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  Listen to MP3 Business Beyond the Reef” to discuss the problems with imports from China, telling all sides of the story and then expand the discussion to revitalizing Chinatown - Special Guest: Johnson Choi, MBA, RFC. President - Hong Kong.China.Hawaii Chamber of Commerce (HKCHcc) and Danny Au, Manager, Bo Wah Trading

BRENDA FOSTER, PRESIDENT OF THE AMERICAN CHAMBER OF COMMERCE IN SHANGHAI; "An Update of the Business Climate in China" to the Hong Kong China Hawaii Chamber of Commerce (HKCHcc) at the Pacific Club 2/14/2008

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Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) http://www.tid.gov.hk/english/cepa/index.html

About APEC http://www.apec.org/apec/about_apec.html APEC 2011 November 2011 Honolulu Hawaii USA

Presentation: Inside APEC http://www.hkchcc.org/insideapechkchccpresentation080810.ppt (Microsoft Power Point 16 Meg File Size)

Aug 31, 2010

Hong Kong*: Hong Kong forensic experts on Monday inspected the bus in which a hijacker killed eight tourists in Manila last week, as the Philippines tried to calm outrage over the bloodshed.

Hong Kong forensic experts on Monday inspected the bullet-riddled bus in which a hijacker killed eight Hong Kong tourists in Manila last week, as the Philippines tried to calm outrage over the bloodshed. A Hong Kong police forensic team examine the tourist bus used in the hostage-hijacking in Manila on August 23 at an auditorium in Taguig City, Manila, on Monday. Guided by Filipino investigators, the Hong Kong team used torches to examine the bloodied passenger compartment, taking pictures of bullet holes and shattered windows. Another investigator checked the bus tyres shot out by police to prevent the hostage-taker from moving out of a police cordon. Hong Kong investigators refused to talk to a throng of Chinese and Filipino journalists. Justice Secretary Leila de Lima met Hong Kong officials on Monday. Philippine investigators plan to question Manila Mayor Alfredo Lim, who helped oversee the hostage negotiations, as well as journalists who interviewed hostage-taker Rolando Mendoza by phone during the drama, de Lima said. They may also travel to Hong Kong to talk to survivors of the nearly 12-hour stand-off. It is unclear if that will be enough to stem the anger in Hong Kong, which has discouraged its residents from traveling to the Philippines. About 140,000 Hong Kong tourists visit the Philippines annually and hundreds have cancelled planned trips. Concerns have also been raised about a possible backlash on the more than 100,000 Filipinos working in the territory, mostly as maids. Filipino anti-crime activists placed flowers on Monday at the site of the carnage in a Manila park. One carried a wooden cross bearing the names of the slain hostages. “We couldn’t stomach this crime,” said activist Dante Jimenez. On Monday morning Hong Kong’s Assistant Commissioner of Police David Ng Ka-sing confirmed that Hong Kong police had been given permission to board the Hong Thai tour bus to carry out investigations into the siege. He said Hong Kong officers had met with officials from the Department of Justice, Legal Department and the Department of Internal Affairs in the Philippines on Monday morning. “This was to discuss arrangements for Hong Kong officers to collect evidence and conduct forensic investigations on the bus,” Ng explained. Ng also said he hoped Philippine authorities would allow them to examine the guns used by police and the gunman. He pledged that Hong Kong officers would try their best to find out the truth. Philippine Justice Secretary Leila De Lima said it was the responsibility of the Philippines police to carry out a thorough and fair investigation. But she has not said when the investigation would be completed. Anger has been rising in Hong Kong since the August 23 carnage in which a disgruntled former Philippine police officer took the busload of tourists from the Chinese territory hostage in a bid to win his job back. HongKongers have blasted a failed rescue operation and botched negotiations that seemed to enrage the hostage-taker, who was eventually killed by a police sharpshooter. Organisers said about 80,000 people marched in Hong Kong on Sunday, denouncing the Philippines and demanding justice for the dead. President Benigno Aquino III has ordered a thorough investigation into the crisis and the police response. “We want to appease them [HK officials] and show that we’re not hiding anything,” Philippine National Police spokesman Agrimero Cruz said. “This is a show of transparency.”

The Provisional Minimum Wage Commission (PMWC) has reached an agreement on what level Hong Kong’s minimum wage should be set at, PMWC chairwoman Teresa Cheng Yeuk-wah said on Monday. However, she did not disclose the exact amount which the commission believes the statutory minimum wage should be. Cheng said the commission would submit its report to Chief Executive Donald Tsang Yam-kuen soon. She said that in reaching its decision the commission had referred to experiences in other countries, the views of different sector groups, and relevant statistics. Local media reported that the wage would be set at HK$28-HK$29. Christine Fang Meng-sang, chief executive of the Hong Kong Council of Social Services, said she believed the minimum wage should be set at HK$33. “The PMWC’s main task is to advise the chief executive on the initial statutory minimum wage (SMW) rate to be adopted,” Fang said. She said the commission had to strike balance between raising wages, minimising the loss of low-paid jobs and ensuring Hong Kong’s economic growth and competitiveness.

The government may rake in up to HK$1.1 billion for a Kowloon Tong site in an auction that could breathe new life into the secondary home market where sales have plunged to a 27-week low. The 25,823-square-foot site at 1 Ede Road is expected to fetch between HK$930 million and HK$1.1 billion tomorrow, according to four surveyors. Given a gross floor area of 77,469 square feet, the accommodation value could be be HK$12,000 to HK$14,200 per square foot. Midland Surveyors director Alvin Lam Tsz-pun said property development and capital inflow are long-term, so a competitive atmosphere at the auction is unlikely to be affected by short-term market cooling. His valuation of HK$1.02 billion is 20 percent higher than a month ago. Slacker rules on joint development - with a larger plot at 3 and 5 Ede Road on the application list - will make the site more attractive, surveyors said. "If the same developer owns both sites, it can apply for lease modification," said Ringo Lam Chun-chiu, valuations director at AG Wilkinson & Associates. "The developer can build an underground car park and a clubhouse for joint use." He believes developers are willing to pay a premium for 1 Ede Road, which he values at HK$1.1 billion. Midland expects the site to be developed into low-rise buildings with around 50 homes of about 1,500 sq ft each. Savills forecasts the average selling price for completed homes can reach HK$17,000 psf . There were four deals this month at nearby One Beacon Hill and Beacon Heights, averaging around HK$14,000 and HK$17,000 psf, said Centaline senior sales director Matthews Lee Tze-ming. Lee admits transactions have halved, but "sellers believe prices will be better after the auction. On the other hand, buyers may expect new [home] measures in the policy address." Total secondary transactions over the weekend fell to just 26, down from 29, while the number of primary homes launched dropped to 417 as of Friday, from 1,513 in July, Midland Realty said.

 China*: Gome tycoon's jail term upheld, wife freed - A mainland court on Monday freed on parole the wife of the former head of appliance giant Gome, prosecutors said, as the jailed tycoon battles for control of the empire he founded.

Spain's Prime Minister Jose Luis Rodriguez Zapatero and Zhou Hanmin, deputy director of the Shanghai Expo's Executive Committee pose with the World Cup football trophy at the Spanish pavilion at the Shanghai Expo on Monday.

The central government announced a global talent search on Monday to fill top posts at 12 major state-owned companies in its latest effort to improve performance at huge but inefficient government firms. State industries have hired managers from abroad in the past but the announcement on Monday by the Cabinet agency that runs the country’s biggest government companies appeared to be most sweeping recruitment effort to date. The State Asset Supervision and Administration Commission wants “talented candidates from home and abroad” to help strengthen and develop companies, said a two-page advertisement in the China Daily, the main government newspaper aimed at foreign readers. The posts include general managers of the State Nuclear Power Technology, the China State Construction Engineering and automaker Dongfeng Motor (SEHK: 0489). Some posts specified Chinese citizens were preferred, indicating companies were trying to lure back Chinese executives abroad. But others said they would consider managers of any nationality. Last year, a major aerospace firm, state-owned Aviation Industry Corp of China, announced a similar worldwide search for managers and said it would consider foreign nationals. After a six-month search, the company hired six Chinese executives. Some of the mainland’s top state-owned banking, oil, telecommunications and other companies are among the largest entities in their global industries due to their protected positions in the huge domestic market. But the government acknowledges they trail their global rivals in technology and efficiency. Other positions advertised on Monday included general manager of Chinatex, a major textile producer; deputy general managers at China National Administration of Geology, China National Gold Group and China Guangdong Nuclear Power Holding and other jobs at China Shipping (Group), China Resources (SEHK: 0291) (Holdings) and China National Building Material Group.

Closer contacts between retired Taiwanese generals and the mainland authorities have sparked concerns in Washington, the island's major arms supplier, media and an official said on Monday. The former generals started visiting China years ago, but with Taiwan’s mainland ties improving rapidly since 2008, the trips have become so frequent that they have drawn US attention, the Taipei-based China Times said. “The United States has voiced its concerns to [Taiwan’s de facto ambassador] Jason Yuan and voiced the hope that Taiwan can come up with an explanation,” the paper said, without naming the source. It said Washington was especially concerned if such contacts may endanger long-standing military co-operation projects with Taiwan. Washington is also wondering if the visits mark the beginning of discussion about military exchanges and the establishment of confidence-building measures between the two former cross-Strait rivals, it said. “It would be understandable if the United States voices such concerns, given the fast improving ties between Taipei and Beijing,” Chen Wen-yi, deputy chief of the foreign ministry’s North American Affairs Department, told reporters. But he said the concerns were unnecessary as the visits were not authorised by the government.

China will launch an inquiry into whether to impose countervailing duties on potato starch imports from the European Union, the commerce ministry said on Monday.

In a world of fakes, tainted food, indifferent service and shoddy products, Lionel Derimais is trying to highlight the best of the mainland's crafts and services people. Xiamen Red Dragon Yacht Building employees craft a sailing boat for a client. The yacht builder is one of the mainland companies featured on nicelymadeinchina.com. And the idea has obviously struck a chord, with the website attracting around 7,300 readers since it launched in April. Derimais, who arrived in Beijing five years ago, said the aim of the website was to focus on the manufacture of "well-made goods by Chinese who take pride in producing quality products". Perhaps unsurprisingly, the companies featured so far have been small and medium-sized enterprises, some of which already have a global reach. They also feature a high proportion of expatriates, albeit with Chinese connections through family or mainland partners. For example, Xiamen Red Dragon Yacht Building, which focuses on yachts and speedboats, was founded in 2003 by David Winter, an expatriate who was associated with shipyards in Taiwan. Working with general manager Liu Hongyan and a team of 50 crafts people, Winter has since developed a network of clients all over the world and the company has sold vessels to at least 10 European countries, the United States, Australia and India. Shanghai Trio, which started making souvenirs 12 years ago, has branched out into making bags, quilts, tablecloths, silk jackets and other products that are sold in its own stores on the mainland and stocked by shops in Hong Kong, Taiwan and Europe.

Lenovo has said it will launch a video games console this year to vie with Nintendo’s Wii, Microsoft’s XBox 360 and Sony’s PlayStation 3 in the booming motion-gaming market.

Shanghai Pudong Development (SPD) Bank said its first-half-year net profit rose 33.92 percent from one year earlier due largely to lending boom and increased commission fees. Net profits climbed to 9.08 billion yuan (1.34 billion U.S. dollars) in the first six months of this year, the Shanghai-based lender said in a statement filed with the Shanghai Stock Exchange late Sunday. Its growth in profits stemmed from rising operating revenues, a result of growing net interest earnings, increased fee incomes and the improved quality of assets, according to the statement. Earnings per share stood at 0.791 yuan, up 20.21 percent from one year earlier. Also, operating revenues grew 36.42 percent to 22.75 billion yuan in the first half of 2010, it said. Total assets for the commercial bank hit 1.781 trillion yuan by the end of June, up 9.77 percent from the end of 2009.

Aug 30, 2010

Hong Kong*: Black alert is more than just a travel warning - Hours after the deaths in Manila, Hong Kong issued a black travel alert for the Philippines, warning people to avoid all travel to the country. The move - and Friday's decision to take Russia off the amber travel alert list days ahead of a visit to Moscow by Chief Executive Donald Tsang Yam-kuen - came after legislators suggested using the travel alert system to exert political pressure on Manila. It also raised concerns among the travel industry over insurance and compensation. The black alert means the government deems the Philippines more dangerous than flood-stricken, strife-torn Pakistan where 3,021 people died in terrorist attacks last year. Legislators last week urged the government to keep the black alert in place until the Philippine government delivered a report on its investigation into what led to the deaths of eight Hongkongers in last Monday's hostage-taking in Manila. Secretary for Security Ambrose Lee Siu-kwong did not respond directly to their calls, made on Thursday at a special meeting of the Legislative Council's security panel. Lee said: "There may be risk in travelling to the Philippines now." This is only the second time the black alert has been imposed on any country since the warning system was launched last year. Thailand received the first black alert in April this year due to political unrest in Bangkok. The government's colour-coded outbound travel alert (OTA) system was launched in October following political violence in Thailand in late 2008. The system covers 60 countries the government deems Hongkongers visit most. The lowest-scale warning is amber, followed by red and then black. Amber means there are signs of threat and travellers should exercise caution; red signals there is a significant threat and calls for travellers to avoid all non-essential trips; while black indicates a severe threat and all travel should be avoided.

A star-studded group is competing against a developer and a newspaper boss to turn the former married police quarters in Hollywood Road into a creative area, where they will mentor budding artists. The all-star cast has been assembled by the Hong Kong Institute of Contemporary Culture, which has been promised a loan of HK$25 million by a group of five people including Pansy Ho Chiu-king, daughter of casino tycoon Stanley Ho Hung-sun. The institute, set up in 1998 by artists and educators, runs a creative school in Lok Fu and has organised international programs to promote culture. "We have no big business behind us. What we have are people who have a proven track record and passion in their fields," said Mathias Woo Yan-wai, director of the institute, introducing the proposal to the media. Wu is also co-artistic director of theatre group Zuni Icosahedron. The revitalisation project for the police quarters site was announced by Chief Executive Donald Tsang Yam-kuen in his policy address last year. The institute has gathered about 30 top figures from the local art and design sector, including actor Daniel Wu Yin-cho, director and actress Sylvia Chang Ai-chia, co-founder of local lifestyle brand G.O.D, Douglas Young, Brian Tse Lap-man and Alice Mak Ka-bik, creators of the Mcdull stories and animation that drew a wide local audience, pop singer and producer Anthony Wong Yiu-ming, ink brush painter Kan Tai-keung, and designers Freeman Lau Siu-hong and Stanley Wong Ping-pui. Wu said they had signed agreements to commit themselves as anchor tenants of the two former residential blocks at the site if the institute won out. The agreements did not stipulate how much time they would spend in the buildings. Asked whether these people would end up being absent from the place most of the time, Wu said: "They are all based in Hong Kong. They undertook to use the buildings as their offices, to mentor at least one young talent every year, to give lectures and workshops for the public and to arrange open sessions for their studios. "The tenants will deliver something different, working with local craftsmen to produce new products. For example, the G.O.D. shop will sell exclusive designs that are unavailable in other branches. A designer will dedicate his workshop to make chairs and stools of different styles with young people." The anchor tenants will comprise about 60 per cent of the tenant mix and pay market rent. The rest of the studios will be open to young talent and creative firms at a discount. Wu said the institute would partner with the Federation of Hong Kong Industries to line up manufacturers keen to help young designers looking for opportunities. While 60 per cent of the 15,000 square-metre total floor area will be used as studios, the other 40 per cent will be open to the public as shops, cafes, exhibition space, a black-box theatre, and a heritage interpretation centre exhibiting the history of Hollywood Road and the Central School, founded on the site in 1889 before the police quarters were built. The institute would form a company to manage the project, with a board comprising figures from industry and academia to monitor the operation. In the government's brief, the operator, a non-profitmaking body, will take a 10-year tenancy to set up a creative area. Half of any profit will have to go to the government, with the rest ploughed back into the operation. The administration will invest millions to cover basic renovation of the buildings and to add a skybridge and glass canopy to connect the two blocks. The others vying for the project are the Hong Kong Heritage Conservation Foundation, set up by Sino Land executive director Daryl Ng Win-kong; an unknown cultural organisation based on the mainland; and the Musketeers Education and Culture Charitable Foundation, formed in 2008 by Hong Kong Economic Times Holdings chairman Lawrence Fung Siu-por and others.

Finance chief's visit marks a new era with Taiwan - Financial Secretary John Tsang Chun-wah landed in Taipei yesterday to begin an historic visit marking a new era in Hong Kong-Taiwan exchanges. Arriving at the Taoyuan International Airport, Tsang spelt out modest expectations on his imminent talks with Taiwanese authorities during his four-day stay. He stressed that it would be just a start. "The important thing is the visit itself. What we are looking forward to is a good beginning," he said, without indicating whether any agreements would be signed during the trip. The financial chief is the most senior government official from the city to travel to the island since Hong Kong's handover in 1997. He is visiting in his capacity as honorary chairman of the Hong Kong-Taiwan Economic and Cultural Co-operation and Promotion Council. The main purpose of the trip is to attend the first meeting between the Hong Kong council and its Taiwanese counterpart, the Taiwan-Hong Kong Economic and Cultural Co-operation Council. The two councils were set up in April and May respectively to provide a semi-official platform for exchanges between the two places. Tsang said both sides would explore matters of common interest that could be worked on. A week before the meeting, Taiwan's Mainland Affairs Council (MAC) had openly said it wanted to discuss the possibility of renaming the Chung Hwa Travel Service to reflect its role as the island's representative body in Hong Kong. Asked to comment on this call, Tsang said: "The agency has been in Hong Kong for some time, and I think as the work between Hong Kong and Taiwan increases, its work will also increase. And if it is something beneficial to both Hong Kong and Taiwan, we will work very hard to facilitate it." He stopped short of saying whether the two sides would discuss mutual travel-visa waivers, which the Taipei government has advocated in the past two years. He also played down the political implications of his visit by saying the councils would discuss economic and cultural co-operation. "Hong Kong and Taiwan have a long history of economic links. Through this trip we hope to build up further friendly co-operative relationships for the long term." The minister is leading a delegation of more than 20 government officials, including Secretary for Commerce and Economic Development Rita Lau Ng Wai-lan. Secretary for Constitutional and Mainland Affairs Stephen Lam Sui-lung and Secretary for Home Affairs Tsang Tak-sing will join the group today. Tsang is expected to meet Taiwanese Premier Wu Den-yih and MAC chairwoman Dr Lai Shin-yuan. Yesterday, he visited the headquarters of cellphone maker HTC in Taoyuan and met Taichung Mayor Jason Hu Chih-chiang in Taipei.

Thousands demand Manila siege justice - Protesters march in silence to express anger over handling of bus hostage tragedy - Thousands marched in silence yesterday to express their anger at Manila's handling of last Monday's tour bus hijacking in which eight Hongkongers were killed. The demonstrators, most of whom wore black or white clothes, marched on Hong Kong Island, demanding justice for the victims. Victoria Park in Causeway Bay, a common gathering place for Filipino and other maids on Sundays - was cloaked in sorrow as crowds started to form for the march. It was organised by the pro-Beijing and pro-democracy camps in the Legislative Council, in a rare demonstration of unity. On stage huge banners hung, stating: "Deeply mourn the dead countrymen, demand thorough probe and truth." An estimated 80,000 people joined the event, the organisers said. "This is a reliable estimate," lawmaker Cheung Man-kwong said. Police, however, said there were 30,000 people at the peak of the march. Many participants brought placards and banners, some of which read: "We are furious" or "Demand an apology from the Philippine government". Some carried a more aggressive message: "Shame on the Philippines" or "Incompetent Manila police". Some placards carried criticism of Philippine President Benigno Aquino, who was widely criticised by Hongkongers for smiling during an inspection of the hijacked bus and during a subsequent press conference. The president later explained he had been misunderstood, saying he would smile when faced with such a situation. In an essay published in the Chinese-language Ming Pao yesterday, Lee Ying-chuen, one of the tourists on the hijacked coach, said that some of them had thought of uniting to subdue the gunman. They did not do so, she wrote, partly because they had overestimated the ability of the Manila police.

