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National holidays this week in China (1 October is the anniversary of the 1949 revolution which brought the Communist Party to power).

The holidays mean that the Shanghai stock exchange is closed. So, we won't know how the markets here will react to the till the exchange opens again on 5 October. But this country is keeping a close eye on the financial crisis currently hacking its way through the United States and Europe.

As it stands right now, the first wave of this crisis doesn't appear to have hit China too badly. Chinese banks didn't get hugely involved in sub-prime mortgages. Reports say that this country's financial institutions have stacked up about 4.3 billion dollars in losses (out of more than $500bn worldwide).

But, in the longer term, the crisis is bound to affect China much more directly. One simple reason explains it: if the world's biggest consumer, the United States, can no longer afford to buy as much, China will no longer be able to sell as much.

That's important, because China's recent growth is based on its exports and on its engagement with the world - the United States in particular. If the world scales down what it can buy, that will have a huge impact here.

If people in Pennsylvania can't afford new DVD players or new microwave ovens, manufacturers in China will have fewer people to sell to and may have to shut down. The downturn in the States has already affected businesses in Shenzhen in southern China which would normally export in bulk to the US.

And there's another, crucial way in which China and the US are locked together. In simple terms, America's been having a great time spending on China's credit card. Consumers in the US have been able to buy homes, cars and occasional yachts partly because China's been willing to invest its own savings in US debt.

The background: China has huge amounts of foreign exchange reserves - or what you or I would call savings. China didn't want to keep all of it under a mattress, so it scouted around for a place to keep it safe. It chose US Treasury bonds - low yield, but low risk - based on the belief that the US economy is its safest long-term bet. So far, China has invested several hundred billion dollars in these bonds.

But now - because of the financial crisis - America's having to look pretty closely at its spending. And it's uneasy with the fact that so much of its buying has been financed by a country which may become its greatest global rival. The subject was mentioned by both presidential candidates during their first debate...

"One of the major reasons why we're in the difficulties we are in today is because spending got out of control. We owe China $500bn." - Senator John McCain.

"We've got challenges, for example, with China, where we are borrowing billions of dollars. They now hold a trillion dollars' worth of our debt." - Senator Barack Obama.

(It may be slightly worrying to find that the two men differ by $500bn as to how much the US owes China - one would imagine that China's keeping a slightly more accurate count of its money.)

I haven't come across any suggestion at the moment that China will stop investing its savings in the US economy. But here's a question for the future - what happens if China decides to invest its money somewhere else?

PS. I'll be away during October. Please have a look at our for news about China. See you back here in November!

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Were you watching? China's just carried out its first ever space walk (broadcast live on almost every channel here).

Colonel Zhai Zhigang - the son of a woman who used to sell sunflower seeds - squeezed himself out of the hatch of his Shenzhou 7 spacecraft. As he got out, he made sure to tether himself with red cables - you don't want to become your country's first ever spacewalker only to find yourself floating away.

For China his mission is as much about national pride as anything else. So, Col Zhai made sure to wave a Chinese flag during his quick hover above his spacecraft. For China this single image is worth all the money it's spending on its space programme.

After a quarter of an hour, the astronaut got back inside. China says that his short walk is a vital step in its plans to build a space station, and then send men off to the Moon and Mars.

This is a country that spent decades feeling left behind - and even picked on - by the rest of the world. But this year that feeling has begun to change. It's hard to carry on feeling like a victim when your country hosts the Olympic Games and then does its victory lap in space.

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Is it possible that a skinny young man sitting in a Chinese jail will ?

There's speculation that the Chinese activist Hu Jia - who's currently serving a three and a half year jail sentence - might be awarded this year's prize.

Hu Jia, who's 35, is already one of China's most prominent activist/dissidents. He's campaigned for the environment, for democracy, and for the rights of people with HIV and Aids. The Communist Party objected to his activism. In April this year, a Beijing court found him guilty of "inciting subversion of state power".

I met Hu Jia a couple of times before he was jailed. The first time was a year ago at the small Beijing apartment he shares with his wife, Zeng Jinyan, who's also an activist.

