From China To The World

PNG riots hit Chinese businesses

2009-05-19T08:58:00.000+08:00

Asian-owned firms have been looted in Papua New Guinea's two largest cities, amid simmering anti-Chinese sentiment.

Chinese-owned shops and offices were looted by gangs in the capital, Port Moresby, and the coastal city of Lae.

The cause of the disturbances is unclear, but hostility towards Chinese immigrants has been intensifying.

Community leaders predict an exodus of Chinese entrepreneurs, who own many businesses in the bigger cities, where unemployment has reached up to 80%.

Teams of police officers and private security guards have failed to stop the widespread looting.

In Lae, witnesses said that hundreds of men and boys had run amok and that much of the coastal city had been brought to a standstill.

In recent days, a man was reportedly stabbed to death as he tried to break into a shop.

Earlier this month, the building of a nickel mine was stopped after a fight over an industrial accident between Papua New Guinean and Asian workers.

Many settlers arrived in Papua New Guinea from China during World War II and there have been subsequent waves of migration.

There are fears the violence will force many to leave the South Pacific country, which would invariably heap further damage on an impoverished economy.

Expatriate Chinese also fled neighbouring Solomon Islands in large numbers after racially-charged disturbances in 2006.

(BBC)

Obama names ambassador to China

2009-05-17T11:06:00.000+08:00

US President Barack Obama has named the Republican Governor of Utah, Jon Huntsman, as ambassador to China.

Mr Huntsman, 49, is a fluent speaker of Mandarin, which he learnt while serving as a Mormon missionary in Taiwan.

He has served as a deputy trade representative and ambassador to Singapore, and was seen as a potential presidential contender in 2012.

President Obama said he had made the appointment "mindful of its extraordinary significance".

"Given the breadth of issues at stake in our relationship with China, this ambassadorship is as important as any in the world," he said.

The US could most effectively confront global challenges by working together with China, he added.

Mr Huntsman co-chaired the campaign of John McCain, Mr Obama's rival in last year's presidential election, and the president said it would not be the "easiest decision to explain to some members of his party".

"But here is what I also know: I know Jon is the kind of leader that always puts country ahead of party," he said.

Mr Huntsman is seen as a moderate voice within the Republican party, correspondents say.

Standing next to the president at a televised news conference, Mr Huntsman said: "I grew up understanding that the most basic responsibility one has is service to country."

He used a Mandarin saying to underline the point: "Together we work, together we progress."

The post requires Senate confirmation.

Mr Huntsman served as a US trade representative under President George W Bush, and as ambassador to Singapore under his father, President George HW Bush.

(BBC)

New Flu Cases Confirmed in China, Hong Kong

2009-05-14T13:48:00.001+08:00

HONG KONG -- Health authorities in China and Hong Kong confirmed two new cases of the A/H1N1 virus, both in people arriving on flights from North America.

China's Health Ministry said on its Web site that lab results showed a 19-year-old man, identified by the surname Lü, tested positive for the disease also known as human swine flu after arriving in Beijing from Canada aboard Air Canada flight AC029 on Friday. The ministry didn't say where the man was flying from. Air Canada's Web site shows AC029 originates in Toronto and stops in Vancouver before landing in Beijing.

The patient took a train from Beijing to the eastern city of Jinan, and was taken to an infectious disease hospital by Jinan health authorities, the ministry said. His condition was improving, it said. Authorities were searching for people who might have come into contact with the man.

Mr. Lü is mainland China's second case of A/H1N1. A 30-year-old man who flew to China from the U.S. was confirmed as the first case Monday.

More than 5,700 cases of A/H1N1 influenza have been recorded around the world so far, according to the World Health Organization. While the disease is considered less dangerous than early reports suggested, health officials remain concerned that it could become more lethal over time.

Meanwhile, Hong Kong health officials confirmed the territory's second case of human swine flu. A 24-year-old resident of the territory was hospitalized with mild symptoms of the disease after arriving from San Francisco on a Cathay Pacific flight on May 11, they said.

Thomas Tsang, controller of Hong Kong's Center for Health Protection, and Gabriel Leung, undersecretary for food and health, said officials were looking to contact 51 people who sat within three rows of the sick man on the flight. Officials said 45 of the people had already left Hong Kong.

The remaining six have been contacted and are being quarantined. Quarantine arrangements have also been made for his family. Officials said the victim didn't circulate widely within the community after his arrival in Hong Kong.

Hong Kong's previous victim of human swine flu had stayed at a business hotel, prompting the government to impose a controversial quarantine on all staff and residents of the hotel for seven days. That quarantine expired Friday night.

(WSJ)

China Marks Anniversary of Devastating Quake

2009-05-12T15:51:00.001+08:00

BEIJING — One year after a massive earthquake devastated parts of Sichuan Province, China paused Tuesday to remember the nearly 90,000 people left dead ormissing by the disaster and to thank international donors for their help with the recovery effort.

But the anniversary was dogged by continuing questions about the deaths of thousands of Sichuan children crushed in the rubble of school buildings that the Chinese government says were solidly built, but many parents insist were substandard.

President Hu Jintao led a ceremony Tuesday at the quake’s epicenter, in the leveled town of Beichuan, shortly before 2:30 p.m., the time the quake occurred. Mr. Hu adjusted the flowers on a single, large memorial wreath adorned with a red sash. Nearby, a large clock stood with its hands stopped at 5:12, signifying May 12, the day of the tragedy.

Parents of dead students gathered at the wreckage of Beichuan Middle School, where about 1,300 of the 2,900 students and teachers perished. They lighted incense and candles and heaped floral tributes to the dead.

The middle school’s collapse during the 7.9-magnitude earthquake, even as nearby buildings withstood the shock, unleashed a flood of bitter accusations from parents and friends of the dead students that cheap materials and corner-cutting building methods had made the school building vulnerable to a quake. Parents in other towns where schools had similarly collapsed joined the outcry, and engineers and building experts who examined the schools’ rubble supported them.

Seeking to calm the turmoil, the government issued a report last week stating that official inquiries had found no evidence that poor construction contributed to the school collapses. The report said for the first time that 5,335 students had died in the earthquake.

Some survivors have rejected the report’s conclusion, and charged that the official death toll is too low.

On Monday, Mr. Hu thanked foreign diplomats who were invited to the quake commemoration ceremony for their nations’ contributions to relief efforts, saying they had demonstrated “grand humanitarianism and friendship with the Chinese people.”

The government said that 160 nations and assorted international organizations had donated more than $11 billion to quake relief efforts, and that their rescue teams had given medical care to 10,000 survivors and saved one victim who had been buried in the wreckage.

(NYT)

China reports suspected swine flu case

2009-05-11T13:39:00.002+08:00

BEIJING — A Chinese man returning from studying at a U.S. university has become the first suspected case of swine flu in mainland China, the Health Ministry said Sunday.

The ministry identified the patient as a 30-year-old student surnamed Bao, but did not specify where he studied.

China has been accused in the past of not acting quickly enough to combat the spread of diseases, especially the 2003 global outbreak of SARS. Chastened by that experience and subsequent threats from avian flu, the government this time has acted quickly and decisively to block an outbreak, but some of its measures have been criticized as excessive.

The swine flu-prevention measures include bans on imports of pork from Mexico, some U.S. states and Alberta in Canada. Beijing has also canceled direct flights between China and Mexico. Authorities require arriving travelers with flu-like symptoms to report themselves and have placed some travelers under weeklong quarantines.

China's tough measures drew complaints from Mexico that citizens were being quarantined based on nationality. China has defended the steps as necessary to block swine flu from entering the world's most populous nation.

The Chinese territory of Hong Kong earlier reported a case of swine flu diagnosed in a 25-year-old Mexican who flew to the city.

The virus has killed at least 53 people and sickened more than 4,370 in 29 countries, mostly in the U.S. and Mexico, but has so far largely spared Asia.

(AP)

Hong Kong turns Bruce Lee's home into a memorial

2009-05-09T18:45:00.001+08:00

Kung Fu legend Bruce Lee was spending a night with his girlfriend, fellow star Betty Ting Pei, when he complained of a headache and took one of Betty's painkillers.

Within hours he was dead from swelling of the brain, at the age of just 32.

His death on 20 July 1973 deprived an avid worldwide audience of more epoch-making films such as his Enter the Dragon, Fist of Fury and The Way of the Dragon.

He created the martial arts genre in movies and gave Chinese people around the world something to be proud of.

So intense and loving is the aura that still surrounds Bruce Lee that it also extends to an average two-storey house in a Hong Kong suburb called Kowloon Tong.

Donation

The house at 41 Cumberland Avenue is where the star lived officially with his wife, Linda Lee Cadwell, son Brandon (who also was to die tragically young) and daughter Shannon.

Currently it is a love motel, a place where couples can check in for a night, or less, with their cars parked behind curtains to obscure their number-plates and secure anonymity.

It is a nondescript place, but the fence, the arch over the gate and the basic shell of the house are original.

After the tragic earthquake in Sichuan last year, noted billionaire philanthropist Yu Panglin thought of selling various properties around Hong Kong, including the HK$100m (US$12.9m, £8.8m) love motel, to donate the proceeds to the quake victims.

Outcry ensued. This was the home of the great martial arts star, a part of Hong Kong's heritage - and local people weren't going to let it simply disappear.

So Mr Yu changed his plans, and decided to donate the home to Bruce Lee fans around the world.

"Mr Yu has had the house for more than a decade and many people go there, even now," said Raymond Chan, the surveyor and member of the town planning board to which Mr Yu has entrusted the property.

Quite what will happen to the building remains unclear - will it be given to the government to manage? Or will a trust be set up to manage the site?

A committee is being formed, of architects, planners, government representatives and others, to work on moving the project forward.

Fans, friends and film buffs around the world are being asked to contribute designs and memorabilia, and Mr Chan has set up a new email address to manage the influx: bruceleehouse@gmail.com.

Bruce Lee's daughter Shannon has said she is happy to help. She leads the Bruce Lee Foundation and has been working on the establishment of the Bruce Lee Action Museum in Seattle, where the Lees lived between 1959 and 1964.

"Reviving my family's old Hong Kong residence is a unique opportunity which I believe should be seized if at all possible," she told Hong Kong's South China Morning Post.

For Mr Chan, Bruce Lee is the legend who created a new identity for Chinese men.

A stroll along Hong Kong's waterfront "Avenue of the Stars" shows Mr Chan is not alone in this view - a statue of the star draws tourists and fans every day, many of them from mainland China.

Last year, China's state broadcaster, CCTV, ran a 50-part series about Bruce Lee in a belated recognition of the star's symbolism for the Chinese - even though people living on the mainland must have been barely aware of him during his lifetime.

Jackie Chan

Somehow the pull of Jackie Chan, another action star, has not captured the Hong Kong public's imagination quite as much.

Jackie Chan has told reporters of his desire to donate his collection of antique sandalwood houses from the Ming and Qing dynasties to Hong Kong, to help spur interest in his heritage and provide Hong Kong with more tourist attractions.

The seven houses, stored in pieces in a Hong Kong warehouse for years, are reportedly worth US$67m (£46m). But he claims the government has dithered for 10 years, and refused him access to adequate sites, sending him to seek a home for the constructions elsewhere.

Singapore and Shanghai are to receive some Jackie Chan houses, but their Hong Kong welcome remains uncertain.

The recent howls of protest after Jackie Chan said that Chinese people "need to be controlled" to avoid the "chaos" of societies such as Taiwan and Hong Kong, will not have helped his search or home-town validation, the pundits have said.

Heritage

The newfound focus on the heritage values of Bruce Lee and Jackie Chan has raised questions about what it means to be a Hong Konger.

"Hong Kong is much more interested in heritage now," said Christine Loh, leader of the Civic Exchange think-tank.

An environmental and heritage campaigner and a former legislator, she points to a growing number of cases where public debate about preserving what makes Hong Kong special has become intense.

The idea of heritage has grown exponentially in recent years, as the change from British to Chinese sovereignty in 1997 alerted people to a passing of an era.

A sense of Hong Kong identity as distinct from mainland Chinese or British colonial identities has animated passionate debates about saving icons such as the Star Ferry, which crosses the harbour, or old neighbourhoods where stone shop-houses are propped up by steel hoists to survive.

(BBC)

Vice PM Wang Qishan: Distant Neighbors

2009-05-08T09:30:00.003+08:00

The most pressing task facing all countries in the world today is to restore global economic growth as soon as possible. Yet it is worrisome to note that the surge of trade protectionism has made the prospects of the already fragile world economy even worse.

China and the European Union, two major economies and stakeholders in the world, should take a responsible attitude and demonstrate their common, clear commitment against trade protectionism at the second China-E.U. high-level economic dialogue.

Trade liberalization is the engine of economic growth. It has served as a strong propeller of economic globalization and benefited people around the world. On the contrary, trade protectionism — featuring the pursuit of benefits for one country at the expense of others — will only lead to retaliation. It serves the interest of no one.

The world economy paid a heavy price for the prevalence of trade protectionism during the Great Depression in the 1930s, which led to the contraction of global trade by two thirds. We should make sure that the same mistake is not repeated.

Europe is the birthplace of free trade theory, and the E.U. is the product of successful free trade practices. The removal of trade barriers promoted formation of a single European market and enhanced development and prosperity in Europe. As a result, the E.U. has grown into the largest economy in the world today.

China is firmly committed to reform and to opening up. Since its accession to the World Trade Organization, China’s market has become much more open and its trade greatly liberalized. The current overall tariff level of China is only 9.8 percent. Its average tariff on industrial products is only 8.9 percent, the lowest among all developing countries. Its tariff on imported agricultural products is only 15.2 percent, which is not only lower than other developing countries but also far below that of many developed countries.

The openness of China’s trade in services has reached a level close to that of an average developed country. China has taken steady steps to improve its market economic system and legal system. In particular, it has made remarkable progress in intellectual-property rights protection, product quality and food safety, environmental protection and labor security. China has also taken concrete actions against trade protectionism — the Chinese government recently sent Chinese enterprises on procurement missions to Europe and the United States.

The economies of China and the E.U. have much to offer each other and our two-way trade holds a huge potential. The E.U. is now China’s largest trading partner and China is the second largest trading partner of the E.U.

China and the E.U. should make full use of the platform presented by the high-level economic dialogue to strengthen communication and cooperation and jointly oppose trade protectionism. This would better enable us to tackle the current crisis and promote economic recovery and growth. It would also reinforce the trend of economic globalization and facilitates a further growth of two-way trade.

The two sides should work actively to put in place the agreement reached at the G-20 summit in London, promote early, comprehensive and balanced outcome in the WTO Doha round negotiations and uphold an open, fair and equitable international trading regime. An early conclusion of the Doha round is of symbolic significance to curbing protectionism.

The two sides should further open markets to each other. China will continue to lower the threshold for market access, improve trade and investment environment and encourage Chinese enterprises to increase procurement and imports from Europe.

We hope the E.U. will relax restrictions on the exports of high-tech products to China, enhance cooperation with China on the development and application of clean energy, new energy and renewable energy and support cooperation among our small and medium-sized enterprises. Meanwhile, our two sides should step up efforts to update the E.E.C.-China Trade and Economic Cooperation Agreement.

The two sides should work in a cooperative spirit and properly resolve trade differences and disputes. Each side needs to take proper care of its own interests. Yet, more importantly, both sides should accommodate the concerns of the other, taking into full account national conditions and their stage of development, and steadily broaden the scope of our common interests.

We should strengthen dialogue and consultation, refrain from taking protectionist measures and avoid politicizing trade issues. China hopes that the E.U. will evaluate the conditions of the Chinese economy in an objective and unprejudiced manner and recognize China’s full market economy status as soon as possible.

Trade liberalization was, is and will continue to be the only way to global economic prosperity. The Chinese side is ready to work with the E.U. and take effective measures to oppose trade protectionism, promote better growth of China-E.U. trade and jointly move the world economy out of the current difficulties at an early date.

Chinese bankers Jailed in U.S. for 20-Plus Years

2009-05-07T17:28:00.003+08:00

May 7 -- Two former Bank of China Ltd. managers, convicted last year of defrauding the lender of $485 million, were each sentenced to more than 20 years in jail by a Nevada court.

U.S. District Judge Philip Pro in Las Vegas yesterday sentenced Xu Chaofan to 25 years and Xu Guojun to 22 years in prison, the Justice Department said in an e-mailed statement. Pro sentenced the former bank managers’ wives, Kuang Wan Fang and Yu Ying Yi, to eight years each.

A grand jury in Las Vegas last year convicted the couples of defrauding Bank of China, racketeering, money laundering, transporting stolen property, and passport and visa fraud. The former bank managers created shell corporations in Hong Kong, and funneled money through those companies as well as bank and investment accounts in Canada and the U.S., prosecutors said.

“Despite the best efforts of these defendants to avoid detection, their scheme first to steal nearly $500 million from a Chinese bank, and then to hide themselves and the money in the United States, was exposed,” Assistant Attorney General Lanny A. Breuer said in the statement.

Prosecutors claimed the couples emigrated to the U.S. using false identities, and presented evidence of their transactions at Las Vegas casinos, including bets of as much as $80,000.

The two men and their colleague, Yu Zhendong, former employees of Bank of China at its sub-branch in Kaiping County in Guangdong, laundered funds through Las Vegas and Macau, and then used fake passports to flee to Canada in October 2001, the Chinese bank said in 2002.

Plea Bargain

Yu accepted a plea bargain and returned to China in 2004, where he was convicted for embezzlement. His wife was allowed to remain in the U.S. to look after their children, according to yesterday’s Justice Department statement.

Bank of China’s Beijing-based spokesman Wang Zhaowen said he wasn’t aware of the sentence and declined to comment immediately.

China’s banking regulator is stepping up efforts to prevent irregularities and fraud at its lenders, which helped create a surge in bad loans in the past decade.

Several senior bank executives including Liu Jinbao, former chief executive of Bank of China’s Hong Kong operations, and Wang Xuebing, who headed China Construction Bank Corp., have been sentenced to prison terms on corruption charges in recent years. Wang Yi, a former vice president of China Development Bank, was arrested in January for allegedly accepting bribes.

Mitchell Posin, an attorney representing Xu Chaofan, and Bret Whipple, a lawyer representing Xu Guojun, didn’t immediately return calls seeking comment.

Lawrence Jay Litman, a lawyer representing Kuang Wan Fang, and Travis Shetler, a lawyer representing Yu Ying Yi, didn’t immediately return calls seeking comment after business hours.

(Bloomberg)

Flu spat cools budding Mexico-China relationship

2009-05-06T13:37:00.002+08:00

MEXICO CITY, May 5 - China's decision to quarantine dozens ofMexicans to guard against the spread of a deadly new flu has soured therelationship between the two exporters, which compete for access to the U.S. market.

Still, a desire on both sides to boost bilateral trade and ship moreMexican raw materials to fast-growing China means the diplomatic flap should only be a temporary setback.

Mexico accused China of discrimination after Beijing, worried about theH1N1 flu strain, ordered some 70 Mexicans, including a honeymooning couple, into seclusion, even though none had symptoms.

Foreign Minister Patricia Espinosa called the isolation measures"unacceptable" and "without foundation" and advised Mexicans against traveling to China.

China rejected the criticism, saying the steps it had taken were purely medical and not discriminatory.

"This should not affect the relationship in the medium-term because weare talking about an overreaction on both sides," said Enrique Dussel,an expert on Mexican-Chinese trade at the UNAM University in Mexico City.

Across China, a Mexican man in Hong Kong was the only person found to beinfected with the new flu strain that has killed 26 people in Mexico,two in the United States and made more than 1,500 people ill in 22 countries.

China sent a plane from Shanghai on Tuesday to pick up about 100 of itscitizens from Mexico, mainly tourists, students and business people.Some Chinese had been holed up in hotels in northern Mexico for days waiting to leave.

The spat has revived old tensions between the two nations, which
established diplomatic relations in 1972. There has been intense trade
rivalry in recent years with Mexico blaming China for muscling in on its
top export territory by flooding the United States with cheap goods made
in low-wage factories.

UNEASY RELATIONSHIP

President Felipe Calderon visited Beijing last July in a push to improve bilateral trade and Chinese President Hu Jintao came to Mexico in 2005 promising more investment in areas like auto parts manufacturing and mineral exploration.

Yet China has leaned more on South American commodities producers like Brazil and Chile for the materials it needs to fuel its export-oriented economy.

Mexico exported just $2 billion worth of goods to China last year, Dussel said, but imported $34 billion of Chinese products, from clothing and electronics to tourist trinkets.

"Of all the major countries in Latin America, China has the most tense relationship with Mexico," said Dan Erikson, an analyst at the Washington-based Inter-American Dialogue.

"The swine flu crisis has just revealed once again that they haven't built the partnership that both countries say that they want," Erikson said.

Other flu-affected nations have had citizens ensnared in China's quarantine measures, including at least four from the United States and more than 20 from Canada, but Mexico, the epicenter of the outbreak, said it has been unfairly targeted.

The person-to-person spread of the virus has kept alive fears of a pandemic, though scientists say this strain does not appear more deadly than common seasonal flu, which can kill 250,000 to 500,000 people a year globally.

Governments around the world are reacting to the outbreak with different levels of severity. Many suspended flights or warned their citizens against travel to Mexico.

Even as Mexico said the flu crisis seemed to be dissipating and prepared to reopen closed businesses, Chinese nationals wearing face masks and loaded with luggage streamed aboard a Chinese-chartered jet that stopped in Mexico City and the northern city of Tijuana.

"There is a lot of mutual ignorance and no strategic framework. This just shows there is a lot of work to be done" to improve ties, Dussel said.

(Reuters)

Mexican plane to pick up nationals in China

2009-05-05T14:06:00.002+08:00

BEIJING, May 5 - An aircraft was due to land in China on Tuesday to take home dozens of Mexicans who have been under forced quarantine, straining diplomatic relations, as a protective measure against a new flu strain.

The confined Mexicans have become players in a larger drama about how far governments should go to stifle fears that the H1N1 virus could creep through their borders.

Mexican Foreign Minister Patricia Espinosa accused China at the weekend of discrimination after Beijing ordered dozens of Mexicans into seclusion across the country, although only one, a man now in Hong Kong, was found to have the H1N1 flu.

China has denied the charge, saying isolation was the correct procedure, but both countries have agreed to send aircraft to pick up their respective nationals.

A Chinese aircraft has already left for Mexico to pick up Chinese left stranded there after China suspended scheduled, direct flights to the country, the Foreign Ministry said.

An Aeromexico flight will arrive in Shanghai on Tuesday and fly on to Beijing and Guangzhou, an airline official said.

None of those quarantined had shown any signs of being infected, the Chinese Health Ministry said.

The state-run Xinhua news agency said the Mexicans in Beijing were doing well inside a hotel where they have been confined, though the air conditioning has been turned off to prevent any spread of disease despite temperatures reaching 30 degrees Celsius (86 F) outside.

They were put in the best rooms and sent fruit and flowers every day, Xinhua said, citing Deng Xiaohong, deputy director of Beijing Municipal Health Bureau.

"The Mexicans said they were grateful for our work. They said they feel it was understandable to be quarantined as it was a necessary method to avoid the spread of the virus," Deng was quoted as saying.

Staff at the hotel contacted by telephone would not let Reuters talk to any of the Mexicans.

A Mexican embassy official, speaking on condition of anonymity, said it was in regular contact with its nationals. "They feel okay," the official said, declining further comment.

In Shanghai, the Mexicans -- including a honeymooning couple -- had been quarantined at a four-star hotel with a sea view, Xinhua said.

"They can contact people outside, watch television, listen to music, read books or surf the Internet," it added.

In a further diplomatic tussle, Canada said it would pursue World Trade Organization action against China if it maintains its ban on pork and hogs from the province of Alberta [nN04406901]. China's Commerce Ministry had no immediate response.

The one Mexican in China found to have the H1N1 virus arrived in Hong Kong on Thursday after passing through Shanghai. Many of the confined Mexicans were on his flight to Shanghai.

China's vast population and patchy medical infrastructure make it vulnerable should the virus take hold. But even Mexicans residing outside their country have been held by Chinese authorities, the Mexican Embassy spokeswoman said.

(Reuters)

Britain to help China on carbon capture

2009-05-04T15:57:00.002+08:00

Britain will share the benefits of its investment in carbon capture and storage technology with China and other developing countries, the energy secretary, Ed Miliband, said today.

The move may help Britain to belatedly meet its Kyoto protocol promise to pass on low-carbon technology to help poorer countries reduce greenhouse gas emissions.

However, questions may arise over how much should be given away for free and how much the UK should exploit the business opportunities of being a potential leader in the industry.

"We're approaching this from the mindset where we can co-operate more with China on things like carbon capture and storage," Miliband said.

While not abandoning the industrial potential of being a leader in the field, he said Britain could benefit from transferring knowledge.

"Eventually we hope to see this technology across the world because coal is something that is used in many countries and the key to that is making it a clean fuel of the future."

Miliband is visiting Beijing to try to forge common ground with Chinese officials ahead of crucial climate change talks later this year in Copenhagen. Britain hopes China will set voluntary targets to reduce the energy and carbon intensity of an economy that recently overtook the US as the biggest emitter of greenhouse gases.

The central goal of China's mandarins is financial support and the transfer of clean-coal and other low-carbon technology from richer nations.

China is also pioneering its own solutions, as Miliband saw at the world's only commercially operating carbon capture facility, Huaneng Beijing cogeneration power plant.

Developed with the Commonwealth Scientific and Industrial Research Organisation in Australia and opened last July, the facility is on a relatively small scale but it claims 85% efficiency in capturing 3,000 tonnes of carbon each year. The recycled product is used for carbonated drinks and dry ice.

"The technology has been successful here so we can say it will be successful in other coal-fired plants," said the general manager, Cai Hongwang. "We could scale this up. We are now considering the market demand for carbon dioxide."

If production is ramped up, the captured carbon could be used for enhanced oil recovery or, in the longer term, possibly pumped into the deep ocean. Britain is considering sequestration of carbon in cavities under the North Sea bed that have been emptied of oil.

Several similar experiments will soon be launched in other parts of China, which is investing heavily in research into reducing the climate impact of coal. More than 70% of China's electricity is generated by coal. Over the next 10 years, the amount burned is expected to double.

According to the Chinese Academy of Science, a plant in Shanxi will capture carbon and use it as fertiliser, while another in Shaanxi may pump captured carbon into oil deposits to extract the fuel.

"It is better to convert carbon dioxide into products, but the demand is limited," said Xiao Yunhan, a government adviser and energy expert at the academy. "Sequestration will be the final solution for carbon dioxide control. But before that we should try other things."

To enhance technology transfer and co-operation on low-carbon projects, Miliband will tomorrow launch a £10m joint venture with the Carbon Trust and the Chinese Development Corporation to encourage British firms to enter the Chinese market.

He will give a speech at Peking University calling on China to take a leadership role in climate talks. "As an emergent great power, China, too, has the ability not just to act but to lead; to be great not just in size but in influence; to energise others around the world" he will say.