Thousands march over Manila hostage tragedy - Thousands of people march through a Hong Kong downtown street on Sunday in honor of the eight local tourists who were killed in the Manila bus hijacking. Many denounced the Philippine government for botching the rescue operation. Demonstrators voiced their anger over the Philippine government’s handling of the siege in the heart of Manila on Monday that left eight Hong Kong tourists dead amid widespread complaints of police bungling. “It’s too late for the governments to do anything, but Hong Kong people hope that, at the very least, the Philippine authorities could tell us the truth,” Daisy Kwong, a telecoms firm project manager, said. “I cried for hours after watching the tragedy played out live on TV,” she said. The sea of demonstrators observed three minutes’ silence as they gathered in Victoria Park, many wearing yellow ribbons and carrying white flowers, the traditional Chinese colour of mourning.

How Flower Street bloomed into a hub of entertainment - The view from the top of Lan Kwai Fong to D'Aguilar Street in 1945. In the late 19th century, flower stalls in Wyndham Street were spread throughout the area and it became known as Fa Gai or Flower Street. A small, L-shaped road off D'Aguilar Street was known as The Place of White Flowers or Lan Kwai Fong in Cantonese. The first nightclub that opened in the area was not in Lan Kwai Fong, but in D'Aguilar Street - which was ironic, since the road is named after Charles D'Aguilar, a British official known for his hatred of late-night music. Gordon Huthart, the Hong Kong-born son of a Lane Crawford executive, opened Disco Disco on December 22, 1978. By 1983, Disco Disco was joined by two fashionable restaurants. One was started by the Austrian community, and featured Tyrolean food. Founder Christian Rhomberg cheekily called it 1997, after Hong Kong's biggest fear - the year the British lease ended. It was located in Lan Kwai Fong, to the horror of the owners of the small offices that shared the road with the flower stalls. The other was California bar, the first in a chain of uber-successful businesses launched by Allan Zeman, who turned a garment fortune into a string of commercial winners. California restaurant opened directly opposite the flower stalls of Lan Kwai Fong. Flower stalls are still there today. The three restaurants were in place for the great Hong Kong financial boom between 1983 and 1997, and triggered the transformation of the area into an entertainment district, with more than 20 places to eat or hang out. Disaster struck Lan Kwai Fong on January 1, 1993, when 21 young people were crushed to death as a huge crowd of New Year's Eve revellers flooded down the hill towards Central. The tragedy prompted calls for better crowd control and tighter rules on under-age drinking. The inquiry into the disaster avoided apportioning any blame, although it did include criticism of police standing orders on crowd control. It soon regained its lustre and in recent years revellers have turned out in droves to celebrate Halloween and knock back the pints at the Lan Kwai Fong Beerfest.

Sun sets on Lan Kwai Fong's 'California' - Zeman hosts last party before towers torn down - An artist's impression of the 25-storey tower that will replace the California buildings in Lan Kwai Fong. Allan Zeman may not have been in a party mood at California Tower's "Bringing Down The House" celebrations last night. It is more likely that he had mixed emotions as the big bash marked the official closure of his iconic California Tower and California Entertainment Building establishments, before they are demolished. The Lan Kwai Fong Beer Bar, Indochine 1929, C Bar and di LUX closed for business on Wednesday, but for the rest it was time to pull down the shutters. The 12-storey buildings are where Zeman began opening the bars and restaurants that transformed Lan Kwai Fong into one of Hong Kong's biggest entertainment hubs. He bought the California Entertainment Building in 1988 and California Tower in 1992. No demolition date has been set as all the premises and offices will still have to be cleared out, but it should be done by September 7 when the buildings will be officially closed. It is the end of an era but as Zeman knows in the entertainment business you either adapt or die, so a modern 25-storey single tower will replace the old buildings, featuring 14 floors of restaurants, each with its own terrace for smokers. There will also be bigger floor areas with high ceilings, rooftop gardens and an extra 40,000 sq ft of commercial and office space. He has not put a price on the redevelopment - though he has hinted that it will cost just under HK$1 billion - and he intends the new building to open in the summer of 2012. It does not mean, however, that he won't have a pang of sadness now that the end is in sight. "I've so many memories. They became great meeting places for people from all over the world," Zeman (pictured) said. "When I first started out in Hong Kong it was very formal and colonial. I just felt it could use a place like the way Lan Kwai Fong is today. So I first bought the California Entertainment Building and slowly started to reconvert the office spaces. Then I later bought California Tower so I could combine both buildings, and redeveloped it as well. Within a few years California Tower had become a landmark for the area." Zeman looked back on the 1997 handover celebrations in the California Tower as a highlight. He had a special mention for C Bar on the ground floor of the California Tower - "one of the best places to people watch in Hong Kong" - and for the California bar now known as the Lan Kwai Fong Beer Bar. "We had so many characters who would come into the California bar. One was famous Canto-pop singer Danny Chan Pak-keung. He'd hang out most days there and everybody loved him," he said. "He sadly had passed away but he was such a friendly guy." Temmy Hau has worked in the California bar and the Lan Kwai Fong Beer Bar, as a cashier and supervisor, for 25 years. She has seen her fair share of stars, too. "It's going to be sad to leave but it's a new beginning for everyone," Hau said. It will not be the same for tourists either who have stood by the Lan Kwai Fong Street sign just outside C Bar to have their photo taken. "People always take photographs of themselves there in front of the street sign. Even today tourists have to get that photograph," Zeman said. Indochine 1929 opened in the California Tower nearly 17 years ago. It is designed to resemble a 1920s veranda from Vietnam's French colonial era with wooden shutters, ceiling fans, and tropical plants. Lai Kam-yuen has been chef all that time. "It's a classic-styled kitchen with traditional market lights that have red shades. It was my idea to have the kitchen exactly that way and I'm sure we can continue that when we move premises," Lai said. The restaurant will be moving across the street to The Plaza building. Indochine 1929 manager Benjamin Fernandes has been there since the beginning, too. "The King of Jordan, Quincy Jones and Phil Collins have all eaten here. It's sad to be leaving after all this time but it's an exciting challenge, too," he said. Zeman confirmed that the other restaurants and bars would be relocated to places in the area as well. But "The Father of Lan Kwai Fong" knows change has to be embraced. "It's all part of the continued evolution of Lan Kwai Fong. This won't change the vibrancy of the area ... But for me it's also all very nostalgic what's happening. In a way it's like seeing one of your children grow up and move on."

The national legislature yesterday rubber-stamped Hong Kong's electoral changes for 2012. The Standing Committee of the National People's Congress approved two amendments to the Basic Law. One increases from 800 to 1,200 the number of electors allowed in the group that will elect the chief executive; and the other will increase the number of Legislative Council seats from 60 to 70. Rita Fan Hsu Lai-tai, a member of the committee and former Legco president, quoted congress chairman Wu Bangguo as saying: "This shows that the consensus in Hong Kong has been affirmed and I hope the approval is favourable to the progressive constitutional development in Hong Kong." Chief executive election committee numbers will increase with the addition of more district councillors. Of the 10 new Legco seats, five will be geographical constituencies and five will be district council functional constituencies. Nominations of candidates for the latter five will come from district councillors, and the votes of 3.2 million registered voters who cannot vote in present functional constituencies will elect them. Chief Executive Donald Tsang Yam-kuen said the move showed "the aspirations of the whole community to roll forward to constitutional development". The relevant legislation is expected to be passed by Legco by next May.

 China*: The Henan government has revoked the permission for Henan Airlines to name itself after the province, saying a deadly plane crash on Tuesday has tarnished its name. The province was "justified by law to revoke any name change of a company which was either misleading or harmed the province's interest", Xinhua said, citing the government. Henan Airlines was known as Kunpeng Airlines until last year, when it was renamed after moving its corporate headquarters to Henan's capital, Zhengzhou. Henan commerce authorities had changed the carrier's name back to Kunpeng, the news portal of People's Daily reported yesterday. The provincial government had never invested in the airline. The carrier is controlled by Shenzhen Airlines, itself part-owned by Air China (SEHK: 0753). The airline's name "misled the public and tarnished the province's image", Xinhua said. Not only is Henan distancing itself from the crash, it also tried to censor media coverage - four mainland reporters were briefly detained yesterday while covering the cremation of the victims. Police detained Wang Nan of Beijing-based The Mirror and Wang Shunda of Huashang Morning Post while they were taking photographs at a funeral parlour in Yichun , Heilongjiang , at 10am. They were brought to a police station in Chaoyang district and only released at 12pm. Lin Chenyin of The Mirror and Shang Qinshuo of China Business News were taken into an office at the funeral parlour by armed police at 10.30am and freed only at 1pm. The Heilongjiang provincial propaganda authorities had received an order from the central propaganda department that only a handful of government agencies were allowed to interview the victims' relatives, according to reporters lobbying for the release of their detained counterparts.

Ningxia, home to around two million Muslims and 3,600 mosques, has rich cultural connections with Arab countries. Now it plans to mould itself into a hub of Islamic investment. As many economies around the world attach more and more importance to their trading partnerships with rich Arab countries since the financial crisis, Ningxia - one of China's poorest regions, where Muslims account for one-third of the population - has also joined the fray, hoping their "petro-dollars" will invigorate its economy. Ningxia, located in the northwest with a healthy Islamic culture, will hold the first China-Arab states trade forum late next month. Local authorities said it aimed to deepen business co-operation between China and Muslim states, which have a population of 1.5 billion and a consumer market of US$2 trillion. "After China became the world's biggest exporter, many developed countries began imposing trading sanctions on China ... So, exploring new markets has become strategically important," Chen Zhiwei , director of the region's commerce department, said. The forum follows the establishment of the China-Asean Expo, a trade fair held annually since 2004 in Guangxi , and the China-Northeast Asia Expo, which has been held in Jilin province annually since 2005. Though not as geographically convenient to their targeted trading partners as the two other forums, Ningxia has that cultural connection with Arab countries. The region is home to more than two million Muslims and has about 3,600 mosques. So far, 260 guests from seven Arab countries had signed up for the forum, and more than 20 Chinese government officials, including two top leaders, would be attending, Chen said.

Officials from the mainland and Japan met yesterday for talks expected to touch on trade tensions between the world's number two and three economies but also North Korea and worries over Beijing's military ambitions. Japanese Foreign Minister Katsuya Okada, heading a delegation to Beijing that includes five other cabinet ministers, was to meet a group led by Vice-Premier Wang Qishan . A top priority for Tokyo at the third Japan-China high-level economic dialogue was perceptions of a worsening business environment for Japanese firms in the country, a Japanese government official said. These concerns have been punctuated by recurring labour disputes at foreign-established factories in recent months, many of which have hit Japanese manufacturers. "One of the main topics will be how to improve the business environment for Japanese companies in China so that they can operate," the Japanese official said. Beijing has said little about the content of the talks other than they would focus on the increasingly interdependent economic relationship between the two trading powers. But Tokyo was likely to also raise longstanding concerns over the intent of a string of double-digit Chinese military budget increases over the past two decades, the Japanese official said. He said Japan would prod China for more transparency on the issue. The official said the two sides could discuss a possible resumption of six-nation talks hosted by Beijing on dismantling North Korea's nuclear programs, but he said a restart any time soon was unlikely. The six-nation talks involve China, the two Koreas, the United States, Japan and Russia. The Japanese delegation to the closed-door talks also includes Finance Minister Yoshihiko Noda and Trade Minister Masayuki Naoshima. They were scheduled to make a courtesy call on Premier Wen Jiabao today. Beijing's representatives include Foreign Minister Yang Jiechi , Finance Minister Xie Xuren and Commerce Minister Chen Deming.

Rescue efforts go on in mudslide-hit Zhouqu.

The new Beijing subway Fangshan Line began test operations Saturday and will open to traffic by the end of this year, adding another line to Beijing's sprawling subway network. The 25-kilometer light rail line will link Beijing's central districts with Fangshan District, its southwestern suburb, according to the Beijing Subway Construction and Administration Corporation. The newly built line is expected to help ease ground traffic and traffic jams in the Chinese capital. Two parking lots, with 350 parking spaces, will be built along the line in a bid to get nearby residents out of their cars and onto public transportation. The total length of Beijing subway lines is 228 kilometers, and this figure will increase to 300 kilometers after five lines begin operating this year.

China will complete building 5,000 kilometers of high-speed railways in the mainland's southern region by 2012 to accelerate its economic integration with the business vibrant Hong Kong and Macao, a senior industry official said Saturday. The rail tracks, to be laid in the sprawling pan-Pearl Delta region which includes eight provinces and an ethnic autonomous region of the mainland, will account for nearly 40 percent of the country' total in the coming three years. Another 5,000 kilometers will be completed in the region from 2012 to 2015, said Lu Dongfu, vice minister of the Ministry of Railways, at the 6th Pan Pearl Delta Regional Cooperation and Development Forum held in Fuzhou, capital of southeast China's Fujian Province. Liu said the railway system played a key role in the region's economic boom, transporting 386 million passengers and 521 million tons of goods in 2009, up 28.7 percent and 7.4 percent respectively from the figures in 2004. He said after the additional high-speed railways are put into service the railway transport will be faster, safer and more comfortable. China is investing heavily in the railway system to meet the demands of an increasing number of rush travelors. Authorities vow to cut the travel time between provincial capitals of neighboring provinces to less than two hours. The pan-Pearl River Delta covers southern coastal provinces of Fujian, Guangdong, Hainan, Guangxi Zhuang Autonomous Region, inland provinces of Jiangxi, Yunnan, Guizhou and Sichuan, as well as Hong Kong and Macao special administrative regions. The forum, running from Aug. 27 to 31, was attended by key government officials and a number of business people.

Aug 29, 2010

Hong Kong*: Behind the scenes of a bloodbath - Clashing personalities, a new president and police attitudes all may have contributed. A personality clash, the teething troubles of a new president and, possibly, sympathy for the gunman may all have contributed to the disastrous efforts by Manila police to resolve Monday's hostage crisis. City mayor Alfredo Lim and the head of the Manila police district, Rodolfo Magtibay, are supposed to be co-chairmen of the city crisis co-ordinating committee. Yet the pair have been at loggerheads since Magtibay's appointment. The latter was foisted on Lim more than a year ago by then Philippine president Gloria Macapagal-Arroyo. He was her personal choice for the job. Lim is a close ally of the family of her successor, President Benigno Aquino, who fell out with Arroyo in 2005. Magtibay is a member of the Philippine Military Academy's class of 1978, with which Arroyo has close links; she has appointed several of his classmates to key roles.

HK beefs up Manila bloodbath probe team - Officers, experts to fly to Philippine capital - Signatures are collected in Mong Kok urging Manila to undertake a thorough investigation. Hong Kong is beefing up its team of investigators in Manila in an effort to get to the bottom of Monday's hostage-taking bloodbath. The government says this will enable it to gather information for an inquest on the eight victims, and contribute to the Philippine government inquiry. Investigating officers and experts, including members of the forensic firearms examination bureau, will fly to the Philippine capital as needed to join two crime wing officers who arrived on Monday as the crisis unfolded. The eight were shot dead after sacked Manila police officer Rolando Mendoza took them hostage aboard a tour bus. Mendoza wanted his job back. Preliminary findings by Philippine National Police show Mendoza probably killed all eight victims before being shot by police snipers. Meanwhile, appeals for calm have been made amid concerns there may be racial clashes during a protest march in Hong Kong on Sunday.

Tours and travellers cancel visits to Philippines - Many packaged tours and individual travellers have cancelled their trips to the Philippines after the Security Bureau issued its Black Outbound Travel Alert on Monday, Travel Industry Council (TIC) chairman Michael Wu Siu-ying on Friday. The travel warning came after eight Hong Kong tourists were killed during the 11-hour hostage siege in the Philippine on Monday. The travel alert warns residents to avoid all travel to the country and says those already there should exercise caution. Wu said since the government raised the travel alert to black, some 28 tour groups and about 550 individual travellers had cancelled their trips. This includes nine tours to Manila and 19 to Cebu. Some 250 travellers, who had bought travel packages, have asked for their trips to be cancelled, the TIC chairman told reporters. Wu said although some airlines had agreed to requests to cancel flight bookings, some hotels in Cebu had refused. The TIC is currently helping people liaise with these hotels in Cebu, he added. More than 400 people have also joined a discussion forum on Facebook, urging people to avoid the Philippines. Some said they would never go there again. Thousands of mainland tourists, who were planning to go to the archipelago, have also asked for cancellations. A spokesman for China International Travel in Beijing said many mainland tourists were concerned about personal safety. They also believed the Philippines had handled the incident very badly, the spokesman said. Guangzhou Daily reported that from September 1, all travel agencies in Guangdong province, including in Guangzhou, Shenzhen, Shandong, Fujian, Zhejiang, Henan, Yunnan, Jiang Xi, Liaoling and Ning Xia would stop organising tours to the Philippines. They expect fewer people would want to go there. The travel companies would also help tourists, who have joined tours to the Philippines, to cancel them. On Friday, Hongkongers were continuing to mourn. About 37,900 people in have signed condolence books at18 locations in the past three days, a spokesman for the Home Affairs Department said. He said the public could continue to post messages of condolences on the Facebook webpage set up by the government on: Hong Kong Mourns. As of Friday afternoon, more than 124,000 people had joined the Facebook webpage.

Shenzhen China postpones 30th anniversary bash - Celebrations in Shenzhen yesterday to mark the 30th anniversary of the establishment of the mainland's first special economic zone were postponed after President Hu Jintao decided to stay in Beijing in the wake of the Manila bus hostage tragedy. Shenzhen's administration bureau issued an urgent notice postponing a 30-minute fireworks extravaganza outside the government headquarters. A propaganda department spokeswoman said it would take place next month. Officials and political observers said it was wise to cancel big celebrations as Hong Kong struggled to deal with its grief. Shenzhen officials last week said top central and provincial leaders were expected to attend the event.

Hong Kong Financial Secretary John Tsang off to historic bilateral talks in Taipei - With Financial Secretary John Tsang Chun-wah setting off for Taipei today, officials from Hong Kong and Taiwan are set to hold their first formal talks since the establishment of a new exchange platform between the two places. Yet both sides' priorities appear to be different. While Taiwan wants to elevate its political status at the negotiation table, Hong Kong remains acutely aware of the constraints of "one country, two systems". Tsang will be the highest-ranking serving Hong Kong official to visit Taiwan since Hong Kong returned to Chinese sovereignty in 1997. He will attend a meeting as honorary chairman of the Hong Kong-Taiwan Economic and Cultural Co-operation and Promotion Council (ECCPC), set up in April to deal with its Taiwan counterpart, the Taiwan-Hong Kong Economic and Cultural Co-operation Council (ECCC), which was inaugurated in May. The two councils, with senior officials from their respective governments participating, were established to provide a quasi-official communication channel between Taiwan and Hong Kong after Taiwan-mainland relationships warmed significantly over the last two years. The ECCC is chaired by Taiwan's former finance minister, Lin Chen-kuo. However, the first meeting between the two councils in Taipei on Monday will not be an easy task. A local person familiar with preparations said there had been intense negotiations over the agenda since a Hong Kong government team arrived in Taipei last week. James Chu Shi, director of the department of Hong Kong and Macau affairs under Taiwan's Mainland Affairs Council, told Taiwan news media that Taiwan wants Hong Kong to waive all visa requirements for Taiwanese travelling through the city, and wants to rename the Chung Hwa Travel Service - Taiwan's representative in the city. Taiwan also wants Taiwan-Hong Kong civil aviation agreements signed by authorised agencies in a similar way as its pacts with the mainland were signed by Taiwan's Straits Exchange Foundation and the mainland's Association for Relations Across the Taiwan Straits, according to the person familiar with the negotiations. The present agreement is between Cathay Pacific Airways (SEHK: 0293) and the Taipei Airlines Association because Hong Kong has avoided official contacts with Taipei. "But these are just one-sided requests from Taiwan," the person said. "For the Hong Kong side, these are not the most urgent matters. We have to get to know each other first at the first meeting." A spokesman for the financial secretary said yesterday the meeting's agenda was not yet available. "It is just the first meeting and we have yet to see what items to discuss." Hong Kong-based political commentator Johnny Lau Yui-shiu said the three issues raised by Taiwan were all sensitive for the SAR government. "On the face of it, Hong Kong can talk about these matters. But the reality is that it must seek Beijing's opinion."

