In an ordinary week, an agreement about the Diaoyu / Senkaku Islands, a disputed area that has triggered a series of standoffs between China and Japan in recent years, would have been big news.

Such an agreement was signed this week, albeit not between China and Japan –rather Japan and Taiwan, which also claims the islands as part of its territory, have reached a deal that will allow Taiwanese fisherman to use the majority of the Japanese-controlled zone around the islands.

Although the deal is framed as an interim agreement, delaying resolution of claims of ownership, it promises to change the dynamics of the East China Sea.  It removes the main source of friction between Taiwan and Japan but creates a variety of problems for the Chinese government, which fears both diplomatic isolation on territorial issues and a revival of Taiwan's diplomatic status. It could also signal an important strategic shift as China's eastern neighbors borrow an approach from the Philippines and Vietnam.

The deal has significant advantages for both Taiwan and Japan: it significantly expands the reach of Taiwan's fishermen, which is a boon for the island's economy, and starts the area on a road toward a sharing agreement such as those proposed by President Ma Ying-Jeou and former Vice President Annette Lu.  Japan will no longer have to deal with protests from Taiwanese fishermen, who have been a frequent cause of tension, and will pull Taiwan toward its side of the issue.

Immediate reaction from Beijing has focused on the issue of Taiwan's status.  Comments from the foreign ministry reminded Japan of a commitment to respect the "One China" policy, while the Global Times criticized Taiwan for ingratitude: "Although there has been no open cooperation between the mainland and Taiwan on the Diaoyu Islands issue, tacit understandings do exist. The strong stance from the mainland side in safeguarding the sovereignty of the islands has undoubtedly strengthened Taiwan's status in its negotiations with Japan."

For mainland observers, this was the second time in as many months Japan has acted to undermine its policy towards Taiwan – the last being a commemoration of the second anniversary of the Fukushima disaster during which Taiwan's representative was treated as an ambassador.

The agreement also deprives the mainland of a rare issue on which it can position itself as a defender of Taiwan's rights – until now, the mainland navy has gleefully stressed its willingness to protect Taiwanese fisherman from the Japanese Coast Guard, and Beijing has proposed the islands as an area for cooperation with Taiwan.

The islands no longer seem ripe for cooperation – in fact, the head of Taiwan's Coast Guard said on Wednesday that Taiwanese ships will help Japan to keep mainland trawlers out of the disputed area, raising the prospect of an embarrassing mainland China-Taiwan standoff.

But China also has reasons to worry about its own claim to the islands.  If Japan and Taiwan can come to a compromise, they may be able to cast the mainland as the unreasonable party standing in the way of resolution, thus winning international support.

Taken together with the Philippines' bid for international arbitration in the South China Sea, this agreement risks making China a territorial pariah.  Jerome Cohen, a distinguished expert on Chinese law, argued at a recent event that the two cases suggest a trend toward using international law as a "defensive weapon" by East Asian countries concerned about being overwhelmed by China.

Cohen said that Japanese officials have floated the idea of taking the case to the International Court of Justice in recent months – a move which seems pretty farfetched, as it would first require Japan to recognize that there is a dispute.  But, Cohen said, the threat of using international law may constrain China, which frequently cites its respect for bodies like the ICJ and UNCLOS in efforts to build its soft power – often contrasting its role in UN peacekeeping missions with the U.S.' willingness to fight wars without Security Council clearance.  However, appealing to international law would risk Japan's losing some or all of its claimed territory.  But this week's agreement suggests that such a calculus may appeal to Japan's current leaders.  It may be that they care more about keeping China from getting the islands than keeping them for Japan.

The SARs outbreak in 2002 – 2003 was a significant turning point in China’s development.  Initial attempts to cover-up the outbreak in southern China were partially blamed for the disease’s spread to the rest of the world via Hong Kong. Eventually, Beijing had to issue an embarrassing apology and change its methods of dealing with such health crises. During the outbreak though, SARs caused many people to leave the country, and indeed those of us in China in 2003 can vividly recall ubiquitous face-masks and an eerie lack of foreigners in cities such as Shanghai and Beijing.

