China’s middle class is now bigger than America’s middle class

Reuters

Flash cars are one symbol of China’s new wealth.

The Chinese middle class has grown to outnumber the U.S. middle class for the first time, with 109 million Chinese adults now counted in that category compared with 92 million American adults, according to a Credit Suisse report.

China now accounts for a fifth of the world’s population, and holds nearly 10% of global wealth, the bank said in its sixth annual Global Wealth Report published Thursday.

“The Chinese middle class is now, for the first time, the world’s largest,” said the report.

China’s wealth growth is especially impressive when viewed over a longer time frame. In 2000, the country’s wealth was similar to that of the U.S. circa 1939, the report found. By 2015, it had expanded to the level of the U.S. in 1972, effectively accomplishing a 33-year leap in less than half the time. Household wealth in China is expected to continue to exceed the growth rate of developed economies, putting it on track to create 2.3 million millionaires by 2020, a 74% increase from today.

The U.S. is still the country with the highest number of millionaires and is home to roughly half of all the millionaires in the world with the stronger dollar helping to push it ahead of Europe.

“Still, the middle class will continue to expand in emerging economies overall, with a lion’s share of that growth to occur in Asia,” Credit Suisse Chief Executive Tidjane Thiam said in a statement. “As a result, we will see changing consumption patterns as well as societal changes as, historically, the middle class has acted as an agent of stability and prosperity.”

Other findings include that the wealth gap has continued to widen in the wake of the 2008 financial crisis, with rising equity and other asset prices in developed countries increasing the wealth of some of the richest.

The top percentile of wealth holders now controls more than half the worlds' wealth.

“While the distribution of wealth is skewed towards the wealthy, the considerable economic importance of the base and middle sections [of a wealth pyramid] should not be overlooked,” said Thiam. Together, those sections account for $39 trillion in wealth and the consumption of a wide range of goods and financial services, he said.

China Cuffs Hackers at Request of US Officials

The Chinese government has arrested several hackers at the request of the US authorities in a sign of greater co-operation between the two superpowers on cyber issues.

According to a Washington Post report, US law enforcement and intelligence agencies drew up a shortlist of suspects they’d identified as engaging in such activity and handed it to the Chinese authorities.

“We need to know that you’re serious. So we gave them a list, and we said, ‘Look, here’s these guys. Round them up’,” one person familiar with the matter told the paper.

The move came one or two weeks before president Xi Jinping’s visit to Washington at a time when there was talk of the US enforcing unprecedented economic sanctions in retaliation for economic cyber espionage against American companies.

It remains to be seen, however, whether this is the start of ongoing co-operation on such matters or whether Beijing agreed on this occasion to avoid sanctions and any embarrassment ahead of Xi’s state visit.

During that visit, China and the US signed a joint deal promising that neither side would engage in cyber espionage for commercial advantage, and agreeing to share intelligence on cyber attacks.

It noted:

“The United States and China committed that neither country’s government will conduct or knowingly support cyber-enabled theft of intellectual property, including trade secrets or other confidential business information, with the intent of providing competitive advantages to companies or commercial sectors.”

Experts claimed that Beijing would try to distance itself from those arrested.

Commenting on the news via his Twitter feed, FireEye/Mandiant strategist Richard Bejtlich said: “Arresting CN hackers explicitly tied to theft for biz benefit puts CN gov in awkward position. I bet they nabbed ‘contractors,’ not PLA/MSS.

He added: “If CN gov arrested 61398 members, CN gov will likely claim they were rogue actors. Fits w/anti-corruption campaign, but bad for PLA morale.”

The infamous Unit 61398 was first exposed by Mandiant two years ago in a landmark report which linked the Chinese People’s Liberation Army to prolific hackers APT1 for the first time.

The report was cited by Washington when it took the unprecedented step last year of indicting five PLA officers for hacking US firms for economic advantage.

China has always denied state-sponsored snooping for such ends goes on, claiming it is a victim not a perpetrator.

Washington will now want to see those arrested get a public trial to show China is serious about cracking down on hackers.

TSMC seeing brisk demand for 16nm chips from China

Almost 10 China-based IC design houses have already entered design-in process using TSMC's 16nm FinFET technology, which is ready for rapid demand growth in China, according to Roger Luo, VP of TSMC's China business development.

In China, 16nm chip demand for a broad range of applications including mobile computing, network communications, Bitcoin mining and FPGA has emerged, said Luo. Demand for advanced 16nm node manufacturing indicates a flourishing IC design industry, Luo indicated.

TSMC has seen robust demand for 28nm chips from China's IC design sector, with many customers already offering their complete 28nm product portfolios, Luo noted.

