Federal authorities successfully kept a U.S. businessman in jail on Wednesday ahead of his trial on charges relating to trade secret theft, and argued that it was Chinese government representatives who directed him to obtain valuable technology manufactured by chemical giant DuPont.

Walter Liew, a U.S. citizen, and his wife, Christina Liew, were indicted last year on three counts each, including witness tampering, making a false statement and conspiracy to tamper with witnesses and evidence.

Now newly released court documents from prosecutors provide fresh details about Walter Liew’s alleged links with the Chinese government. They name, as one of the Chinese representatives who met with him, a high-ranking Communist Party official who later became a member of the Politburo.

Liew, 54, and his wife have pleaded not guilty, and he was held without bail and his wife released, court documents show.

On Wednesday, he appeared in a yellow prison jump suit at a San Francisco federal court hearing where U.S. Magistrate Judge Nathaniel Cousins rejected defense attempts to obtain his release.

Liew attorney Thomas Nolan maintained in court that Liew had only possessed publicly available information.

“There is nothing at all illegal about that conduct,” Nolan said. “What is illegal is if he uses trade secrets.”

Liew paid at least two former DuPont engineers for assistance in designing chloride-route titanium dioxide, also known as TiO2, according to the indictment. DuPont is the world’s largest producer of the white pigment used to make a range of white-tinted products, including paper, paint and plastics.

The United States has identified industrial spying as a significant and growing threat to the nation’s prosperity. In a government report released last November, authorities cited China as “the world’s most active and persistent perpetrators of economic espionage.”  [Reuters]

I wonder if it is possible for the US to put out arrest warrants for people within the Chinese government directing the economic espionage?  Not that I expect the Chinese to extradite them, but it would at least prevent them from traveling to the US due to fear of arrest.

The government will submit a bill next month for a law revision that would double fines against illegal fishing, in its latest effort to counteract Chinese fishing boats poaching in South Korean waters in the Yellow Sea, an official said Saturday.

Korea has vowed to take tougher measures against illegal fishing by Chinese vessels in the Yellow Sea after a coastguard officer was stabbed to death last month by a Chinese skipper during a raid on a Chinese boat for violating South Korean waters.

Under the revision that needs to be approved by the National Assembly, the maximum fine levied against illegal fishing would rise to 200 million won ($176,056) from the current 100 million won ceiling.

The revision would also allow coastguard officers to confiscate boats and equipment if they were captured being used for illegal fishing, according to the official at the Ministry of Food, Agriculture, Forestry and Fisheries.  [Korea Herald]

When Barack Obama joined Silicon Valley’s top luminaries for dinner in California last February, each guest was asked to come with a question for the president.

But as Steven P. Jobs of Apple spoke,President Obama interrupted with an inquiry of his own: what would it take to make iPhones in the United States?

Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.

Why can’t that work come home? Mr. Obama asked.

Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.

The president’s question touched upon a central conviction at Apple. It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.  [New York Times]

I am surprised that no one on the President’s staff briefed him up on these realities before asking such a question.  Anyway the details of the scope of the labor force in China that these hi-tech companies use is quite stunning:

An eight-hour drive from that glass factory is a complex, known informally as Foxconn City, where the iPhone is assembled. To Apple executives, Foxconn City was further evidence that China could deliver workers — and diligence — that outpaced their American counterparts.

That’s because nothing like Foxconn City exists in the United States.

The facility has 230,000 employees, many working six days a week, often spending up to 12 hours a day at the plant. Over a quarter of Foxconn’s work force lives in company barracks and many workers earn less than $17 a day. When one Apple executive arrived during a shift change, his car was stuck in a river of employees streaming past. “The scale is unimaginable,” he said.

Foxconn employs nearly 300 guards to direct foot traffic so workers are not crushed in doorway bottlenecks. The facility’s central kitchen cooks an average of three tons of pork and 13 tons of rice a day. While factories are spotless, the air inside nearby teahouses is hazy with the smoke and stench of cigarettes.

Foxconn Technology has dozens of facilities in Asia and Eastern Europe, and in Mexico and Brazil, and it assembles an estimated 40 percent of the world’s consumer electronics for customers like Amazon, Dell, Hewlett-Packard, Motorola, Nintendo, Nokia, Samsung and Sony.

“They could hire 3,000 people overnight,” said Jennifer Rigoni, who was Apple’s worldwide supply demand manager until 2010, but declined to discuss specifics of her work. “What U.S. plant can find 3,000 people overnight and convince them to live in dorms?”

I highly recommend reading the entire article which also explains how Korean companies are doing business with Apple and using Chinese manufactures as well.  What I found most interesting about the article was that not one word was mentioned about labor unions.  If China had labor unions would they be able to have the manufacturing scope they have today?  Under such conditions I don’t see anyway that manufacturing jobs lost to China are going to be coming back to the US any time soon.