Since then, bird flu and swine flu outbreaks have been dealt with a much greater degree of openness and professionalism.  The latest version of bird flu to emerge in China is known as H7N9. Fears surrounding its spread and distrust of official disclosure have already begun to weigh heavily on market sentiment in Shanghai.  Following the Tomb Sweeping Holiday in China, Shanghai markets opened down nearly 2% on Monday morning, which many attributed to the rising concern about H7N9. Although the market eventually rallied to close down just 0.6%, a brief look at the main gainers during the day shows a conspicuous number of pharmaceutical and biotech companies such as Zhejiang Shenghua Biok Biology, Jiangxi Changjiu Biochemical Industry, Guangzhou Pharmaceutical, Henan Taloph Pharmaceutical and Nanjing Pharmaceutical.  Clearly, the virus (and possible beneficiary companies in the event of its spread) was on the market’s “mind.”

The “river pigs” scandal near Shanghai has yet to be properly explained, but given a further discovery of dead ducks in a different river, and the ability of other flu viruses to cross species between birds and swine, it hasn’t taken long for people to begin (rightly or wrongly) drawing connections between the two phenomena. High feed prices have apparently made hog-rearing a profitless exercise for many farmers, and the pig carcasses could be related to the slaughtering of loss-making herds, although the question would then turn to why the farmers dumped the meat rather than sell it even at low prices.

At the time of writing, mainland China has 21 confirmed cases of H7N9, with 6 deaths and 12 patients with severe symptoms, according to the most recent update from the World Health Organization. Yet lingering doubts about Chinese disclosure at a local level – a natural concern given the SARs cover-up – along with ongoing distrust of China’s official media, provides ample space for conspiracy theories— such as that the virus is a U.S. bio-psychological weapon as one military officer claimed— to take hold.  

However, a new burst of face-mask clad people will not be such an unusual sight this time around, for it has already been a difficult year for health in China. Record levels (at least acknowledged levels) of pollution in January, February and March already garnered much media attention. So widespread was the discussion that face-masks once again became common sights on the streets of some Chinese cities even before fears of H7N9 spread.

At this point, there are no signs that H7N9 has caused a flood of expats and well-off locals out of China along the lines of what occurred during the SARS outbreak, but HR departments in China’s major cities are almost certainly closely monitoring the situation.  Furthermore, even if the H7N9 virus turns out to be less serious than some fear, the ongoing problems with food safety and pollution will probably continue to push some of those who can leave to do so.  

After all, if H7N9 were to reach a tragic death toll of 400,000+ people per year, few who didn’t have to stay in China would do so. Yet the World Bank has reportedly estimated that almost double that amount of people die prematurely each year in China from pollution related illness.

“Brain Drain” afflicts a country when the best and brightest of a country opt to use their talents abroad. China, with its latest flu outbreak but more importantly its appalling environmental situation, may well be on the cusp of coining a new term; perhaps “health drain,” with the negative economic effects that such a phenomenon would entail. 

James Parker has lived in Beijing for eight years and has worked at both foreign and domestic financial institutions. He is also engaged in consulting in the areas of international economics and international political risk, and teaches post-graduate finance courses for various UK Universities. He is currenly a writer for The Diplomat's Pacific Money blog.

There’s a key reason real estate is hot in China--it’s one of the few investment options available to Chinese citizens. The stock market is super volatile, interest rates on savings accounts lag behind inflation, and there are significant overseas investment restrictions. Regarding the latter, citizens are allowed to send $50,000 a year out of China for “current account transactions” such as tourism, but not for “capital account transactions” like most types of investment. There are several investment products allowed, including foreign currency-denominated financial products issued by foreign commercial banks and the gold trade, according to WantChinaTimes, but they are limited. 

However, the Wall Street Journal estimates that from September 2011 to September 2012, $255 billion left China--3% of China’s economic output for that period.   If Chinese want to invest overseas, there are a number of ways to do it. One very popular method is to set up a corporation to channel funds abroad, though corporate income taxes are levied.  There are also a spate of quasi-legal methods, such as using “underground banks” (which are straight-up illegal), and other methods detailed in Quartz including: exchanging gambling chips in Macau; getting foreign currency to pay fake foreign invoices; and buying art and selling it for foreign currency. The WSJ comments that a cottage industry has developed to get money out of the country, including money-transfer agents and private jets, and adds other money-moving methods such as corporate bank transfers that include private money and private funds rolled into export and import transactions. 

