ChinaWatch: Gripes Over Google

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Tax Violations Denied

Chinese authorities found three companies linked to Google Inc. broke tax rules and are investigating possible tax avoidance, a Chinese state-run newspaper reports, raising the risk of fresh pressure on the Internet search giant.



Google, the world's largest Internet search company, says two of the companies named were its units, and a third was a separate firm that works closely with Google, Reuters reports.

But Google denies the tax violations alleged in the Chinese-language Economic Daily.

“We believe we are, and always have been, in full compliance with Chinese tax law,” Google says.

Even if the report is unfounded or embellished, it could bring fresh headaches in China for Google, which has gone through difficult times there since early last year when it quarreled with the one-party government over Internet censorship and hacking attacks.

China generates a small percentage of Google's revenues, but is the world's largest Internet market with more than 450 million users.

The country's search market, dominated by homegrown Baidu Inc., was worth 11 billion yuan ($1.7 billion) in 2010 and is likely to grow by about 50 percent each year for the next four years, according to iResearch.

The Economic Daily reports the three companies investigated and punished were “Google enterprises in China.”

“The taxation authorities have already investigated and punished the three companies according to the law,” the ED reports.

The companies were accused of presenting false and unjustified claims to the total value of 40 million yuan ($6 million), according to the report.

Solar Over Nukes

China, the world’s biggest energy consumer, will cut its 2020 target for nuclear power capacity and build more solar farms following Japan’s atomic crisis, according to an official at the National Development and Reform Commission.

The country will reduce its nuclear capacity goal of 80 gigawatts, says Ren Dongming, director of the renewable energy development center under the economic planner’s energy research institute.

But while he did not give a new nuclear target, the goal for solar-power capacity will increase from the current target of 20 gigawatts, Bloomberg reports.

“We can see delays in some projects, but in the longer term, I don’t see how they can change the program they have in place without facing drastic power shortages,” says David Lennox, an analyst at Fat Prophets in Sydney. “It’s difficult to see what their alternatives to nuclear are.”

Radiation leaks from the crippled Fukushima Dai-Ichi power station following Japan’s record March 11 earthquake have prompted other countries to review their nuclear development.

NDRC Vice Chairman Xie Zhenhua says China won’t alter its atomic energy plans, even as the Cabinet had stopped approving new nuclear plants, pending safety checks.

The crisis in Japan will encourage “healthy development” of the Chinese nuclear industry in the long term as the Fukushima accident will prompt China to take additional safety measures, says Cao Peixi, chairman of Huaneng Power International Inc.

China’s biggest electricity producer won’t alter its nuclear plans because of Japan, according to Cao.

The Chinese government approved on March 1 a proposal by parent China Huaneng Group to develop a 4,000-megawatt atomic plant in Shandong province, says Cao, who’s also president of the group.

The country, building more reactors than any other, currently has at least 14 atomic units in operation, according to data from the World Nuclear Association.

The world’s fastest- growing major economy is constructing at least 27 reactors and has 50 more planned, according to the association. The country started operating its first commercial nuclear plant in 1994.

ChinaWatch

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