A Chinese-based cyber attack is targeting the Defense Department’s Common Access Cards with technology that could steal information from military networks while troops and civilians work at their desks, researchers say.

The new cyber weapon apparently can get inside individual computers after users unwittingly open a standard PDF email file. Once embedded, it logs the users’ keystrokes to obtain personal identification numbers or codes associated with that card and user, according to AlienVault, a Silicon Valley-based cyber security firm.

“Basically, they are able to steal the PIN and then they can get access to whatever they want,” said Jaime Blasco, the lab manager for AlienVault who published detailed technical information about the attack.

The attacks are a variant of a virus, or malware, known as “Sykipot” and date back as far as March 2011, Blasco said.

The new Sykipot strain specifically targets the technology used to support the Pentagon’s CAC system and the emails seeking to spread it often are disguised as official military or government communications, Blasco said.

To lure defense workers to open the infected attachment, some of the emails have used information about new drone technology and pictures of unmanned aerial vehicles, he said.  [Army Times]

You can read more at the link, but at some point the US is going to have to do something about these constant attacks by Chinese hackers.

 Prosecutors indicted the captain of a Chinese fishing boat with physical detention Tuesday on charges of killing a South Korean law enforcement officer last month during a raid on the vessel for illegally fishing in Korea’s exclusive economic zone.

The 42-year-old captain, whose identity was withheld from the public, was accused of stabbing a South Korean Coast Guard corporal to death with a knife and seriously wounding another officer on Dec. 12 during a crackdown on Chinese sailors fishing in waters off Incheon, west of Seoul.   [Yonhap]

You can read more about this murder at this prior posting.  I wonder how different the news coverage would be if it was an American that murdered a law enforcement officer?

President Lee Myung-bak agreed to begin the necessary “domestic procedures” for opening formal negotiations on a South Korea-China free trade agreement during a summit meeting Monday afternoon with Chinese president Hu Jintao at Beijing’s Great Hall of the People.

Lee and Hu expressed interest in working out a South Korea-China FTA “so that the trend of economic partnership is further strengthened,” the Cheong Wa Dae (South Korea’s presidential office or Blue House) reported.

The necessary domestic procedures for an FTA include hearings at home, deliberation by a promotion committee, and voting at a meeting of foreign and economic ministers. In the case of the South Korea-United States FTA (KORUS FTA), the procedures in 2006 took approximately three months.

A senior Cheong Wa Dae official said the agreement was “strongly requested by China” and explained that the chances of formal negotiations starting in the near future were “not high.”

Lee was invited by Beijing to spend three days in China in honor of the 20th anniversary of the establishment of diplomatic relations between the two countries.

Analysts said the impact of an FTA between South Korea and China would be far greater for the national economy than the agreements with the US or European Union.  [Hankyoreh]

Chinese airlines will not pay a charge on carbon emissions imposed by the European Union from January 1, a national aviation industry group said Thursday.

The cap-and-trade scheme, which has angered the US and Chinese governments and airlines worldwide, came into force on Sunday after the European Union’s highest court rejected a challenge brought by US carriers last month.

“China, of course, will not cooperate with the European Union on the ETS (emissions trading scheme),” said Chai Haibo, deputy secretary-general of the China Air Transport Association, which represents the country’s airlines.

“The CATA, on behalf of Chinese airlines, is strongly against the EU’s improper practice of unilaterally forcing international airlinesinto its ETS,” Chai said from Beijing, where the group is based.

He said the Chinese government was considering “counter-measures” against the European Union, but gave no details.

Airlines that refuse to comply could be fined with the possibility of being denied the right to land in the 27-nation EU in extreme cases, according to the Europeans.

State media has previously warned the EU scheme “infringes on national sovereignty, violates international aviation treaties and will lead to a trade war” in the sector.

The EU launched the ETS in 2005 in a bid to reduce carbon emissions of power stations and industrial plants.

It decided to include airlines, responsible for three percent of global emissions, in the system in the absence of a global agreement to cap aviation emissions.

Under the EU scheme, airlines will have to pay for 15 percent of the polluting rights accorded to them in 2012, the figure then rising to 18 percent between 2013 and 2020.

China has said it fears its aviation sector will have to pay an additional 800 million yuan ($125 million) a year on flights originating or landing in Europe, and that the cost could be almost four times higher by 2020.

The tax would affect all of China’s major airlines — including Air China, China Eastern and China Southern, the CATA previously told AFP.