There has been an effort on the part of the government to expand investment opportunities.  In 2006, the central government launched the QDII (Qualified Domestic Institutional Investor) program, which allowed citizens to buy securities in overseas market, but via asset managers and funds.  In 2007, the “through-train” program provided an opportunity for citizens to invest in Hong Kong stocks, but was ended in 2010, in favor of the QDII program, according to the State Administration of Foreign Exchange (SAFE), and also over fears that it would hurt the mainland stock markets.  The QDII program was expanded in 2008 to allow investment in U.S. stocks.

On a less encouraging note, a pilot investment program launched last year in Wenzhou and Tianjin that allowed for direct overseas investment lasted just a short time. The pilot program in Wenzhou permitted $200 million of investments, albeit with such restrictions as no investment in property, stocks, or in any countries without diplomatic ties to China. SAFE allowed the program for just 2 weeks, after which it was cancelled, potentially because of inter-agency power conflicts, according to some analysts.

Last April, SAFE commented that it would open more channels for capital outflows and allow for increased overseas investment.

This spring, speculation was rife on the topic of the QDII2 program, which would allow for direct overseas investment, but for now, will likely be limited to allowing investors to participate in the Hong Kong stock market, according to The South China Morning Post. In a January 2013 work report, the People’s Bank of China stated that the QDII2 initiative is a “major goal” for 2013. 

However, the enthusiasm about QDII2 is measured--analysts believe that it would have a limited impact due to the length of time it would take to develop and the fact that the investors the program is trying to attract are most likely already invested in the Hong Kong market, again according to SCMP  Analysts also cited the brief tenure of the “through train” program as a reason for caution.

Capital outflow reforms have thus come in fits and starts, but the overall trend is certainly toward a more open system, which is fitting, considering that capital outflows occur anyway through semi-legal and illegal means.  This area is something to watch as the new leadership becomes more comfortable and more able to effect policy changes, particularly since Xi Jinping has a reputation for pro-market liberalization.  What happens in this arena will significantly impact other areas such as the currency and the balance of international payments.

The Organization of Petroleum Exporting Countries (OPEC) said in a report this week that it now expects China to overtake the U.S. in terms of oil imports next year. The report estimates that China will be importing 6 million barrels a day (bpd) by the end of the year, and that U.S. imports—which declined by 21 percent in 2012—will drop below the 6 million bpd mark in 2014. The report also said that China may have to import as much as 60 percent of its oil needs this year.

This is a dramatic turnaround from 2011 when the U.S. imported 8.7 million bpd compared to just 5.5 million bpd from China, according to the U.S. Energy Information Administration. The EIA also writes that oil made up less than 20 percent of China’s total energy consumption in 2009, with the overwhelming bulk of its energy (70 percent) coming from coal.

As Chinese leaders have long understood, the country’s explosive growth in foreign oil dependency creates stark vulnerabilities. Indeed, many analysts believe that Beijing’s investments in seaports along the greater Indian Ocean are part of a “string of pearls” strategy that could ultimately see the PLA Navy actively patrolling the area in order to ensure the protection of oil tankers transporting supplies to China from the Middle East and parts of Africa.

Furthermore, some believe that China’s interest in laying claim to the entire South China Sea is driven in part by the oil reserves the waters are believed to hold. Indeed, as production from Beijing’s onshore oil fields has peaked the country has expanded its offshore exploration and production, which is currently around 15 percent of its total oil production.

At the same time, with the U.S. quickly becoming energy self-sufficient, and EU energy demand likely to remain stagnant or even decline as a result of greater efficiencies, alternative energy sources, and slow economic growth, China could come to have a dominant presence on the demand side of global oil markets. This is especially true if India’s expected growth rates are not realized.

In this case China’s reliance on foreign oil could be matched by large oil-exporting nations’ dependence on China as a customer. Whereas China will purchase its oil from many different sources some countries may become increasingly unable to lose Beijing as a customer.

Even Russia is becoming increasingly reliant on China as an energy customer. According to a deal signed during Xi Jinping’s recent trip to Russia, a copy of which was obtained by Bloomberg News, Russian oil giant, Rosneft, has agreed to more than double its exports to China in exchange for US$ 2 billion in oil-backed loans. Starting in 2018, Rosneft has agreed to furnish China with at least 37 million metric tons of oil a year (743,000 barrels a day) for the next 25 years.

