LinkedIn adds Chinese censorship as risk to IPO

NEW YORK (Reuters) – Following a recent blocking of LinkedIn in China, the social Internet network for professionals warned potential investors in its initial public offering that similar incidents in the future could hurt its value.

In its latest filing with U.S. financial regulators, LinkedIn confirmed that the Chinese government had briefly blocked access to its site and said that such censorship by China or other governments or organizations could lead to the loss or slowing of growth in its member base or member activity.

LinkedIn, which recently surpassed 1 million users in China, has filed with U.S. regulators to raise up to $175 million in a highly awaited U.S. technology IPO, but has yet to set terms and the timing of the offering.

China’s Facebook Syndrome- Censorship hinders access to China’s online markets

Since 2009, China has blocked Facebook, the world’s largest online social media network. This year, Renren, one of China’s largest social networks, plans to raise $500 million on the New York Stock Exchange (NYX). So a Chinese social network can tap U.S. capital markets, but American social networks can’t tap Chinese consumer markets. Does that sound fair?

If Facebook grew corn or built cars, the cry would go out that China was putting up barriers to trade. That hasn’t happened because U.S. officials and politicians have typically viewed China’s Internet censorship as a human rights, not a trade, problem. That’s changing—slowly. The Office of the U.S. Trade Representative, which negotiates trade deals, has been reviewing the idea of Internet censorship as a trade barrier at least since 2007. A nonbinding clause protecting “cross-border information flows” is part of the still-unratified Korea-U.S. Free Trade Agreement. And on Mar. 7 the trade office told Bloomberg Businessweek it is “considering proposals” for stricter language in the Trans-Pacific Partnership, an agreement under negotiation with Pacific-Rim countries such as Vietnam, Australia, and Malaysia (not China).

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.

Facebook in China: Connecting with 1bn people – and the censors

Social network chief Mark Zuckerberg photographed meeting boss of Chinese search engine Baidu in Beijing

Mark Zuckerberg thinks that China is not just a place where it would be nice to do business; it’s where the social network’s future must inevitably be found. “How can you connect the whole world if you leave out a billion people?” he asked in October.

And so he began his first visit to the country this week. Just as well it wasn’t a week ago, when China banned pictures of empty chairs as they were considered symbolic of those designated to activist Liu Xiaobo at the Nobel peace prize award ceremony in Oslo. Liu has been jailed in China for “inciting subversion of state power”.

Chinese Regime Profits by Re-selling Cheap Venezuelan Oil

Leaked diplomatic cables from February this year suggest Venezuelan officials are angry at Chinese companies. They said the companies bought their oil for cheap and made big profits by selling it to other countries.

The two countries began trading oil with much fanfare last year. Venezuelan President Hugo Chavez proclaimed he wanted to triple his country’s oil exports to China to one million tons in five years. The two countries invested billions in joint development projects.

Chinese vice premier Called Data ‘Man-Made’ – Wikileaks

By ANDREW BATSON, The Wall Street Journal, Dec. 6, 2010 –

BEIJING—A senior Chinese official said in 2007 that much of the country’s local economic data are unreliable, according to a leaked diplomatic cable published by the WikiLeaks website.

The official, Li Keqiang, was at the time Communist Party secretary of the northeastern province of Liaoning, and has since been promoted to vice premier. Since landing that position, he has overseen many of the central government’s efforts to improve the quality of its economic statistics, which continue to face many questions over their accuracy and consistency.

China links to North Korean arms flights- weapons sent to Iran through Beijing airport- WIKILEAKS

The Daily Telegraph, via Montreal Gazette, Nov. 29, 2010 –

North Korea has been secretly assisting Iran develop a weapons program under the auspices of the Chinese government, American officials believe.

The U.S. government has repeatedly asked the Chinese to stop shipments between the rogue states passing through Beijing airport, according to memos sent by both the U.S. Secretary of State, Hillary Clinton, and her predecessor, Condoleezza Rice.

Australian business leader arrested in China

Sydney Morning Herald, Nov. 26, 2010 –

ONE of Australia’s most successful entrepreneurs in China, Matthew Ng, has been detained on suspicion of embezzlement after an acrimonious business dispute with his Chinese joint business partner.

Guangzhou police are yet to lay charges or reveal their case for detaining him and this week refused his application for bail.

Mr Ng’s incarceration comes nine months after Australian iron ore salesman Stern Hu was sentenced to 11 years’ jail, amid fears that China’s business playing field is increasingly tilted against overseas business people.