Teens put books aside to chase Bolshoi dream - Shirley Pu (left) and Josephine Cheung will begin studies at the Bolshoi Ballet Academy next month. Two teenagers aspiring to be ballerinas have overcome their parents' objections to follow their hearts and their dream - all the way to a prestigious ballet school in Russia. Josephine Cheung Ching-nga, 16, and Shirley Pu Wei-hsuan, 18, are the first Hong Kong students to be admitted to a three-year full-time diploma programme at the Bolshoi Ballet Academy in Moscow. The school accepted them after viewing videos showcasing the young dancers' strong foundation skills. The teens have been friends for five years, studying together at the Jean M Wong School of Ballet. They both hope to be principal dancers in dance troupes abroad. Starting next month, they will spend nine hours a day at the Bolshoi academy, studying the Russian language and culture as well as ballet. Cheung, who has finished Form Five at Maryknoll Convent School, said, "I'm very happy, because this is such a famous school." She received the Dame Margot Fonteyn Award of the Tsinforn C. Wong Memorial Scholarship, which was set up by Jean Wong, principal of the school that bears her name, in memory of her father. The award will cover the first year of tuition fees at the Bolshoi: €12,500 (HK$123,500). Wong said: "Many great dancers come from [the academy], and with training from there, you can basically join any dance troupe you want." Cheung started ballet at the age of three and continued with her training even during the Hong Kong Certificate of Education Examination. Her commitment impressed her father, an engineer, and mother, who works at the Labour Tribunal. "They said I shouldn't focus on just dancing and pay attention to my studies [instead]. But they've seen my performances and they understand my dedication," Cheung said, admitting that she was not a great fan of hitting the books. Her friend Pu had a tougher time convincing her father, a businessman. Pu, who graduated from Diocesan Girls' School with flying colours in her HKCEE, has been struggling to pursue her ballet dreams while meeting family expectations. She said her parents wanted her to take a normal educational path, so she stopped her ballet training for a year during Form Five and then enrolled in the Hang Seng School of Commerce last year. But her heart was not in it, and she sent her application to the Bolshoi academy. "I know this is my last chance, and I do not want to give up on the chance to make my own choice for my own future," Pu said. "My parents doubt if I'm making the right decision, and they are worried that I'm giving up a stable life. But I will give my best in the coming three years. I want to be a professional dancer, and I can always study when I retire."

Chief Executive Donald Tsang Yam-kuen has appointed Alice Kwok Yim-ming as a new member of the Broadcasting Authority, a government spokesman said on Friday. The appointment is for two years – starting from September 1. Secretary for Commerce and Economic Development Rita Lau Ng Wai-lan said: “Alice Kwok has extensive experience in the media industry and has worked for a wide range of media organisations including radio, TV and the print media.” Kwok, a former executive chief editor of Metro Finance Radio, graduated from the Chinese University of Hong Kong in 1979 with an economics degree. She then worked for different organisations, including Hong Kong Economic Journal, Apple Daily and nowTV.

Henderson Land Development (SEHK: 0012), the developer in the spotlight over controversial flat sales at its luxury 39 Conduit Road development, said underlying profit fell 37.36 per cent, mainly due to a loss from the cancellation of the sale of 20 units at the Mid-Levels project. The developer said underlying profit, which excludes property revaluation gains, amounted to HK$1.32 billion for the six months to June. The result reflected the HK$734 million loss caused by the cancellation of sales of 20 flats at its 60 per cent-owned 39 Conduit Road and a HK$32 million loss at another project. Bottom-line profit, including property revaluation gains, was HK$7.66 billion, up 75.24 per cent from HK$4.37 billion a year earlier.

Hong Kong Stock Exchange eyes launching China yuan futures market - The Hong Kong Exchanges and Clearing (SEHK: 0388) (HKEx) is considering launching a yuan currency futures market, another small step towards internationalising the Chinese currency, the China Business News said in a report on Friday. HKEx has not fixed a plan for yuan futures products yet but the size of each contract will be 1 million yuan (US$147,100), the newspaper cited a spokesman from the exchange as saying. HKEx chief executive Charles Li said earlier there was a need for investment tools using the yuan to broaden the acceptance of the currency by international trade partners amid efforts to internationalise the currency, the newspaper said. Li added that a yuan-denominated product could be traded on the HKEx as early as the end of the year or early next year. The HKEx will further study the development of the product if most banks show strong interest, but the initial volume may not be very big, the newspaper said. Until a few months ago, Hong Kong banks could only deposit yuan funds at the designated clearing bank. In recent months, China opened alternatives for the use of yuan outside it borders as it develops Hong Kong as an offshore market to trade the currency. The move has prompted some deliverable forwards deals in the territory, already marking the potential emergence of a market that could eventually draw business from the mainland and offshore..Last month, CITIC Bank International and Industrial and Commercial Bank of China (SEHK: 1398) (Asia) completed Hong Kong’s first foreign exchange swap for yuan.

Jason Leung Song-xue - the badly injured 18-year-old survivor of the Manila hostage crisis - was recovering on Friday after undergoing five hours of brain surgery in Tuen Mun Hospital on Thursday night. Jason, who suffered severe head injuries caused by an unknown heavy object during the siege, was flown back to Hong Kong from the Philippines on a medical charter flight on Thursday evening.

Hong Kong Mass Transit (MTR) rides to rescue of orphans - pay all educational and medical expenses - The MTR Corp said it will pay all educational and medical expenses for two children made orphans in Monday's tragedy. Tracey Wong Cheuk-yiu, 15, and Jason Wong Ching-yat, 12, are the children of Wong Tze-lam, who worked for the MTR for more than 20 years. Chief Executive Donald Tsang Yam- kuen and Secretary for Labour and Welfare Matthew Cheung Kin-chung yesterday visited them at home in Tseung Kwan O. Cheung last night said the pair are staying with their uncle and aunt. He stressed that the government will do its utmost to provide comprehensive support in the long run, including assigning a social worker who will be responsible for giving each orphan emotional support. He also said the public response to a call for donations in the past 24 hours was overwhelming, with many people willing to support their studies. MTRC head of operations Choi Tak- tsan described Wong as a hardworking and conscientious individual. "He also liked to take part in sporting activities. Every day during lunch time, he would exercise," Choi said. He said the MTRC is making special arrangements for Wong's children, with all employees touched by the tragedy. He added that the MTRC is also discussing funeral arrangements with Wong's relatives. All Tracey and Jason's education- related and health expenses will be met by the corporation until they finish university and reach adulthood. Apart from offering counseling to Wong's colleagues, Choi said a condolence book has been placed at Wong's former workstation and 17 MTR stations. The MTRC will also accept donations from staff for the children. Meanwhile, the Tung Wah Group has also set up an education fund for all those who lost their parents in the bungled hostage rescue operation with an initial target of HK$1 million.

Tens of thousands of Hong Kong people are expected at a weekend rally to demand justice for the victims of this week’s hostage bloodbath Manila, organisers said on Friday.

United in grief and fighting back tears - A silence in the city as Hong Kong mourns - For three solemn minutes yesterday morning, Hong Kong was united in grief over the deaths of eight of its residents in the Manila hostage tragedy. People across the city bowed their heads, many fighting back tears, as the city observed a silence from 8am. As Chief Executive Donald Tsang Yam-kuen led officials and fellow mourners in grieving for the victims at a flag-raising ceremony in Golden Bauhinia Square, passers-by on their way to work paused to reflect on the tragedy. At Times Square in Causeway Bay, dozens watched the ceremony on a giant screen. "It's embarrassing to cry here," security guard Wu Xiaocui said. "I cried watching the news and reading the newspaper. It's heartbreaking." Wu, who had just finished her night shift and had waited for the silent tribute to start, said she hoped the survivors would stay strong. Another woman walking in Times Square could not hide her sorrow. "Everyone has their own way of mourning," she said. Ricky Leung, a hospitality student, watched the hostage drama unfold live on television on Monday, like thousands of others in Hong Kong. "It makes me angry because the police were so useless. They [the hostages] could have been saved," Leung said. Tsang urged people to stay strong and determined when facing adversity. In a speech at a ceremony for a youth programme yesterday, he said the Manila tragedy had revealed the ugly side of human nature. "A single wrong thought in one's mind can destroy eight valuable lives and shatter many happy and blissful families. We have to ask why human nature can be so ugly. Had the killer ever thought of others apart from his own interests? Can one put aside the lives of others and all moral values to achieve goals by whatever means?" Tsang asked. Many questions remain unanswered about the events that led to the deaths of the holidaymakers on the last day of a group tour of Manila. Much of the public anger and dismay has been directed at the Filipino community, with many believing that the rescue operation could have prevented at least some of the deaths. More than 1,000 mourners, including legislator Fred Li Wah-ming, flocked to Ng Wah Catholic Secondary School in San Po Kong, Kowloon, last night for a memorial service for Ken Leung Kam-wing, 58, who lost his life along with his two daughters in the tragedy. A long-time friend of Leung, Paul Mak, spoke at the service. Mak, who had known Leung since Form One, described him as a helpful and straightforward man. "He would never be hesitant about doing what was right to do. He was killed while trying to protect others, that was his character." Among the more than 800 guests at last night's mass was the chief executive and his wife. At a Mass for the victims at St Joseph's Church in Garden Road, Philippine Consul General Claro Cristobal expressed condolences. "In this most trying of times, we feel your profound sorrow and pain. We are deeply sorry for the tragic event that took place in our homeland," Cristobal said. "There are 152,000 of us here in Hong Kong, working and living alongside you over very many years, even decades. Through times of trouble or great rejoicing, we have been and we remain in solidarity with you. We hope that the ties that have bound us two peoples through all this time will overcome this shared adversity in the past few days." In Central, Alexis Fung, 50, paid tribute to the victims. "I felt the urge to take part in the moment of silence in memory of them," Fung said. "During the three-minute silence, images of that night crossed my mind. I was watching the tragedy live on television that night. It's heartbreaking to see the images. I am still very upset about it. I hope those who survived and the families of the dead will be tough and resilient." One Filipino who arrived in Hong Kong yesterday to start work as a maid offered her prayers. "All Filipinos feel sad about the tragedy," she said. "We were praying for the Chinese people. It's only the policeman, [Rolando] Mendoza, who made that big mistake, not the whole nation. I am praying for the Chinese people because I will work here for two years and my employers are Chinese too. I hope both the Filipino government and the Hong Kong government will help the victims." One academic said the collective outpouring of grief in both Hong Kong and the Philippines was a reflection of the effect the live coverage of the hostage crisis had on the public. Dr Dennis Wong Sing-wing, an associate professor of applied social sciences at City University, said many people probably felt they lived through the crisis with the hostages after watching the events unfold live on television. Since then, people had reacted differently in expressing their grief and anger.

 China*: Qingdao Haier Co., Ltd, one of the world's leading white goods and household appliance manufacturers, said Friday that its net profit in the first half year jumped 51.83 percent on expanding market share. Net profits hit 1.08 billion yuan (160 million U.S. dollars) in the first half year, according to its statement delivered to the Shanghai Stock Exchange. Earnings per share stood at 0.807 yuan, up 51.69 from a year earlier, according to the statement. The company attributed its growth in profits to mounting market share due to its upgrading services and product innovations. The Qingdao-based company, with over 60,000 employees at home and abroad, sells its products in over 100 countries around the world.

PLA carrier-killer missile nearly ready, says US - China's anti-ship ballistic missile - a long-feared weapon known as the "carrier killer" - is close to operational, according to a senior US military official. The commander of the US Pacific Command, Admiral Robert Willard, made the remark in Tokyo this week. He said the US would not be deterred from deploying vessels in the region because of the missile. "To our knowledge, it has undergone repeated tests and it is probably close to being operational," Willard told Japanese journalists. "We have not allowed the development of these capabilities and capacities to deter our right to navigate in international waters in areas around China, nor do you want us to. "The security in the region is dependent on the regional militaries' presence on the water and in the air ... to ensure that the sea lines of communication and air lines of communication are kept safe." Willard said concern over such a weapon highlighted the need to resume Sino-US military exchanges.

China will launch a trial to allow exporters to keep part of their revenue overseas, a move that could help slow growth of the country’s foreign exchange reserves and reduce pressure for yuan appreciation. A select number of exporters would be allowed to park some of their revenues offshore, instead of repatriating the funds back to China as now required, the foreign exchange regulator said on Friday. The one-year trial would start on October 1 and would apply to up to ten exporters in each of the four trial zones (Beijing and the provinces of Guangdong, Jiangsu and Shandong, the State Administration of Foreign Exchange (Safe) said. “It will enrich China’s tools for adjusting international payments. It will also make it easier for domestic companies to better use their capital,” Safe said in a statement on its website. The policy change will cut costs for exporters, by allowing them to avoid charges involved in bringing money home and converting it into yuan, Safe said. “The new policy is very welcome and we exporters do want to keep some funds abroad,” said Ye Lianghua, deputy general manager at Cixi Export-Import in the eastern port city of Ningbo. However, he said he had some technical concerns – for example, in order to obtain export tax rebates, companies must now bring their revenue onshore. Ye also said the change would merely confirm in law what some companies were already doing in practice. Chinese exporters could already park revenue abroad by setting up offshore vehicles, he said. China has previously encouraged exporters to hold part of their revenues in foreign currencies instead of converting them into yuan in an effort to limit the growth of official forex reserves, the world’s largest at US$2.45 trillion. Cash inflows from China’s massive trade surplus over the past decade have been the primary source of upward pressure on the yuan exchange rate, which Beijing has locked in a managed float against in the dollar. Larger-than-expected trade surpluses in recent months suggested that resurgent inflows were once again generating appreciation pressure.

Shenzhen seeks to stay special as it marks a coming of age - It's called the Shenzhen Special Economic Zone. It was established 30 years ago as one of the mainland's first special economic zones - the others being Zhuhai and Shantou in Guangdong and Xiamen in Fujian. Shenzhen officials regard the 30th anniversary as important because people at age 30 are expected to be able to stand firmly on their own two feet, according to Confucius. That is the issue for city officials as people await a new date for the celebration: how to keep Shenzhen special. By many accounts, the city has lost its way, and the road map back to that status, as well as moving forward, is still uncertain. Shenzhen Mayor Xu Qin said on Wednesday that the city would invest 105 billion yuan (HK$120 billion) in 60 huge projects to celebrate the anniversary, including cheap housing, schools, hospitals, infrastructure and industrial parks. The city is pronouncing today a public holiday for about 14 million residents, and 15 million phone cards, valued at 100 yuan each, will be given free to the residents. There will be month-long activities, including a seminar on political reform, exhibitions, concerts and a choral competition. Yesterday's celebrations were cancelled as Hong Kong was mourning the victims killed in the hostage crisis in Manila on Monday. The incentive for city leaders to keep the momentum going came from Premier Wen Jiabao when he made a study tour of the city last week. Wen pledged his support for Shenzhen to continuously develop and "do an even better job". "The special zone should ... keep being special, being good, being innovative, being one-up and being the doer," he said. The central government provided a boost in June by approving the expansion of the special economic zone from 395 sq km to 1,948 sq km, or nearly twice the size of Hong Kong. City authorities saw that as a big gift, allowing them more power and opportunity for reform. They are eagerly expecting more such special policies and support from Beijing. They were the key to transforming Shenzhen from a small fishing village three decades ago into a modern city with almost nine million people. Guo Wanda , of the Shenzhen Development Research Centre, a government think tank, said the way to maintain its special status was to adjust strategies and become pioneers in political and civil reform. "Shenzhen is no longer special in economic terms, as the central government is seeing more and better replacements, such as Shanghai, Beijing or even Tianjin ," he said. "The GDP-only standard is no longer enough to make Shenzhen a special zone. We must realise this and find out ways to keep our uniqueness. In the past, it was easy for Shenzhen to be the model across the country. Its aim was simple - to learn and copy from Hong Kong to set up a market economy. Every simple simulation brought big success in economic growth. But it doesn't work any more now." Guo Zhongxiao , an independent researcher, said Shenzhen had had chances to use political and civil reforms to maintain its special status but had not done well. For example, in May last year, the city vowed to streamline government institutions by more than 30 per cent and separate administrative power into three independent branches - policy formulation, execution and supervision. This "separation of powers" was meant to be the mainland's first attempt at administrative structural reform. But one year later, the reform seemed to have failed, Guo Zhongxiao said. Internet users complained that the city's administrative departments had too much bureaucracy when they saw one director and 20 vice-directors in charge of a department. Another example is a draft of Shenzhen's reform programme in May 2008, which proposed direct elections for some district-level officials and People's Congress deputies - the latter an attempt to strengthen the representation of the public in the legislative body. Local media and scholars praised it as an attempt to formulate a systematic reform of the national political structure that would gradually provide for the direct election of Communist Party leaders. More than two years later, the draft had come to nothing definitive, Guo Zhongxiao wrote in his blogs. Becoming a world-class metropolis by 2020 should be the top priority for Shenzhen to keep leading the country, Guo Wanda said, but it depends on the local leaders' determination. "Shenzhen already has the best market system on the mainland and a big middle-class population," he said. "The government must improve its transparency and efficiency in urban management and services. We also must reform our legal system and improve democracy among the middle class to set up a true civil society in China. "Only by constantly trying new reforms in these fields can Shenzhen stay ahead of others."

China will build a research base on its east coast as it steps up its efforts to search for energy sources and rare mineral resources on the ocean floor, state media said.

Xi Jinping tipped to gain military post at plenum - New position would be big step to presidency - Vice-President Xi Jinping looks set to be promoted to a military position in the upcoming Communist Party plenum, in a significant step towards finalising the succession process for him to take over the nation's top leadership post. The fifth plenum of the party's 17th Central Committee, to be held in October, has been scheduled to approve the draft of the nation's 12th Five-Year Programme - the only item on the agenda according to the official announcement. However, the plenum will also confirm the long-anticipated promotion of Xi to become vice-chairman of the party's Central Military Commission, according to officials briefed on the matter. If confirmed, Xi will also automatically assume the same position in the government's CMC in the National People's Congress plenary session in March. Both are organs that oversee the People's Liberation Army. "The promotion has been decided," an official briefed on the development said. The confirmation will pave the way for Xi to succeed President Hu Jintao as chief of the ruling party in autumn 2012 and as president in the spring of 2013. Holding a military post was not a prerequisite for becoming head of the party and the state, but the promotion would help clarify uncertainty over leadership succession, analysts said. At the fourth plenum last year, Xi was widely rumoured to be anointed to the military position. However, when the plenum closed with no word of any personnel changes, speculation arose over possible factional infighting. Later on, there were suggestions in some overseas media that it was Xi's decision not to take the promotion then, saying he needed more time to learn. "If Xi rises through the ranks according to schedule, it could reduce worries about instability among the secretive inner circles of the Communist Party, which has no transparent mechanism for choosing its leaders," Zhang Ming , a political science professor at Renmin University, said. But Jin Zhong , editor of Hong Kong-based Open Magazine, which also reported Xi's upcoming promotion, said it remained unclear whether Xi could eventually take the real top position, despite the formal appointment as the deputy chief of the CMC. "In stark contrast, Xi's endorsement has much less legitimacy than that of Hu, who was appointed by the country's former paramount leader, Deng Xiaoping , as early as 1992, 10 years before Hu took the highest post." Xi was the dark horse who came from behind to beat Hu's top protege, Li Keqiang , in a high-profile succession competition in the 17th party congress in 2007. Li, party boss of the northeastern province of Liaoning , was also seen as a front runner to replace Hu in 2012. China experts often have to rely on past patterns in order to predict successions. Hu became vice-chairman of the CMC at a fourth plenum meeting in 1999, paving the way for him to take over from Jiang Zemin as party chief in 2002 and president in 2003. At the 17th party plenum in 2007, Xi was apparently hand-picked to be fifth in the top hierarchy and serve as Hu's deputy in the party and state. Unlike Jiang and Hu, who had no military background until they became top CMC officials, Xi has strong connections with the PLA. He served as personal secretary of Geng Biao, then defence minister for three years after his graduation from Tsinghua University in 1979 with a chemical engineering degree. The Shaanxi native - the son of former vice-premier Xi Zhongxun , who was a close ally of Deng - shot up from relative obscurity as a local official in Fujian and Zhejiang before he was made party leader in Shanghai in early 2007. The elder Xi died in 2002. Many attribute Xi's rise to the fact that he is one of the few people accepted by all factions in the top echelons of power. Xi belongs to the powerful princeling group, whose members include Chongqing party secretary Bo Xilai and Vice-Premier Wang Qishan . He is also connected to Jiang, leader of the powerful "Shanghai Gang". Xi has generally kept a low profile since being installed as one of the top national leaders. But he also has been known for his occasional outspokenness, something that would be a marked change in style if he did succeed Hu. While on a visit to Mexico in February last year, Xi hit out at overseas critics, telling a crowd of overseas Chinese that there were "a few foreigners with full bellies who have nothing better to do than try to point fingers at our country". "China does not export revolution, hunger, poverty, nor does China cause you any headaches. Just what else do you want?" he said.