As a result, China—which was just Russia’s fourth largest oil export market in 2011— will become Russia’s largest oil customer in five years. China already became Russia’s largest trading partner in 2010, and in 2011 bilateral trade reached a record high of US$80 billion.

Russia is the largest energy exporter in the world and its economy remains extremely dependent on these sales. According to a December 2012 report by the European Bank for Reconstruction & Development, oil and natural gas now account for 70 percent of Russia’s exports and over half of its government budget, up from the 1990s when oil and natural gas were less than 50 percent of the country’s exports. Altogether commodities made up as much as 92 percent of Russia’s exports in 2011, according to the EBRD report.

With the shale revolution in North America and greater output in Iraq likely to drive down energy costs in the years and decades ahead, this dependency puts Russia in a precarious position. As Georgy Bovt, a Russian political analyst recently put it, Russia is quickly becoming China’s favorite junior partner.

A good way to directly or inadvertently start a trade war with China would be to take on the economic development goals expressed in the Five-Year Plan. After all, China's leaders see continued economic growth as the key to their survival. 

Conscious that massive investment in heavy industry is unsustainable, Party planners have focused for years on “innovation.”  In the future, they believe, China must change from manufacturing goods for multinational companies to selling products developed by Chinese companies under Chinese brands.  Thus, China's leaders hope to avoid the “middle income trap” and a prolonged recession that could fatally undermine the legitimacy of the Party.

After the first five years of the “indigenous innovation” policy, it has become known in the international business community as a massive scheme for protectionism and technology theft.  Dealing with its impact remains a top priority for American trade negotiators.  But a few Chinese companies have emerged as global brands during this period, establishing a niche in international markets as reliable low-cost alternatives – PC maker Lenovo, the appliance company Haier, and the network equipment manufacturers Huawei and ZTE.

So the way that the U.S. has dealt with Huawei and ZTE, pillars of China’s economic development, over the past year is remarkably ill-advised.  Friday's Wall Street Journal suggests that American regulators are taking a page from China's protectionist playbook – using vague national security concerns, secret hearings, and behind-the-scenes pressure on private companies to exclude Chinese competitors from American markets.  This is hardly consistent with Washington’s efforts to open Chinese markets to American IT equipment – an issue which dominates.

Most recently, U.S. regulators have pushed Japanese and American telecom operators Softbank and Sprint to swear off using Chinese-made equipment as a condition of their proposed merger. The move was driven by concern about Chinese hacking and intellectual property theft.  This follows a move by Congress two weeks ago that added language to a budget resolution strongly discouraging government agencies from buying IT equipment from companies “owned, directed or subsidized by the People's Republic of China.”

As the Journal shows, the decision in the Sprint-Softbank deal was suggested by the national security apparatus, and doesn't appear to have followed any set rules – it differs from the deal worked out by the Federal Communications Commission  in the T-Mobile/Metro PCS deal also under negotiation.  Federal officials have evidently settled on a ban that isn't a ban:

“Because of concerns about violating trade rules, any constraints wouldn't specifically exclude gear from Huawei, which Softbank has used in its home market of Japan, or ZTE, a person familiar with the process said. Nor would they explicitly give the government a veto, this person said. But U.S. officials have made no secret of their distrust of the Chinese companies and are aiming to make sure their equipment doesn't become a core part of U.S. telecom infrastructure, the people said.

"You have to find a way to say, 'Don't buy from the Chinese,' without saying, 'Don't buy from the Chinese,' " said a person who has spoken with Sprint.”

The national security concerns may well be justified. Still, given the available public evidence – the net effect of the Sprint-Softbank vetting procedure is likely to be undermining many of the United States' top priorities with China.  Using non-transparent processes to avoid World Trade Organization rules will only confirm widespread Chinese suspicion that American talk of international norms is a tool to constrain Chinese development.  Huawei is a particularly critical example – as one of the champions of China's current development goals, it is a high priority for China's leaders.  If global rules cannot protect it from backhanded treatment, Beijing is much more likely to give up on global trade agreements and turn to tit-for-tat protectionism.

Government meddling in the procurement decisions of private companies undermines another key goal of our relationship with China: reaching an agreement on the government procurement protocol of the WTO, under which governments that are party to the protocol agree not to discriminate against other members’ companies in sourcing.  China's accession to the Government Procurement Agreement, however, has been held up for more than a decade by legal technicalities regarding the question of State-Owned Enterprises.  China would prefer not to consider them as part of the government, which would allow them to keep “buy Chinese” policies, while the U.S. argues that their role in carrying out public projects makes them part of the government.  If the American government can ban private companies from using Chinese products in infrastructure, that severely blurs this line.

