US moves to sink Chinese CD pirates

An animated little crowd gathers on a busy pavement in the south- eastern Chinese town of Shenzhen. The glitzy new skyscrapers towering over the scene would not disgrace the more famous Hong Kong skyline. But the crowd is more interested in what is lying on the ground, rather than the mirror-glass and concrete towers which multiply month after month.

On the streets of Shenzhen compact discs are being sold for around 50p. Pink Floyd, Red Hot Chilli Peppers, Mendelssohn; the choice is yours.

The sale in this boom town goes to the heart of a blazing row which has re-erupted between China and the United States. The Americans are furious that the Chinese are producing pirated CDs and CD-Roms.

Talks in Peking yesterday, aimed at giving Chinese officials an opportunity to rebut the American allegations, failed to persuade the US administration. Officials said Washington will take steps today to introduce trade sanctions on Chinese textile and electronic manufacturers. The action would include publication of a list targeting about $3bn (pounds 2bn) worth of Chinese goods for import taxes of 100 per cent. China's total annual exports to the US total $40bn, while the US alleges a loss of $2.3bn to piracy. There is still time for a compromise before sanctions take effect, as US law requires a one-month delay to allow public comment.

The Chinese insist that they are trying to bring the situation under control. "What can we do, in a country of 1.2 billion?" pleaded one businessman in Shenzhen. "These things can be made in people's garages, you know. Its impossible to clamp down completely."

The excuse is partly disingenuous. As the South China Morning Post noted: "It is tempting to ask how long it would take Peking to close down factories if they were producing seditious material."

"Clampdown" headlines were a regular feature in the Peking press in the lead-up to the visit to Peking of Lee Sands, the US Assistant Trade Representative, who wound up the abortive talks yesterday. Mr Sands reportedly keeps a scrapbook of such cuttings, timed to coincide with his trips.

None the less, there is some truth in the Chinese defence. A number of manufacturing plants have been closed down in the past year. The CDs and their casings had been confiscated and sheared at the edges - precisely because they were illegal. The damaged CDs, it seems, then fell off the back of the investigators' lorry and popped up in the street markets.

The CD sale is a vivid reminder that, even where piracy is being tackled, there are few Chinese corners which corruption has failed to reach. The authorities have shown little inclination to liberalise on the political front, but, on economic legislation, they are keen to persuade the world that their heart is in the right place.

Senior legal officials in Hong Kong, just across the border from Shenzhen, talk in bemused but flattered tones of the growing "plagiarisation" of Hong Kong's laws by mainland China. Peking, according to this analysis, knows that its economic growth may be slowed down by the lack of a legislative framework.

So far at least, even when China's ideological spirit has been willing, its corruption-loving flesh has proved weak.