The Economist wrote an astute analysis of the Chinese Communist Party earlier this year that called the Chinese leadership “confident, but they are nervous bunch.”

Indeed, they are. Nervous and edgy in normal times of any kind of challenge to the Party’s authority or legitimacy, they are now deeply concerned with controlling public perception of the democracy protests sweeping though the Middle East.

The first sign of their vigilance became evident during the protests in Egypt, whereby they blocked the word “Egypt” from internet searches and online commentary. Standard Operating Procedure for China’s internet censors.

Now, the Chinese government is taking steps to ensure that any type of similar protests calling for democratization are suppressed and prevented in China. According to reports, many news correspondents working in China for a variety of news organizations are being harassed, detained for questioning, and even beaten in one case. According to many of them this kind of treatment is unprecedented.

See the recent NYT article China Tracks Foreign Journalists.

According to one of the journalists in the article, this kind of treatment is unprecedented.

An excerpt from the NYT article describing the extent of China’s domestic security apparatus and their monitoring activities is below:

On Sunday, about a dozen European and Japanese journalists in Shanghai were herded into an underground bunkerlike room and kept for two hours after they sought to monitor the response to calls on an anonymous Internet site for Chinese citizens to conduct a “strolling” protest against the government outside the Peace Cinema, near People’s Square in Shanghai.

In Beijing, several plainclothes officers planted themselves on Saturday night outside the home of an American correspondent who was severely beaten by security officers the previous week as he sought to cover a similar Internet-inspired protest there. Seven officers in two separate cars then trailed the reporter to a basketball game on Sunday, recording his trip on video the entire time, correspondents said.”

That’s what foreign journalists are encountering for looking into an a “strolling” protest that may or may not materialize.

Just yesterday, Wen Jaibao, China’s Premier, addressed the National People’s Congress gathering in Beijing, effectively their version of our State of the Union address, and stated the following:

We will strengthen and improve the system of public security. We will improve the contingency response system, and enhance society’s capacity to manage crises and withstand risks. We will intensify our information security and secrecy, and improve management of information networks. We will improve all facets of public security, and be on high alert for and crack down on all kinds of crime in accordance with the law.

Props to Patrick Chovanec at An American Perspective from China for highlighting this. Nice blog template by the way.

In essence, we can expect the Chinese leadership to stop at nothing in order to suppress any form of public descent or disagreement with the regime.

The largest risk facing China is that eventually, one-party rule in China will end.

Whether or not financial markets are discounting this is not evident to me and perhaps investors should take the threat of nationwide protests as seriously as the Chinese leadership.

Be sure to check out Out of Mao’s Shadow (Amazon) by Philip Pan, the former Beijing bureau chief of the Washington Post. Hi book is amazing overview of China’s ragtag democracy dissidents and all they are doing to reform their country for the better. Inspirational and sobering at the same time.

How the Communist Party decides to act when their own citizens do rise up against them will be the true test of their character. Let’s hope their true colors are more akin to Hosni Mubarak and the Egyptian Military themselves, rather than Qaddafi and the ruthlessness he personifies.

Rudolf Elmer plans to hand over secrets of the rich and famous to WikiLeaks (The Guardian)

Energy Efficiency Proves Unattractive for Policy Makers in Europe (NYT)

Is Law School a Losing Game? (NYT)

Solar Panel Maker Moves Work to China (NYT)

U.S. Retail Sales Hit All-Time High in December (The Atlantic)

Can Europe Be Saved (Paul Krugman)

Fed Officials Saw Housing Bubble in 2005, Didn’t Alter Policy (Bloomberg)

The coming green car pileup (Financial Post)

Avoiding a U.S.-China Cold War (Washington Post)

How Wall Street Blew It in China (WSJ)

America’s Aging Infrastructure: What to Fix, and Who Will Pay? (Knowledge@Wharton)

Generation Y getting hard finance lessons early (MSNBC)

Thailand Rises From the Ashes (RealClearWorld)

