Delta Begins Nonstop Flights Between Seattle and Shanghai

By on June 18, 2013 at 6:00 AM Leave a Comment

Capitalizing on growing Chinese interest in homes and businesses on the U.S. West Coast, Delta Airlines on Monday launched nonstop flights between Seattle and Shanghai’s Pudong International Airport.

The U.S. carrier said the flight is the latest addition to its growing Asian gateway in Seattle, which includes nonstop flights to Beijing, Osaka, Tokyo-Narita and Tokyo-Haneda.

The nearly 12-hour flight to Shanghai will take place aboard 208-seat Boeing 767-300ERs, and like all Delta Airlines trans-Pacific flights, will be equipped with flat-bed seats in BusinessElite, a section for Economy Comfort class, and in-flight entertainment in every seat. Having inaugurated a Seattle-Beijing route in 2010, Delta will now offer Shanghai service with connections to 58 U.S. cities through a partnership with Alaska Airlines. Within China itself, Delta’s partner China Eastern has also started offering connections across China for passengers arriving directly from Seattle. [Read more...]

Snowden Draws Praise and Debate as the Wild Card between U.S. and China

By on June 13, 2013 at 10:45 PM 2 Comments

Edward Snowden on the street in Hong Kong.

Truth is always stranger than fiction. Who could have thought that a 29-year-old contractor working for the National Security Agency would make U.S.-China relations more interesting to watch than the “shirt-sleeves” Presidential summit in California? Edward Snowden’s revelation of the NSA’s PRISM program of global surveillance and world-wide hacking, especially against China since 2009, has provoked alarming headlines from around the world: “The U.S. behaving like China,”  “US leaker Snowden both boon and burden for China,” and “U.S. Fears Edward Snowden May Defect to China.”

Hero or criminal, Snowden has certainly created a situation in U.S.-China relations that neither Beijing nor Washington is prepared to handle.

With Snowden hiding in China’s territory of Hong Kong, U.S.-China ties are further complicated, as this VOA report analyzed. Until now, the Chinese government has not taken a position on Snowden except this indirect mention of PRISM through its Foreign Ministry spokeswoman Hua Chunying, “China has stated repeatedly that China was a main victim of hacking attacks in the world,” and “We believe that it is not conducive to solving problems in cyber security with a double-standard.” [Read more...]

China’s Ultra-Wealthy Invest in the U.S. West Coast

By on June 12, 2013 at 8:00 AM Leave a Comment

This Washington state home is advertised on a real estate site in China.

Relations between the West Coast and China are strengthening as wealthy Chinese elites seek out million dollar homes in all-cash deals that offer the promise of starting life anew in the States. The West Coast offers richer educational opportunities for their children, the prospect of establishing job-creating projects, and ways to diversify their own fortunes through jump starting various businesses.

According a recent Seattle Times article, this new influx of wealthy Chinese buyers has led to more than half the recovery in Eastside prices. From downtown Seattle condos to homes of former NBA stars, many kinds of high end properties are being snatched up by Chinese buyers. These buyers are also a new competitive force in the market — other buyers who wish to use real estate for potential commercial development are sometimes no match for those who offer cash from halfway around the world without even setting foot on the properties prior to purchase. [Read more...]

NSA Program Damaging for American Tech Companies… Especially in China

By on June 11, 2013 at 12:30 PM Leave a Comment

NSA headquarters in Maryland

U.S. President Barack Obama and Chinese President Xi Jinping held their historic two-day summit last Friday and Saturday. Pre-summit briefings by American officials revealed that cybersecurity was at the top of the agenda for the talks and that the U.S. even planned to impress upon China the importance of the norm of state responsibility – that a state is responsible for activities originating in its territory. Any perceived American moral high ground on the issue, however, was heavily damaged when the Guardian (UK) revealed on Friday morning that the NSA was monitoring the communications of millions, indeed potentially hundreds of millions, of individuals both in the U.S. and abroad. The NSA reportedly carries out this feat through access to the systems of companies such as Google, Facebook, Apple, and Microsoft, which was allegedly the first company to participate in the program. Though all of these companies have publicly denied participating in such a scheme, Prism is bad news for them, particularly for those seeking to succeed in China.

For Chinese officials, it must have been difficult to know how to react to the revelations. On the one hand, the NSA’s mass monitoring of electronic data, both domestic and international, largely aligns with the Chinese conception of the Internet as a realm to be closely watched and tightly managed. Indeed, the similarities between China’s approach to electronic surveillance and the NSA’s Prism weren’t lost on Western press outfits like the International Herald Tribune, which published an article titled “On Surveillance, Is America Becoming More Like China?” Chinese officials must also have been pleased by the fact that the Guardian report on Prism undermined U.S. credibility on cybersecurity issues on the very day that President Obama was slated to discuss the topic with their own President Xi. [Read more...]

