Western Intelligence Agencies Ban China Lenovo Computers Over Hacking Issues

Britain’s intelligence agencies, including MI6 and MI5, have allegedly banned the use of computers manufactured by Chinese company Lenovo due to concerns that the machines come hardwired with a vulnerability to hacking.

More Than 1 Million China Counterfeit Parts Found in U.S. Weapons

U.S. officials say a problem that has long plagued luxury handbag makers such as Gucci and Louis Vuitton is now afflicting the Pentagon’s high-end weapons systems: cheap Chinese counterfeits.

A months-long congressional probe found at least 1,800 cases of counterfeit electronics in U.S. weapons, with the total number of suspect parts exceeding 1 million.

The results of the investigation, conducted by the Senate Armed Services Committee, are to be presented at a hearing Tuesday, where senators plan to grill defense contractors about lapses in monitoring their parts supply chain.

“We cannot allow our national security to depend on electronic scrap salvaged from trash heaps by Chinese counterfeiters,” said committee Chairman Carl Levin (D-Mich.). He called the report’s findings — based on records from 10 defense contractors and their testers — “just the tip of the iceberg.”

Greenpeace Finds Toxic Chemicals NPE in Top Clothing Brands in China, including Adidas and Li Ning

(Epochtimes)- Traces of toxic and hormone-disrupting chemicals have been found in clothes bearing 14 top manufacturing brands, Greenpeace said in its report released on Tuesday in the Philippines and China, where many of the clothes are made.

Nonylphenol ethoxylates (NPE) were found pervading clothing and fabric-based shoes sold internationally by brands such as Adidas, H&M, and Abercrombie & Fitch. NPE breaks down to form nonylphenol, which interrupts biological endocrine functions and harms the reproductive system.

“Scientific research has shown that NPE have direct correlation with premature puberty,” Zhang Kai, who was in charge of the investigation, told Chinese business daily Changjiang Daily. “Experiments have confirmed that these environmental hormones could induce male fish to transform into female fish.”

China accounts for 85% of fake goods seized in EU

BRUSSELS — European customs intercepted one billion euros worth of counterfeit goods last year, with 85 percent of the fakes originating from China, the European Commission said Thursday.

The figures highlighted the rise of Chinese counterfeit goods, which had accounted for 64 percent of the fake articles seized in the 27-nation European Union in 2009.

China is by far the biggest exporter of such goods in a list that includes India, the source of counterfeit drugs, and Hong Kong, which supplies counterfeit memory cards, as well as Turkey and Thailand.

Chinese prison-made goods enter Canada: report

An Alberta company has been importing products made at a Chinese prison camp, according to a report by the Washington, D.C.-based Laogai Research Foundation.

Canada bans the importation of any goods made by prison labour, but the foundation, which raises public awareness about the Laogai — China’s extensive system of forced-labour prison camps — indicates prison-made goods are turning up in Canada.

Rice noodles prompt latest China food scare

BEIJING — Large amounts of rice noodles made with rotten grain and potentially carcinogenic additives are being sold in south China, state press said Friday, in the country’s latest food safety scare.

Up to 50 factories in south China’s Dongguan city near Hong Kong are producing about 500,000 kilogrammes (1.1 million pounds) of tainted rice noodles a day using stale and mouldy grain, the Beijing Youth Daily said.

High amounts of heavy metals found in China tobacco

(Reuters) – Some Chinese cigarettes contain amounts of lead, arsenic and cadmium that are three times higher than levels found in Canadian cigarettes, a study has found.

While consuming such heavy metals is widely known to be harmful to health, there is little research done so far about their impact when inhaled into the body.

The researchers, who published their findings in the journal Tobacco Control on Thursday, said more investigation was needed.

China: Sexual prematurity in babies- Dairy Companies Face New Questions

By BRIAN SPEGELE, The Wall Street Journal, Aug. 12, 2010 –

BEIJING— Mounting questions about abnormal hormone levels in several Chinese infants who demonstrated early signs of puberty have again put a Chinese milk supplier and New Zealand dairy giant Fonterra Cooperative Group Ltd. on the defensive about their products.

The latest issue comes two years after the 2008 milk scandal, in which at least six children died and 300,000 were sickened from milk that contained dangerous levels of melamine, an industrial chemical.