China-based IC design houses have been expanding their worldwide market presence. First-tier players including HiSilicon and Spreadtrum have already emerged to play in the global marketplace, said Luo, adding that China has been catching up fast in terms of design capabilities.

According to IC Insights, there were nine China-based companies among the top-50 fabless companies in 2014 as compared to only one in 2009.

Mobile devices will remain the biggest driving force behind China's IC design industry growth, Luo believes. The rise of China-based handset brands and the country's transition to 4G will make a positive contribution to the growth of China's IC design sector, Luo said.

For TSMC, sales generated from the China market continue to grow at a gradual pace. China accounted for 7% of TSMC's overall revenues in 2014, compared with 6% in 2013, 5% in 2012 and 4% in 2011, Luo disclosed.

TSMC's revenues generated from the China market jumped to NT$53.4 billion in 2014 from NT$17.1 billion in 2011, representing a CAGR of 46%, Luo noted.

In China, TSMC currently has an 8-inch wafer fab located in Songjiang (Shanghai) with monthly production capacity exceeding 100,000 units, Luo said. The fab has production lines for the manufacture of chips for use in handsets, tablets, consumer electronics, TVs and IoT applications.

Roger Luo, VP of China business development of TSMC
Photo: Josephien Lien, October 2015

Commentary: China DRAM industry set to rise

China's DRAM industry is set to take a big step forward as its state-backed technology conglomerate Tsinghua Unigroup has successfully raided a senior executive from Taiwan's DRAM industry.

Charles Kau, chairman of Inotera Memories and president of Nanya Technology, is expected to join Tsinghua Unigroup soon after leaving his current positions.

Kau will serve as executive VP of Tsinghua Unigroup's global operations, steering the development of China's home-grown DRAM and NAND flash technology and production capacity, as well as the build-up of a competitive talent pool for China's DRAM sector.

While confirming Kao's resignation, Nanya said Kao's new position will be facilitating the future cooperation among cross-strait DRAM industries and Micron Technology. The company is also looking forward to cooperating with Kau to enhance market presence in the Greater China region.

With immense financial strength and government support, Tsinghua Unigroup has recently offered to buy a stake in Micro for US$230 million, an attempt which has been turned down by the US-based DRAM chipmaker.

However, Tsinghua Unigroup's hiring of Kau, chairman of Micron's Taiwan-based subsidiary Inotera Memories, seems to place Kau in a perfect position to renegotiate with Micron for technology cooperation or a eventually tie-up between the two companies.

Given that the DRAM and NAND flash industries have been heading for a downturn recently and the prospects are likely to remain sluggish in 2016, the declining memory chip prices and rising production costs could force Micron to reach some sort of ally agreement with Tsinghua Unigroup.

Some indicate that Micron and Tsinghua Unigroup will build up a 12-inch joint venture fab, with the US-based chipmaker providing DRAM and NAND flash production technologies, while Tsinghua is responsible for building up memory production capacity.

In short, such a 12-inch joint venture fab will serve as a China version of Inotera Memories established by Kau.

Thus, Kau is actually to be in charge of integrating DRAM and NAND flash production capacity in the US, China and Taiwan, enabling Micron to take on Samsung Electronics and SK Hynix, while also helping China to establish its DRAM industry.

Study Shows US with Lion's Share of Data Center Market

Data centers are widely considered to be a global enterprise, with presence all over the planet as different uses for the systems are used in different places. Entertainment, high-end data mining, a host of other options all come into play. But a recent study from Synergy Research Group suggests that the data center market has two major dominating forces holding a majority of data centers between the two: specifically, the United States and China.

It's not surprising that the first and second largest economies on the face of the Earth would be accountable for the lion's share of data center operations, but the Synergy report makes it clear how the split actually fared. The United States accounts for most of that half, representing 44 percent of the major data centers for both cloud and Internet data center sites. China, meanwhile, rounds out the half at 10 percent, representing the second largest proportion of such sites. Australia chips in five percent, tying its mother country the U.K. at the same number as well as Japan and Singapore. Germany and the Netherlands each chip in four percent of sites; and the rest of the world falls into the “other” category at a hefty 18 percent.

Based on the analysis of 13 major firms in both cloud-based services and Internet services—including social networking giants, e-commerce firms and those that offer the various “as-a-service” options—the companies reportedly control around 150 major sites worldwide, with each holding an average of 11 sites total. Within the average, though, clear differences emerged; three companies, the leaders in hyperscale cloud—Microsoft,IBM and Amazon Web Services (AWS)—held at least 20 data centers each, and represented the broadest such footprint.

Synergy Research Group chief analyst and research director John Dinsdale offered up some comment regarding the study, saying “The country distribution of major data centers clearly reflects two things – the U.S. dominance of cloud and Internet technologies; and the scale and unique characteristics of the Chinese market. The ranking also reflects the relative importance of smaller countries that are often used as regional hubs – Hong Kong, Singapore, Netherlands and Ireland.”