China-made manned submersible reaches 3,759 meters beneath waves - Submersible "Jiaolong" catching a sample of deep sea's living beings during one dive in the South China Sea in July of 2010. A China-made manned submersible, dubbed "Jiaolong" and designed to dive to a depth of 7,000 meters, had successfully reached 3,759 meters beneath the waves during a manned test, the Ministry of Science and Technology and the State Oceanic Administration (SOA) of China announced Thursday. It made China the fifth country, following the United States, France, Russia and Japan, to have the technologies for a manned dive to more than 3,500 meters below sea level.

Taiwan writer Li Ao takes in Shanghai World Expo - Taiwan writer and cultural figurehead Li Ao, on his second return visit to the Chinese mainland, Friday called for "cross-Strait peace" at the Taiwan Pavilion at the Shanghai World Expo. Li launched a traditional Kong-Ming-Lantern inscribed with "cross-Strait peace," which sailed to the top of the pavilion as a symbol of his wish. "Why do I wish for cross-Strait peace? Because I think it's the key," said the 75-year-old man of letters. Li, a mainland-born author, scholar and critic, arrived in Shanghai Thursday. His goals were to visit the Shanghai Expo and to take his son, Li Kan, 18, to Peking University, where he has been admitted by the school of economics, he said. Li said the pavilions of China, Shanghai, Zhejiang, Spain, Italy and Saudi Arabia were on his list to visit at the Expo. At the China Pavilion, Li, pointing to his trademark red jacket, said the color was the same as the China Pavilion, bathed in red in tribute to the Forbidden City in Beijing. Li was born in 1935 in the northeastern Heilongjiang province and was brought up in Beijing till the age of 14. He left for Taiwan in 1949 when he was a high school student. In 2005, Li returned to the mainland for the first time. The 10-day "Chinese cultural trip" in 2005, which was arranged by Hong Kong-based Phoenix TV, was closely watched by media across the Taiwan Strait and abroad. Li said the China Pavilion made him thoroughly understand things "from ancient to modern times," and the understanding became "more concrete." He was impressed by the pavilion's 128-meter-long multimedia scroll painting, "Riverside Scene at Qingming Festival," a well-known artwork depicting life in an ancient Chinese city. "Taiwan also has a version of the painting, but it is extraordinary that I see today at the World Expo a spectacular animation," he said. Describing Chinese provincial pavilions as "gorgeous," he received a paper-cut gift from a girl at the Shanghai Pavilion. His son, Li Kan, showed great interest in the high-tech elements at the Expo Garden and said he wanted to make friends on the mainland. Li Kan became known to the mainland Internet users this month in a debate with outspoken Shanghai-based writer Han Han. Li's family will visit the Expo Garden at the weekend. Li is known for his profound knowledge of traditional Chinese culture. "Over the past six decades, I've rarely left Taiwan. The only trip outside Taiwan was the 2005 trip to the mainland. Now, this is my second trip back to the mainland," he said. A legendary figure in the eyes of many Chinese readers, Li is a prolific writer of criticism, an ardent supporter of Chinese unification, and an earnest scholar. He received a Nobel Prize nomination after the publication of his historical novel, "The Fayuan Temple of Beijing." His books are available in all major bookstores in Beijing.

China will boost its installed hydropower capacity by 90 percent to 380 million kW by 2020 in an effort to meet the nation's pledge at last year's Copenhagen climate conference to generate 15 percent of its power from non-fossil sources by the end of the decade, said a top energy official.

China's men march on but women's number one Wang loses - Lin Dan returns a shot against Bao Chunlai during the World Badminton Championships in Paris on Thursday. Lin went on to beat his old rival 21-16 21-13 and progress in his bid for a fourth world championship.

Beijing's demand for full probe delays Philippine envoys - A high-level delegation of Philippine officials remained in Manila yesterday instead of flying to Beijing, where the central government said it wanted a "thorough investigation" of Monday's bus hostage crisis. Philippine presidential spokesman Edwin Lacierda said the delegation, which had been scheduled to leave yesterday morning, was awaiting "confirmation" from China. Lacierda, Vice-President Jejomar Binay and Foreign Secretary Alberto Romulo were to visit Beijing and Hong Kong on the orders of Philippine President Benigno Aquino to present the results of an investigation into the crisis, which ended in the deaths of eight Hong Kong tourists. Anger and frustration has been mounting in Hong Kong and on the mainland, with many accusing the Philippine police of handling the crisis unprofessionally. The central government expressed its "shock" and demanded a "thorough investigation" by the Philippine government. On Wednesday, Aquino announced the delegation would personally deliver the results of his government's investigation. "In Beijing, they will personally deliver our messages to President Hu Jintao and also the foreign minister, and they will then proceed to Hong Kong to talk to the chief of the Special Administrative Region, Mr Donald Tsang [Yam-kuen], again to deliver our letters," Aquino said. Xinhua reported on Wednesday night that a high-level Philippine delegation was scheduled to leave yesterday morning for Beijing to meet Chinese officials. The delegation would proceed to Hong Kong today to meet Tsang and visit the families of the victims before returning to Manila on Sunday, the report said. But Ministry of Foreign Affairs spokeswoman Jiang Yu said at noon yesterday that the Chinese government believed the most important thing at the moment was to investigate the incident thoroughly. Jiang said the ministry had been keeping in close contact with the Philippine government and had stressed the Chinese government's position many times. "We believe what's most imperative is to get a clear investigation result of the incident as soon as possible," she said. Shi Yinhong , a professor of international relations at Renmin University, said Jiang's remarks could be interpreted as a reason for delaying the trip. "It is very clear that the public and the government in Hong Kong and Beijing are discontented with the handling of the crisis by the Philippine government. The Philippine side has apologised on various occasions, but it has yet to be accepted by the public," Shi said. "I believe both Hong Kong and Beijing think there are many technical factors and questions in this incident, and they are waiting for all the questions to be answered. "It's understandable and right for a government to delay a hasty trip and wait for the result of a thorough investigation."

Aug 28, 2010

Hong Kong*: The Philippine president vowed on Thursday that "someone will pay" for the bus hostage crisis that killed Hong Kong tourists as senators began grilling senior police officers.

Brunching out - Late-morning delicacies are now available in all manner of cuisines. Brunch may be a Western concept, but long, lazy weekend meals are a tradition across the globe. And while champagne brunches continue to steal the spotlight at high-end eateries, there's also been a surge of other finer trends in leisurely weekend meals, most notably the rise of ethnically themed brunches. Weekend brunches in Hong Kong have long been synonymous with free-flowing bubbly and extravagant buffets. Even today, restaurants are still trying to outdo each other in this category. The Peninsula hotel's fine-dining establishment, Gaddi's, for example, recently launched its first-ever champagne brunch - "Rose Sundays", featuring free-flowing Billecart-Salmon rose champagne. But when it comes to the new breed of regionally themed brunches, The Pawn is showing how it should be done. The weekend menu is a medley of British comfort food, from sloppy sausages and mash to golden-brown fish and chips, and from English crumpets with onion marmalade and black pudding to Sunday roasts. Since its launch last year, the weekend brunch has become popular among the expatriate crowd yearning for a taste of home. Italian restaurant Domani also launched a weekend brunch earlier this year with tiers of antipasti lining the buffet table. Rhys Adams, project and marketing manager of El Grande Holdings, says the same effort and quality of ingredients used in the a la carte menus go into the weekend antipasti buffet. Wan Chai tapas restaurant Uno Mas also jumped on the brunch bandwagon at the beginning of this year, opening another door for those wanting more than the regular menu of eggs and waffles. The weekend "long brunch" is a five-course tasting menu highlighting traditional breakfast and lunch dishes from executive chef David Izquierdo Jover's native Spain. Menu highlights include omelettes in Catalan style, stuffed with serrano ham from Segovia and the tosta choricera, an open-faced sandwich with chorizo and fried eggs. And instead of champagne, brunch at Uno Mas comes with the option of free-flow cava. More surprisingly, the past year has also seen the brunch tradition embraced by many non-Western restaurants. In February, Japanese restaurant Zuma launched a "Sake Saturdays" brunch series, offering free-flowing sake with their signature izakaya bites. Other restaurants, such as Gilbert Yeung's Busy Suzie and Unkai at the Sheraton Hong Kong, have followed suit with their own Japanese brunch menus showcasing robatayaki and teppanyaki delicacies, respectively. Those preferring the flavours of the subcontinent aren't being left out either: Indian restaurant Gaylord is now serving a weekend brunch. While Gaylord is predominately a Northern Indian restaurant, the brunch menu features a host of South Indian delicacies and popular snacks from the streets of Mumbai. A major highlight on the menu is the dosa - a crispy thin crepe made popular as a brunch-time item by the tiffin rooms in southern India. At Gaylord, the crepes are made according to a traditional recipe with fermented rice flour and lentil batter, and are served with coconut chutney and a hot lentil sambar. Whether it comes with limitless champagne or a buffet of ethnic delicacies, brunch is no longer a simple fusion of breakfast and lunch. It's an interesting meal in its own right - and something for all types of diners to hunger for.

Chief Executive Donald Tsang Yam-kuen leads a remembrance ceremony on Thursday with other senior officials at Golden Bauhinia Square for the eight Hong Kong tourists who were killed in Manila on Monday. Hong Kong observed a mournful silence on Thursday for eight tourists killed in a Manila bloodbath, after their bodies returned home amid mounting outrage against Philippine authorities. The territory held three minutes of silence with government work suspended and flags lowered to half-mast at a special ceremony overseen by Chief Executive Donald Tsang on the city’s harbour waterfront. Emotions are running high in Hong Kong over blunders by Philippine police in the chaotic climax to a day-long bus siege on Monday, when a disgraced former policeman held a group of Hong Kong tourists hostage for 12 hours. The bodies of the eight tourists killed at the end of the siege – including three members of one family – were on Wednesday night flown back to Hong Kong, with bagpipers playing Amazing Grace at a poignant airport ceremony.

Secretary for Security Ambrose Lee Siu-kwong said on Thursday that autopsies would be performed on all eight victims killed in a Manila bus hijacking.

Hong Kong’s exports surged 23.3 per cent year on year in July, official data showed Thursday, on the back of vibrant trade within Asia.

Call for heroes to get city's top medal for bravery - Some of those who were held hostage in Manila should be considered for Hong Kong's top honour for bravery, lawmakers and members of the public say. Those whose names have been suggested for the Gold Medal for Bravery include Ken Leung Kam-wing, who tried to stop the gunman as he opened fire, but was killed; tour guide Masa Tse Ting-chunn, who tried to stop the gunman getting onto the coach, and secretly called the travel company, but was later killed; and Tsang Yee-lai, who helped 12-year-old Jason Wong Ching-yat leave the bus by claiming, when she was allowed to leave it with her two children, that he was also her relative. The medal is awarded for acts of gallantry of the greatest possible heroism or of the most conspicuous courage in extreme danger. Paul Tse Wai-chun, the lawmaker representing the tourism industry, believes the trio should be presented with the medal. "They acted unselfishly, in that they did not care about themselves but only others, and kept calm throughout the event, so they should be honoured," he said. "And by giving out the medal, I hope that Hong Kong people will be encouraged to show the same spirit and act bravely when encountering similar circumstances." Lawmaker Albert Ho Chun-yan, chairman of the Democratic Party, cautiously agreed. "Yes, some of the victims should receive the awards. But then we do not have a detailed picture, such as who should be honoured, so far. We want to know more about the incident before making a decision." Lawmakers will hold a special meeting today to discuss the tragedy. "The whole incident is very sad: many Hong Kong people are shocked and touched," Ho said. People from various walks of life have demanded, using the internet, that the government offers some of the hostages the honour. "Masa Tse is a hero in our minds." Hong Lok wrote in a Facebook group. "You are a great man. You did not know Jin Zhong Zhao [a form of kung fu that allows a person to be struck without injury] but you still tried to protect the tourists. Even though you sat near the emergency door, you did not try to escape, but stayed with others until the last moment." Many people also wrote commending the courage of Leung and Tsang, in other Facebook groups, including one opened by the government to mourn the deaths. The top honour was last given to Wong Fuk-wing, 46, after he died saving orphans from the earthquake in Qinghai province in April. He is one of the few ordinary citizens since the handover to be accorded the honour, which is normally reserved for public servants who die on duty. Since the handover, 21 Hongkongers have been awarded the Gold Medal for Bravery, including doctor Joanna Tse Yuen-man, who died during the severe acute respiratory syndrome epidemic in 2003. The Constitutional and Mainland Affairs Bureau said that the honours committee would consider cases later. "We feel deeply sorry over the Manila tragedy," the bureau said. "Our first priority now is to look after the injured and the families of the victims, and to render every possible assistance to them. We have noted the suggestions from some members of the public on recognition of the bravery acts of individuals involved."

Andrew Li, at his last press conference at the Court of Final Appeal before stepping down, surprised many in August last year when he announced he was leaving. No bias in the judiciary, Andrew Li says - Without referring directly to Bokhary case, outgoing chief justice says courts are fair. Chief Justice Andrew Li Kwok-nang said yesterday he did not believe justice was administered with bias, as questions were still being asked about speculation that the niece of a top judge had received preferential treatment after she assaulted a police officer. Li, 61, was speaking at his last press conference at the Court of Final Appeal before stepping down from his post as the city's first top judge after the handover. He enters pre-retirement leave on Wednesday, the same day his successor, current Chief Judge of the High Court, Mr Justice Geoffrey Ma Tao-li, takes over as chief justice. Concerns were raised after a magistrate this month gave Amina Mariam Bokhary, niece of Court of Final Appeal judge Mr Justice Kemal Bokhary, a non-custodial term for her third conviction for assaulting a police officer. Magistrate Anthony Yuen Wai-ming placed her on probation for one year. When prosecutors requested he review the sentence, he refused. They are now appealing to a higher court. Speaking generally and not specifically in relation to Amina Bokhary, Li said yesterday: "I do not accept at all that justice is administered in Hong Kong with social bias or any bias. Judges are deeply conscious of the important responsibility resting on their shoulders to do justice according to law, to do justice without fear or favour, and that they must do justice fairly and impartially." He acknowledged concern about Bokhary's case, but said that because the secretary for justice had applied for a review at the Court of Appeal, it would be inappropriate for him to comment. Li announced he would step down ahead of the retirement age of 65 last August, surprising many in the legal community. He said he was leaving to achieve "orderly succession planning" and he believed it would be appropriate for the new chief justice to deal with the succession planning rather than an outgoing chief justice. Li, who has been credited with maintaining confidence in Hong Kong's judicial system since the handover, presided during the first years of the Basic Law and the Court of Final Appeal, which replaced the Privy Council as the court of final adjudication. In addition to the development of the judicial and legal system in Hong Kong, Li spoke yesterday about the situation on the mainland. He said the legal and judicial system there had seen "remarkable development" over the past 13 years. The judge, who has spoken out in support of increasing access to justice, reiterated the call. He said there needed to be an increase in legal aid, encouragement of pro bono services by the legal profession, the provision of the appropriate legal assistance to unrepresented litigants and the promotion of mediation. Attracting talent to courts at all levels was very important, he said, adding remarkable progress had been made on this front. Looking back on the cases he has tackled over his tenure, he said, the case of Ng Ka-ling, involving the issue of the right to abode, was the most interesting and challenging for him. "It was the most memorable case because it was the first case ever involving the Basic Law to reach the Court of Final Appeal." A lot of legal literature had been written about it since, he said. As he steps down and Ma fills his position, there is still no public indication of who will replace Ma as Chief Judge of the High Court. Li said the next chief judge would not be announced before next month.

Foreign domestic helpers, already set to be excluded from the city's minimum wage legislation, will have their salaries frozen this year, the government announced yesterday. The minimum wage for foreign domestic helpers will remain at HK$3,580 per month. The decision was made after a regular review, taking into consideration the city's economic and employment situation, a government spokesman said. A food allowance, which is paid to workers whose employers fail to provide them with free food, will increase by HK$10 to not less than HK$750 per month. The Mission for Migrant Workers, which assists foreign domestic helpers, said the announcement was "untimely", coming just two days after the hostage tragedy in Manila. An adjustment in the minimum allowable wage was usually announced in July, but the government had delayed its decision, the group's executive director, Cynthia Tellez, said. "It now comes at a controversial time ... Because of this tragic incident, people may put more meaning behind it." Announcements concerning the wages of domestic helpers were usually big news as they affected more than 200,000 workers, Tellez added, but news of the freeze had been drowned out amid the hostage incident. Despite a revival in the local economy, the minimum wage for domestic helpers remained lower than the 1998 level of HK$3,860, Asian Migrants' Co-ordinating Body spokeswoman Eni Lestari said. Most workers did not receive the food allowance and the HK$10 increase was nothing more than a gesture, she said. Employers of Overseas Domestic Helpers Association chairman Joseph Law welcomed the freeze, saying it was in line with statistics.

Leisure and corporate travellers returning to Asia after the financial crisis has boosted luxury hotelier Shangri-La Asia (SEHK: 0069)'s earnings and the good times are set to continue. Net profit before non-operating items climbed to US$71.1 million in the first six months of this year from US$12.9 million in the same period last year. The momentum continued in July and August and was likely to prevail in the rest of this year, executive director Gregory Dogan said yesterday. Shangri-La, which owns and runs a 68-strong portfolio of properties across the Asia-Pacific, saw its revenue per available room rebound 20 per cent in the first half, led by growth in Hong Kong, the mainland and Singapore. The group's executive director and chief financial officer, Madhu Rao, said revenue per available room of its flagships in Hong Kong - the Island Shangri-La hotel and the Kowloon Shangri-La hotel - had risen 53 per cent. "Their [revenue per available room] was close to the record level in 2007," Rao said. "This is a good year." Including non-operating items, net profit grew 11.13 per cent to US$74.75 million. Net credit of non-operating profit shrank to US$3.7 million from US$54.4 million previously after a US$32.7 million gain in revaluation of investment properties was offset by losses such as those in financial assets and interest rate swap contracts in the first half. Turnover jumped 35.46 per cent to US$722.85 million. The interim dividend was lifted 66.66 per cent to 10 HK cents per share. Earnings per share rose 11 per cent to 20.24 HK cents. Shangri-La shares fell 2 HK cents, or 0.11 per cent, to HK$16.74 yesterday before the results announcement. Shangri-La is part of the Kerry Group, which publishes the South China Morning Post (SEHK: 0583, announcements, news) through the SCMP Group. Meanwhile, Hongkong and Shanghai Hotels (SEHK: 0045), which owns and runs deluxe Peninsula hotels, said net profit rose 31 per cent to HK$605 million on turnover up 11 per cent to HK$2.17 billion. The interim dividend was raised 1 HK cent, or 33.33 per cent, to 4 HK cents per share. However, the group is cautious about the outlook of its hotels in Bangkok, the Philippines and the United States as a result of economic and political uncertainty. "When you look at the overall situation, one doesn't want to overpromise at this stage, because there are still issues which will be relevant to our business," chief executive Clement Kwok King-man said. Following the tragic siege in Manila in which eight Hong Kong tourists were killed, there had been a few cancellations with the Peninsula hotel in the city, Kwok said. But he said it was too early to assess the impact of the incident on the hotel. The company said it was seeking more expansion opportunities on the mainland. Its shares remained unchanged at HK$13.08 yesterday.