The U.S. should not have to compromise its national security to uphold free trade – but following China's example is not the way to do it.  Rather, it should develop transparent procedures that allow companies like Huawei and ZTE to clear their names – and which can serve as models for procedures American companies could deal with overseas. 

Hundreds of billions of dollars of U.S. trade are at stake with these issues: U.S. companies have struggled for years to overcome protectionist measures loosely justified by national security (a report from the U.S. Trade Representative covers China's restrictions on foreign IT) – in the IT field, Microsoft, Google, and Intel, have all been cast as possible American Trojan horses, while cultural exports like Hollywood movies and Facebook contend with the charges of ideological infiltration – in Chinese eyes, another form of national security.

Huawei and ZTE are national champions, and the Chinese state has frequently proved willing to bend over backwards on their behalf in domestic affairs.  Their access to the U.S. market could be a huge step for China's development goals – which could give Washington substantial leverage to get concessions on free trade or security issues.  But to get those concessions, the U.S. will have to show that it is negotiating in good faith – and to convince China's leaders that its concerns about security are not excuses to exclude China from its market.

Every Wednesday, The Diplomat’s editorial team scours the web to find the best material on all things China. From Beijing’s relations with its neighbors and growing military might, to a rapidly evolving economy and amazing arts and culture, we present a diverse grouping of articles for your reading pleasure.

Here is our top pics for this Wednesday. What did we miss? Want to share an important article with other readers? Please submit your links in the comment box below!

 -The big news this week was the emergence of a new variant of H7N9 bird flu in China. Two individuals have already died from the disease and at least five others have been infected. Currently authorities do not believe the disease is transmitted by humans. In political terms this development immediately conjures up images of the SARS epidemic that took place early on in the Hu-Wen administration.

- Could Sino-Japanese relations be on the mend? The two sides have begun  their first unofficial cultural exchanges since bilateral relations deteriorated after Tokyo announced plans to nationalize the Diaoyu/Senkaku Islands in September of last year. This weekend former Japanese PM Yasuo Fukuda is expected to meet with Chinese President Xi Jinping at a regional security forum.

     - In February Daryl Morini outlined six ways Chinese and Japanese leaders can dial down tensions in the East China Sea.

- Many news organizations are reporting on a recent study that found that 1.2 million Chinese died prematurely in 2010 from outdoor air pollution. This constituted 40 percent of the global total. Public concern over pollution has been growing in China in recent months.

     - There are signs the government has been proactive in addressing the issue. The Climate Institute’s 2013 report on G-20 nations’ green energy policies, which was released in late March, found that China was among the top five countries best positioned to compete in a low-carbon economy. This was partially due to the fact that China boasted over half of worldwide public equity investment in clean energies.

     -For analysis on how China’s new leaders may address environmental issues see Greenpeace China’s Li Shuo & Monica Tan’s recent piece in  China Power.

- Deng Yuwen, deputy editor of the Study Times, a weekly journal published by the Central Party School, told South Korean media this week that he was relieved of his position as deputy editor and suspended from the school after he wrote an op-ed in the Financial Times arguing that China’s relationship with North Korea was “outdated.”

      - For more on China’s North Korea diplomacy, see Joel Wuthnow’s recent piece on how Beijing handled negotiations over the most recent UNSC sanctions against Pyongyang.

-  Beijing and Shanghai outlined new rules aimed at curbing property prices. Beijing’s municipal government said it planned to finish construction  on 70,000 affordable housing units in the city this year. Shanghai’s local government also said that it hopes to complete 10,000 affordable housing units in 2013.

     -Creating affordable urban housing is crucial to Premier Li’s goal of accelerating the pace of urbanization.

- Bonus: Xi Jinping made his first foreign voyage as China’s president last week. Here are some interesting primary documents and official coverage.

     - Transcript: Xi Jinping’s pre-trip interview with BRICS nations media.

     - Transcript: Vladimir Putin and Xi Jinping’s remarks following bilateral talks.

     - Transcript and Video: Xi Jinping’s speech in Tanzania.