Seeing the bulk of the data center market so squarely in United States hands might be a shock to some, but given the substantial number of major tech firms in the country, it may not be. With companies like eBay, Salesforce, Facebook and others—don't forget Google, Amazon and Microsoft—all running operations in the region, it's clear that plenty of high-end data center power will be needed to keep all of that aloft. Of course, knowing what we know about disaster preparedness and redundancy suggests it would likely be useful to keep operations in other regions as well. But by like token, there also may be security concerns involved, particularly when getting involved with China or the like.

As the importance of the data center market grows, knowing the geographical makeup of this market might be valuable. The world beyond the United States is starting to look like a potentially appealing niche market in the making when it comes to data center material, so we may well start seeing some big changes to come.

China's replacement for Windows is an XP ripoff

China has been trying to move away from relying on Microsoft's Windows software for its government, enterprise, and education industries. The Chinese government originally partnered with Ubuntu maker Canonical back in 2013 to create an alternative to Windows, codenamed Kylin. While that initial effort didn't really take off, a new Linux-based operating system dubbed NeoKylin is quickly becoming one of the most popular alternatives to Windows in China.

Quartz has taken a closer look at NeoKylin, and it's clear it's simply a Windows XP ripoff. Built by Shanghai's China Standard Software, NeoKylin includes a Start menu with a skin that looks like the Media Center version of Microsoft's famous Window XP theme. It's shamelessly identical, even down to references to My Computer, My Documents, Control Panel, and even a Recycle Bin. NeoKylin also includes Word, Excel, and PowerPoint alternatives that look identical to Microsoft's counterparts, and are reportedly based on an old modified version of OpenOffice.

Dell is even selling PCs running the software in China, with more than 40 percent of its commercial PC sales shipping with NeoKylin. "The NeoKylin OS is available on Dell Latitude commercial laptops, Dell OptiPlex commercial desktops, and DellPrecision workstations," a Dell spokesperson told Quartz. It's not clear if Dell's machines run the same Windows XP skin, as there are alternative themes for the NeoKylin OS.

It's not surprising that a Chinese company has created a Windows XP alternative. The operating system is still hugely popular in China, with estimates last year suggesting that as many as 27 percent of all Windows machines in China are still running Windows XP. Microsoft was left "surprised" when the Chinese government announced its plans to ban Windows 8 usage following the end of support for Windows XP. Microsoft has continued to supply Windows 7 to the Chinese government.

US, China reach cyberespionage agreement

The U.S. and China have reached their first ever cybercrime and cyberespionage agreement, but the deal is quite general and how it will translate into actions is still unclear.

Leaders of both countries announced the deal in Washington on Friday after two days of top-level talks, but both dodged questions on specific hacking incidents or the indictment last year by the U.S. of five Chinese military hackers for cybercrimes.

"We have agreed that neither the U.S. or the Chinese government will conduct or knowingly support cyber-enabled theft of intellectual property, including trade secrets or other confidential business information for commercial advantage," President Obama said at a White House news conference.

And that appears to be the main thrust of the agreement -- government-sponsored cyberespionage for the economic gain of companies. It doesn't cover government espionage and is pretty specific in its definition but, as President Obama indicated: It's a start.



The deal also seeks to improve cooperation between law enforcement in both countries on cyber investigations.

"We have made significant progress in agreeing how our law enforcement investigators will work together, how we are going to exchange information and how we are going to go after individuals or entities that are engaging in cybercrimes or attacks," said President Obama.

Chinese President Xi endorsed the deal and acknowledged that disagreements between the two countries over hacking were something to be avoided.

"We should strengthen dialogue and cooperation," he said through an interpreter. "Confrontation and friction are not the right choices for either side."



But Obama, preempting the questions that would undoubtedly be asked on the deal, went on to say what everyone was thinking.

"The question now is, are words followed by actions. We will be watching carefully to make an assessment as to whether progress has been made in this area," he said.

Neither leader addressed a question about whether China would hand over hacking suspects to the U.S. Last year's indictment of the five accused military hackers illustrated that without an agreement on extradition, such moves were more symbolic than anything else.

Obama, though, indicated that the U.S. remains ready to act against Chinese cyberattacks while working with the Chinese government.

"I believe we can expand our cooperation in this area even as the United States will continue to use all of the tools at our disposal to protect United States companies, citizens and interests," he said.

The two governments also said they would work together to try and establish international "rules of the road" for conduct in cyberspace.

China Says It Will Start the World’s Biggest Carbon Market by 2017

On Friday, Chinese president Xi Jinping will announce that China will start the world’s largest carbon trading system by 2017, according to a statement released Thursday night by the White House.

