That is the gist of an article in today’s New York Times – that nearly 150 years after American railroad companies imported thousands of Chinese laborers to build rail lines across the West, China may once again to play a role in American rail construction. This time, however, they will have a much different role: supplying the technology and engineers to build high-speed rail lines.

The Chinese government has signed cooperation agreements with the state of California and General Electric to help build such lines. The agreements, both of which are preliminary, show China’s desire to become a big exporter and licenser of bullet trains traveling 350 kilometers, or about 215 miles, an hour, an environmentally friendly technology in which China has raced past the United States in the past few years.

“We are the most advanced in many fields, and we are willing to share with the United States,” said Zheng Jian, the chief planner and director of high-speed rail at the Chinese Railroad Ministry.

Governor Arnold Schwarzenegger of California has closely followed progress in the discussions and hopes to return to China this year for talks with rail ministry officials, said David Crane, the governor’s special adviser for jobs and economic growth and a board member for the California High Speed Rail Authority. China is offering not just to build a railroad in California but to help finance its construction, and Chinese officials have already been shuttling from Beijing to Sacramento to make presentations, Mr. Crane said by telephone.

China is not the only country interested in selling high-speed rail equipment to the United States. Japan, Germany, South Korea, Spain, France and Italy have also approached the state of California.

The state’s high-speed rail authority has made no decisions on whose technology to choose. But Mr. Crane said that there were no apparent weaknesses in the Chinese offer and that Mr. Schwarzenegger particularly wanted to visit China this year for high-speed rail discussions.

PayPal, the online payment service provider that is a owned by eBay of San Jose, has shocked Indian nationals who rely on the service by suspending payment transactions to and from India for more than a week. Almost nothing was given in explanation for this abrupt action except a vague blog post on their website by Anuj Nayar, a PayPal spokesman:

Personal payments to and from India and transfers to local banks in India have been suspended while we work with our business partners and other stakeholders to address questions they have about the service

PayPal executives have been unavailable for comment on specific reasons why the service was discontinued. There is speculation that this may have something to do with new Indian government rules aimed at preventing money laundering. Last November, the Indian government introduced rules requiring financial institutions and other intermediaries to verify the identity of clients carrying out international money transfers.

Paypal has not just been blocking all their money transfer but has also not letting the Indian account holders withdraw money they already have in their accounts. For the past week, merchants have been unable to withdraw funds in Rupees to local Indian banks. shocking many Indians who have relyed on the service. The blocking started on January 28th and Paypal will only say that it is working to resolve the current situations in “the shortest span of time.”

California shipments of wine have dropped in 2009 for the first time since 1993. As reported in the San Francisco Chronicle, sales figures show that consumption is up 2.1 percent nationally, but consumers are turning to cheaper imports from Chile, Argentina and Australia as global production exceeds demand.  ”

The numbers announced last week by Woodside wine research firm Gomberg, Fredrikson &amp Associates analyst Jon Fredrikson at the Unified Wine & Grape Symposium in Sacramento. “As we basically had a financial heart attack, people just reined in their spending and were very cautious,” Fredrikson said. “They moved dramatically down to lower price points, below $5 and $7. Small wineries in the North Coast that sell bottles from $25 to $100 were basically shut out. Inventories backed up, and that just made it an ugly year.”

The biggest drop in wine sales is for bottles that retail for more than $20. Sales were off between 20 and 30 percent in 2009, Steve Rannekleiv, an analyst for Rabobank told the Chronicle.  During the same time, sales for wines that cost less than $6 a bottle rose 5 percent.

As consumers have tightened their purse strings, bulk wine imports from countries with lower production and land costs have climbed. Between 2007 and 2009, imports more than doubled to 13 million cases to capture 32 percent of the U.S. market. “Argentina is the sleeping giant,” Rannekleiv said. Argentina has 510,000 acres planted in grapes, compared with 480,000 in California, which produces 90 percent of the wine made in the United States.

Sony Pictures Entertainment Inc., based in Culver City, will be laying off about 450 people and eliminating 100 open positions to cope with declining DVD sales. Most of the cuts at the studio will occur by the first week of March and will be in the home entertainment and information-technology units in the United States.

The company, a subsidiary of Japan’s Sony Corp. also cut back last March, when it laid off nearly 250 people and eliminated nearly 100 open positions. Company staff was informed of the latest cuts in a memo Monday and through videos by the studio co-chairs on an employee Web site. “Our industry is affected by two things: It’s affected by the economy, of course, and it’s affected by technology,” co-chair Amy Pascal says in the video. “Over the last two years, it’s changed people’s DVD buying habits, which has had a huge effect on our company and the industry at large.”