US report slams ‘highly discriminatory’ China trade barriers

WASHINGTON (AFP) — China is following “highly discriminatory” economic practices that favor domestic trade over foreign imports, an effort that harms the US economy, a commission reported to the US Congress Wednesday.

“Under the guise of fostering ‘indigenous innovation’ in its economy, the government of China appears determined to exclude foreigners from bidding on government contracts at the central, provincial, and local levels,” said Dan Slane, chairman of the US-China Economic and Security Review Commission.

Panel urges renewed U.S. pressure on China on currency

(Reuters) – The United States should name China a “currency manipulator” and take on trade-distorting Chinese policies in the World Trade Organization, a congressional advisory body said on Wednesday.

U.S.-China Economic and Security Review Commission Chairman Dan Slane said the report “reflects the commission’s conclusions that China has failed in some notable areas to fulfill the promises it made nine years ago when it joined the World Trade Organization.”

China’s “indigenous innovation” policies that require foreign investors to transfer technology to Chinese partners, and favoritism toward domestic firms, suggest “the Chinese government quite simply intends to wall off a majority of its economy from international competition,” he told reporters.

Google urges western governments to challenge foreign internet censorship

Josh Halliday, guardian.co.uk, Tuesday 16 November 2010 –

Google is urging western governments to challenge internet censorship in countries such as China, saying the economic implications of stifled trade will become more grave if nothing is done.

“More than 40 governments now engage in broad-scale restriction of online information, a tenfold increase from just a decade ago,” the US-based technology giant warns in a policy brief on internet trade restrictions published yesterday.

Donor nations ask why China gets billions in aid each year

Detroit Free Press – Gillian Wong – ‎Sep 26, 2010‎ –

BEIJING — China  spent tens of billions of dollars on a dazzling 2008 Olympics. It has sent astronauts into space. It recently became the world’s second-largest economy.

Yet it gets more than $2.5 billion a year in foreign government aid — and, increasingly, taxpayers and lawmakers in donor countries are asking why.

With the global economic slowdown crimping government budgets, many countries are finding such generosity politically and economically untenable. China says it’s still a developing country in need of aid, while some critics argue that the money should go to poorer countries.

IPhone Demand Outstrips Supply in China

By OWEN FLETCHER, wsj.com, Sep. 25, 2010 –

BEIJING— China Unicom (Hong Kong) Ltd. said its supply of Apple Inc.’s iPhone 4 handsets is insufficient to meet user demand but that it will increase its supply as quickly as possible. Sales of the model started at a much faster pace than when older versions of the iPhone went on sale in China last year.

Unicom had received more than 200,000 iPhone 4 preorders by early Saturday, the day sales started, and more than 40,000 buyers received the phone and a bundled mobile-service plan that day, Unicom said. By comparison, Unicom last year sold 100,000 iPhone handsets in roughly six weeks after officially introducing the devices in China in late October.

The latest version of Apple’s popular smartphone was widely awaited in China and could help Unicom attract more users to its third-generation mobile services, which are more expensive but offer faster data speeds than typical services. Unicom, the only network operator in China to offer the iPhone, is competing with rivals China Mobile Ltd. and China Telecom Corp. to build its 3G subscriber base.

An Apple spokeswoman said more iPhones will be available soon and that customers should check online or with local stores regarding availability…...(more details from Wall Street 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

Legislative reports confirm ECFA with China risks for Taiwan

The Taiwan News, July 29, 2010 –

The substantive risks to Taiwan’s national security, economic autonomy and democratic health posed by the controversial “Cross-Strait Economic Cooperation Framework Agreement” with the authoritarian People’s Republic of China have been confirmed by reports drafted by the legal affairs and budget research departments of the Legislative Yuan.

Although the drafts have not yet been finalized, the nine reports are based on substantive research and investigation tours in both Hong Kong and Macau to examine the impact of the “closer economic partnership agreements” (CEPA) signed between the two PRC “special administrative regions” and the Beijing central government.

The preliminary results of the Legislative studies conflict sharply with the incessant attempts by President Ma Ying-jeou and numerous senior officials of his rightist Chinese Nationalist Party (Kuomintang) government to paint opposition to ECFA as “alarmist” or “ideological.”