Microsoft Building Huge IT Services Center in Chongqing

By on June 11, 2013 at 8:30 AM Leave a Comment

Microsoft recently inked a deal to build its first China-based Microsoft Services Global Delivery Center in Chongqing, its second largest in the world, which is expected to bring in $200 million over the next three years and provide a major boost to the Chinese city’s IT industry, according to China’s International Business Daily (国际商报). 

Microsoft China will build and fund the entire Chongqing project, and has exclusive rights to not only manufacture but market its products both domestically and internationally. The center’s purpose is to carry out software consulting and application development and coordinate service delivery, gradually expanding its business scope to Greater China, South Korea, Japan and other North Asian nations.

The Chongqing center, in the sprawling southwest metropolis that is Seattle’s sister city, will be the world’s second largest service delivery center and is modeled after an Indian prototype. It will consolidate manufacturing plants, research and development, and online business. The center is expected to employ 500 people and earn $200 million from services over the next three years. [Read more...]

While California Shines, Washington Risks Falling Behind in Attracting Investment from China

By on June 10, 2013 at 8:29 AM Leave a Comment

Photo credit: Evan Vucci / AP

The Seattle Times printed an op-ed by contextChina’s Robert O’Brien and Kristi Heim on Friday. The article, in its entirety, can be read below.

THIS week features yet another milestone in the relationship between California and China — U.S. President Barack Obama and Chinese President Xi Jinping will meet at Sunnylands, a desert retreat in Rancho Mirage.

The presidential summit on Friday and Saturday follows a string of recent high-level meetings between officials from the Golden State and the People’s Republic, including a session between Los Angeles Mayor Antonio Villaraigosa and President Xi in Beijing last month, and California Gov. Jerry Brown’s pathbreaking weeklong trip to China in April. Meanwhile, the last time a senior Chinese leader came to Seattle was almost a decade ago, when President Hu Jintao stopped here for a two-day visit in 2006. [Read more...]

Jockeying for Access to U.S. Market, China Closes Door on Washington Apples

By on June 7, 2013 at 12:00 PM Leave a Comment

Washington state produces 95 percent of the country’s apple exports, and from 2011 to 2012, more than 2.5 million of those went to China (directly and via Hong Kong), its fourth largest market behind Mexico, Canada, and India.

Washington state’s close proximity to China and that country’s growing taste for imported products created a lucrative market at a time when U.S. domestic sales were flat, said Todd Fryhover, president of the Washington Apple Commission, which represents 2,200 apple growers.

But since last August, those exports have all but completely halted. On August 9, China slammed the door shut on American apples when it declined to issue import permits. [Read more...]

China Set to Cap and Trade Carbon Emissions, Ahead of U.S.

By on June 7, 2013 at 8:11 AM Leave a Comment

Severe pollution is forcing China to take action on CO2 emissions.

Climate change is a major challenge confronting President Obama and President Xi, as leaders of the world’s two biggest carbon emitters, and among the top issues during their two-day summit that begins today at Sunnylands.

On that issue, Xi now has a fresh upper hand: China has just announced that it will cap its greenhouse gas emissions in 2016. Meanwhile in the U.S., talks of cap and trade have been dead for three years.

Not long ago, countries at the UN climate change talks in Copenhagen failed to reach an agreement on the reduction of carbon emissions. One reason was that China didn’t agree that developing countries should have to commit to carbon caps while developed countries were not doing enough to cut their emissions.

But that has changed since a China National Development and Reform Commission (NDRC) decision in May. [Read more...]

People’s Daily Column on ‘Dishonest Americans’ Backfires

By on June 5, 2013 at 2:04 PM Leave a Comment

China’s President Xi Jinping, who is preparing to travel to the U.S. for a summit with President Obama later this week, has repeatedly encouraged exchanges between Americans and Chinese people.

People-to-people ties, he said, can help “boost the China-U.S. cooperation” and establish “a new type of relationship between China and the United States.”

