China Arrests Head of Largest Telecom

The arrest in China of Chang Xiaobing will hardly raise a ripple in the U.S. but it is something we should be paying attention to.  The story is in every major financial newspaper because China reported it, given the publicly traded company's investment value. [see http://www.wsj.com/articles/china-telecom-head-detained-by-countrys-antigraft-regulator-1451218892 as an example ]  A similar event in the U.S. would be like having the Chairman of the Board of AT&T arrested for public corruption.  It would not be something we would miss.
There are two things about this particular arrest.  First, unless you were sleeping for the past couple of years, it was hard to miss the number of arrests of public officials in China, most of them associated with the military.  Very few of these are what we would call "criminal behavior", but the Chinese have no problem with labeling anything the Party is unhappy about as criminal.  Xiaobing must have crossed swords with the wrong people along the way, and they would have to be way up there in the hierarchy of the Party.  The three telecoms in China are managed by a special committee run by President Xi Jinping.  He controls them very tightly and has quite a bit to say about how they are managed and controlled.  He relies on the telecoms to enforce the new counter terror regulations which included both monitoring and "cooperating with investigations", a new term that means give up your encryption and give us back doors when we need one.  These are not good for relations with foreign companies that must cooperate with these onerous rules.

Second, Xiaobing was the head of a state-sponsored enterprise, a business with quasi-independence but where the rules and policies of the company are set by the government.  The government regulates it and manages it, something that doesn't work out very well anywhere.  This is where the arrest of the Chairman of AT&T would be different.  He runs a business responsive to the shareholders and the board, not the Democratic Party.

If nothing else, none of the telecoms are going to push back on the policies China has instituted.  They make not like the affect it has on their customer relations, but they will be smiling and moving along.