that the initiative is intended to create a "hacker army."

China's Defense Ministry revealed for the first time in May that it had formed a 30-strong cyber defense unit, called the "Blue Army," but insisted that it was for defensive purposes only.

 

On May 27, 2011, China's Defense Ministry spokesman Geng Yansheng announces the formation of China's Cyber Blue Team

The People's Liberation Army has reportedly invested tens of millions of dollars in the project, which is sure to ring alarm bells around the world among governments and businesses wary of Beijing's intentions.

The Global Times quoted China's defense ministry spokesman Geng Yansheng as telling a rare briefing this week. 

"Cyber attacks have become an international problem affecting both civilian and military areas.  China is relatively weak in cyber-security and has often been targeted. This temporary program is aimed at improving our defenses against such attacks."

The 30-member "Cyber Blue Team" - the core of the PLA's cyber force - has been organized under the Guangdong military command in the country's south and will carry out "cyber-warfare drills", the newspaper said. 

China's Cyber Capabilities (Click Image To Enlarge)

The Cyber Blue Team  is based in Jinan, China where there are 12 Universities and a high tech zone and boast 6 million people. It’s also the headquarter of the PLA. The squad is aimed at carrying out attacks on other countries Internet.  

Li Li, a military expert at the National Defense University said,

“China’s Online Blue Army is currently at its fledging period."  

Zhang Shaozhong, a military expert from the PLA adds.

“Just like the army and air forces, the ‘online blue army'  is a historical necessity."

The reason is very simple. Teng Jianqun, a research fellow at the China Institute of International Studies, said.

“We must adapt to the new types of warfare in the information era. The ‘online blue army’ is of great strategic significance to China’s economic development and social stability.” 

The United States, Australia, Germany and other Western nations have long alleged that hackers inside China are carrying out a wide-range of cyberattacks on government and corporate computer systems worldwide.

But in a commentary, the Global Times hit out at "some foreign media" for interpreting the program as a breeding ground for a "hacker army" said. 

"China's capability is often exaggerated. Without substantiated evidence, it is often depicted by overseas media as the culprit for cyberattacks on the US and Europe. China needs to develop its strong cyber defense strength. Otherwise, it would remain at the mercy of others."

China's military has received annual double-digit increases in its budget over much of the last two decades as it tries to develop a more modern force capable of winning increasingly high-tech wars.

In 2007, the Pentagon raised concerns about a successful Chinese ballistic missile test strike on a satellite. That weapon could be used to knock out the high-tech communications of its enemies.

U.S. computer firm McAfee said in February that hackers from China have also infiltrated the computer networks of global oil companies and stole financial documents on bidding plans and other confidential information.

According to US diplomatic cables obtained and published by WikiLeaks, the United States believes that China's leadership has directed hacking campaigns against U.S. Internet giant Google and Western governments.

In one cable, the U.S. Embassy in Beijing said it learned from "a Chinese contact" that the Politburo had led years of hacking into computers of the United States, its allies and Tibet's exiled spiritual leader, the Dalai Lama. 

WHO's WINNING THE CYBERWAR?

USCYBERCOM and China's Blue Cyber Team are very new cyber organizations.  Both organizations carry out and defend against cyber attacks.  Both were established with the goal of defending their their military organizations against cyber attacks, from each other, rogue nations, cyber terrorist groups bent on compromising their defense systems.   It's very difficult to ascertain which country is winning the cyber wars since neither the U.S. or China military will publicly acknowledge every single cyber attack and what was compromised.  The following lists major cyber attacks committed by the Chinese against the U.S. and its allies against the U.S. military, government agencies and embassies between 1999 and 2009.

 

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US Deputy Defence Secretary William Lynn said that in a March 2011 attack and other breaches, hackers had taken information on "our most sensitive systems". The admission came as the Pentagon rolled out a strategy for strengthening US cyber capabilities and addressing threats and attacks in cyberspace.