The Chinese company at the center of the latest questions, Nasdaq-listed Synutra International  Inc., insists it isn’t to blame for symptoms of sexual prematurity in babies, including breast growth. On Synutra’s website, it says the company has never added illegal hormones to its milk products, and questions links between its product and the babies’ signs of puberty.

“These claims are highly irresponsible and based on speculation instead of scientific evidence,” said the company’s chairman and chief executive, Liang Zhang. “As a well-known and trusted provider of infant formula in China, we are completely confident that our products are safe and our quality levels are industry leading.”

Earlier this month, parents and doctors in central China’s Hubei province began voicing concern that milk powder from Synutra had caused at least three infant girls to exhibit signs of puberty, the state-run Xinhua news agency reported. This week, Ministry of Health officials said they were launching an investigation into the milk powder.

At a news conference on Tuesday, a spokesman for China’s Ministry of Health said multiple factors could cause sexual prematurity, and experts couldn’t yet determine whether food was a factor, Xinhua reported.

In 2008, Fonterra, one of New Zealand’s largest companies, faced a wave of criticism in the aftermath of the milk scandal. Fonterra owned a large stake in one of the companies at the center of the scandal, the now-defunct Sanlu Group, but has flourished in China following Sanlu’s closing. Synutra recalled some of its products during the melamine scare…….(more details from Wall Stret Journal)

US in huge federal crackdown on alleged luxury fakes from China

AFP, Aug. 4, 2010 –

SAN FRANCISCO — US authorities announced Tuesday the biggest federal crackdown ever on West coast shopowners who allegedly sell counterfeit luxury handbags and other goods worth some 100 million dollars.

Prosecutors said they have charged operators of eight San Francisco shops with selling suspected designer fakes made in China, the US attorney for northern California and US Immigrations and Customs Enforcement (ICE) said.

The 25-count indictment is “part of the largest federal enforcement action ever taken against West Coast retailers suspected of selling counterfeit designer apparel and accessories,” they said in a statement.

“To consumers who think designer knockoffs are a harmless way to beat the system and get a great deal, ‘buyer beware,'” said ICE Director John Morton.

“Trademark infringement and intellectual property crime not only cost this country much needed jobs and business revenues, but the illegal importation of substandard products can also pose a serious threat to consumers’ health and safety,” he said.

Authorities revealed the details of the case in an indictment unsealed Monday. The indictment was filed in federal court July 22.

It charged the defendants, mostly residents of San Francisco, with conspiracy, smuggling goods into the United States, and trafficking in counterfeit goods.

“The investigation has led to the seizure of nearly 100 million dollars worth of counterfeit merchandise [based on the manufacturer’s suggested retail price (MSRP) had the products been legitimate],” a statement said.

Among the items seized were “clothing, handbags, wallets, jewelry, watches, scarves, sunglasses and shoes that were illegally imported from China,” it said.

The suspected counterfeit items purported to be luxury brands such as Dooney and Bourke, Nike, Coach and Kate Spade, Armani, Burberry, Prada and Louis Vuitton.

“Interdicting and destroying counterfeit and trademark infringing goods has long been a priority of the federal government,” US Attorney Joseph Russoniello said.

“The significant impact of trafficking in such merchandise on the American economy should be obvious.”

– AFP

EU report: 64% of fake goods are from China- a 10% increase

BBC News, 22 July 2010 –

An EU report says 64% of fake or pirated goods seized in the 27-nation bloc last year came from China – a 10% increase on 2008.

Clothing was the biggest category of goods seized at 27%, while the amount of illegal CDs, DVDs and electrical goods seized showed a marked decline.

The economic downturn accounted for a fall in customs interventions.

Black market cigarettes, fake labels and counterfeit medicines were common contraband, the EU says.

There were significant quantities of contraband shampoos, toothpaste, toys, medicines or household appliances that could pose a health hazard, the European Commission report said on Thursday.

In all, customs officials intervened in more than 43,500 cases last year, seizing 118 million articles.

The commission said that in the past luxury goods were the most susceptible to intellectual property right (IPR) infringements, but “more and more items used by citizens in their daily lives are now affected”.

Cigarettes accounted for 19% of the products seized, other tobacco products 16%, labels 13% and medicines 10%.

More than 77% of all detained products were destroyed or a court case was initiated to determine the infringement.

Of the goods seized, 38% were flown into the EU and 34% entered the EU by post.

The main origin of contraband food and drink was Turkey, while for medicines it was the United Arab Emirates and for toys and games it was Egypt.

