China denounces US tech \\\'pawns\\\' as cyber espionage spat deepens

Chinese state media have launched a publicity offensive against Google and other US technology companies as a spat with the US over cyber espionage coincided with the 25th anniversary of the Tiananmen Square massacre.
Google's traffic in China has slowed since Monday, with wired internet access blocked but mobile services still working, while other US tech groups face sanctions and boycotts because of perceived security risks following revelations last year by Edward Snowden, the US National Security Agency contractor.
Every year the government beefs up security ahead of the June 4 anniversary to discourage any commemoration of the events of 1989, though this year's clampdown is stronger than usual, one US group said.
In February Google introduced encrypted search in China, encrypting sensitive words such as Tiananmen to get around keyword censorship filters, which may have made it harder to censor Google without blocking the service altogether.
"Foreign tech firms pose threat on internet: companies asked by Washington to use online services to spy on customers," read the banner headline and subheading of the English-language China Daily newspaper on Wednesday.
The People's Daily, the mouthpiece of the Communist party, said on its microblog on Wednesday that US companies such as Yahoo, Cisco, Microsoft and Facebook posed a threat to China's security and to the integrity of the internet.
"To resist the naked internet hegemony, we will draw up international regulations, and strengthen technology safeguards, but we will also severely punish the pawns of the villain. The priority is strengthening penalties and punishments, and for anyone who steals our information, even though they are far away, we shall punish them!" the blog post read.
David Drummond, Google's chief legal officer, said in an emailed statement on Wednesday that the company does not share information with US intelligence services.
"We cannot say this more clearly - the [US] government does not have access to Google servers - not directly, or via a back door, or a so-called drop box," he said. "We provide user data to governments only in accordance with the law."
Chinese commentators say Google is among the US tech companies that helped the NSA in its efforts to spy on users. Last year, Mr Snowden revealed widespread spying programmes in which the NSA gathered data from companies including Google and Apple.
US tech companies have vehemently denied working with the US government.
Technology imports have become an especially sensitive point in US-China relations following the Snowden revelations and US charges brought against five Chinese computer hackers last month.
In the wake of the charges, Chinese government officials have been quietly discouraging banks and ministry offices from importing foreign technology from companies such as IBM and Cisco, according to press reports. IBM says it is unaware of such a policy.
Beijing last month ordered state-owned enterprises to cut ties with US consulting companies because of fears they are spying on behalf of the US government.
Also last month, central government offices were banned from installing Windows 8, Microsoft's latest operating system, on new computers.
Sites such as YouTube, Facebook and Twitter have been blocked for years in China because of perceived risks of political subversion. (FT Syndication Service)
Meanwhile, Wayne Cole of Reuters writes from Sydney: Activity in China's vast factory sector expanded at the fastest pace in 27 months in July, while industry surveys across Asia showed a pick up in export orders that hinted at a long-awaited revival in global trade.
China's official manufacturing purchasing managers' index (PMI) rose to 51.7 in July -- the strongest since April 2012 and up from 51 in June, the National Bureau of Statistics said on Friday. Economists had expected a reading of 51.4.
The upbeat result was echoed in the HSBC/Markit China measure of manufacturing which climbed to an 18-month peak of 51.7, from June's 50.7. Anything above 50 in these surveys separates growth from contraction.
The reports added to evidence that Beijing's stimulus measures were gaining traction in the world's second-largest economy, and followed news that growth in the United States had rebounded from a winter lull.
"Taken literally, these PMIs signal an exceptionally strong start for third quarter growth in China," said Annette Beacher, head of Asia-Pacific research at TD Securities in Singapore.
"Each time the PMIs have printed around 51 to 52 in recent years, annual economic growth peaked at around 8 per cent in the same quarter, and so we pencil that in as a starting point."
China was not alone in scenting better times ahead.
India's factory activity expanded at its fastest pace in 17 months in July as firms responded to burgeoning new orders by increasing output.
The HSBC PMI, compiled by Markit, rose to 53.0 in July from 51.5 in June, its highest since February 2013.
"A flood of new orders from both domestic and external sources has led to a surge in activity," said Frederic Neumann, co-head of Asian economic research at HSBC.
"Details within the survey show that all monitored categories witnessed a rise in output and order flows."
Adding to the promising omens for global trade, South Korea reported exports to the United States expanded by over 19 per cent in July, the fastest clip in nine months.
Taiwanese manufacturers, who do much of the work on Apple's iPhones, reported a robust improvement in overall business conditions in July, with output, total new orders and new export orders rising sharply.
All of which helped offset a disappointing reading from Japan, which has been struggling to recover from a tax-induced slump in consumer spending.
The final Markit/JMMA Japan Manufacturing Purchasing Managers Index (PMI) fell to a seasonally adjusted 50.5 in July, from a preliminary reading of 50.8 and a final 51.5 in June.
In a brighter sign, new export orders grew for the first time in four months, albeit modestly. Policymakers have been counting on an export rebound to help ease the pain from the sales tax hike, but shipments have been stubbornly weak.
For global financial markets, the quickening pulse in Asian trade was a welcome diversion from conflict in the Middle East and Ukraine, as well as Argentina's latest brush with default.
The US factory survey from the Institute for Supply Management (ISM) due later Friday is also expected to tick up to 56.0 in July, which would be the best reading so far this year.
It will be preceded by the ever-influential US payrolls report for July which analysts expect will show another healthy gain of 233,000 net new jobs.
The unemployment rate is seen holding at 6.1 per cent, which might be welcomed by investors worried that further tightening in the labour market might lead the Federal Reserve to lift interest rates earlier than otherwise.
Those concerns were inflamed on Thursday when data showed US labour costs rose by the most in more than 5-1/2 years during the second quarter.
They also got some of the blame for a sell off on Wall Street that saw the S&P 500 .SPX suffer its biggest daily loss since April.