(Guardian)

Australia in $70 billion boost to military, for China?

2009-05-03T14:02:00.003+08:00

SYDNEY — Australia will spend more than 70 billion US dollars boosting its defences over the next 20 years in response to a regional military build-up and global shifts in power, the government said Saturday.

A long-term strategic blueprint for the future of Australia's armed forces warned that war could be possible in the Asia-Pacific region in the next two decades, as emerging powers such as China flexed their military might.

The United States would continue its military dominance and be an "indispensable" ally for Australia, the defence white paper said.

But as emerging or resurgent powers such as China, India and Russia tested US primacy, the paper said there was "a small but still concerning possibility of growing confrontation between some of these powers."

"China will be the strongest Asian military power, by a considerable margin," the paper said. "A major power of China's stature can be expected to develop a globally significant military capability befitting its size.

"But the pace, scope and structure of China's military modernisation have the potential to give its neighbours cause for concern if not carefully explained, and if China does not reach out to others to build confidence regarding its military plans," it said.

If it did not take these steps, the paper said, there would be "a question in the minds of regional states about the long-term strategic purpose of its force development plans, particularly as the modernisation appears potentially to be beyond the scope of what would be required for a conflict over Taiwan.

"China will have even more interest in convincing regional countries that its rise will not diminish their sovereignty," the paper said.

Greater engagement with Beijing was essential for encouraging transparency about Chinese military capabilities and intentions, and securing greater cooperation in areas of shared interest, the paper said.

China's Premier Wen Jiabao in March vowed to modernise his nation's military across the board, asking legislators for a 15.3 percent increase in defence spending for 2009 to 472.9 billion yuan (69 billion dollars) -- double 2006 funding levels. The global financial crisis was likely to accelerate a shift of power to the Asia-Pacific, and regional security would pivot on how strategic dynamics were managed between the US, China and Japan, the blueprint said.

A major conflict on the Korean peninsula remained a possibility, and the paper said the collapse of North Korea could not be ruled out, while Myanmar remained a "serious challenge."

An escalation in tensions between India and Pakistan was also of "significant concern," and the paper said Islamist extremism would pose a direct threat to Australia and its interests.

The paper reiterated Canberra's commitment to the conflict in Afghanistan, which it said could endure another decade or longer.

Canberra will acquire long-range cruise missiles, double its submarine fleet to 12 and buy 100 F-35 Joint Strike Fighter jets and eight new warships under the plan, titled "Force 2030."

"Force 2030 will mean the best fighter jets, the most versatile armoured vehicles and the most sophisticated submarines available to defend Australia?s national security," said Prime Minister Kevin Rudd at the report's Sydney launch.

The Sino-focused strategy, which was widely leaked to the press, was met with unease in Beijing, where it was reportedly perceived by some as Australia aligning itself with the United States against China.

"China definitely will not accept Australia adopting the so-called 'China threat' thesis," Beijing professor Shi Yinhong told the Sydney Morning Herald newspaper on Friday.

"(China) will have to publicly criticise (the paper)," added Yinhong, international relations specialist from the People's University.

(AFP)

Hong Kong 'flu' hotel sealed off

2009-05-02T11:43:00.002+08:00

About 300 people at a Hong Kong hotel have been placed under quarantine after a guest there became China's first confirmed swine flu case.

The 25-year-old man, who is now in hospital after testing positive for the virus, had travelled from Mexico via Shanghai, Hong Kong's leader said.

Local TV footage showed police wearing masks guarding the hotel exits.

Meanwhile, the UK joined Canada, Spain, Germany and the US in reporting person-to-person transmission of the virus.

On Friday, French Health Minister Roselyne Bachelot said two people were infected with swine flu, France's first confirmed cases.

South Korea has also confirmed its first case, local media said.

The announcements take to 16 the number of countries where swine flu has been confirmed.

Mexico, where the outbreak began, has shut down parts of its economy for five days in a bid to curb the virus's progress.

Late on Friday, Health Secretary Jose Angel Cordova announced the confirmed death toll from the virus had risen by one, to 16.

"The mortality rate isn't as great as could be expected," said Mr Cordova. "The majority of the deaths are women."

Mexican officials say the spread of swine flu - suspected in more than 380 deaths - is slowing.

International experts are more cautious - but one, Nancy Cox, chief of America's Center for Disease Control's influenza division, said the new virus lacked the traits that made the 1918 pandemic so deadly.

"We do not see the markers for virulence that were seen in the 1918 virus," she said.

'No panic'

In cases outside Mexico the effects of the virus do not appear to be severe, although one death of a Mexican child has been confirmed in the US.

The WHO has set its pandemic alert level at five - but says it has no immediate plans to move to the highest level of six.

In Hong Kong, the authorities have raised the alert level to emergency but urged residents to carry on life as normal.

"I assure you the Hong Kong government will try its best to conquer the virus," Chief Executive Donald Tsang said.

"I stress we don't need to panic."

The Mexican man is said to be in a stable condition in Hong Kong's Princess Margaret Hospital, after seeking treatment on Thursday night after becoming unwell.

The Metropark Hotel in Wanchai district where he briefly stayed will be sealed off for seven days, health officials said, and the antiviral drug Tamiflu given to about 200 guests and 100 staff there.

Medical staff wearing protective clothing were seen carrying boxes of equipment into the building.

Efforts are also under way to trace people who travelled on the same flights as the Mexican, and taxi drivers with whom he came into contact.

BBC China Editor Shirong Chen says confirmation that the man has tested positive for the virus has set alarm bells ringing beyond Hong Kong.

Chinese Health Minister Chen Zhu said the virus was very likely to enter mainland China and urged the country to prepare for an outbreak, as millions start travelling over the May Day long weekend.

In South Korea, a 51-year-old woman who had recently returned from Mexico was confirmed as the country's first case, Yonhap news agency reported.

Two other people are being tested for the virus, the agency said.

Schools closed

Meanwhile, the authorities in Mexico hope a nationwide shut-down ordered from Friday, covering two public holidays and a weekend, will help curb the spread of the virus.

Some factories will stop production and schools are already closed. Residents have been urged to stay at home, but it is not clear how widely the shut-down order will be followed.

The number of confirmed cases of swine flu infection in Mexico now stands at more than 300, officials say.

Mexican Health Secretary Jose Angel Cordova said on Friday that three more deaths from swine flu had been confirmed, bringing the toll to 15.

Announcing the figure, Mr Cordova said that new cases of the virus were levelling off.

But Dr Keiji Fukuda, acting assistant director general of the World Health Organization (WHO), said fluctuations were to be expected.

In other developments:

• The US announces that it will buy 13 million new courses of antiviral treatment and send 400,000 of them to Mexico

• A flight from Germany to Washington DC is diverted to Boston after a female passenger complains of flu-like symptoms

• An aide to US Energy Secretary Stephen Chu who helped arrange President Barack Obama's recent trip to Mexico is being tested for swine flu, although the aide is said not to have been in contact with the president

• The head of the US Centers for Disease Control and Prevention says it is fine for people without flu symptoms to fly and use the subway, a day after Vice-President Joe Biden said he would advise his own family members against using public transport

• Denmark reports its first confirmed case of swine flu

• German authorities confirm that a nurse who treated a patient with swine flu also contracted the disease, in the first person-to-person transmission in the country

• Test results confirm the UK's first person-to-person transmission of swine flu, in a friend of a couple from Scotland who were first in the country to be diagnosed with the virus

Several countries have restricted travel to Mexico and many tour operators have cancelled holidays.

The WHO, meanwhile, says it will now call the virus influenza A (H1N1) rather than swine flu - which it says is misleading as pork meat is safe and the virus is being transmitted from human to human.

(BBC)

China-donated anti-flu goods arrives in Mexico

2009-05-01T21:11:00.001+08:00

MEXICO CITY, April 30 (Xinhua) -- A cargo plane ferrying the first load of China-donated relief supplies to help Mexico battle an outbreak of Influenza A/H1N1 landed at a Mexico City airport early Friday.

The humanitarian aid, including masks, latex gloves, isolation coats, disinfectant and infrared thermometers, was received in a ceremony attended by Mexican President Felipe Calderon.

The goods are part of a 5 million U.S. dollar assistance package that the Chinese government has offered Mexico to help it fight the A/H1N1 flu outbreak.

China's donation was the first massive arrival of material assistance that has reached Mexico since the flu outbreak began in April.

Calderon said at the ceremony that China's help was appreciated. He noted that sanitary security was not only an issue for Mexico but also for the entire world.

Calderon said the methods China used while fighting the 2003 outbreak of SARS -- severe acute respiratory syndrome -- should be learned by Mexico.

The president expressed confidence that Mexico will win the battle with the virus through the efforts of its citizens and outside aid.

Yin Hengmin, the Chinese ambassador to Mexico, said his countrymen feel for Mexico, and the government is ready to offer help of any kind.

The Chinese Embassy on Thursday donated 50,000 U.S. dollars to the Red Cross in Mexico to help people there fight the flu, Yin said.

"We are convinced that Mexico... is capable of overcoming the epidemic and restoring the normal order of life and production in maximum brevity," the ambassador said.

The Chinese government on Thursday pledged 5 million dollars worth of humanitarian assistance to Mexico, including one million dollars in cash and four million dollars in medical supplies.

The funds were transferred to the Mexican government Thursday and the Chinese Ministry of Commerce (MOC) is coordinating with related government agencies to arrange the rest of the relief materials.

MOC spokesman Yao Jian said Friday that China was highly concerned about the situation in Mexico and nations should work together to counter the spread of the flu virus.

In addition to China, Spain, the United States, Japan and the World Bank also have offered aid to Mexico.

Mexican Health Minister Jose Angel Cordova said Thursday the number of confirmed Influenza cases has risen to 312, with 12 of them being fatalities.

(Xinhua)

Chinese imperial seal auctioned in Paris

2009-05-01T12:21:00.001+08:00

A Chinese bidder bought an 18th Century jade imperial seal for 1.68m euros (￡1.5m) at a Paris auction house, despite protests by Chinese officials.

The Chinese bidder refused to give his name, but said he was acting on behalf of an art collector in France.

The piece sold for more than five times its estimated value after a tense bidding race with another Asian buyer.

Beijing said the Qing Dynasty relic was looted by British and French troops from its Summer Palace in 1860, towards the end of the Second Opium War. All such relics should be returned to China.

The auction house said the seal, mounted with two carved dragons, came from the personal collection of a descendant of a French general who commanded some of the invading troops.

The sale comes two months after the contested sale of two bronze animal heads also said to have been looted from the Summer Palace.

(BBC)

China bans pig and pork imports from Mexico, U.S.

2009-04-30T16:15:00.001+08:00

Apr. 30, 2009 - China, the world's biggest pork consumer, has forbidden direct or indirect imports of both live pigs and of pork products from Mexico and from the three U.S. states of Texas, Kansas, and California with the intent to prevent the swine flu virus from spreading to the country, according to a joint statement issued by the Agriculture Ministry and the General Administration of Quality Supervision, Inspection and Quarantine on Monday.

The statement, which took effect upon its announcement, also said that pork products sent by mail or personally carried by travelers are also prohibited.

A number of countries, including Russia, Thailand and Ecuador, have banned or restricted pork imports in spite of assurances from authorities such as the Center for Disease Control and Prevention and the World Health Organization that the swine flu cannot be transmitted through food, but only from person to person.

Though the E.U., Australia, and the top buyer of U.S. pork, Japan, have not issued bans, the pork industry is concerned about the effect the bans will have on trade.

(China Knowledge)

Japanese PM in Beijing for visit

2009-04-29T15:18:00.001+08:00

Japanese Prime Minister Taro Aso has arrived in Beijing for a visit expected to focus primarily on the economy.

Japan and China, the world's second and third-biggest economies respectively, are hoping to work together to combat the global downturn.

But the visit comes at a sensitive time for China-Japan relations.

Last week Mr Aso sent an offering to the controversial Yasukuni shrine, which Beijing sees as a symbol of Japan's past militarism.

China said in a statement that it expressed "serious concern and dissatisfaction" for the shrine offering.

Sensitive issue

Mr Aso was due to meet with his Chinese counterpart Wen Jiabao on Wednesday, and President Hu Jintao on Thursday.

Economic ties are expected to dominate talks, along with efforts to develop joint energy reserves and combat an outbreak of swine flu.

North Korea may also be on the agenda. Japan is keen to enlist Chinese help in persuading Pyongyang to return to six-nation talks on its nuclear programme.

North Korea walked away from the negotiating table in the wake of UN criticism over its rocket launch earlier this month.

Mr Aso's visit comes just a week after he upset China by a making an offering to Tokyo's controversial Yasukuni war shrine.

He did not actually visit the shrine, but sent a plant which he said expressed his "appreciation and respect as a Japanese national to the people who sacrificed their precious lives for the country".

Previous prime ministers have stirred regional tensions by visiting Yasukuni - which honours Japan's war dead, including 14 people convicted as Class A war criminals after World War II.

Repeated visits by Junichiro Koizumi caused anger in South Korea and China, where there remains a widely-held conviction that Japan has not atoned properly for its war-time crimes.

(BBC)

Alcatel-Lucent signs China deals worth $1.7 bln

2009-04-28T16:03:00.002+08:00

NEW YORK, April 27 - Alcatel-Lucent said on Monday it had signed two agreements valued at $1.7 billion with China Mobile and China Telecom to provide network upgrades, integration and maintenance services in 2009.

The agreements were secured through Alcatel-Lucent Shanghai Bell, Alcatel-Lucent's Chinese flagship company.

The agreement with China Mobile is valued at about $1 billion, while the China Telecom deal is valued at about $700 million, Alcatel-Lucent said.

The agreements were signed in Washington, D.C., where on Monday U.S. and Chinese companies signed 32 business deals worth $10.6 billion.

China Telecom also signed contracts with Cisco , Microsoft , Dell and Emerson , while China Mobile deals included those with with HP, Oracle ), Emerson, Sun Microsystems and Cisco.

(Reuters)

Air China Drops on Concern Over Swine Flu

2009-04-27T13:43:00.003+08:00

April 27 -- Air China Ltd., Singapore Airlines Ltd. and Qantas Airways Ltd. led declines by Asia-Pacific carriers on concern a growing number of swine-flu cases in the U.S. and Mexico may damp travel.

Air China, the world’s largest carrier by market value, sank as much as 11 percent to HK$3.57 in Hong Kong trading and changed hands at HK$3.59 as of 11:15 a.m. Singapore Air, Asia’s most profitable carrier, fell 4.7 percent to S$10.10 in the city-state. Sydney-based Qantas, Australia’s largest carrier, dropped 4.8 percent to A$1.885.

Airlines, already struggling amid the global recession, face further declines in travel because of the deadly swine-flu outbreak in Mexico and the U.S. Panasonic Corp. and Sharp Corp. have told employees to avoid travel to Mexico, while the U.S. has declared a public-health emergency.

“Swine flu poses a risk to global airlines as discretionary travel gets cut back even more,” said Ben Potter, a Melbourne-based analyst at IG Markets. “Customers look to avoid possible contact with infected persons and there’s the possibility governments may urge a cutback in flights to help control the spread.”

Singapore has tightened checks at its main airport to screen arriving passengers against the flu outbreak, while authorities in Japan will examine flights from Mexico, where the flu was first detected.

Economic Consequences

The disease has killed more than 80 people in Mexico, and 20 in the U.S. have contracted it. The number is likely to rise, Dr. Richard Besser, acting chief of the Centers for Disease Control and Prevention, said at a White House briefing yesterday.

Japan Airlines Corp., Asia’s largest carrier by sales, fell 2.5 percent to 194 yen, while Korean Air Lines Co., South Korea’s biggest, tumbled 5.2 percent to 38,700 won. The airlines said separately they will monitor the situation in Mexico.

“Travel gets impacted rather quickly and savagely during virus outbreaks,” said Prasad Patkar, who helps manage the equivalent of about $800 million at Platypus Asset Management in Sydney. “The market clearly believes that the swine-flu outbreak will have economic consequences.”

The Bloomberg Asia Pacific Airlines Index, which tracks the region’s largest carriers, sank 4.4 percent on concern that the outbreak may be similar to Severe Acute Respiratory Syndrome, or SARS, which killed almost 800 people globally six years ago.

Reminded of SARS

“This swine flu reminds investors of the SARS outbreak in 2003,” said Jack Xu, an analyst of Sinopac Securities Asia Ltd. in Shanghai. “It will curb air traffic on both domestic and international routes. Cutting travel is a basic precautionary measure when people face the threat of flu outbreak.”

Yamaha Motor Co., the world’s second-largest motorcycle maker, has asked employees to refrain from traveling to Mexico, while Hino Motors Ltd., Japan’s largest maker of heavy-duty trucks, has decided to postpone business trips to the Latin American country.

Panasonic, the world’s largest maker of consumer electronics, and Sharp ordered employees to avoid travel to the country. Sony Corp., the world’s second-biggest consumer- electronics maker, told workers to avoid Mexico City, while Hitachi Ltd. recalled Japanese staff based in the country.

(Bloomberg)

Publishers look to China and India to help them weather recession

2009-04-26T15:38:00.002+08:00

In China, inspirational business books such as Who Moved My Cheese and family health titles compete with the latest blockbusters; in India, classics from Agatha Christie and Enid Blyton vie for shelf-space with homegrown authors and the penned advice of billionaire IT entrepreneurs; while in South Africa, the boarding school antics of John 'Spud' Milton have captured readers' imaginations and created a Harry Potter-like craze.

Across the world, the appetite for English language books is booming and publishers struggling under the weight of the recession in their core markets of the US and UK are increasingly turning their sights overseas. Random House, for instance, yesterday announced that the record-breaking first print run of 6.5 million copies of The Lost Symbol, Dan Brown's follow-up to The Da Vinci Code, will include over half a million for overseas territories including India and South Africa, an unprecedented number for a new fiction title.

Publishers from across the globe have gathered in London this week to discuss how to exploit this growing opportunity. This year's London Book Fair has a distinctly Indian flavour, with heavyweight authors such as Vikram Seth and Amartya Sen among the 48 writers appearing, but delegations from China, Russia, Africa and the Arab world will also be there to meet the estimated 16,000 publishers that have come to showcase their catalogues to the rest of the world.

A combination of the recession, which has pared back consumer spending, and a longer-term demographic change brought about by a fall-off in population, is hitting book sales in the US and Britain. Both markets are still the largest for English language publishers, but growth has stalled. The US market was worth an estimated $24.3bn in 2008 while sales in Britain were about £3bn. Last year, book sales by volume in the US dropped 6% on 2007, while in value terms the drop was 2.5%. In Britain the drop was more pronounced, with the volume of books down 4% and value down 6%, spurred lower by aggressive price competition in the major book chains and supermarkets.

Differing tastes

In contrast, overseas English language markets are positively booming. India is the world's third largest English language book market and has been growing at about 10% per annum for several years. Research by UK Trade & Investment (UKT&I), which is using the Book Fair to encourage British publishers to export more, and the Publishers Association estimates that the market was worth about £1.25bn in 2007, with publishers estimating that about half that amount was English language books.

The Chinese market was worth about £7bn in 2007 - with almost a quarter of a million titles producing a total print run of 6.3bn copies - but its English-language market is small by comparison with India and UK exports to the country run at about £10m.

The South African book market was worth about £260m in 2007, with three quarters of those sales going to English language books, and has doubled in value in four years, while the enormous ex-pat community has helped fuel growth in the book market in the United Arab Emirates, with UKT&I estimating that book exports have doubled in the past six years.

Tastes differ across these markets, according to publishers. In China "books about earning money and making a family healthier just sell forever", according to Jo Lusby, general manager of Penguin in the country. The publisher has also done well with Elizabeth Gilbert's account of the spiritual gap year she took to recover from her divorce, entitled Eat, Pray, Love.

Who Moved My Cheese, the motivational book by Spencer Johnson which celebrated its 10th anniversary last month, is one of China's all-time best-selling translated titles with several million sold to date. Film tie-ins also help sales, with Penguin's The Kite Runner receiving a boost from its recent film adaptation, while former Fed chairman Alan Greenspan's book The Age of Turbulence has been a surprise hit. Many English books in China are used as educational tools, with people using them to improve their skills in a language which is now spoken by over 300 million people in China.

In South Africa the market has experienced something of a publishing sensation in recent years with the boarding school antics of Spud and his gang - the Crazy Eight - helping to expand the book reading populace. The first tome has already sold well over 125,000 copies since its publication four years ago and while that may not sound like much there are only an estimated 800,000 general book buyers in the country's population of just under 50 million people.

But with its booming population, of whom 350 million speak English, it is no surprise that most of the publishers at the London Book Fair are turning their attention, eagerly, to India.

"India is an incredible growth market at the moment," says Alistair Burtenshaw, the exhibition director of the London Book Fair. "It provides fascinating business opportunities in almost all sectors, and that's absolutely the case in publishing."

The trade show coincides with a growing push by western publishing companies to ramp up their operations on the subcontinent. Later this month Hachette is joining the ranks of Penguin, HarperCollins and Random House by publishing its first new book in India - My Friend Sancho, by Amit Varma.

English language publishing in India stretches back to the days of the Raj, and the likes of Macmillan and Longman have had a presence as educational publishers since the 19th century. For many decades, western publishers exported their books to India for distribution by local companies, while domestic operators also produced books in English. But the arrival of Penguin in 1987 marked a decisive change, establishing a berth in India for a major international publishing house for the first time.

Others followed: HarperCollins set up a joint venture in the 1990s and is now in partnership with the India Today group, then after ownership rules changed earlier this decade Random House and Hachette both set up fully owned operations.

Curiosity

With 180 English titles published a year - and some in Hindi, Marathi and Urdu too - Penguin retains first mover advantage. It has also outsourced 130 jobs at its Dorling Kindersley division to India, where Eyewitness travel guides are now produced.

"We're far and away the leading English language publisher in India," says Penguin chief executive John Makinson. "It's a more competitive environment than it was but we have a tremendous headstart."

Publishers are also noticing a new mainstream literary culture that has transformed book-reading from the preserve of an educated elite into a cerebral leisure activity for India's emerging chattering classes.

"It's not that people have suddenly got interested in books and reading, it's that the nature of the interest is coming more to resemble the nature of the interest you might see at Cheltenham, Oxford or Hay-on-Wye," book festivals says Simon Littlewood, the international director at Random House. "There's a curiosity about authors and the authorial process, building on an established bedrock of literacy and literary interest."

The hope now is that this bedrock, both in India and other overseas markets, will be sturdy enough to support a growth industry while UK and US markets hibernate through the recession.

(Guardian)

Huiyuan Rises on Report of Coca-Cola Stake Bid

2009-04-25T14:20:00.001+08:00

April 24-- China Huiyuan Juice Group Ltd., the country’s biggest maker of pure juice, climbed the most in a month in Hong Kong trading after the Wall Street Journal reported Coca-Cola Co.

may buy a minority stake.

Huiyuan rose 13 percent to HK$5.74 in Hong Kong trading, the most since March 25, making it the biggest gainer on the MSCI Asia-Pacific Index. The gain trimmed the stock’s decline to 31 percent since March 18, when China’s government blocked Coca- Cola’s $2.3 billion bid for Huiyuan.

Coca-Cola is exploring options for a deal with Huiyuan that will satisfy Chinese regulators, the Journal reported yesterday, citing people familiar with the situation. Coca-Cola and PepsiCo Inc., which together control 86 percent of China’s soda market, are in a race to buy juice and dairy-beverage brands in developing markets.

“The talk definitely will be a short-term catalyst to the share price,” Jacqueline Ko, a food and beverage analyst at Kim Eng Securities (Hong Kong) Ltd. said in a report today. “There are numerous challenges facing China Huiyuan going ahead due to the slowdown in demand for their core 100 percent juices and nectars as well as the stiffer competition in the juice-drink market.”

Huiyuan’s Suitors

Huiyuan said today it’s unaware of the source of newspaper reports saying it resumed discussions with Coca-Cola. The company “is not in possession of any price-sensitive information which would require an announcement,” it said in a statement to Hong Kong’s stock exchange.

Coca-Cola declined to comment on “speculation” in a statement sent by e-mail late yesterday. “We were disappointed, but we also respect the Ministry of Commerce’s decision not to approve our proposed purchase of the Huiyuan Juice business,” said the statement sent by Coca-Cola spokesman Kenth Kaerhoeg.

Zhu Xinli, chairman and president of the Beijing-based company said April 15 that Huiyuan Juice had been approached by “many more suitors” after Coca-Cola’s bid was blocked. He declined to provide further details.

“Even if Coca-Cola finally takes some minority stakes in China Huiyuan, we see that the deal is simply more beneficial to Coca-Cola and the Chairman Zhu Xinli than to China Huiyuan,” said Ko, who recommends selling the Chinese juicemaker’s shares.

China’s Ministry of Commerce has denied that its decision to block Coca-Cola’s takeover bid was aimed at protecting a national brand. The biggest foreign takeover of a Chinese company would have hurt competition by strengthening Coca-Cola’s control over China’s juice and beverage market, enabling it to abuse its dominance, the ministry has said.

(Bloomberg)

Yum Vows To 'Slug It Out' In Recession

2009-04-24T12:08:00.001+08:00

NEW YORK - Yum Brands Inc. (YUM) vows to "slug it out" with competitors in 2009 after reporting a 14% dip in first-quarter profit amid a decline in U.S. sales from increasing pricing competition and slumping dinner sales for its KFC and Pizza Hut brands.

Yum's international divisions produced stronger results than did the U.S., with same-store sales gains in both China, where it is pinning hopes for growth despite a slowdown in the economy there, and other international markets.

Effective cost management across all three divisions and deflating commodity costs helped the world's largest fast-food chain, with more than 36,000 restaurants, top analyst first-quarter estimates with per-share earnings of 48 cents, excluding special items, compared with expectations of 40 cents a share, according to Thomson Reuters.

The quarter also gave greater certainty to analysts that the company can hit its full-year goal of growing per-share earnings without special items 10%, sending shares up $2.33, or 7.3% in recent trading, to $34.42.

That growth is expected to be back-half loaded as sales, costs and foreign- exchange rate comparisons make it easier to lap the prior-year periods. Yum expects the current quarter to be the toughest of the year due to a low tax rate and record sales growth in China for the year-ago period.

"This is a slug it out year," Chief Executive David Novak said on an earnings call. "You got to take your gloves off, slug it out, take on competition, keep building your brands and be strong as you go into 2010."

That's not a write-off for 2009, as Yum is launching initiatives to both drive sales in addition to managing costs. It will especially look to focus on rejuvenating sales in the U.S., its largest and more mature market, where same- store sales fell 2%, compared with gains of 2% in China and 6% in other international markets.

Yum's sales during dinner are taking a huge blow as families, eager to save money, cook more meals at home. That is taking its toll at both KFC and Pizza Hut, which derive a majority of their sales during the dinner hours.

KFC's new grilled chicken platform was recently launched to drive more sales at the lagging brand, while Pizza Hut is relying on more sales of pasta, lasagna and chicken wings, as it tries to become more than a pizza chain.