Hu Jia was a slight, shy figure. His wife - who speaks good English - was more talkative. Their apartment was cluttered with boxes, DVDs (including a few series of Friends) and baby stuff - Zeng Jinyan was seven months pregnant with their first child. At the time, Hu Jia was under house arrest - police officers even slept on the floor right outside the front door to make sure he didn't escape. He was only allowed out of the house to accompany his wife for doctors' visits (followed by the police, of course).

A couple of months later, the couple went to hospital for the birth of their daughter, called Qianci. My colleagues and I filmed them in hospital as they got ready to check out and go back home. Hu Jia spent most of his time filming his wife and daughter with his own hi-definition video camera. Plain clothes police officers stood in the hospital parking lot, keeping an eye on the couple and their baby. The officers managed to miss Hu Jia when he went from one part of the hospital to another - they ran after him in a slight panic when they realised he was out of their sight.

At the end of 2007, Hu Jia was formally detained. We tried to go and interview his wife at their apartment - but we were stopped by uniformed officers and taken to a nearby police post for our details to be taken down. Then, in April, .

We haven't been able to interview Zeng Jinyan since the day her husband was sentenced - the authorities still stop people from going to visit her. But she does keep up a in Chinese.

To the Communist Party, the couple are annoying opponents who deliberately break the law and try to embarrass the country. It's hard to tell what ordinary Chinese people make of Hu Jia and Zeng Jinyan because their activism is barely reported here.

This year's Nobel Peace Prize winner will be announced on Friday 10 October.

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China's about to send three men into space. The country wants to show them off, but it doesn't want any of them to get sick before they go. So, this afternoon, China's authorities arranged a news conference in which the astronauts took questions from behind a glass panel, thereby protecting them from potentially sickly journalists and officials marooned on the other side.

The three answered questions for a few minutes.

"I feel very honoured to be able to participate in this mission," said Zhai Zhigang, the commander.

Do they feel any pressure?

"You should pay attention to what you're doing right now," said Zhai, "You have to maintain a very even state of mind."

Any time for snapshots when you're out in space?

"When we have time we will take pictures and videos," said Liu Boming evenly.

The three men then stood up, saluted and left the room. Hopefully they didn't catch any germs.

On Thursday evening, they're set to take off in their rocket - the Shenzhou 7 - from China's central Gansu province (the government has invited a number of media agencies to cover the launch - but, sadly for us, the ³ÉÈË¿ìÊÖ isn't on the list.)

Then, on Saturday, Zhai Zhigang is expected to perform China's first ever space walk. This is the next step in a long-term space plan which eventually has China heading off to explore Mars and Jupiter as well.

The three men on this mission will be the 4th, 5th and 6th men that China's sent into space - the first Chinese citizen to leave this world was Yang Liwei in October 2003.

Everything seems to be going well so far. But there's one small problem that China hasn't fully addressed: what, exactly, should you call a Chinese space traveller?

The front page of the English-language China Daily happily refers to "astronauts" as did a state TV translator during the press conference. But the official news agency, Xinhua, refers to the space travellers as "taikonauts" (taken from the Chinese word Tai Kong which means space).

Any preferences?

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Milk powder tainted with an industrial chemical - just a year after lead paint was found in children's toys, and poison was discovered in pet food and toothpaste. So how do people feel about a government that has again failed in its promise to keep products safe?

"I think the government is doing a good job so far," says Dong Zhen Sheng who took his two year-old daughter to hospital be checked for kidney stones, "After news of the scandal was broken by the media, the government reacted quite quickly. And they've allowed us to have free hospital checks for our children."

For all the parents' anger then, you still come across a bedrock faith in this country's top leaders - and in their ability to make things right. As I've written here before, . Traditionally, when things go wrong in China, you blame corrupt lower-level officials, and you look to a benevolent leader in the capital to come to the rescue.

So, in recent days, Chinese state TV has followed this ancient model closely. It's reported openly on the failure of lower-level officials - the resignation of the chief quality regulator and the sacking of a number of provincial officials. And it's shown the benevolent leader coming in to make things right - in this case, the Premier Wen Jiabao visiting hospitals and promising to reform the dairy industry.

Mr Wen represents a system that's built on trust not scepticism - on the belief that you should put your faith in wise leaders to keep you safe. In this system - inherited from imperial times - there's no room for any meaningful checks and balances.

