You might be wondering why this story of Google is taking up so much space in this otherwise low-tech blog. I am as well. I think what fascinates me is the almost complete absence of first hand news after the G bomb. The time is for speculation, and for China bloggers and tea leave readers like me, it feels like we are right in our element. To the rest, welcome to China.

Yesterday I imagined a worst case scenario where Google let ugly international politics get mixed into this affair. That was just a scenario of doom, and not the outcome I consider most likely. In fact, I believe the G leaders are more intelligent than all that, and today I want to offer my personal, optimistic prediction. And to round it up, we will go back to the basics for a little study of Search Engine Manipulation, an essential and often ignored concept.

My prediction

I was glad to hear today that Google wants to retain its operations in China, and that it is “ready to shut down its local search engine Google.cn unless it is allowed to run it uncensored”.

The key info here is “shut down its local search engine”. This would mean that Google is not going to force the situation anymore. Because the best way to piss off the CCP today would be to suddenly uncensor Google.cn without notice, and have the Propaganda Department issue an official note to close the servers. The document would be in all the headlines, and that would represent  an unmistakeable challenge to the CCP’s authority.

But as it stands today, regardless of the old “face” arguments that some commentators have written, I don’t think the situation is critical. The CCP is not particularly happy to see Google leave, and if Google keeps its blogging enthusiasm under control, there is no reason why they will not be lenient. For all the bad points I noted in Google’s initial post, it has the great advantage of being ambiguous. Most Chinese people haven’t read the text, and the CCP can ignore the ultimatum implied and ascribe it to bad Laowai manners, a la emperor Qing.

I am predicting that if Google comes back to reason and avoids big game politics in the coming weeks, in exhange for that the Chinese government will let them get away with the rest.  Well, probably Google will encounter some administrative trouble in their business, their Android plans might take ages to get approved, because the CCP needs to give a lesson to other audacious companies in the future.

But that is a problem of Google and its shareholders. What really matters to us is the freedom and openness of the Chinese internet, and here is the big news of the day: if Google.cn closes and Google.com remains, the Chinese internet will be MORE FREE THAN IT IS TODAY! You don’t believe me? Keep reading to find out why.

Google.com and Google.cn

One interesting thing of the Google search engines that is not very well understood is the difference between the different country sites: Google.com, Google.cn, Google.co.uk, etc. People don’t understand this simply because Google does not explain it in the instructions, and because it has changed over time.

But it is very easy to do some tests and compare the search results to come to this conclusion: what really matters is not the extension of the search engine, but your actual location. The simple reality is that, for Chinese non-SEM search terms (more below), the results in China for Google.com and Google.cn are exactly IDENTICAL. They have the same results in the same order, differing only in the sponsored ads.

If you are in China you can try this by looking up neutral terms like 上海浦东 or 鞋子. Google.com and Google.cn share indeed a single index, and the only difference between them is SEM, or the Manipulation of Search Engine results artificially done by Google in its Google.cn search engine. For various reasons that we will see below, this SEM is the shame of Google and the curse of the Chinese internet. Not only China, but Google Inc. and the whole World is much better off without Google.cn.

This means that, if Google operates smoothly and succeeds to retain in China its PR&D operations, it is very possible that in exchange the CCP will allow them to keep Google.com unblocked (GFW). Then the Chinese netizens, free of the scourge of Google.cn, will click on Google.com, and automatically be free of the brainwashing effects of Google.cn.

Search Engine Manipulation (Introduction)

I know athe conslusions above might sound a bit strange, and there are clearly a few objections that you can make. Namely, that URL and IP blocks still affect the sites you find on Google.com, producing the beautiful Reset Connections (RC) that we are so used to. But there are very important reasons to prefer the Google.com way to the Google.cn way. I need to get some sleep, but stay tuned and tomorrow I will give you the explanation and some nice pictures as evidence.