Wikileaks publishes CIA report on terrorism - WikiLeaks founder Julian Assange attends a seminar at the Swedish Trade Union Confederation headquarters in Stockholm: Whistle-blower website Wikileaks on Wednesday published a CIA report on U.S. terror recruits, warning the United States could be viewed as an "exporter of terrorism," potentially complicating the country's anti-terrorism efforts abroad. The "Red Cell" report was dated from Feb. 2, 2010. It looks at what will happen if it is internationally understood that the United States is an exporter of terrorism. The report said that American export of terrorism or terrorists is not a recent phenomenon, nor has it been associated only with Islamic radicals or people of Middle Eastern, African or South Asian ethnic origin. The report looks at a number of the cases of the U.S. exported terrorism, including attacks by U.S. based or financed Jewish, Muslim and Irish-nationalism terrorists, concluding that foreign perceptions of the United States as an "exporter of terrorism" together with the country's double standards in international law, may lead to noncooperation in renditions, and the decision to not share terrorism related intelligence. This latest classified memo didn't offer eye-popping revelation such as those provided by nearly 77,000 classified U.S. military documents related to the Afghanistan war, published by the website last month. It doesn't seem to expose any U.S. state secrets.

 China*: Industrial & Commercial Bank of China (ICBC) cited multiple challenges in the second half of the year after posting a record quarterly profit on new lending and improved margins.

Bank of China posted its slowest quarterly growth in a year as the benefit of last year's lending binge wanes, while lenders face new uncertainties as Beijing seeks to cool the economy.

China Unicom reported a 54 per cent fall in second-quarter profit on Thursday, but the figure beat expectations, as increasing 3G use helped to offset intensifying competition.

China said on Thursday it had used a small, manned submarine to plant the national flag deep beneath the South China Sea, despite territorial disputes.

China said on Thursday it hoped for wider use of its currency in trade with Southeast Asian nations. “We are looking at the possibility of trade settlement in yuan or (ASEAN countries’) own currencies” within the framework of a free trade deal that took effect this year, said Minister of Commerce Chen Deming. “We hope to settle trade with ASEAN countries in [their] own currencies or in yuan if everybody is willing to do so,” he said on the sidelines of annual talks with his counterparts from the 10-member Association of Southeast Asian Nations (ASEAN). Analysts say Beijing is stepping up efforts to increase overseas use of the yuan as the nation seeks to reduce its exposure to the US dollar and allow its currency to take on a greater global role. In the past two years, China has signed currency swap arrangements with several nations and launched trials for yuan trade settlement with a number of mainly Southeast Asian countries. “We will organise a seminar specialising in the study of this issue at an appropriate time,” Chen said. “It will facilitate our co-operation on regional currencies.” Despite the global success of China’s exporters, the yuan plays only a minor international role because of restrictions on exchanging it for other currencies. Official controls make it difficult to move the yuan in and out of China. The ASEAN-China Free Trade Area, which took effect earlier this year, is the world’s biggest by population, with a market of 1.7 billion consumers.

Zheng Shaodong , formerly the mainland's top economic crime-buster, was given a suspended death sentence yesterday for accepting bribes and abusing his authority, Xinhua reported.

Women train to become faces of Asian Games in China - Women selected as Miss Etiquette of the 16th Asian Games, to be held in Guangzhou, receive training at the Shunde campus of Southern Medical University in Guangzhou, South China's Guangdong province, Aug 20, 2010. About 550 women, aged 17 to 25 and between 168 and 175 centimeters tall, have been receiving training since July 22, which includes body balancing, smiling, gesturing, music appreciation, basic English, ballet form and fundamentals in medal-award ceremonies. After 40 days of training, 380 of them will serve at the 476 medal-award ceremonies during the Asian Games.

Aug 27, 2010

Hong Kong*: Anger over hostage deaths spreads to Aquino's Facebook - President Benigno Aquino called for calm on wednesday after his profile on Facebook was swamped with angry comments criticising the Philippine's handling of the hostage tragedy.

Flags fly low over Hong Kong in mourning for lives cut short in Philippines - The pall of grief over Hong Kong was palpable yesterday, with flags flying at half mast, company nameplates and logos draped in black, the Hong Kong stock exchange struck silent for its opening minute, and even the Symphony of Lights cancelled. Many public services, such as television stations, newspapers and online websites and forums, turned their logos or mastheads to black, and tens of thousands of messages appeared on condolence pages set up on social networking sites. President Hu Jintao and Premier Wen Jiabao expressed their condolences in a joint letter to Chief Executive Donald Tsang Yam-kuen. Flags at all government offices will continue to be flown at half mast today and tomorrow. The operator of the ill-fated tour, Hong Thai Travel, opened a message board on its website for 31-year-old tour guide Masa Tse Ting-chunn, killed in Monday's tragedy. More than 4,000 messages wishing him peace were posted. One read: "You are a hero that should be admired. It is because you were the first and foremost to make a phone call to your company in HK, and let us know that you and the HK tourists were in danger in Manila. RIP!" Many users of the social networking site Facebook started or joined pages, some of which lambasted the Philippine police. The government set up a page - facebook.com/hkmourning.manila - dedicated to the victims in the afternoon and by 10pm it had more than 40,000 members. The Home Affairs Department provided condolence books in each of the 18 districts for the public to express their grief. Philippine consular officials expressed concern for the city's Filipinos. The United Filipinos in Hong Kong issued a statement on behalf of domestic helpers in the city saying: "This act of hostage-taking ... must be condemned." The Catholic diocese and the Philippine consulate arranged prayer vigils for today and Sunday. All are open to the public. Executive Council convenor Leung Chun-ying issued a statement demanding a full accounting by the Philippine government. It ended with: "The concern and care shown by the whole community for the Hong Kong tourists held hostage and the solidarity of Hong Kong people are reassuring." Tsang laid a bouquet of flowers at the Leighton Hill Community Centre in the evening in memory of the victims. Government officials were advised against attending unnecessary public events, and some senior officials cancelled overseas trips. Secretary for Commerce and Economic Development Rita Lau Ng Wai-lan cut short an official visit to Europe and returned to the city. Chief Secretary Henry Tang Ying-yen cancelled a visit to Italy and Switzerland that was to take place from today till Sunday.

A Hong Kong couple – released by the gunman before Monday’s hostage siege in Manila turned violent – said they were haunted by the deaths of their fellow travellers.

Hong Kong’s Filipino community, which includes legions of vulnerable household helpers, on Wednesday voiced fears of retribution following the bloody end to a hostage drama in Manila.

The bodies of eight victims of Monday's hostage seige in Manila - along with most of the survivors - were expected to return to Hong Kong on Wednesday night.

Alibaba makes second US acquisition - Chief Executive Officer of Alibaba.com David Wei at the company's Hong Kong's office in Wan Chai. China's largest e-commerce company, Alibaba.com (SEHK: 1688), made its second US acquisition in as many months and its chief executive said on Tuesday he was working on more deals to fuel global growth. The Chinese company said it has entered into an agreement to buy Auctiva, which provides listing and marketing tools to vendors on e-commerce websites like eBay. Alibaba, a fast-growing Web operator founded by outspoken former schoolteacher Jack Ma, is building up its AliExpress wholesale transaction platform aimed at small merchants. Chief Executive David Wei said he is keen on more acquisitions to add technology or already-proven commercial applications to Alibaba’s lineup. “There are a number of deals in the pipeline both domestically in China and outside China,” he told reporters during a visit to San Francisco. Alibaba said buying Auctiva would help it reach US businesses and connect them with suppliers outside of the country. “If we can get it right in the US – because it’s internet savvy, e-commerce savvy – we may get a chance to win in other countries,” Wei said. Wei said buying Auctiva would help Alibaba target the more than 90 per cent of US online merchants who continue to source their products offline. The acquisition, which closed on August 18, is part of a US$100 million investment plan for AliExpress that Alibaba announced in April. Auctiva will operate as a new business unit and will retain its own brand and operations. In June, Alibaba bought Vendio Services in its first major US acquisition to further its strategy of expanding its global footprint. Alibaba, which this month reported its strongest quarterly profit in two years, said that the combination of both the Auctiva and Vendio acquisitions brings more than 250,000 new customers to Alibaba.com and related platforms, such as aliexpress.com. Web commerce is on the upswing in China, as buyers look for better deals in the nation’s fragmented distribution network. Alibaba should hit 1 million paying members this year, up from about 713,000 in the second quarter, Wei said. The e-commerce company is the listed unit of Alibaba Group, in which Yahoo holds a nearly 40 per cent stake.

Orphaned after playing dead - Fifteen-year-old Tracey Wong Cheuk- yiu survived the Manila tour-bus massacre by playing dead on the floor as the crazed gunman opened up. Last night she was recovering with minor foot injuries - but her parents and aunt were slain. Wong told reporters from her hospital bed: "I hid under a chair. Police threw in tear gas and many people could hardly breath." She learned later in the day that her father Wong Tze-lam, 51, and mother Yeung  Yee-wa, 44, along with aunt Yeung Yee-kam, 46, were killed. Her brother Jason Wong Ching-nat, 12, was among those released by the gunman before the carnage started. Wong worked as an operation station officer with the MTR for more than 20 years. The company will pay his family a death gratuity equivalent to 52 months' salary. The Wong tragedy unfolded as other heartbreaking stories emerged from the bloodshed. Yik Siu-ling, 32, is in serious condition in Philippines General Hospital after she was shot in the lower jaw and lost two fingers. She apparently used her hand to shield her face when struck by the bullet. Yik's husband, Joe Chan Kwok- chu, 46, has gunshot wounds to the stomach and head. He is in stable condition. Fu Cheuk-yan, 30, was killed, but his 40-year-old wife Tsang Yee-lai was released with her two children on Monday afternoon. Tsang is a nurse at the Kowloon Hospital, which has promised her every help. Lo Kam Fun, 66, and her daughter Lee Ying Chuen, 33, were both slightly injured during the siege. Tour leader Masa Tse Ting-chunn, 31, was killed about one hour after he was handcuffed by the gunman to the exit of the coach. Tse had alerted Hong Thai in Hong Kong of the hijacking using his cell phone. The gunman later used Tse to shield him during negotiations with police. Tse, who is single, joined Hong Tai as a part-time tour leader five years ago. More than 4,000 people went online to pay him tribute. A netizen named Shantal wrote: "You're the hero of Hong Kong. We're proud of you." The Hong Kong Travel Industry (Outbound) Tour Escort and Tour Guide Union issued a statement saying: "He was a professional escort assisting tourists till the last moment in the tragic event."

Rents to rise as buyers wait on price drop - Government measures to cool housing market expected to spark demand for leasing. Midland Realty's Buggle Lau says a growing number of potential home buyers "is waiting on the sidelines and turning to lease instead of buying". Residential rents are expected to rise because of the government's measures to cool the housing market. This is because people planning to buy homes, anticipating a fall in residential prices, will postpone buying and continue to rent. And those owning rental properties are likely to keep them empty in case they need to sell before prices drop too much, constricting supply. Property consultants predict residential rents, which have already risen 8.6 per cent this year, could increase a further 10 per cent by the end of the year. The forecast comes as Census and Statistics Department figures show private residential rents edged up 1 per cent in July from June to an 11-month high. "A growing number of potential home buyers is waiting on the sidelines and turning to lease instead of buying property. It will drive up leasing demand," said Buggle Lau Ka-fai, Midland Realty's chief analyst. After the government announced a string of measures to crack down on property speculation, transaction volumes in the secondary market dropped 27 per cent last week from the week before. The cooling measures announced on August 13 include releasing more land for auction to increase supply and a directive to banks to cut loans to luxury home buyers from 70 per cent of a property's value to 60 per cent. On the supply side, availability of fewer flats for leasing could push up rents. Property investors, who have chosen not to sell their flats amid a sluggish market, prefer to leave them vacant rather than leasing, Lau said. "This is because the holding cost is too low and it will be easier to sell without a lease [if prices are anticipated to fall further]," he said. Given low interest rates, mortgage plans based on Hong Kong interbank offered rate (Hibor) are usually one-month Hibor plus 0.7 percentage point. That translates into an effective home loan rate as low as 0.85 per cent, based on the one-month Hibor of 0.15 per cent yesterday. Going by lease transactions in 73 estates handled by Centaline Property Agency, average rental rose 22.1 per cent to HK$17.70 per square foot per month in July year on year. Cecilia Cheung, an executive in an information technology company, has put plans to buy a home on the back burner and is waiting for the market to clear up first. She renewed her lease this month. Since 2006, the rent for her 675 sqft flat in Taikoo Shing has risen 20 per cent, from HK$13,500 a month to HK$16,200. "This is my second renewal. My landlord originally wanted to raise it to HK$17,000; I rejected it." Cheung convinced her landlord to renew the lease at the same rate of HK$16,200. She said her previous lease had been signed a month before the outbreak of the global financial crisis in September 2008. Average rent for similar flats in Taikoo Shing had dropped to HK$14,000 a month during the period. "For the past two years, the landlord knows I have been paying above market rate," she said, explaining why the landlord might have agreed to keep the old rent level. Oliver Watt, a real-estate industry insider, said rising rents have forced him and his wife to move out of Happy Valley. His family had been renting a 750 sqft flat with a rooftop there for HK$25,000 a month, and he was expecting the landlord to increase the rent by 20 to 30 per cent when the lease came up for renewal. "As we will have a baby soon, we are watching our expenses. So we are going to sacrifice the location if we want to stay on Hong Kong Island," he said. A month ago, he rented a 1,000 sqft flat in a 40-year-old building on Stubbs Road for about HK$20,000 a month. "Although the location is less convenient, it is a good deal as we got more space at a lower rent."

 China*: About 450 people were arrested in Taiwan and China on Wednesday in the largest joint anti-fraud operation launched by the two sides, the police in Taipei said.

Foreign lenders keen on yuan bonds - Citigroup, CIMB Group Holdings, HSBC upbeat on investment mandate - Citigroup Inc, HSBC Holdings Plc, Standard Chartered Plc and CIMB Group Holdings Bhd plan to apply to invest in yuan bonds following the People's Bank of China (PBOC) decision to open up its interbank debt market. Andrew Au, the Shanghai-based chief executive officer of Citigroup's Chinese unit, said the bank is working on the documents required for units outside China to invest in the market. John Thang, Standard Chartered's head of financial market sales in Northeast Asia, said the bank's Hong Kong branch will submit an application "soon." HSBC is studying application procedures, it said in an e-mail. Lee Kok Kwan, deputy chief executive at Kuala Lumpur-based CIMB, Malaysia's second-largest banking group, said his company intends to apply. The Hong Kong Monetary Authority (HKMA) said it is investigating details of the program. Overseas demand for the yuan has grown since China ended the yuan's two-year dollar peg on June 19, giving scope for appreciation in the currency of a nation that surpassed Japan as the world's second-largest economy last quarter. The PBOC said on Aug 17 it would let overseas financial institutions invest yuan holdings in the nation's interbank bond market to promote greater use of the yuan in global trade and finance. "There will be a level of interest on the part of central banks and foreign participants," Au said. "China is already the world's second-largest economy based on government data in the second quarter. It would be logical for a lot of international players to be interested." The PBOC didn't reply to a fax from Bloomberg seeking more details on the licensing procedures and the banks who have submitted applications. China approved use of the yuan to settle cross-border trade with Hong Kong in June 2009, part of a drive to reduce reliance on the US dollar. Lack of investments - The popularity of that program was limited by the lack of investments available in the currency. Trade settlement using the yuan more than doubled to 48.7 billion yuan ($7.2 billion) in the second quarter from the previous three months, bringing the total amount in the past year to 70.6 billion yuan, the PBOC said on Aug 5. Au said the amount of settlements using the yuan will expand after China provides overseas investors with more channels to invest in yuan funds. He said he "wouldn't be surprised" if the yuan became one of the three major currencies in the global monetary system. Yuan deposits in Hong Kong climbed 4.8 percent in June to a record 89.7 billion yuan, according to data released by the HKMA on July 30. "The HKMA welcomes the scheme that allows central banks and monetary authorities to invest in the mainland's interbank market and we are following up with the PBOC on the scheme details," the HKMA said in an e-mail to Bloomberg on Aug 20. Bank Negara Malaysia, which in 2009 won a QFII, or qualified foreign institutional investor license to invest in Chinese stocks and bonds, declined to comment on whether it intends to apply to invest in yuan bonds. Enhanced potential - Citigroup and Credit Agricole CIB said on Aug 18 that China opening up its bond market to foreign banks would enhance the currency's potential as a foreign-exchange reserve asset. Overseas banks and central banks must first apply for investment quotas on the interbank market, the PBOC said on Aug 17. Foreign institutions should also disclose funding sources and investing plans, it said.

National cable TV network soon - China on Tuesday said it intends to consolidate radio and television networks under a single national cable television network company. The State Administration of Radio, Film and Television (SARFT) said the new company will come up by the end of the year and will further expand into new businesses like mobile TV and online videos. "The nation's radio and television networks need to be consolidated under one roof as currently they are individually run and have not developed into large-scale entities," said Tao Shiming, director of the SARFT's society administration bureau. At present, there are 1,000 radio and television networks in China, and are run by different operators at varied administrative levels. The absence of a nationwide and unified network comes in the way of their plan to compete with others for the opportunities that arise from the convergence of technologies, said industry experts. Tao said the consolidation exercise is likely to start at the provincial level by the end of this year and culminate in nationwide consolidation later. "All networks in the nation are likely to be integrated in three years," said Zeng Huiming, deputy secretary-general of the cable TV committee of the China Radio and Television Association. Earlier reports said the new consolidated company will have a start-up investment of around 80 billion yuan ($11.8 billion), with contributions coming from both the government and broadcast and television companies. Zeng said the investment modalities and consolidation plans are still being discussed by the SARFT. Though the SARFT insists that the move would create huge opportunities for the networks, analysts said that it would not be an easy task to achieve. Xiang Ligang, a leading telecom expert, said he was not sure of what the returns would be from the whole exercise. "It's hard to earn profits if the new company offers lower prices. But at the same time it is also hard to win more users if it charges high fees," said Xiang, adding that the three telecom operators, which have invested over 2 trillion yuan on telecom networks, will still have an advantage in the market. The government last month launched a pilot project in 12 cities to test the convergence of the three networks. The trials are expected to last till 2012 and will focus on connecting the broadcasting and telecom networks.