The home video market has been declining as people have not been buying videos as often, and instead turn to rentals, which are far less profitable for the industry.

The hit movie “Avatar” directed by James Cameron of Fullerton, and distributed by 20th Century Fox, of Los Angeles, is being pulled from most theaters in China, apparently because it is so successful.  As reported in the Los Angeles Times, The movie is no longer being allowed in 2D theaters even though is already the most successful movie of all time in China, having grossed a record $76 million.  The Chinese government only allows 20 foreign movies per year to be shown in China’s theaters. “Avatar,” which opened worldwide in mid-December, was held in Chinese theaters until January because the 2009 quota had already been filled.  The movie is already being widely pirated, with copies available in Beijing’s bootleg DVD stores. 

It seems incredibly strange that the Chinese government should be able to pull one of our most successful products just because it is successful, without any repercussions at all from our government.  Should the U.S. now stop the sale of some manufactured goods from China, as soon as they become successful?

Talk about biting the hand that feeds you.  The Alibaba group – owners of the Chinese trade portal Alibaba has strongly criticized Yahoo – its largest shareholder, for siding with Google after a cyber attack on that company.  

As reported in the New York Times, a spokesman for Alibaba, said executives at the company were “angry” because Yahoo appeared to follow Google in suggesting the Chinese government was behind the cyberattacks.  They issued a statement saying that Yahoo was “reckless” in supporting Google because they believed there was a lack of evidence that the attacks were supported by the Chinese government. 

Yahoo is one of the companies that was targeted in the attacks but the company declined to confirm that it was a victim. “The people with knowledge of the situation said that Google contacted Yahoo about the attacks before it publicized them. Google executives were dismayed that other companies were unwilling to publicly acknowledge the attacks, and they were particularly frustrated by Yahoo’s silence” the Times reported. 

Yahoo paid Alibaba $1 billion in 2005 and gave Alibaba control of Yahoo China in exchange for a 40 percent stake in the Chinese company. Yahoo’s investment in Alibaba has paid off in a big way for that company. Alibaba.com, a unit of Alibaba, went public in 2007 with a huge stock offering in Hong Kong and is now valued at $12.5 billion.  Jack Ma, the founder of Alibaba is a celebrity in China because of his success in forcing California’s Ebay to leave the Chinese market, and for taking over Yahoo’s China operations, as part of their billion dollar investment in his company. 

This was a huge amount of capital from a California company that was used to make Alibaba fantastically successful. Now that company is turning on very the people who helped it become what it is.  Is this a simple case of “sucking up” to the Chinese authorities?  Jack Ma is said to be famous for that, and some people even believe he is now milking the resources out of Yahoo so it eventually fails in that country. 

In any event, a consensus seems to be forming that this is a free trade issue.  If the Chinese government blocks Google or other American Internet firms – or forces them to leave that country, the the American Goverment should take the same action with Chinese Internet firms – and it seems like a good place to start would be Alibaba.

China has unilaterally declared that their depute with Google over censorship and strong evidence of government sponsored hacking will not affect U.S. Trade relations, but do they get to make that call?  

“Any decision made by Google will not affect Sino-U.S. trade and economic relations, as the two sides have many ways to communicate and negotiate with each other,” Chinese government spokesman Yao Jian told a news briefing in Beijing.

Well of course the two sides have many ways to communicate with each other – that is not the point. If one party to a trade agreement censors and blocks the content of the other party, then of course it should it should be a trade issue.  In the tit for tat world of diplomacy, if they block the content from one of our companies, then shouldn’t we block one of theirs?

California buys a huge amount of Chinese imports, but they don’t by nearly as many of our exports. One of our strongest industries in the movie industry – but only 20 foreign films are even allowed to be shown in that country each year. The rest of the movies we produce here are simply pirated (i.e. stolen) there, Can you imagine if we said to China, “we will only allow the products from 20 of your manufacturers in our country each year”. Now they are blocking, and possibly even attacking, one of California’s other great industries – Internet services.

It is not at all disrespectful to China to expect our government to respond to blocking and censorship with reciprocal actions that affect Chinese companies. That is how a mature trade relationship works. Mr. Yao Jian has it wrong. This is exactly the kind of thing that should affect trade and economic relations – this is a trade issue.