– BBC News

Products made in China often cost more there than in the West

By David Pierson, Los Angeles Times, July 13, 2010-

Reporting from Beijing — The laptop computer Luo Guangli carried out of the Apple flagship store in Beijing was no different from the models sold in the United States. It had the same high-resolution screen, an identical processor and the same printed label on the back: “Assembled in China.”

The only difference — besides a manual written in Chinese — was the price. Luo paid $2,760. That’s about $460, or 20%, more than an American buyer would spend at an Apple store or buying it online.

“It’s a huge expense, but what can I do?” said Luo, a 24-year-old professional photographer who wears glasses with Buddy Holly frames.

The premium prices aren’t limited to foreign-branded computers. Kobe Bryant’s Nike sneakers with the Made in China label go for $165 in the U.S. But at an official Nike store in China? $190. A flat-screen Sony TV assembled by Chinese laborers runs about $800 at a Best Buy store in the U.S. But you’d pay 30% more at the popular Chinese appliance chain Gome. The same goes for that Maclaren Techno XT infant stroller. It’s also manufactured here, but you’ll typically pay 40% more for one at a Beijing mall than you would in the U.S.

It’s a paradox of life here in the world’s factory floor. The place known for delivering low-cost goods to Western consumers doesn’t always do the same for its own people……. (more details from Los Angeles Times)

Father of China’s toxic milk-powder Children victim on Trial

Civil Rights & Livelihood Watch (Chinese), via The Epochtimes –

The father of one of the victims of China’s toxic milk-powder scandal has been charged with “inciting social upheaval” because he demanded medical help for his child.

Zhao Lianhai, a Beijing resident whose son developed kidney stones after consuming melamine-tainted milk powder, founded a citizen’s group called “Kidney Stone Babies” that advocates for the rights of the victims and their families. Because of his vocal public activism, he has been nicknamed “The Father of Kidney Stone Babies.”

Zhao’s proactive involvement in assisting others who were unhappy with the way the government handled their cases made him a target for investigation by the Daxing District police.

He was arrested and has been held in custody since last November. His first court appearance was on March 30.

The trial, held at the Daxing District Court in Beijing, was closed to the public. Li Xuemei, Zhao’s wife, had asked to attend but was turned down. No verdict was announced at the conclusion of the trial.

During the entire five-hour proceedings, Zhao was kept shackled at the ankles. According to Peng Jian, Zhao’s defense attorney, Zhao was also handcuffed when he was first taken into the courtroom in the morning. Only after Peng protested were the handcuffs removed; the ankle shackles remained.

Zhao pleaded not guilty to the charge of inciting social upheaval. Peng and Zhao’s other defense attorney Mr. Li Fangping told Civil Rights & Livelihood Watch that prosecutors don’t have a case as evidence was collected before Zhao was even charged. In addition, most of the prosecution’s witnesses are policemen, creating an obvious conflict of interest.

The hearing attracted wide attention among Zhao’s supporters and human rights activists. A few dozen supporters waited outside the courtroom during the trial along with several overseas media, including the Associated Press.

Police had cordoned off the area to separate the demonstrators and were using a camera and video camera to keep a record of the demonstrators.

Some supporters held signs that read, “Citizen’s Right to Life,” “Rule of Law,” and “Justice.” Some shouted, “Release Zhao Lianlai, Zhao Lianlai is innocent!”

Some demonstrators asked the police, “Do you have children? Do you have a conscience?”

Zhao’s wife and son were among the supporters, and both of them were weeping……. (more details from The Epochtimes)

Tainted China drywall linked to deaths?

Reported by: WPTV staff, Mar. 3, 2010-

WASHINGTON, DC —  Chinese drywall has surfaced again. Now there are several deaths being reported that may be linked to the toxic wallboard. Senator Bill Nelson wants answers and is demanding the feds investigate a possible connection.

There are nine deaths associated with homes that have toxic chinese drywall. The big question, did the tainted wallboard contribute to those deaths? Nelson is demanding an investigation into each case immediately.

“Common sense will tell you if silver is turning black, if AC coils are corroding and if brass is completely disintegrating, if that’s what’s is happening to the home what is it gonna do to your respiratory system>

According to Scripps Howard News Service, five deaths are linked to tainted drywall homes in Louisiana and four here in Florida. The deaths were primarily among elderly and young people with long-standing medical problems.