The Party doesn't allow the establishment of an independent legal system, a free press, or strong NGOs - the kind of tools that other countries use to keep their officials honest and their food safe. If you dare to challenge the Party in China, your life can get pretty difficult.

A few days ago, in south Beijing, several hundred neighbours decided to break the law. They went to protest against the presence of a rubbish dump near their homes. The police marched next to them. Two officers with white gloves raised banners printed with the words "Do Not Violate Public Order."

"They feel furious - more than angry," one protestor told me (he declined to give me his name).

"Do you hope the government will listen and do something?" I asked.

"I don't think so - unless somebody dies. As you can see with the milk problem, that's the philosophy and without any necessary monitoring from any third party I don't think the government will do anything to curb the feeling that people generate."

After a couple of hours the protestors went home. A little later, a number of them were detained by the police. This is what happens in China when you try to challenge the Party's authority - when you try to suggest that there should be more independent regulation and oversight. But this week, the irony of how China is run may be pretty clear. You're still meant to trust the Party even if you can no longer trust the food it allows you to buy in the shops.

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Right now, China might want to remember Cordelia Gummer.

In 1990, Britain was worried about infected beef and "mad cow disease". The government insisted that no-one need panic - Britain's beef was fine.

In order to make the point in a dramatic way, Britain's Agriculture, Fisheries and Food Minister John Gummer decided to in front of the cameras. It was a slightly curious, much criticised and derided tactic.

I wonder if the Communist Party's been thinking of anything similar in recent days. The food scare which began with tainted baby milk powder last week has been getting worse and worse.

On Friday, everyone here woke up to find that - including the normal milk that you or I would buy in the shops. The government insists that most milk is safe to drink - but that doesn't reassure very many people.

This afternoon, at the Tesco supermarket in Beijing, milk was still on sale. But most shoppers avoided the dairy counter. Parents have continued to take their babies to hospitals to be checked for kidney stones.

Perhaps China's Health Minister, Chen Zhu, may decide to invite the media to his house to watch him and his family drink pints of milk and eat ice cream. But maybe not. It didn't really work when John Gummer tried it.

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On the way to work this morning, I had another quick look at the Beijing Paediatric Research Institute (one of 74 hospitals in Beijing where parents worried about can take their children to be checked for kidney stones).

A crowd of parents lined up in the car park at the back, waiting to get their babies checked. Doctors took a urine sample and carried out an ultrasound on each infant - the results are given the next day.

Outside the front gate, parents came out with their children. Many babies held on to balloons - their reward for a pretty painful morning.

"My kid Kaikai is three years old, he's been drinking the milk powder for over a year and we have no idea whether he's okay or not, so we just came to do a test, "said one mother, "We blame the factory for manufacturing the milk."

"My kid is nine and a half months old, he's been drinking the milk powder since he was born," said another, "We're really angry with the milk manufacturers, and the useless quality inspection departments."

Right now, many parents no longer trust milk powder made in China. So, they're looking for alternatives. Some have decided to buy foreign-made baby milk powder instead.

Newspaper reports say that others have switched their infants to soybean milk or rice soup. One newspaper says that some mothers are even looking for wet nurses to feed their children.

The Communist Party has promised to reform the dairy industry. But from the anger I've seen outside the hospital, it'll take more than a promise to win back parents' trust.

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I'm writing this post while the closing ceremony of the Paralympic Games goes on at the Olympic Stadium in north Beijing (the event's hard to miss since it's being shown on at least five different TV channels - the only alternatives appear to be a programme about opera or a travel show about Bangladesh).

This ceremony is the conclusion of what has been a pretty successful sequel to the Olympics themselves. The Paralympic sports were well attended by polite and often curious crowds (including me - I had no idea that wheelchairs could be used as weapons till I went to see the final of the men's wheelchair rugby).

For China this is the end of a decade's worth of Olympic and Paralympic planning. This city now has to get back to normal. On Sunday 21 September, emergency clean air measures will come to an end - construction sites will get back to work, and drivers will be allowed to use their cars every day (since late July, they've only been allowed to drive every other day).

