China Leading Global Race to Make Clean Energy

By KEITH BRADSHER, NY Times, January 30, 2010

TIANJIN, China — China vaulted past competitors in Denmark, Germany, Spain and the United States last year to become the world’s largest maker of wind turbines, and is poised to expand even further this year.

China has also leapfrogged the West in the last two years to emerge as the world’s largest manufacturer of solar panels. And the country is pushing equally hard to build nuclear reactors and the most efficient types of coal power plants.

These efforts to dominate renewable energy technologies raise the prospect that the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels, wind turbines and other gear manufactured in China.

“Most of the energy equipment will carry a brass plate, ‘Made in China,’ ” said K. K. Chan, the chief executive of Nature Elements Capital, a private equity fund in Beijing that focuses on renewable energy.

President Obama, in his State of the Union speech last week, sounded an alarm that the United States was falling behind other countries, especially China, on energy. “I do not accept a future where the jobs and industries of tomorrow take root beyond our borders — and I know you don’t either,” he told Congress.

The United States and other countries are offering incentives to develop their own renewable energy industries, and Mr. Obama called for redoubling American efforts. Yet many Western and Chinese executives expect China to prevail in the energy-technology race.

Multinational corporations are responding to the rapid growth of China’s market by building big, state-of-the-art factories in China. Vestas of Denmark has just erected the world’s biggest wind turbine manufacturing complex here in northeastern China, and transferred the technology to build the latest electronic controls and generators.

“You have to move fast with the market,” said Jens Tommerup, the president of Vestas China. “Nobody has ever seen such fast development in a wind market.”

Renewable energy industries here are adding jobs rapidly, reaching 1.12 million in 2008 and climbing by 100,000 a year, according to the government-backed Chinese Renewable Energy Industries Association.

Yet renewable energy may be doing more for China’s economy than for the environment. Total power generation in China is on track to pass the United States in 2012 — and most of the added capacity will still be from coal.

China intends for wind, solar and biomass energy to represent 8 percent of its electricity generation capacity by 2020. That compares with less than 4 percent now in China and the United States. Coal will still represent two-thirds of China’s capacity in 2020, and nuclear and hydropower most of the rest.

As China seeks to dominate energy-equipment exports, it has the advantage of being the world’s largest market for power equipment. The government spends heavily to upgrade the electricity grid, committing $45 billion in 2009 alone. State-owned banks provide generous financing.

China’s top leaders are intensely focused on energy policy: on Wednesday, the government announced the creation of a National Energy Commission composed of cabinet ministers as a “superministry” led by Prime Minister Wen Jiabao himself.

Regulators have set mandates for power generation companies to use more renewable energy. Generous subsidies for consumers to install their own solar panels or solar water heaters have produced flurries of activity on rooftops across China.

China’s biggest advantage may be its domestic demand for electricity, rising 15 percent a year. To meet demand in the coming decade, according to statistics from the International Energy Agency, China will need to add nearly nine times as much electricity generation capacity as the United States will.

So while Americans are used to thinking of themselves as having the world’s largest market in many industries, China’s market for power equipment dwarfs that of the United States, even though the American market is more mature. That means Chinese producers enjoy enormous efficiencies from large-scale production.

In the United States, power companies frequently face a choice between buying renewable energy equipment or continuing to operate fossil-fuel-fired power plants that have already been built and paid for. In China, power companies have to buy lots of new equipment anyway, and alternative energy, particularly wind and nuclear, is increasingly priced competitively.

Interest rates as low as 2 percent for bank loans — the result of a savings rate of 40 percent and a government policy of steering loans to renewable energy — have also made a big difference.

As in many other industries, China’s low labor costs are an advantage in energy. Although Chinese wages have risen sharply in the last five years, Vestas still pays assembly line workers here only $4,100 a year.

China’s commitment to renewable energy is expensive. Although costs are falling steeply through mass production, wind energy is still 20 to 40 percent more expensive than coal-fired power. Solar power is still at least twice as expensive as coal.

The Chinese government charges a renewable energy fee to all electricity users. The fee increases residential electricity bills by 0.25 percent to 0.4 percent. For industrial users of electricity, the fee doubled in November to roughly 0.8 percent of the electricity bill.

The fee revenue goes to companies that operate the electricity grid, to make up the cost difference between renewable energy and coal-fired power.

Renewable energy fees are not yet high enough to affect China’s competitiveness even in energy-intensive industries, said the chairman of a Chinese industrial company, who asked not to be identified because of the political sensitivity of electricity rates in China.