In the meantime, re-read last year’s study on SEM, RC and all the other creatures. And to start heating up, I leave you with this nice picture of what a Google.com search gives in China, without VPN or proxy or any other special device. This has remained exactly the same in the two years I have been monitoring. There is no real technical reason why Google does not apply SEM here, it must have negotiated with the government when they first came to China, and the CCP must have bought that all Chinese would go to Google.cn. Click to continue »

I know, there are other news in the World, and I am probably not paying enough attention to them. But I can’t help it, I’ve been overclocking for the last 48h trying to understand Google’s decision, I have read every single article appeared on the internet since. And I still don’t get it.

I want to make this a collaborative page, I will keep it on top and I would appreciate comments with clues and POVs I might have missed. The objective is to come up with reasonable hypothesis and then cross out the wrong ones. I will also add interesting bits of info below as they come out:

Hypothesis: Why did Google stand up to the CCP? (UPDATES Below)

Business: We have seen that, with the info in hand, the decision doesn’t make sense from a pure business perspective. Who knows, you might say, perhaps the goodwill earned in the West will end up compensating for the loss of China, perhaps democracy will come soon. Yes, que sera sera. But that’s not how decisions are taken in business. There is a profit and a risk to consider, and when the gain is so uncertain and the loss so clear, it doesn’t make business sense. More on this below.

Ethical: Yes, “don’t do evil”, I know. Hello, all the corporations today have CSR and ethical codes, mine too, even if it is not as cool as Google. But really, a company doesn’t have feelings, it doesn’t respond to notions like love or ethics. Only people do that. And, in the case of Google, only Page, Brin and Schmidt have that kind of power. Did they suddenly get pangs of conscience and decided to follow their own principles at any cost? Some already suggest this might have been a personal decision influenced by Sergey Brin. More on the personal hypothesis below.

Checkmate: Google has some information about the Chinese industrial espionage activities that is still undisclosed, with evidence that would compromise the CCP, and possibly push it against the wall in some WTO proceeding. The victims include dozens of Western companies, and the crime is so outrageous that all those countries would be forced to stand up to the CCP as well. This could be Google’s ace in the hole, and it would explain the style of their blog post. This is the only winning hypothesis for the G. It deserves strong consideration, based on the premise that the 3 leaders of Google are Very Intelligent Guys.

Legal: The muddled style of the message and the bad moment chosen (we should be speaking of Nexus One right now!) makes me think that there might have been some pressing matter that pushed Google to do this. Like we said, the same goodwill could have been obtained by simply uncensoring Google.cn without writing a public accusation to the CCP. Is this a move to deslegitimate the Chinese system and avert an upcoming Chinese lawsuit? Did some of the activists threaten to sue Google for the leaks, or was it the Chinese authorities that were getting dangerous? Google Books? Porn on Google Images?

Political: We saw as well that the most likely political outcome is an increase of censorship in China, a net loss for the employees of Google and the Chinese netizens, and perhaps even a rise of nationalism and protectionist policies. There is no way that this move is going to help the Chinese in the short term.  Even if there was: it is not and it can not be the role of a public company to actively engage in politics hand in hand with the US government. Need I remember anyone that the US government is today responsible for evil as severe as the CCP? More news here.

IP Protection: Google might have decided to force its way out of China because really it has detected some theft of IP so severe that it puts in danger the whole business. It is hard to believe that Google is unable to hide its own IP from the Chinese government. We are speaking of the same government that couldn’t even come up with a decent filtering software last year. Let’s just say this option is unlikely. Update: this hypothesis is stronger after rumour of a CCP mole, see Update 2 below.

Conspirational: Google has something to hide. It is something very big and very very weird, like E. Schmidt is an alien, or an irrecoverable bug has been found on Larry’s algorithm, or a Google databank in the US has been held by AlQaida and… and all this noise is just to distract our attention. This would be consistent with the quick messy post at the Google blog.