So it’s ironic that the People’s Daily, the mouthpiece of China’s Communist Party, started a column on its online USA channel in March called “The Immoral and Dishonest Americans.” The editor stated, “The impression of most Chinese is that Americans are an honest, trustworthy, moral and kind people. But after living in the U.S. for some time, one would find they are misled.” It carried several stories to show a different side of Americans. One talked about how a locksmith in New Jersey overcharged for an incomplete service. Another complained about United Airlines taking its time giving a refund it owed. A third was about someone’s disappointment with Verizon’s poor service and a technician asking to be paid in cash. [Read more...]

What Can Businesses Expect from Xi, Obama Talks on Cybersecurity?

By on June 4, 2013 at 1:00 PM Leave a Comment

Later this week, US President Barack Obama and Chinese President Xi Jinping will meet at a secluded estate in Southern California for two days of talks on a host of bilateral and global issues. Among them will be cybersecurity, which has quickly risen in prominence to the top of the Sino-American agenda. What can businesses, for which the issue is of critical importance, expect from the talks? In short, they can expect that the discussion will be the beginning of a long process of negotiations aimed at resolving the dispute, and they can hope that the two leaders make a strong commitment, public or private, to increase cooperation designed to create a more secure cyber realm.

A flurry of recent news reports and the elevation in the importance of cybersecurity to the US-China relationship has created the illusion that the phenomenon of Chinese hackers is a very new one. Businesses, though, know better. They’ve been under attack for years. Between 2007 and 2009, Chinese hackers stole several terabytes of data from defense contractors working on the F-35 Joint Strike Fighter, the most expensive weapons program in U.S. history. In 2009, Coca-Cola was the victim of a Chinese cyber espionage campaign that may have scuttled a major acquisition. Earlier this year, Apple joined the growing list of companies that admitted to having been hacked by China-based actors. And just last week, The Washington Post reported that “designs for many of the nation’s most sensitive advanced weapons systems have been compromised by Chinese hackers.” All of these incidents speak to the wisdom of comments made by James Lewis, a senior fellow at the Center for Strategic and International Studies: “Companies doing business in China or competing against Chinese rivals should expect hackers will go after their most confidential files.” [Read more...]

Taking Stock of Alibaba’s Dominance: Much More Than an E-Commerce Company

By on June 3, 2013 at 8:18 AM Leave a Comment

Alibaba offices in Hangzhou

Alibaba celebrated two momentous occasions on May 10 – the 10th anniversary of the creation of Taobao, their wildly successful consumer-to-consumer (C2C) e-commerce platform, and the resignation of company founder and CEO Jack Ma. The occasion was hardly understated. Among the feature highlights was Ma, accompanied by a band of company employees, singing to an adoring crowd of 40,000 people in Hangzhou’s principal soccer stadium.

Taobao’s 10th birthday and Ma’s departure are just two of the many major changes that are likely to occur at Alibaba in the coming months. The biggest of these is an expected IPO, which analysts predict will likely bring in more than $60 billion.

Before we consider Alibaba’s future, however, it’s worth considering its state in the present moment. Alibaba is often referred to as an e-commerce company, and it is. But it offers much more than just popular e-commerce platforms. Alibaba, like Amazon before it, started off as an e-commerce provider, but has morphed into a tech giant involved in multiple industries. In this post, we take a picture of Alibaba at a distinct moment in time, assessing some of its major operations. [Read more...]

This Week in China — June 1, 2013

By on June 1, 2013 at 10:21 PM Leave a Comment

Here’s a roundup of the news of the week, from our email newsletter.

Politics and Policy

Technology

Cybersecurity

Washington State Residents Offer Talking Points for Obama-Xi Summit

By on May 31, 2013 at 8:13 AM Leave a Comment

President Barack Obama and Chinese President Xi Jinping are preparing to meet in California early next month (June 7-8) at a critical point for U.S.-China relations.  Seasoned China Hand and former ambassador to Thailand Darryl Johnson spoke to an audience in Kirkland last week about relevant issues. As someone who handled the Hainan Island Incident in 2001 when a U.S. Navy plane crash-landed in China after colliding with a Chinese Navy fighter, Johnson knows well how the two sides need to talk, cooperate and solve problems.

The upcoming summit will be the first meeting between the two heads of state since Obama began his second term as president and Xi became president of China in March, and the first one on the West Coast. The two are expected to discuss a wide range of bilateral, regional and global issues and “review progress and challenges in U.S.-China relations over the past four years and discuss ways to enhance cooperation,” according to the White House.

With many pressing issues between the two countries, from cybersecurity to the North Korean nuclear threat, as well as growing trade and investment, more and more Washingtonians have become interested in China.  That’s why an overflow crowd at Kirkland library came to listen to Ambassador Johnson talk about “China and Its Neighbors,” a program organized by the World Speakers Forum. [Read more...]