Taco Bell, the top performing brand, which contributes 60% to U.S. profits, is seeing more competition from other fast-food chains pushing their value menus harder as they try to attract customers, and plans to fortify its own "Why Pay More" value menu in response.

International markets remain in better shape, even as the economic slowdown spreads worldwide. KFC's same-store sales in India, for instance, were up more than 30% in the quarter, and Yum plans its first Taco Bell locations there later this year. The company is also continuing to rapidly open units in China.

Fast-food chains have been more resilient in the economic slowdown than casual-dining restaurants due to their lower-priced food and convenience. But the higher-priced chains are cutting prices to win back customers, leading some to believe that the quick-service industry may resort to a "zero sum industry" highlighted by intense competition for fixed pool of customers.

(Dow Jones)

China puts naval might on display

2009-04-23T16:47:00.001+08:00

China is staging a military parade to celebrate its navy's 60th anniversary - and show the world its latest warships.

A least one of the country's nuclear-powered submarines is on display at the naval parade, being held in the port city of Qingdao.

Twenty-one foreign naval vessels from 14 countries are also taking part, including the US, France and Russia.

Military analysts say the event will allow the rest of the world to see how China has developed its naval forces.

Chinese sailors laid out a red carpet in front of the Chinese destroyer Shijiazhuang that took the country's president, Hu Jintao, out to sea for the parade.

"Both now and in the future, no matter to what extent we develop, China will never seek hegemony," state media quoted him as saying.

A total of 25 ships and 31 aircraft from the People's Liberation Army Navy were involved in the event.

Joining President Hu on the destroyer were military officials from nearly 30 countries - many of whom had the chance to tour a Chinese submarine, a destroyer and a hospital ship.

Flag Lieutenant Ollie Hucker, of Britain's Royal Navy, said he was impressed with what he had seen.

"In some ways we are jealous of their capabilities," he said, adding that it was clear that China wanted to become a major naval power.

"The global high seas are somewhere they need to make sure they can protect. The sea is where most of the trade routes are," he said.

Military-to-military relations

Ordinary people also attended the parade, despite the biting wind in Qingdao.

Carrying binoculars, they lined the city's waterfront from early in the morning to get a glimpse of the parade, most of which took place at sea out of view.

Some said they were proud to see that China now had advanced warships to match the country's growing global importance.

Shi Huijuan came from Shanghai to see the parade. "This is the first time the country has put on such a big parade so I really wanted to come and see it," she said.

China appears to have become more assertive in the waters off its coastline over recent years.

Earlier this year, five Chinese vessels were involved in a stand-off with a survey ship from the US navy off China's Hainan Island.

But the diplomatic row that followed did not stop the US from sending two ships to take part in the Qingdao parade.

"Our goal has always been to maintain and develop military-to-military relations," said a US Embassy spokesman in Beijing.

(BBC)

Shanghai bucks car industry gloom

2009-04-22T13:57:00.001+08:00

Outside the skies were grey and overcast, but inside the brightly lit exhibition halls at the Shanghai Auto Show, there was little sign of the gloom that hangs over the rest of the auto industry.

Perhaps they were pretending - but the besuited executives standing on podiums, introducing new models or new features to the crowds below them watching sounded excited.

The major manufacturers are pinning their hopes of recovery on the Chinese auto market. They don't really have much choice.

This is one of the only places in the world where the numbers are heading in the right direction at the moment.

More vehicles were sold in China in March than ever before.

Subsidies

For three months now more vehicles have been sold here than in the United States, although to be fair, that's almost as much due to a collapse in sales there as it is to growth here.

In fact growth in the China market slowed considerably in the last few months of 2008, and has only picked up in recent weeks, thanks largely to stimulus measures introduced by the government.

These have included a cut in the purchase tax for smaller cars, from 10% to 5%.

And $730m dollars in subsidies has been made available for those in rural areas who want to replace ageing vehicles with new small vans or trucks.

But growth, any growth is to be celebrated in the current circumstances.

Mature market

The halls are full here. Those running the show were apparently turning potential exhibitors away.

Certainly some visitors said the show felt busier than it had done in past years, and appeared better organised.

In front of the Ford Motor Company stand John Parker, the man responsible for the company's business in Asia Pacific and Africa, declared confidently that China was now "a mature market which is a very significant part of the world auto-market scene".

Ford's Asia Pacific Vice President, John Parker talks to Chris Hogg

But much of last month's extra sales volume came from the smaller cars, which are cheaper now under the new tax rules and they're often not as profitable as bigger ones.

"That creates some challenges, and it really means that you must pay close attention to your cost structure," Mr Parker acknowledged.

"But it is viable to make profits on small cars, we're profitable in our business here in China."

Quality questions

Chinese auto manufacturers tend do well when people buy smaller cars because they sell many of the cheapest models on the market.

Brilliance Autos was unveiling nine new models.

The company has been criticised in the past for producing cars that performed poorly in safety tests.

Wan Yufei, the General Manager of the company's international division insisted those problems were now behind them.

"Our vehicles have now passed a number of tests to enter the European market," he says.

He added that in his view when his company tried to enter more mature, more developed markets, other "non-tarriff barriers" tended to appear which "made life difficult for them."

Certainly the quality issue is one that a lot of the Chinese manufacturers feel they have to address in interviews with the international media.

Robust recovery

Industry analyst Mike Dunne from JD Power, had another question on his mind though, as he toured the stands. Not how robust were the chassis on display, but how robust was the recent recovery in their sales?

"If we look at the engines of growth in China's economy, number one is exports, number two is foreign direct investment," he said.

"Those are both down. If the two key engines are sputtering, what have we got left? We have government stimulus. Can that last? Let's watch and see. No guarantees."

The current measures introduced by the government to help China's car industry are due to remain in place until the end of the year.

By then some economists expect the economy to be performing much more strongly in this country and so, the logic goes, they will no longer be needed.

But such stimulus measures are usually 'front loaded' - they are more effective in the early months when larger numbers of people who didn't need much persuasion to make a purchase go into the showrooms to buy.

The exhibitors here will be watching nervously, once the auto show opens to the public on Wednesday, to see how many people come to see the vehicles on display - it's an important opportunity to try to judge public sentiment.

Of course, with the help of the skinny models draped across the cars, rock music, dancing, and exploding glitter balls, they will also try to spread some excitement in an industry that really doesn't have much to celebrate at the moment.

(BBC)

China Influence Grows With Car Sales

2009-04-21T18:22:00.001+08:00

SHANGHAI — After a century in which American tastes largely set the course of the global automotive market, China is poised to increasingly take on the role of global trendsetter.

Automakers say just as car buyers around the world saw more sport utility vehicles and cup holders because that was what Americans wanted, they will probably see more features that the Chinese favor, from greater fuel efficiency to more comfortable back seats.

Vehicle sales in China passed those in the United States in the first quarter, as China has weathered the global downturn much better than other major economies. And there are growing signs that China will become the leading automotive market in the long term.

“The center of gravity is moving eastward,” Dieter Zetsche, the chairman of Daimler, said at the opening day of the Shanghai auto show Monday. “This has, if anything, only accelerated through the crisis.”

China’s emphasis on fuel efficiency is partly a reflection of frugality: income per person in China is still one-sixteenth of American levels. But it is mainly a result of the Chinese government’s strong determination to reduce dependence on imported oil.

Late last year, the government cut to 1 percent its tax on “family vehicles” with fuel-sipping engines no larger than 1.6 liters, while raising the tax to as much as 40 percent on cars, minivans and sport utility vehicles with larger engines.

Sales of cars with smaller engines have surged in response, while sales of beefier models have grown more slowly and in some cases actually fallen. Multinational automakers are responding by transferring their latest fuel-efficiency technology to China, so as to shrink their engines to 1.6 liters or less while providing the best possible performance.

John Parker, executive vice president for Asia, the Pacific and Africa at Ford Motor, said that the carmaker would transfer its “Eco-boost” engine efficiency technology, including turbocharging and very precise fuel injection, to its Chinese joint venture. Ford is also reconsidering its future vehicle development plans after having concluded that the Chinese government would keep insisting on greater fuel efficiency.

“My overall belief is the trend is for keeps,” he said.

General Motors is also trying to expand sales of fuel-efficient models worldwide with a special emphasis on China. It has a 34 percent stake in a Chinese joint venture, Wuling, that already produces small, lightweight minivans that get 43 miles a gallon in city driving, although they do not meet American safety and environmental standards.

G.M. wants to increase its stake in the company by buying at least part of the nearly 16 percent held by the municipal government of Liuzhou, the city in southernmost China where Wuling is based, Nick Reilly, the president of G.M.’s Asian and Pacific operations, said in an interview on Monday afternoon.

Mr. Reilly said he wanted the Wuling venture to start exporting, although probably not to the United States.

Mr. Reilly’s remarks represent the first time a G.M. executive has publicly voiced an interest in an overseas acquisition since the company ran into severe financial difficulties last year and had to seek billions of dollars in help from the United States government. While an automaker is being kept in business by federal loans, any of its acquisitions in China could prove controversial in Washington.

Beyond stressing fuel efficiency, the Chinese government is emphasizing alternative-fuel vehicles, particularly electric cars with rechargeable batteries. Senior Beijing officials want the country to become a leader in such technology, and Western auto executives give China a strong chance of success.

“There’s no question that the government and the companies here are spending huge amounts in this area, so there’s no doubt they are going to be important players,” Mr. Reilly said. “If you look at where batteries are making the fastest progress, it’s China, it’s Korea, it’s where the government is heavily behind it.”

Andy Palmer, Nissan’s senior vice president for vehicle planning, said that Nissan started an electric car experiment this month in Wuhan, China, mainly because China wanted it. “We didn’t approach them, they approached us,” Mr. Palmer said.

Automakers have long built vehicles to suit American preferences and then marketed the same models around the world after recouping the development costs in the United States market. Manufacturers sharply increased their development and production of sport utility vehicles and minivans in the 1980s, for example, in large part because those vehicles were subject to less stringent fuel economy regulations in the United States; the automakers then marketed the same models around the globe.

In addition to better fuel economy, the rapidly rising importance of the Chinese market will probably result in much more comfortable rear seats in cars around the world. That is because even the owners of compact cars in China frequently hire full-time chauffeurs, who cost as little as $440 a month and allow the owner to read or make phone calls in the back seat while in traffic jams.

(NYT)

Russia, China stage war games in Central Asia

2009-04-20T14:51:00.003+08:00

FAKHRABAD, Tajikistan - China, Russia, Kazakhstan, Tajikistan and Kyrgyzstan took part in war games on Saturday in the first such exercise since Kyrgyzstan said in February it would shut the last U.S. air base in Central Asia.

The Manas base plays an important role in supplying U.S.-led troops fighting in Afghanistan and its closure poses a challenge to plans by President Barack Obama to send additional troops there to fight the growing Taliban insurgency.

Russia sees Central Asia as part of its traditional zone of influence and is concerned by the West's growing presence there.

About 1,000 soldiers took part in the exercises, 50 kms (30 miles) south of the Tajik capital Dushanbe under the auspices of the Shanghai Cooperation Organization (SCO).

Only Uzbekistan declined to take part, saying its special services were occupied by other, pre-planned events.

Russian President Dmitry Medvedev has suggested that the SCO countries should have a stronger say in international efforts to restore peace in Afghanistan. Analysts have said the closure of the Manas base could be interpreted as Moscow's offer to Washington to review the regional rules of the game.

The plot of the war games featured "al Qaeda" members who had crossed over the border from Afghanistan and captured a chemical factory, taking its workers hostage. The soldiers freed the hostages with the help of planes and parachutes.

During the exercises, Tajik soldiers demonstrated their ability to tear apart a live rabbit with their teeth and hands. Another soldier bit off the head of a small snake and ate it.

(Reuters)

Jackie Chan warns over China 'chaos'

2009-04-19T17:23:00.001+08:00

HONG KONG — Hong Kong movie legend Jackie Chan has told a Chinese audience that too much political freedom can lead to chaos "like in Taiwan," according to a newspaper report.

Chan, best-known for his martial-arts comedies, told an annual meeting of governments and business leaders that China should be wary of allowing too many freedoms, the Sunday Morning Post reported.

"I don't know whether it is better to have freedom or to have no freedom," he said at the Boao Forum for Asia.

"With too much freedom ... it can get very chaotic, could end up like in Taiwan."

The star of the Hollywood blockbuster franchise "Rush Hour" got into trouble in 2004 when he described the Taiwanese presidential elections as the "biggest joke in the world."

Chan also told the forum he would not buy a television made in China because he was afraid it might explode. Instead, he said, he would buy one from Japan.

The 55-year-old's latest film, "Shinjuku Incident", has been banned in China for being too violent, but Chan shied away from criticising Beijing.

"If you want to make a film in China, you have to follow our rules," he told the forum, according to the report.

(AFP)

China's top airlines may return to profit this year

2009-04-18T12:21:00.003+08:00

SHANGHAI, April 17 - China's top three airlines, which lost more than $4 billion in 2008, may return to profit this year as a faster-than-expected rebound in domestic air travel in the first quarter could extend through the year.

After years of double-digit growth, China's airlines faced strong headwinds last year as a series of natural disasters and a slowing economy hit demand for air travel.

But air traffic has resumed its normal growth pattern this year, as Beijing's aggressive stimulus package to bolster economic growth lifted consumer confidence, boosting travel.

Flag carrier Air China, which reported a 9.15 billion yuan ($1.3 billion) net loss last year under Chinese accounting standards, was profitable in the first quarter. [ID:nHKG306793]

Loss-making China Eastern Airlines and China Southern Airlines, due to release quarterly figures later this month, are expected to see positive results, analysts said.

(Reuters)

China's 1Q GDP up to 6.1% may signal worst is over

2009-04-16T15:24:00.005+08:00

BEIJING --China said first-quarter gross domestic product rose 6.1% from a year earlier, its worst quarterly economic growth in nearly two decades. Other fresh data, however, hinted that the deepest part of the downturn may have passed amid a huge wave of government spending.

The data issued Thursday prompted heady calls from some economists declaring outright recovery in the world's third-largest economy. Beijing itself struck a more cautious note.

"The national economy is confronted with the pressure of slowdown," said Li Xiaochao, spokesman for the National Bureau of Statistics, which issued the figures. "The foundation is not firm; the task is still very arduous," Li said.

The 6.1% rise -- roughly in line with economists' median expectations of 6.0% growth -- was lower than the 6.8% expansion in the 2008 fourth quarter, and a dramatic slowdown from 2007's full-year growth of 13%.

Li cited the impact of the international financial crisis, large declines in exports, slumping corporate profitability, a worsening jobs landscape, and a decline in fiscal revenue as key factors pressuring China's economy.

Still, many economists say China's economic growth likely accelerated in the first quarter from the last quarter of 2008 - a change that isn't apparent in the headline figure as China provides only year-on-year comparisons.

Nomura economist Robert Subbaraman said the economy probably began turning around in late February or early March. "GDP is the most rear-view mirror of all the economic statistics. If you look at the March data for (fixed-asset investment), loan growth and industrial production, they have all picked up strongly from earlier in the quarter."

The government's stimulus program has been ramping up investment to counteract a steep fall in exports, which were down 19.7% in the first quarter from a year earlier. Fixed-asset investment in urban areas, China's benchmark measure of capital spending, rose 30.3% in March from the year-ago period, picking up from 26.5% growth in the first two months of this year.

March industrial production, the key driver of China's manufacturing-heavy economy, grew by 8.3% in March from a year earlier, accelerating from a 3.8% gain in January and February.

Merrill Lynch's Lu Ting went as far as to say that China is the first major economy to recover from the global downturn.

Other economists were more tempered. "So far, the recovery is quite narrow," said Macquarie Securities analyst Paul Cavey, since bank loans and spending on infrastructure are the key drivers of growth now.

UBS Securities economist Wang Tao estimated that first-quarter GDP grew around 7% from the fourth quarter on an annualized, seasonally adjusted basis.

"The stimulus policies -- both fiscal and credit expansion -- led by the government is certainly the main driver of the rebound. The full impact of those stimulus policies will be shown in the coming months," Wang said. She expects sequential growth of 12% in the second quarter, although she cautioned that the push from the stimulus may taper off toward the end of the year.

The world's third-largest economy is being closely watched by investors for signs it will recover before crisis-stricken Western nations. Demand from China could provide support to export-dependent Asian neighbors such as Singapore and Japan, whose economies are contracting sharply. Producers of iron ore, copper and oil - from Australia to Latin America to the Middle East - are looking to China's CNY4 trillion (around $585 billion) economic stimulus program to drive demand for commodities.

China appears "on track to reach - or at least get very close" to its stated target of around 8% GDP growth in 2009, said Moody's Economy.com analyst Sherman Chan. She added, however, that "export prospects won't improve until the U.S. and Europe emerge from recession."

The stimulus has been supported by consumer spending that has been surprisingly resilient during the global downturn. Car sales hit a monthly record in March, and home purchases and air travel both have been rising this year after sharp falls last year. In March, retail sales rose 14.7% from a year earlier, down only slightly from a 15.2% rise in January and February.

Still, concerns about deflation and excess capacity in manufacturing persist as prices continue to fall. China's consumer price index for March fell 1.2% from a year earlier, the statistics agency said, after dropping 1.6% in February and gaining 1.0% in January.

Li said China should prepare for possible deterioration in the economy and prepare a contingency plan for changes in the economy.

The Shanghai Composite index fell as much as 1.5% after the GDP figure was dislosed; shares later recovered somewhat and were down 0.1% at 2532.54 in midday trading.

"Beijing is more likely to unveil new stimulus measures if the GDP data were below expectations. Since the actual data offered no surprises, stocks fell as the policy hopes of some investors have been dashed," said Guotai Junan Securities analyst Xu Yinhui.

(WSJ)

Angry N Korea quits nuclear talks

2009-04-15T20:42:00.003+08:00

North Korea has vowed to walk out on international talks to end its nuclear programme, and said it would restore its disabled nuclear reactor.

The unusually strong statement follows criticism by the UN Security Council of its recent rocket launch, which critics say was a long-range missile test.

North Korea says its launch was part of a peaceful space programme, designed to put a satellite into orbit.

China and Russia have appealed for the North to return to negotiations.

China, Pyongyang's closest ally, called for "calm and restraint" from all sides.

A Foreign Ministry statement said that Beijing hoped "all sides will... continue to advance and push forward the six-party talks and the denuclearisation of the Korean peninsula".

Moscow expressed regret at the North's decision, while Japan said it "strongly urges" Pyongyang to return to the negotiating table.

Last week, Japan renewed unilateral economic sanctions against North Korea for another year because of its rocket launch.

'Unbearable insult'

The six-party talks, involving North and South Korea, China, Japan, Russia and the US, have seen many setbacks since they began more than five years ago.

North Korea now says it is walking out for good, after describing the UN action as an "unbearable insult".

The North Korean Foreign Ministry said the UN statement - condemning its rocket launch and tightening existing sanctions - infringed its sovereignty and "severely debases" its people.

The ministry said it would "strengthen its nuclear deterrent for its defence by all means".

The North also said that it would restore its partially disabled Yongbyon nuclear reactor - the fuel source for its 2006 atomic test.

Pyongyang partially dismantled the plant in 2008, as part of an international agreement which guaranteed it aid and diplomatic concessions in exchange for disabling its nuclear facilities.

The BBC's diplomatic correspondent Jonathan Marcus says this latest instalment of the North Korean drama has been seen by many analysts as a predictable attempt by Pyongyang to gain the attention of the new US administration.

How far the North Koreans are really willing to go in unpicking the current deal is not clear, he says.

With growing uncertainty about the internal political dynamics in Pyongyang, and a much tougher sounding leadership in South Korea, it may not be easy to get these talks back on track, our correspondent says.

International condemnation

Pyongyang's defiant response came shortly after the 15-member Security Council unanimously condemned the long-range rocket launch on 5 April.

The council also ordered the UN Sanctions Committee to begin enforcing both financial sanctions and an existing arms embargo imposed after the 2006 tests.

There had been hope that the unified statement could pave the way for a return to the talks, which have stalled over the inability to verify the shutdown of Yongbyon.

North Korea had previously threatened that any criticism of the rocket launch would cause it to walk away from the negotiating table.

(BBC)

Dell in Smartphone Talks With China Mobile

2009-04-14T17:18:00.001+08:00

Dell is in talks with China Mobile to offer a smartphone based on the carrier's mobile operating system, a move that would take Dell into a huge but competitive market in China, an analyst said Monday.

The world's number two PC vendor has strongly hinted it plans to offer a smartphone or mobile Internet device, but it has not given any details or said if it will offer such a product in China.

Dell is waiting for China Mobile to pick one or two models from smartphones it has offered and the two firms could reach a deal around August, Zhang Jun, an analyst at research firm Wedge MKI, said in a phone interview.

A Dell smartphone could then hit the Chinese market by the end of the year, Zhang said.

No one from China Mobile was immediately available for comment.

A Dell representative in Beijing declined to comment.

The China Mobile OS, known as Open Mobile System (OMS), is based on Google's Android but will include China Mobile applications like the firm's instant messaging client.

OMS will support China Mobile's next-generation mobile network that is expanding coverage beyond major cities this year. The network's standard was developed in China and is called TD-SCDMA (Time Division-Synchronous Code Division Multiple Access).

China Mobile, the world's biggest mobile carrier, hopes for a flashy Dell addition to currently drab handset offerings that have hurt the take-up of TD-SCDMA so far, Zhang said.

Dell will also offer a TD-SCDMA netbook with the launch of its Inspiron Mini 10 in China this Thursday.

Other firms designing OMS phones include High Tech Computer (HTC), the manufacturer of the G1 smartphone, and Chinese telecommunication equipment providers Huawei and ZTE, Zhang said.

Lenovo Mobile is set this spring to launch the first OMS smartphone, a touchscreen handset called the OPhone, according to research firm BDA.

Lenovo Mobile was sold to a group of investors in January, 2008 by Chinese PC giant Lenovo.

(PC World)

China planned $10 bil invest fund at failed ASEAN summit

2009-04-12T17:32:00.002+08:00

BEIJING - China had planned to announce a $10 billion (6.8 billion pound) infrastructure investment fund and offer credit to neighbours at a cancelled weekend summit of Asian leaders in Thailand, its foreign minister said.

Anti-government protestors forced the cancellation of the summit in Pattaya after they swarmed into the summit venue.

In an interview with state media on a flight back to China, Foreign minister Yang Jiechi avoided direct criticism of the Thai government while detailing measures that Chinese premier Wen Jiabao had planned to offer at the summit.

China plans to establish a $10 billion China-ASEAN investment cooperation fund to promote infrastructure that connects it to ASEAN nations, Yang said.

China has been active in building roads from its southern border through neighbouring Myanmar, Laos, and Vietnam, to ease trade.

It will also offer a credit of $15 billion to ASEAN countries, including preferential loans of $1.7 billion for cooperation projects, Yang said.

It plans to offer 270 million yuan ($39.51 million) in aid to Cambodia, Laos and Myanmar to help those impoverished countries combat the global financial crisis, and will inject $50 million into the China-ASEAN cooperation fund, Yang said.

While not an ASEAN member, China's growing economic clout, huge market and competitive exports make it an important participant in ASEAN summits, although tensions persist over competing claims to the South China Sea and Chinese plans for dams that are opposed by other nations along the Mekong river.

China recently appointed its first ambassador to ASEAN, after the 10-member grouping formally adopted a charter.

(Reuters)

China Outlines Plans for Making Electric Cars

2009-04-11T15:04:00.002+08:00

BEIJING — Senior Chinese officials outlined on Friday how they aimed to turn their country into the world’s largest producer of electric cars, including a focus on consumer choice rather than corporate subsidies.

Speaking at a conference at the government’s prestigious Diaoyutai guesthouse here, the officials acknowledged that their efforts faced challenges in terms of the cost and safety of electric cars. They promised a nationwide effort by manufacturers, universities, research institutes and government agencies to overcome these obstacles.

Wan Gang, a former Audi engineer in Germany who is now China’s minister of science and technology, portrayed the country’s electric car initiative as central to China’s international competitiveness, but said that there were environmental goals as well.

“We need to be sustainable in different sectors, particularly in the auto sector,” he said.

Zhang Shaochun, a vice minister of finance, said that the government wanted to let the market determine which electric vehicle models would become popular. So while the government is providing some research subsidies, the main step will be to provide very large subsidies for buyers of electric cars — already up to 60,000 yuan, ($8,800), for purchases by taxi fleets and local government agencies.

“The fiscal subsidy gives voting rights to the consumer,” he said.

China also has a 10 billion yuan ($1.46 billion) program to help the industry with automotive innovation.

In the United States, the government is providing $25 billion to help cover Detroit’s research costs in the coming years.

Mr. Zhang said that with a greater emphasis on incentives for electric car buyers, “we will cut back on the discretionary power of government agencies — otherwise, the companies will just fight for subsidies.”

Chinese and foreign automakers have embarked on a number of demonstration projects for electric cars, with Nissan announcing one Friday in Wuhan, a city in central China. But very few electric cars are on the road in China yet.

While electric cars are rapidly improving, they remain roughly twice as expensive as similarly sized gasoline-powered cars, which also provide greater range, higher top speeds and better records for reliability. Mr. Wan, the minister of science and technology, raised another concern Friday when he noted that the industry had to look at safety as it sought to make electric cars ever lighter.

Electric car makers may find it easier to gain a following in the Chinese market than in other countries. First-time buyers in China are less accustomed to the power of gasoline-powered cars; most commutes are short and slow because of traffic jams; and Chinese law makes it hard for consumers to sue automakers for safety problems.

Miao Wei, the vice minister for industry and information technology, said at the conference that automotive sales and production set records last month; the previous records for both were set in March of last year.

Sales and production were running at an annualized rate of about 11 million vehicles last month, Mr. Miao said, indicating the previous records were narrowly beaten. In the United States last month, sales were running at an annualized rate of 10 million.

On Thursday, the China Association of Automobile Manufacturers said passenger car sales rose 10 percent in March from a year earlier. The group said sales of cars, minivans and multipurpose vehicles rose to a record 772,400. Including trucks and buses, vehicle sales were up 5 percent, to 1.11 million units.

Yale Zhang, a China specialist at CSM Worldwide, a vehicle market forecasting service, said that sales of small cars and small minibuses had surged because of a tax cut on vehicles with engines of less than 1.6 liters and because of a $730 subsidy introduced last month for car buyers in rural areas.

Mr. Miao, a former chairman of Dongfeng Motor, one of China’s biggest automakers, said that the ever-growing fleet of China posed three problems: air pollution, rising consumption of imported oil and traffic congestion.

“If these three bottlenecks cannot be addressed, the Chinese auto industry cannot grow sustainably,” he said.

Alternative-energy vehicles “are the only way out to address these challenges,” he said, without explaining how a shift from gasoline-powered cars to electric cars would address the chronic traffic jams in Chinese cities.