Personal: Larry Page and Sergey Brin are among the most admired persons in the universe, they are the Gods of the internet. They achieved that at a very young age, and they have spent the last decade sitting on the Google Search cash cow and freely recruiting the best intelligences in the World to conquer the internet and get more universal love than Jesus Christ. Their egos are shooting through the Googolplex roof, and they have decided to bring democracy back, coz them other CEOs don’t know how to act. Girl.

Macroeconomic: Google has obtained insider info on the financial position of some Chinese Banks and the superhuman brains of P and B have come up with a new algorithm predicting that the Chinese system is going to collapse tomorrow. They leave while they are still in time, collecting bonus World goodwill and defying a CCP that will not be there this time next year anyway…

Various/Spectacular: From Daily Beast via BoingBoing: “the reason they know it’s the Chinese government behind these attacks is because Google gave them the key”, “Your entire life, as stored on Google’s servers, may now be there for the taking.” and “Google is attempting to create a distraction.”  Also from Posner in Daily Beast: The Red Menace is back, Google thwarts China’s plan to control the World with an army of hackers.

UPDATE: Danwei has collected some informations regarding the low profit that Google is getting in China. This would give some weight to the Business option above. However, it still doesn’t make any sense. They could have just uncensored Google.cn, get sent away with all the PR hoopla, and all the while not cross the CCP too much with the public accusations of email hacking. Because there is ABSOLUTELY no business interest in Google forcing things in a way that even Google.com and all the G services will be blocked. China can do that easily with the GFW.

UPDATE 2: The moles theory. ESWN translates from anonymous Chinese blogger claiming insider info: Google trusts its employees and gives them access to all the codes, suddenly discovered one  of the employees is actually a CCP mole who’s been passing information, not only about activists but also Google’s own IP (actually from the initial G’s post it is not clear which of the two problems has moved Google).

Rings true to me, and explains why all employees in China are being sent on holidays. And yet, this doesn’t change much the situation. Wasn’t it pretty obvious that Google had CCP spies all along? Every company here has members of the CCP working in it, mine as well. And it is difficult to believe G was so naive as to not take precautions against this.

Moreover, the kind of people that work in Google are the best of the best universities, a high percentage of those people are members of the party here. The surprising thing would have been that there was NO moles in Google China.

I don’t think the big deal is the mole. Whether the hacks were done through moles or through other means is secondary, what is essential to the issue here is the Magnitude of  the IP theft, and the Evidence G has, and possibly the other Companies involved.  For the POLL, this theory is included in the IP Protection option above.

UPDATE 3: (h/t CDT) Newsweek interview Eric Schmidt: Decision based on values, not business. Mentions monitoring of dissidents, not technology  IP theft. Says Google’s IPO specified Google would be different, maximizing profits was not the objective of Google Inc, so no responsibility to the shareholders.

But why why why? Why such a bad form? They could have done it more smoothly, and avert the risk of being completely banished from China. And why now, when the treatment of dissidents is known in China for years? Does it make any difference if hacks are done through a mole in Gmail or through Baidumail once Google is gone? And wouldn’t the right thing be to fight, and encrypt the email better, and give those dissidents a much needed support to stay alive?

Feel free to suggest other hypothesis, or else just vote below: 

(POLL IS CLOSED)

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I was a bit reluctant to read “Chinese Gods”.  I never had much of a taste for the mystical, and the rows of whiskered statues staring in the temples fail to arouse in me more than a cautious curiosity. But when I received the latest publications of Blacksmith, the promise of a book that “makes sense” of China’s religions caught my eye, and I thought perhaps this was my chance to jump into it and cover a gap in my education.

You might be familiar by now with Blacksmith books of Hong Kong -  the same Blacksmith that did the Asian edition of Apologies and other gems like King Hui and Business Republic. I am, and I have come to expect good surprises from them;  many things can be said of their books, but surely not “hackneyed” or “banal”. Pete Spurrier, the man behind the company, is not afraid to go with first-time authors, and he seems to have a knack to find intriguing writers with original points of view. Jonathan Chamberlain is perhaps his best find.