Suning Confirms It: Amazon’s Kindle is Headed to China

By on May 30, 2013 at 10:45 AM Leave a Comment

After months of speculation, it appears that Amazon’s Kindle is about to go on sale in China. The latest round of rumors that the Kindle’s Chinese debut was imminent began yesterday with a report by Sina Tech, citing information from “multiple sources,” that the Kindle line of products would go on sale in China on June 7. While Amazon has not yet confirmed the report, Suning, China’s largest electronics retailer, has publicly stated that it has secured an exclusive deal to sell the Kindle e-book readers as well as the Kindle Fire tablet. Whether the devices’ international popularity – Amazon recently reported that the Kindle Paperwhite is its best selling product globally – will translate into success in a competitive Chinese market, however, remains the subject of debate.

The latest rumors regarding the Kindle, which surfaced yesterday on Sina Tech, stated that the Amazon devices would go on sale in China on June 7. Though they have yet to be confirmed by Amazon officials, Ge Shuang, a public relations official at Suning, China’s largest electronics retailer, informed the China Daily earlier today that his company had attained exclusive rights to sell the Kindle line of products. China Daily also cited an unnamed Suning employee as stating that the products will go on sale in early June, a timeline which alines with the earlier Sina Tech report. According to this unnamed employee, the Kindles will even be sold on Suning’s growing e-commerce platform, which is perhaps an accession on Amazon’s part that their own e-commerce site’s share of the market – reportedly less than one percent – isn’t large enough to spur the Kindle’s success.

Rumors of an impending Kindle release in China have been around since 2010 and have been particularly rife over the last six months, a period which included the Chinese Kindle Store’s December launch and the Amazon Appstore’s China debut earlier this month. Four different Kindle products, including the Kindle Fire, received approval for sale in China last June. Their approval combined with the aforementioned developments and the April launch of Amazon’s Cloud Drive services in China all heightened speculation regarding the Kindle’s release.

[Read more...]

Tencent’s WeChat Social Networking Goes Global

By on May 29, 2013 at 9:30 AM Leave a Comment

Tencent has seen the social networking future – and it’s WeChat. WeChat (微信 in Chinese) is Shenzhen-based Tencent Technology’s latest social networking treasure trove. The free app and social networking site is expected to surpass 400 million users by June, and boasts nearly 195 million monthly active users.

As it did earlier with QQ, the mobile instant messaging and entertainment service, the company hopes to leverage WeChat’s recent critical success into a new global social network built upon its nearly 800 million current QQ users. WeChat is an outward looking service that can be registered through a QQ number, Weibo microblog account, phone number or Facebook account.

Tencent, which is listed on the Hong Kong Stock Exchange and recorded $2.2 billion in sales last quarter, is one of the largest Internet companies in China. Responsible for creating QQ and TenPay, Tencent’s services integrate communication and information with entertainment and e-commerce. WeChat can be described as a more advanced version of QQ. Tencent improved on QQ’s games and text/video chatting services with several new features. These include Moments, which is similar to Instagram; Hold To Talk voice chat, which allows users to utilize their device like a walkie-talkie; and Shake and Look Around, which allow users to connect with random users all over the world who are also using these features. [Read more...]

While Microsoft Expands Across Pacific, Amazon’s China Strategy Remains Hazy

By on May 28, 2013 at 12:00 PM Leave a Comment

Microsoft CEO Steve Ballmer visited Peking University last year.

Microsoft just announced a significant hiring increase in China and a renewed commitment to offering its cloud computing services in the country. Amazon just announced a major expansion of its own cloud computing services, not in China, but rather in Northern Virginia, where the company reportedly signed a $600 million deal with the Central Intelligence Agency (CIA) two months earlier. These two announcements, which came just a day apart, are indicative of the two Pacific Northwest tech giants’ seemingly disparate approaches to the Chinese market. While Microsoft is building bridges across the Pacific in a very transparent fashion, Amazon’s China strategy remains difficult to discern.

Last Tuesday, Microsoft CEO Steve Ballmer announced that his company would be hiring several thousand new workers in China. The expansion, which comes on top of the Redmond-based software giant’s current population of 4,000 employees in the country, is aimed primarily at beefing up capacity in the cloud computing and Windows Phone services realm. In his press conference, Ballmer noted that China has become the fastest growing market for Windows Phone. Microsoft will also begin a public preview of Windows Azure, its corporate cloud computing service, in China next month. [Read more...]