Grid operators are unhappy. They are reimbursed for the extra cost of buying renewable energy instead of coal-fired power, but not for the formidable cost of building power lines to wind turbines and other renewable energy producers, many of them in remote, windswept areas. Transmission losses are high for sending power over long distances to cities, and nearly a third of China’s wind turbines are not yet connected to the national grid.

Most of these turbines were built only in the last year, however, and grid construction has not caught up. Under legislation passed by the Chinese legislature on Dec. 26, a grid operator that does not connect a renewable energy operation to the grid must pay that operation twice the value of the electricity that cannot be distributed.

With prices tumbling, China’s wind and solar industries are increasingly looking to sell equipment abroad — and facing complaints by Western companies that they have unfair advantages. When a Chinese company reached a deal in November to supply turbines for a big wind farm in Texas, there were calls in Congress to halt federal spending on imported equipment.

“Every country, including the United States and in Europe, wants a low cost of renewable energy,” said Ma Lingjuan, deputy managing director of China’s renewable energy association. “Now China has reached that level, but it gets criticized by the rest of the world.”

Boycott Microsoft Bing

By NICHOLAS KRISTOF, NY Times, Nov. 20, 2009

Critics have accused President Obama of kowtowing to Chinese leaders, by failing to meet dissidents, toning down his criticisms and delaying a meeting with the Dalai Lama. On balance, I think that criticism is premature: Confrontation doesn’t help with China and can hurt, and so engagement becomes a fine line to navigate. The Obama visit wasn’t a ringing success, but neither was it a craven embarrassment.

For the latest craven kowtowing, we can look somewhere else: Microsoft and its new search engine, Bing.

Western corporations have often behaved embarrassingly in China, sacrificing any principles to ingratiate themselves with the Communist Party authorities. Yahoo was the worst, handing over information about several email account holders so that they could be arrested – and then dissembling and defending its monstrous conduct. Now Microsoft is sacrificing the integrity of Bing searches so as to cozy up to State Security in Beijing. In effect, it has chosen become part of the Communist Party’s propaganda apparatus.

If you search a term on Bing that is politically sensitive in China, in English the results are legitimate. Search “Tiananmen” and you’ll find out about the army firing on pro-democracy protesters in 1989. Search Dalai Lama, Falun Gong and you also get credible results. Conduct the search in complex Chinese characters (the kind used in Taiwan and Hong Kong) and on the whole you still get authentic results.

But conduct the search with the simplified characters used in mainland China, then you get sanitized pro-Communist results. This is especially true of image searches. Magic! No Tiananmen Square massacre. The Dalai Lama becomes an oppressor. Falun Gong believers are villains, not victims.
What’s most offensive is that this is true wherever in the world the search is conducted – including in my office in New York. If Microsoft felt it had to bow to Chinese censorship within China’s borders, based on the IP address, that might be defensible. But when Microsoft skews its worldwide searches to make Hu Jintao feel better, that’s a disgrace. It becomes simply a unit of the Central Committee Propaganda Department.

(This is an issue with Google as well, but to a much lesser extent. Google censors results on its search engine used within China, google.cn, but offers mostly uncensored results using simplified Chinese characters on its worldwide browser, google.com. However, some searches on google.com, such as images for Falun Gong, are also censored.)

When I originally wrote about this issue back in June, Microsoft protested. “From what you described, that’s not the way Bing is supposed to work,” wrote Kevin Kutz, a company spokesman. He said that Chinese speakers at Microsoft could not replicate my results and did not detect this kind of skewed result. I sent screen shots, and then Microsoft acknowledged the issue but said that it was simply a temporary mistake. “It’s a bug,” Kutz told me. Later, he added: “What’s important is it’s getting fixed.” Soon, he said, Bing searches would be the same for Tiananmen and other sensitive subjects, whatever the language.

Six months later, the censorship continues. And now all of a sudden, it’s company policy.
Microsoft’s current position, which insults my intelligence and yours, is that there was indeed a bug of some kind and that that is fixed – but that searches in simplified characters continue to produce pro-Communist results because of the algorithms used. Mr. Kutz now asserts that a search in any given language emphasizes results from within the country that uses that language. Thus if you search in the simplified characters used within China, then you get disproportionately Chinese propaganda. Thus, he says, the explanation lies in the search algorithms, rather than in Microsoft policy.

