U.S. Ambassador Jon Huntsman spoke with a trusted tech source last January who told him the Beijing government is in “technologically-aggressive state of mind” in its dealings with Google and other Western Internet companies. He said

growing Chinese  pride, economic clout and influence, and the “weakened” position of the U.S. and its allies after the global economic downturn, are emboldening the Chinese to take ever more aggressive positions in advancing its innovative industries at the expense of foreign ones.

This state-to-corporation harassment is not going to stop.

The Wikileaks documents released in the past few days revive that question, first posed  in 2006 when the search engine entered China, by revealing  the hardball tactics that Beijing’s communists use to bring Mountain View’s capitalists to heel. One Google executive, worn down by three years of Chinese harrassment, told a U.S. diplomat that the company might consider leaving China, a comment quoted in this July 2009 cable. With company co-founder Sergey Brin already going public with his qualms, Google’s Chinese future seems in doubt.

The cables reveal how Beijing relentlessly pressurizes Google to achieve its economic and political goals.

–Use of the media: When the Chinese government charged that Google was failing to filter pornographic Web sites from its search results, there were at least 57 negative articles in the Chinese media  before Google had a chance to respond. These stories have damaged Google’s brand in the Chinese market.

–Manipulation of the private sector: When Google refused to remove a link to Google.com, its uncensored search engine, from its Google.cn site, which is censored, the government told three leading Chinese telecommunications firm to void existing contracts  and cease negotiations with Google, dealing a blow to the company’s mobile device estrategy.  Google’s share of traffic in China has suffered.

–Selective hacking. During the Chinese Communist Party’s annual meeting in 2007, Chinese hackers diverted searches from Yahoo and Google to Baidu, the Chinese search engine. For example, search for “Dali Lama” was sent to Baidu which reported it could find “no  information on your request.”

The cables showed that Google preferred to enlist U.S. government support rather than complain publicly about such incidents. With the diplomatic channel showing little success, senior Google executives, including Brin, have  to decide if they can live with these realities.

There is zero possibility that the Chines government will change its behavior.  Google controversially acceded to the  government’s demand that it censor its China-based search engine. In response to the latest Chinese demands, Google dropped the Google.com link but installed a link to another uncensored site, Google.hk, which as you can see, could not be more prominent on Google.cn.

But in larger perspective, Google’s cat-and-mouse moves amount to a strategy of appeasement which, however sincere, has not impressed or deterred China. The Times reported yesterday that senior Chinese officials, initially worried that the Internet could undermine their grip on power, have concluded that “the Web is fundamentally controllable.”

So the ultimate question raised by the Wikileaks cables is: Will Google participate in (or acquiesce to) Beijing’s campaign control the Web in the world’s largest country?

Would that be good for Google’s bottom line ? Probably.

Would it be good for Google’s brand and self-respect. Probably not.

GM and its ventures in China sold 199,641 vehicles last month, up 20 percent from the year before. That took its sales for the first 10 months of the year to 1,976,913 vehicles — a gain of 36 percent….

So even as America protects its manufacturing base, the dominant market power of China is felt. In the alternative universe known as mainstream American politics this will perhaps be cited as proof that Obama’s administration’s success in Detroit is a victory for Maoist socialism.

–via Sydney Morning Herald.

Economic Times of India: Roubini’s all wet. “What bubble?”

Regulators need to curb credit –Anoop Singh in Shanghai Daily