- Full Text: Joint Communique Between The Republic of South Africa and the People's Republic of China

- Full Text: Fifth BRICS Summit Declaration and Action Plan

- China’s Foreign Ministry Recap of Xi’s speech to the Parliament of the Republic of Congo.

Since taking over as party chairman Xi Jinping has repeatedly invoked the theme of the “Chinese Dream,” which heralds “the great revival of the Chinese nation.”

The phrase should probably be seen as the conceptual framework for Xi’s presidency. Indeed, coining such a phrase has become something of a formalized tradition in China. Under Hu Jintao, for instance, the concept of the “harmonious society” sought to capture Hu’s aims of building a moderately prosperous and more inclusive society. On the other hand, Jiang Zemin’s “Three Represents” signaled an opening up of the Party to business and other important societal groups that were empowered through Deng Xiaoping’s own ideological contribution to Party lexicon: “reform and opening up.”

An interesting characteristic of Xi’s term, which will no doubt be studied ad nauseam within CCP circles, has been its instant international exportability. During his first trip abroad, for example, Xi gave a speech in Tanzania laying out his idea of “Africa Dream,” which entailed, among other things, “unity and achieving development through rejuvenation.” In the same speech Xi also spoke of a “world dream” that was aimed at achieving “enduring peace and common prosperity”  

The degree to which such a term might take hold in foreign countries should not be underestimated, especially in Africa, where China has been engaged in a charm offensive for over a decade. Terms such as “win-win” and “harmonious relations” have already been drawn on extensively by African leaders in recent years.

One of the reasons Xi’s concepts of “World Dream” and “Africa Dream” have more appeal in Africa as opposed to countries like Britain or the United States is because they are bound up with the growing economic influence China now exercises over Africa. In short, such terms are not merely hollow slogans but rather embedded within dense capital flows manifested in very tangible things such as roads, railways and refineries. They are also behind more symbolic structures such as the new African Union building in Addis Ababa, which was constructed by the Chinese for US$200 million (it is worth noting that the very auditorium where Xi gave his “Africa Dream” speech was also built using Chinese capital).

In certain respects, it comes across as misguided to criticize Xi’s “Africa Dream.” Chinese investment over the past decade has coincided with an all-round boom in African economies and the country’s policy of “non-interference” has been welcomed by African leaders long used to the meddlesome policies of the former Western colonial powers. The vision of an African Dream aptly captures the optimistic spirit of a continent on the rise, growing internally while also gaining a modicum of freedom in its relations with the outside world.

However, African states would do well to be cautious in embracing Xi’s African Dream wholeheartedly. As innocuous as “Africa Dream” sounds, it signals a shift in which Beijing is pushing a revised form of its internal ideology on African countries. While the dissemination of such as term might result in policies that produce some domestic growth and rejuvenation in Africa, there is also the danger that it will come to resemble the CCP’s vision of the dream.

To understand the reason why one needn’t look any further than the tri-annual Forum on China-Africa Cooperation (FOCAC), a platform often presented as a meeting of equals where talk of peaceful co-existence and harmony abounds. But the asymmetry of power is obvious, essentially highlighting the interface between 54 sovereign and sometimes fractured states and one tightly organized and largely unitary one. The unbalance is sometimes reflected in pure formalities. For example, at last year’s forum in Beijing former President Hu stood tall in the Great Hall of the People while African leaders fawned over him. The ceremony was followed by Hu pledging US$20 billion in credit to African nations.

Again, it can be argued that such assistance has the potential to benefit African countries immensely - and indeed it can - but the nature of the forum highlights how Beijing, the vast economic powerhouse, determines the rules of the engagement. The fact that such conditions are presented as the meeting of equals, merely reflects Beijing’s desire to portray it as such.

The underlying point is that Xi’s notion of an “African Dream” has the potential to spread voluntarily, or through coercive measures, or not at all. What it should not become however, is a blanket term embraced by elites in ways which render resistance or criticism to it as having an anti-Chinese bend. To do so would be to condemn Africa to playing a supporting role in China’s dream on its own continent.

Ross Anthony is a reserach fellow at the Centre for Chiense Studies, Stellenbosch University

David Bandurski, editor of China Media Project, recently translated an article that Sun Liping—a sociologist at Tsinghua University who served as President Xi Jinping’s dissertation advisor— has published harshly criticizing the Hu administration’s decade in power, and even comparing China under their administration to North Korea.

