News is a speculator's sport In China.

In US, companies generate publicity through news. After all, Sun's own Jonathan is a the skilled player. In China, news, in whatever channels, are messages from the government. For a country with 1.3 billion people, China government uses the media and news wish admirably adroitness. Interpreting news becomes a sport — “Does this mean this or that? When and what will happen according to this news?” My amateur news interpretation career inaugurated few days ago. For beginner's luck, the development seems to have fallen into the path I predicted.

If you are not a regular reader, this is really a follow-up to my earlier entry.

The famed and controversial¹ Carlyle Group has been trying to buy 徐工集团 （dugong, a US$2 billion and largest industrial equipment manufacturer headquartered in 徐州 (XuZhou) the company's namesake). From the start, this is a highly controversial deal. The local government faced pressure to meet its GDP goal.² If the deal goes through, it is going to be billions infused into the local community and it will blow away the GDP “quota” for years.

But 徐工 is not only the largest, it is also in the industrial equipment segment that is key to China's huge and numerous infrastructure public projects. China will tolerate the dependency on on foreign companies to provide the bread and butter industrial machineries for all those constructions. This is bitterly described when 薄熙来 (BO XiLai), Minister of Commerce, was negotiating with EU on textile quota, "We will need to export few billions pairs of socks to balance a single AirBus A380." This painful comment revealed a universal sentiment. China views low cost labor not too far from slavery and colonization (think railroad workers and dock laborers). If China loses 徐工, would it ever be possible for them to get out of this low-cost manufacturing purgatory?

How to balance GDP growth with independence and local brands? Which parts of the value chain are OK to give up? Does the country have a choice? Will it be glory if industries are decapitalized one by one?

The government needs to think and the news media is staging a rare public debate.

¹The Carlyle Group employs the most influential people — George Bush Sr., for example — and is reportedly highly profitable in the politically charged defense industry.

²In China, GDP is heavily dependent on foreign investment and light from consumption. Famous for their frugality, personal savings is among the highest in the world.