They Don’t Come any Greener than Obama (SpiegelOnline)

Hiding From Reality (NYT)

The Irish problem (The Economist)

Tight Employers: Frugal or Counter-Productive? (Ritholtz)

Trina Solar: solar power goes through the roof (The New Economy)

In China’s Orbit (Niall Ferguson)

China buys up the world (The Economist)

Ireland’s young flee abroad as economic meltdown looms (UK Guardian)

How to Make the Dollar Sound Again (NYT)

Municipal Bond Market Shudders (NYT)

Why Rising Yields Aren’t Bad for Bonds (Barron’s)

U.S. Stocks with Emerging-Market Returns (Bloomberg Businessweek)

QE2 and the Titanic (Michael Pettis)

GM IPO Draws $60 Billion in Orders—6 Times Offering (CNBC)

Dirty Coal, Clean Future (James Fallows @ The Atlantic)

Courts Helping Banks Screw Over Homeowners: Retired judges are rushing through complex cases to speed foreclosures in Florida (Matt Taibbi @ RollingStone)

The upcoming release of China’s new national energy strategy seems similar to what the U.S. Senate is debating- incentivize and lean towards renewables and efficiency, but keep the stuff that is providing the majority of the electricity supply, which is coal. China has abundant domestic supplies of coal and will continue to make good use of them going forward.

As far as oil is concerned, China is well aware of its need to secure petroleum supplies abroad. The central plank of China’s foreign policy throughout much of Africa, Central Asia and Middle East amounts to a grand strategy designed around a pressing need to secure oil and natural gas. Pipelines from Turkmenistan, Kazakhstan, Iran and Russia enter China from the East, while state-backed Chinese firms sign infrastructure deals with numerous African counties in exchange for minerals, petroleum or other natural resources.

At the same time, China spent twice as much the United States on renewable energy generation last year and is now the world’s leading manufacturer of solar panels, wind turbines and other critical renewable technologies.

The reason for this is that the Chinese government is able to achieve fast, effective results through top-down, highly scaled policy implementation. The Chinese government recognizes the importance of shifting away from fossil fuels and has made a conscious decision to do so. In the meantime, they will not sacrifice their economic growth and need for energy in the process.

In the United States, we are constrained by our politicians. In a recent article in Politico, Jay Rockefeller, the Junior Senator from West Virginia said,“The Senate should be focusing on the immediate issues before us – to suspend EPA action on greenhouse gas emissions, push clean coal technologies, and tackle the Gulf oil spill. We need to set aside controversial and more far-reaching climate proposals and work right now on energy legislation that protects our economy, protects West Virginia and improves our environment.“

Sen. Rockefeller is a known supporter of President Obama and was an outspoken advocate of the “public option” during last year’s health care debate. When it comes to tackling an issue that would would be unpopular in his own West Virginia coal country, he is predictably unenthusiastic. The story is the same with many other politicians throughout the country, who on a personal basis may believe in the merits of a climate bill, are unable to support it politically because of their own electoral prospects.

This is where China will kick our ass in renewable energy. The Chinese government acts through deliberation and consensus. Once a decision is made, it happens.

While the Chinese will achieve admirable renewable and efficiency targets, they will remain dependent on petroleum and coal, just like the United States.

An energy bill in the U.S Senate that prices carbon with incentives for efficiency and renewables would be ideal. As China finalizes and implements their new energy plan, I’m afraid they will already be there.

Security Tops the Environment in China’s Energy Plan,
Keith Bradsher, New York Times, June 17, 2010

Jones Lang LaSalle: 15% Building Energy Efficiency ‘Not Rocket Science’ (Environmental Leader)

Ford Agrees to Sell Volvo to a Fast-Rising Chinese Company (NYT)

China Leads in Clean Energy Investments (NYT)

Reputation Is Dead: It’s Time To Overlook Our Indiscretions (Tech Crunch)

Is China a Bubble? (Barry Ritholtz @ The Big Picture)

Right off the bat, I think we have to applaud Google for making the courageous decision that they have. I’m not sure if there is any other corporation out there that could have executed such a thoughtful, precise and ultimately moral action, the way Google has.