Among the topics reviewed are the impact of the CEPA on social equity and employment, the economic impact of the revaluation of the renminbi, PRC economic policy toward Taiwan in the wake of the ECFA signing, the termination and conflict resolution mechanisms in ECFA, the economic impact of regional trade agreements focused on the ECFA, issues concerning the FTA between the PRC and the Association of Southeast Asian Nations, the question of rules of original production in regional trade agreements, the experience of Hong Kong and Macau in permitting Chinese students to study in the two SARs and the influence of the CEPAs on news freedom.

The existence of this study indicates that the leadership of the Legislative Yuan was preparing for a detailed and substantive review of the ECFA and was not planning to simply immediately refer the draft pact and four associated sets of legal revisions for immediate second reading, a decision that excluded article by article review and discussion in legislative committee.

The release of this report before July 9 could well have raised sufficient public concern to stymie the ramming of the referral of the ECFA package to a second reading over the physical objections of opposition Democratic Progressive Party lawmakers, especially since its contents confirm that the issues raised by DPP Chairwoman Tsai Ing-wen and numerous economists were valid.

Warnings for the future

For example, unlike the Ma government, the Legislative Yuan report clearly warned that PRC leaders have historically displayed strategic “consistency” and “continuity” and acknowledged that Beijing defines the ECFA as a pact signed “under the one-China principle” and that the touted benefits in “international space” and “economic cooperation” are offered “under the precondition of the ‘one China principle.”‘

Moreover, the Legislative report cautioned that the PRC could adopt a negotiating strategy of “initially making concessions and then using such “benefits” to compel Taiwan to accept political negotiations” and use a possible “peace agreement” as an “peaceful unification framework agreement.”

However, unlike the Ma government, the Legislative report acknowledged that there were grave risks for Taiwan of falling into a ‘one China’ trap”‘ as political factors manifest an “invisible catalyst effect” and consolidate the PRC’s leadership advantage in promoting a substantive “one country, two systems” and creating the international impression that “Taiwan and the mainland have indivisible sovereignty.”

Ironically, PRC officials have already fulfilled the prediction by the Legislative Yuan report that Beijing would “uphold the one China principle” even with “more flexibility in interpretation” as shown by the affirmation by PRC Deputy Commerce Minister Gao Hucheng Monday that the ECFA was signed under the “one China principle” and that the PRC government continued to oppose any FTAs between Taiwan and any other country.

In sum, the reports by the legal affairs and budget offices of the Legislative Yuan confirm that concerns over the negotiation and structuring of the ECFA and its future economic, social, political and cultural implications and potential impact on Taiwan’s national security, sovereignty and democratic system (including news freedom) are absolutely not “alarmist” but should have been earmarked for consideration in the process of the negotiating strategy and the structuring of the ECFA…….(more details from The Taiwan News)

A week after US’ announcement of trade sanctions, North Korea Sign Agreement with China for Economic, Technological Cooperation

Bloomberg News – Jul 29, 2010 –

North Korea signed an economic and technical cooperation agreement with China today, a week after U.S. Secretary of State Hillary Clinton announced further trade sanctions to halt the regime’s nuclear-weapons program.

Liu Hongcai, the Chinese ambassador to North Korea, and Ri Ryong Nam, the nation’s Minister of Foreign Trade, signed the agreement during a ceremony held in Pyongyang, according to the state-run Korean Central News Agency. It didn’t elaborate.

Clinton announced sanctions that target government officials and the foreign banks that help sustain the North’s weapons industry during a visit to Seoul last week. The U.S. has backed South Korean claims that the North torpedoed one of its ships and has been pressing for an international effort to put more pressure on Kim Jong Il’s regime.

China has so far refused to condemn North Korea for the attack on the Cheonan, which killed 46 South Korean sailors. China accounted for 79 percent of the North’s 2009 international trade, according to the Seoul-based Korea Trade-Investment Promotion Agency. China provides almost 90 percent of energy imports and 45 percent of the country’s food, according to a July 2009 report by the New York-based Council on Foreign Relations.

China’s Foreign Ministry had no knowledge of the agreement and the Commerce Ministry didn’t immediately respond to a fax seeking comments.

– The Bloomberg

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

Two German Business Chiefs Criticize China

By Andrew Willis, via The Business Week, July 19, 2010 –

Two of Germany’s leading industrialists publicly attacked China’s business environment during a meeting with the country’s premier, Wen Jiabao, over the weekend (17 July).

Jürgen Hambrecht, chairman of giant chemical company BASF (BASFY), and Peter Löscher, chief executive of industrial conglomerate Siemens (SI), added their voices to a growing clamour of criticism against Chinese rules that are seen as disadvantaging foreign firms.