The announcement allows China to implement something that evaded President Barack Obama during his first term in the White House: an economy-wide reform putting a price on carbon dioxide emissions and encouraging big polluters to develop alternative ways to generate energy. Ultimately, the program is intended to curb the planet-warming emissions that are generated by burning fossil fuels.

To those who have closely followed China’s extensive actions to reduce greenhouse gas emissions and air pollution, today’s announcement that the planet’s biggest emitter of CO2 will launch a nationwide cap-and-trade sysetm will not come as a surprise. The program—which builds upon seven regional carbon markets that are already active across the country—has been in the works for some time, and first appeared in the press last year.

But Friday’s high-profile announcement marks the first time that the Chinese president has committed to the cap-and-trade program—as well as the first time China has laid out a firm timetable—says Li Shuo, who tracks international climate negotiations for Greenpeace. “To date, there has been no official policy paper that confirms [the program],” he said in an email. “The fact this will be officially announced from the president’s level during the world’s most important bilateral meeting is significant. It also delivers the message: Now the Chinese will put a price tag on carbon nationwide—how about the US?”

According to a source briefed by US officials about Friday’s announcement, the new cap-and-trade program will cover “the lion’s share of China’s emissions.”

“It’s not just the power sector: It’s steel, it’s cement…it’s basically all heavy emitting industries,” this source told me. A cap-and-trade system essentially puts a price on every ton of carbon emitted by polluters, and it allows those companies involved in the program to trade permits allowing them to pollute. In the pilot carbon markets already operating across China, prices per ton of carbon are roughly comparable to other international markets. China will now become the biggest and most important hubin a string of Asian countries that have adopted, or are in the process of building, carbon trading programs.

And cap-and-trade will be just one part of a wide-ranging agreement announced between the two countries, building on a breakthrough deal forged by President Obama and President Xi last November in Beijing, in which China promised to finally start to taper its coal use. In that deal, the US pledged to cut emissions by up to 28 percent by 2025, while China agreed that its emissions would peak around 2030 and promised to get one-fifth of its power from non-fossil-fuel energy sources by the same year.

While we must wait to see the final text of the deal, the person briefed by officials told me the announcement will also include a new agreement on heavy duty vehicle standards and building efficiency standards. China will also pledge “pretty major financing” to help developing countries reach their goals of slashing carbon emissions and adapting to climate change. (China plans to contribute to another fund, rather than the United Nations’ Green Climate Fund that other countries have agreed to back. The US has pledged $3 billion to the Green Climate Fund.) Crucially, China and the US will also agree to a common system of reporting and transparency for greenhouse gas emissions ahead of December’s high-stakes climate negotiations in Paris, and there will also be diplomatic language announced about the goals for a Paris accord.

The announcement by the White House ahead of tomorrow’s state dinner is also fascinating for what it says about the statecraft of Xi’s historic visit to the US. Climate action is vital to both Obama and Xi at this crucial juncture ahead of the Paris talks, and this public commitment counterbalances thornier issues such as the militarization of the South China Sea and cybersecurity, on which China and the US share far less common ground. “They’ve been working on it pretty hard, and it’s part of the few bright spots in the overall China-US relationship,” the person who was briefed by US officials told me. “So this is an area they have been collaborating and found some common ground.”

“This seems like a pretty significant contribution and hopefully will build momentum towards Paris,” the source said. “This is not going to resolve everything, but it’s an important signal between the two biggest players.”

Tech CEOs among guests at state dinner for China

A high-wattage collection of Hollywood studio chiefs and technology big-wigs convened at the White House Friday for a state dinner in honor of Chinese President Xi Jinping, even as cybertheft of American trade secrets remains a major point of contention between Washington and Beijing.

The White House invited marquee names from Silicon Valley, including Apple CEO Tim Cook and Facebook founder Mark Zuckerberg, to sit at the dinner's head table alongside President Barack Obama and President Xi. Disney CEO Bob Iger and DreamWorks chief Jeffrey Katzenberg were also seated at the President's side.

Facebook boss Mark Zuckerberg and his wife, Priscilla Chan, arrive for a State Dinner for Chinese President Xi Jinping on September 25.

The four CEOs lead companies doing billions of dollars of business in China -- with the exception of Zuckerberg, whose Facebook is officially banned in the country. Apple has long produced components for its products in China, but is now seeking to expand its sales to the country's rapidly growing consumer market. Iger, meanwhile, is preparing to open Disney Shanghai, the company's first park in mainland China.

U.S., China say they won't engage in cybertheft.