Indeed, in terms of surprises, this book delivers from the preface.  First, you discover it was actually written and self-published by Chamberlain 30 years ago, inspired by a series of painted glass figures he collected from local markets. It goes on to describe an unusual interview in Bangkok with British mystical writer John Blofeld, a reference in Asian religions, who agreed to give the book a prologue in articulo mortis. And then suddenly, before you realize it, you are swimming in the thick soup of China’s beliefs, following the author in his daring quest to make sense of  all the Gods. Click to continue »

You know how Wen Jia Bao asked us this week to have “faith and determination“, and added that the “nation will be the first to recover” from the crisis and grasp the opportunities available. Then come the experts of the World Economic Forum, who are getting ready for their yearly skiing holiday, and they publish a prediction right on their front page:

Global Risks 2009: a new report from the World Economic Forum, identifies a deteriorating global economy, a hard landing in China…

In the report , which you can download here, they go on to speak of China 09 GDP of “6% or below”, a point which the international media is quick to report. How’s that for the confidence. Ouch, one 2 good points below the waistline of the CPC’s 8% , and right in the family jewels.

Mind you, I am not writing this to pick on Wen’s predictions. First of all, the WEF’s report is only making hypothesis, to see their possible impact on the World economy. Second, I think Wen would be as likely to get it right for China’s economy as the gurus of the WEF. After all, the CPC prepares its predictions with the advantage of insider information, and it suffers less distractions than the vedettes at the Convention of Dismalness.

On the other hand, it is a long time already since the Forum passed the heigh of its influence and it looks this year more irrelevant than ever. In the end, the important decisions for the World economy will be taken by Obama’s team and the CPC, and it is unclear how either of them will listen to the WEF. Most importantly, the role of the Forum as a brainstorming event has largely been taken over by the econobloggers, as we saw in this fascinating article you might remember from last month.

Inexplicably, we have not been invited to Davos this time, so we’ll hit the road in Shanghai instead and see how the faith and determination is doing, and whether there are signs of  faltering in the good old Shanghai shopping spirit. A big part of China’s economic Wall is made of the faith of its consumers, who are the ones supposed to make up for the lack of exports. Here’s how they are faring in Shanghai:

Nanjinglu: The usual mobs of shoppers and sellers in spite of the biting cold.

Xujiahui: It is difficult to walk the Street, the shops are as full as ever and the official sign on the Bridge reads: “Do Well Your Economic Survey, capture the situation and the strengths of the District, and promote the development of XuHui.” This district is also undergoing an economic survey, like the one done by these funny villagers, but hopefully using more standard statistical methods.

Sitting 牛: Hordes of consumers worship the goddess of consumption, the Sitting Cow.

We Hire - I got this last night right next to my place. I haven’t been keeping track of the changes these last weeks, but all I can say is that we still see many signs like this. The red character means: We hire.  1200RMB a month plus extras. Searched: waiters, shop manager, dish cleaners, etc.

So there you go, in Shanghai, in spite of some people getting worried and a few foreign startups having a hard time to meet ends, it looks like the F and D are still holding stong. Let’s hope they stay right up there throughout 2009, and we might avert this one of the Global Risks.

You will excuse me for writing two serious posts in a row. It’s been ages we don’t do anything on the Crisis, and these days there’s been a series of articles on the subject that I couldn’t just let pass.

Two of them have to do with the growth projections for 2009. Yawn. We’ve been seeing new projections and discussions thereof almost every week, and after the holidays break it looks like here it is all over again. It is mostly fruitless, because there’s not enough new information between one projection and the next, and so most of the times the changes reflect the mood of the expert more than anything else.