China reportedly blocked an order by Hong Kong Airlines for billions of euros’ worth of Airbus aircraft earlier this year in retaliation for the EU move, underscoring the potential for a significant trade row.  [AFP]

I agree that the ETS is ridiculous but airlines have no problems charging passengers plenty of ridiculous fees themselves.  If the Chinese feel so strongly about this then why don’t they just implement their own tax on aircraft landing in China from European carriers in retaliation?

Summary

China has every reason to want a smooth transition of power in North Korea as the post-Kim Jong Il period begins. This is because North Korea provides a strategic buffer to China and, through Pyongyang’s nuclear program, leverage via mediation in the international arena. North Korea also is a valuable economic asset to China. Therefore, Beijing’s interests will be to maintain the regional balance of power.

Analysis

Perhaps no country has more to gain from maintaining the status quo in Pyongyang than China. Likewise, Beijing stands to be affected more negatively by any deterioration in the orderly turnover of power. Mao Zedong best described North Korea’s strategic importance to China when he characterized the relationship between the two countries with the phrase “when the lips are gone, the teeth get cold” — an acknowledgement of North Korea’s importance as a buffer state to protect China’s borders. Beijing also uses its ability to deal with Pyongyang as leverage on the international stage, even as North Korea’s isolation and status as a nuclear power make it an unsteady partner with which to share a 1,334-kilometer (829-mile) border.

China was already preparing to play a stabilizing role in the expected political succession in North Korea. Beijing will now try to manage any potential disruptions to the power transfer. Although Kim Jong Un may be an unknown element, the rest of the North Korean regime is not. Beijing has exchanged a number of high-level visits with North Korean officials in the past few years, and these contacts have increased in 2011.A smooth transition would not only protect China’s basic security interests, but it may even present Beijing with an opportunity to increase its influence over the North Korean regime.

How a Stable Transition Could Deteriorate

Read more: China Weighs Its Options in North Korea’s Leadership Transition | STRATFOR

For those that don’t have a subscription to STRATFOR I have included the rest of the article below the fold:

Beijing has prepared itself to try to steer North Korea’s regime toward a relatively pro-China stance. The death of Kim Jong Il has the potential to create uncertainties that might result from internal conflicts. The third generation of North Korea’s power structure is about to take power. To see how complications could emerge during the power shift, one need only recall the 1994 transition from Kim Il Sung to Kim Jong Il. Kim Il Sung only had one son, and it was known for more than 17 years that Kim Jong Il would be his successor.

Beginning in 1970, Kim Jong Il held a number of different government positions, and by the time he was appointed the first vice chairman of North Korea’s National Defense Commission (NDC) in 1980, little doubt remained that he would take over leadership once Kim Il Sung left the scene. Yet Kim Jong Il needed three years to fully consolidate his hold on power. That succession was complicated by crop failures and natural disasters that led international observers to declare North Korea in famine conditions — as well as Kim Jong Il’s need to pull North Korea’s elite in line.

Kim Jong Un’s claim to power is far less established. He does not have much experience, and when talk of succession began in North Korea in 2001, his eldest brother, Kim Jong Nam, appeared to be next in line. The transition to Kim Jong Un was far from complete when his father died, though the elite seem to have coalesced around the transition for now. In the long term, the potential exists for different factions, which emerged to back potential successors, to take advantage of Kim Jong Un’s inexperience, thus opening up an internal competition for influence among these factions.

A key bloc in support of Kim Jong Un is led by Jang Song Thaek, Kim Jong Il’s brother-in-law, who oversaw economic reforms in earlier years. Jang is reportedly close to China, and he was the most prominent member of a loose “pro-China” faction that may have initially backed Kim Jong Nam, before a scandal caused the latter to lose his status as the surest choice for succession. Since 2008, Jang has backed Kim Jong Un.

China’s Potential Role and Beijing’s Priorities

A series of meetings between Kim Jong Il and authorities in Beijing suggest that China should be attuned to North Korea’s succession plans and that it should have lines of communication open with important elites and figures in the regime. Kim Jong Il visited China three times this year, and some sources in South Korea suggested North Korea’s succession plan may have been high on the agenda during meetings with Chinese officials. In addition, Chinese Premier-in-waiting Li Keqiang, State Councilor Dai Bingguo, as well as Chinese military officials, visited North Korea in recent months as part of an effort to deepen Beijing’s influence over senior North Korean officials, particularly within the military.