(NYT)

In China, 'Buy American Still' Resonates

2009-04-10T11:41:00.002+08:00

Think the wheels are coming off the global car business? Think again.

U.S. automakers sold about 858,000 new cars in March, according to market research firm Autodata - another dismal month for the Big Three, which saw North American sales drop nearly 40 percent from a year ago.

But General Motors says it sold a 137,000 cars and trucks in China in March, up nearly 25 percent from a year earlier and a new company record for the month, as CBS News correspondent Barry Petersen reports.

The China Association of Automobile Manufacturers reports that the country's auto sales hit a monthly record of 1.11 million vehicles in March. China's soaring sales coupled with falling U.S. demand make China, for the moment, the world's largest car market.

China sales are booming thanks in part to a government economic stimulus plan keeping showrooms hopping by paying out rebates for purchasing small cars.

And what's hot in this hot market?

"I love American cars for their performance," said one Chinese customer.

Turn on the TV and the market leaders are American. Both Ford and GM. build cars in China for China, and part of their success is what's in a name. In China, a Ford or Chevrolet is considered a high-end import.

"China is a face-oriented culture," said Bill Russo, an expert on the Chinese automobile market. "People buy an imported car in order to demonstrate an achievement of a particular social status."

And when is the last time you heard a GM executive say that "our factories are running flat out to meet that demand," as GM China president Kevin Wale recently did?

One key to success - designing cars just for this market, like a Buick model favored by Chinese executives and high-level bureaucrats.

"They tend to have a driver which means you have to put more attention to the rear seat passenger," Russo said. "The person who paid the money for that car is sitting in the back."

So the carmakers are making those back seats luxurious, with controls for air conditioning and stereo and lots of legroom for that back-seat VIP.

And the Chinese profits are sent back to Detroit, which means U.S. car companies are getting a badly needed boost back home from a country far away where customers still love to buy American.

(CBS)

Mercedes, GM Sales in China Jumped in March

2009-04-09T09:24:00.002+08:00

SHANGHAI -- Daimler AG's Mercedes-Benz and General Motors Corp. said their sales in China rose to a monthly record in March, despite a global slowdown in auto demand.

March was Mercedes-Benz's "best ever" month in China, with sales rising 50% from the same period in 2008, said Klaus Maier, Mercedes-Benz (China) Ltd.'s president and chief executive.

"I think it shows confidence in China is back," Mr. Maier said at a briefing Wednesday on the launch of Daimler's Smart minicar in China.

In China and Hong Kong, 11,800 Mercedes-Benz vehicles were sold, which was up 23% from the 9,626 units sold in March last year.

Mercedes-Benz sold 98,500 cars world-wide in March, down 18% from a year earlier. In the quarter, sales dropped 25% from the first quarter of 2008, to 216,000 cars.

Separately, GM said its China sales in March rose 25% from a year earlier to a record 137,004 vehicles. GM's brisk sales in China also run counter to the global trend.

March sales at GM's commercial vehicle joint venture, SAIC-GM-Wuling Automobile Co., rose 38% from a year earlier to 90,784 units, a monthly record. GM attributed the growth to demand for its Buick lineup, Sunshine and Wuling Rongguang minivans, and Spark mini-car.

Mercedes-Benz's Mr. Maier said he expects China's car market to grow 6% this year, and the luxury auto segment to grow in the double-digits. He said Mercedes aims to grow faster than the market, but didn't provide details.

Of the 421 Mercedes dealerships in China, 17 will sell the imported Smart minicar in 13 cities. The company has received 1,000 preorders for the Smart, which is priced between 158,000 yuan and 206,000 yuan ($23,133 and $30,161).

Auto sales in China had declined for five out of six months before rebounding 25% in February, according to the China Association of Automobile Manufacturers.

(WSJ)

China auto sales surpass US for 3rd month

2009-04-08T16:45:00.002+08:00

Preliminary figures show auto sales in China reached about 1.03 million in March, exceeding U.S. sales for the third month in a row, state media reports said Wednesday.

Sales data from 14 major auto makers, accounting for roughly 90 percent of total sales, totaled 1.026 million, the Shanghai Securities News and other state-run newspapers said, citing Chen Bin, head of the Department of Industry at China's main economic planning agency.

Full industry data due to be released by the China Association of Automobile Manufacturers in coming days could push March auto sales in China, the world's second-largest auto market, to a monthly record, the report said.

China's industrywide auto sales in March 2008 totaled 1.06 million, it said.

Americans bought 857,735 new vehicles in March, down 37 percent from the 1.36 million sold in the same month a year earlier, according to Autodata Corp.

But a 25 percent jump in U.S. sales from February raised hopes that the worst may be over for an industry battered by global economic malaise and financial catastrophe.

China is bound to eventually overtake the U.S. as the world's largest auto market, and the recent developments have accelerated that trend, with Chinese vehicle sales in January and February exceeding U.S. monthly sales for the first time ever.

China's first-quarter sales may exceed those in the U.S., Chen told a shipbuilding conference in Beijing. Sales for the full year are forecast to exceed 10 million units for the first time ever.

With sales slumping elsewhere, China is one of the few bright spots for the ailing industry. But its promise is also a curse for automakers facing ever intensifying competition among both domestic and foreign manufacturers.

Stuttgart, Germany-based Daimler AG on Wednesday was launching its Smart model in China - the 39th market for the two-seater hybrid minivehicle. Other automakers are also planning launches ahead of and during the April 20-28 Shanghai Auto Show.

The focus is mainly on smaller and more fuel-efficient vehicles likely to appeal to frugal families, rather than the roomy, gas-guzzling sedans of the past.

"Sales may be surpassing the U.S., but at the same time profits are being squeezed due to the lower prices of the smaller cars," said Zhang Xin, an analyst at Guotai Junan Securities, in Beijing.

Automakers and shipbuilders are among 10 strategically vital industries singled out by Beijing for special support this year as China battles a slump in demand for its exports.

To help spur auto sales, the government halved taxes on purchases of small autos and is spending 5 billion yuan (about $730 million) on subsidies for purchases of light trucks and minivans in the countryside, where most of its 1.3 billion people live.

Partly as a result of those policies, China's vehicle sales rose 25 percent in February from a year earlier.

But Zhang, the analyst, cautioned against reading too much into volatile monthly figures.

"It doesn't really make sense to compare our industry with the U.S. industry. We are not at the same level at all and there is no reason for arrogance," Zhang said. "With competition growing, the question is how to become stronger," he said.

(AP)

China's Yuan Ambitions

2009-04-07T08:02:00.003+08:00

China is playing a growing role in discussions over solutions to current economic problems. Much of the talk has focused on money -- whether Premier Wen Jiabao's concerns about the value of China's U.S. treasury investments, or the People's Bank of China's paper floating the idea of a de-dollarized international monetary system. Up to now, one limit to China's ability to contribute to global monetary reform has been its own currency policy, particularly the fact that the yuan is not convertible. However, now there are tentative signs that's starting to change.

Beijing has signed currency swap agreements with six central banks: Hong Kong, Indonesia, Korea, Malaysia, Belarus and most recently Argentina. These swaps permit those central banks to sell yuan to local importers in those countries who want to buy Chinese goods. This is particularly useful for importers struggling to obtain trade finance as a result of the financial crisis. As such, it's consistent with China's desire to participate in the Group of 20's efforts to support trade financing.

China has long wanted its currency to play a more important role in the global financial system. These swap arrangements come in the context of that broader policy aim. The broader policy goal also has a more practical function in reducing currency exposure and transaction costs for Chinese exporters. The rise in the yuan's value relative to the dollar in early 2008 was a reason why some Chinese exporters went bankrupt. The ability to settle trade in yuan would reduce this risk in the future.

Certainly the swaps should not be mistaken for full yuan convertibility. Details are scarce, but it appears the yuan cannot be sold for other currencies, in particular, the dollar. Neither can they be used by the other countries as part of their reserves to defend their own currencies, unlike the recent swap agreements several countries have signed with the United States Federal Reserve. In large part this is because the yuan is not fully convertible. Hong Kong remains the only place where it is possible to open yuan deposit accounts, and even there daily deposits and withdrawals are capped.

Yet while the swap arrangements do not signal full convertibility, they are an important step in that direction. Even better, the Chinese authorities appear to have accelerated the reform schedule in recent months to suggest that the prospect of partial convertibility, especially between China and its major regional trading partners, may be closer than many believe.

China's State Council announced its intention in December to permit businesses in specific provinces to settle international trade-related transactions in yuan with specific trading partners. Guangdong province can settle in yuan with Hong Kong and Macau, while Guangxi and Yunnan provinces can settle in yuan with members of the Association of Southeast Asian Nations.

These are trial schemes that have yet to start, and it is still unclear how they will differ in practice from the swap agreements already in place. Hong Kong's experiments with yuan convertibility will be the most important to watch. China has a tendency to use the territory as a laboratory for financial reforms. So, the State Council's clarification on the yuan-settlement trial scheme in Hong Kong, expected soon, and the response of Hong Kong's business community, will be a good indicator of what the rest of the world can expect.

The transformation of the yuan into a global currency has begun. It will not be an overnight change, but the change may take place faster than expected. The economic crisis has provided China with a window of opportunity to leverage its relative stability and status as a trade surplus country to extend yuan credit to deficit countries globally.

(WSJ)

China Vies to Be World’s Leader in Electric Cars

2009-04-04T18:45:00.002+08:00

TIANJIN, China — Chinese leaders have adopted a plan aimed at turning the country into one of the leading producers of hybrid and all-electric vehicles within three years, and making it the world leader in electric cars and buses after that.The goal, which radiates from the very top of the Chinese government, suggests that Detroit’s Big Three, already struggling to stay alive, will face even stiffer foreign competition on the next field of automotive technology than they do today.
“China is well positioned to lead in this,” said David Tulauskas, director of China government policy at General Motors.
To some extent, China is making a virtue of a liability. It is behind the United States, Japan and other countries when it comes to making gas-powered vehicles, but by skipping the current technology, China hopes to get a jump on the next.
Japan is the market leader in hybrids today, which run on both electricity and gasoline, with cars like the Toyota Prius and Honda Insight. The United States has been a laggard in alternative vehicles. G.M.’s plug-in hybrid Chevrolet Volt is scheduled to go on sale next year, and will be assembled in Michigan using rechargeable batteries imported from LG in South Korea.
China’s intention, in addition to creating a world-leading industry that will produce jobs and exports, is to reduce urban pollution and decrease its dependence on oil, which comes from the Mideast and travels over sea routes controlled by the United States Navy.
But electric vehicles may do little to clear the country’s smog-darkened sky or curb its rapidly rising emissions of global warming gases. China gets three-fourths of its electricity from coal, which produces more soot and more greenhouse gases than other fuels.
A report by McKinsey & Company last autumn estimated that replacing a gasoline-powered car with a similar-size electric car in China would reduce greenhouse emissions by only 19 percent. It would reduce urban pollution, however, by shifting the source of smog from car exhaust pipes to power plants, which are often located outside cities.
Beyond manufacturing, subsidies of up to $8,800 are being offered to taxi fleets and local government agencies in 13 Chinese cities for each hybrid or all-electric vehicle they purchase. The state electricity grid has been ordered to set up electric car charging stations in Beijing, Shanghai and Tianjin.
Government research subsidies for electric car designs are increasing rapidly. And an interagency panel is planning tax credits for consumers who buy alternative energy vehicles.
China wants to raise its annual production capacity to 500,000 hybrid or all-electric cars and buses by the end of 2011, from 2,100 last year, government officials and Chinese auto executives said. By comparison, CSM Worldwide, a consulting firm that does forecasts for automakers, predicts that Japan and South Korea together will be producing 1.1 million hybrid or all-electric light vehicles by then and North America will be making 267,000.
The United States Department of Energy has its own $25 billion program to develop electric-powered cars and improve battery technology, and will receive another $2 billion for battery development as part of the economic stimulus program enacted by Congress.
Premier Wen Jiabao highlighted the importance of electric cars two years ago with his unlikely choice to become minister of science and technology: Wan Gang, a Shanghai-born former Audi auto engineer in Germany who later became the chief scientist for the Chinese government’s research panel on electric vehicles.
Mr. Wan is the first minister in at least three decades who is not a member of the Communist Party.
And Premier Wen has his own connection to the electric car industry. He was born and grew up here in Tianjin, the longtime capital of China’s battery industry, 70 miles southeast of Beijing.
Tianjin has thrived in the six years since Mr. Wen became premier. It now has China’s first bullet train service (to Beijing), a new Airbus factory and an immaculate new airport. Tianjin has also received a surge of research subsidies for enterprises like the Tianjin-Qingyuan Electric Vehicle Company.
Electric cars have several practical advantages in China. Intercity driving is rare. Commutes are fairly short and frequently at low speeds because of traffic jams. So the limitations of all-electric cars — the latest models in China have a top speed of 60 miles an hour and a range of 120 miles between charges — are less of a problem.
First-time car buyers also make up four-fifths of the Chinese market, and these buyers have not yet grown accustomed to the greater power and range of gasoline-powered cars.
But the electric car industry faces several obstacles here too. Most urban Chinese live in apartments, and cannot install recharging devices in driveways, so more public charging centers need to be set up.
Rechargeable lithium-ion batteries also have a poor reputation in China. Counterfeit lithium-ion batteries in cellphones occasionally explode, causing injuries. And Sony had to recall genuine lithium-ion batteries in laptops in 2006 and 2008 after some overheated and caught fire or exploded.
These safety problems have been associated with lithium-ion cobalt batteries, however, not the more chemically stable lithium-ion phosphate batteries now being adapted to automotive use.
The tougher challenge is that all lithium-ion batteries are expensive, whether made with cobalt or phosphate. That will be a hurdle for thrifty Chinese consumers, especially if gas prices stay relatively low compared to their highs last summer.
China is tackling the challenges with the same tools that helped it speed industrialization and put on the Olympics: immense amounts of energy, money and people.
BYD has 5,000 auto engineers and an equal number of battery engineers, most of them living at its headquarters in Shenzhen in a cluster of 15 yellow apartment buildings, each 18 stories high. Young engineers earn less than $600 a month, including benefits.
When Tianjin-Qingyuan puts its entirely battery-powered Saibao midsize sedan on sale this autumn, the body will come from a sedan that normally sells for $14,600 when equipped with a gasoline engine. But the engine and gas tank will be replaced with a $14,000 battery pack and electric motor, said Wu Zhixin, the company’s general manager.
That means the retail price will nearly double, to almost $30,000. Even if the government awards the maximum subsidy of $8,800 to buyers, that is a hefty premium.
Large-scale production could drive down the cost of the battery pack and electric motor by 30 or 40 percent, still leaving electric cars more expensive than gasoline-powered ones, Mr. Wu said.
But Mr. Wu has plenty of money to pursue improvements. He interrupted an interview at his company’s headquarters on Thursday to take a call on his cellphone, politely declined an offer from the caller, and hung up.
The general manager of a state-controlled bank had called to ask if he needed a loan, he explained.

(NYT)

Leaders' statement from the G20 summit in London

2009-04-03T09:16:00.002+08:00

1. We, the Leaders of the Group of Twenty, met in London on 2 April 2009.

2. We face the greatest challenge to the world economy in modern times; a crisis which has deepened since we last met, which affects the lives of women, men, and children in every country, and which all countries must join together to resolve. A global crisis requires a global solution.
3. We start from the belief that prosperity is indivisible; that growth, to be sustained, has to be shared; and that our global plan for recovery must have at its heart the needs and jobs of hard-working families, not just in developed countries but in emerging markets and the poorest countries of the world too; and must reflect the interests, not just of today's population, but of future generations too. We believe that the only sure foundation for sustainable globalisation and rising prosperity for all is an open world economy based on market principles, effective regulation, and strong global institutions.
4. We have today therefore pledged to do whatever is necessary to:
· restore confidence, growth, and jobs;
· repair the financial system to restore lending;
· strengthen financial regulation to rebuild trust;
· fund and reform our international financial institutions to overcome this crisis and prevent future ones;
· promote global trade and investment and reject protectionism, to underpin prosperity; and
· build an inclusive, green, and sustainable recovery.
By acting together to fulfil these pledges we will bring the world economy out of recession and prevent a crisis like this from recurring in the future.
5. The agreements we have reached today, to treble resources available to the IMF to $750 billion, to support a new SDR [IMF special drawing rights] allocation of $250 billion, to support at least $100 billion of additional lending by the MDBs [Multilateral Development Banks], to ensure $250 billion of support for trade finance, and to use the additional resources from agreed IMF gold sales for concessional finance for the poorest countries, constitute an additional $1.1 trillion programme of support to restore credit, growth and jobs in the world economy. Together with the measures we have each taken nationally, this constitutes a global plan for recovery on an unprecedented scale.
Restoring growth and jobs
6. We are undertaking an unprecedented and concerted fiscal expansion, which will save or create millions of jobs which would otherwise have been destroyed, and that will, by the end of next year, amount to $5 trillion, raise output by 4 per cent, and accelerate the transition to a green economy. We are committed to deliver the scale of sustained fiscal effort necessary to restore growth.
7. Our central banks have also taken exceptional action. Interest rates have been cut aggressively in most countries, and our central banks have pledged to maintain expansionary policies for as long as needed and to use the full range of monetary policy instruments, including unconventional instruments, consistent with price stability.
8. Our actions to restore growth cannot be effective until we restore domestic lending and international capital flows. We have provided significant and comprehensive support to our banking systems to provide liquidity, recapitalise financial institutions, and address decisively the problem of impaired assets. We are committed to take all necessary actions to restore the normal flow of credit through the financial system and ensure the soundness of systemically important institutions, implementing our policies in line with the agreed G20 framework for restoring lending and repairing the financial sector.
9. Taken together, these actions will constitute the largest fiscal and monetary stimulus and the most comprehensive support programme for the financial sector in modern times. Acting together strengthens the impact and the exceptional policy actions announced so far must be implemented without delay. Today, we have further agreed over $1 trillion of additional resources for the world economy through our international financial institutions and trade finance.
10. Last month the IMF estimated that world growth in real terms would resume and rise to over 2 percent by the end of 2010. We are confident that the actions we have agreed today, and our unshakeable commitment to work together to restore growth and jobs, while preserving long-term fiscal sustainability, will accelerate the return to trend growth. We commit today to taking whatever action is necessary to secure that outcome, and we call on the IMF to assess regularly the actions taken and the global actions required.
11. We are resolved to ensure long-term fiscal sustainability and price stability and will put in place credible exit strategies from the measures that need to be taken now to support the financial sector and restore global demand. We are convinced that by implementing our agreed policies we will limit the longer-term costs to our economies, thereby reducing the scale of the fiscal consolidation necessary over the longer term.
12. We will conduct all our economic policies cooperatively and responsibly with regard to the impact on other countries and will refrain from competitive devaluation of our currencies and promote a stable and well-functioning international monetary system. We will support, now and in the future, to candid, even-handed, and independent IMF surveillance of our economies and financial sectors, of the impact of our policies on others, and of risks facing the global economy.
Strengthening financial supervision and regulation
13. Major failures in the financial sector and in financial regulation and supervision were fundamental causes of the crisis. Confidence will not be restored until we rebuild trust in our financial system. We will take action to build a stronger, more globally consistent, supervisory and regulatory framework for the future financial sector, which will support sustainable global growth and serve the needs of business and citizens.
14. We each agree to ensure our domestic regulatory systems are strong. But we also agree to establish the much greater consistency and systematic cooperation between countries, and the framework of internationally agreed high standards, that a global financial system requires. Strengthened regulation and supervision must promote propriety, integrity and transparency; guard against risk across the financial system; dampen rather than amplify the financial and economic cycle; reduce reliance on inappropriately risky sources of financing; and discourage excessive risk-taking. Regulators and supervisors must protect consumers and investors, support market discipline, avoid adverse impacts on other countries, reduce the scope for regulatory arbitrage, support competition and dynamism, and keep pace with innovation in the marketplace.
15. To this end we are implementing the Action Plan agreed at our last meeting, as set out in the attached progress report. We have today also issued a Declaration, Strengthening the Financial System. In particular we agree:
· to establish a new Financial Stability Board (FSB) with a strengthened mandate, as a successor to the Financial Stability Forum (FSF), including all G20 countries, FSF members, Spain, and the European Commission;
· that the FSB should collaborate with the IMF to provide early warning of macroeconomic and financial risks and the actions needed to address them;
· to reshape our regulatory systems so that our authorities are able to identify and take account of macro-prudential risks;
· to extend regulation and oversight to all systemically important financial institutions, instruments and markets. This will include, for the first time, systemically important hedge funds;
· to endorse and implement the FSF's tough new principles on pay and compensation and to support sustainable compensation schemes and the corporate social responsibility of all firms;
· to take action, once recovery is assured, to improve the quality, quantity, and international consistency of capital in the banking system. In future, regulation must prevent excessive leverage and require buffers of resources to be built up in good times;
· to take action against non-cooperative jurisdictions, including tax havens. We stand ready to deploy sanctions to protect our public finances and financial systems. The era of banking secrecy is over. We note that the OECD has today published a list of countries assessed by the Global Forum against the international standard for exchange of tax information;
· to call on the accounting standard setters to work urgently with supervisors and regulators to improve standards on valuation and provisioning and achieve a single set of high-quality global accounting standards; and
· to extend regulatory oversight and registration to Credit Rating Agencies to ensure they meet the international code of good practice, particularly to prevent unacceptable conflicts of interest.
16. We instruct our Finance Ministers to complete the implementation of these decisions in line with the timetable set out in the Action Plan. We have asked the FSB and the IMF to monitor progress, working with the Financial Action Taskforce and other relevant bodies, and to provide a report to the next meeting of our Finance Ministers in Scotland in November.
Strengthening our global financial institutions
17. Emerging markets and developing countries, which have been the engine of recent world growth, are also now facing challenges which are adding to the current downturn in the global economy. It is imperative for global confidence and economic recovery that capital continues to flow to them. This will require a substantial strengthening of the international financial institutions, particularly the IMF. We have therefore agreed today to make available an additional $850 billion of resources through the global financial institutions to support growth in emerging market and developing countries by helping to finance counter-cyclical spending, bank recapitalisation, infrastructure, trade finance, balance of payments support, debt rollover, and social support. To this end:
· we have agreed to increase the resources available to the IMF through immediate financing from members of $250 billion, subsequently incorporated into an expanded and more flexible New Arrangements to Borrow, increased by up to $500 billion, and to consider market borrowing if necessary; and
· we support a substantial increase in lending of at least $100 billion by the Multilateral Development Banks (MDBs), including to low income countries, and ensure that all MDBs, including have the appropriate capital.
18. It is essential that these resources can be used effectively and flexibly to support growth. We welcome in this respect the progress made by the IMF with its new Flexible Credit Line (FCL) and its reformed lending and conditionality framework which will enable the IMF to ensure that its facilities address effectively the underlying causes of countries' balance of payments financing needs, particularly the withdrawal of external capital flows to the banking and corporate sectors. We support Mexico's decision to seek an FCL arrangement.
19. We have agreed to support a general SDR allocation which will inject $250 billion into the world economy and increase global liquidity, and urgent ratification of the Fourth Amendment.
20. In order for our financial institutions to help manage the crisis and prevent future crises we must strengthen their longer term relevance, effectiveness and legitimacy. So alongside the significant increase in resources agreed today we are determined to reform and modernise the international financial institutions to ensure they can assist members and shareholders effectively in the new challenges they face. We will reform their mandates, scope and governance to reflect changes in the world economy and the new challenges of globalisation, and that emerging and developing economies, including the poorest, must have greater voice and representation. This must be accompanied by action to increase the credibility and accountability of the institutions through better strategic oversight and decision making. To this end:
· we commit to implementing the package of IMF quota and voice reforms agreed in April 2008 and call on the IMF to complete the next review of quotas by January 2011;
· we agree that, alongside this, consideration should be given to greater involvement of the Fund's Governors in providing strategic direction to the IMF and increasing its accountability;
· we commit to implementing the World Bank reforms agreed in October 2008. We look forward to further recommendations, at the next meetings, on voice and representation reforms on an accelerated timescale, to be agreed by the 2010 Spring Meetings;
· we agree that the heads and senior leadership of the international financial institutions should be appointed through an open, transparent, and merit-based selection process; and
· building on the current reviews of the IMF and World Bank we asked the Chairman, working with the G20 Finance Ministers, to consult widely in an inclusive process and report back to the next meeting with proposals for further reforms to improve the responsiveness and adaptability of the IFIs.
21. In addition to reforming our international financial institutions for the new challenges of globalisation we agreed on the desirability of a new global consensus on the key values and principles that will promote sustainable economic activity. We support discussion on such a charter for sustainable economic activity with a view to further discussion at our next meeting. We take note of the work started in other fora in this regard and look forward to further discussion of this charter for sustainable economic activity.
Resisting protectionism and promoting global trade and investment
22. World trade growth has underpinned rising prosperity for half a century. But it is now falling for the first time in 25 years. Falling demand is exacerbated by growing protectionist pressures and a withdrawal of trade credit. Reinvigorating world trade and investment is essential for restoring global growth. We will not repeat the historic mistakes of protectionism of previous eras. To this end:
· we reaffirm the commitment made in Washington: to refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organisation (WTO) inconsistent measures to stimulate exports. In addition we will rectify promptly any such measures. We extend this pledge to the end of 2010;
· we will minimise any negative impact on trade and investment of our domestic policy actions including fiscal policy and action in support of the financial sector. We will not retreat into financial protectionism, particularly measures that constrain worldwide capital flows, especially to developing countries;
· we will notify promptly the WTO of any such measures and we call on the WTO, together with other international bodies, within their respective mandates, to monitor and report publicly on our adherence to these undertakings on a quarterly basis;
· we will take, at the same time, whatever steps we can to promote and facilitate trade and investment; and
· we will ensure availability of at least $250 billion over the next two years to support trade finance through our export credit and investment agencies and through the MDBs. We also ask our regulators to make use of available flexibility in capital requirements for trade finance.
23. We remain committed to reaching an ambitious and balanced conclusion to the Doha Development Round, which is urgently needed. This could boost the global economy by at least $150 billion per annum. To achieve this we are committed to building on the progress already made, including with regard to modalities.
24. We will give renewed focus and political attention to this critical issue in the coming period and will use our continuing work and all international meetings that are relevant to drive progress.
Ensuring a fair and sustainable recovery for all
25. We are determined not only to restore growth but to lay the foundation for a fair and sustainable world economy. We recognise that the current crisis has a disproportionate impact on the vulnerable in the poorest countries and recognise our collective responsibility to mitigate the social impact of the crisis to minimise long-lasting damage to global potential. To this end:
· we reaffirm our historic commitment to meeting the Millennium Development Goals and to achieving our respective ODA [Overseas Development Agencies] pledges, including commitments on Aid for Trade, debt relief, and the Gleneagles commitments, especially to sub-Saharan Africa;
· the actions and decisions we have taken today will provide $50 billion to support social protection, boost trade and safeguard development in low income countries, as part of the significant increase in crisis support for these and other developing countries and emerging markets;
· we are making available resources for social protection for the poorest countries, including through investing in long-term food security and through voluntary bilateral contributions to the World Bank's Vulnerability Framework, including the Infrastructure Crisis Facility, and the Rapid Social Response Fund;
· we have committed, consistent with the new income model, that additional resources from agreed sales of IMF gold will be used, together with surplus income, to provide $6 billion additional concessional and flexible finance for the poorest countries over the next 2 to 3 years. We call on the IMF to come forward with concrete proposals at the Spring Meetings;
· we have agreed to review the flexibility of the Debt Sustainability Framework and call on the IMF and World Bank to report to the IMFC [International Monetary and Financial Committee] and Development Committee at the Annual Meetings; and
· we call on the UN, working with other global institutions, to establish an effective mechanism to monitor the impact of the crisis on the poorest and most vulnerable.
26. We recognise the human dimension to the crisis. We commit to support those affected by the crisis by creating employment opportunities and through income support measures. We will build a fair and family-friendly labour market for both women and men. We therefore welcome the reports of the London Jobs Conference and the Rome Social Summit and the key principles they proposed. We will support employment by stimulating growth, investing in education and training, and through active labour market policies, focusing on the most vulnerable. We call upon the ILO, working with other relevant organisations, to assess the actions taken and those required for the future.
27. We agreed to make the best possible use of investment funded by fiscal stimulus programmes towards the goal of building a resilient, sustainable, and green recovery. We will make the transition towards clean, innovative, resource efficient, low carbon technologies and infrastructure. We encourage the MDBs to contribute fully to the achievement of this objective. We will identify and work together on further measures to build sustainable economies.
28. We reaffirm our commitment to address the threat of irreversible climate change, based on the principle of common but differentiated responsibilities, and to reach agreement at the UN Climate Change conference in Copenhagen in December 2009.
Delivering our commitments
29. We have committed ourselves to work together with urgency and determination to translate these words into action. We agreed to meet again before the end of this year to review progress on our commitments.