But this country doesn't have much time to enjoy a post-Paralympic state of bliss. Right now, China's going through a pretty painful food safety scandal. After a number of food safety problems a year ago, the Communist Party assured its citizens that the right lessons had been learned. But now, thousands of babies have got sick because they've been fed on poisonous milk powder. The government's told worried parents to take their babies to hospital to be checked for kidney stones.

This afternoon, my colleagues and I went to the Beijing Pediatric Research Institute near Ritan Park. Dozens of parents carried in their babies to be checked for kidney stones. Zhao Jian Xin brought in his 15-month-old son Chunxi.

"I took my son to the hospital for a medical check, and he was diagnosed with a stone in the right side of his kidney, because he was given Sanlu milk powder," Mr Zhao told us, "He has now been hospitalized. I feel very bad and very disappointed as well. Sanlu is one of the most famous brands in China. We chose it because we trusted it. But now we are disappointed."

This is the second time this year that parents in China have felt let down by those meant to keep their children safe.

In May, hundreds of school children were killed in the Sichuan earthquake. Parents protested that their children's schools were badly built - that their children were killed not by natural disaster but by corruption and negligence.

Parents whose children have fallen ill after being fed on poisonous baby powder are now threatening action against the milk powder companies. Increasingly, parents in China are not prepared to sit quietly when things go wrong.

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1.3 billion Chinese people walk on the earth. In a few days time, one of them will walk in space.

Unofficial reports on Chinese websites say that China has chosen , a 42-year-old fighter pilot, as this country's first space walker.

On 25 September, Colonel Zhai and two other astronauts are expected to take off on the Shenzhou VII rocket. Once the rocket gets into space, the colonel will carry out a 40-minute spacewalk. The entire mission is expected to last for several days.

They'll have quite a lot to do in space. It's been suggested that the three astronauts - all loyal soldiers - may form the first ever branch of the Chinese Communist Party in space (the party's rules state that you need three members to form a new branch - these rules appear to apply even if you've left the planet).

For decades, China has been determined to press ahead with its own space programme. In October 2003, the country . China also has plans to go to the moon, and then onto Mars, and possibly even Saturn as well (why stop there?)

A year ago, , called Chang'e 1 (named after the ancient Chinese goddess of the moon). A little later, the probe sent back its first pictures of the lunar surface. This was such an emotional moment that one newspaper ran the headline "Scientists burst into tears when they see lunar pictures."

Space is a pretty popular subject here. I went to a popular space exhibition last year in central China - a collection of rockets, space models, and astronaut uniforms. We were told that China's first man in space, Yang Liwei, would show up. But we were warned that because he was still serving in the army, he was not allowed to talk to foreign journalists. So, we were offered an interview with an eminent scientist instead. But, speaking to a serious middle-aged man - however brilliant he may have been - wasn't quite the same thing as speaking to someone who's been out of this world.

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I'm not sure if you get severance pay if you lose your job in the Chinese Communist Party. But Meng Xuenong probably knows.

He was for covering up the outbreak of the respiratory disease, SARS. His was one of the most high-profile sackings in China in recent years.

But in China, if you're sacked it doesn't always mean that you're done. Rehabilitation can come pretty quickly. A few months after he was fired, Meng Xuenong was quietly given a new low-profile job (in charge of a water project.) Then, in 2007 he was chosen to be the governor of the Shanxi Province - China's biggest coal-producing region.

But now, he's run into trouble again. Earlier this month in Shanxi, heavy rains broke down the retaining wall of an unlicensed mine. Tonnes of iron ore waste poured down a hillside onto a nearby marketplace. More than 250 people were killed (many of the dead are unidentified migrant workers).

The landslide has angered many people here. Every year around 5,000 people in China die in mining accidents - many are killed working in dangerous, unlicensed mines. The Communist Party says that it's tried to close down as many illegal mines as possible, but, in many areas, these mines continue to operate.

The men who ran the illegal mine which caused the landslide in Shanxi have now been detained. A state investigator has criticised the local government for poor supervision of work safety. And Meng Xuenong has had to resign as governor of Shanxi - the second time he's lost a high-profile job. Will he get to come back again?

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Moving day could come soon for Tuan Tuan and Yuan Yuan - four-year-old giant pandas currently making a living sleeping and eating bamboo shoots in a reserve in central China.