The factions within North Korea’s elite that are the most likely to support Kim Jong Un during the transition are strong supporters of China. These include Jang, who serves as vice chairman of the NDC and thus wields substantial influence in the military. These figures could serve as reference points for China as Beijing works to make sure its strategic interests regarding North Korea are addressed. These interests are manifold:

• North Korea is a critical component of China’s buffer strategy, offering strategic depth and supplementing China’s defense forces with natural barriers. Meanwhile, internationally, China’s mediation and negotiation role in Korean affairs also makes North Korea an important component in the trade-off between Sino-U.S. relations.
• Maintaining stability along the North Korean border is highly important to Beijing. A large influx of refugees could impact China’s core northeast region, which extends to Beijing. China fears that this could trigger domestic instability. So far, the only overt show of force has occurred along the Chinese side of the border, as the border region is known to be both an area of lower political reliability and a potential entry point for external instigators to try to slip into North Korea to exploit the transition.
• China wants to exploit North Korea’s international isolation to exert political and economic influence over Pyongyang (China accounts for around 70 percent of North Korea’s trade) and to wield that influence on the international stage. China stands to benefit by offering itself as a mediator in — or by acting to interfere with — multilateral talks.
• Beijing wants to curtail any South Korea-led, U.S.-supported unification of North Korea and South Korea.

As the post-Kim Jong Il period begins, China’s interest in maintaining stability in North Korea lies in avoiding changes in the international balance of power in the region and staving off any potential problems along China’s northeast border. Over the past several years, and particularly following Kim Jong Il’s 2008 stroke, China has increased substantially its economic ties with North Korea, expanding its role as the lifeline of the North Korean regime and state. Currently China provides 80 percent of North Korea’s consumer goods and 45 percent of its food. This economic penetration has enabled Beijing to maintain substantial influence in North Korean policy, allowing Beijing to leverage its international behavior through Pyongyang and other powers. The economic expansion was coupled with Beijing’s renewed involvement in various elements of the North Korean elite structure.

For now, Beijing will employ a deliberate “wait-and-see” approach with North Korea while seeking to strengthen ties with new leaders and elite factions. Nevertheless, Beijing will keep a close watch on the moves of other players likely to affect China’s strategic calculations.

Read more: China Weighs Its Options in North Korea’s Leadership Transition | STRATFOR

Actor Christian Bale was roughed up by Chinese security guards as he attempted to visit a blind legal activist whose detention has sparked a domestic and international outcry, CNN reported on Friday.

Bale, who plays crime-fighting superhero Batman, and a camera crew from CNN were jostled by men in plainclothes in Dongshigu village in eastern Shandong province, where activist Chen Guangcheng has been under house arrest for 15 months, according to a video released by CNN on its website.

“Why can I not visit this man?” Bale asked several security officers, while they were pushing him.

“You know, I’m not being brave doing this,” Bale told CNN. “The local people who are standing up to the authorities and insisting on going to visit Chen and his family and getting beaten up for it, and my understanding, getting detained for it and everything. I want to support what they are doing.”

CNN said the guards shadowed its van for more than half an hour.

The fate of Chen, a self-schooled advocate who has campaigned against forced abortions, has become a test of wills, pitting the Communist Party’s crackdown on dissent against activists championing his cause and that of artist Ai Weiwei.

In recent months, dozens of supporters have been blocked from visiting Chen. Many were beaten by men in plain clothes.  [Reuters]

More than 80 percent of Chinese Internet poll participants said that Korea was responsible for the Dec. 12 killing of a Korean coastguard by a Chinese skipper illegally fishing in Korean waters.

Popular Chinese portal qq.com launched an online survey Tuesday asking netizens who should primary be responsible for the incident, according to Yonhap News Agency of Korea.

As of Tuesday morning, 10,427 people, or 81 percent of participants, voted that the Korean Coast Guard was responsible, showing Chinese netizens’ sympathetic attitude toward their own fishermen.

Meanwhile, 2,447 people, or 19 percent, responded that the Chinese fishermen were responsible.

The Chinese believe that the South Korean coastguard used “excessive violence” that elicited a violent response from the fishermen involved.   [Korea Times]

Oh and here is the attitude of the fishermen they are supporting:

“They were chasing me, so I obviously resisted. We are just ordinary fishermen trying to avoid paying some 300,000 yuan (5.5 million won). We don’t have intentions to hurt people,” said the fisherman, who lives in Shandong Province on the eastern coast of China facing the Korean peninsula.

So it is okay in China to violate another country’s fishing grounds and resist arrest simply because you are trying to earn a living?

To the Korean government’s credit they are demanding that Beijing apologize for the murder:

“The government is calling on the Chinese government to take measures that would be acceptable by our people to prevent such an incident from happening again,” ministry spokesman Cho Byung-jae said.

“We expect the Chinese government to express regret over the incident,” Cho said, adding the “acceptable” measures would include an official apology from Beijing.   [Korea Times]

Good luck with that; I will be very surprised if the Chinese government apologizes for this murder.