Huh? How come that wasn’t the explanation in June? And if that’s the case, then why is there a marked difference between text and image searches? And in any case, why should Bing use an algorithm that results in propaganda and skews results far more than Google? Why isn’t Wikipedia higher on the results with simplified characters?

Of course, it’s possible that Microsoft executives in Redmond, since they can’t read Chinese, are being misled by those executives focused on the China business. Yet my hunch is that Microsoft simply has decided at a top level that it will compromise what principles it must to ingratiate itself with China. This presumably isn’t at China’s specific request: it’s unlikely that Chinese authorities would be so detailed in their demands, and it doesn’t negotiate over minor points like this. But China has made it clear that it dislikes search engines that lead to results it considers seditious, and it can block them.

Microsoft apparently doesn’t want to pursue the Google solution of having separate sites – one that produces generally legitimate results (google.com) and another within China that blatantly censors (google.cn). Instead, Bing figured it would have one site and just censor all the results in simplified Chinese characters. It then compounded the problem by dissembling and disguising its policy. That’s craven and embarrassing, it betrays the integrity of Microsoft searches, and for me it’s a reason to boycott Bing.

UPDATE: Microsoft has posted a measured response: http://bit.ly/6CD49e . It notes that some Bing searches are not skewed even in simplified characters but acknowledges that image searches in particular are sanitized. It says that this is a bug that was identified today and that it will soon be fixed. That’s basically what I was told last June, and I’m very skeptical.

UPDATE 2: For those asking for specific terms, and specific search results, here are some examples by date.

Beijing's Favorite Capitalists

By Harold Meyerson, Washingtonpost.com
Wednesday, June 3, 2009

Marx railed against "the idiocy of rural life," by which he meant its isolation and its lack of social differentiation, but 20 years ago, it was that very "idiocy" on which the Chinese Communist Party depended to maintain its hold on power. Once Deng Xiaoping decided to suppress the demonstrators in Tiananmen Square by force, the challenge for the Chinese leadership was to find army units that wouldn't shy from shooting unarmed Chinese students.

Deng's henchmen quickly despaired of finding such soldiers in the cities; they had been contaminated by too much contact with the very kinds of people they'd be called upon to kill. The military units that rolled into Beijing 20 years ago today came chiefly from the sticks. Isolated by geography and indoctrination from the liberalism flowing through Chinese cities and packed into Tiananmen Square, they were the perfect shock troops for Deng's murderous reassertion of authoritarian power.

Two decades later, however, the troops who pulled the triggers have reason to wonder who won and who lost in the class-and-culture war in which Tiananmen was but the bloodiest battle. Today, the Communist Party has proven itself, in all but one particular, a friend to the urbanites and professionals who now prosper in China's cities -- socioeconomically, the very kinds of people it gunned down in Tiananmen Square. All it asks of them in return is that they not actively seek democratic rights. For their part, the hundreds of millions of beneficiaries of China's new prosperity have kept up their end of that bargain. Knowing that they'd face the brute wrath of the party and state if they did, they've made an understandable decision.

In the countryside, where hundreds of millions of Chinese still reside, the benefits of the nation's economic miracle are far harder to detect. For many, the backbreaking drudgery of peasant life persists as it has for centuries. Some Sinologists believe that one reason the urban Chinese haven't demanded more rights is their fear that in a democratic China, they'd be outvoted by a peasantry that would demand a more equitable distribution of the nation's wealth.

According to the nostrums of Reagan Age America, the current Chinese system -- in equal measure capitalist and authoritarian -- cannot actually exist. Capitalism spread democracy, we were told ad nauseam by a steady stream of conservative hacks, free-trade apologists, government officials and American companies doing business in China. Given enough Starbuckses and McDonald's, provided with sufficient consumer choice, China would surely become a democracy.

And yet, it hasn't. And this week, Treasury Secretary Timothy Geithner has traveled there to assure its government that America won't permit China's massive investment in our government's notes to diminish in value, even if that means we have to cut back on needed public programs.

In explaining China's rise and America's decline, historians may well note that capitalism -- American capitalism, anyway -- far from spreading democracy, actually has played a key role in transforming China into an authoritarian superpower. The transfer of manufacturing from the United States to China -- driven by the rise of mega-retailers such as Wal-Mart that have been able to enforce a regime of low wages all along their global supply chains -- has diminished our middle class and expanded theirs. American companies such as Wal-Mart have not been deterred in the slightest by China's authoritarian practices; indeed, before China enacted a law that infinitesimally increased workers' rights last year, the American chambers of commerce in China joined with communist hard-liners in opposing the statute.

