Wikinvest Wire

Censorship and oil demand in China

Monday, June 08, 2009

Two reports in the Wall Street Journal provide yet another reminder of how China's "market" economy is different than any other market economy in the world. The lead story($) in today's paper provides details on a new requirement for PC makers to install internet filters on all personal computers sold in the country beginning in just a few weeks.

China plans to require that all personal computers sold in the country as of July 1 be shipped with software that blocks access to certain Web sites, a move that could give government censors unprecedented control over how Chinese users access the Internet.

The government, which has told global PC makers of the requirement but has yet to announce it to the public, says the effort is aimed at protecting young people from "harmful" content. The primary target is pornography, says the main developer of the software, a company that has ties to China's security ministry and military.
For all the benefits provided online by companies such as Google and Wikipedia, pornography and gambling remain two of the most profitable internet businesses, an indication that unfettered capitalism does not always produce the intended result.

What else besides pornography gets blocked remains the important question. It sounds innocent enough based on the company that provides the software.
The software was developed by Jinhui Computer System Engineering Co., with input from Beijing Dazheng Human Language Technology Academy Co.

Bryan Zhang, founder of Jinhui, said Green Dam operates similarly to software designed outside China to let parents block access to Web content inappropriate for children. Some computers sold in China already come with parental-control software, but it isn't government-mandated.

Mr. Zhang said his company compiles and maintains the list of blocked sites, which he says is limited to pornography sites. He said the software would allow the blocking of other types of content, as well as the collection of private user data, but that Jinhui would have no reason to do so. He also said the software can be turned off or uninstalled.

His company plans to transmit new banned addresses to users' PCs through an Internet update system similar to that used by operating-system software and antivirus programs.
Since the Chinese government is already known to block many internet sites and determined web surfers have found ways to get to the content they really want - often times related to independence in Tibet, Falun Gong, or other issues that could foment social unrest - it seems unlikely that the new filtering will be limited to pornography (and maybe gambling).

It should be interesting to see how this develops as it is a much more intrusive form of censorship than restricting access to websites at higher layers of the network.

The other report($) from China deals with a much more economically important issue in the world today - energy demand from the world's fastest growing economy and how difficult it is to obtain any reliable information on the subject.
China is estimated to account for 9.3% of the world's oil use, yet it releases no actual consumption data. That has led analysts to turn to Google Earth to track the movements of oil tankers and to travel across China meeting with low-level oil industry officials. To predict agricultural production, firms are studying ways to use satellite, weather and soil data throughout China.

These analysts were early in spotting a rise in demand in China this spring and believe demand will stay strong, justifying the current oil price and possibly pushing it higher.

Sanford C. Bernstein analysts Neil McMahon and Alexander Inkster are using Google Earth, the Web site that provides satellite images of almost any place on the planet, to zoom in on Chinese storage facilities, helping monitor the increase in capacity over time.

In May their focus was on Aoshan, a site in eastern China. Images from 2000, 2003 and 2007 proved what had long been suspected -- that storage capacity had been massively expanded. That helped give Messrs. McMahon and Inkster the confidence to predict a surge in Chinese demand.
Historically, the focus of oil research was on the U.S. and Europe. Analysts would get a good handle of the overall picture just by looking at these two markets. The game changed in 2004, when Chinese oil demand surged 15.4%.
You can see how this might become a contentious issue if the global economy, at some point, mounts a strong recovery and energy supply/demand fundamentals all of a sudden take center stage again.

Recall that, last year, when oil prices peaked in July, U.S. demand had been flat or falling for many months, yet daily production could not keep pace with daily demand, China being the biggest driver of the growth in demand.

It would be nice to get a better handle on just how much energy China consumes and how much crude oil it has been stockpiling, particularly in light of the fact that it took the government six years to let the rest of the world know that its gold reserves had doubled.


Anonymous said...

Could China be exchanging one asset for another - Treasury bonds for oil in storage ???? If you expect inflation, this would be a no-brainer.

Bewert said...

Hi Tim,

Found your blog via a post in that toxic waste dump known as BB2 aka

China is the sleeping giant, especially when it comes to oil. India is to some extent as well. We ain't seen nothing yet. Wait until a significant percentage of their population can afford cars. Your recent Hummer post points towards this as well. But, as Lance said on Twitter re: Hummer: "They can have it."

Enjoy Bend. I moved there in Feb. '05 and moved back to UT and it's 5+% unumployment at about the same time you moved to Bend. A couple of tips: 1) no matter what you drive, get studded tires for the winter. I grew up in Northern Wisconsin, drove on frozen lakes as a kid, and the roads in Bend are a skating rink compared to that. Coming off Aubrey in anything with all-season radials will be very amusing except to those in your path... 2) Check out Widgi for golf. Nice course, nice price. I worked as a P/T greenskeeper there for a couple of summers. 3) The weather seems mild, and is except for the freezing nights. Bend only stays above freezing an average of 65 days a year according to the weather gurus. Plan accordingly.

Lots of good outdoor fun to be had. Enjoy it.

Personally I got sick of the incompetent, developer-run city government and the endless gauntlet of homeless beggars. And we like gardening, which is a real challenge in Bend. We already have strawberries and cherry tomatos ripening here.

A few local Bend links that you may find interesting:

My own, which I no longer update but will give you some political background:
All about the money pit at JR that was supposed to provide jobs. Rather hopeless, as it went from a 1500-acre area for industry to a Celebration, FL-style development with a much smaller job area. They also have visions of a four-year university there...
A local political reporting blog I started in February. Links to City Council stuff as well. The council was taken completely over by development interests this year. They seem to be planning on building their way out of the current economic mess in Bend. One of my biggest reasons for leaving.
Dunc's local small business blog. Good long-timer views. Has a cool little shop downtown, a half block east of Bellataza(sp?)
Aggregates most all local Bend blogs. There is an amazing number of them. Built by local Jake Ortman, who also has his own blog at

And of course there us the aforementioned BB2, a place only for the thick-skinned, mostly filled with anonymouses...but a source of stuff you will not find elsewhere. Started calling the Bend Bubble a long time ago. Took a lot of heat for a long time, but as anyone with a brain recognized long ago Bend's rate of RE growth was unsustainable without an employment base. And in the last year and a half or so things have imploded.

Tim said...


Thanks for all the info.

What part of UT did you move to?

Bewert said...

For the summer we are living in the house that my wife bought before we were married, less than a mile from the mouth of Little Cottonwood Canyon aka the home of Alta and Snowbird. (We met at Alta 20 years or so ago when we both worked there.)

The house has stayed in the family, currently with the in-laws, and they go to Homer, AK for the summers, so it worked out great. The garden was in and the Jack Russells are familiar with each other.

We are figuring out what to do this fall over the summer, before the in-laws come back in October. I've been looking at houses but they are still too optimistic to consider buying, so we'll probably rent for a while longer here.

Tim said...

Sounds like fun - we've passed by that area on the 15 many times but never stopped to look around.

Mathlete said...

People's first reaction to the censorship story is a political reaction. But a lot of political material is blocked already. This may be a way to up the control and make it harder to use proxy servers, etc., but there's no evidence yet.

On the other hand, my immediate thought was: higher productivity.

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