In a speech at National Defense University in Washington, Mr Lynn said about 24,000 files containing Pentagon data were stolen from a defence industry computer network in March, marking one of the largest cyber attacks in US history.

CYBER ATTACKS RULES OF ENGAGEMENT

At the end of October 2011, there was a Wall Street Journal story reporting that the US government had decided that certain types of cyber attacks originating from another country can constitute an act of war, and therefore could trigger a "traditional" military response from the US. from the US.

As one military official in the WSJ article stated it:

"If you shut down our power grid, maybe we will put a missile down one of your smokestacks."

Well, today there is a long AP story that says that Preident Barack Obama signed executive orders about a month ago outlining when and how US military commanders can employ cyber capabilities to mount cyber attacks or conduct espionage against other countries.  

Defense officials and security experts told the AP that:

"The orders detail when the military must seek presidential approval for a specific cyber assault on an enemy and weave cyber capabilities into U.S. war fighting strategy."

The executive orders act in a similar fashion as operational theater rules of engagement. The AP story states, for example, that:

"Under the new Pentagon guidelines, it would be unacceptable to deliberately route a cyberattack through another country if that nation has not given permission - much like U.S. fighter jets need permission to fly through another nation's airspace."

The full set of cyberwar guidelines have not been announced, but the US Department of Defense is expected to do so soon.

CIVILIAN ORGANIZATION CYBERATTACKS

Cyber attacks against both US and Chinese civilian organizations occur almost on a daily basis.

China reported that in 2010 year its government websites experienced a 68 percent increase in cyber attacks.

The Chinese government has been accused of sponsoring cyber attacks against major companies like Google and Yahoo as well as governments around the world.

A report released by the National Computer Network Emergency Response Technical Team/Coordination Center of China (CNCERT/CC) found that a total of 35,000 Chinese websites, including 4,635 government sites, were hit by hackers in 2010.

Attacks on China's non-government websites actually decreased 22 percent in 2010, while attacks on government websites had increased nearly 70 percent.

The report also found that roughly 60 percent of ministerial-level websites have potential security risks.

McAfee, a cybersecurity company owned by Intel, announced on August 4, 2011, that it uncovered a wide-ranging, global cyber attack that impacted 72 organizations.

The U.S. cannot afford to let its guard down for a single second.  We are fighting a very devious and invisible enemy, who can strike at any moment.  We don't know where they will strike.  It could be a miltiary installation, our power grid system, national air traffic control system, the Federal Reserve Bank or Facebook's data center in Washington state.  

We do know that China's Cyber Blue Team and individual Chinese cyber criminals mean business and we have to be on the alert at all times. If this is the way tomorrow's wars will be fought we must be ready, and prepared to pay whatever it takes to insure our national security.     

I am happy to hear that USCYBERCOM has identified China's cyber culprits including the individual PLA units, names of the individuals or groups involved.  We need to lower the hammer, and just let them have it with an all-out, bent for leather, cyberattack of our own, and let them know "whose their daddy".   

Courtesy of an articvle dated December 13, 2011 appearing in The Wall Street Journal

U.S. SOLAR PANEL COALITION FILES ANTI-DUMPING AND COUNTERVAILING-DUTY COMPLAINT AGAINST CHINESE UV PANEL PRODUCERS

As the dust settles following Wednesday's submission of anti-dumping and countervailing-duty filings related to Chinese solar cells and modules, the eyes of industry observers are turning to the U.S. Department of Commerce (DOC) and International Trade Commission (ITC) to see how the drama will unfold.

The seven-party Coalition for American Solar Manufacturing, led by U.S. module maker SolarWorld, is accusing the Chinese government of cushioning its solar sector with land grants, export assistance, preferential loans and other state-sponsored subsidies. These measures have artificially deflated the price of Chinese products and caused "material injury to the domestic industry," the coalition's petition states.

The complaint reads.