The attraction of authoritarian regimes to America's more authoritarian business executives is long established, if seldom noted. Henry Ford, who routinely spied on and abused his employees until the United Auto Workers came along, built and owned factories in Stalin's Soviet Union. Wal-Mart, which used to lock its night-shift stock clerks and janitors inside a number of its stores until the morning managers arrived, prefers production in Guangdong to manufacturing in the Midwest. Indeed, the director of purchasing for Wal-Mart is based in China.

As historian Nelson Lichtenstein and others have documented, Wal-Mart inspires in its managers an almost fanatical allegiance to the company's cause. In Wal-Mart world, the provincialism (if not "idiocy") of rural life is fused with a brilliance in the art of low-cost, low-wage logistics to create a company that is both authoritarian in its inner workings and a friend of authoritarian regimes abroad. The butchers of Beijing could not have found any more compatible capitalists.

meyersonh@washpost.com

Rising Powers Challenge U.S. on Role in I.M.F.

By MARK LANDLER, NY Times, March 30, 2009

WASHINGTON — Barely six months ago, the International Monetary Fund emerged from years of declining relevance, hurriedly cobbling together emergency loans for countries from Iceland to Pakistan, as the first wave of the financial crisis hit.

Now, with world leaders gathering this week in London to plot a response to the gravest global economic downturn since World War II, the fund is becoming a chip in a contest to reshape the postcrisis landscape.

The Obama administration has made fortifying the I.M.F. one of its primary goals for the meeting of the Group of 20, which includes leading industrial and developing countries and the European Union. But China, India and other rising powers seem to believe that the made-in-America crisis has curtailed the ability of the United States to set the agenda. They view the Western-dominated fund as a place to begin staking their claim to a greater voice in global economic affairs.

Treasury Secretary Timothy F. Geithner, who once worked at the fund, has called for its financial resources to be expanded by $500 billion, effectively tripling its lending capacity to distressed countries and cementing its status as the lender of last resort for much of the world.

Japan and the European Union have each pledged $100 billion; the United States has signaled it will contribute a similar sum, though its money will take longer to arrive because of the need for Congressional approval. China, with its mammoth foreign exchange reserves, is the next obvious donor.

Yet officials of China and other developing countries have served notice that they are reluctant to make comparable pledges without getting a greater say in the operations of the fund, which is run by a Frenchman, Dominique Strauss-Kahn, and is heavily influenced by the United States and Western Europe.

A senior Chinese leader, Wang Qishan, said Friday that Beijing was willing to kick in some money, but he called for an overhaul of the way the fund is governed. China wants its quota — which determines its financial contribution and voting power — adjusted to reflect its economic weight better.

China’s contribution, Mr. Wang said, should not be based on the size of its reserves but on its economic output per person, which is still modest. Some American officials now expect a pledge on the order of $50 billion from China.

“Their arms may yet be twisted, but they simply do not want to pony up based on vague promises of governance reform,” said Eswar S. Prasad, a professor of economics at Cornell University who has discussed the matter in recent days with Chinese and Indian officials.

Given the inevitability that these countries will have a growing influence, the London summit meeting, which begins Thursday, is likely to be remembered “as the last hurrah for the U.S. and Europe rescuing the world economy,” said Simon Johnson, a professor at M.I.T. and a former chief economist of the fund.

One reason the I.M.F. has emerged as such a popular cause is that the United States has been unable to rally countries behind its other major priority: economic stimulus. The European Union opposes further stimulus packages in 2010, arguing that its social safety net makes an increase in government spending unnecessary.

European and American officials are also still divided, to a lesser degree, on how to rewrite international financial regulations. France and Germany are more receptive than the United States to giving regulators supranational authority to scrutinize global banks and other financial companies.

“The United States is desperately trying to assert leadership, as if it were 10 years ago, when the U.S. set the agenda,” said Kenneth S. Rogoff, an economist at Harvard and another former chief economist of the fund.

With more countries slipping into crisis by the week, there is general agreement that the fund needs additional resources. Since last year, the I.M.F. has made nearly $50 billion in loans to 13 countries. It is streamlining the process for making loans and loosening its strings, hoping to counter the resentment that built up against it during past crises because of its stringent demands.

At a preparatory meeting two weeks ago, finance ministers of the Group of 20 agreed to “very substantially” increase financing, though the Europeans favored an extra $250 billion, not $500 billion.

