Choppy water

China’s has been making waves this week, and not just in the swimming pools of Rio.

Over the weekend, the Japanese government charged China with stirring up trouble in the East China Sea by dispatching more than 200 fishing boats into waters near islands Japan occupies but both countries claim.

On Monday, the New York Times published a series of photos collected and analyzed by the Center for Strategic Studies that appears to show China has built reinforced aircraft hangars on the three reefs it controls in disputed waters in the South China Sea. CSIS analysts say the hangars are large enough to accommodate military aircraft–bombers, refueling tankers and transport planes–which would seem to contradict Chinese president Xi Jinping’s September promise to President Obama that “China does not intend to pursue militarization” of the islets.

Then Admiral Scott Swift, commander of U.S. naval forces in the Pacific, questioned China’s recent military moves in the region, including China’s decision to hold joint naval exercises with Russia and a recent increase in the frequency of Chinese combat air patrols over the South China Sea. Swift, chiming in from aboard a US destroyer visiting China’s eastern port of Qingdao, said China’s actions are destabilizing.

As if on cue, Reuters reports today that Vietnam has “discreetly fortified” several of the islands it controls in the South China Sea with “new mobile rocket launchers capable of striking China’s runways and military installations.”

This is getting a little scary. China’s more assertive maritime posture comes a month after an international tribunal in The Hague sided with the Philippines in condemning China for building artificial islands in the South China sea by dredging sand around and piling up concrete atop a chain reefs and rock outcroppings. The tribunal rejected China’s claim of sovereignty over the surrounding waters and found China violated international law, endangered Philippine ships and damaged the environment.

China says The Hague has no jurisdiction in the matter. But many analysts think China’s recent moves are designed to show it won’t cowed in Asia by the U.S. and its military allies.

Most business executives would just as soon shrug this off. Dutch court rulings? Fishermen and coast guards playing chicken on the high sea? And all over a bunch of rocks?  Yes, it sounds a bit silly. But the risk of conflict is real, and stakes are high: More than $5 trillion worth of goods, about 30% of global maritime trade, passes through the South China Sea every year. In recent months, global brands like Apple, KFC and Toyota have felt the wrath of Chinese consumers angered by the West’s perceived unwillingness to recognize China’s territorial claims. Stay tuned.

Chinese regulator renews his public feud with Jack Ma

In a rare interview with Hong Kong-based Phoenix TV, Zhang Mao, the head of China’s State Administration of Industry and Commerce (SAIC), has reopened his face off with Jack Ma and Alibaba over counterfeiting. In January 205, Zhao went public with charges that Alibaba’s online marketplaces were riddled with fake merchandise. Alibaba launched a strident defense of their business practices, and Zhao backed down and withdrew a “white paper” purportedly documenting the Internet giants lapses. But in the Phoenix interview, Zhao goes back on the offensive. “I’ve repeatedly told Jack Ma that he is not in the land of outlaws and he should take the primary responsibility,” he says.

Wall Street Journal

China’s insular Internet

An excellent piece by New York Times Asia tech correspondent Paul Mozur explains why the Chinese Internet is becoming a universe unto itself, forcing Chinese tech firms to choose between succeeding in China or competing in the rest of the world. Mozur profiles, an app that lets users lip-sync and dance in their own music videos and is hugely popular with American kids (including mine!). make look American, it’s actually based in Shanghai, and was founded by Alex Zhu, an engineering graduate from Zhejiang University in Hangzhou. The article highlights the case of WeChat, the messaging app owned by TenCent. In China, WeChat is everywhere and does everything. It

The article highlights the case of WeChat, the messaging app owned by TenCent. In China, WeChat, which boasts 700 million users, is everywhere and does everything. If you live or work in China, it’s the one app you cannot live without. WeChat combines services like messaging, search, and e-commerce, allowing users to do everything from pay bills, order dinner, buy movie tickets, book a taxi or make plane reservations. Even if you are a fluent Mandarin speaker, if you are not on WeChat, and try to get by with fuddy-duddy American platforms like Gmail, Facebook messenger or WhatsApp, it’s almost impossible to stay in touch with Chinese friends and colleagues. And yet this Chinese behemoth is a comparative midget beyond the borders of the Middle Kingdom. China’s other two Internet giants, Alibaba and Baidu, also have struggled to establish themselves as global players. One thing the article doesn’t explore, though, is how start-ups like, who try to succeed globally while based inside China contend with tighter regulatory scrutiny and are able to manage global operations from inside the China’s infamous Internet firewall.

The New York Times

China’s straddling commuter bus: breakthrough or put on?

The Transit Elevated Bus, that gargantuan road-straddling commuter bus that grabbed headlines around the world last week may never be put to use. When China’s state-run Xinhua news service touted the bizarre looking contraption as a possible solution to congestion in gridlocked cities like Beijing, global media including the Atlantic, the Guardian and New York Times enthusiastically passed the story on. “China actually built that crazy traffic-straddling bus!” marveled the headline about the TEB in Gizmodo.  Alas, a report in yesterday’s  South China Morning Post suggests the TEB may not really be a thing. In might even be the reverse of those many instances when China’s state media picked up a story from The Onion without realizing it was a hoax. The Post could find only a single prototype at the manufacturers testing ground in Hebei. The story suggests the prototype was a fundraising gimmick and the company that built it has no plans to manufacture it at large scale. It quotes a Shanghai transportation expert as saying “The biggest advantage of this project is that its designers have rich imaginations.”


China delays approval of Marriott’s acquisition of Starwood

China Ministry of Commerce has announced that it’s extending by up to 60 days its review of Marriott International Inc’s acquisition of Starwood Hotels & Resorts Worldwide. Neither the ministry nor the hotels offered any explanation for the delay. Shareholders from the two resort groups approved the deal last April. The merger has been approved by antitrust authorities in more than 40 companies including the US, the European Union, and Canada. The combination of Marriott and Starwood would create the largest hotel operation in China, with a 4.1 market share. Marriott won a battle for Starwood after a Chinese company, Anbang Insurance Group, abruptly withdrew its bid.


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