Earlier Friday, Obama greeted Xi with all the trappings of a formal state visit, including a 21-gun salute on the South Lawn. Ahead of the dinner, the President and First Lady Michelle Obama -- wearing a black off-the-shoulder gown designed by Chinese-American dressmaker Vera Wang -- welcomed the Chinese leader and his wife with a red-carpet ceremony.

Chinese President Xi Jinping's wife Peng Liyuan, first lady Michelle Obama, Chinese President Xi Jinping and President Barack Obama pose for a formal photo prior to a state dinner at the White House, September 25.

But even amid the pomp, shouts of protest could be heard in the distance, as groups demonstrated against China's treatment of Tibetans, Uighurs and other persecuted groups. Among the guests invited to the dinner was the China director for Human Rights Watch, a nod by the White House to the groups working to expose abuses by the Chinese government.

Food served at state dinners typically incorporates elements of both U.S. cuisine and the host country's own fare. On Friday, however, the menu appeared largely American, including poached Maine lobster and Colorado lamb. Hints of Chinese cuisine included rice noodle rolls and panna cotta fried in tempura batter.

In China, VPN internet access tools suffer further disruptions

Internet services that allow people to freely access blocked websites and apps from within China have seen more severe disruptions this week, said three providers, moves that Chinese state media said were justified.

The services affected include popular Virtual Private Network (VPN) providers Astrill, StrongVPN and Golden Frog, which are engaged in a technological arms race to one-up China's highly sophisticated Great Firewall internet censorship system.

"This week's attack on VPNs that affected us and other VPN providers is more sophisticated than what we've seen in the past," said Sunday Yokubaitis, president of Golden Frog.

Chinese internet analysts said internet services should observe the network governance of the country "for safety," according to the Global Times, an influential tabloid published by the ruling Communist Party's official People's Daily newspaper.

A cyber security expert at a government-backed Chinese think-tank told the Global Times that China's Great Firewall "has been upgraded for cyberspace sovereignty", in a rare acknowledgement in state-run media of the country's efforts to block technical workarounds to the firewall.

Attacks and blocks on foreign internet services have become increasingly common in China. Censors maintain a tight grip on what can and cannot be published online to eliminate anything seen as a threat to the ruling Communist Party.

VPNs allow individuals and companies to access websites and services that are normally blocked in China, including those operated by Google Inc, Facebook Inc and Twitter Inc.

Almost all foreign and many domestic companies in China use VPNs to conduct business relatively unimpeded by disruptions to web services. The services that have seen disruptions recently are widely used by individuals, largely affecting mobile devices.

A notice from Astrill this week said that certain VPN protocols are "blocked in almost real-time" in China.

StrongVPN said on its blog that some of its servers were not working for users in China. Golden Frog, which operates the service VyprVPN, also reported heightened disruptions in recent past days.

Hua Chunying, a spokeswoman for China's Foreign Ministry, said she had not seen reports related to the VPN disruptions and was not aware of the specifics.

Uber to launch carpooling service for commuters in China

Uber has grand expansion plans in China, and it's chosen the country as its testing ground for a new carpooling service.

The San Francisco-based ride-hailing service on Tuesday announced the launch of UberCommute, a service that will connect drivers who commute long distances with passengers heading in the same direction to share the cost of the journey. The service will make its debut in Chengdu, China, but Uber ultimately plans to expand it to markets around the world.

"When people can push a button and get a ride in minutes, they are less likely to drive themselves," Uber said in a blog post. "Instead of 30 people using their own cars, you have one car serving them all."

UberCommute, the ride-hailing service's first major product launch outside the US, underscores China's growing influence in the technology world. The country's massive population of 1.35 billion and growing middle class have created a lucrative market for companies to capitalize on.

Highlighting that opportunity, Uber CEO Travis Kalanick announced earlier this month that the company plans to spread its service to 100 additional cities in China within the next 12 months -- twice the number of cities Uber previously said it would enter. In June, Kalanick reportedly sent a letter to investors that said the company planned to invest more than $1 billion for its China expansion during 2015. He called the company's growth there "remarkable and unprecedented."

Despite Uber's heavy emphasis on expansion in China, it hasn't necessarily been a smooth ride. The company, which pairs passengers with drivers via a smartphone app, has faced resistance from regulators and competitors. Transportation authorities have reportedly conducted raids at two of the company's offices in China ass part of a broad crackdown on illegal taxi services.


The new service could help it better compete with local taxi-hailing company Didi Kuaidi, which is estimated to control the vast majority of the local ride-hailing market share. Uber is currently in 20 Chinese cities, according to Reuters, while Didi Kuaidi is in more than 300. That competition is likely to intensify after Didi announced a partnership last week with Uber rival Lyft that will link the two companies' apps, enabling passengers to use their usual app while traveling abroad just like they would at home.