Whatever their reservations about financing, the Chinese have seized on the fund for another purpose: to tweak the United States. The governor of China’s central bank, Zhou Xiaochuan, recently proposed that the American dollar be phased out as the world’s default reserve currency. As a replacement, he suggested using special drawing rights, or S.D.R.’s, the synthetic currency created by the fund that is used for transactions between it and its 185 member countries.

Few economists view that idea as a realistic one, at least for years to come. But the mere assertion that the dollar’s pre-eminence is waning — a theme picked up by Russian officials as well — sends a message.

“I don’t think the Chinese or Russians really believe the S.D.R. is a viable currency,” said Mr. Prasad, the Cornell economist. “But they’re laying down a very clear marker that they’re going to be much more assertive about their role.”

Mr. Geithner took the remarks seriously enough that he publicly reaffirmed the primacy of the dollar.

The United States will address China’s status this week, when it announces details of a new high-level strategic and economic dialogue with Beijing, led by Mr. Geithner and Secretary of State Hillary Rodham Clinton, according to a senior administration official, who spoke anonymously because the information was not yet public. The announcement will come after the first meeting between President Obama and the Chinese president, Hu Jintao, in London.

The Obama administration has personal reasons to support the fund. Mr. Geithner was the I.M.F. director of policy planning from 2001 to 2003, after his first stint in the Treasury Department. He recruited Edwin M. Truman, another former Treasury official and a longtime advocate of the fund, as a temporary adviser to develop policies for the Group of 20 meeting.

Just before leaving his academic position at the Peterson Institute for International Economics, Mr. Truman proposed that the fund issue $250 billion in S.D.R.’s on a one-time basis to be allocated to all its members, as another way of increasing its resources. Western European countries, he said, could use their S.D.R.’s to lend money to their troubled Eastern neighbors.

That proposal is in a current draft of the statement to be issued at the Group of 20 meeting. If all the American proposals for the fund are adopted, its resources will approach $1 trillion — a big number, even in these extraordinary times.

Yet for Mr. Johnson of M.I.T., it merely shows how difficult it is for the United States to marshal support for anything else.

“They can’t agree on fiscal policy; they can’t agree on regulations,” he said. “The only thing left is the I.M.F.”

Vast Spy System Loots Computers in 103 Countries

By JOHN MARKOFF, NY Times, March 29, 2009

TORONTO — A vast electronic spying operation has infiltrated computers and has stolen documents from hundreds of government and private offices around the world, including those of the Dalai Lama, Canadian researchers have concluded.

In a report to be issued this weekend, the researchers said that the system was being controlled from computers based almost exclusively in China, but that they could not say conclusively that the Chinese government was involved.

The researchers, who are based at the Munk Center for International Studies at the University of Toronto, had been asked by the office of the Dalai Lama, the exiled Tibetan leader whom China regularly denounces, to examine its computers for signs of malicious software, or malware.

Their sleuthing opened a window into a broader operation that, in less than two years, has infiltrated at least 1,295 computers in 103 countries, including many belonging to embassies, foreign ministries and other government offices, as well as the Dalai Lama’s Tibetan exile centers in India, Brussels, London and New York.

The researchers, who have a record of detecting computer espionage, said they believed that in addition to the spying on the Dalai Lama, the system, which they called GhostNet, was focused on the governments of South Asian and Southeast Asian countries.

Intelligence analysts say many governments, including those of China, Russia and the United States, and other parties use sophisticated computer programs to covertly gather information.

The newly reported spying operation is by far the largest to come to light in terms of countries affected.

This is also believed to be the first time researchers have been able to expose the workings of a computer system used in an intrusion of this magnitude.

Still going strong, the operation continues to invade and monitor more than a dozen new computers a week, the researchers said in their report, “Tracking ‘GhostNet’: Investigating a Cyber Espionage Network.” They said they had found no evidence that United States government offices had been infiltrated, although a NATO computer was monitored by the spies for half a day and computers of the Indian Embassy in Washington were infiltrated.

The malware is remarkable both for its sweep — in computer jargon, it has not been merely “phishing” for random consumers’ information, but “whaling” for particular important targets — and for its Big Brother-style capacities. It can, for example, turn on the camera and audio-recording functions of an infected computer, enabling monitors to see and hear what goes on in a room. The investigators say they do not know if this facet has been employed.

The researchers were able to monitor the commands given to infected computers and to see the names of documents retrieved by the spies, but in most cases the contents of the stolen files have not been determined. Working with the Tibetans, however, the researchers found that specific correspondence had been stolen and that the intruders had gained control of the electronic mail server computers of the Dalai Lama’s organization.