Ping An Insurance (2318) said net profit in the first half rose 27.9 percent to 9.87 billion yuan (HK$11.29 billion), beating analysts forecasts, thanks to rapid growth in all businesses. An interim dividend of 15 fen per share was declared. The insurance giant did not disclose details of its progress on the merger of its banking unit - Ping An Bank - with Shenzhen Development Bank as a step toward becoming a financial conglomerate. But it said SDB already started contributing profit during the first half. "In the future, we will pursue the restructuring and integration of SDB and our banking unit," chairman Peter Ma Mingzhe said. The mainland's second-largest insurer held 29.99 percent of SDB as at June 30. Shares of Ping An and SDB have been suspended from trading since June 30. SDB posted a 31 percent year-on-year rise on first-half net income to 3 billion yuan, the lender said yesterday. Ping An Bank's first-half net profit surged 56 percent year-on-year to 900 million yuan. The banking sector contributed 1.104 billion yuan, or 11.19 percent, to its net profit. For the first six months, Ping An's written premiums from individual life insurance and property and casualty insurance soared 52.1 percent and 61.1 percent, respectively, year- on-year. Life insurance and P&C insurance accounted for 66.4 percent and 11 percent, respectively, of the total earnings, remaining its major source for the year. Net investment income rose 44.3 percent to nearly 12.62 billion yuan in the first half, as interest income from fixed maturity investments and dividend income from equity investments both rose. Net investment yield rose to 4.1 percent compared with last year's 3.7 percent. Responding to a volatile economic environment in the first half, Ping An raised the fixed maturity investments of its portfolio to 79.3 percent from 76 percent six months back, while the equity portion was trimmed to 8.1 percent from 10.8 percent.

Safety concerns over Heilongjiang air crash runway - A firefighter searches for victims near a burning passenger jet after it crashed in Yichun in Heilongjiang province on Wednesday. The Henan Airlines passenger jet crashed and burned while trying to land at night on a fog-shrouded runway, killing 42 people. At least one airline had questioned the safety of night time landings at the relatively new airport in Heilongjiang province where a passenger jet crashed and burned while trying to land at night on a fog-shrouded runway, killing 42 people and injuring 54. The Henan Airlines plane crashed late on Tuesday in a grassy area near the Lindu airport in the city of Yichun. Survivors among the 96 passengers and crew described scenes of horror, with luggage falling and escape through flames and broken holes in the fuselage. It was China’s first major commercial air disaster in nearly six years. The plane’s two black boxes were recovered on Wednesday, the official Xinhua News Agency reported, but it is still not known what caused the accident. Vice Prime Minister Zhang Dejiang arrived on Wednesday at the crash site to help set up an investigation team. State television reported that a preliminary investigation found that the airplane did not catch fire or explode in the air and that there were no signs of sabotage. The newly built airport in Yichun sits in a forested valley and has been in operation for one year. China Southern Airlines decided last August to avoid night flights in and out of Yichun, switching its daily flight from Harbin to the daytime. A technical notice cited concerns about the terrain surrounding the airport, runway lighting, and wind and weather conditions.

Cosco Pacific expects port throughput to keep growing - Cosco Pacific (SEHK: 1199), one of the world's major port operators, is confident of achieving double-digit growth in throughput this year despite an expected slowdown over the coming months. The Hong Kong-based company said first-half net profit rose 82 per cent to US$190 million on an exceptional gain from selling its logistics division to its parent and on robust demand for container boxes. Stripping out the US$84.7 million one-off gain from selling Cosco Logistics, underlying net profit amounted to US$105.2 million - up 20.3 per cent from a year earlier. Global container port volumes could rise 12 per cent this year, with growth led by the mainland, the shipping data provider Alphaliner, reported. "Container operations rebounded in the first half as trade recovered," said Francis Lun, general manager at Fulbright Securities in Hong Kong. "Europe and US demand is showing some uncertainty and that may slow growth at ports in the second half." Earnings from the terminal division were undermined by the newly acquired Piraeus port in Greece and delays in dividend payouts from Yantian port. Net profit from terminals dropped 11.4 per cent to US$39.6 million, despite total throughput at the 20 ports partially owned by the company increasing 18.7 per cent year on year. "We believe that Piraeus container terminal could turn around not later than the first half of next year," Xu Minjie, the vice-chairman and managing director of the port operator, said yesterday. The management maintained its forecast of full-year throughput growth of more than 10 per cent between the 20 ports. "The fourth quarter will not be as good as the first three quarters, but we are still confident of the throughput growth for the full year," Xu said. High labour costs were largely behind the US$10.7 million loss at Piraeus, said Ken Chan, Cosco's deputy managing director. After June's dismissal of more than 400 dock workers, who earned several times the salary of Chinese workers, Chan said that the company had hired 216 new workers, resulting in a substantial reduction in labour costs. Piraeus, which used to be a vital transshipment port for Europe, saw its throughput plunge more than 50 per cent from 2007 when it handled 1.6 million 20-foot equivalent units (teu). Years of strikes at the port have driven away shipping lines. Chan said Cosco Pacific was in talks with Maersk Line and Mediterranean Shipping to resume their services to Piraeus. Cosco Container Lines, the sister company of Cosco Pacific, and the shipping company members of CKYH Alliance, including K Line, Yang Ming and Hanjin Shipping, had started to increase their calls to the port, Chan said. He said the port could handle 420,000 teu in the second half, up from 380,000 teu in the first half. The container-leasing division reported a 30 per cent increase in net profit in the half to US$48 million.

A model demonstrates the skill of spitting fire during a body painting competition in Dalian, Northeast China's Liaoning province, Aug 25, 2010.

Aug 26, 2010

Hong Kong*: Villagers given three weeks to quit their homes on site for public flats - Tuen Mun villagers who have been refusing to quit their homes to make way for public flats have been told they have three weeks to leave and demolish all structures on the site. In a notice issued to the remaining occupiers of Tsz Tin Tsuen, the government said it would move in on September 9 to end a six-month standoff delaying construction of 5,000 flats. But villagers said they would not go until the government responded to demands for more compensation and resettlement. The government failed to retake the site on August 3, the previous deadline, when villagers clashed with lands and housing department staff. A government spokesman said it was not possible to increase the compensation or defer clearance as the project was already behind schedule. "The government has so far only taken action to repossess vacant premises where the occupiers have agreed to move out," the spokesman said. "However, for the timely production of about 5,000 public rental housing flats by 2016, there can be no more delay." The site had reverted to the government under the resumption ordinance on July 17 last year. Of 69 former landowners, 37 agreed in 2007 to a government plan to buy their land for HK$474 per sq ft. The remaining 32 are asking for HK$606. Some tenants - who did not qualify for compensation because they had never owned the land - are also refusing to move out. Rehousing allowances have also been offered to 49 eligible households and six business owners. A government official said the compensation bill would reach about HK$200 million, of which HK$80 million had already been paid. Another official said the structures were supposed to have been demolished in March. Tuen Mun district councillor Josephine Chan Shu-ying said the government had not given clear information to villagers about resettlement, while some eligible tenants had not been offered interim flats. "There are just about two weeks before the deadline and I wonder if it can get everything done in such a short period of time." She said the villagers were still dissatisfied with the government's arrangements and she would meet them later this week. Wong Yiu-wah, 38, who has lived his entire life in the village, said he would refuse to leave even if the government tried to force them out. He said his father, who owned the land, got HK$1.4 million in compensation for their 3,000 sq ft site, but his and his brother's families, who also lived on the site, could not get a relocation payment. "The compensation is not enough to relocate all our three households," he said.

Development urged for green border zone - Think tank calls for new malls, hospitals - Leave large parts of the former border security zone a verdant wildlife haven? What a waste. That's the message from a think tank which wants to concrete them over for anything from malls for cheap goods to exhibition venues to hospitals and university campuses. One-fourth of the 2,400-hectare border area to be opened up should be used to develop commerce and industries, said Cheung Chi-kong, executive director of the One Country Two Systems Research Institute, which announced the results of a study yesterday. Use of the area could range from private hospitals and outlet malls to conference and exhibition venues and university campuses, catering to mainland as well as local residents, said Joe Fang Zhou, the institute's assistant chief research officer. "The released border area can be as thriving a place as Causeway Bay if mainlanders can come to seek medical treatment or meet business partners," he said. "If they can enter the area with a landing visa, it will further stimulate development," Fang said. Such a visa would allow mainlanders to get an entry permit on the spot from the Hong Kong Immigration Department. It would allow visitors to stay in the released border zone - but not urban Hong Kong - for up to seven days at a time. Guangdong province's population of 90 million is big enough to create demand for the services in the area, Fang said. New service industries would bring job opportunities for residents of the nearby towns of Tin Shui Wai and Yuen Long. However, the institute's land use suggestion runs against the Planning Department's idea of preserving more than half the border area as a green buffer between Hong Kong and Shenzhen. The new proposal would turn a large green belt in the middle of the border zone, including the ecological wetlands at Hoo Hok Wai, into built-up areas. But Cheung said: "We are not giving up country parks. Now everyone says Hong Kong needs land for housing, for offices or even university student accommodation. The area would help solve the bottleneck." The newly developed area, together with the Futian business district in Shenzhen and the three new towns south of the border area, would stimulate land values in this remote part of Hong Kong, he said. The Planning Department has proposed a conservation-led development for the 2,400-hectare border area to be opened next year. It has zoned only 11 hectares for low-rise residential development and 40 hectares for developments surrounding the border crossings at Man Kam To and Lok Ma Chau. More than half - or 1,484 hectares of land - would be preserved as a green belt, country parks or conservation zones. The border area, closed to the public since 1950, is estimated to see a rise in population from 3,000 to 30,000 upon completion of development. Only 400 hectares of land would remain closed. The department says it has not yet received the institute's proposal.

Being taken hostage is only the second-worst experience in the Philippines - The worst is to be the object of a Govn't rescue. Perfect storm of bad co-ordination, tactical ineptitude - Monday night's massacre seemed to show that for a visitor to the Philippines, being taken hostage is only the second-worst experience. The worst is to be the object of a government rescue attempt. The botched and bloody police operation left many Filipinos seething and wondering whether the country's "elite" police units deserve the designation. Millions of people here and around the world saw a SWAT team take more than an hour opening the doors of a bullet-riddled bus full of tourists and a heavily armed hijacker. At one point, a policeman tried smashing the door with a sledgehammer only for the hammer to slip out of his hands. Speaking shortly after the operation, President Benigno Aquino expressed dissatisfaction. His interior secretary, Jesse Robredo, said: "We could have done better." The country's record in rescue operations is spotty. In 1989 in the southern city of Davao, troops stormed a prison whose inmates had seized five visiting foreign missionaries. The assault killed all the hostage takers and their hostages. In 2002, an operation to free three hostages held by the terrorist group Abu Sayyaf resulted in the death of two of the hostages and the escape of their captors. On Monday evening, the heavy downpour in Manila seemed redundant in what turned out to be a perfect storm of bad co-ordination, poor control and tactical ineptitude. Despite deciding on a policy that Robredo called "low-key engagement", and after spending most of the day assuring the public the safety of the hostages was paramount, officers let the situation suddenly deteriorate. Authorities waited more than eight hours, sacrificing daylight, before mounting a rescue attempt in the darkness of a rainy night. The decision to attack may have been made hastily, but the actual operation was conducted in excruciating slow motion. Although one report said the SWAT team had practised assaulting an identical bus hours before, when it came to breaching the actual vehicle the policemen were unable to get inside for a painfully long time. According to Metro Manila police chief Leocadio Santiago Jnr: "We only had a sledgehammer and what we weren't expecting was the durability of the windows." While the rescuers blundered about, the hostage-taker intermittently sprayed bullets from inside the bus. Crowd control completely broke down, allowing civilians to pour in behind the police. People milled around the bus during the rescue attempt, impeding medical workers and possibly destroying evidence. There was no co-ordination with media, who were allowed to interview the hijacker's relatives and to position cameras and crew where they could. Reporters and camera crew accompanied the SWAT team so closely that at one point, furious policemen positioned on the back of the bus yelled at one cameraman who had trained lights on them. Authorities did not brief the press or lay down guidelines. The hijacker, cashiered police officer Rolando Mendoza, was watching the news on a television inside the bus and became incensed when he saw his brother seemingly being maltreated by police. He opened fire on the hostages, prompting authorities to hastily mount a rescue attempt. Mayor Alfredo Lim, a former Manila police chief, said he had ordered law enforcers to cordon off the place and prevent the media from doing interviews. He claimed the negotiations were being conducted by officers trained by the FBI and Scotland Yard. But congressman Rodolfo Biazon, a former commander of the armed forces, said there had been no ground commander in charge of the negotiations. "There were too many people meddling," he said. A senior national police official who asked not to be named said the country's elite police were "properly trained" and "properly selected", explaining the members were instructed by people who themselves received training in the United States. The problem was "lack of additional equipment", he said. "We need more resources, equipment." The policemen who made the assault on the bus used tear gas but had no gas masks. One media report alleged that the masks were available but had no breathing filters. Authorities have promised a full investigation into the debacle. "We are studying the shortcomings and drawing up recommendations," secretary Robredo said. "We need to review the protocol, not just for the police, but also for the media." In the meantime, the stock of the national police, never high at the best of times, is possibly at an all-time low. Public outrage and indignation has found virulent expression online. One remark going around says that "SWAT" actually stands for "Sayang Wala Akong Training" (A pity I don't have any training).

Hong Kong politicians on Tuesday afternoon protested outside the Philippine consulate in Admiralty to express their disgust over the handling of Monday's hostage crisis in Manila.

Fury in HK over Manila bloodbath - The Philippines faced fury in Hong Kong on Tuesday as the territory plunged into mourning for eight tourists shot down in Manila, with flags flying at half-mast and share traders holding a minute's silence. Chief Executive Donald Tsang Yam-kuen told reporters he was very upset about the tragedy. He offered his condolences to the families of those who died. Tsang pledged to provide every assistance. “Our priority now is to look after the injured and the families of the dead people. "A charter flight carrying 14 people from six families, more than 30 government officers from government departments, the tourism sector and about 30 journalists from Hong Kong have gone to Manila,'' he said. “Our team, which is comprised of officers from the Social Welfare Department, the Immigration Department, Hong Kong police and the Hospital Authority has been separated into six groups." He said each group would look after an individual family. “For people who are injured and those who died, we hope to fly them back to Hong Kong as soon as possible. “For other Hong Kong citizens still in the Philippines, I hope they can come back to Hong Kong as soon as possible with the charter flight,” Tsang said solemnly. The chief executive also urged the Philippine government to provide a full report of what happened. “I have called Chinese Foreign Minister Yang Jiechi and I know the Ministry of Foreign Affairs sent officers to Manila on Tuesday to find out the truth behind the incident. “We have to find out the truth, but we will to wait for the Philippine government to give us a comprehensive report,” Tsang said. “The way it was handled – particularly the outcome – was very disappointing,” he added. Hong Thai travel agency manager Susanna Lau confirmed on Tuesday that four men and four women, aged between 14 and 57, had been killed. They are: Hong Kong tour guide Masa Tse Ting-Chunn, 31; tourists Doris Leung Chung-see, 21; Jessie Leung Song-yi, 14; Ken Leung Kam-wing, 58; Fu Cheuk-yan, 39; Yeung Yee-wa, 44; Yeung Yee-kam, 46; and Wong Tze-lam, 51. AIU Insurance Company senior vice-president Wong Fu-tat said because it was a special case, they had doubled the amount of compensation that would be paid from travel insurance polices. Adult victims, who purchased travel insurance through the company, could receive higher compensation – up to HK$1 million. “We have sent four staffers along with the staff from the Hong Thai travel agency to provide assistance,” Wong told local media. Hong Thai travel agency's Lau said all the victims’family members would get HK$300,000 in compensation. The company would also provide an extra HK$200,000 in emergency funds for all family members of victims, she said. One survivor of the siege said her husband and two daughters were killed in a hail of bullets. The survivor, whose son was in intensive care, identified herself as Mrs Leung, told Hong Kong officials flown to the Manila hospital “The Philippine government... I can’t accept this. Why did they do this to us?”she said in a report on Cable News TV. “[The gunman] did not want to kill us. He only shot us after the negotiations failed,” she said, sobbing. The Hong Kong government has raised a ‘black alert’ for those planning to visit the Philippines. Tour groups said they were cancelling all organised visits. The government has organised two chartered flights by Hong Kong’s flag carrier Cathay Pacific (SEHK: 0293) to take relatives of the hostages, as well as psychologists, doctors and social workers, to Manila. Lurid photographs of the bloodbath dominated the front pages of the Hong Kong press, with some newspapers changing their mast-head colour from red to black. Editorials queried the response of Philippine authorities. Newspapers bemoaned missed opportunities to end the siege much earlier, including when the gunman – a disgraced former senior police inspector – had waved from the bus door. “A large group of police failed to get into the bus after surrounding the vehicle for nearly half an hour,” the Hong Kong Economic Journal said. “Their appalling professional standards, and the lack of strategic planning, made observers both angry and sad. This tragedy could have been avoided,” it said. Also noting the length of time it took Manila police commandos to intervene, Apple Daily said: “It makes people question the competence of the police”. But while Manila police defended their actions, Donald Tsang said he had been unable to reach Philippine President Benigno Aquino on Monday. The Chinese embassy in Manila on Tuesday “urged the Philippine side to take concrete measures to ensure the safety and security of the Chinese citizens in the Philippines”. The Hong Kong tourists were killed when police stormed a bus that had been commandeered 12 hours earlier by the ex-police officer demanding his job back. Chinese Foreign Minister Yang Jiechi telephoned his Philippine counterpart to express Beijing’s shock and demand a thorough investigation, Xinhua news agency said. Victims and survivors names released: Masa Tse Ting-chunn, 31 (tour guide) / dead, Wong Tze-lam, 51 (dead), His wife, Yeung Yee-kam, 46 (dead), His sister-in-law, Yeung Yee-wa, 44 (dead), His son, Jason Wong Ching-yat, 11 (released on Monday), His daughter, Tracey Wong Cheuk-yiu 15 (injured), Fu Cheuk-yan, 39 (dead), His wife, Tsang Yee-lai, 40 (released on Monday), His son Fu Chung-yin, (released), His daughter, Fun Chak-yin, 4 (released), Ken Leung Kam-wing, 58 (dead), His wife, Amy Leung Ng Yau-woon (slightly injured), Doris Leung Chung-see, 21 (dead), Jason Leung Song-xue, 18 (critical), Jessie Leung Song-yi, 14 (dead), Li Yick-biu, 72 (released on Monday), His wife, Li Fung-kwan, 66 (released on Monday), Lee Ying-chuen, 36 (slightly injured), Her mother, Lo Kam-fun, 67 (slightly injured), Joe Chan Kwok-chu,46 (two arms injured), His wife, Yik Siu-ling, 32 (jaw broken).

'My husband died shielding me with his body' - A Hong Kong holidaymaker who survived the Manila bloodbath said her hero husband died as he used his body to shield her from the spray of bullets. She still does not know what happened to her three children who were on the bus. The woman, named Mrs Leung, was one of the eight Hong Kong tourists being treated in Manila hospitals last night. The mother of three said in the Ospital ng Maynila that hostage-taker Rolando Mendoza started randomly firing at the hostages at around 8pm. She and her family of five were among the 15 people that held hostage. Her husband, who was killed, shielded her with his body. "He was very brave. He rushed forward to try to prevent the hostage-taker from killing people and sacrificed himself," Leung said. Her husband was very worried about her safety as she was sitting in the front row. "Bullets were flying around. I thought I would be shot dead," she said. Weeping outside the hospital, she said she was still looking for her children, aged 14, 18 and 21, also on the coach. "I don't know how they are doing," she said. "Why didn't they save us? Was it for money?" she cried out. "It was cruel. I was nearly shot." She left the hospital around midnight to search for her children. The four hostages at Ospital ng Maynila were said to be in stable condition last night, according to a report, which said they just wanted to return to their hotels to rest. The wounded hostages were taken to Ospital ng Maynila and the Philippine General Hospital. One of the hostages, 52-year-old Wong Tsa-lam, was certified dead on admission to hospital. A bullet penetrated his body after piercing his left shoulder. A 32-year-old woman, Ling Yuk- tsu, was conscious when she arrived at the hospital but lost two fingers to gunshots. Tour guide Diana Chan, the first one released by the gunman, said she was sad how things turned out and admitted she had a narrow escape. She said she did not think the gunman was such a bad guy when she was released in the afternoon. She asked him for mercy and told him that she had high blood pressure, that her husband had died and that she had to take care of the children. He eventually allowed her and an elderly male traveler to leave. A mother who was released during the hostage crisis, Tsang Yee-lai, 40, was emotional when she initially heard on the news that all hostages on the bus were killed, said Hong Thai general manager Susanna Lau Mei-sze when they talked over the phone. "The three children are fine but the mother, whose husband was held on the bus, is emotionally unstable and is now being attended by a doctor in the hotel," Lau said. Fourteen family members of the tourists held hostage left early today for Manila on a flight arranged by the Hong Kong government, according to Hong Thai Travel Services. Undersecretary for Security Lai Tung-kwok, with a team of other officials, accompanied relatives of the victims - two representatives for each of the seven families. The team comprised officials from the Social Welfare Department, Immigration Department and medical staff. The second flight by the Hong Kong government was due to leave at 8am today, Chief Executive Donald Tsang Yam-kuen said last night. More than 113,700 members joined a Facebook group to grieve for the dead.

