Weekend Economists Pull Timmy Out of Well (and Throw Him Back In)May 30-June 1, 2014

[Demeter]

19. China uses a cyber-security row with America to boost national champions

http://www.economist.com/news/business/21603028-china-uses-cyber-security-row-america-boost-national-champions-technationalism

WESTERN fashion models have long been in high demand for catwalk shows and photo shoots in Shanghai and Beijing. However, dozens of them were rounded up recently on alleged visa infractions and chucked out of the country. Leggy beauties are not the only foreign models now under threat in China. Unsourced rumours are swirling of a forthcoming ban on state-owned enterprises (SOEs) buying Cisco telecoms equipment and IBM computer servers. This week the Financial Times reported that American consulting firms like McKinsey and Bain would be blocked from working for SOEs.

The American tech firms and consultants appear not to have been informed of any prohibition. The big SOEs say quietly that they have not received any written notice to cut off contracts. The state banks are unable to confirm the directive to chuck out IBM servers.

What is clear is that these rumours are coming in response to the news that America wants to prosecute five members of China’s People’s Liberation Army for alleged hacking of industrial secrets. This provoked outrage in China. Edward Snowden’s revelations of American hacking of Chinese targets have persuaded many locals that the Yanks are hypocrites.

One way to understand this recent flurry of rumours is as a calibrated political manoeuvre. On this argument, Chinese officials want to threaten to expel important American firms so as to force the United States to reconsider its new cyber-offensive. If America enforces any punitive sanctions then today’s rumoured bans will become tomorrow’s official policy...


AND THE GREAT UNWIND OF AMERICAN EMPIRE PROCEEDS APACE...EVERY MOVE TO ENFORCE IT BREAKS IT UP A LITTLE MORE...