Sun begins the article by noting that when Hu first took over power in 2002 there was hope among Chinese that he would further open up the system, and a number of incidents in the earlier part of his tenure seemed to confirm he would.

“But then,” Sun continues, “without explanation, the new administration lowered its banners and muffled its drums. It studied the ways of North Korea. Control and stability preservation (维稳) become the salient priority, and this approach was relentless.”

In considering possible explanations for this crackdown, Sun comes to focus, interestingly enough, on the 2008 Beijing Olympics. According to Sun the preparation for the international sporting event marked the beginning “of the ascendance of the stability preservation regime in China.” As a result:

“In the 21st century, China’s two most obvious characteristics have been the inflation of power (权力膨胀) and the failure of power (权力溃败), and the way the two of these have woven together. The process of the strengthening of the government’s capacity to extract resources, which had already begun before, concentrated more and more money in the hands of the government [during this decade]. And he who has wealth speaks loudest.”

The rest of the article is available on China Media Project’s website here, and is well worth the read (as are Bandurski’s insights preceding the article).

The gist of what Sun goes on to argue is that after the Beijing Olympics the leadership began touting all the great things China was capable of, even as interest groups became more powerful, social inequality rose, and the government became “utterly helpless” of doing anything to rectify the situation. Instead, the Hu administration merely tried to preserve regime instability in the face of it. However, Sun contends, “Preservation of this sort, has preserved China right down into the gutter.”

It was no April Fools’ Day. Taiwan on April 1 strengthened monitoring measures at its ports of entry after Chinese health authorities confirmed on March 31 that two Chinese had died after contracting a lesser-known type of H7N9 avian influenza (Bird flu) and another was in critical condition. Though there are no signs of an epidemic but the cases are a reminder that nontraditional threats, not ballistic missiles or fifth-generation aircraft, are most likely to negatively affect large numbers of people in this densely populated and highly mobile part of the world.

Two men from Shanghai, aged 87 and 27, died from H7N9 in early March within two weeks of falling ill, while in Chuzhou, Anhui Province, a 35-year-old female patient remains in critical condition after contracting the disease. Chinese health authorities have noted that those are the three first known cases of H7N9 infection worldwide.

According to the World Health Organization, which is closely monitoring the situation, there is no evidence that H7N9 can be transmitted from person to person. It adds that H7N9, about which little is known, is a low pathogenic strain of avian flu — a claim that would be supported by China’s National Health and Family Planning Commission, which said there were no signs of infection among the 88 people who had been closest to the patients in the past months.

Chinese authorities are trying to determine how the three individuals, who did not appear to have been in contact with one another, contracted the disease. The 87-year-old man died on March 4, while the 27-year-old died on March 10. The Shanghai Health Bureau said on April 1 that the two victims had a history of chronic illness, but did not provide specifics.

Later on Monday, the commission, which had yet to provide much in terms of specifics, said that two sons of one of the victims from Shanghai also suffered from acute pneumonia, though the source of the infection remained unknown.

Although some Internet users in China complained that the government had “gambled with people’s lives” by taking more than a month before reporting news of the cases, health authorities said it had needed time to confirm that the cases involved the new strain of the avian flu. Chinese scientists only confirmed on Friday that H7N9 was involved in all three cases.

The commission, meanwhile, said the female patient had a history of contact with poultry and that the 27-year-old victim was a butcher, suggesting transmission of the H7N9 subtype may occur from animals to humans. According to the U.S. Centers for Disease Control and Prevention (CDC), most H7 subtype viruses seen in wild birds and poultry globally are low pathogenic avian influenza. The CDC adds that while H7 virus infection in humans is uncommon, it has been documented in persons who have direct contact with infected birds, especially during outbreaks of H7 virus among poultry. Some experts have speculated that the deaths in China could be an indication that the H7N9 strain had morphed to become more lethal to humans.

The Shanghai Daily reported the same day that hospitals across the city had been ordered to monitor patients with respiratory illnesses. Hong Kong is also reported to have increased checks.

There is no vaccine for H7N9, though Taiwan’s Centers for Disease Control says the disease can be treated with Tamiflu.

Although there are no known cases in Taiwan, the island’s CDC stepped up precautionary inspections at all its ports of entry on Monday and intensified monitoring of passengers from China, Hong Kong and Macau.