It was however interesting to read this PD article Sunday where one CPC “renowned economist” worried that “China is likely to lose 3.9 million jobs in 2009″ if GDP growth slows to 8 percent. Well, he need not worry anymore, according to other top CPC officials quoted here the very next day, “China Risks Missing 8% Growth Target”, which will be “extremely arduous” to achieve. They are starting to change their tune, again.

And this brings us to a more interesting subject which, although it is as difficult to predict, at least it is more telling than the empty statistical artifice of GDP. I am speaking of Unemployment.

There has been two contradicting articles over the weekend, by Wang Tao from UBS and by Victor Shih. They hold different positions as to what will be the unemployment figures in 2009 and what will be their social impact. In any case, it is worth noting that both of them, with their 15 Million (Tao) and 35-50 Million (Victor) figures, are way above any calculation by the “renowned economist” of the People’s Daily, who gives 1 Million for every % of GDP lost.

Needless to say, I am with the relatively pessimistic predictions of Victor on this issue. Partly because I deeply distrust socio-economic projections issued by banks (you can hardly blame me on that). But mostly because the arguments that Victor puts forward are more solid than Tao’s. Based on his deeper knowledge of Chinese politics,  Victor goes on to analyze the possible consequences of his prediction in a worse-case scenario.

Noting that, even if the government has the capacity (as he calculated here) to subsidize the unemployed families for an extended period,

the current wave of layoffs affects a young and vibrant cohort most capable of carrying violent collective action against the state. Without any systematic triggers, we at least will see a spike in localized riots which necessitate the mobilization of People’s Armed Police (PAP) units all over China. The central government would also be compelled to (and they are doing so already) roll out generous unemployment benefits for migrant workers and college graduates (to the tune of 300-400 billion RMB). If a systematic trigger occurs and instability spreads to a sizable city, we will see the large scale mobilization of both PAP and army units and possibly substantial bloodshed. In most scenarios, the CCP regime would still survive a large scale, cross regional rebellion. However, “overall investor confidence” will be lost.

What is the “systematic trigger” which I refer to? I don’t know exactly what it would be. However, if we look back in history, it can be a wide range of events, including the death of a popular leader, a serious natural disaster, the spread of a deathly infectious disease, a small student demonstration turned violent, religious groups…

This idea of the “trigger” (I called it the “Spark” on my previous post) is right on. It is exactly the element that is missing and the one that will make all the difference: when we have social tension to get the people in action, and intellectuals to draft the road map, the mix is an unstable equilibrium waiting to get in contact with a spark. Of course, Victor doesn’t know what exactly this spark would be, and neither do I because its own nature makes it unpredictable. But I would add to his hypothesis one of my own:

The emergence of a massive wave of protest on the internet that extends to all the forums and BBS simultaneously, with new sites being created faster than the government can block the old, which could create a cascade effect that would force the government to commit its worst mistake: close down the internet altogether. This would add to the protesters millions of online game addicts released from their cybercafes, constituting a serious army of instability.

Check out today’s post by Imagethief on the subject, showing with 2 nice graphs that we have an unprecedented situation in China. Also,  yesterday Jeremiah of the Granite Studio did an interesting comparison of the present situation and the one in 1919 during the May 4th movement. In those times, there was a clear “trigger”: the humiliating treatment of China by the Western powers in the Treaty of Versailles after the First World War, including the unforgivable transfer of territories to Japan.

One last note for the optimists: this weekend I learnt of a reputable economics professor living in Shanghai who recently bought 3 months advance of canned food to store in case the situation gets rapidly unmanageable. In a city like Shanghai, if the logistic networks are disrupted we can run out of food in a matter of days. I am still not quite there myself, but I must admit that, since I heard this, the idea hasn’t quite left my head and I tend to go more generous on every visit to Lawson’s.

UPDATE: Oops, I completely missed this one. All Roads has been doing the same comparison and drawing his own conclusions. You can see it here.