The Consumer Product Safety Commission maintains there is no scientific link between tainted Chinese drywall and death but it will continue to look into each case to see if drywall played a role.

Louisiana Senator David Vitter is joining the fight for his state along with Nelson putting pressure on the CPSC……. (more details from WPTV)

Italy police raid warehouses with 500,000 tonnes of fake brand name goods made in China

Reuters, Feb. 13, 2010-

ROME (Reuters) – A police raid on a sprawling complex of warehouses in Rome turned up about 500,000 tonnes of Chinese goods including fakes of some of the world’s most famous designer labels, Italian police said on Saturday.

The operation, carried out in the past few days and announced on Saturday, was one of the biggest of its kind in Italy, they said.

The merchandise, which included fakes of big name brands, boxes with designer logos, and toys that did not meet European safety standards, was worth at least 5 million euros.

About 70 police agents took part in the raid on the southern outskirts of the city and found some 37 Chinese citizens, some of whom acted as lookouts, on the premises of the complex of eight warehouses.

“Inside we found an amazing number of boxes of name brand goods subdivided by type. All that was missing were the labels which had yet to be put on,” said police official Maurizio Improta.

Television footage provided by police showed fakes or empty boxes with logos of brands such as Salvatore Ferragamo, Calvin Klein, Roberto Cavalli, Armani Jeans and Puma.

“This is one of the biggest ever hauls of counterfeit goods in Italy,” Improta said.

The goods included clothing, furs and spectacles. The merchandise came from China and police said it was possible the complex of warehouses was used as a distribution point for other Italian and European cities.

– Reuters

Alert: Counterfeit condoms spread out in China and sold in USA

By John M. Glionna, the Los Angeles Times, January 21, 2010-

Reporting from Beijing – Sex shop owner Wang Yunsu wondered how so many competitors could suddenly undercut her low prophylactic prices.

Now she thinks she knows: The other condoms are counterfeit.

“Some manufacturers are cutting corners,” she said, stocking a shelf with a domestic brand whose name translates as Forever Love. “And it’s all about profit.”

It’s China’s latest knockoff scandal — inferior contraceptives that health officials say provide little protection and may in fact spread infectious diseases, tarnishing the axiom that condoms mean safe sex.

In November, investigators in Hunan province provided details about a July raid on an underground workshop where they found laborers lubricating condoms with vegetable oil in unsterile conditions, passing off the counterfeits as high-quality-brand products.

It wasn’t the first such bust. Police in 2008 raided an illicit factory in Zhejiang province, seizing half a million knockoff condoms.

In another case, workers recycled used condoms into hair bands in southern China.

“People could be infected with AIDS, [genital] warts or other diseases if they hold the rubber bands or strings in their mouths while weaving their hair into plaits or buns,” a dermatologist told the state-run China Daily newspaper.

The practice poses yet another disease threat in the world’s most-populous nation, where more than 2 billion condoms are used each year, supporting an estimated $530-million industry.

China mass-produces countless fake brand-name consumer goods, from shoes and handbags to DVDs and iPods, even beer. But after tainted milk killed six Chinese children and sickened about 300,000 in 2008, the spread of counterfeit condoms further demonstrates that unscrupulous manufacturers will stop at nothing to turn a profit.

Authorities estimate that up to a third of the contraceptives used in some parts of China are counterfeits, despite improvements in state food and drug oversight. None of the counterfeits are properly sterilized, and others are of such inferior quality that they could rupture during use. Authorities say they’re all dangerous.

“The quality of the knockoff condoms cannot be guaranteed, and they can easily break,” said Cheng Feng, director of the group Family Health International, China. “Such condoms definitely cannot play the role of contraception and disease prevention.”

But counterfeit condoms aren’t being sold only in China.

In 2008, officials in the New York area confiscated knockoff Chinese-made goods, including millions of phony Trojan-brand condoms that were sold in small discount stores in New York, Texas and Virginia……(more details from the Los Angeles Times)

US recalls 1.5m baby strollers manufactured in China

AFP via The Straits Times, Singapore, Jan 21, 2010 –

WASHINGTON – THE United States ordered a recall on Wednesday of 1.5 million baby strollers manufactured in China for US company Graco Children’s Products after fingertip amputations suffered by children.

The US Consumer Product Safety Commission announced the voluntary recall of the Graco’s Passage, Alano and Spree strollers and travel systems manufactured between October 2004 and February 2008.