Food Safety Concerns in China Spill Beyond its Borders

By on May 28, 2013 at 8:00 AM Leave a Comment

Can’t wait to try that Chinese chili pepper hot sauce? Like a growing number of such items on the supermarket shelves these days, there’s a good chance this sauce is a “product of China.”

But what does “product of China” entail? Recent outbreaks of food safety issues in China have put hundreds of items in question. Popular food stuffs such as dried food (chili, seaweed, Chinese herbal medicine), canned seafood, marinated bamboo shoots, and processed meat products could contain harmful additives that are either absent from food packages or mislabeled. Chinese food imports in the U.S. are continuing to rise, but inspections by China and the U.S. are not keeping pace with that growth, law professor Stanley Lubman writes in the Wall Street Journal.

Chinese authorities are cracking down on illegal food producers and adulterated food, but the problem persists. So far this year, the government has cracked down on dozens of illegal food operations. One of the most prominent cases is a “black factory” in Changsha that used industrial sulfur to cure chili peppers to maintain their color and prevent rotting. The remaining sulfur dioxide in the chili is 67 times the national standard in China, far exceeding the international standard for food additives. [Read more...]

Vice President’s Commencement Remarks about China Provoke Debate, Demand for Apology

By on May 26, 2013 at 11:02 AM 2 Comments

Vice President Joe Biden gave a commencement speech May 13 at the University of Pennsylvania (watch video). In front of 6,000 graduates, Biden talked about how the U.S. was well-positioned to lead the 21st century.  With an ever more powerful China on his mind, Biden brought up the popular notion that “China’s going to eat our lunch.” What he said next caused a stir, followed by a petition from 350 Chinese students demanding an apology.

“You cannot think different in a nation where you cannot breathe free,” Biden said. “You cannot think different in a nation where you aren’t able to challenge orthodoxy because change only comes from challenging orthodoxy.”

In their petition, the Chinese students said for a commencement speech Biden should have spoken to all students, not just American students. As international students from China, they found Biden’s singling out and demeaning of China inappropriate and offensive. The university had a total of 1,339 Chinese international students enrolled as of fall 2012. [Read more...]

Could Chinese Investment Have Saved I-5 Bridge from Collapse?

By on May 24, 2013 at 12:00 PM Leave a Comment

Three people had to be rescued from the Skagit River after an I-5 bridge collapsed last night, throwing their cars into the water. Could Chinese investment have prevented the bridge’s demise? Maybe. Consider: a) Nearly a quarter of Washington’s bridges are either structurally deficient or functionally obsolete; b) China has consistently demonstrated an interest in investing in U.S. infrastructure and Chinese investors helped bankroll the replacement of Washington’s 520 Floating Bridge; and c) The leader of China’s largest sovereign wealth fund recently told Bellevue Mayor Conrad Lee that Washington has turned down Chinese investment in the past.

American infrastructure is in a state of disrepair. Such a fact has been trumpeted not only by scholars and think tanks, but also by the nation’s preeminent leaders, including President Obama. Washington is part of this national problem. The state was given a C by the American Society of Civil Engineers on their 2013 Infrastructure Report Card and a C- in the bridges category. According to the report, more than 25 percent of Washington’s nearly 8,000 bridges are either structurally deficient or functionally obsolete. [Read more...]

Boeing’s 787 Dreamliner (Finally) Headed to China

By on May 24, 2013 at 8:09 AM Leave a Comment

The Civil Aviation Administration of China (CAAC) officially approved Boeing’s 787 Dreamliner on Thursday, paving the way for Chinese airlines to begin using the aircraft. The CAAC was the last major aviation regulator to clear the Dreamliner, following in the footsteps of American, European, and Japanese regulators. The 787’s approval in China will likely yield both relief and exuberance amongst the Boeing’s brass, who are facing tough competition in the form of Airbus and the rise of domestically produced aircraft.

The CAAC’s approval of the Dreamliner comes just a few weeks after a Hainan Airlines executive told the Wall Street Journal that the 787 would be granted its airworthiness certification in May. Between the WSJ’s report and yesterday’s official announcement, however, the CAAC remained mum on the status of the Dreamliner in its inspection processes.

It has been a long and bumpy road to China for the Dreamliner, whose delivery to Chinese airlines was pushed back by delays in both production and the CAAC approval process. Boeing officials, however, will no doubt be pleased with the outcome as a) their signature aircraft is now headed to one of the world’s fastest growing commercial aviation markets, and b) the 787’s approval could herald in new sales of the plane to Chinese airlines. [Read more...]

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