UPDATE: Evidence that the Obama Administration may be looking at these blocking and censorship issues from a more sensible “fair trade” perspective, might be found in a speech Secretary of State Clinton plans to give on the issue on Thursday. From a column by Andrew Ross in today’s San Francisco Chronicle:

“The Internet is integral to the international trading system,” said Ed Black, CEO of the Computer & Communications Industry Association, who is scheduled to meet with Clinton on the matter this week. “China cannot limit the free flow of information and still comply with its international trade obligations.” “You can’t lecture the Chinese on human rights,” said another industry executive. “You won’t get anywhere with that. So, it’s best to treat it as a trade issue.”

Should the administration go that route, it will enlarge the can of U.S.-China worms already growing around the latter’s increasingly protectionist economic policies. “Greater control of the Internet is part of a wholesale tightening up of the Chinese economy,” said an executive with a high-tech trade organization that is also due to meet with Clinton. “It’s about protecting domestic industries and pushing indigenous innovation. But they’re doing it in blatantly discriminatory, brazenly unfair ways.”

Yahoo, based in Sunnyvale has issued a statement supporting its cross town rival Google in their dispute with the government of China.  Google apparently believes the Chinese government or its spy agencies were responsible for an attack on its technical infrastructure, which targeted the accounts of human rights activists.  Yahoo issued the following statement:

“We condemn any attempts to infiltrate company networks to obtain user information.  We stand aligned with Google that these kinds of attacks are deeply disturbing and strongly believe that the violation of user privacy is something that we as Internet pioneers must all oppose.”

The issue is sensitive for Yahoo because they provided information from their servers to the Chinese government that resulted in long prison terms for two Chinese journalists.  Yahoo is much more entrenched in China however.  They sold their Internet operations to Alibaba – a Chinese trade portal operator, but retained a 39 percent stake in that company.  According to the San Francisco Chronicle, Yahoo spokeswoman Nina Blackwell declined on  to say whether its solidarity with Google would cause the company to sell its Alibaba holdings.

Google Inc. will stop censoring its search results in China and may pull out of the country after experiencing an attack on the email accounts of human rights activists, according to a report in the San Francisco Chronicle:

Google disclosed in a blog post that it had detected a “highly sophisticated and targeted attack on our corporate infrastructure originating from China.” Further investigation revealed that “a primary goal of the attackers was accessing the Gmail accounts of Chinese human rights activists,” Google said in the post written by Chief Legal Officer David Drummond.

Google did not specifically accuse the Chinese government. But the company added that it is “no longer willing to continue censoring our results” on its Chinese search engine, as the government requires. Google says the decision could force it to shut down its Chinese site and its offices in the country.

It’s unclear how much of a blow to its business Google would suffer by pulling out of China. The country has the world’s largest population of Internet users but research firm Analysys International said last year that Baidu.com handled 62 percent of Web searches in China compared with 29 percent for Google.

Update, according to the New York TimesGoogle linked its decision to sophisticated cyberattacks on its computer systems that it suspected originated in China :

Those attacks, which Google said took place last week, were directed at some 34 companies or entities, most of them in Silicon Valley, California, according to people with knowledge of Google’s investigation into the matter. The attackers may have succeeded in penetrating elaborate computer security systems and obtaining crucial corporate data and software source codes, though Google said it did not itself suffer losses of that kind.

While the scope of the hacking and the motivations and identities of the hackers remained uncertain, Google’s response amounted to an unambiguous repudiation of its own five-year courtship of the vast China market, which most major multinational companies consider crucial to their growth prospects. It is also likely to enrage the Chinese authorities, who deny that they censor the Internet and are accustomed to having major foreign companies adapt their practices to Chinese norms.

Pasadena-based eSolar Inc. has signed a deal with a Chinese electric equipment manufacturer to build solar thermal power plants throughout China.  The agreement between eSolar and China Shandong Penglai Electric Power Equipment Manufacturing Co. calls for eSolar to provide the technology and information to build solar farms with a capacity totaling 2,000 megawatts over the next decade.  The first plant will have a 92 megawatts capacity and will be built in 2010 in the Mongolian desert in northern Chinanorthern China at the Yulin Alternative Energy Park.  Plans are for the solar thermal power plants to be co-located with biomass facilities, the companies said in a press release.