I know I shouldn’t be linking the same source all the time, but since I got my new coded connection I have rediscovered the Time China Blog and I just can’t get my eyes off it. Check out this picture of the rich corn fields in Ningxia in their last post by Lin Yang. After the recent avalanche of crisis articles, this must be the most heartening piece of info I have seen in weeks.

In her message, Lin Yang explains how, during their holiday trip to the native land, they were surprised to see the prosperity of the Ningxia farmlands, where 30 years earlier they had known trickier times. Obviously this is not a scientific study, and I don’t know if the situation applies to all farms or all parts of the province. But I am happy to see that, for once, the Good Earth is bringing prosperity to her children. Consider this paragraph:

It is hard work though. It usually takes a couple of years to break new land, and Wang spent the last two decades acquiring the 50 acres he has now. The family grows mostly corn, but also vegetables and melons (a local specialty). Last year the harvest was 200,000kg. In fact, over the years Ningxia has gained the reputation as Hong Kong’s vegetable basket, and migrant workers have been returning to the west to pick up their old trade.

This is a tribute to the patience and hard work of the men and women of the land. Madoff and all the band of crooks in Wall Street, the conceited Shanghai sharks and vain princesses who look down on immigrant workers, they can read this when they sit, in a few months time,  wondering how they lost their jobs. And perhaps some of them should be sent to labour the Ningxia fields and learn what honest work feels like. That would be a way to make something useful of the old reeducation camps.

Popcorn Doomsday Scenario

In parallel to this, I have conducted some research as to the probability of a meterorite falling on the farm of the picture at the moment when the 200,000kg harvest is out for collection. I am reassured to see it is rather unlikely, for it would mean the end of civilization as we know it, and the beggining of a new sweet glaciation era  in which the planet would be covered by a floating cloud of hot, delicious pop-corn.

OK, yeah, I admit my hypothesis today are a bit wonkish, like the economists like to say. But what do you want, this is another panda-eyed Saturday morning, and the electric coolie I called in to fix the air-con is hovering around me all the time. It is freezing. Not easy to concentrate in these conditions.

After what I wrote last week in my sensationalistic post of the Tower of Babel, I have continued to follow as promised my Path to Enlightment. The results are modest for the moment, but I’ve found already five good links to get me closer to smelling Chinese politics. And I have added these 5 links on a separate section of the sidebar called “Intelligence”. This is not to say that the links in the Normal Blogroll are any less intelligent, I continue to read them and respect them as much as ever.

Now, the difficult part. In my quest to knowledge I have been lucky enough to speak (through email and blog comments) with some of the best specialists in Chinese politics and media. One of them who I am not allowed to quote has confirmed to me that the China Daily editorial was probably just that: an article by an editor in the paper looking for controversy to get the sales up. This is not so unusual nowadays in Chinese newspapers, neither is this article considered particularly risky, as it is not attacking any of the CCP holy principles.  So yeah, my thesis is limping a bit after this.

This doesn’t mean that I regret posting that entry. Some of the hypothesis might be wrong, but the core of the message (tensions in Zhongnanhai) still rings very true. In the end, each entry in the blog has a different role, and this one clearly specified its own: propose some wild hypothesis, incite discussion and try to get some commenters to come in the aid of the party. And yes, let’s admit it, I am still quite proud of having quoted the Bible and China Daily in one single post.

Finally, I would like to make a statement: I set a high value on the accuracy of this blog. Yes, I might write some weird stuff sometimes,  post on politics like a paparazzo or draft nonsensical Chinese lessons. But this has nothing to do with me not taking seriously my readers. What CHINAYOUREN will never do is tell you that a word is fact, or a fact is none, unless it has the proof or citations to support it. I feel the need to say this particularly because I know my being (semi)anonymous takes away part of my credibility. And I wouldn’t want to have people mistaken about me.

So, there’s that for today. And now if you excuse me I will continue with my Blog Optimization Routine (BOR):

“Dalai Lama, Dalai Lama, Dalai Lama, Dalai Lama, Dalai Lama … “

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