China issues travel warning after Manila hostage-taking - The bullet-riddled windscreen of the tourist bus, which remains at the scene where a Hong Kong tour group was held hostage by an armed former policeman on the tour bus last night. Eight Hong Kong citizens were killed and one remains in critical condition. China on Tuesday urged its citizens travelling to the Philippines to exercise caution, after eight Hong Kong tourists were killed in a bus hijacking in Manila. “The consular section of the foreign ministry and the embassy in the Philippines warn Chinese citizens to be cautious when travelling to the Philippines,” the ministry said in a statement. “Chinese citizens in the Philippines must pay attention to security risks, step up measures of self-protection and immediately inform the Chinese embassy of any emergency situations.” A disgruntled sacked policeman commandeered the bus carrying 25 Hong Kong tourists on Monday in a desperate bid to win his job back. The ordeal ended when police fired tear gas into the bus and a sniper shot the hostage-taker. China has strongly condemned the hijacking and urged the Philippine government to ensure the safety of Chinese travellers.

Chinese President Hu Jintao and Premier Wen Jiabao on Tuesday expressed their condolences to the families of the Hong Kong tourists killed in a hostage crisis in the Philippines. In a joint letter to Donald Tsang Yam-kuen, chief executive of Hong Kong special administrative region (SAR), Hu and Wen expressed their deep sorrow for the families of those killed and consolation for the injured. Chinese Vice President Xi Jinping on Tuesday also expressed his condolences in a letter to Tsang. The coachload of Hong Kong tourists were held hostage for more than 10 hours by a former policeman who was protesting his dismissal before police commandos stormed the vehicle.

Push for middle class flats without the downpayment - The government should build flats that do not require a downpayment to help members of the lower middle class buy their first homes, a think-tank believes. Failing that, the Bauhinia Foundation Research Centre argues, sites should be set aside for groups who will build such homes. They are among proposals from the foundation for inclusion in the chief executive's policy address in October. It sees a downpayment as the main hurdle when those who are less well off are thinking about buying a home. The secretary general of the center, Gregory Leung Wing-lup, said the ideas are alternatives to a resumption of the Home Ownership Scheme. The no-downpayment approach would aim to help hopeful first-time buyers whose monthly income is between HK$16,916 and HK$39,000 for a four-member family. A flat would not cost more than HK$3 million and must be for the family's own use. Those conditions, the foundation said, would benefit those whose monthly income is above the cap for applying for public housing flats but below that of the now-defunct Sandwich Class Housing Scheme. Center chairman Anthony Wu Ting- yuk said the proposals are also in response to complaints that some people cannot afford to buy homes no matter how hard they save because prices keep rising. The foundation did not suggest how many flats could be supplied each year, but Leung said they could be built by the Housing Society. The center also proposed a shared ownership scheme. Eligible households could acquire half of a flat's ownership and the partner may be a mortgage company or a provident fund designated by the government. Households would pay a concessionary rent to the co-owner until the money is available to buy the entire flat at the original price. Rent paid, or part of it, would count towards that buyout. Wu believes mortgage and provident fund firms would be interested in that sort of scheme as it could offer a stable investment return. The foundation also called on the government to consider allowing people to withdraw money from the Mandatory Provident Fund before they retire to help cover the cost of a home. Those who rent a home during their working lives "may end up falling back to public housing when they retire," Leung said. "The MPF is protection for retirees, so it is reasonable to let them draw money from their MPF accounts to buy homes if needed." The chairman of the Legislative Council's panel on housing, Wong Kwok-hing, said the ideas seem feasible and suggest several thousand flats that do not require a downpayment may be provided each year. But panel deputy chairman Frederick Fung Kin-kee said the mechanics are too complicated and it is easier to resume building HOS flats.

 China*: Mainland retailer Gome Electrical Appliances Holding has set a special meeting date to address controversial measures proposed by its jailed founder and biggest shareholder.

TPG founding partner Jim Coulter with Chinese officials in Shanghai yesterday. He says private equity is now a global business and the firm's move is its commitment to China - Why TPG has joined rush into yuan funds? TPG, one of the world's biggest private equity firms, is teaming up with the municipal governments of Shanghai and Chongqing to raise nearly US$1.5 billion and create its first funds denominated entirely in yuan. By making deals with the two cities TPG, which will be the sole manager of each fund, is in a position to be one of the biggest investment firms in the mainland market. The company, which has about US$57 billion in assets under management worldwide, said that it was time to move into the mainland's currency and it had been drawn by the prospect of working with the Chinese government. "Private equity is now a global business," Jim Coulter, a co-founder of San Francisco-based TPG, said in Shanghai. "And this is our commitment to China." The announcement came as some of the world's biggest private equity firms, including the Blackstone Group and the Carlyle Group, scramble to raise huge funds denominated in yuan. Analysts said the moves were a reflection of the growing importance of the yuan, but also a sign that global funds were eager to tap the enormous pools of wealth forming in the fast-growing Chinese economy. Beijing is encouraging the shift, hoping the yuan investments will help strengthen the country's capital markets and create a more efficient system for allocating capital to private Chinese companies. For years, big private equity funds have financed mainland start-ups with United States dollar-denominated funds and complex offshore structures. The method often meant listing Chinese companies on overseas stock markets, beyond the reach of mainland regulators. Yet Beijing now wants to keep more stock listings on shore, which could improve the quality of the companies listed in the domestic stock market and help create a vibrant private equity industry. Analysts said a growing number of mainland companies no longer wanted to go through the trouble of creating offshore structures when there were more and more yuan funds willing to invest. This is part of the mainland's plan to strengthen its financial services industry and transform cities such as Beijing and Shanghai into global financial centres that can one day compete with New York, London, Tokyo and Hong Kong. With the central government's approval, cities such as Shanghai are offering incentives, including tax breaks and assistance navigating regulations, to attract private equity firms to establish funds in their regions. But there are also other inducements. By teaming up with the government, private equity firms believe they stand a better chance of getting speedier investment approvals and gaining access to huge pools of state capital. "This is the new model," said Lawrence Sussman, a Beijing-based lawyer, who specialises in local currency funds for O'Melveny & Myers. "And fund-raising is a driving force. Some [local] governments are even asking them to bid to manage government funds." Many of the big global firms have opened a yuan fund. Blackstone signed a joint venture in November with the Shanghai government to create a US$732 million local currency fund. Earlier this year, Carlyle signed its own deals with the Beijing government and the Fosun Group in Shanghai; and CDH Investments and the Hony Fund, which is controlled by the parent company of computer group Lenovo (SEHK: 0992), won approval in 2008 to invest money for the mainland's huge government pension fund. If TPG raises US$1.5 billion in local currency funds, it will become the biggest global private equity firm in the mainland's local currency market. TPG, formerly known as the Texas Pacific Group, has a long track record of investing in China. It has invested in Lenovo, the Shenzhen Development Bank and China Grand Auto, a huge car dealership. Shanghai and Chongqing are both working aggressively to lure global financial services companies to the financial districts they are developing. Shanghai is already a financial powerhouse, and Chongqing aspires to be something like Chicago - a centrepiece of China's ambitious "go west" program. TPG executives said the yuan funds - each of which aims to raise about five billion yuan (HK$5.7 billion) - would be able to invest in areas previously restricted by the government. And because regulators recently agreed to allow insurance companies to invest a portion of their money in private equity, the incentives for creating a local currency fund were now incredibly attractive, TPG said. "This creates a different set of investing opportunities," Stephen Peel, managing partner of TPG Asia, said.

Guotai Junan Securities aims to raise up to 1.9 billion yuan (US$279 million) in China’s second overseas investment fund by a brokerage to invest mainly in Hong Kong, betting consumer and new-energy stocks listed there would benefit from China’s rapid growth, fund manager Chen Yijin said. Guotai Junan is also preparing for the launch of a yuan-denominated fund in Hong Kong as China plans to ease cross-boarder rules to allow yuan held offshore to be invested in domestic capital markets.

Lensman keeps prize for Yangtze photo - The winning photo purportedly showing salvage company workers holding onto the body of a drowned university student. The winner of a top news photography award last week for a photo showing a man negotiating the price for recovering the body of a drowned young man was allowed to keep the prize last night. The contest committee of the China News Photography Golden Lens Award agreed with the finding of a team of investigators after the photo raised questions over the professional ethics of the winner, Zhang Yi. In the photo, entitled "Holding Back the Body to Ask for a Price", the subject, Wang Shouhai , had recovered the body of Fang Zhao from the Yangtze River and was holding a rope hooked onto Fang, whose body was in the water. The controversy surrounded the photo's title. Li Yuquan , head of the Yangtze University publicity department, said Zhang had incorrectly explained Wang's hand gesture. Li said Wang was actually directing the rescue boat towards the shore, not refusing to give the body back to waiting university teachers and students. But Zhang insisted that Wang was raising his right hand to delay delivery of Fang's body. "The price negotiation did happen and was confirmed by all interviewees," the investigators said in a statement. Yin Yuping, from People's Photo News, said the gesture was not the point. "The point is that the price negotiation did happen and was redressed by the local government."

Authorities have halted shipping through the massive Three Gorges Dam on the upper reaches of the Yangtze River because it is expected to experience another flood peak on Tuesday. Water levels at the world’s largest hydroelectric project have been at high levels for weeks because of record rains, which have also lashed other parts of the country, triggering landslides and flooding, and causing deaths and vast amounts of damage.

"Mapping Satellite - I" is sent from Jiuquan Satellite Launch Center in Northwest China at 3:10 pm on August 24, 2010. China successfully launched a mapping satellite, "Mapping Satellite - I," from the northwestern Jiuquan Satellite Launch Center at 3:10 pm (Beijing time) Tuesday. The satellite, which was launched on a Long March 2-D carrier rocket, had entered into the preset orbit, according to the center. The satellite, developed by a company under the China Aerospace Science and Technology Corporation (CASC), would be mainly used to conduct scientific experiments, carry out surveys on land resources, and mapping, said a statement on the Ministry of National Defense website. The remote sensing information and test results from the satellite would promote the country's scientific research and economic development, said the statement. The launch was the 128th for China's Long March series of rockets since April 24, 1970, when a Long March-1 rocket successfully sent the country's first satellite Dongfanghong-1 into the space.

Refined copper imports climb - Refined copper imports by China, the largest consumer, gained for the first time in four months in July as traders profited from disparities between prices in London and Shanghai. Inbound shipments were 224,723 metric tons last month, the General Administration of Customs said on Monday. That's 6 percent higher than 211,957 tons in June and 23 percent less than 292,226 tons a year earlier, according to Bloomberg calculations. "The increase reflects demand for imports in May and June, when higher prices in Shanghai prompted arbitrage trade," Ying Haoliang, an analyst at Orient Securities Futures, said by phone from Shanghai. Arbitrage traders try to profit by buying metal in London and selling it in Shanghai, exploiting a gap in prices. Copper stockpiles monitored by the Shanghai Futures Exchange declined to the lowest level in six months as of July 30. End-consumers drained local stocks after inbound shipments fell for three consecutive months since April. Stockpiles monitored by the Shanghai exchange fell to 104,507 tons in the week ended July 30, the lowest since January, bourse data showed. Stocks stood at 110,371 tons as of Aug 20, down 3.1 percent from a week earlier. "It takes one or two months for the imports to arrive in Shanghai. With the arbitrage window closed since early July, imports in August may fall slightly," Ying said. Copper for three-month delivery on the London Metal Exchange gained as much as 0.6 percent to $7,295 a ton before trading at $7,255 at 3:50 pm in Shanghai. November-delivery copper on the Shanghai Futures Exchange climbed as much as 0.7 percent to 57,430 yuan ($8,447) a ton, before trading at 57,190 yuan.

Aug 25, 2010

Hong Kong*: The Dutch team's design for the West Kowloon arts hub gives more space to the arts and cultural facilities than its rivals, but the associated cuts in office and residential space could cost the government HK$590 million. For that loss in land revenue, however, the city gets an extra 36,300 square metres of cultural space, with creative schools, an archive and arts production facilities, and seven hectares of extra open space. "We think cultural facilities are more important and they should be given extra space, especially for education and production," David Gianotten, a director of the Netherlands-based Office for Metropolitan Architecture, said. The company had worked out a self-sustaining financial model with its financial consultant McKinsey, the architect said, and he stressed that production space and studios could also generate revenue. "We want to allow more diverse activities," said Gianotten, a teammate of the world-renowned architect Rem Koolhaas, who proposed turning the arts hub into three villages featuring visual arts, theatres and a local market. According to figures provided by the three architectural firms involved in the arts hub design (see graphic), the Dutch design allocates less space to build offices, hotel rooms and flats than recommended by the West Kowloon Cultural District Authority. Charles Chan Chiu-kwok, chief valuer for property consultancy Savills, said extra cultural facilities would make the arts hub more appealing to the public, but it would result in a HK$590 million reduction in the government's land revenue. Chan estimated the residential sites would be sold for HK$14,000 per square metre and the hotel and office sites for HK$9,000.

Chief Executive Donald Tsang Yam-kuen criticised the handling of a hostage crisis in Manila last night in which eight Hong Kong tourists were killed and two critically injured. Police commandos stormed the tour bus on which they were being held and shot the gunman in the head. One of the hostages is passed through a window of the bus last night. The vehicle, which was initially carrying 25 passengers, was stopped earlier in the day in Rizal Park by a disgruntled former police officer who was armed with an M-16 assault rifle. The Chinese embassy in Manila said seven of the Hongkongers on the bus survived the dramatic siege. The names of those killed and injured were not released. The bloody climax capped a 12-hour siege after the 55-year-old gunman, Rolando Mendoza, a disgruntled former police officer armed with an M-16 assault rifle, stopped the bus, which was carrying 25 people, across a wide road in Manila's biggest park. Mendoza was honoured by police chiefs in 1986 as one of the top 10 officers in the country. But he was dismissed in 2008 for alleged involvement in drug-related crimes and extortion, police said. He took the hostages in an attempt to demand his job back and to have his name cleared.

Boutique hotel bid worries concern group - Sino Land tries for third time to get SoHo development approved. Concern over SoHo's redevelopment is mounting a month after a developer filed a third application regarding a site in Staunton Street. This time the application is for a boutique hotel - the same developer's two previous applications over the past three years were rejected. Sino Land applied to the Town Planning Board last month to turn its two five-storey residential tenement buildings at 20-26 Staunton Street - about 50 metres from the Mid-Levels escalator - into a 25-storey boutique hotel. The low-rise residential blocks are more than 40 years old. If permission is granted, construction of the 95-room, mid-tariff hotel with a restaurant would be completed in 2013. In its application to the board, Sino Land said the development would be compatible with the high-density area where there was a trend towards commercial development. It would create a substantial number of job opportunities and commercial business in the local community, and would not set any undesirable precedent for similar applications in the area, the company said. But Katty Law Ngar-ling, spokesman for the Central and Western Concern Group, objects strongly to the plan, saying it is not in keeping with the area, which has a quaint, low-rise, open-dining street appeal. "It would set a bad precedent if this gets permission," she said. "Similar developments would sprout up and completely destroy this unique neighbourhood, which blends residential and entertainment." Art gallery owner John Batten of the concern group also opposes the plan.

 China*: Drink-driving on the mainland will become a criminal offence whether or not it leads to an accident, with violators facing fines and imprisonment, according to a draft issued by the Standing Committee of the National People's Congress yesterday. Legal practitioners hailed the change, to be made in the eighth revision of the Criminal Code, but thought more could be done. Currently drink-driving is a criminal offence only if it involves an accident - in which case the maximum jail term is seven years except in hit-and-runs. Otherwise drink-driving is an administrative offence that warrants up to 15 days of administrative detention. There have been calls to make the offence criminally punishable because of the increasing number of deaths it causes. One of the cases that may have forced the change in the law was that of Sun Weiming of Chengdu , Sichuan province, who killed four people and injured one on December 14, 2008, when he hit five vehicles. He was drunk and had no driving licence. Other incidents have stirred public discontent because they involved public servants or rich people being handed light sentences. A 20-year-old man from a rich family was street-racing with his friends in downtown Hangzhou in May last year when he killed a university student who was crossing the road. He received a three-year jail term. This month in Juancheng county, Shandong province, an official of the county Human Resources Bureau hit 11 people, injuring three seriously, including two pregnant women who lost their babies. He continued driving and stopped only when an electric bicycle was lodged under one of his tyres. Witnesses said he smelled of strong alcohol after getting out of his car. The county government did not reveal details about the accident. Sichuan-based lawyer and Chinese People's Political Consultative Conference delegate Shi Jie said the new charge was a step in the right direction, but it was regrettable that the revision covered only drink-driving and street-racing, but not other types of dangerous driving or irresponsible acts. Furthermore, the charge does not address what would happen in the event of injury or death, leaving the question of whether the old laws are still applicable in such cases. Shi defended Sun in the high-profile case. Sun was sentenced to life under the awkward charge of "endangering public safety with intent". "This is not an appropriate charge for drink-driving since it requires the defendant to have wanted to kill or injure someone deliberately," Shi said. "However, since the public is so angry at Sun, and punishment under the current `traffic accident' charge is too light, the court was stuck in an embarrassing position." The lawyer added: "China has a big drinking culture. There's an old saying that `a banquet is not a banquet without wine'. At the same time, when our current law went into effect, there were a lot fewer people driving." He advocated setting up a new "dangerous driving" offence to cover drink-driving, reckless speeding, driving without a licence and other similar dangerous acts.

The list of crimes punishable by the death penalty on the mainland will be cut by a fifth if amendments to the criminal code gain approval from the legislature. It is the first time since 1979 that the government has made such a proposal. The mainland's use of the death sentence for a wide range of offences has subjected Beijing to severe criticism from the international community. In a report published yesterday, Xinhua said: "The control of the use of the death penalty is an international trend." The amendments would remove 13 of the 68 offences subject to the death sentence - mainly non-violent crimes where the death penalty has been rarely or never invoked. Such offences include smuggling, the forgery of value-added tax receipts, and stealing from ancient graves and fossil sites. Crimes such as faking VAT receipts were considered serious three decades ago, but are now common offences on the mainland. The country's highest lawmaking body, the Standing Committee of the National People's Congress, is meeting this week to discuss new legislation and amendments. The proposed eighth amendment to the criminal code, passed in 1979, and the abolition of the death penalty for 13 crimes has attracted the most attention.