The electronic spy game has had at least some real-world impact, they said. For example, they said, after an e-mail invitation was sent by the Dalai Lama’s office to a foreign diplomat, the Chinese government made a call to the diplomat discouraging a visit. And a woman working for a group making Internet contacts between Tibetan exiles and Chinese citizens was stopped by Chinese intelligence officers on her way back to Tibet, shown transcripts of her online conversations and warned to stop her political activities.

The Toronto researchers said they had notified international law enforcement agencies of the spying operation, which in their view exposed basic shortcomings in the legal structure of cyberspace. The F.B.I. declined to comment on the operation.

Although the Canadian researchers said that most of the computers behind the spying were in China, they cautioned against concluding that China’s government was involved. The spying could be a nonstate, for-profit operation, for example, or one run by private citizens in China known as “patriotic hackers.”

“We’re a bit more careful about it, knowing the nuance of what happens in the subterranean realms,” said Ronald J. Deibert, a member of the research group and an associate professor of political science at Munk. “This could well be the C.I.A. or the Russians. It’s a murky realm that we’re lifting the lid on.”

A spokesman for the Chinese Consulate in New York dismissed the idea that China was involved. “These are old stories and they are nonsense,” the spokesman, Wenqi Gao, said. “The Chinese government is opposed to and strictly forbids any cybercrime.”

The Toronto researchers, who allowed a reporter for The New York Times to review the spies’ digital tracks, are publishing their findings in Information Warfare Monitor, an online publication associated with the Munk Center.

At the same time, two computer researchers at Cambridge University in Britain who worked on the part of the investigation related to the Tibetans, are releasing an independent report. They do fault China, and they warned that other hackers could adopt the tactics used in the malware operation.

“What Chinese spooks did in 2008, Russian crooks will do in 2010 and even low-budget criminals from less developed countries will follow in due course,” the Cambridge researchers, Shishir Nagaraja and Ross Anderson, wrote in their report, “The Snooping Dragon: Social Malware Surveillance of the Tibetan Movement.”

In any case, it was suspicions of Chinese interference that led to the discovery of the spy operation. Last summer, the office of the Dalai Lama invited two specialists to India to audit computers used by the Dalai Lama’s organization. The specialists, Greg Walton, the editor of Information Warfare Monitor, and Mr. Nagaraja, a network security expert, found that the computers had indeed been infected and that intruders had stolen files from personal computers serving several Tibetan exile groups.

Back in Toronto, Mr. Walton shared data with colleagues at the Munk Center’s computer lab.

One of them was Nart Villeneuve, 34, a graduate student and self-taught “white hat” hacker with dazzling technical skills. Last year, Mr. Villeneuve linked the Chinese version of the Skype communications service to a Chinese government operation that was systematically eavesdropping on users’ instant-messaging sessions.

Early this month, Mr. Villeneuve noticed an odd string of 22 characters embedded in files created by the malicious software and searched for it with Google. It led him to a group of computers on Hainan Island, off China, and to a Web site that would prove to be critically important.

In a puzzling security lapse, the Web page that Mr. Villeneuve found was not protected by a password, while much of the rest of the system uses encryption.

Mr. Villeneuve and his colleagues figured out how the operation worked by commanding it to infect a system in their computer lab in Toronto. On March 12, the spies took their own bait. Mr. Villeneuve watched a brief series of commands flicker on his computer screen as someone — presumably in China — rummaged through the files. Finding nothing of interest, the intruder soon disappeared.

Through trial and error, the researchers learned to use the system’s Chinese-language “dashboard” — a control panel reachable with a standard Web browser — by which one could manipulate the more than 1,200 computers worldwide that had by then been infected.

Infection happens two ways. In one method, a user’s clicking on a document attached to an e-mail message lets the system covertly install software deep in the target operating system. Alternatively, a user clicks on a Web link in an e-mail message and is taken directly to a “poisoned” Web site.

The researchers said they avoided breaking any laws during three weeks of monitoring and extensively experimenting with the system’s unprotected software control panel. They provided, among other information, a log of compromised computers dating to May 22, 2007.

They found that three of the four control servers were in different provinces in China — Hainan, Guangdong and Sichuan — while the fourth was discovered to be at a Web-hosting company based in Southern California.

Beyond that, said Rafal A. Rohozinski, one of the investigators, “attribution is difficult because there is no agreed upon international legal framework for being able to pursue investigations down to their logical conclusion, which is highly local.”