(BBC)

At G20, China Takes Stage as Global Economic Power

2009-04-02T10:34:00.003+08:00

BEIJING — Let the rest of the world dither over whether this week’s economic summit meeting in London will save the planet from economic collapse.

China arrives at the meeting with a sense of momentum, riding a wave of nationalism and boasting an economy that, more than any other, is surfing the trough of a crippling recession. While other major economies shrink this year, China’s is expected by some economists to pass Japan’s as the world’s second largest, if it has not already.

The most talked-about new book here, “China Is Unhappy,” combines hypernationalism with biting criticism of Western mismanagement and of China’s reluctance to grasp its place in history.

China’s normally faceless vice president, Xi Jinping, achieved cult status in late February after cameras caught him in an unguarded moment in Mexico, attacking “foreigners who had eaten their fill and had nothing better to do, pointing their fingers at our affairs.”

It has not dampened this spirit that China — and its $2 trillion in exchange reserves — are viewed around the world as the solution to a host of problems, whether by shoring up the capital base of the International Monetary Fund or by becoming a bigger engine of growth for Asian economies long dependent on the United States market.

Yet even as Presidents Hu Jintao and Obama had their first meeting on Wednesday on the sidelines of the summit proceedings, the Chinese appeared torn between seizing their moment in the geopolitical spotlight and shying from it.

Government censors quickly deleted Mr. Xi’s remarks from Chinese news reports last month. On Wednesday, the front page of China Daily, the English-language newspaper that telegraphs government positions to the outside world, warned that China “is not as strong an economy as some people think.”

“Bailing out China is our most important contribution to bail out the world,” Tang Min, an economist at the state-financed China Development Research Foundation, was quoted as saying.

Such is the quandary of a nation whose rise to power appears both inevitable and, in the view of many experts, still a bit premature.

“China is a major global economy now. That is a fundamental reality,” Chu Shulong, who directs the Institute of Strategic Studies at Tsinghua University in Beijing, said in an interview. “What China says and does has an effect on international finance, international economics and other economies.”

But just as real, Mr. Chu and others said, are the factors that hamstring China: widespread poverty, authoritarian rule, a culture shrouded by decades of isolation and poorly understood intentions. China’s global ambitions are unlikely to be realized until it resolves those issues.

Even then, China’s economic fortunes remain deeply entangled with those of the United States, its biggest customer, rival, debtor and still — by far — the world’s biggest economy.

So although Beijing may agitate for changes in the global financial structure, and relish some schadenfreude at Washington’s expense, its interests lie very much in getting America back on its economic feet.

That does not negate China’s newly enhanced status. With most of the world in financial collapse, China’s economy has suddenly become too big — and too healthy, expected to grow by at least 6.5 percent this year — for the rest of the world to ignore.

Evidence of China’s ascension is everywhere. Three years ago, China did not have a single bank among the world’s top 20, measured by market capitalization. Today the top three are Chinese. (In 2006, the United States had 7 of the top 20 banks, including the top 2; today it has 3, and the biggest, Morgan Stanley, is rated fifth.)

China’s government-owned enterprises are buying companies, technology and resources worldwide. This year they have spent $13 billion in Europe, and plan new investments in the United States. China has struck long-term oil contracts with Brazil and Russia, and is angling for a more than $20 billion stake in three Australian mining companies.

China holds $1 trillion in United States government debt, and that is but half the foreign reserves generated by its huge trade surplus and investment inflows. The rest of the West owes China money, too.

Just as clearly, China harbors global ambitions. Military spending has grown for years at a double-digit clip, though as a share of gross domestic product, it is half of the United States’ military spending. China is slowly building a blue-water navy, and in December it sent three ships to the waters off Somalia to patrol against pirates, in the first modern active deployment of its warships beyond its home waters.

Foreign analysts uniformly say they are struck by China’s new assertiveness in diplomatic and military affairs, from tart critiques of American fiscal policy to verbal sparring over control of the South China Sea.

Kenneth G. Lieberthal, a Brookings Institution scholar who oversaw White House Asia policy from 1998 to 2000, said the Chinese traditionally deferred to Washington on major economic and strategic issues, assenting or differing only after Washington made its case.

But “in meetings with the Chinese on several issues in the last two months, I’ve been quite surprised that Chinese are sitting there talking the way you would expect a major power to talk,” he said. “They are beginning to appreciate that when countries emerge from this current economic crisis, China is likely to be either the first to emerge or right after the U.S., and that China will be one of the very few countries at the end of this crisis to emerge without having high levels of government debt.”

“There is a palpable change taking place here,” Mr. Lieberthal added, “with a sense of greater confidence that China has now become an important place and needs to act that way.”

But economic importance does not automatically translate into geopolitical heft. In China’s case, most of the other components of true global power — moral sway, military clout, cultural influence, to name a few — are in the assembly stage, or missing altogether.

Even China’s unquestioned economic clout comes with an asterisk. While Chinese megacities boom and the country’s coast has become the world’s factory, 800 million of the nation’s 1.3 billion citizens remain farmers, many mired in poverty. China remains a developing nation, still vying for first-world status.

“I would be careful calling China a superpower. It is not one,” David Shambaugh, who directs the China Policy Program at George Washington University in Washington, wrote in an e-mail message. “It has no global military reach, its soft power is limited, and its diplomatic reach, while now global, is still limited in areas such as the Middle East and Latin America.”

(NYT)

Australia Approves China’s Investment in Fortescue

2009-04-01T08:33:00.005+08:00

March 31 -- China’s Hunan Valin Iron & Steel Group’s A$1.3 billion ($893 million) investment in Fortescue Metals Group Ltd. was approved by Australia with conditions to avoid conflicts of interest over prices, sales and marketing.

The investment, a 17.6 percent stake acquired through new stock and from shareholder Harbinger Capital Partners, is subject to “formal and strict undertakings,” Treasurer Wayne Swan said today in an e-mailed statement.

Chinese investments face increasing attention in Australia as the biggest metals consumer speeds up takeovers amid a global recession. China Minmetals Group today made a revised bid for OZ Minerals Ltd. after an initial offer was rejected because of security concerns. Swan has yet to approve Aluminum Corp. of China’s proposed $19.5 billion investment in Rio Tinto Group.

“It shows the door isn’t shut to Chinese investment in Australia but all deals are being closely scrutinized,” Alex Passmore, head of metals and mining research at Patersons Securities Ltd. in Perth, said today by phone. “Just because this deal has been approved doesn’t mean the other two in front of the regulators will go ahead.”

Fortescue, Australia’s third-biggest iron ore exporter, rose 2.4 percent to A$2.55 at the 4:10 p.m. Sydney time close on the Australian stock exchange. State-owned Valin is China’s ninth-largest steelmaker.

The conditions apply to Valin board nominations and cover potential conflicts of interest with sales and marketing, Treasurer Swan said. They require the company to report to Australia’s Foreign Investment Review on its compliance, he said.

“These undertakings ensure consistency with Australia’s national interest principles for investments by foreign government entities,” Swan said. “They ensure the appropriate separation of Fortescue’s commercial operations and customer interests, and support the market-based development of Australia’s resources.”

The requirements aren’t a “special arrangement” and are in line with Australian laws and the normal practices of such deals, Valin Group said in a faxed statement today. “We have complied with the commitment as we submit the application to the FIRB.”

Fortescue last month agreed to increase sales to a unit of Valin and will boost shipments from 2010. It’s seeking to boost exports from its iron ore mine in Western Australia and is facing a A$731 million funding shortfall for the expansion, Macquarie Group Ltd. analysts said in a Feb. 24 report. China is the world’s biggest buyer of iron ore.

“I have no intention of seeking any more direct equity investment,” Fortescue Chief Executive Officer Andrew Forrest said on a conference call after the announcement. “I will continue to grow Fortescue within the Chinese economic system. If there’s a requirement for any further capital then we’ll let you know about the need for Chinese participation.”

Fortescue may seek funding from China’s debt markets and capital providers, Forrest said. The company is talking to “organizations which lead the Hubei steel industry,” he said, without giving details.

Fortescue on March 24 said investment talks are still continuing with China Investment Corp., or CIC, the $200 billion sovereign wealth fund.

China may spend more than $500 billion on overseas resources investments over the next eight years to secure supplies, Eric Lilford, head of Australia mining for Deloitte Touche Tohmatsu, said March 23.

Fortescue started shipping to Chinese customers from its A$2.8 billion Pilbara iron ore project in May. It wants to expand production of the steelmaking ingredient from its mines in Western Australia that supply Chinese steel mills.

The company sold shares in December to pay bills. An expansion to boost capacity at its Cloud Break mine to 80 million metric tons from 55 million tons may cost A$2.5 billion, JPMorgan & Chase Co. said in a Jan. 30 report.

“It’s a positive for the company as its funding requirements over the next half are now met after looking fairly precarious,” Paterson’s Passmore said.

(Bloomberg)

Rudd Denies Getting 'Too Cozy' With China

2009-04-01T08:23:00.004+08:00

Australian Prime Minister Kevin Rudd has defended his government's pursuit of closer ties with China. His comments follow criticism by opposition politicians who have accused Mr. Rudd of being too close to the Chinese.

Australia's Prime Minister Kevin Rudd, 30 Mar 2009Australia's links to China, its second biggest trading partner, have come under scrutiny after the conservative opposition in Canberra claimed that the relationship had become "far too cozy".

The criticism emerged after it was revealed that two senior Chinese officials, including a Communist Party propaganda chief, recently visited Australia without the public's knowledge.
Prime Minister Kevin Rudd, who is in London for this week's G20 economic summit, ignored a question about the secrecy surrounding the visits. Instead, he said that robust ties with China are important and that Australian jobs depend on them.

Although China's demand for Australian minerals has shrunk because of the global financial crisis, Foreign Minister Stephen Smith says that relations with the Chinese had to remain strong.
"Let's be very clear, very clear, about Australia's relationship with China. It's absolutely essential in the course of this century that Australia have a very strong relationship with China. This is all in Australia's national interest," said Smith.

Australia's opposition leader, Malcolm Turnbull, thinks, however, that the Rudd government has become too close to China. He accuses the prime minister of acting like a "roving ambassador" for Beijing.

Turnbull says he worries that the government's links with the Chinese could result in Australia's natural resources being sold too cheaply.

"Issues of our ... dealings, our relationship - our friendly relationship, I might add - with China are of important national interest," said Turnbull. "We have big questions to debate all the time about foreign investment. There are big issues around at the moment and our dealings with China, as indeed with other major powers, are matters of intense public interest."

Australian Defense Minister Joel Fitzgibbon has been drawn into the dispute after he admitted that he did not declare two trips to China when he was an opposition lawmaker in 2002 and 2005. An Australian-Chinese businesswoman paid for the trips.

Last week, Treasury officials in Canberra blocked a $1.8 billion takeover bid of Australian company at OZ Minerals by the Chinese company Minmetals because of national security concerns. The deal would have included a gold and copper mine near a sensitive missile facility in the Australian desert.

(VOA)

Argentina, China reach currency swap agreement

2009-04-01T08:10:00.004+08:00

MEDELLIN, Colombia, March 31- Argentina's central bank considers its recent currency swap agreement with China as a contingency measure and the South American country does not need it for now, Argentine central bank president, Martin Redrado, said on Tuesday.

"This is a standby swap. At this moment Argentina does not need it," Redrado said during an investment conference on the sidelines of the Inter-American Development Bank annual meeting.

"It could be used to do operations for monetary and currency operations," he said.

The two governments signed a memorandum of understanding, creating a framework for the 70 billion yuan ($10.2 billion) swap on Sunday. The news was distributed by the official Xinhua news agency on Monday.

Zhou Xiaochuan, Governor of the People's Bank of China said on Monday that but both sides needed to work out final details.

The swap is the sixth that the PBOC has signed with central banks since December in a drive to free up trade-finance channels that have been clogged by the global credit crunch.

"The fact that China represents such a small share of Argentina's total trade (less than 12 percent) suggests limited impact on FX, but is an important political gimmick at this time (convertibility will remain an issue)," RBS wrote in a research note issued on Tuesday.

"Indeed, we have been talking out the view that it is in the government's best interest to maintain a stable exchange rate into the elections as a strong currency has been the pinnacle of the Kirchner's economic plan and is essential for moderating capital flight," RBS said.

This is China's first currency swap line into Latin America. China's bilateral trade with the region has grown from $15 billion in 2001 to roughly $140 billion in 2008, Zhou told delegates to the IADB meeting.

The PBOC has signed six bilateral currency swaps in recent weeks, totaling 650 billion yuan ($95 billion). The other five central banks that have signed agreements with the PBOC since mid-December are South Korea, Malaysia, Indonesia, Hong Kong, and Belarus.

(Reuters)

China's WISCO buy stake in Consolidated Thompson

2009-03-31T08:13:00.003+08:00

TORONTO - Consolidated Thompson Iron Mines Ltd said on Monday that Chinese steel maker Wuhan Iron and Steel Corp (WISCO) has agreed to make a $240 million in the Canadian mining company in return for a 19.9 percent stake in the company.

Numerous Chinese companies have been acquiring stakes in foreign mining companies, in a bid to secure access to metals needed to fuel the country's rapid internal growth.

Chinese metals group Chinalco has just arranged a $21 billion loan to finance a major investment in Rio Tinto , while China's Minmetals has made a $1.7 billion bid for Australian miner OZ Minerals Ltd.

The letter of agreement between Consolidated Thompson and WISCO provides for WISCO to make a total investment in Consolidated Thompson of $240 million and in return Consolidated Thompson will issue 29.7 million of its common shares to WISCO.

This will represent 19.9 percent of Consolidated Thompson's outstanding shares post the transaction.

In addition, WISCO will receive not less than a 25 percent interest in a newly incorporated company that is to be established to operate the Bloom Lake mine, and will commit to purchase a similar percentage of iron ore production over the life of the mine.

Furthermore, WISCO will also be entitled to other long-term off take rights at fair market value from both the initial production and future expansion of the Bloom Lake project, as well as from Consolidated Thompson's Lamelee and Peppler Lake projects.

"This partnership will also strengthen Consolidated Thompson's potential to expand from the current mine plan of 8 million tons per year to 16 million tons of annual production of iron ore," said Consolidated Thompson's Chief Executive Richard Quesnel, in a statement.

(Reuters)

EU says G20 not to focus on China financial calls

2009-03-30T09:05:00.002+08:00

BEIJING - Europe is comfortable with China's growing world role but believes the G20 summit will be too early to decide on Beijing's calls for more say in global financial bodies, the EU Commissioner for External Relations said on Sunday.

European Union Commissioner Benita Ferrero-Waldner told Reuters in Beijing that the London gathering of 20 major wealthy and developing powers this week would focus on "concrete results" to revive the global economy, not more distant issues.

China caused a stir ahead of the Thursday summit when it suggested the world move to greater use of IMF Special Drawing Rights as an international reserve currency.

"I don't think that this will be the question that really will be discussed thoroughly in London," Ferrero-Waldner said after talks with Chinese Foreign Minister Yang Jiechi and Vice Premier Li Keqiang.

Likewise, she said, China's call for a bigger role in the International Monetary Fund (IMF) and other international financial bodies would not be a focus of the summit.

"I think it's too early for us to give a really concrete answer," she said of these calls. "I think it is within the IMF, it is within the international financial institutions, that these questions have to be discussed."

The idea of a new reserve currency system based on the IMF special drawing rights has not been entirely knocked down, but many G20 leaders have made clear that for now the U.S. dollar's status as the dominant reserve unit remains.

Ferrero-Waldner is seeking to smooth differences between Brussels and Beijing before the G20 meeting and a planned summit between China and the EU in May.

She said China's growing economic clout naturally meant more of an international role for Beijing.

"With the prosperity of China's economy, we of course have seen more self-assertiveness in policy and diplomacy," she said, adding that Beijing had taken a "very constructive attitude" in many international issues, such as climate change negotiations.

Chinese officials were angered by French President Nicolas Sarkozy's decision to meet the Dalai Lama, Tibet's exiled Buddhist spiritual leader, in December, when France held the six-monthly rotating EU presidency.

China condemns the Dalai Lama as a separatist for demanding high-level autonomy for his homeland.

Beijing is still giving Sarkozy the cold shoulder, but relations with the EU have improved, with Premier Wen Jiabao visiting Brussels and other capitals in February.

Ferrero-Waldner said she hoped Beijing and Brussels would seal a new framework treaty governing their ties by the end of the year.

(Reuters)

China To Actively Support IMF, Zhou said

2009-03-30T08:58:00.001+08:00

MEDELLIN, Colombia--People's Bank of China Governor Zhou Xiaochuan said Saturday that China is ready to actively join in the international effort to enhance the results of the International Monetary Fund and other multilateral lenders.

In a speech before the Inter-American Development Bank meetings being held in Medellin, Zhou outlined the need to emphasize greater regulatory reform.

He also called for a better balance of savings on a global level and for "greater responsibility for the banking sector."

In the wide-ranging speech, Zhou also said that China is ready to boost economic, trade and other ties between his nation and those in Latin America.

"We see huge potential for economic ties and trade between Latin America and China," he said, noting that China has a free-trade pact with Chile, has concluded negotiations for such a pact with Peru and could have one with Costa Rica.

"The potential for China to make foreign direct investment in the region is huge," he said, adding that some sectors of special interest are in pharmaceuticals, computer software, aeronautics and biological products.

He added that there was also potential in the finance, tourism and transportation sectors.

"We have every reason to believe that with joint efforts we can overcome the current difficulties and bring our cooperation to a new level," he added.

(Dow Jones)

Australia Blocks China Minmetals’s Purchase

2009-03-28T09:22:00.004+08:00

HONG KONG — Citing national security, Australia blocked on Friday one of several acquisitions China is seeking in the country’s natural resources sector, a move that may stoke concerns about rising protectionist tendencies around the globe.

The decision to block the purchase of OZ Minerals, a mining company, by state-owned China Minmetals Corporation, coincides with a heated debate concerning a much larger investment that the Chinese metals company Chinalco is planning to make in the British-Australian mining group Rio Tinto.

Two weeks ago, Chinese antitrust authorities blocked a move by Coca-Cola to take over Huiyuan Juice Group, a Chinese juice manufacturer, for $2.4 billion — a decision that caused widespread concern about China’s attitude to foreign takeovers of local companies.

Australia’s treasurer, Wayne Swan, said on Friday that he decided to block the OZ Minerals transaction because the company’s Prominent Hill gold and copper mine, its core asset, is near a sensitive military facility.

“The government has determined that Minmetals’ proposal for OZ Minerals cannot be approved if it includes Prominent Hill,” Mr. Swan said in a statement.

He added that discussions were continuing “in relation to OZ Minerals’ other businesses and assets, and the government is willing to consider alternative proposals relating to those other assets and businesses.”

The chief executive of OZ Minerals, Andrew Michelmore, said the company and Minmetals were discussing potential changes to the deal and would make an announcement “as soon as possible.”

Battered by falling earnings as raw materials have plunged in line with the slowing global economy, both OZ Minerals and Rio urgently need the cash injection that the Chinese companies’ investments represent.

OZ Minerals is scheduled to repay more than $900 million in debt next week, and must now renegotiate the deal or obtain a loan extension.

Analysts on Friday said it was unclear whether Minmetals would proceed without Prominent Hill, which is considered a core asset.

In a statement issued in Australia, Minmetals said Friday it wanted to continue talks: “Our focus is on delivering an agreed solution to OZ Minerals that meets national interests, can satisfy lenders, deliver stability to employees and protect existing operations.”

Whatever happens, Friday’s announcement will fuel the debate about a rise in global protectionism — even if Canberra’s rejection was due to security concerns rather than business protectionism.

A recent flurry of bids for some of Australia’s most prized natural resource assets has caused public and political unease in the country, as well as, in the case of the proposed Chinalco transaction with Rio, angry protests from shareholders.

At the same time, however, China is the main buyer of the natural resources that form the bedrock of Australia’s economy, making the approval of such deals politically sensitive.

Chinalco, or Aluminum Corporation of China, as it is officially known, last month proposed investing $19.5 billion in the miner. That deal, currently being evaluated by Australia’s antitrust authorities, would be the biggest foreign investment to date by a Chinese company and increase its leverage in pricing negotiations for iron ore from Rio’s mines.

The attempted OZ Minerals takeover, and a separate bid by the Chinese steel manufacturer Hunan Valin Iron for a 17.5 percent stake in Fortescue Metals Group, another Australian company, are much smaller — $1.7 billion in the case of OZ Minerals.

But all three transactions, each announced in the last few months, reveal China’s desire to take advantage of the recent drop in commodities prices to secure its hold over natural resources.

(NYT)

China questions Dollar's dominance

2009-03-27T08:14:00.003+08:00

The dollar's role as the world's dominant currency is coming under intense scrutiny.

This week, China added its voice to demands for a new global currency as an alternative to the dollar in international trade and finance.

It is worried that the dollar's value is being eroded by the steps the US is taking to rescue its economy from the worst financial crisis since the 1930s.

The US currency recorded its biggest weekly slide since 1985 last week, after the Federal Reserve said it would begin buying government debt to try to boost the economy, underscoring concerns.

"Calls for a new global currency come at a time when the US dollar is probably at its most vulnerable in many years," says Mitul Kotecha, global head of foreign exchange strategy at French financial services firm Calyon.

Dangers

China's central bank governor Zhou Xiaochuan called for a new reserve currency run by the International Monetary Fund.

He said the recent crisis revealed the dangers of relying on one currency.

He echoed similar calls made by Russia, which said it would bring up the topic at next week's G20 meeting.

The US response to China's unusually frank comments confused many investors.

US Treasury Secretary Timothy Geithner said he was "quite open" to China's idea, triggering a plunge in the dollar.

But he then added that the dollar was likely to remain the world's reserve currency for a long time, helping the currency to recover.

"The machinations of currency policy between the US and China are becoming increasingly intriguing," says Neil Mellor, currency strategist at Bank of New York Mellon.

China has almost $2 trillion in foreign exchange reserves, of which 65% is believed to be in dollars.

Popularity wanes

It is not unheard of for currencies to fall from grace in the global currency league.

Sterling was the dominant reserve currency of much of the world in the 18th and 19th Centuries.

The cost of fighting World Wars I and II, as well as the primacy of the US in the world economy, resulted in the pound losing its status.

And there have been anecdotal signs that the dollar's popularity as the world's currency of choice is fading.

In 2007, Indian tourist authorities said they would no longer accept dollars for entrance to the Taj Mahal.

And at home, rapper Jay-Z waved a wad of euros in a music video.

Stable reserves

To be clear, China is not calling for the US to replace the dollar as its own currency.

It is worried that the value of its reserves, which are predominantly held in dollars, is subject to the volatility of the dollar on foreign exchanges.

It has suggested that the International Monetary Fund's Special Drawing Rights (SDR) could be used as a reserve currency.

The SDR, which as created in 1969 as a unit of account, was initially pegged to the dollar, but is now based on dollars, euros, sterling and yen.

China's proposal would broaden the basket of currencies forming the SDR to include all large economies. Its use would be expanded and the IMF itself would manage some of the reserves.

The goal is to make currency reserves more stable.

Unrealistic

It is not a new idea. Economist John Maynard Keynes made a similar proposal.

But many analysts say such a move is unrealistic, even in the long term.

The dollar's appeal as a reserve currency is the depth and liquidity of US financial markets, says Mark Williams, international economist at Capital Economics.

This is something which the little-used SDR cannot compete with.

Even the world's next most traded currency, the euro, has not emerged as a true competitor to the dollar.

According to the IMF, the dollar accounts for 65% of declared currency reserves. This is down from 73% in 2001, but the decline also reflects the euro's higher value.

"If the euro falls short, it is hard to see markets for assets denominated in a new currency ever becoming developed enough for it to have a chance of dislodging the dollar, " Mr Williams says.

Furthermore, if China were to ditch the dollar, it would have to tread carefully.

Any suggestion that it is diversifying away from the dollar would dramatically undermine the value of its own reserves.

'Massive impact'

But as the world's largest holder of dollars, China's comments cannot easily be dismissed.

Should reserve managers begin to shift away from the dollar, it would have a "massive impact" on US markets, says Mr Kotecha at Calyon.

The huge appetite for dollars from countries such as China helped keep US mortgage rates low - in part causing the crisis the US economy currently faces.

If foreign investors shy away from buying US debt, it could lead to problems financing the Obama administration's stimulus spending plans.

As such, the US is likely to keep China and other large reserve holders on side and pay lip service to China's demands, even if they are unrealistic.

"It's a pointed reminder that China holds some key cards in its game of diplomatic poker with the US," says Mr Mellor at Bank of New York Mellon.

(BBC)

GE Wins $300 mil Natural-Gas Contract in China

2009-03-26T08:30:00.003+08:00

General Electric Co. said it has won a $300 million contract to supply compression equipment for the second phase of a natural-gas pipeline across China.

GE Oil & Gas executives say the West-to-East pipeline is one of the largest ongoing gas pipelines in the world and, when completed in the next six years, will stretch roughly 20,000 kilometers through 13 provinces and bring $600 million in revenue to GE.

