From the U.S. Department of Commerce blog:

U.S. Commerce Secretary Gary Locke traveled to Los Angeles, Calif., today for the second stop of the New Markets, New Jobs small business outreach tour.  Joined by Los Angeles Mayor Antonio Villaraigosa and USC Marshall School of Business Dean James G. Ellis, Locke discussed the importance of exports to America’s economic recovery and job creation, and the resources that the government is providing to connect local small- and medium-sized businesses with foreign buyers, especially those from the Asia-Pacific markets, in order to help them sell more overseas and hire more at home.  

Announced on the one-year anniversary of President Obama’s National Export Initiative, New Markets, New Jobs is a year-long, interagency, multi-city outreach campaign designed to proactively bring government services to businesses across the country that are interested in exporting.  The tour was launched in Minneapolis in February, and will continue on to New Orleans, Louisiana in April and Wilmington, Delaware in May.

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.

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.