Chevron Corp. will work with USAID and another group to support economic development in Angola. The San Ramon-based oil giant will work with the United States Agency for International Development (USAID) and the Cooperative League of the United States of America (CLUSA) on this project. Secretary of State Hillary Clinton witnessed the Memorandum of Understanding (MOU) for the project in Angola’s capital, Luanda. The partnership is intended to support financial, educational, technical and training services to improve the viability of small and medium scale farmers in the southern African state. According to Chevron spokesman Scott Walker, the MOU is an extension to the $56 million Angola Partnership Initiative, created in 2002. The new MOU focuses on agricultural initiatives to increase yield and market share for small to medium scale farmers. Chevron didn’t disclose how much funding it will provide for the program, but itsoil interests in Angola include the Tombua-Landana Project, which is projected to achieve peak production of 100,000 barrels of crude oil per day as of 2011. Read the full story here.

Toyota Motor Corp. has announced that it plans to end production in March 2010 at the Fremont plant it has run with General Motors Co. The Toyota-GM partnership has run the plant since 1984 – Corolla compact and Tacoma pickups are built there. Bob Wasserman, mayor of Fremont expressed disappointment at the news that the 5.3-million-square-foot plant would close: “This is a real tragic loss of jobs, very good jobs, for the workers at NUMMI,” he said. “There are a lot of good people there who will now be out of work. And this impact will be felt well beyond Fremont, considering all of the people employed by suppliers around the East Bay and the Central Valley. This is a very difficult situation.”

Agricultural holding company Yasheng Group reported a $76 million profit for 2008 as part of its goal to be listed on a major U.S. stock exchange, according to a report in the San Francisco Business Times. Yasheng Group is a Redwood City holding company focused on agriculture in China. It has about 15,000 workers. It owns seven agricultural businesses in China that grow products such as onions, potatoes, apples, alfalfa, flax, beets, wheat, apricots, sunflowers, beer barley and cumin. As part of its move towards a major stockmarket listing, Yasheng published its financial results for 2006 and 2007 in January. More on Yasheng Group seeking stock exchange listing

China has blocked the video-sharing Web site YouTube but has not offered any reason or explanation for the ban. Mountain View-based Google, which owns YouTube, said it began noticing a decline in traffic from China about noon Monday.  By early Wednesday, site users insider China continued to encounter an error message: “Network Timeout. The server at youtube.com is taking too long to respond.” “We do not know the reason for the blockage and we are working as quickly as possible to restore access to our users,” said Scott Rubin, a spokesman for Google. It’s not the first time users in China have been unable to access the site. In March 2008, China blocked YouTube during riots in Tibet.

Sony Pictures Entertainment Inc., the movie studio subsidiary of the Japanese electronics maker, is laying off nearly 250 people and eliminating nearly 100 open positions in an effort to cut costs. According to a report in the San Francisco Chronicle, about 150 of those jobs will be in the Los Angeles area:

Chief Executive Michael Lynton and studio co-chair Amy Pascal announced job cuts of 3.5 percent of the studio’s staff worldwide in a staff memo sent out Tuesday afternoon. “Our studio remains profitable, but over the past five months, the deepening global financial crisis has begun to impact some of our lines of business, such as television syndication, DVDs and advertising sales,” they said in the memo. These economic effects have, regretfully, made it necessary to take the step we had hoped to avoid, and worked hard to minimize: reducing our headcount.”

Online video site YouTube will block most music videos in the United Kingdom because talks with a royalty group there failed and an earlier license between YouTube and the group expired. San Bruno-based YouTube, which is owned by giant Google Inc. said the Performing Rights Society for Music asked for too much money in licensing fees, more than YouTube was willing to pay.

Chancellor Angela Merkel of Germany and California Governor Arnold Schwarzenegger jointly inaugurated CeBIT, one of the top annual fairs in the technology industry. CeBIT exhibits computers, software and communications products, mainly for corporate and manufacturing buyers. At the event this year, California has been declared ‘partner,’ an honorary status usually awarded to entire nations.  Schwarzenegger, speaking in both English and German to an invited audience, highlighted California’s advanced computer technology.  “Technology is really our great hope for creating extra revenues and stimulating the economy — especially green technology is where the action is,” said Schwarzenegger.  Speaking in English, our Austrian-born governor said environmental-technology companies represent the only sector of California’s economy that is creating jobs.  Schwarzenegger praised Germany’s commitment to renewable energy and the reduction of greenhouse gas emissions, and attacked economic protectionism. “The world is the marketplace … and the only way we can protect the consumer is if we let the consumer choose from products all over the world no matter where they come from,” he said. The Governor also tried to encourage the executives attending to be more upbeat, “”Losers whine but winners move forward in a strong and powerful way and I know that everyone who is here at the CeBIT is a winner!” In spite of the upbeat speeches, to mood at CeBIT was reported to be gloomy as a result of the worldwide economic slowdown and slump in the computer industry.  This year’s CeBIT has suffered a 25-per-cent slump in exhibitor numbers to 4,300.