‘Graco has received seven reports of children placing their fingers in the stroller’s canopy hinge mechanism while the canopy was being opened or closed, resulting in five fingertip amputations and two fingertip lacerations,’ it said in a statement.

‘The hinges on the stroller’s canopy pose a fingertip amputation and laceration hazard to the child when the consumer is opening or closing the canopy.’ The strollers were sold in US retail stores such as Burlington Coat Factory, Babies ‘R’ Us, Toys ‘R’ Us, Kmart, Sears, Target and Walmart.

This is the second major recall in recent months of strollers following reports of fingertip amputations and injuries.

Last November, about a million strollers, manufactured also in China for Britain’s Maclaren were recalled after there were 12 reports of fingertip amputations in the United States. — AFP

– The Straits Times

FDA Recalls Dangerous Face Paints Made In China

Matthew Borghese, AHN Editor, May 13, 2009 –

Washington, D.C. (AHN) – The Shanghai Color Art Stationery Company and the U.S. Food and Drug Administration (FDA) are issuing a recall for children’s face paint that may be harmful when used.

The FDA issued a recall after exposure to the product led to “rashes, itchiness, burning sensation, and swelling where the face paints were applied.” The FDA tested the paint and found “significant microbial contamination” in “most of the products.”

The products were sold by Fun Express Inc., a wholly-owned subsidiary of Oriental Trading Co. The colors effected by the recall include blue, purple, red, orange, black and green.

– AHN

Report: Prison-like High-Tech Sweatshop in China Producing for HP, Dell, Lenovo, Microsoft and IBM

NEW YORK, Feb. 5 /PRNewswire-USNewswire/ — Today, Charles Kernaghan and the National Labor Committee (NLC) are releasing a 60-page report, High Tech Misery in China, documenting the grueling hours, low wages and draconian disciplinary measures at the Meitai factory in southern China. The 2,000 mostly-young women workers produce keyboards and other equipment for Hewlett-Packard, Dell, Lenovo, Microsoft and IBM. Along with worker interviews, photographs of primitive factory and dorm conditions and extensive internal company documents were smuggled out of the factory.

Full report: http://www.nlcnet.org/article.php?id=613

• Workers sit on hard wooden stools as 500 computer keyboards an hour move down the assembly line, 12 hours a day, seven days a week, with just two days off a month. The workers have 1.1 seconds to snap on each key, an operation repeated 3,250 times an hour, 35,750 a day, 250,250 a week and over one million times a month. The pace is relentless.
• Workers are paid 1/50th of a cent for each operation they complete.
• Workers cannot talk, listen to music or even lift their heads to look around. They must “periodically trim their nails,” or be fined.
• Workers needing to use the bathroom must learn to hold it until there is a break. Security guards spy on the workers, who are prohibited from putting their hands in their pockets and are searched when they leave the factory.
• All overtime is mandatory and workers are at the factory up to 87 hours a week, while earning a take-home wage of just 41 cents an hour. Workers are being cheated of up to 19 percent of the wages due them.
• Ten to twelve workers share each overcrowded dorm room, sleeping on metal bunk beds and draping old sheets over their cubicles for privacy. Workers bathe using small plastic buckets and must walk down several flights of stairs to fetch hot water.
• Workers are locked in the factory compound four days a week and prohibited from even taking a walk.
• For breakfast the workers receive a thin rice gruel. On Fridays they receive a small chicken leg and foot to symbolize “their improving life.”
• Workers are instructed to “love the company like your home”…”continuously striving for perfection” …and to spy on and “actively monitor each other.”
• China provides large subsidies to its exporters. In 2008, the U.S. trade deficit with China in advanced technology products is expected to reach $74 billion. There are 1.4 million electronic assembly jobs left in the U.S. — paying $12.72 to $14.41 an hour — which may be lost due to China’s low wages and repression of worker rights.

Young women cue up in the factory cafeteria

One Metai worker summed up the general feeling in the factory: “I feel like I am serving a prison sentence…The factory is forever pressing down on our heads and will not tolerate even the tiniest mistake. When working, we work continuously. When we eat, we have to eat with lightning speed… The security guards are like policemen watching over prisoners. We’re really livestock and shouldn’t be called workers.”