UberCommute works much like the company's popular ride-hailing app. After signing into the app, drivers indicate where they are heading. The app then pairs drivers with passengers who have requested rides in the same direction, as well as showing them how much payment they will receive. The driver then has the option to accept or reject the ride request.

Uber, highest-valued venture-backed company in the world with a valuation of more than $50 billion, enters a carpool market that has gained tech attention of late. Google confirmed in July that its Waze navigation app is running a "limited trial" of a new carpooling service in Israel called RideWith that connects drivers on their way to work with potential riders. BlaBlaCar, a French startup that finds vacant seats in cars for passengers traveling long distances, has raised $200 million, giving it a valuation of $1.6 billion.

China market: Intel to strengthen presence in mobile CPU market via ODMs and white-box vendors

Intel reportedly will step up its cooperation with ODMs and white-box makers in China to strengthen its presence in China's handset market. Some vendors will launch 3G smartphones built using Intel's quad-core solutions in the third quarter of 2015 and release 4G LTE models in the fourth quarter, according to industry sources.

Intel will provide ODMs and white-box makers with turnkey solutions, which many include chipsets, reference designs, software and developing tools for production of mobile devices - an approach similar to that used by MediaTek and Qualcomm, indicated the sources.

Under the cooperation pacts, more China-based ODMs and white-box makers have recently released smartphones, tablets and other mobile devices based on Intel's SoFIA X3 platform, the sources indicated.

Intel has begun volume shipments of its 3G dual-core C3130 chips to support the production and is expected to begin volume production of its quad-core C3230 solutions soon, said the sources.

Intel's more advanced chipsets supporting LTE technology and Ultra HD (4K) displays are likely to come at the end of 2015, the sources added.

China-based vendors that have adopted Intel's solutions include BYD Electronic, Yuko Technology, Water World Technology and Bluebank Communication Technology, revealed the sources.

The majority of Intel's solutions support Android platforms and some support Windows 8 currently. Intel is scheduled to releases chipsets supporting Windows 10, the sources added.

China's 'Great Cannon' can intercept and redirect web traffic

Alongside the Great Firewall, China has been developing a new way to intercept and redirect internet traffic, according to a new report from Citizen Lab. The report looks at the recent denial-of-service attack against Github, which flooded the site with bad traffic for five days, resulting in intermittent downtime. China's cybersecurity administration had been suspected as the source of attacks, but the new report lays out the evidence in more damning detail, showing the redirection occurring as traffic enters China Telecom, indicating it is part of the same infrastructure as China's Great Firewall.

The attack on Github worked by tampering with an analytics script that the Chinese web giant Baidu distributes. Anyone visiting a site with the script would normally send back data to Baidu and receive a reply, but the Cannon intercepted that data in transit, inserting a new script that would blast Github with bad traffic. It isn't the first time the tactic has been used, but it's the most high-profile example, and it put China's new web powers on full display. The same tactics could also be used to inject malware into any unencrypted communication with the Chinese web, including ads or analytics scripts, in a stealthier version of a network injection attack.

The report was possible in part because the attack against Github went on for days, long after Github's mitigation efforts had blunted the attack. That gave researchers a chance to run tests and assess what triggered the Great Cannon injections and what didn't. At the same time, the duration of the attack suggests China didn't care about keeping the Great Cannon secret, and may have been showing off the new weapon as a kind of deterrent. A denial-of-service attack against a popular American site is also one of the most visible ways to deploy the tool. "I would assume China would’ve had this sort of capability," said ICSI's Nicholas Weaver, one of the report's lead researchers, "but I would’ve also assumed that they wouldn’t want to broadcast this to the world."

Many have already called for US retaliation for the Github attack — with one researcher describing it as "attacks by a nation state against key United States internet infrastructure." The NSA has similar capabilities through the QUANTUM program, revealed by Edward Snowden, but it has never used them in such an aggressive and public way. Still, the existence and nominal secrecy of those programs may make it difficult to go after the newly revealed weapon through diplomatic channels.

Still, it's unclear how the rest of the web might blunt the Great Cannon's power going forward. HTTPS encryption can be used to protect against the attack, but the Chinese government strongly discourages HTTPS among Chinese companies for just this reason. As a result, the biggest blow may be to companies like Baidu as they seek to integrate with the global web. Baidu was a tempting target for the Great Cannon because its analytics script was so widely used — but now that the capabilities of the Great Cannon are public, sites may be more wary of using code that might be vulnerable to it. That would be bad news for Baidu, but also any Chinese companies looking to serve ads or other plugins to the rest of the web.

Intel Celebrates 30 Years of Investment in China by Doubling Down

Intel is the boss. If you want a processor and you want some brand flash and you want it to be fast, you go to Intel. Well, Intel has never been one to sit on its laurels, so the brand is making huge strides into the IoT ecosphere and shaking the ground. Like a boss.