What the world’s leading search engine has done for itself from a marketing perspective is not insignificant. They are now seen as a company with courage and principle, achieving incredible brand equity and international trust along the way.

Choosing to walk away from the the largest and fastest growing internet market in the world, in Google’s business, takes balls.

From a raw corporate strategy perspective, this decision may be a disaster. Poisoning the well with the Chinese government is not good for business if you want access to all of the internet users and mobile phones that are growing every day over there. Google has chosen to embarrass the Chinese Politburo in a very public manner, and the fallout from their actions have yet to be seen.

But Google is a bit different, I think, when it comes to corporate decision making. Before going public, they said that they were not a normal company and that they did not intend to be. Cheers, guys.

Clearly, people like Sergey Brin have significant moral problems about serving as an enabler to Chinese government censorship, an ethic that I share. Google has decided that that is is not willing to cooperate with a regime that selectively controls information, a policy that in intractable with Google’s core mission to be the most effective intermediary between all information on the internet and all people, regardless of whatever that information may be.

It is a bold decision, one that sets a strong example for other large multinationals operating in China.

The results are twofold, and only benefit Google. Google pulls far ahead of the pack in terms of burnishing its reputation as a strong corporate citizen that is indeed living up to its slogan, “don’t be evil.” Secondly, the Chinese government is embarrassed at such a high profile dust-up over its censorship policy. The average Chinese person on the street might be wondering, “Why is it absolutely crucial that search terms be controlled?”

For Venture Capital, Efficiency is in Vogue (NYT)

Junk Bond Avalanche Looms for Credit Markets (NYT)

Lehman Whistle-Blower’s Fate: Fired (WSJ)

China: This Year the Dragon Slows (Seeking Alpha)

China’s Cyberposse (NYT)

US may be headed for long decline. You don’t have to follow (Christian Science Monitor)

Obama ramps up push for energy-efficiency program (CNN)

Obama’s new adversary (Fortune)

Happy Stuff…

50 Depressing Facts About The Healthcare System That Will Make You Beg For Reform (Business Insider)

Treasury Reiterates Commitment on Fannie, Freddie (WSJ)

Comparative Unemployment Graph during recessions courtesy of Clusterstock:

Asia’s Boom Conceals Some Darker Prospects (NYT)

China becomes a net coal importer in 2009 (China Daily)

Cyber Evil Will Thrive Without Global Rules — Good Luck With That (Epicenter @ Wired)

E.P.A. Plans to Phase in Regulation of Emissions (NYT)

Majoring in Debt: Average College Grad Now Owes $23,000 (Huffington Post)

Yuan hits new high against US dollar (China Daily)

The Top Ten States for Wind Power:

via Fast Company:

Good news on the wind energy front: new statistics from the National Renewable Energy Laboratory (NREL) show that previous estimates of U.S. wind power resources actually underestimated the amount of energy available. The new statistics estimate that onshore wind power could generate 37,000,000 gigawatt-hours (GWh) each year–nine times the amount of energy required to power the country. NREL also ranked the top 10 states with the highest wind potential as follows:
Top 10 wind potential states State MW of wind turbines GWh each year of wind power Texas 1,901,530 6,527,850 Kansas 952,371 3,646,590 Montana 944,004 3,228,620 Nebraska 917,999 3,540,370 South Dakota 882,412 3,411,690 North Dakota 770,196 2,983,750 Iowa 570,714 2,026,340 Wyoming 552,073 1,944,340 Oklahoma 516,822 1,788,910 New Mexico 492,083 1,644,970

We still have a long way to go before the U.S. meets its full wind power potential. The country currently has an installed capacity of 35 GW, but its total potential is over 10,000 GW. In other words, it’s time to start building.