The second phase will extend 8,700 kilometers, 2,000 kilometers longer than the Great Wall, and bringing natural gas to 400 million Chinese residents by the end of 2011. The pipeline is being built by PetroChina, the largest oil and gas producer in China, and will use 28 GE turbo compressors.

GE, Fairfield, Conn., also has supplied equipment for other Chinese pipelines, including a Sinopec line that carries natural gas from the Puguang field in Sichuan to Shanghai in China's eastern region.

GE has been making a push to expand industrial sales in emerging markets, particularly China, as a way to weather an economic downturn in other parts of the world and credit risks in its finance businesses.

The company says it recognized about $600 million in revenues in 2008 from roughly 400 infrastructure projects it sold in China surrounding the Olympics last year. It claims it also has sold 300 China Mainline locomotives since 2005 and hundreds more to nearby Kazakhstan. In January, GE said sales of healthcare products in China were increasing.

GE's Oil & Gas division has been active in China for more than 30 years. It borrows technologies GE uses on aircraft engines and gas turbines. GE's builds the turbocompressor equipment in Cincinnati and Florence, Italy, and ships it to China.

The PetroChina pipeline moves natural gas from remote regions in Northwestern China, near the Kazakhstan border, to Eastern parts of China such as Shanghai.

GE reported Oil & Gas orders down 11% and revenues down 4% in the fourth quarter from a year earlier but showed 22% growth in segment profit and 14% growth in oil and gas-related services.

Joseph Mastrangelo, a vice president for equipment at GE's Oil & Gas unit, said orders are continuing in emerging markets such as Brazil, Russia and China. "They are really taking the long term view," he said of China's government and oil and gas sector.

(WSJ)

China Becoming the World's Malware Factory

2009-03-25T08:17:00.003+08:00

With China's economy cooling down, some of the country's IT professionals are turning to cybercrime, according to a Beijing-based security expert.

Speaking at the CanSecWest security conference last week, Wei Zhao, CEO of Knownsec, a Beijing security company, said that while many Chinese workers may be feeling hard times, business is still booming in the country's cybercrime industry. "As the stock market dropped like a stone, a lot of IT professionals lost lots of money on the stock market," he said. "So sometimes they sell 0days," he said, referring to previously unknown software bugs.

"China is not only the world's factory, but also the world's malware factory," Zhao said.

China's red-hot economy has been hit by the global recession, and while the economy is still growing, technology companies such as Intel, Motorola and Lenovo have all laid off employees in China in recent months.

Last December, Chinese hackers found a previously undisclosed 0day vulnerability in Internet Explorer. When employees of Zhao's company inadvertently published details of the bug on a public forum, Microsoft was sent scrambling to patch the issue.

Chinese hackers tend to focus on hacking software that runs on the desktop, rather than the server, because the underground market pays big money for client-side bugs, which are then often used to install malicious software on millions of desktops.

While recently investigating a single, but widespread attack, Zhao's researchers counted more then 4 million infected computers over a one-day period.

China has an estimated 250 million computer users, so attackers can do pretty well targeting only Chinese systems. "We have a huge amount of users and a very big local market," he said.

Hackers have had a lot of success launching widespread 0day attacks against programs like RealPlayer and Adobe Flash, but they have also hit local Chinese programs, including Xunlei, QQ and UUSee.

Security is often little more than an afterthought for local software developers, Zhao said.

"In China you have all this third-party software that's very popular, but which is much less secure than Microsoft software," said Wayne Huang, CEO of Web security consultancy Armorize, which has research labs in Taiwan. Not only are exploits for Chinese programs like QQ much easier to find -- software companies tend to take much longer to patch the exploits. "QQ is not going to be able to react as quickly as Microsoft," he said.

Cyberattacks in the region can be ingenious. Earlier this month, criminals redirected Taiwanese traffic to the tw.msn.com and taiwan.cnet.com Web sites using what's known as a non-blind TCP spoofing attack.

In this attack, the hackers managed to compromise a switch in Singapore, the country where the Web sites were hosted, Huang said. They then monitored the switch for traffic and when they saw packets looking for the MSN and Cnet Web sites, they sent back spoofed packets that redirected the victims to a malicious Web site, which launched attack code.

The attack lasted about 10 days, in part because security experts had such a hard time figuring out how it was working. "No attack that I have known has persisted for such a long time," Huang said.

He agreed that the economic downturn has had an effect on computer security. "People are more reluctant to disclose vulnerabilities because now they sell them," he said, and Chinese newsgroups are now awash with postings about hackers receiving large payouts for their exploit codes.

"I think the downturn has definitely made the crime scene a lot more active," he said.

(PC world)

Alcatel-Lucent gets China Unicom 3G contract

2009-03-24T09:00:00.001+08:00

Alcatel-Lucent on Monday said it received a contract to deploy and maintain third-generation mobile networks for Chinese telecommunications provider China Unicom in 14 of the country's provinces.

Alcatel-Lucent did not disclose the value of the contract, which will give some of Hong Kong-based China Unicom's cell phone customers faster speeds for surfing the Web and watching video on their phones.

The Paris-based company said it expects the first six networks to be finished in May, in the cities of Tianjin, Baoding, Wenzhou, Taizhou, Guiyang and Guilin.

Alcatel-Lucent already operates some second-generation wireless networks in China, and in a statement it called new deals for networks in the provinces of Fujian, Jiangxi, Heilongjiang and Jiangsu a "strategic breakthrough."

The company, formed when Alcatel SA bought U.S.-based Lucent Technologies Inc. in 2006, said it will also build out the so-called 3G networks in Hebei, Guangxi, Tianjin, Zhejiang, Inner Mongolia, Guizhou, Guangdong, Hunan, Shandong and Xinjiang provinces.

Shares of Alcatel-Lucent rose 15 cents, or 9.4 percent, to close at $1.74.

(Business Week)

China Fires 8 Top Regulators Over Milk Scandal

2009-03-23T08:23:00.004+08:00

SHANGHAI — China said Friday that eight senior regulators were fired last week for “slack supervision” in a tainted milk scandal that killed at least six children and sickened over 300,000 last year.

The government said high-ranking regulators in the country’s major food supervisory agencies, including the ministries of health and agriculture and the top food safety watchdog, were stripped of their positions and their membership in the Communist Party.

One of the highest officials to lose his job was Wang Bubu, chief of the law enforcement division of the General Administration of Quality Supervision and Quarantine.

The dismissals were Beijing’s latest efforts to strengthen food safety practices and hold government officials accountable after the worst food safety crisis here in decades.

The scandal dealt a huge blow to China’s dairy industry last year and also led to global recalls of Chinese-made food products, damaging international trade and further shaking confidence in this nation’s ability to monitor its food producers.

China arrested dozens of farmers, middlemen and dairy company executives last year, accusing them of violating the public trust. Some middlemen were accused of intentionally spiking milk supplies with melamine to save money, essentially using the toxic chemical as filler.

One major dairy company, the Sanlu Company, was forced into bankruptcy. Two men were sentenced to death for their role in the scandal earlier this year and several other people, including the 66-year-old chief executive of Sanlu, were sentenced to life in prison.

The punishments announced late Friday were handed down by the Communist Party watchdog, the Central Commission for Disciplinary Inspection.

Regulators in the State Administration for Industry and Commerce and the State Food and Drug Administration were also punished. Last September, the chief of the General Administration of Quality Supervision and Quarantine and two high ranking officials in the city of Shijiazhuang, where Sanluwas based, were dismissed or stepped down.

Beijing has struggled to demonstrate that it is taking strong steps to improve food safety. But a four-month nationwide food safety campaign in late 2007 failed to prevent the milk scandal.

(NYT)

China's Coke Decision Threatens to Chill Investment

2009-03-20T07:55:00.001+08:00

Lawyers and investment bankers said China's rejection of Coca-Cola Co.'s $2.4 billion bid for China Huiyuan Juice Group Ltd. could prompt a backlash against Chinese investing abroad as it risks chilling investment within the country.

China's Commerce Ministry said Wednesday that the combined company's market power could "narrow the room for survival" of smaller players in China's beverage industry and lead to higher prices for consumers. Coke might use its dominant position in the carbonated-beverage market to restrict competition in the juice business, the ministry said.

Coca-Cola is the largest seller of carbonated soft drinks in China, with a 52.5% market share, according to research firm Euromonitor. Huiyuan, meanwhile, is China's largest maker of 100%-juice drinks, with a 33% market share. Coke also sells juice drinks, and the two companies' combined share of the fruit-and-vegetable juice market last year was 20.3%, according to Euromonitor.

The ruling -- the first major test of a new antimonopoly law -- sends "a very negative message," said Lester Ross, an attorney in U.S. law firm WilmerHale's Beijing office, who wasn't involved in the deal. "I think it was driven by protectionism, fueled by popular resentment against a foreign company acquiring a popular Chinese brand."

Mei Xinyu, a researcher at the Chinese Academy of Trade and Economic Cooperation, which is affiliated with the Commerce Ministry, said the ruling had "nothing to do with trade protectionism."

The deal did, however, block what would have been the largest-ever takeover of a Chinese company by a foreign buyer.

Merger-and-acquisition lawyers who weren't involved in the deal said the ministry's statement indicates that officials appeared to rely on broader definitions of anticompetitive harm than used by their counterparts in the U.S. The ministry's statement implied that a company's overall size, in addition to its share of any given market, should be taken into account, these lawyers said.

Yi Xianrong, a researcher in the finance and banking section of the government-backed Chinese Academy of Social Sciences, criticized the ministry's rejection, saying it was "groundless" given the intense competition in the industry.

Lawyers and bankers said higher antitrust barriers from Beijing could further hinder companies trying to conduct deals and invest in China, where it long has been difficult to acquire assets from state-owned companies. The Finance Ministry on Wednesday announced rules that make it harder for foreign investors in financial-services businesses to buy or sell their stakes. This follows moves by some foreign banks in recent months to sell holdings in Chinese banks.

Meanwhile, perceptions that China is hostile to foreign investors could hurt Chinese companies looking to take advantage of low prices to invest abroad, particularly in oil, metals and other natural resources that Beijing sees as critical to sustaining the nation's economic growth.

The government is looking to loosen those reins further, issuing rules Monday that reduce regulatory hurdles for Chinese companies looking to invest overseas. Last week, China's minister of commerce, Chen Deming, called on the global community to "jointly oppose trade protectionism." In the past two years, the value of deals struck by Chinese companies overseas has far exceeded that of deals made by foreign companies in China.

The Commerce Ministry said Wednesday that it had attempted to negotiate with Coca-Cola for a more limited deal that would ease the anticompetitive effects of the acquisition but that the company's response didn't go far enough to address its concerns. Coke didn't comment beyond its prepared statement expressing regret the deal was killed.

Coke's effort to acquire Huiyuan met with public criticism in China. Shortly after the deal was announced, a poll of about a half-million people by Web portal Sina.com showed that nearly 80% of participants opposed the transaction.

Chinese executives also were critical. Yang Xiulin, the marketing director of beverage company Hangzhou Wahaha Group Co. said "if national brands are gone, for the long term, it's not good for the Chinese industry."

The roles have been reversed, however. In 2005, state-controlled Cnooc Ltd. attempted to acquire Unocal Corp. of the U.S. for $18.5 billion, only to withdraw within weeks amid intense political pressure in the U.S. While Cnooc's deal-making inexperience contributed to its difficulties, opposition from U.S. lawmakers surprised China and left many in the country believing the U.S. wouldn't stand by its own open-markets rhetoric.

(WSJ)

Coca's bid for Huiyuan rejected by China's Gov't

2009-03-19T08:07:00.006+08:00

March 18 -- China’s rejection of Coca-Cola Co.’s $2.3 billion bid to buy the country’s largest juice maker leaves the company to compete with PepsiCo Inc. the hard way, by building sales of existing products.

China’s Ministry of Commerce barred Coca-Cola’s purchase of China Huiyuan Juice Group Ltd., saying it might have used its “dominant position” to push up prices and limit choices for consumers. Coca-Cola would have roughly doubled its juice market share with the deal, said Jason Pride, director of research for Haverford Investments.

“It would have given them better access to China when they are going head-to-head with Pepsi,” said Pride, whose Radnor, Pennsylvania-based firm has $5 billion of assets under management including shares of Coca-Cola and PepsiCo. “It slows Coca-Cola down in China.”

Coca-Cola and PepsiCo are in a race to buy juice and dairy-beverage brands in developing countries to diversify beyond soft drinks and win customers by catering to local tastes. PepsiCo and its chief bottler agreed last year to pay $1.4 billion for a 75.5 percent stake in Russia’s largest juice maker, OAO Lebedyansky and are seeking to buy the rest.

Coca-Cola, based in Atlanta, controlled 52.5 percent of the Chinese soda market by volume in 2008, compared with PepsiCo’s 33 percent, according to market research company Euromonitor. Coca-Cola had 12 percent of the fruit- and vegetable-juice market, while Huiyuan had an 8.5 percent share. The Chinese beverage company controlled 33 percent of the nation’s pure-juice market.

“We will now focus all of our energies and expertise on growing our existing brands and continuing to innovate with new brands, including in the juice segment,” Chief Executive Officer Muhtar Kent said today in a statement.

Pulpy Orange

Minute Maid Pulpy Orange is one of Coca-Cola’s best-selling juice drinks in China, where it was developed before being introduced in 2004. Sales were expanded to India in 2007.

Coca-Cola plans to invest $2 billion in China over the next three years as part of its attempt to win more of the nation’s 1.3 billion consumers, it said this month.

The investment plan includes a $90 million technology center that opened in Shanghai March 6. Coca-Cola’s proposed investment is 25 percent more than the $1.6 billion it has spent in China since returning in 1979.

China’s denial of the acquisition is the first under an anti-monopoly law that’s been criticized for a lack of openness.

“Having two companies with way under 25 percent market share come together and try to make efficiencies is not anti-competitive,” Pride said. “Protectionism is an evil beast that destroys overall global economic prospects.”

Coca-Cola rose 20 cents to $41.65 at 4 p.m. in New York Stock Exchange composite trading. The shares have declined 8 percent this year. PepsiCo climbed 22 cents to $49.47.

(Bloomberg)

EX-StanChart China credit exec to join ANZ

2009-03-18T09:00:00.002+08:00

SHANGHAI, March 17 - Former Standard Chartered China Chief Credit Officer Frankie Chow has agreed to join Australia and New Zealand Banking Group Ltd , said two sources with direct knowledge of the appointment.

Asia-focused Standard Chartered announced Chow's resignation in an internal email to its China staff on Tuesday without saying where Chow will move.

But the sources told Reuters that Chow will join ANZ for a senior position in China.

The move will make Chow the second senior Standard Chartered banker in China to join its rival ANZ after Christine Ip, former head of consumer banking for Standard Chartered in China, decided to join ANZ as its new China chief executive early this year.

"This year, ANZ has become very aggressive in China in grabbing talent from rival banks," one source said.

"First, ANZ got Christine Ip and now Frankie Chow. If you go to ANZ offices in China, I am sure you will find many familiar faces who are former bankers of Standard Chartered or HSBC," he added.

ANZ, headed by Michael Smith, the former Hong Kong-based Asia chief of HSBC Holdings Plc, has said it will expand headcount in Asia this year.

Chow's last job at Standard Chartered was chief credit officer for Hong Kong and Japan, based in Hong Kong.

But he is better known for his position as a top China executive, based in Shanghai, in charge of approvals for Standard Chartered's loans and deposits.

Both Standard Chartered and ANZ have ambitious expansion plans in China. Standard Chartered said on Tuesday it has no plans for job cuts and will continue to focus on organic growth while eyeing acquisition opportunities in key markets including Asia, Africa and the Middle East. [ID:nSEO322947]

Standard Chartered declined to comment while a spokesman for ANZ could not be immediately reached for comment.

ANZ plans to set up a locally incorporated banking unit in China to accelerate its expansion despite the global financial crisis, people with direct knowledge of the plan told Reuters last week. [ID:nHKG162243]

ANZ currently owns branches in Beijing and Shanghai, as well as a representative office in the southern Chinese city of Guangzhou near Hong Kong.

ANZ also owns 20 percent of Tianjin City Commercial Bank through strategic partnerships, and 20 percent of Shanghai Rural Commercial Bank in China's financial hub where ANZ's China headquarters is based.

(Reuters)

China relaxes rules for firms to invest overseas

2009-03-17T09:00:00.001+08:00

SHANGHAI, March 17 - China's Ministry of Commerce has relaxed rules to make it much easier for Chinese companies to win approval to invest overseas, in the country's latest move to encourage its companies to go abroad.

China, the world's No. 3 economy and the biggest foreign owner of U.S. Treasury bonds, is keen to diversify the investments made using its nearly $2 trillion pool of foreign-exchange reserves, the world's biggest.

Although China is also turning more cautious in overseas investment after the global financial crisis left some firms nursing heavy losses in overseas acquisitions, outbound mergers and acquisitions by Chinese companies still leapt 64 percent last year to $47.8 billion, Thomson Reuters data showed.

Now according to new rules that take effect on May 1, local authorities under the Ministry of Commerce will have the power to give approval for most corporate overseas investment projects, the ministry said in rules published late on Monday on its website, http://www.mofcom.gov.cn.

The ministry will only retain the power to give approval for corporate overseas investment worth $100 million and above for a single project or investment in a country that does not have diplomatic relations with China, the rules said.

The rules apply to the establishment, mergers and acquisitions of only non-financial companies, the ministry said.

The official Shanghai Securities News said on Tuesday the changes meant 85 percent of Chinese foreign investment projects would be approved by local commerce authorities when the new rules come into effect.

(Reuters)

VW's China JV to buy partner's unit for $73 mln

2009-03-17T08:48:00.001+08:00

SHANGHAI, March 16 - Volkswagen AG's car making venture in north China has agreed to take over a subsidiary from its partner FAW Group for 502.35 million yuan ($73.46 million), an FAW spokesman said on Monday.

FAW group, which makes Volkswagen and Audi cars in a tie-up with the top European automaker, had put up its subsidiary in the western city of Chengdu for sale at the Tianjing Property Rights Exchange last month.

But the spokesman with the Chinese auto group told Reuters the two sides had already reached a deal before the public auction but needed to go through official procedure as required by regulators.

FAW's Chengdu unit made a net profit of 354.66 million yuan in 2008, data on the property exchange's website showed. No capacity information was provided.

Volkswagen, which competes with General Motors Corp, Toyota Motor Corp in China and globally, sold 1.02 million vehicles in mainland China, Hong Kong and Macau in 2008, up 12.5 percent from a year earlier.

The automaker said last month that it planned to double its vehicle sales in the Greater China area by 2018 and add four models each year during the period.

Volkswagen also has a car manufacturing venture with SAIC Motor Corp , China's biggest automaker.

(Reuters)

China SUFA in nuclear venture with U.S. Flowserve

2009-03-16T07:45:00.001+08:00

SHANGHAI, March 14 - SUFA Technology Industry Co 000777.SZ, a top Chinese valve maker, said on Saturday it would establish a venture with U.S. firm Flowserve Corp to make valves for China's growing nuclear power industry.

The venture, based in the eastern Chinese city of Suzhou, would be owned 51 percent by SUFA and 49 percent by the U.S. company, and involve investment of $25 million.

SUFA is a subsidiary of state-run China National Nuclear Corp (CNNC), the country's biggest owner of nuclear power plants and a developer of nuclear technology. China has nuclear generating capacity of 9.07 gigawatts and aims for 60 GW by 2020.

In the final two months of last year, China announced it would start building three nuclear stations, and it has said it will begin construction of four more in 2009 as it boosts infrastructure spending to aid the economy.

(Reuters)

Norway Oil Fund Expels China Firm

2009-03-15T09:52:00.002+08:00

Norway has barred its oil fund from investing in China's Dongfeng Motor Group because the firm sell arms supplies to military-ruled Burma.

Norway's finance ministry says the Chinese company sells military trucks to Burma.

Finance Minster Kristin Halvorsen said Friday Norway cannot finance companies that support the military dictatorship in Burma through military sales.

Norway's oil fund, officially called the Government Pension Fund-Global, invests the country's oil and gas wealth in foreign stocks and bonds. The fund is meant to save money for the future when Norway's oil supply runs dry.

The fund is currently worth around $300 billion. Norway is a major exporter of oil and natural gas.

(VOA)

Iran, China sign $3.2 billion gas deal

2009-03-15T09:39:00.002+08:00

TEHRAN, Iran — State TV says Iran and China have signed a $3.2 billion gas deal to produce more than 10 tons of liquid natural gas.

The deal was signed in Tehran between Iran LNG Company and a Chinese-led consortium, the report said.

The Chinese company will build a line to liquefy gas in Phase 12 of the giant South Pars Gas Field in southern Iran. It didn't give further details.

The United States is pushing for China and others to abide by United Nations sanctions aimed at pressuring Iran to rein in its nuclear program.

Iran has trumpeted recent energy deals as a vindication against U.S. efforts to isolate Tehran.

(AP)

PM Wen Concerns Over China's U.S. Treasurys

2009-03-14T08:15:00.003+08:00

BEIJING -- Premier Wen Jiabao voiced confidence in China's economy, saying his government's finances give it room to spend even more to support growth if needed, but expressed concern about the outlook for the U.S. and the safety of its Treasury bonds.

The forceful comments from Mr. Wen's annual press conference -- a rare opportunity for domestic and foreign reporters to ask a top Chinese official questions directly -- helped depress the U.S. dollar and prices of U.S. Treasurys in Asian trading Friday.

The public airing of his concerns reflect how the relationship between China and the U.S. has been evolving under the pressure of the financial crisis. For years the U.S. has pressed China to change the way it runs its economy, such as by opening up its financial system. But in the last year China's government has been increasingly vocal about what it sees as U.S. economic mismanagement. And as the U.S. government's largest creditor, it has become more assertive in trying to ensure its interests receive a hearing.

"We have lent a huge amount of money to the U.S., so of course we are concerned about the safety of our assets. Frankly speaking, I do have some worries," Mr. Wen said in response to a question. He did not offer specific suggestions on economic policy to the U.S. government, but called on it to "maintain its credibility, honor its commitments and guarantee the security of Chinese assets."

Mr. Wen did indicate that China would not be rash in making changes to its $1.946 trillion stockpile of foreign reserves, much of which is in U.S. dollars. While China is naturally looking out for its own interests, it will "at the same time also take international financial stability into consideration, because the two are inter-related," he said.

In that vein, Mr. Wen also pointed out that China hasn't pushed down the value of the yuan, despite pressure on its exporters, and repeated his government's commitment to currency stability. The yuan has hovered around 6.84 to the dollar since July 2008, but Mr. Wen noted that because the dollar has risen against other Asian and European currencies, the yuan has actually become stronger overall.

He said China alone would decide where the yuan goes from here. "No country can pressure us to appreciate or depreciate" the currency, he said.

Despite the rising external challenges, Mr. Wen reaffirmed his belief that China should be able meet its traditional target of economic growth of around 8% this year. He said market expectations last week of another stimulus package were based on "rumors and misunderstandings," and that China's announced program of four trillion yuan in investments over two years will help meet "both short-term and long-term needs."

China's government is planning on an eightfold expansion of its budget deficit this year, to around 3% of gross domestic product, to fund the stimulus program. Mr. Wen said government debt remained at a manageable level and that conservative budgeting in previous years means China is well positioned to do more if necessary.

"We have already prepared plans to deal with greater difficulties, and have reserved adequate ammunition. We can introduce new stimulus policies at any time," he said.

Mr. Wen said that China is also closely watching to see the effects of the policies taken by U.S. President Barack Obama aimed at returning the world's largest economy to health. Chinese foreign minister Yang Jiechi was also in Washington this week to discuss how the two countries can cooperate on economic policy, among other issues.

A test of that cooperation is quickly approaching. U.S. Treasury Secretary Timothy Geithner this week called on the Group of 20 – a gathering of the world's largest developed and developing economies – to increase funding for the International Monetary Fund by up to $500 billion to help combat the financial crisis. Achieving that sum likely will depend on getting agreement from countries that hold large foreign exchange reserves, such as China and Saudi Arabia.

Ahead of a preparatory meeting of G-20 financial officials this weekend near London, Mr. Wen said pointedly that "increased funding for the IMF is not a question for just one country" but for all member nations. He also repeated China's desire to see reforms to the IMF that give more clout to developing nations.

The Chinese premier's annual press conference is held each March at the close of the country's legislative session. Mr. Wen was asked about a broad range of subjects, from relations with France and Russia to the possibility of political reform in China and the sensitive issue of Tibet.

Mr. Wen used harsh language against the Dalai Lama, Tibet's spiritual leader, who accused the Chinese government this week of turning the Himalayan region into a "hell on earth." He said talks between Beijing and the Dalai Lama, which took place last year without making any progress, could only resume if the Dalai Lama is "sincere."

Despite blanket security in Tibet around the 50th anniversary of the Dalai Lama's flight from Tibet, Mr. Wen said that "the situation in Tibet on the whole is stable. The Tibetan people hope to live and work in peace and stability."

Obama Calls for Military Dialogue With China

2009-03-13T08:50:00.002+08:00

WASHINGTON — President Obama told China’s foreign minister on Thursday that their two countries need to raise “the level and frequency” of military dialogue “in order to avoid future incidents” like the high seas confrontation between naval vessels this week, the White House said.

The two met in the Oval Office in the highest level contact since a tense encounter Sunday involving a United States Navy survey vessel and five Chinese ships that escalated into what the chief American intelligence officer called the “most serious” military incident with China since 2001.

Foreign Minister Yang Jiechi spent two hours at the White House, meeting first with the national security adviser, Gen. James L. Jones, and then with Mr. Obama and Vice President Joseph R. Biden Jr. The White House played down the meeting, keeping it closed to reporters and news photographers. But it did release its own handout photo afterward.

Mr. Yang made no statements to reporters as he left the White House and did not mention the naval confrontation in a speech elsewhere in Washington earlier in the day.

The incident occurred Sunday about 75 miles off Hainan island, south of the Chinese mainland. Five Chinese ships surrounded and harassed the USNS Impeccable as it conducted surveillance in an area Beijing claims jurisdiction over but other countries consider international waters, according to the American account. The Chinese tried to block the ship and snag its cables with hooks. The Americans used a fire hose to spray water at the Chinese.

In meeting with Mr. Yang, General Jones “raised the recent incident in the South China Sea with the USNS Impeccable,” the White House said in a statement. The description of the conversation during the later meeting with Mr. Obama was more general, focusing on how to avoid future incidents. White House spokesmen would not say whether Mr. Obama talked about the Impeccable episode in any detail.

The president pledged to work closely with China on stabilizing the global economy and pressing North Korea to give up nuclear weapons.

And while Secretary of State Hillary Rodham Clinton recently said disputes over human rights “can’t interfere” with work on other issues with China, Mr. Obama said “the promotion of human rights is an essential aspect of U.S. global foreign policy” and urged Beijing to make progress in a dialogue with representatives of the Dalai Lama.