Mr Hambrecht said foreign companies are frequently forced to transfer business and technological “know-how” to Chinese companies in exchange for market access.

“That does not exactly correspond to our views of a partnership,” he told Mr Wen at the roundtable discussion in the northwestern Chinese city of Xian, according to German journalists who attended the meeting.

The strong statements are particularly noteworthy due to their public nature and delivery during a meeting also attended by German Chancellor Angela Merkel, in China as part of a four-day state visit.

Mr Löscher voiced widespread complaints about draft Chinese public procurement rules which are intended to support “indigenous innovation,” a policy foreign companies fear could shut them out of lucrative government contracts.

The Siemens boss also called on China to remove investment restrictions in certain sectors, reported German daily Handelsblatt. At present, foreign companies can be required to form joint ventures with Chinese companies when setting up shop in China, as exemplified by the Shanghai Volkswagen Automotive company.

Mr Wen reportedly responded to the criticism by telling Mr Hambrecht to calm down, insisting that China remained committed to opening its economy. “Currently there is an allegation that China’s investment environment is worsening. I think it is untrue,” Mr Wen said.

But the comments from two of Europe’s leading industrialists come on top of a recent survey by the EU’s chamber of commerce in China which showed that foreign executives hold an increasingly gloomy outlook regarding China’s regulatory setup.

The increasing fears of discrimination led the EU chamber’s president Jacques de Boisseson to suggest firms may even consider pulling out of China altogether.

“Nobody should take for granted that European companies will continue investing whatever the business environment,” said Mr De Boisseson.

– The Business Week

Why other countries, such as China, pay for our politicians to visit (2)

Brian Stewart, CBC News, Canada, Wednesday, July 7, 2010 –

<< previous

Another country’s dole

“Sponsors wouldn’t pay for travel without an expectation of getting something back,” says Errol Mendes, a constitutional law professor at the University of Ottawa.

What these sponsors want, above all, is influence on our politics, trade relations and international positions. For our politicians to proclaim otherwise, as some do, carries naiveté into the realm of fantasy.

China is a relentlessly generous host and deserves special mention because the federal government and CSIS have both publicly acknowledged that it is the most aggressive nation spying on us by a substantial margin.

The Conservatives have long vowed to crack down on Chinese espionage, although much of that talk was before the recent thaw in business relations.

That said, Israel and Taiwan, both very active in the world of espionage, are well up there with China at least in terms of courting potential supporters with trips.

According to the federal ethics commissioner, the Canada-Israel Committee paid more than $160,000 to host 14 MPs on one-week trips to Israel in 2009.

The committee, at least, is openly registered in Ottawa as an Israeli lobby group and it is important to note that there is nothing illegal, corrupt or against the rules of Parliament in accepting such favours from any foreign nation.

The practice is just thoroughly “reprehensible,” as Senator Colin Kenny, the former chair of the Senate committee on national security and defence, puts it in a recent article in the Ottawa Citizen defending Richard Fadden.

“Fadden did Canadians a service,” Kenny argues, “by pointing out that too many Canadian politicians are effectively on other countries’ dole.”

‘China junket’

In fact, the issue of dubious foreign favours being lavished on our politicians is a scandal waiting to happen. Just look at what’s happened elsewhere.

Two years ago, the British media had a field day when it was revealed that former London mayor Ken Livingstone enjoyed an all-expense paid, $35,000 week-long trip to Beijing, including business class travel and $1,700 a night hotel room complete with, as one newspaper described it, “rainforest show and bath master to prepare the bath and fill it with heavily oils.”

A staunch defender of China’s human rights record over the years, Livingstone was the mayor who allowed tough-minded Chinese security officers to run alongside the Olympic flame as it passed through the city, a strong-arm role he later admitted was “a mistake.”

A far stormier scandal is currently raging in Australia over political freebies and foreign influence.

Last year the Australian government came under sustained fire when its defence minister disclosed he had received, while in opposition, two free trips to China paid for by a business concern with close ties to Beijing.