"Chinese producers and exporters have pushed - and will continue to push - large and growing volumes of dumped and subsidized [crystalline-silicon PV] products into the U.S. market, regardless of demand.  In the absence of the restraining effects of anti-dumping and countervailing-duty orders, the domestic industry faces a grim future."

According to Kevin Kilkelly, president of SolarWorld Americas, suspicion about unfair Chinese trading practices has been building for some time.

He tells Solar Industry. 

"We'd been monitoring the competition very closely for years.  We were tracking economic data coming in from the U.S. Customs Department."

Kilkelly says the company's examination found that in July alone, the volume of Chinese imports exceeded the total for all of fiscal-year 2010.

He remarks.  

"That triggered thoughts of dumping." 

The coalition wants the ITC and DOC to impose duties to counteract Chinese subsidies and bring the prices of imported solar products to true market levels.

John Smirnow, vice president of trade and competitiveness at the Solar Energy Industries Association says. 

"U.S. companies have the right to bring a case.  There are competitive pressures in the marketplace, and the coalition believes the competitive pressures are the result of unfair competition."

However, the U.S. industry will have to be patient to see if remedies are forthcoming. Smirnow says the federal agencies will need to collect a "tremendous amount of data" and analyze that information. Preliminary determinations from the ITC and DOC will not be made for at least five months, and the case will likely take upwards of a year to get resolved.

Unsurprisingly, this issue is huge news at trade show Solar Power International (SPI), which is taking place this week in Dallas. During a special session held Thursday morning, experts outlined the case and explained that the investigation will look for evidence of adverse price effects, such as imports underselling domestic products, as well as for signs of declines in U.S. companies' sales, market share and profits.

Jeffrey Telep, a partner in King & Spalding LLP's international trade group, told SPI attendees that the petition names several Chinese companies that are allegedly dumping products into the U.S. market, but it is uncertain which exporters will be investigated and to what extent.

But ultimately, he explained, if federal authorities find merit in the allegations, U.S. Customs will collect duties equal to the dumping margin and subsidy rates. Presumably, these measures will have a measurable, positive effect on the U.S. solar market.

For his part, Kilkelly explains SolarWorld's attitude succinctly:

"This is about making an even playing field."

COMMENTARY:    In a blog post dated September 6, 2011, I commented on a report by Solar Energy Industries Association and GTM Research released in August 30, 2011, that reported  that the U.S. solar industry had produced a net surplus of $1.9 billion for the year ending 2010.   

The report is titled, US Solar Energy Trade Assessment 2011, claims that the US solar industry exported a net of $1.9 billion in solar photovoltaic (PV) and solar heating and cooling (SHC) components in 2010 globally, with $240 million of orders coming directly from China. Total exports totaled more than $5.6 billion, according to the report.

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Though the US has continued to buy PV modules from China, the report found that the US was selling China an ever greater value of capital equipment and polysilicon for PV modules.

Solar Energy Industry Association (SEIA) President and CEO Rhone Resch in a statement said. 

"In 2010, we grew by over 100%.  We achieved a positive trade balance and we exported more goods and services to China than we imported".

Shayle Kann, managing director of Solar at GTM Research said. 

"The PV market is more complex than meets the eye.  To completely understand solar trade flows, this report looks both at earlier steps in the value chain and at non-panel components of a solar PV system."

In another blog post dated September 29, 2011, I pointed out that the DOE loan of $535 million to Solyndra pales in comparison to the number and size of the loans the Chinese government is furnishing its solar PV manufacturers.   It's obvious that Chinese manufacturers are getting a lot of help, something that U.S. PV manufacturers are not.   

I have a very good feeling that U.S. solar producers will finally get their day in court, and the Department of Commerce and International Trade Commission will have no choice but to rule in their favor given the massive evidence of unfair trade practices and massive dumping of PV panels in the U.S.

Hopefully, this will begin a series of complaints by other U.S. industries harmed by Chinese producers dumping their products on our shores and killing our industries.

Courtesy of an article dated October 20, 2011 appearing in Solar Industry and an article dated