One of its key areas of focus is in China, like everyone else, because it’s smart. On April 8, the brand began its Intel Developer Forum (IDF) in Shenzhen, China, where it is celebrating 30 years of innovation partnerships in that country. Intel CEO Brian Krzanich in his keynote announced a number of additional investments and collaborations in the M2M space that will reap dividends in the global IoT for years to come.

Krzanich said it is critical for the company and its developer partners to stay ahead of the rapidly rising technology curve in order to be successful in industries from mobile devices to wearables and the IoT.

The first big launch was the Intel Firmware Engine, which is a free graphical tool for building system firmware for tablets, IoT and embedded devices. Firmware is the basic software needed to initialize platform hardware and launch operating systems. The advantage is that building boot architecture is time consuming and not very creative, and now Intel has made it possible to get products to market that will work across a variety of OS faster and easier for its customers.

In partnership with China-based Rockchip Electronics, Intel also announced an expansion to expand the functions of its upcoming Atom x3 processor for use with M2M devices. Krzanich said the Intel Atom x3 processor had been initially designed for entry-level tablets, phablets and smartphones but its scope now will be expanded with the addition of 3G and LTE processors for the IoT space. The processor will have an extended temperature range for extreme weather conditions, support for Linux and Android, and seven years of extended product lifecycle support. Developer kits will be available in the second half of this year.

Other announcements included the unveiling of Intel’s Mass Makerspace Accelerator program that aims to find and fund China's next generation of global entrepreneurs, from makers and students to developers and startups, via an investment of almost $20 million.

Other highlights of the IDF were the use case studies that Intel humblebragged about throughout, including how customers Vantron and BII Group worked together to incorporate Intel-based IoT gateways into the Beijing Friendship Hotel to gather sensor data and create a smart building that consumes less energy and that the company is working with TransWiseway, a Beijing traffic information service provider for vehicle monitoring and management solutions, to create an end-to-end commercial vehicle telematics platform based on Intel® Quark technology.

Intel is also planning an IoT Lab in Beijing, to be established in partnership with the Strategic Alliance of Smart Energy Industrial Technology Innovation (SASE) and BII Group. The lab will use Intel tech to develop cloud-based M2M energy efficiency solutions.

It’s been an exciting few days for Intel, but the real news will be hitting in the next few months and years as these announcements bear fruit. And the rest of the world bears witness.

Four Chinese Supercomputing Orgs Named on US Blacklist

We were alerted to a story that could have major ramifications for international supercomputing with the publishing of a report in VR-World yesterday, titled “Uncle Sam Shocks Intel with a Ban on Xeon Supercomputers in China.” The article was also published on the TOP500 site.

Citing an unnamed source familiar with the matter, the staff-bylined piece related that several Chinese supercomputing centers have been placed on the United States “Denial List,” which prevents “high technology from the USA” to be sold to these sites.

The affected sites, according to the article, are Guangzhou Supercomputer Center, National University of Defense Technology in Changsha, Tianjin Center, “among others.”

While we await confirmation from the parties involved, we uncovered that four Chinese organizations, including the ones referenced in the article, were placed on the Entity List on February 18, 2015, meaning that they’ve been “determined by the U.S. Government to be acting contrary to the national security or foreign policy interests of the United States.”

Published by the Bureau of Industry and Security (BIS), the Entity List notifies the public about persons or organizations that have engaged in activities that could result in “an increased risk of the diversion of exported, reexported or transferred (in-country) items to weapons of mass destruction (WMD) programs.”

The main claim of the Bureau of Industry and Security’s End-User Review Committee (ERC) is that the National University of Defense Technology, which used US-manufactured parts to produce the Tianhe-1A and Tianhe-2 supercomputers located at the National Supercomputing Centers in Changsha, Guangzhou, and Tianjin, is believed to be engaged in activities related to nuclear explosives.

The pertinent information can be found in the Federal Register (Vol. 80, No. 32, page 8524):

“The ERC determined the following four persons being added to the Entity List under the destination of China have been involved in activities contrary to the national security and foreign policy interests of the United States. The ERC determined that the National University of Defense Technology (NUDT), the National Supercomputing Center in Changsha (NSCC–CS), National Supercomputing Center in Guangzhou (NSCC–GZ), and the National Supercomputing Center in Tianjin (NSCC–TJ), all located in the People’s Republic of China, meet the guidelines listed under § 744.11(b): Entities for which there is reasonable cause to believe, based on specific and articulated facts, that an entity has been involved, is involved, or poses a significant risk of being or becoming involved in activities tha​t are contrary to the national security or foreign policy interests of the United States and those acting on behalf of such entities may be added to the Entity List pursuant to this section. Specifically, NUDT has used U.S.-origin multicores, boards, and (co)processors to produce the TianHe– 1A and TianHe–2 supercomputers located at the National Supercomputing Centers in Changsha, Guangzhou, and Tianjin. The TianHe–1A and TianHe–2 supercomputers are believed to be used in nuclear explosive activities as described in § 744.2(a) of the EAR.”