Now, it has been revealed that a quarter of Australian MPs have taken free overseas travel worth hundreds of thousands of dollars, paid for by foreign governments and lobby groups, with China the most popular destination……. (to be cont’d)

<< part 1 part 2 part 3

– from CBC News

Related:
– We need to get real about spies– China’s interference in Canada
– The Seduction of China’s Red Carpet
– Canadian Spy Master Criticized by Alleged China Front Organization

We need to get real about spies– China’s interference in Canada

By L.N. (Len) Giles, Vancouver Sun, Canada, June 26, 2010 –

The director of the Canadian Security Intelligence Service, Richard Fadden, should be given top marks for calling a spade a spade, albeit in a gentle and diplomatic manner. He was painting a realistic picture for a naive audience that has little or no understanding of the world of political and economic espionage or foreign interference.

It is interesting to note that those who cry foul the loudest are usually those in business or public office who see themselves in the limelight and on the “cutting edge” of international relations and understanding. At least that is how they like themselves to be seen, and they are mortified when someone suggests that their activities may not be in Canada’s best interests. There are cases in which those kinds of relationships, when closely examined, are shown to be instances of Canadians being manipulated and groomed by foreigners to support long-term political or economic initiatives, which in the end “give away the farm.”

A number of local politicians in Metro Vancouver accepted an all-expense paid junket to China in the spring of 2007 without, it seems, giving any consideration to the appropriateness of their actions. This is a classic example of the kind of influence Fadden was talking about.

CSIS is an agency of the Government of Canada with a mandate to protect the interests of all Canadians. It is not a sinister organization aiming to harass Canadians in their legitimate day-to-day activities. People do unwittingly or willingly come under the influence of a foreign power. It is a fact of life and Canadians need to be attuned to that reality.

Surrey

Giles spent 27 years in the RCMP and CSIS.

– Vancouver Sun

Foxconn symbolizes China economy’s wider structural problems and industrial unrest (2)

By Craig Stephen, The Market Watch, May 31, 2010 –

<< Previous

(China’s wider problems)

While Shenzhen was set up as China’s first Special Economic Zone thirty years ago, media reports describe Foxconn’s operations there as operating something like an independent kingdom with officialdom rarely regulating it. Given that the company reportedly provides more than 10 billion yuan ($1.46 billion) in taxes annually to the city’s coffers, it’s understandable if there is a hands-off approach.

Arguably Foxconn symbolizes wider structural problems in China’s economy: It’s unbalanced and overly focused on exports and investment spending, and lacks domestic-led consumption.

At the root of weak consumption is low wages. According to a survey released by the All China Federation of Trade Unionists (ACFTU) last week, almost one-quarter of Chinese employees had not seen a salary rise in the past five years. The workers at Foxconn got a base monthly salary of 950 yuan, which is in line with the minimum wage set by Guangdong government — although a 20% pay rise was announced on Friday.

The low level of wages is also borne out by looking at the make-up of China’s gross domestic product, where the share of company profits is rising and wages shrinking.

According to the ACFTU the proportion of China’s GDP that goes towards wages and salaries has continued to shrink since 1983, having dropped from 65.5% in 1983 to 36.7% in 2005. Meanwhile the proportion of returns on capital in GDP had risen by 20% in the 27 years through 2005.

This may be good news for equity investors in the short run, but it hardly looks like a sustainable model of development.

The Foxconn controversy also came in a week when workers in Honda’s (HMC 30.40, +0.36, +1.21%) (JP:7267 2,764, -6.00, -0.22%) four mainland factories were shut after parts makers went on strike seeking a pay rise, paralyzing the Japanese auto maker’s production.

The risk is that Foxconn is just the tip of the iceberg, and China could be entering a new phase of industrial unrest. Other imbalances in China’s economy, such as feel-bad rising prices of food and housing, are exacerbating tensions.

We should acknowledge not all factories are bad stories. Huawei, China’s largest telecom equipment vendor, is also based in Shenzhen, and is held up as model operator with its impressive, campus-like facilities. Making modern telecom equipment is more sophisticated than assembling mobile phones, of course.

The mainland authorities, manufacturing companies and international brands face a difficult challenge to quell labor unrest and better share the spoils of China’s growth.

Dealing with the cause — better pay and conditions — looks to be a better start than simply asking workers not to jump. (END)

– The Market Watch

Related:
– Foxconn symbolizes China economy’s wider structural problems and industrial unrest (1)

Foxconn symbolizes China economy’s wider structural problems and industrial unrest (1)

By Craig Stephen, The Market Watch, May 31, 2010 –

HONG KONG (MarketWatch) — When employees are asked to sign a pledge not to kill themselves (later retracted) and safety nets outside dormitories are erected to prevent suicide jumpers, something is badly wrong.