(NYT)

HSBC, StanChart to keep up China expansion in 2009

2009-03-12T08:46:00.001+08:00

SHANGHAI, March 11- HSBC Holdings Plc and Standard Chartered Plc , the two biggest foreign banks in China, said on Wednesday they would continue to expand in the country despite global cost-cutting by banks struggling to survive the financial crisis.

HSBC China, whose pretax profit surged 85.2 percent last year to 2.19 billion yuan ($320 million), plans to boost its number of outlets in 2009 to 100 from 82 and will hire 1,000 employees to support the expansion, it said in a statement.

Rival Standard Chartered aims to add 11 to 15 sub-branches in China in 2009, its China consumer banking head Wilson Chia said in an interview.

He added that the bank would continue investing in people but gave no projections for staffing levels in China, which have risen five-fold to 2,000 over the past three years.

The China expansion plans at HSBC, Europe's largest bank, contrast with its plans to shut its U.S. consumer lending business, cutting 6,100 jobs.

"Our growth was driven by China's stimulus efforts, which enabled continued economic growth and market confidence amid the global financial crisis," HSBC said.

(Reuters)

China February Auto Sales Rise 25% After Tax Cuts

2009-03-11T08:01:00.002+08:00

March 10 -- China vehicle sales surged 25 percent in February, the first gain in four months, after the government cut taxes on some models, helping the country extend its lead as the world’s largest auto market this year.

Sales of passenger cars, buses and trucks climbed to 827,600, the China Association of Automobile Manufacturers said today in Beijing. The tally in the first two months rose 2.7 percent to 1.56 million, compared with a 39 percent decline to 1.35 million in the U.S.

China has halved retail taxes on small cars and drawn up plans to give out vehicle subsidies in rural areas to revive demand after auto sales rose at the slowest pace in a decade last year. Combined with the country’s wider 4 trillion yuan ($585 billion) economic stimulus package, the policies have caused General Motors Corp. to roughly double its forecast for China’s nationwide auto market growth this year.

“Consumers are regaining confidence because of the government’s stimulus policies,” said Ricon Xia, an analyst at Daiwa Research Institute in Shanghai. “Still, vehicle sales may fluctuate in the coming months.”

Sales this month will likely be better than in February, Xiong Chuanlin, vice secretary-general of the automakers group, told reporters in Beijing today. The body is “cautiously optimistic” about full-year sales, he added.

Snow, New Year

The February sales jump, the biggest in 18 months, was also helped by an earlier Lunar New Year holiday. The weeklong break was in January this year compared with February last year. Snowstorms across much of China also disrupted the market in 2008.

Passenger-car sales, including sport-utility and multipurpose vehicles, rose 24 percent last month to 607,300, the association said. In the first two months, the tally climbed 5.8 percent to 1.22 million.

Sales of cars with engines or 1.6 liters or less jumped 19 percent in the first two months. Their market share gained by 7.71 percentage points.

Rising sales and production cuts by automakers has caused the nation’s stockpile of unsold vehicles to fall to the lowest in two years last month, the grouping said.

Commercial-vehicle sales fell 6.9 percent in first two months as the sector received less government support than passenger cars, the group said. Truckmakers are now seeking similar stimulus plans, it added.

GM Forecast

GM, the biggest overseas automaker in China, raised its forecast for the nation’s market growth this year to a range of between 5 percent and 10 percent from an earlier prediction of less than 3 percent, GM Asia-Pacific President Nick Reilly, said last week.

India, the world’s second-most populous nation, also had an increase in February auto sales, the first gain in five months, as emerging markets avoid the world of the global recession.

By contrast, GM is shuttering plants in the U.S. and seeking a government bailout on tumbling demand. GM’s domestic sales collapsed 51 percent in the first two months as the industrywide sales rate dropped to the lowest level since 1981 amid the recession.

In China, the government halved sales taxes on cars with engines of 1.6 liters or less starting from Jan. 20. It’s also providing 5 billion yuan in subsidies to spur auto sales in rural areas. That has particularly benefited GM’s SAIC-GM-Wuling Automobile Co. venture, the largest minivan-maker in China, Reilly said. The carmaker expects its own China sales growth to outperform the market by as much as 3 percentage points this year, he added.

Volkswagen AG, the second biggest automaker in China, said last month that it plans to double local sales by adding at least four new models a year until 2018. The carmaker sold 1.02 million vehicles in China last year.

(Bloomberg)

Coke will pump a further $2 billion into China

2009-03-10T07:56:00.003+08:00

The Coca-Cola Company opened a $90 million innovation and technology centre in Shanghai on Friday. The company also announced that it will pump a further $2 billion into China over the next three years. The news comes just weeks before the deadline for the completion of Coke's proposed takeover of domestic drinks company Huiyuan Juice.

The new research centre, Coke's largest in Asia, will look at developing new products suitable for Chinese tastes—where drinks like juices and teas are preferred over Coke's traditional mainstay, carbonated beverages.

The $2 billion of further investment will be spent on new plants and distribution infrastructure, sales and marketing, and research and development. The investment announced is greater than all the money the US drinks giant has put into China since it returned to the country in 1979, estimated at $1.6 billion.

The timing of the announcement is likely to be linked to the imminent deadline for Coke's takeover of Huiyuan Juice, which is due for completion on March 23. In September, Coke revealed a $2.4 billion offer for control of Huiyuan and has since been waiting for regulatory approval under China's new anti-monopoly law. The regulator's decision is critical because it will signal China's attitude towards inbound M&A deals.

Coke is advised on the Huiyuan deal by the Royal Bank of Scotland, while Huiyuan Juice is advised by Goldman Sachs. The controlling shareholder of Huiyuan, Huiyuan Holdings. is advised by UBS.

The regulator's decision is likely to be watched from all corners of the world as China is also aggressively pursing outbound targets. China is awaiting approval from Australia's Foreign Investment Review Board (FIRB) for the acquisition of stakes in two mining assets and China may not want to send a message that it plays by different rules on its home ground.

As for Coke, the US soft drinks compnay will be hoping that by injecting large chunks of cash into China, its third largest market, it will be corroborating its long-term commitment to the country. The acquisition has proved controversial, with accusations that Zhu Xinli, the man behind Huiyuan, has sold out to a foreign multinational.

In terms of multiples, $2.4 billion is six times Huiyuan's 2007 revenues and 26 times its trading profits. At HK$12.20 a share, it represents a premium of 195% to the price of the target's shares before the deal was out. Although shares in the company rocketed after the deal was announced, reaching HK$10.94, six months of market turmoil have pulled the price down again to HK$9.1, suggesting that perhaps Coke could have got away with paying less. Indeed, some sources suggest that if the deal were to unravel it would be a blessing for Coke. Market conditions have worsened in the time since the deal was announced and a couple of billion dollars on Coke's balance sheet could be welcome in these uncertain times.

But Coke president and CEO, Muhtar Kent, presented a picture of confidence in February when he spoke to analysts about the company's fourth quarter 2008 and full-year financials. In a transcript posted on seekingalpha.com, Kent highlighted that the company had delivered another quarter of strong performance, marking its ninth consecutive quarter of double-digit earnings per share growth and the third straight year of meeting or exceeding targets. "Simply said, we were built for times like these," said Kent referring to Coke's ability to weather the recession which has adversely impacted results at a number of companies.

China's importance was apparent on the call which mentioned the world's most populous country time and again. Sprite sales reached two billion units in annual volume, driven by China; the Olympic sponsorship allowed Coke to connect with half a billion consumers; Coke's product Minute Maid Pulpy was deemed a "huge success in China" reaching a volume of a couple of hundred million cases; and China's volume growth of 19% in 2008 was highlighted.

Coke's bullishness on China is not surprising. Per capita consumption of Coke beverages in 2008 was 24 units per person per annum, compared to over 400 in North America. Even accounting for the difference in purchasing power and consumption preferences, the potential for Coke to further penetrate China seems indisputable. If the money spent on Huiyuan takes Coke a little closer to that goal, even the expensive deal it has struck may be worthwhile.

(FinanceAsia.com)

Crude Oil Trades Near $45 as China to Boost Commodity Imports

2009-03-09T08:20:00.002+08:00

March 5 -- Crude oil traded near $45 a barrel, after climbing in the past two days, as China plans to increase imports of commodities.

The world’s second-largest oil consumer will boost stockpiles of economically strategic materials, Premier Wen Jiabao said in Beijing today. Prices climbed 9 percent yesterday after an official said the country may add to their stimulus plan. A U.S. government report yesterday showed an unexpected drop in crude inventories.

“If these efforts to stockpile crude oil and oil products become a reality then it raises China’s apparent demand,” said Victor Shum, a senior principal at Purvin & Gertz Inc. in Singapore. “In terms of a global impact, it will certainly tighten up the supply and demand situation.”

Crude oil for April delivery was at $44.92 a barrel, down 46 cents, in electronic trading on the New York Mercantile Exchange at 1:29 p.m. Singapore time. Yesterday, futures rose $3.73 to $45.38. Prices are down 69 percent from the record high of $147.27 a barrel reached on July 11.

China will “significantly increase” investments in 2009 to counter a slowdown in the world’s third-biggest economy, Wen said in the work report, presented to the National People’s Congress. He didn’t announce a bigger stimulus package.

Commodities yesterday had their biggest increase since Dec. 31. The Reuters/Jefferies CRB Index of 19 raw materials rose 7.78, or 3.8 percent, to 211.45.

(Bloomberg)

China's Red Cross funds NGOs

2009-03-08T08:14:00.002+08:00

BEIJING, March 7 - China's Red Cross for the first time disbursed money to non-governmental organisations after a major 2008 earthquake, making a successful departure from solely state-sponsored action, a top official said in a rare interview.

Individuals, corporations and overseas chapters donated 19.05 billion yuan ($2.79 billion) to the Red Cross Society of China to help rebuild after the May 12 earthquake killed more than 80,000 people and left at least 5 million homeless in Sichuan, Gansu and Shaanxi provinces.

The Red Cross in turn disbursed 20 million yuan to non-government organisations in an unprecedented recognition that government alone could not solve all of society's problems.

"It was a real change for us. Before, we tried to do everything ourselves, but we didn't have enough people," executive vice president Jiang Yiman told Reuters in an interview at China's annual legislative meeting.

"Besides, we are founded on the volunteer principle and we need to leverage that in society."

The earthquake that shook China galvanized civil society, as volunteers rushed to bring food and water and dig out victims, while common people opened their wallets like never before.

The central government moved to restore control after the quake, limiting volunteers' access to the disaster zone and mandating that all donations had to go through the Red Cross Society of China and other approved organisations.

By November, however, the tide had reversed again. The Red Cross disbursed money for specific projects to private foundations and groups that had proven their worth in Sichuan.

"The results have been very good," Jiang said.

TRANSPARENCY

The need to assure Chinese citizens that their money was well used drove the Red Cross to publish the donations it received, followed by a second report on where donations of goods had gone.

A final report, due out before the first anniversary of the earthquake, will detail where the money has been spent. That could help answer Chinese citizens' concerns about transparency, and aid organisations' questions about how money is disbursed.

The Red Cross Society of China collected about a quarter of the 76 billion yuan in donations for earthquake relief.

The majority, or about 11 billion yuan, is managed by local chapters that are working with local governments on rebuilding a particular area. China has paired each quake-hit city or county with a province that is responsible for its reconstruction.

The national Red Cross received 7.9 billion yuan in earthquake funds, about one-third of which came from Red Cross chapters overseas, in Taiwan or in Hong Kong.

It has disbursed about 4 billion yuan to rebuild homes, rural schools and clinics, Jiang said. The Red Cross also helped supply tents, quilts and food in the immediate aftermath.

Jiang could not give a figure for how much the local chapters have disbursed.

The National Audit Office, which was recruited to ensure propriety in earthquake relief, said on Dec. 31 that the Red Cross "seriously reformed disaster relief funds and materials management based on the audit recommendations," and called the overall situation "generally good."

Nine months later, the Red Cross thinks it could be better prepared for future disasters by improving contingency plans, building better emergency stockpiles and improving rescue skills and expertise among its volunteers.

"We discovered that the international assistance included equipment and skills that we just didn't have," Jiang said.

"Also, we need to be better able to handle such a huge inflow of money. Right now it's all done by hand. As each donation comes in we write the receipt by hand."

The organisation's ranks of registered volunteers have nearly doubled since the earthquake, to 1.13 million.

"We hope that after this, the government will give greater recognition to civic organisations," Jiang said.

(Reuters)

China faces most difficult year

2009-03-06T08:43:00.002+08:00

Wen Jiabao: 'We have not seen the worst of it yet'

Chinese Premier Wen Jiabao has said the current year will be the most difficult the country has faced this century because of the global economic crisis.

Addressing parliament, Mr Wen reiterated that there would be a $585bn (£413bn) investment programme to stimulate the Chinese economy.

He also declared an annual growth target of 8% and goals to boost consumption and raise consumer demand.

His address opens the annual session of the National People's Congress.

The BBC's James Reynolds in Beijing says the Communist Party fears that if annual growth slips below 8% there will be social instability.

When people cannot get jobs they start to question why the Communist Party should stay in power, our correspondent says, which is why it is so important for the Party to try to build on its stimulus package.

The premier said he hoped to create nine million new jobs in the cities and increase local government spending budgets by almost 25%.

"In China, a developing country with a population of 1.3 billion, maintaining a certain growth rate for the economy is essential for expanding employment for urban and rural residents, increasing people's incomes and ensuring social stability," he said.

Mr Wen was frank that China was suffering from the global financial crisis, and acknowledged the country lacked adequate social security provisions and health care.

As more people lose their jobs, the lack of a social safety net is becoming a glaring problem, our correspondent says.

• Chinese stock markets nose-dived amid news of no expansion to Beijing's economic stimulus plan

• Mr Wen says Beijing was ready to talk to Taiwan on political and military issues

Global impact

The increased spending talked about by Premier Wen in his keynote speech was announced last November.

There appeared to be no new money to help the ailing economy, as some had speculated.

Extra government money will be spent on infrastructure projects, such as railways, roads and irrigation schemes.

Mr Wen said the government would work to maintain social cohesion, amid fears in Beijing that job losses for millions of migrant workers could spark unrest.

"We will improve the early warning system for social stability to actively prevent and properly handle all types of mass incidents," he said.

He also pledged greater efforts to tackle corruption, the source of widespread public discontent.

But he said he was satisfied that China would cope with the unprecedented challenges.

"We are fully confident that we will overcome difficulties and challenges, and we have the conditions and ability to do so," Mr Wen told the 3,000 delegates attending the Communist Party's showpiece political event of the year.

On the eve of the meeting, which lasts nine days, China said it would increase military spending by 14.9% this year to 480.6bn yuan ($70.2bn).

(BBC)

Global stocks rise on China hopes

2009-03-05T08:47:00.002+08:00

NEW YORK - World stocks bounced back from multiyear lows on Wednesday, buoyed by signs of economic recovery in China and plans by its government to increase fiscal spending, news that helped lift oil and metals prices.

U.S. crude oil futures jumped more than 7 percent, extending gains to top $45 a barrel after inventory of crude in the United States declined unexpectedly and demand for gasoline rose.

Euro zone and U.S. government debt prices mostly fell as the rebound in equities undermined investors' appetite for less risky fixed-income assets.

But the cost of borrowing dollars over three months nudged higher as ongoing worries over the financial sector, where counterparty risks have risen, kept banks wary about lending to each other.

A key gauge of Chinese manufacturing rose in February for the third straight month, hitting a five-month high and lifting investor optimism on hopes the data signaled that China, a major driver of global growth, may be on the brink of economic recovery. China also said it will boost spending on infrastructure and manufacturing under a second stimulus package.

The Shanghai Composite Index , the main Chinese stock index, surged 6.1 percent in its biggest gain since November.

European shares rallied, breaking three straight sessions of losses, and U.S. stocks snapped a five-day sell-off. Higher prices for oil and other commodities -- driven by China hopes -- spurred energy and natural resource stocks.

"The market is encouraged by the news from China," said Joe Arsenio, president of Arsenio Capital Management in Larkspur, California. "They believe (China) will gain traction in the second quarter."

Exxon Mobil gained 2.1 percent while miner Freeport-McMoRan Copper & Gold Inc rose 14 percent.

Shares of Caterpillar Inc , a big exporter to China and a major seller of equipment to the mining industry, rose 13.7 percent.

After 1 p.m., the Dow Jones industrial average .DJI rose 117.08 points, or 1.74 percent, at 6,843.10. The Standard & Poor's 500 Index .SPX gained 12.03 points, or 1.73 percent, at 708.36. The Nasdaq Composite Index added 27.05 points, or 2.05 percent, at 1,348.06.

The FTSEurofirst 300 .FTEU3 index of top European shares closed at 696.23 points, up 4 percent.

Miners Rio Tinto gained 14 percent and BHP Billiton rose 12.9 percent on the back of higher copper prices, while steelmaker ArcelorMittal rose 12.4 percent.

Copper jumped over 5 percent to its highest level in more than three months as investors pinned hopes on demand from China, the world's largest consumer of the red metal.

The rise in equity markets around the world overshadowed more dire economic data suggesting that the U.S. and euro zone recessions have yet to hit bottom.

U.S. private companies hemorrhaged 697,000 jobs in February and the service sector slump deepened [ID:nN04538530].

The dollar vaulted to a four-month high against the yen as another slide in the U.S. private-employer payrolls and persistent worries about the world economy boosted safe-haven flows into the U.S. currency.

But the dollar cut earlier gains against the euro and sterling as stocks rallied and investors took profits ahead of Friday's government payrolls report and interest rate decisions due Thursday from the European Central Bank and Bank of England.

The dollar rose as much as 99.48 yen, closing in on 100 for the first time since early November, as investors worried about Japan's struggling economy and the U.S. jobless data.

The dollar rose 0.97 percent at 99.25 against the yen, but it fell against a basket of major currencies, with the U.S. Dollar Index .DXY down 0.49 percent at 88.751.

The euro rose 0.40 percent at $1.2615.

U.S. government debt fell. The benchmark 10-year U.S. Treasury note fell 36/32 in price to yield 3.02 percent. The 2-year U.S. Treasury note slipped 6/32 in price to yield 0.98 percent.

U.S. light sweet crude oil rose $2.73 to $44.38 per barrel.

Gold fell in Europe, flirting with three-week lows, as the bounce in equities lured investors back into riskier assets.

Spot gold prices fell $8.40 to $906.85 an ounce.

Asian stocks rallied on Wednesday on hopes Beijing will step up efforts to support the Chinese economy,

Japan's Nikkei share average .N225 rose 0.9 percent, after sliding to a 25-year low on Tuesday. The MSCI index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 1.3 percent.

(Reuters)

China sending group to Europe to look for mergers

2009-03-04T08:47:00.001+08:00

BEIJING: China will send a group to Europe this weekend to look for merger and investment targets following a visit by a multibillion-dollar Chinese buying delegation, the commerce minister said.

Chinese companies have been stepping up investments abroad despite global financial turmoil and have signed a flurry of foreign energy and resource deals.

"We will send a tour to Europe this weekend mainly for the purpose of investment and mergers, to take a look at what enterprises would be worth our taking shares in and operating together," Commerce Minister Chen Deming said Monday in comments shown on state television.

The report said the delegation of businesspeople would visit Britain and other countries but gave no other details. Chen's ministry did not immediately respond to a request for more information.

Chen led a 200-member group of Chinese businesspeople and officials on a buying mission to Switzerland, German, Britain and Spain last week. The total spent was not announced but the group said in Germany it signed contracts worth $10 billion.

China's major companies have largely avoided the impact of the global financial crisis and are still flush with cash.

In February, China signed multibillion-dollar deals to obtain oil from Russia, Venezuela and Brazil. China's biggest aluminum producer agreed to invest $19.5 billion in Anglo-Australian miner Rio Tinto Group.

(AP)

Isinbayeva agrees China sponsorship deal

2009-03-03T08:25:00.005+08:00

BEIJING: Russian pole vault queen Yelena Isinbayeva agreed a sponsorship deal with Chinese sportswear firm Li Ning yesterday that state media said sets a new world mark for a track and field athlete.

Neither company officials nor Isinbayeva’s camp would disclose the terms of the deal, but the Chinese press put its value at a combined US$7.5mil over five years.

Isinbayeva, the world record-holder since July 2004 who has set a total of 26 best marks, said she hoped Li Ning’s support and a planned line of tailored gear would help her vault to greater heights.

“I am really looking forward to it. I’m sure it ... will help me set a lot of records,” she told a press conference at Li Ning headquarters outside Beijing.

The endorsement highlights the growing clout of Chinese companies in the world of athlete endorsements, with several top sporting stars recently signing lucrative deals in China.

Isinbayeva’s dazzling performance and appeal made her one of the shining stars at last year’s Beijing Olympics.

The Russian confirmed her status as history’s greatest female pole vaulter in Beijing by setting a new record as she defended her gold medal.

Her agent, Daniel Wessfeldt, indicated Li Ning’s offer trumped all others and it was hoped the deal would lead to further endorsements in China.

“This will open other doors in China,” he said.

While some struggling US corporations have dropped leading athletes from endorsement deals, China’s market has proven a bright spot for sponsorships, with companies shelling out big bucks here to top foreign names.

In perhaps the biggest deal, US swimming star Michael Phelps recently signed a sponsorship deal with Mazda to endorse the car company in China.

Although no figures have been announced, it was reported to be worth more than US$1mil, making it the biggest sponsorship deal for a foreigner in China at the time.

Last month, tennis star Jelena Jankovic signed a lucrative deal with Chinese firm ANTA Sports Products Limited.

Under the deal, the terms of which have been kept secret, the 23-year-old Serb’s on-court gear is being marketed as the “JJ” brand, which she exhibited for the first time in Melbourne last month at the Australian Open.

(AFP)

China plans first space docking for 2011

2009-03-02T08:23:00.001+08:00

BEIJING — China will launch a space module next year and carry out the nation's first space docking in 2011 as a step towards its goal of building a space station, state media said Sunday.

The Tiangong-1, or "Heavenly Palace-1" is scheduled for launch in late 2010 and will dock with a Shenzhou-8 spacecraft early the following year, Xinhua news agency said, citing officials with China's space programme.

"The module, named Tiangong-1, is designed to provide a 'safe room' for Chinese astronauts to live and conduct scientific research in zero gravity," the report said.

"Weighing about 8.5 tonnes, Tiangong-1 is able to perform long-term unattended operation, which will be an essential step toward building a space station."

Space programme officials have previously said China is expected to place in orbit several modules like the Tiangong and link them up to form a semi-permanent space platform.

It was not immediately clear if the Tiangong-1 would eventually serve as China's first manned space station, or whether it would be a base to test docking and space station technology.

The planned 2011 docking would be remotely carried out by scientists on the ground and would not involve astronauts, the report said.

The announcement of the Tiangong mission came as China's first lunar probe, the Chang'e-1 impacted the moon's surface Sunday afternoon, after a nearly 16 month mission photographing and mapping the lunar surface, Xinhua said in a separate report.

The Chang'e-1 was launched on October 24, 2007, signalling China's rising space ambitions and Beijing's participation in a renewed race against Asian rivals Japan and India to explore the moon.

The probe, named after a legendary Chinese goddess who flew to the moon, is the first stage of China's lunar programme, which includes landing an unmanned rover on the surface by 2012 and a manned mission by around 2020.

China became the third nation to put a man in space when Yang Liwei piloted the one-man Shenzhou-5 space mission in 2003.

Last September, the Shenzhou-7, piloted by three "taikonauts" or astronauts, carried out China's first space walk.

This year, China's space programme will focus on building several prototypes of the Tiangong, while upgrades to the carrier rocket that will launch the module into space would also be carried out, Xinhua said.

Following the Shenzhou-8 flight, China also hopes to begin the mass production of Shenzhou spacecraft which will be used to transport astronauts to the space station, it said.

The International Space Station began with the launch into orbit of the first station element, a Russian-built module on November 20, 1998.

It orbits 350 kilometres (190 miles) above the earth's surface with a permanent crew of three astronauts, who remain aboard for stays lasting several months.

(AFP)

China's Lunar Probe Lands on Moon

2009-03-02T08:17:00.003+08:00

China says its first lunar probe has landed on the moon, marking a significant step forward in its space exploration program.

The state-run Xinhua news agency says the satellite hit the lunar surface Sunday, ending a 16-month mission through space.

The landing was the first step in China's plans to land a vehicle on the moon to collect mineral samples in 2012.

Before that happens, China plans to send another lunar probe to the moon to practice soft landings.

China became the third country to send a manned flight into space in 2003, following Russia and the United States.

(Voice of America)

GuLi(古力) wins LiShiShi(李世石) in LG Cup of Go

2009-03-01T08:20:00.003+08:00

In what is one of the most anticipated Weiqi(GO) matchup in history, GuLi destroyed LiShiShi’s legend and won 2-0 in a best of 3 series in Feb 26,2009. Both youngsters are known for their superb fighting skills and violent styles, and both are arguably the best in their own countries, China and Korea respectively. It is the divine match destined from birth. Yet there can only be one winner.

I must admit I was a little disappointed that they did not get to play the third match especially when LiShiShi would have won the second match and made it 1-1, had he only played out the endgame normally. Instead, he chose to fight aggressively, perhaps hoping to get the win convincingly and carry that dominance over to the next match. But, a win is a win and GuLi deserves it this time.

This is the new Weiqi era and these are the two leaders. There will be more memorable games to follow and I can hardly wait.

(Evolution Paradise)

Locke’s China Deals may draw scrutiny

2009-02-27T08:52:00.004+08:00

Feb. 26 -- Gary Locke, President Barack Obama’s pick to be commerce secretary, persuaded Chinese President Hu Jintao in 2006 to visit Seattle, where he was feted at the mansion of Microsoft Corp. founder Bill Gates.

Both sides benefited from the trip, arranged by Locke as an attorney specializing in China trade. Before Hu arrived, China agreed to require computer makers to load legal software on new machines, a key to unlocking the $3 billion market to the maker of Windows software. Days later, Redmond, Washington-based Microsoft announced plans to invest $3.7 billion in China.

Earlier, when he was governor of Washington state, Locke, now 59, helped lumber-company Weyerhaeuser Co. and aircraft maker Boeing Co. win business with China. As he seeks the new post, and as secretary should he be confirmed, Locke may find his deals seen in a different light by lawmakers, unions and U.S. factory owners who say trading with China poses more peril than promise.

“Locke understands the benefits of trade up close and personal,” said Christopher Padilla, a former undersecretary of commerce and a managing director of C&M International, a trade and investment consulting firm in Washington. “But the question will be how he reacts to the enormous protectionist pressures he will face.”

Obama named Locke yesterday to head the Cabinet department responsible for adjudicating trade disputes, compiling economic data, overseeing the Census Bureau and providing help to exporters. The president said Locke, a Chinese-American, will be an “influential ambassador” for U.S. businesses in global markets.