China in 2005 (a bit of panda diplomacy towards an island that China considers to be an inseparable part of its own country). But the authorities in Taiwan said no. They feared that accepting the pandas would also mean accepting China's position that Taiwan is a part of China. They also didn't like the fact that, when put together, the pandas' names spell the word "reunion" in Chinese. So the pandas stayed in China.

But in May this year, a new government took power in Taiwan - promising to improve relations with China. This promise appears to include accepting Tuan Tuan and Yuan Yuan.

China's State Council now says that keepers are getting ready to send the pandas to a zoo in Taiwan - and that the pandas will soon be able make their journey (no date has yet been given).

Whenever China wants to make friends, it likes to offer a panda (failing that, it organises a game of ping pong). Between 1958 and 1982, China sent 23 pandas to nine countries. After that, as capitalism took off in China, the country decided to start charging for the privilege. The country offered to rent out pandas to foreign zoos for fees of up to one million dollars a year (excluding upkeep costs.)

The authorities have made sure to consider the small print as well. If a loaned-out panda has a cub, that cub automatically becomes the property of China. So, as far as I can tell, this means that China owns all the pandas in the world (200 or so in captivity, together with around 1500 in the wild in central China).

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Is North Korea's leader Kim Jong-il sick? Would the Chinese government - a neighbour and ally of North Korea - tell us if it knew anything about his health?

We tried to find out at a regularly scheduled foreign ministry briefing held here in Beijing (briefings are held twice a week at the foreign ministry's headquarters).

The briefings are well-organised events. You go through a metal detector and take a seat in an auditorium decorated with plants. In case you get bored before the spokesperson steps onto the stage, there's some piped music for you to listen to (in the most recent briefing we enjoyed a subdued acoustic version of "Under the Boardwalk" followed by "The Sounds of Silence").

The spokesperson came out and was asked three times about Kim Jong-il's health...

Question One: "Can you comment on reports that Chinese doctors treated Kim Jong-il after he reportedly collapsed on August 22? Can you comment on his health?"
Foreign Ministry: "I have no information on that."

Question Two: "Has the Chinese government actually spoken to Kim Jong-il to pass on its best wishes for the 60th anniversary of the founding of North Korea? If not, when was the last time the Chinese government spoke to Kim Jong-il?"
Foreign Ministry: "The two countries have maintained friendly exchanges, frequent co-ordination and communication."

Question Three: "There are reports that Kim Jong-il is ill. Can you comment?"
Foreign Ministry: "I have not heard of that."

(The answers were given in Chinese. The English versions above are from the official English interpretation provided at the briefing).

So, if the Chinese government does know anything about Kim Jong-il and his health, it's decided - for now at least - not to speculate about it in public.

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Back from a bit of a post-Olympic break...

China's leaders sometimes do their best to look as stolid as possible (they wear identical black suits and blank expressions, they sit in oversized chairs and clap politely). But many of them are known for more than just staring straight ahead and signing decrees.

, who was China's ruler in the 70s and 80s, was "widely known as a master of the game of bridge" according to the official media here. It's not documented whether or not anyone dared to beat him.

China's former president enjoyed singing (both other people's and his own). Last year, when he visited the newly-built National Grand Theatre in Beijing, reports say that he sang arias from Western and Chinese operas. Sadly, his songs don't appear to be available to buy in the shops.

The current president, , doesn't appear to sing in public (apart from the national anthem, presumably). But it's mildly worth knowing that he took a dance class when he was at university. And, as noted here before, he's pretty good at ping-pong.

The current premier, , is also a successful poet. One of his poems has been used in a new film about reform in the forestry industry, Drawing the Border. It's not exactly a Jackie Chan martial arts action film, but it'll no doubt attract a loyal audience of Communist Party members and people intrigued by the latest developments in the forestry industry (there are always many).

The film tells the story of how party officials successfully persuade local villagers to take part in the reform of the forestry industry. The film-makers have used one of Mr Wen's poems, called Looking up at the Starry Sky, as the lyrics of their theme song.

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Catching my breath a bit between the end of the Olympics and the start of the Paralympics on 6 September. So, this post is my equivalent of one of those out-of-office automatic replies that tell you that the person you e-mailed has received your message, but is currently off fishing/whaling/climbing all mountain peaks over 8,000 metres.

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