And this is not a Second World War concentration camp we’re talking about — rather, it’s a factory making some of the coolest brand-name gadgets in the twenty-first century.

The spate of suicides at Foxconn’s  (HK:2038 5.77, -0.08, -1.37%) mammoth industrial complex in Shenzhen, China has everyone looking to attribute blame, from the Taiwanese owner Hon Hai Precision Industry (HNHPF 8.39, -0.11, -1.26%) to the global brands such as Dell (DELL 13.11, +0.02, +0.15%) , Apple (AAPL 261.80, +0.97, +0.37%) and Nokia (NOK 10.10, +0.08, +0.80%) , which outsource their assembly there.

There is plenty of shame to go round. All have gone along with China’s economic model proscribed by the one-party state and the apparent productivity miracle. Economists generally like to describe the unbalanced growth or structural imbalances in China’s economy. Could it be much worse, and is the world’s factory workshop rotten at its core?

When I first visited Shenzhen a good sixteen years ago it was grey and drab with a few cars on the streets. Begging children clamped themselves to my legs to stop me walking.

Today, its population has soared to 17 million and its downtown roads are packed with cars and sport utility vehicles, while its hotels and shopping malls can match anything in Hong Kong.

But if you are a migrant factory worker living in a cramped dormitory, you are likely to have missed this progress. Migrants are locked out from enjoying health, education and housing benefits available to Shenzhen residents.

Foxconn stands out as the largest factory complex, with over 300,000 living and working in a city within a city. I doubt Mercer ranked this destination on its global quality of life index.

China’s wider problems

The dozen worker suicides this year have become a public relations nightmare not just for Foxconn and its clients, but also for the mainland government which sets the rules. Beijing would much rather see the spectacle of its glitzy Shanghai expo in the headlines instead of the international media focusing on the ugly underbelly of its economy.

When former Paramount leader Deng Xiaoping opened up socialist China to capitalism, he tried to juggle the contradictions with a new path, famously saying, “Poverty is not socialism. To be rich is glorious.” He also added: “Let some people get rich first.”

Eighteen years after Deng’s famous South China inspection tour, if he were alive today, he would surely recognize something has gone wrong. (to be cont’d)

– Marketwatch.com

9-day strike at all 4 Honda China factories– Labor Unrest May Signal New Phase in China Economy

By KEITH BRADSHER, The New York Times, May 29, 2010 –

FOSHAN, China — Add another entry to the list of worries for the global economy and financial markets: labor unrest in China.

Rapidly rising industrial wages are beginning to allow China’s workers to share in their country’s rising prosperity. The question is whether these gains can be maintained and even increased without disrupting supply lines to companies around the world, and without discouraging much future investment by Chinese and global companies alike.

The biggest eye-opener for multinationals in China recently has been a nine-day-old strike at a sprawling Honda transmission factory here in Foshan, about 100 miles northwest of Hong Kong.

The strike, which has forced Honda to suspend production at all four of its joint venture assembly plants in China, has shown that Chinese authorities are willing to tolerate work stoppages at least temporarily, even at high-tech operations on which many other factories depend.

Chinese policy makers are trying to let wages rise to create the foundations of an economy driven by domestic demand, without derailing the export machine that has produced the world’s strongest economic growth over the last three decades.

Even before the strike, manufacturers and buyers of low-cost products were already actively seeking alternatives to China, like Vietnam and Cambodia, said Richard Vuylsteke, the president of the American Chamber of Commerce in Hong Kong.

“They’re looking very seriously, and we’re seeing that in apparel and footwear,” he said. “A lot of our members are seeing appreciating wages.”

Honda has been making increasingly generous offers — or perhaps desperate offers — to settle the strike. The company has already offered increases in total compensation of close to 50 percent, according to crumpled-up copies of the offer provided by striking workers.

Roughly half of the 1,900 workers are recent hires from high schools and vocational schools who are paid training rates of just 900 renminbi, or $132, a month, pay slips showed. More experienced workers at the three-year-old factory earn up to 1,500 renminbi, or $220, a month.

Honda’s offer would raise total compensation for trainees to $202 a month, including benefits like a new food allowance; older workers would get slightly smaller raises. The strikers rejected the offer because nearly half of the raises consisted of increases in benefits that might be revoked later. The strikers are demanding an extra 800 renminbi a month, or $117, all in cash.

Takayuki Fujii, a Beijing-based spokesman for Honda, said Saturday evening that negotiations were continuing, but he declined to provide details……. (more detals from The New York Times)