Amid growing ties between the two sides, China has become Taiwan’s No. 1 source of tourism, with approximately 2.58 million arrivals in 2012, up from less than 1 million just three years earlier. Furthermore, as many as 1 million Taiwanese businesspeople are based in China, mostly in the Shanghai region, resulting in high demand for cross-strait flights.

The rapidly growing exchanges between the two countries, compounded by the liberalization of Taiwan’s laws on Chinese tourists and the launch of direct cross-strait flights in recent years, also provides an opportunity for disease to travel that did not exist — at least not to this extent — just a decade ago, when both China and Taiwan were among the countries affected by the Severe Acute Respiratory Syndrome (SARS) outbreak. The slow response by Chinese authorities at the time, partly due to initial attempts to conceal the scope of the outbreak, are believed to have been a factor in the virus’s ability to spread to other countries.

A total of 775 people died worldwide of SARS between November 2002 and July 2003, with 8,069 infections. Thirty-seven died in Taiwan, 349 in China and 299 in Hong Kong, WHO statistics show.

J. Michael Cole is a Taipei-based journalist who focuses on military issues in Northeast Asia and in the Taiwan Strait and is wrtier for The Diplomat's Flashpoints blog. He previously served as an intelligence officer at the Canadian Security Intelligence Service. You can follow him on Twitter: @jmichaelcole1.

People are always looking for a youth movement in China. With an autocratic government, extreme levels of inequality, and a rising degree of gender mismatch that is making it harder to get married, contemporary China has many of the ingredients we associate with political uprisings like the Arab Spring.

Since 1989, international media have flirted with dozens of incipient "next Tiananmens" - some, like the rise of social media, have had major effects on Chinese society, while others, like Ai Weiwei and the "Jasmine Revolution," have proved to be little more than wishful thinking. To a great extent, China analysts have become jaded about disaffected youth stories.

But I want to argue that one of the latest of these, the rise of "diaosi" - or "loser" - culture on the Chinese internet, is interesting enough to deserve close attention from a political perspective. The popularity of this identity among people who do not seem like natural losers is a major challenge for Xi Jinping as he makes his current push for legitimacy on the strength of the "Chinese dream."

The slang term, which is less than two years old, emerged as an insult, occupying a space that should be familiar to Western web users as the close equivalent of "living in your mother's basement" - a shorthand for "you're brave enough in a web forum but who are you in real life?" The Chinese term, which literally means "pubic hair," calls to mind a young graduate working a dead-end job, with little prospect of saving enough to buy a house and a car - basic trappings of middle-class life that are widely seen as essential prerequisites to finding a girlfriend and marriage.

But the way the term has evolved in the past year is what makes it interesting. Like many insults, it was embraced by the people it was meant to dismiss - but diaosi has gone on to become an almost universal identity among Chinese web users. Just among my acquaintances, there are now (all self-described) female diaosi, diaosi working in finance, diaosi doing PhDs at China's top universities - and prestigious universities overseas. It has grown into a decidedly mainstream identity - and the diaosi novel has become a popular genre.

In fact, diaosi-ness has become important enough to people to generate concern about posers – enough so that netizens are creating very specific requirements that one must meet to qualify as a diaosi. There are also websites like Renren that give users "diaosi scores" and fierce debates about whether owning an iPhone makes you a fake diaosi. The fact that owning an iPhone can be both an embarrassment as well as a prized possession should lead us to rethink our assumptions about the materialism of the Chinese middle class.

The only constant about the use of the word "diaosi" is that it is the opposite of a pair of online slang terms that refer to privilege "gaofushuai" (tall, rich, and handsome) for men and "baifumei" (pale, rich, and beautiful) for women. Nobody calls themselves gaofushuai or baifumei. This opposition is the important thing about the rise of diaosi identity - implicit in it is the belief that the prosperity of the last 20 years has gone mostly to a small group of well-connected people.

What is also important is the widespread sense that only diaosi have access to the "authentic Chinese experience." Dispossessed youth have been around in China for a long time, it’s been some time since young people have been defining themselves as among the dispossessed as a matter of choice.

As we watch Xi Jinping trying to inspire the nation with talk of the Chinese Dream, we should also be watching the spread of diaosi identity. It is a view of Chinese society that says the Chinese Dream is for other people— at least as Xi and official China might define it. The Party's good luck has not run out yet, but the diaosi idea may make their audience that much tougher.