Apple takes smartphone crown in China

Apple has stolen the No. 1 spot in smartphone sales in urban China from local rival Xiaomi, according to market researcher Kantar Worldpanel ComTech.

For the three months that ended in February, Apple's iPhone 6 was the top selling phone in urban China with a market share of 10.2 percent, up from 9.5 percent for the prior three months. The iPhone 6 Plus was the third best-selling phone just behind Xiaomi's Android-based RedMi Note in second place. With the two new iPhones as well as older models selling robustly in China, Apple jumped to the top spot with 27.6 percent market share overall, Kantar said Wednesday.

As the world's largest smartphone market with almost 520 million users, China is prime territory for Apple and other mobile phone vendors. Apple aggressively pursued deals with China's three major mobile carriers, including top carrier China Mobile, to bring the iPhone to the country. China-based smartphone rivals, such as Xiaomi, have typically held the upper hand by offering high-quality phones at low prices. So Apple's rise in China is a clear sign of the appeal of the iPhone 6 and 6 Plus.

"There has been a strong appetite for Apple's products in urban China seen since the launch of the iPhone 6 and 6 Plus, and this has continued into Chinese New Year," Kantar Worldpanel research chief Carolina Milanesi said in a statement. "China Mobile's subscribers accounted for 59 percent of the 27.6 percent volume share recorded by iOS in the latest period."

Apple also made some headway against Android in France, Germany, Italy, Spain and the UK. Over the three months ended in February, Apple's smartphone market share climbed by 2.9 points in those five countries, while Android's share fell by the same amount. Still, Google's Android OS by far remained the dominant platform with a 67.6 percent share compared with Apple's 20.9 percent.

"In Great Britain, as Samsung prepared the channel for the arrival of the new flagships Galaxy S6 and S6 Edge, sales of the Galaxy S5 grew slightly over the previous period and captured 8.7 percent of smartphone sales, keeping this model as the second best selling smartphone after the iPhone 6," according to Kantar Worldpanel ComTech Europe business unit director Dominic Sunnebo.

Consumers who chose the iPhone 6 cited such factors as the phone's reliability and durability and its attractive design. Those who opted for the Galaxy S5 pointed to its reliability and durability as well but also said it was a good deal based on the contract.

In the United States, Apple's smartphone share inched down to 38.8 percent for the three months that ended in February, compared with 39.3 percent during the same period last year. But the iPhone 6 was still the best selling iPhone across the US. Buyers of the 4.7-inch iPhone 6 mentioned screen size as the No. 1 factor, followed closely by 4G LTE support. Among those who went for the 5.5-inch iPhone 6 Plus, 70 percent cited screen size as the top reason.

Climate change: China official warns of 'huge impact'

Climate change could have a "huge impact" on China, reducing crop yields and harming the environment, the country's top weather scientist has warned, in a rare official admission.

Zheng Guogang told Xinhua news agency that climate change could be a "serious threat" to big infrastructure projects.

He said temperature rises in China were already higher than global averages.

China, the world's biggest polluter, has said its emissions of gases that cause climate change will peak by 2030.

However, the country has not set a specific target for cutting emissions of the gases, mainly carbon dioxide.

'Emphasise climate security'

Mr Zheng, the head of China's meteorological administration, said warming temperatures exposed his country to a growing "risk of climate change and climate disasters".

He said temperature rises in China had already been higher than the global average for the past century.

These are rare admissions from a Chinese official, BBC Asia analyst Michael Bristow says.

China's leaders have acknowledged the damage from global warming but they usually do not lay out the full scale of the problems.

Mr Zheng warned of more droughts, rainstorms, and higher temperatures, which would threaten river flows and harvests, as well as major infrastructure projects such as the Three Gorges Dam. He urged China to pursue a lower-carbon future.

"To face the challenges from past and future climate change, we must respect nature and live in harmony with it," the Xinhua news agency quoted him as saying.

"We must promote the idea of nature and emphasise climate security."

China and the US together produce around 45% of global carbon emissions.

Leaders from the two countries are taking part in a summit in Paris this year that will aim for a global deal to cut carbon emissions by 2020.

China's decades-long pursuit of rapid economic growth has boosted demand for energy, particularly coal.

Scientists fear that pledges made so far to cut emissions will not be enough to avoid the harmful impact of climate change.