As reported in New American Media, San Francisco-based AsiaWeek has stopped publication after nearly three decades of service.

AsianWeek is just the latest in a string of Asian-American media closures, including KQED’s Pacific Time, AZN Television, and the San Jose Mercury News’ Vietnamese-language supplement Viet Mercury. While most cities have trouble supporting one daily newspaper, he said, San Francisco has five Chinese-language dailies, offering not only local and national news, but a dozen pages of international coverage of news from Taiwan, mainland China, Hong Kong, and Southeast Asia.  But just as the mainstream media are being hobbled by declining readership and revenue, hastened by a faltering economy and growth of online media, their ethnic media counterparts are being squeezed too. “There are fewer major newspapers, fewer newspaper readers and fewer newspaper advertisers than ever before,” wrote AsianWeek President
James Fang, and Ted Fang, editor and publisher, in a letter to readers published in the newspaper. In the last few months, a handful of ethnic publications has gone the way of AsianWeek, scrapping paper editions and going online, reaching out to readers for help or pulling the plug completely.
Ted Fang said AsianWeek would continue publishing online and in special newspaper editions. He said, however, that all staff had been laid off. Fang said AsianWeek plans to do more community work, which Fang counted among the newspaper’s greatest “successes.” “Media is a part of bringing together APA communities,” he said. “We plan to organize around events… around issues and causes as a way of helping the community.”

Two Engineers from China have been sentenced to a year in prison after pleading guilty to economic espionage against the United States. The two men – Fei Ye, a citizen of the U.S., and Ming Zhong, a permanent U.S. resident – were facing a maximum of 30 years in prison after confessing to stealing microprocessor designs from their Silicon Valley employers in 2006. They had planned to smuggle the designs to China to launch a government-sponsored startup company there. Their guilty pleas were the first convictions for the most serious crime under the 1996 Economic Espionage Act. Prosecutors asked for a lenient sentence because the men cooperated with investigators – both apologized in court.

Unlike traditional industrial espionage economic espionage means that someone acted to benefit a foreign government and is a more serious crime. Only a few economic espionage cases have been resulted in convictions, mostlybecause it’s difficult to prove a person was acting to benefit a foreign nation. The case against Ye and Zhong began seven years ago, when they were arrested at San Francisco International Airport while attempting to board a flight to China. Their luggage was allegedly full of sensitive documents on chip designs taken illegally from four Silicon Valley tech firms who had employed the engineers. The companies include NEC Electronics Corp., Sun Microsystems Inc., Transmeta Corp. and Trident Microsystems Inc. Both had worked at Transmeta and Trident, while Ye had also worked at Sun and NEC. Other documents seized by authorities allegedly demonstrate the engineers were attempting to solicit money from Chinese government agencies to fund a startup firm.

Prosecutors say the documents showed that Ye and Zhong were promoting the startup as something that would elevate China’s chip-making capabilities, however, the documents do not confirm the Chinese government was aware that the chip designs were stolen.

Online payment service PayPal, a subsidiary of San Jose-based eBay Inc. has announced that it has expanded into Mexico. Mexican buyers will now be able pay for online purchases using their credit cards or bank accounts with pesos as currency. According to a report in the San Jose Business Journal, the peso is the first Latin American currency to be added to the PayPal system. PayPal also enables payments in the U.S. dollar, Canadian dollar, Australian dollar, euro, British pound, Japanese yen, Chinese yuan, Czech koruna, Danish lrone, Hong Kong dollar, Hungarian forint, New Zealand dollar, Norwegian krone, Polish zloty, Singaporean dollar, Swedish krona, Swiss franc and Israeli new shekel. PayPal is now accepted in 190 countries around the world, and the company said users in Mexico can now shop at retailers that include including, Mixup, Sears, Match.com, Blockbuster, Best Day Travel, PlazaVIP, and PC en Linea “PayPal’s goal is to provide consumers a secure, fast and convenient way to pay and get paid online and to give online shoppers in Mexico more places to shop quickly and securely,” said Fernando Moreno, director of PayPal Latin America. “The launch of PayPal Mexico is a significant step towards our next phase of growth.”