Friday Asia Update: Top Five Stories for the Week of August 7, 2015

Rachel Brown, Lincoln Davidson, William Piekos,  Ariella Rotenberg, Ayumi Teraoka, and Gabriel Walker look at the top stories in Asia today.

1. China to embed Ministry of Public Security units in Internet companies. Cybersecurity police units will soon be posted within major Internet companies in China, in order to more quickly and effectively prevent criminal activities such as fraud, online theft, and rumormongering. The move is especially direct for a government that largely expects companies to comply with censorship regulations and already employs millions of microblog monitors. In recent years, China has tightened oversight over social media and websites in a push to rewrite the rules of the global Internet, and lawmakers are currently reviewing public comments to a new cybersecurity law that gives the government extensive ability to control the flow of online information. The announcement also comes at a time of tense relations between the United States and China over cybersecurity, after a determination by the Obama administration to retaliate for the recent Office of Personnel Management cyberattack, though not publicly attributed to Beijing.

2. Japan keeps its cool in response to United States spying allegations. WikiLeaks released documents last Friday alleging that the National Security Agency (NSA) had conducted surveillance on the phone lines of top officials in the Japanese government, including Prime Minister Shinzo Abe. According to the documents, the NSA was able to gather sensitive information about internal deliberations on trade issues and had been conducting the surveillance since 2006. Japan’s response has been muted, a direct contrast to similar cases in Germany, France, and Brazil, whose governments responded with outrage when it was revealed that the NSA had been collecting data on their leaders. The Abe Cabinet only called the allegations “deeply regrettable,” and Liberal Democratic Party Secretary General Sadakazu Tanigaki said that leaders today need to make “statements on the assumption that wire-tapping does happen.” Although Abe asked U.S. Vice President Joe Biden to investigate the allegations, Japan may be seeking to downplay the spying issue because it is aiming to strengthen its alliance with the United States, and Abe is seeking to pass controversial security legislation by the end of September.

3. China’s central bank to regulate online finance. Last Friday, the People’s Bank of China (PBOC) released draft regulations for Internet finance platforms, a $1.28 trillion industry of online payment and wealth management tools that’s been driven by the rapid growth of ecommerce in China in recent years. The proposed rules would cap payments at 5,000 RMB ($800) per day, prohibit peer-to-peer payments, and require users to register their real names to access the services. Instead, PBOC wants people to go through state-owned banks for online transactions, claiming this will be more secure for users. The rules are open for public comment until August 28. Chinese citizens have so far responded with outrage, and China’s Internet regulators may not be on board with the rules, either.

4. Pakistan’s military courts empowered to pass death sentences on civilians. On Wednesday, Pakistan’s Supreme Court ruled that secret military courts are legal and permitted to sentence civilians to death. After Taliban gunmen massacred 134 children at an army-run school in December, Pakistan’s military courts were given the authority to put suspects on trial by way of a constitutional amendment passed in January. Advocates at human rights organizations such as Human Rights Watch are critical of this decision by the Supreme Court and see it as further undermining the civilian justice system, which is already rife with corruption and delay. Chief Justice Nasir-ul-Mulk noted in his decision that the court did not have the constitutional power to strike down amendments made by the Pakistani Parliament but the military court decisions could be subject to judicial review in a normal court.

5. Apple loses top spot in China mobile market to Xiaomi. The Chinese technology company Xiaomi had the largest share of the Chinese smartphone market in the second quarter of 2015, displacing Apple from the top spot, which it had occupied for the preceding two quarters. Huawei, another Chinese firm, ranked second, while Apple ranked third. Although Xiaomi only began selling smartphones in 2011, it has grown rapidly through its use of social networks for advertising and online sales. The decline in Apple’s share was partially attributed to the recent launch of new products by both Xiaomi and Huawei, while Apple last released a new smartphone in October. China is the world’s largest market for smartphones. Recently, however, sales have begun to slow as many Chinese consumers already own smartphones.

Bonus: A hard week for the baijiu industry in China. More than 5,300 bottles of baijiu, a fiery Chinese grain liquor, were confiscated by food safety officials in Liuzhou, Guangxi, after the bottles were found to have been laced with Sildenafil, better known as Viagra. The distillers claimed the baijiu had “health-preserving qualities.” “Reduces blood pressure, improves sleep,” proclaimed one label, while another claimed the liquor was made with “Chinese herbs.” Sales of Viagra increased 47 percent in China last year after a campaign by Pfizer to educate the public about erectile dysfunction.