Charles Kernaghan, director of the NLC commented, “God help us if the labor-management relations being developed in China become the new low standard for the rest of the world. The $200 personal computer and $22.99 keyboard may seem like a great bargain. But they come at a terrible cost. The low wages and lack of worker rights protections in China are leading the race to the bottom in the global sweatshop economy, where there are no winners.”

Website: http://www.nlcnet.org/
Website: http://www.nlcnet.org/article.php?id=613/

Food products from China destroyed in Ireland

PAUL GALLAGHER, The Irish Times, January 27, 2009 –

FOOD PRODUCTS entering Ireland from China that contain the chemical melamine are now being destroyed at Dublin Port following recent powers given to health officials and customs officers.

The new European-wide emergency control legislation was introduced following the melamine-tainted infant formula food scandal uncovered in China last September.

Milk used to manufacture a wide range of products within China had been diluted fraudulently and melamine was added to restore the apparent protein content of the milk.

Melamine was subsequently found in many food products, forcing a wave of recalls in many countries around the world. It was part of a long list of food scandals to hit China and prompted the Food Safety Authority of Ireland (FSAI) to recall Chinese-made sweet products from a number of stores within Ireland, fearing they may contain melamine.

The legislation, which came into effect last October, now requires all food imports from China that contains milk/soya at any level (which can also include chocolate and biscuits) to be detained at Dublin Port and tested. Any product found to contain melamine at a concentration greater than 2.5mg/kg is then destroyed.

Raymond Ellard, a director with the FSAI, said: “The vast majority of products have been allowed to pass through, but a small number of melamine-contaminated products have been destroyed. The testing is an on-going safety measure and as many as 160 products have been tested so far.”

Melamine can cause kidney stones, leading to kidney failure, and infants are particularly vulnerable.

“At least six babies died and more than 290,000 were made ill in China after taking milk contaminated with melamine. Composite feed products are also covered under the new rules to ensure that non-compliant food products are not diverted for animal use. The import and sale of all infant formula food from China is also prohibited.

Last Thursday, a Chinese court condemned two men to death and handed a life term to another former dairy boss for their part in the contaminated milk scandal.

It was also reported on Sunday that Chinese quarantine authorities seized more than 23 tonnes of frozen Irish pork that was found to be contaminated with dioxin and ordered it be returned.

The pork was imported by a company in the city of Suzhou in October. Inspectors sealed the pork and ordered the company to send it back. China had banned the importation of Irish pork last month following the contamination scare.

– The Irish Times

India bans toy imports from China, gives no reason

Reuters, Jan 23, 2009 –

NEW DELHI, Jan 23 (Reuters) – India on Friday banned imports of several types of toys from China for six months without saying why, a move that pleased local manufacturers but shocked importers.

A government statement issued late on Friday did not give details but industry officials said the order would ban imports of almost all toys from China.

The government said in a statement it had banned imports for six months with immediate effect in the public interest.

The Toy Association of India’s president, Raj Kumar, said the ban would severely hit imports of Chinese toys, but Indian authorities had likely taken the step in the interest of the economy.

“You see Chinese toys everywhere. The good, upper-end toys are made in India, but the cheap toys in the street and small shops were being dominated by them. They are bringing in toys without safety norms,” he said……. (more details from Reuters)

Nortel’s China Syndrome

Andy Greenberg, The  Forbes, 01.12.09 –

Concerns over Chinese cyber-spying may have stalled a deal with Huawei that Nortel needs.

Since the beginning of this decade, worries about Chinese cyber-spying have reverberated through the media, rocked the security industry and added billions to the U.S. government’s cybersecurity budget. Now, for Nortel Networks, those concerns may also have frozen a deal the struggling networking vendor badly needs.

Toronto-based Nortel, whose stock has lost 96% of its value last year, announced in September that it would sell its metro Ethernet business, an Internet-focused piece of the company that generates about $1.5 billion a year in revenue.

The most interested potential acquirer of that division of Nortel may be Huawei, which bid $400 million for Nortel’s offering in September, according to Avian Securities–a generous offer considering that the company’s current market capitalization, hammered by debt and missed earnings projections, languishes at less than half that value. More recent rumors suggest Israeli networking company Radware may be bidding as little as $50 million for the same division, according to the Israel news site Globes.