U.S.-China Relations

At stake is the commercial relationship between the U.S. and China, the world’s largest and third-largest economies respectively. Many of the biggest U.S. companies see China as a rare export opportunity amid the global recession. U.S. exports to China grew 10 percent last year, and China is now the U.S.’s third-largest export market.

“We need a guy at Commerce who both understands the importance of trade and has the political know-how to get things done,” said Myron Brilliant, the senior vice president of the U.S. Chamber of Commerce, the largest business lobbying group. “Locke knows the importance of international engagement, with China as a key part of it.”

Some manufacturer groups point to China’s record trade surpluses with the U.S. as evidence that the pro-trade policies of Locke and Ron Kirk, Obama’s nominee for U.S. trade representative, need to be realigned.

‘Different World’

“We are in a different world now, and we need a total rethinking of our economic models,” said Alan Tonelson, a research fellow at the U.S. Business and Industry Council, which represents American-based manufacturers. “I hope Locke will be more flexible, but the jury is out.”

Obama pledged on the campaign trail to push China to raise the value of the yuan and said he would consider caps on certain Chinese imports.

Members of Congress, steelmakers and unions say China’s export subsidies and its refusal to float its currency are running up the U.S. trade deficit and putting Americans out of work.

Lawmakers such as Ohio Democratic Representative Tim Ryan are pushing a measure that would allow steeper tariffs on imports to compensate for what they say is China’s undervalued currency.

“We have every intention to push it this year,” Ryan, the bill’s sponsor in the House, said in an interview this month. “Any change in China’s currency means investment in American jobs.”

Steel companies and textile makers may bring new trade complaints against Chinese imports to the commerce secretary’s office.

Born in Seattle

Locke’s grandfather arrived in Olympia, Washington as a houseboy for a family there, according to a biography on the state governor’s Web site. Locke was born in Seattle, attended Yale University and received a law degree from Boston University in 1975. He served in the Washington state House and then as King County executive before being elected nation’s first Chinese-American governor in 1996.

As governor, Locke promoted Boeing airplane sales to China. He served his state well through his “global knowledge, balanced approach to business issues” and a “focus and energy on solving problems,” Boeing said in a statement yesterday.

China is the second-largest market for commercial jet-maker Boeing, a former Seattle-area company that still has factories in Washington state. The company, now based in Chicago, predicts China’s airlines may buy 3,400 aircraft over the next 20 years, worth $340 billion.

After leaving the governor’s mansion in 2005, Locke joined the law firm Davis Wright Termaine LLP as a partner in Seattle, working on behalf of U.S. companies trying to invest in China, among other issues.

In that role he helped convince Hu to stop in Seattle and visit with Gates on his way to a summit in Washington, D.C. Later, Microsoft hired Locke’s law firm to help it in China, according to spokeswoman Ginny Terzano.

(Bloomberg)

Obama Names Gary Locke Commerce Secretary

2009-02-26T07:43:00.007+08:00

OBAMA: Good morning, everybody.

Last night, I outlined my vision for our common future, one in which we accept the responsibility to act boldly and wisely to confront the extraordinary challenges of our times, put people back to work doing the work America needs done, and lay a new foundation for America's growth and prosperity.

Today, I'm pleased to announce that I'm filling out my economic team with a man who shares that vision and who will play a key role in carrying it out as my secretary of commerce, Governor Gary Locke.

Now, I'm sure it's not lost on anyone that we've tried this a couple of times, but I'm a big believer in keeping at something until you get it right. And Gary is the right man for this job.

OBAMA: Sometimes the American story can be told in the span of a single mile. More than 100 years ago, Gary's grandfather left China on a steamship bound for America. He had no family here. He spoke no English. He found work as a servant and purpose in a dream. He raised a son, Gary's father, who would go on to fight in World War II, return home, and open a grocery store, and later raise a family of his own.

Now, Gary didn't learn English until he was 5, but he earned the rank of Eagle Scout, worked his way through Yale University with the help of scholarships and student loans, and got a law degree. He returned to Washington state and served as a prosecutor, a state representative, chief executive of one of the most populous counties in the United States, and finally as governor in the state capitol building not one mile from the home where his grandfather worked as a servant all those years ago.

So Gary knows the American dream. He's lived it. And that's why he shares my commitment to do whatever it takes to keep it alive in our time, because somewhere in America another small-business owner is hard at work on the next big idea and dreaming big dreams for his grandchild, a scientist is on the cusp of another breakthrough discovery, an entrepreneur is sketching designs for the startup that will revolutionize an industry.

Our economic crisis has put these plans at risk, but it has not dimmed the dreams that inspire them. And that's why we've put a recovery plan into action that will save or create 3.5 million jobs over the next two years. It's why the vast majority of these jobs, 90 percent, will be created in the private sector, because we know that business, not government, is the engine of growth in this country.

It is entrepreneurship and industry that are the wellsprings of an economy that has been the greatest force of progress and prosperity in human history. It is America's workers and businesses that employ them that will determine our economic destiny.

It is the task of the Department of Commerce to help create conditions in which our workers can prosper, our businesses can thrive, and our economy can grow. That's what Gary did in Washington state, convincing businesses to set up shop and create the jobs of the 21st century, jobs in science and technology, agriculture and energy, jobs that pay well and can't be shipped overseas.

That's what he did by establishing favorable markets abroad, where Washington state's businesses could sell their products. That's what he did by unleashing powerful partnerships between state and local governments, between labor and business, all with an eye towards prosperity and progress for all those in his state who had dreams of their own.

So Gary will be a trusted voice in my cabinet, a tireless advocate for our economic competitiveness, and an influential ambassador for American industry who will help us do everything we can, especially now, to promote our industry around the world.

I'm grateful he's agreed to leave one Washington for another. I'm looking forward to having him on my team as we continue the work of turning our economy around and bringing about a stronger, more prosperous future for all Americans.

Ladies and gentlemen, I want to -- to introduce to you an outstanding public servant, somebody I'm certain will be a great secretary of commerce, Gary Locke.

(APPLAUSE)

LOCKE: Thank you very much, Mr. President. I'm truly humbled and honored to be asked to join your economic team and to serve as secretary of commerce.

As I flew across the country yesterday from Seattle, I saw the cities and farmlands of America below me. And I thought of all those businesses, small and large, that are struggling, struggling to meet payroll, struggling to provide benefits to their employees, wondering about their future and viability as companies.

Most of all, I thought about all those families in those communities who are hurting and worried about their future.

Mr. President, I know you hear their concerns.

The American people and I fully support you and have confidence in your bold strategies to turn our economy around, to rejuvenate the health of American businesses, to preserve and create good family-wage jobs, to restore our country to an era of lasting prosperity.

You eloquently outlined your strategies last night on how America will rebuild, recover, and emerge stronger than ever before.

Working with the professionals at the Department of Commerce, I'm committed to making the department an active and integral partner in advancing your economic policies and restoring the American dream to all Americans.

LOCKE: Our nation's economic success is tied directly to America continuing to lead in technology and innovation and in exporting those products, services, and ideas to nations around the globe. The Department of Commerce plays a critical role in nurturing innovation, expanding global markets, protecting and managing our ocean fisheries, and fostering economic growth.

The Department of Commerce can and will help create the jobs and the economic vitality our nation needs.

When I was first sworn in as governor of the great state of Washington, I told a story of how 100 years ago my grandfather came from China as a teenager and worked for a family as a houseboy in exchange for English lessons, just one mile from the governor's mansion. It took our family 100 years to move that one mile, a journey possible only in America.

And during World War II, my father served in the United States Army as a staff sergeant and landed on the shores of Normandy. As a kid, I lived in public housing, and my mom and dad worked very hard in the neighborhood grocery store that they owned.

We grew up on the values of, "Get a good education, work hard, and take care of each other." It was a struggle. But thanks to their sacrifices, I received the best education America offered. And here I am today, proud to have the opportunity to serve all the people of our great nation.

My family's story is America's story. Our story is just one of hundreds of millions since the birth of our nation, of people coming from every part of the world in pursuit of the American dream of freedom, hope and opportunity.

In hard times, Americans have rallied together, sacrificed, and even given their lives for our country, because they believe in the essential goodness and promise of America.

Americans are prepared to do the same today. They believe in your leadership, Mr. President, and want you to succeed, because they want America to succeed. They want a better future for themselves and their children.

We will harness the resources and the talent of the Department of Commerce to help you fulfill your commitment to the American people to build a stronger and more prosperous nation. I embrace this opportunity to serve you and the American people. And, finally, I want to thank my family, my parents and brother and sisters and the extended Locke clan, but especially my beautiful and truly gifted and loving wife, Mona, and the joys of our lives, Emily, Dylan, and Madeline.

Today would not have been possible without their love, support and sacrifices.

And thank you, Mr. President, for this opportunity.

OBAMA: Congratulations

LOCKE: Thank you.

(The Washington Post)

The looting of the Summer Palace: a colonial humiliation in China

2009-02-24T08:34:00.001+08:00

BEIJING — The looting of the Summer Palace in Beijing is one of the most infamous episodes of colonial abuse in China -- a humiliation that remains vivid nearly 150 years on.

The auctioning in Paris of two imperial bronze relics that were part of the booty seized by the British in 1860 has opened this wound and become a rallying cry for nationalists.

"The looting of the Summer Palace (Yuanmingyuan) by the French and the English, and the fire started by the British, remains an unforgivable crime in Chinese memory," Bernard Brizay, author of a book on the subject, told AFP.

"For the French, it would be the same as if the Prussians in 1870 had razed Versailles down to the ground, looted the Louvre (museum) and set fire to the national library, as the Yuanmingyuan was all of those at once," he said.

In October 1860, towards the end of the Second Opium War -- which pitted the British and the French against China for four years from 1856 -- foreign troops reached Beijing.

Soldiers first looted what the Chinese now call the Old Summer Palace, and then came back to set fire to the place in retaliation for the death and torture of French and British hostages.

The Western-style palace had been built northwest of the Chinese capital at the heyday of the Qing dynasty, and emperors had made it a habit to go there to escape the Forbidden City and stifling heat during the summer.

The looting and burning of the palace was a shock not only for the Chinese but also for foreigners such as the French writer Victor Hugo, who denounced the destruction of this "splendid and sensational museum of the East".

"In the eyes of history, one of the two outlaws will be called France, the other will be called England," he wrote.

"I hope there will come a day when France, liberated and cleaned up, will send back this booty to a plundered China."

Today, Chinese lawyers are playing the nationalist card as they drum up local support for a legal campaign in France to stop the relics being sold at the Christie's auction.

"The looting of the Summer Palace is a wound that has never really healed. Selling these objects that were stolen from us is like pouring salt on the wound," said Beijing attorney Liu Yang, who is leading the group's efforts.

Brizay also said government propaganda was keeping alive the "painful memory".

Indeed, the Chinese government has spoken out forcefully on the issue.

"Auctioning cultural objects looted in war time not only offends the Chinese people and undermines their cultural rights, but also violates relevant international conventions," Chinese foreign ministry spokeswoman Jiang Yu said.

(AFP)

China Daily launches U.S. edition

2009-02-24T08:23:00.002+08:00

NEW YORK, Feb. 23 -- China Daily, China's national English-language newspaper, formally launched its U.S. edition here on Monday.

Targeted at North American businesses and observers of China's rapidly-changing economic, cultural and political landscape, China Daily's U.S. edition will feature reports of local events related to China in the United States, according to a company statement.

The new edition will also have analysis and opinions from American and Chinese thinkers and business leaders, and personal profiles of noted contributors to China and America's growing understanding of each other.

"As a widely recognized authoritative English media outlet in China, China Daily has been publishing in the United States since 1983, only two years after it was founded," Qu Yingpu, deputy editor-in-chief of China Daily told Xinhua. "But it is the first time we publish a specialized edition for our readers in North America. It is a milestone for us."

The launch of the new edition coincided with a deepening economic recession worldwide, which has prompted both Chinese and American leaders to call for joint efforts to combat the crisis.

"It is our responsibility to our readers to do on-the-ground reporting here in America," said Qu. "We also see it as part of our social responsibility to promote common understanding among people engaged in the two economies."

Qu rang the opening bell at the NASDAQ Stock Market in Times Square, New York, on Monday to celebrate the launch of China Daily's U.S. edition. He was joined by Bethany Sherman, senior vice president of NASDAQ, Stephen Orlins, president of the National Committee on U.S.-China Relations, and Huang Xueqi, secretary-general of China General Chamber of Commerce-USA.

China Daily has a worldwide readership of 300,000. It is also the publisher for China Daily Hong Kong edition, China Business Weekly, Shanghai Star, Beijing Weekend, 21st Century and China Daily CEO Roundtable.

(Xinhua)

Paris court rejects China's Saint Laurent art claim

2009-02-24T08:14:00.002+08:00

PARIS - A Paris court rejected a bid to block the sale of two bronze sculptures claimed by China that are to be auctioned with the art collection of the late fashion designer Yves Saint Laurent, a court official said on Monday.

APACE, an association representing Chinese cultural and heritage interests, filed an appeal to have the sale blocked but the Tribunal de Grande Instance in Paris rejected it, an official at the Paris court told Reuters.

The court also ordered APACE to pay auctioneer's Christie's and Pierre Berge, Saint Laurent's former business manager and companion, 1,000 euros ($1,274) in costs each.

The two sculptures, representing the head of a rat and the head of a rabbit, were taken from the Summer Palace in Beijing when it was burned down by invading French and British forces in 1860 during the Second Opium War.

They were acquired by Saint Laurent and Berge as they built up what has been called one of the most important collections of art in private hands, but Chinese officials have said the sculptures rightfully belong to China and should be returned.

After Saint Laurent's death last year, Berge decided to sell the collection, which is estimated to be worth up to $300 million, and donate the proceeds to medical research.

Before the ruling, he had expressed confidence that the appeal to block the sale would be rejected, telling Reuters that he was "completely protected by the law."

Interest in the case went beyond the art world because of tensions between Paris and Beijing over French President Nicolas Sarkozy's decision to meet the exiled Tibetan spiritual leader, the Dalai Lama, whom Beijing considers a separatist.

Berge had offered to hand over the sculptures, valued at 8-10 million euros each, if China agreed to guarantee human rights and allow the Dalai Lama back into Tibet. The Dalai Lama says he only wants greater autonomy for the region.

(Reuters)

China Bought Almost Half of Australia’s Mineral Exports in 2008

2009-02-23T08:31:00.002+08:00

Feb. 23 -- Australia sold almost half of its mineral exports to China last year as demand rose from steelmakers.

China bought A$22.534 billion ($14.5 billion) worth, or 44 percent, of the A$51.36 billion of minerals Australia exported last year, the Department of Foreign Affairs and Trade said in an e-mailed statement.

Economic growth in Australia, the biggest exporter of coal and iron ore, will slow in the coming year as export earnings decline 20 percent, the central bank says. Australia’s biggest trading partners in the year ended June 30, 2008, were Japan, China and the U.S.

Demand for minerals in China is falling as it cuts the amount of shipments to the U.S. and Europe, both in economic recession. China’s exports in January declined by the most in almost 13 years.

(Bloomberg)

China Is at the Heart of Clinton's First Trip

2009-02-22T10:14:00.003+08:00

When Hillary Rodham Clinton was running for president last year, she raised eyebrows in foreign policy circles -- especially in Japan, the key U.S. ally in Asia -- when she declared in an article in Foreign Affairs that "our relationship with China will be the most important bilateral relationship in the world in this century."

Now, as secretary of state, Clinton will be putting that bold pronouncement into action. She departs today for Asia on her maiden voyage as the nation's chief diplomat, and Tokyo snared the symbolically important first stop on four-nation tour. But Clinton and other Obama administration officials have made it clear that they want to move dramatically forward in relations with Beijing, finding new avenues for cooperation between the world's biggest economy and the world's fastest-growing economy, especially on climate change and the environment.

"Some believe that China on the rise is, by definition, an adversary," Clinton said in a speech Friday to the Asia Society in New York. "To the contrary, we believe that the United States and China can benefit from and contribute to each other's successes. It is in our interests to work harder to build on areas of common concern and shared opportunities."

In the eyes of many analysts, a better relationship with China is one of the few foreign policy success stories of the Bush administration. But Clinton and her aides have suggested that the overall relationship was hijacked by the Treasury Department, keeping it largely focused on economic policy. She has argued for what she calls a "comprehensive dialogue" and a "broader agenda," and aides said she will bring proposals to the Chinese leaders for regular discussions at very high levels of both governments.

Analysts say the moment is ripe for such a discussion between the two countries. Despite the financial crisis and the turmoil in the Middle East, "in the longer sweep of history, historians will judge this administration and our generation on how we managed the shift of power from the West to the East and the rise of China and India," said Michael J. Green, formerly President George W. Bush's top White House adviser on Asia.

"They are in a good position with China," said David Shambaugh, director of the China policy program at George Washington University. "They inherited the best relationship we have had with China in 20 years. There is a high degree of understanding, professionalism and trust, and there is deep interdependence between the two countries."

Still, Clinton's approach also carries the risk of roiling the relationship at the moment when the struggling world economy is increasingly dependent on cooperation between the two countries. Clinton, as presidential candidate and as first lady, was highly critical of China's human rights record -- sensitive topics in a year that will mark both the 50th anniversary of the Dalai Lama's flight from Tibet and the 20th anniversary of the uprising in Tiananmen Square.

In her speech Friday, Clinton noted that "as part of our dialogues, we will hold ourselves and others accountable, as we work to expand human rights and create a world that respects those rights . . . where Tibetans and all Chinese people can enjoy religious freedom without fear of prosecution."

State Department officials played down the prospects of major announcements on the trip, but they said it is symbolically important that Clinton is the first secretary of state in nearly 50 years to intensely focus his or her maiden voyage on Asia.

In addition to Japan and China, Clinton will visit South Korea and Indonesia. She will bring along Todd Stern, the administration's special envoy for climate change negotiations, in an effort to begin discussions on joining forces on environmental issues. China recently passed the United States as the world's biggest emitter of greenhouse gases, Clinton noted Friday. To highlight public-private partnerships, she will visit a clean thermal power plant built with General Electric and Chinese technology.

In North Asia, the stalled talks on North Korea's nuclear program will be a key topic. China chairs the six-nation negotiations, which have been stymied by Pyongyang's refusal to commit to a plan to verify the extent of its nuclear activities. While Clinton has tried to reach out to North Korea, she also agreed to meet with the families of Japanese citizens abducted by the country.

The Indonesia stop is intended to demonstrate the administration's interest in building ties in Southeast Asia, where China has made important trade and diplomatic inroads in the past five years as the United States was distracted by the war in Iraq. Clinton plans to announce that she will attend a Southeast Asian ministerial meeting this summer -- which her predecessor, Condoleezza Rice, tended to skip -- and Clinton is expected to indicate a willingness for the United States to sign a treaty of "amity and cooperation," which the Bush administration refused to do. Other nations in the region have signed the treaty, which calls for peaceful relations with the Association of South East Asian Nations (ASEAN).

Although Japan remains the closest U.S. ally in the Pacific -- and Clinton on Friday said the 50-year security alliance with Japan "has been and must remain unshakable" -- the government of Prime Minister Taro Aso is unpopular and increasingly weak. The yen has soared to a 13-year high against the dollar, largely because Japanese investors are liquidating their overseas accounts while there is little overseas demand for Japanese assets, thus pushing the country deeper into recession.

By contrast, the Chinese leadership appears increasingly sure of its ability to weather the economic storm and play an important role in efforts to stem the crisis. "Will China's economy continue to grow fast and steadily? Yes, it will," Premier Wen Jiabao said in a speech last month at the World Economic Forum in Switzerland. "We are full of confidence," he declared, crediting "our right judgment of the situation and prompt and decisive adjustment" of policies.

The International Monetary Fund this month rated China's economic stimulus plan as being the second-largest in terms of gross domestic product and having the second-greatest impact among the Group of 20 nations managing the economic crisis; the Obama administration's plan in the United States was close behind. (Oil-rich Saudi Arabia was first.)

"The Chinese stimulus is the gold standard in terms of the countries which matter," said Nicholas R. Lardy, senior fellow at the Peterson Institute for International Economics. "She ought to give them credit for that. . . . The Chinese are increasingly confident. I think the government feels they have a good program in effect and it will help economic growth."

China holds nearly $700 billion in U.S. Treasury securities, which some analysts have said China could use as lever against the United States if relations begin to fray. But in a signal of the two countries' growing interdependence, a top official recently said in New York that Beijing had little choice but to keep buying them.

"Except for U.S. Treasuries, what can you hold?" Luo Ping, a director-general at the China Banking Regulatory Commission, said to reporters. "Gold? You don't hold Japanese government bonds or U.K. bonds. U.S. Treasuries are the safe haven. For everyone, including China, it is the only option."

(Washington Post)

Clinton Paints China Policy With a Green Hue

2009-02-22T10:00:00.003+08:00

BEIJING — Declaring that “we hope you won’t make the same mistakes we made,” Secretary of State Hillary Rodham Clinton invited China to join the United States in an ambitious effort to curb greenhouse gases, as she toured an energy-efficient power plant in Beijing on Saturday.

Secretary of State Hillary Rodham Clinton at a news conference in Beijing, where she was on a two-day visit.

What does Secretary of State Hillary Rodham Clinton need to know about China when she visits Beijing?

Secretary of State Hillary Rodham Clinton visited the Taiyanggong Geothermal Power Plant in Beijing on Saturday. “When we were industrializing and growing, we didn’t know any better; neither did Europe,” Mrs. Clinton said. “Now we’re smart enough to figure out how to have the right kind of growth.”

The gas-fired power plant, which uses sophisticated turbines made by General Electric, is nearly twice as efficient as the coal-fired plants that supply much of China’s electricity and that helped vault China past the United States as the world’s leading emitter of carbon dioxide.

The Obama administration hopes to make climate change the centerpiece of a broader, more vigorous engagement with China. For Mrs. Clinton, the two-day stop in Beijing at the end of a weeklong Asian tour, represents an effort to put her own stamp on a relationship that was dominated by the Treasury Department in the latter years of the Bush administration.

“The opportunities for us to work together are unmatched anywhere in the world,” Mrs. Clinton declared, on a hectic day filled with meetings with President Hu Jintao and other top Chinese officials.

Human rights groups have criticized Mrs. Clinton for soft-pedaling Tibet and other issues during her first visit as secretary of state. She said she did not want these disputes to interfere with critical challenges like climate change, the global economic crisis and security concerns.

It was a stark contrast to 1995, when Mrs. Clinton, then first lady, gave a speech in Beijing at a United Nations conference, in which she catalogued abuses against women and concluded by saying that “human rights are women’s rights, and women’s rights are human rights.”

Speaking after a meeting with the foreign minister, Yang Jiechi, Mrs. Clinton said she had raised the Tibet issue and other concerns. But she argued that the work of advocacy groups and people in civil society in this area was “at least as important” as that of government officials.

Mr. Yang repeated China’s customary statement that Beijing was ready to discuss human rights with Washington on the basis of “equality and noninterference in each other’s affairs.” The “smiling faces” on Chinese people, he said, attested to the country’s respect for human rights.

A local rights group, Chinese Human Rights Defenders, said the Beijing police put a number of dissidents and activists under surveillance during Mrs. Clinton’s visit, confining some in their homes.

On the global economic crisis, the two governments said they would work together to chart a recovery. Mrs. Clinton said she expected to see changes in the economic relationship between China, with its high savings rate, and the United States, with its heavy borrowing.

During their meeting, she said, Mr. Yang told her that Chinese people were spending more on home appliances. “It would also be fair to say that that many Americans have now come to terms with the fact that saving might be a good habit to acquire,” Mrs. Clinton said.

She thanked Mr. Yang for China’s “continuing confidence” in the United States, as the largest foreign buyer of Treasury securities. He offered a noncommittal statement that China would decide where to invest its foreign-exchange reserves on the basis of safety, value and liquidity.

Mrs. Clinton got a warmer reception at lunch with Dai Bingguo, a member of the powerful State Council. “You look younger and more beautiful than you look on TV,” he exclaimed. Mrs. Clinton was momentarily nonplused, before replying, “Well, we will get along very well.”

Mrs. Clinton’s visit to the Taiyanggong Thermal Power Plant allowed her to steer the focus back to climate change. She introduced her special envoy for climate change, Todd Stern, who noted that the United States and China accounted for 40 percent of the world’s emissions.

“This not a matter of politics or morality or right or wrong,” he said. “It is simply the unforgiving math of accumulating emissions.”

So far, the United States and China are mainly collaborating on research projects and ventures like the power plant. The harder work, analysts said, will come if the United States presses China to accept mandatory caps on its emissions — something Beijing has so far rejected.

Still, some China experts say they believe that climate change can give relations between the countries fresh energy. The White House has paid close attention to a report by the Asia Society and the Pew Center for Global Climate Change, which offers a road map for cooperation.

“If you look at U.S.-China relations, there are a lot of issues that can go either way,” said Orville Schell, a China scholar at the Asia Society who was involved in producing the report. “What’s missing is an issue in which the two countries can lean into a problem together.”

Brazil sells oil to China, expects $10 bln loan

2009-02-20T10:35:00.002+08:00

BRASILIA, Feb 19 - Brazil signed an agreement on Thursday to supply China with 100,000 to 160,000 barrels of oil per day at market prices and expects to obtain billions of dollars in Chinese investment to develop its huge oil reserves.

The agreement, which will take effect immediately, was announced at Brazil's foreign ministry after President Luiz Inacio Lula da Silva met with Vice President Xi Jinping of China in the capital city of Brasilia.

The oil will go to state-owned China National Petroleum Corp and to Sinopec .

Brazil's state-run energy company, Petrobras signed a memorandum of understanding to secure long-term financing from the Chinese Development Bank and hopes to receive up to $10 billion from it by May. The funds are to help extract massive, newly found oil reserves deep beneath the ocean floor off Brazil's southern coast.

"We'll settle it by the time the president (Lula) visits China in May," Petrobras Chief Executive Jose Sergio Gabrielli told reporters after meeting with Chinese officials.

"It could reach $10 billion," he added.

The foray into Brazil is part of China's global push to ensure future supplies of key natural resources, such as petroleum, agricultural goods and minerals.

Petrobras needs cash to help cover the massive costs of exploring vast new discoveries of high-grade light oil and natural gas in the so-called Santos Basin, which analysts estimate could hold up to 80 billion barrels of oil.

Brazilian Foreign Minister Celso Amorim hailed the deals as proof of growing cooperation between two large emerging markets.

"This is the most important South-South relationship," he said, referring to growing trade ties between developing countries.

On Tuesday, China Development Bank signed a $25 billion financing deal with Russia's state oil champion Rosneft and pipeline monopoly Transneft in exchange for oil from the huge new East Siberian fields for the next two decades.

Petrobras said on Monday it was negotiating with up to four oil consumer countries to receive financing from them in exchange for future oil supplies. It is the first time that the Brazilian firm has negotiated this type of financing.

(Reuters)