Huawei’s higher bid, however, came with a caveat: The Shenzhen, China-based networking giant has a murky history of cooperation with its homeland’s authoritarian regime. And concerns over Huawei’s government ties, according to some industry-watchers and security analysts, may have spooked Nortel’s customers that carry sensitive U.S. government data and scuttled the Chinese company’s offer.

Huawei, which didn’t respond to requests for comment, has good reason to want a chunk of Nortel’s business. It’s likely most interested in Nortel’s market share in fiberoptic equipment–8.5% of the world market according to Synergy Research, behind only Alcatel-Lucent (nyse: ALU – news – people ) and Huawei itself. Nortel’s 100-gigabyte-per-second fiberoptic switches are also significantly faster than the 40-GB-per-second switches that Huawei currently offers.

The Chinese company has long been searching for an opportunity to expand to North America. It tried a joint venture with Nortel in 2005. And though that deal was scrapped in 2006, it means the two companies may have closer ties than other potential bidders.

In an informal poll of 44 fiberoptics and Ethernet industry executives at the Carrier Ethernet World Congress last September, the telecom trade blog Light Reading found that 18 respondents named Huawei as the most likely buyer for Nortel’s metro Ethernet business, far more than other candidates like Cisco Systems (nasdaq: CSCO – news – people ) or Ericsson (nasdaq: ERIC – news – people ). The second most popular response in the poll was “no one.”

But a deal between Huawei and Nortel would have raised security hackles: The company sells telecom equipment to major Internet carriers like Verizon  (nyse: VZ –  news  –  people ), AT&T  (nyse: T –  news  –  people ), Sprint  (nyse: S –  news  –  people ) and Qwest, which in turn carry data for practically every government agency from the National Security Agency to the Pentagon. And given Huawei’s history, a tieup with the company would raise the specter of a hidden back door in a router or switch, siphoning that data to foreign spies.

A January 2007 report for the U.S. Air Force written by the RAND research group highlighted the military background of Huawei chief executive Ren Zhengfei: Before he founded Huawei in 1988, Ren was an engineering director for the Chinese military’s telecom research department. Today, “Huawei maintains deep ties with the Chinese military, which serves a multifaceted role as an important customer, as well as Huawei’s political patron and research and development partner,” according to the report.

A month later, the conservative think tank Heritage Foundation issued its own report, citing Huawei as a security threat and arguing that “if a PLA protégé firm acquired an American firm that provided computer network equipment, software and services to the U.S. government, the possibilities for cyber-espionage would be virtually unlimited.”…… (more details from The Forbes)

China says 296,000 children fell ill from tainted milk

AFP, Jan 11, 2008-

BEIJING (AFP) — China said Monday that a total of 296,000 children had fallen ill from consuming dairy products tainted with the industrial chemical melamine, up 2,000 from the previous official count.

The health ministry also told reporters at a briefing that a total of 52,898 babies had been treated in hospital for kidney problems caused by the toxic ingredient. Of these, 52,582 had been discharged.

The health ministry announced in early December a figure of 294,000 babies sickened by melamine, a chemical normally used to make plastic.

Earlier ministry data also showed six deaths had been linked to melamine.

The figure was released as the nation awaited the verdicts in the first cases against officials from Sanlu Group, the company at the heart of the baby formula scandal.

The discovery that melamine was mixed into baby milk, in a bid to make it look richer in protein, shocked consumers both in China and abroad, dealing another blow to the reputation of the nation’s products.

– AFP

Hamas Rockets Made in China

By Ofir Kaminkovski, Epoch Times Staff, Jan 1, 2009 –

TEL AVIV,  Israel—The Israel-based Intelligence and Terrorism Information Center reports that the rockets fired by the Hamas are contraband from mainland China. Hamas is a terrorist organization that took control on the Gaza strip by force in 2007.

“It was revealed that the rockets were contraband from China. The experts who liquidated the rockets saw that it was made in China,” said Hagai Huberman, an Israeli Military Correspondent to the Makor Rishon newspaper, to New Tang Dynasty Television.

Chinese communist authorities have been accused of selling weapons to Hamas before. In 2006 a Paris-based intelligence newsletter reported that Chinese Ministry of State Security official, Gong Xiaosheng, worked with Hamas militants.

In a separate case in August this year, a group of Israeli terror victims alleged that the Bank of China assisted terrorist attacks by allowing the transfer of money to Hamas. According to their lawyer Nitzana Darshan-Leitner, Chinese authorities were informed about it but did nothing to stop it.

– The Epochtimes