China Petroleum & Chemical Corp (Sinopec (SEHK: 0386)) is considering expanding its overseas oil and gas operations, including buying its parent's rapidly growing portfolio, to offset the negative impact of state fuel-price controls on its refining business. The nation's second-largest oil and gas producer and Asia's largest oil refiner received shareholder approval in May to buy the 27.5 per cent stake held by its parent China Petrochemical Corp in an Angolan offshore oil field for US$2.46 billion. The deal is expected to add 8 per cent to Sinopec's otherwise stagnant annual oil and gas output. China Petrochemical's overseas oil and gas output had risen from 4.52 million tonnes of oil equivalent in 2006 to 12.29 million tonnes last year, chairman Su Shulin said yesterday. It is expected to soar to 20 million tonnes this year, he added, boosted by the US$7.9 billion acquisition last August of Addax Petroleum, whose assets are in Kurdistan in Iraq; Nigeria; and Gabon. Su said that although Sinopec was also independently searching for overseas targets, successful deals were hard to come by owing to differences in price expectations. He also denied speculation that Sinopec was in talks to buy assets from BP in the wake of the international giant's disastrous spill in the Gulf of Mexico. Sinopec's share price slid 1.6 per cent to HK$6.26 yesterday despite the firm's 6.6 per cent year-on-year rise in first-half net profit to 35.46 billion yuan (HK$40.53 billion), 9 per cent above analysts' forecasts. Neil Beveridge, a senior analyst at Sanford Bernstein Securities, said he did not think the Angolan acquisition would substantially lift shareholders' returns, given that the purchase price was not cheap. He also noted that the profit margin of Sinopec's refining operation remained low and inversely linked to the price of oil. Chief financial officer Wang Xinhua said July and August gross refining margins remained comparable to the second quarter's US$5 a barrel. The first quarter's margin was US$4. The first-half refining margin fell 45 per cent year on year to US$4.77 a barrel, as rising crude oil prices were met by Beijing holding off on raising refined-fuel prices by a comparable degree to combat inflation. While Sinopec and rival PetroChina (SEHK: 0857) are adding substantial new refining and petrochemical capacity this year, Sinopec vice-chairman Wang Tianpu said a marked refining oversupply had not been noted. However, he warned that second-half chemical profits would be squeezed by oversupply.

US private equity firm Blackstone Group has agreed to a deal with Great Eagle to build high-end apartments in China, where the housing market is booming.

Dell, boosted by a 50 per cent year-on-year increase in Chinese revenue in the quarter to June, has moved ahead of Hewlett-Packard to become the mainland's No 2 personal computer brand.

Aug 24, 2010

Hong Kong*: Chief Justice of the Court of Final Appeal Andrew Li Kwok-nang has been appointed Honorary Professor of Law at both the Chinese University of Hong Kong (CUHK) and the University of Hong Kong (HKU). The announcements by the universities followed Li’s previous statement announcing his intention to retire as chief justice at the end of August 2010. HKU Dean of Law Johannes Chan commended Li. “It is a privilege for HKU and its students to be able to benefit from the wisdom and immense experience of the chief justice,” he said. Li said he was greatly honoured by the appointment. He will take up his posts at CUHK and HKU from September 1. Li was educated in Hong Kong. He furthered his studies at the University of Cambridge, where he obtained an MA and a Master of Law degree. He was called to the Bar in 1970 and started practising in Hong Kong in 1973 and also in the UK, and was later appointed as a judge in Hong Kong. Li was appointed deputy judge of the District Court of Hong Kong in 1982 and was appointed Queen’s Counsel in 1988. He was then appointed a deputy high court judge in 1991. In 1997 he was appointed Chief Justice of the Court of Final Appeal, Hong Kong’s first in the post-colonial era. Li will be succeeded as Chief Justice of the Court of Final Appeal by Justice Geoffrey Ma Tao-li, the current Chief Judge of the High Court.

Eight HK tourists killed in Manila bus hijacking - Police and SWAT members close in on hostage-taker Rolando Mendoza hanging from the door of a tourist bus following an assault the bus in Manila's Rizal Park on Monday. Mendoza, a dismissed policeman armed with automatic rifle, seized the bus - mostly full of tourists from Hong Kong - in a bid to demand reinstatement, police said. Mendoza was killed by police after he killed numerous hostages.

Nearly half the business and opinion leaders in Hong Kong favour a statutory minimum wage set somewhere between HK$28.10 and HK$33, close to the level sought by unions, a SCMP/TNS survey shows. About three-quarters of the 1,000 respondents to the survey said they could live with an increase in operating costs of between 1.1 per cent and 5 per cent after the implementation of a minimum wage. More than half the respondents said they could accept increases in prices for products or services, pushed up by the introduction of a minimum wage. Unionist lawmaker Wong Kwok-kin said the survey findings indicated that the city's business and opinion leaders endorsed the need for a minimum wage and had taken the negative impact of its implementation into account. But Stanley Lau Chin-ho, deputy chairman of the Federation of Hong Kong Industries, warned that many people might find increases in prices in products unacceptable even if they told pollsters they thought they could accept them. Twenty-nine per cent of respondents considered an hourly minimum wage between HK$28.10 and HK$32.90 an appropriate wage level while 19 per cent favoured HK$33, the target at which unions are aiming. Another 11 per cent preferred a rate of more than HK$33 while 27 per cent considered an hourly rate of between HK$24.10 and HK$28 appropriate. Just 7 per cent opted for a rate of HK$24, which is backed by some business groups. One thousand opinion leaders and business decision makers from households with monthly incomes of more than HK$40,000 were interviewed between July 30 and August 9.

Loopholes in Hong Kong's voting rules have raised fe ars that foreigners can influence the outcome of functional constituency elections. Democratic Party lawmaker Cheung Man-kwong called for the law to be changed after it emerged that foreign consulates are registered as corporate voters because they are members of the Hong Kong General Chamber of Commerce. Cheung, of the education sector, said the long-standing arrangement showed how ridiculous the set-up of functional constituencies can be. The law should be amended and functional constituencies should be abolished in the long run, he said. "That is exactly what the central government fears: foreign powers can influence Hong Kong politics." Cable TV reported that the consulate- general of Belgium and the Vienna representative office in Hong Kong are registered as corporate electors for the commercial (first) functional constituency since they are members of the chamber. The consulates can designate a representative to register as an elector so long as he or she is a Hong Kong permanent resident. Consuls-general from missions such as the British and Swedish can, in theory, also be electors as they are members of the chamber of commerce, the largest and most influential trade body in Hong Kong. But they have not registered as electors. Jeffrey Lam Kin-fung, lawmaker of the commercial (first) sector, whose seat is returned by the chamber, said the matter should be dealt with under the Basic Law. "If it's legal, it should be left up to the members themselves to decide whether they want to become registered electors." This is regardless of whether these electors might be considered to be in sensitive positions. Timothy Fok Tsun-ting, who represents the sports, performing arts, culture and publications constituency, also has corporate electors, including Kwang Hwa Information and Culture Centre, the de facto Taiwanese consulate. A Registration and Electoral Office spokesman said the existence of functional constituencies and the definition of corporate voters have been approved under the law. "Any authorized representative of corporate voters has to be a permanent resident of Hong Kong." Legco president Jasper Tsang Yok- sing said he is not worried about the issue. If there is any mistake, it can be rectified under the Basic Law, he said. But political analyst James Sung Lap- kung said it is sensitive for foreign organizations to vote under the current system. The situation will be alleviated when the government widens the electoral base for elections. With more people having the right to vote in functional constituencies, the influence of any foreign organization will be diluted, he said. Meanwhile, lawmaker Andrew Cheng Kar-foo, formerly of the Democratic Party, said he might not stand for reelection in the 2012 Legco vote because he felt "powerless" in chamber under the split-voting system. Cheng, a founding member of the party, resigned after 16 years just before the government's electoral reform proposal was endorsed by Legco in June, as he was against the proposal and the party supported it.

The final shape of the long-awaited West Kowloon cultural hub will not be a mishmash of incoherent elements, Chief Secretary for Administration Henry Tang Ying-yen argued yesterday. Also trying to talk up what should be a waterfront showpiece was Stephen Cheung Yan-leung, chairman of the consultation panel of the West Kowloon Cultural District Authority. Cheung, in particular, faced a torrid time at the first public forum on the project, with people raising doubts over a plan that sets aside one-fifth of the gross floor area for residential use. He insisted that the one-fifth - or 145,000 square meters - that will go on homes will not turn the hub into a property project. The remarks flew as the three-month consultation period on three concepts for the 40-hectare harborfront site - from London-based firm Foster + Partners, Rotterdam's Office for Metropolitan Architecture and local Rocco Design Architects - entered a third day. Tang, chairman of the board of the authority, said: "We will choose only one design, and I believe it will be very organized and complete as only one team will follow up the project from start to finish." But he did not rule out incorporating bright ideas from the other two designs into the development. Such ideas may involve green facilities, transport and drainage, he said, "but it will not make it messy." Adding weight, Graham Sheffield, chief executive of the authority, said he believes the selected team can maintain architectural integrity. Rocco Yim Sen-kee, executive director of Rocco Design Architects, said: "In theory, the three plans can be integrated. But the one doing it has to have good judgment to decide what is most essential and find the best ways to incorporate the design of other firms into the final plan. He cannot simply add features of other plans into his own." Visiting the culture-consultation facility at the convention and exhibition center again, Tang also said the authority will make sure the project remains within the HK$21.6 billion budget approved by the Legislative Council's Finance Committee in 2008. But some of his audience had nagging doubts about those private homes, with questions including whether the project could be a financial success if no flats were built. "This is not a property project," Cheung said. "Hong Kong people dislike buildings that create a wall-like effect. No such kind of building will be in our project." Also, he said, "commercial, catering and retailing facilities can generate income to help sustain art and cultural activities." Yim added: "I support the view that there should be some residential buildings to make the district vibrant. "What I hope is to avoid flats from falling into the hands of speculators. Flats can also be regarded as artworks. They are not necessarily luxury flats. "They can be flats with restricted prices or - boldly speaking - they can be Home Ownership Scheme flats." After the forum, Rem Koolhaas, who leads the Office for Metropolitan Architecture, said subsidized housing could indeed be integrated into the project. All the three plans unveiled last Friday place an emphasis on open space and trees while incorporating local elements.

The 27-year-old woman who has become the first person in Hong Kong to undergo a combined heart-and-liver transplant is on the mend. "She has shown good progress and is expected to be discharged in 10 to 14 days," Lo Chung-mau, head of the University of Hong Kong's liver transplant team based at Queen Mary Hospital, said yesterday. "She cannot eat now but can talk and drink water. Her heart and liver functions are reported to be normal." The young woman underwent 17 hours of surgery to be given a new heart and liver on Friday after displaying symptoms of heart failure. She was suffering from a genetic liver disease that affected the functioning of her heart. It was Hong Kong's first heart-and- liver transplant performed on a patient at the same time. The mortality rate for such transplants is about 10 percent. She is now in isolation in an intensive care ward. The woman told Lo that she felt in reasonable spirits but was a bit worried as she had experienced intense pain around the sites of the surgery. Lo explained: "The largest concern at present is the wounds in the abdomen and the chest. Most [surgical] patients only have a single and much shorter wound." The professor has prescribed anti- rejection drugs to his patient. But it will be a week before any organ rejection or complication is detected. The woman, who has familial amyloidotic polyneuropathy - a condition that leads to a failing liver affecting the functions of other organs, including the heart - could not have been expected to live beyond 30 if she had not received the heart transplant. One of her relatives died from heart problems because of the disease. Her family said they are satisfied with her progress since the operation. During the surgery, which involved almost 70 medical staff, the woman received the organs from a brain-dead donor. Among those on the transplant team were five cardiac surgeons, seven liver surgeons, four cardiac anesthesiologists, six liver anesthesiologists and more than 40 nurses. The woman's own failing but still usable liver went to a 62-year-old man with liver cancer. He is now in a satisfactory condition at Queen Mary Hospital and could also be out of the hospital after two weeks. By last month there were 1,640 people waiting for kidney transplants, 100 for livers, eight for hearts and 13 for full lung transplants. Lo attended entertainment personality Lydia Sum Din-ha when she was admitted to hospital for a liver tumor and gall bladder cancer in 2006. Sum died in 2008.

Urban renewal has no place for hungry ghosts - Redevelopment drives out tradition - Redevelopment looks like ending two historic Yu Lan (Hungry Ghost) Festivals. The festival is a month-long effort to appease restless spirits of the dead. But threats from urbanisation are forcing communities in Central, Kwai Chung and Wong Tai Sin this year to stage what are likely to be their last celebrations. The festival falls on the 15th day of the seventh month of the lunar calendar, and more than 60 celebrations take place across the city throughout the month to pacify roaming hungry ghosts. Worshippers make offerings of food, letters and fake cash to satisfy the hungry spirits. The Ministry of Culture in Beijing is likely to name the festival, and three other traditional Hong Kong events, as part of the nation's intangible cultural heritage later this month or early next, said conservationist Roger Ho Yao-sheng, who is familiar with the Hong Kong government's approaches to Beijing on the matter. The three other festivals are the Cheung Chau Bun Festival, the dragon boat water parade at Tai O and the Tai Hang fire dragon dance. The prospect of gaining national status delighted Wong Kan-oi, chairman of festival organiser 30 House Yue Lan Associates, last year. He has been organising hungry ghost events in Central, Mid-Levels and Sheung Wan from his shop at 62 Staunton Street since 1996. But he said an Urban Renewal Authority decision to redevelop the area which encompasses his shop has confused and depressed him and his neighbors.

A makeshift altar and decorations adorn Staunton Street in Central as part of events marking the Yu Lan (Hungry Ghost) Festival. The festival is a month-long effort to appease restless spirits, but redevelopment is forcing communities in Central, Kwai Chung and Wong Tai Sin to stage what are likely to be their last such celebrations this year. The festival falls on the 15th day of the seventh month of the lunar calendar, with more than 60 celebrations taking place across the city.

The West Kowloon Cultural District Authority has brushed aside concerns that the final design of the arts hub will end up being a mishmash of incoherent elements. The final plan for the 42-hectare project would maintain the integrity of its original design, the authority's chief executive, Graham Sheffield, said. His comments came amid criticism that a final blueprint incorporating features of all three shortlisted proposals would result in the arts hub being an awkward mismatch. Three proposals have been submitted for an initital three-month city-wide public consultation. The proposals, from three renowned architects - Hong Kong's Rocco Yim Sen-kee, Britain's Norman Foster, and Rem Koolhaas from The Netherlands - all accentuate light, air and greenery, but in unique and novel ways. Chief Secretary Henry Tang Ying-yen, who is chairman of the authority's board, said the final plan would be "complete and organised". Only one plan would be chosen and a master planner would oversee execution of the whole project, he said.

More than HK$150 million will be spent on passenger air bridges and other facilities to accommodate up to five Airbus A380s at Chek Lap Kok, even though only one of the aircraft a day currently uses the airport. As more airlines add the A380, which can carry over 500 passengers, to their fleets, Hong Kong airport is increasing its readiness with three new triple air bridges and two double air bridges modified to handle the A380. Hong Kong joins Singapore, Beijing and other major cities in the region that have airports equipped with triple air bridges for the A380. The aircraft has two levels, each requiring at least one air bridge. This means triple air bridges are needed for the A380 to help the large number of passengers board and disembark faster, and also to cater to passengers in first and business class and those in economy. On average, it takes about 11 or 12 minutes for passengers to disembark with three air bridges and 15 minutes with just two. Compared to a Boeing 747-400, the A380 has an almost 80-metre wing span - about 15 metres wider than the Boeing aircraft - is 1.7 metres longer and has a tail that rises just over five metres higher than that of the 747-400. Depending on the configuration, a fully loaded A380 can carry 555 passengers, compared with about 400 for the 747-400. Since July last year, Singapore Airlines has been the only airline operating an A380 to Hong Kong, with daily flights. From October 1, Emirates Airlines will fly an A380 daily to Hong Kong. An A380 landed at the airport on a test flight in November 2006. One of the new triple air bridges, at a cost of about HK$27.5 million, started operating at gate E15 four weeks ago. Triple air bridges will also be installed at Gates 64 and 66 by the middle of next year. Another HK$80 million has already been spent on modifying two double air bridges at Gates 60 and 62 to facilitate passenger flow at both the upper and lower decks of the aircraft, as well as other related infrastructure improvement work. Henry Ma Yiu-man, the Airport Authority's airfield general manager, said more triple air bridges would probably be installed as the airport expanded its facilities to meet market demand. "But we're still in the planning stages," Ma, who has not flown on the A380, said. Officials at Chek Lap Kok, which Airports Council International said handled the world's third largest international passenger volume last year, are studying a plan to construct a passenger concourse and aircraft stands in the midfield, the only large-scale undeveloped area on the airport site. This would allow Chek Lap Kok to handle the 70 million passengers and 6 million tonnes of cargo expected to flow through the airport annually by 2020.

 China*: Companies in Shanghai have falsified answers in replies to some surveys by the national statistics agency, calling into question the reliability China's property market data. The problems, from omitting information to reporting incorrect prices, were identified by the Shanghai arm of the National Bureau of Statistics. The NBS announced the findings on its website (www.stats.gov.cn) on Monday, but it did not say that any of its specific surveys or reports had incorrectly characterised the country’s housing market conditions. Data about China’s housing prices is in large part derived from surveys conducted by the NBS. The Chinese public has long been critical of some of the figures, saying that they understate how expensive property has become. A striking example of discrepancies within official data came to light last week. The NBS said housing prices in 70 major cities, the index most closely watched by the market, were unchanged in July from June. But the National Development and Reform Commission said property prices in 36 key cities actually rose 1.6 per cent in July from June, according to information gathered by that agency’s price monitoring bureau. In the absence of a single set of reliable official figures, many private institutions and real estate agencies have started producing their own statistics, making the overall picture yet more confusing for industry observers. The Shanghai NBS agency will work harder to inform companies of “the importance of statistics and the significance of improving accuracy”, the statement said.

If housing prices in China plummeted by 60 per cent, there would be no noticeable increase in the default rate on loans issued by China Construction Bank (CCB).

China Cinda Asset Management Corp is leading a mainland consortium to buy into AIA, as the state asset manager aims to build itself into a financial services conglomerate. Cinda is in talks with AIA's parent, American International Group, to acquire a stake either before the Asian insurer's initial public offering in Hong Kong in October or during the IPO process as a strategic investor, bankers with knowledge of the matter, said. Attracted by AIA's leading position in Asia, at least four consortiums comprising mainland private investors have been in talks with AIG for possible acquisition after British insurer Prudential aborted its US$35.5 billion bid for AIA in June, the South China Morning Post (SEHK: 0583) reported last month. On August 13, the 21st Century Business Herald reported China Life (SEHK: 2628) Insurance, Fosun Group and Cinda have decided not to proceed with their bids as the trio failed to find common ground with the seller on pricing. However, bankers said that Cinda remained at the table and was pushing ahead with the acquisition bid. It remains unclear which other firms are in the consortium led by Cinda but one major state-owned bank is believed to be involved as the deal would involve a large amount of money. Huan Guocang, an investment banker turned private equity fund manager, is believed to be advising Cinda on the deal. Huan is a co-chairman of Hong Kong-based Primus Financial Holdings, which had bid for AIG's Nan Shan Life Insurance in Taiwan. Huan was not available for comment.

China Construction Bank (0939) net profit for the first six months of this year surged 26.76 percent to 70.74 billion yuan (HK$80.97 billion), due to a rise in both interest and fee-based income as well as a 23.36 percent decline of impairment losses. No interim dividend was declared. The bank's average balance of interest-bearing assets rose by 18.26 percent, boosting net interest income 14.96 percent year on year to nearly 117.8 billion yuan, the company said. Net interest margin shrunk by 5 basis points to 2.41 percent. Net fee and commission income surged 43.63 percent to 33.64 billion yuan due to sustained rapid expansion of fee-based business. "In the second half, it is more difficult on deposit expansion due to the tight liquidity and volatile capital market, while we have to meet higher pressures from regulators and competition," said vice chairman and president Zhang Jianguo. "But the changing mainland economic structure and gradually improving operating environment will help the bank improve our credit structure and expand." CCB's current capital adequacy ratio and core CAR are at 11.68 percent and 9.27 percent, respectively. The mainland's second-largest lender by market value earlier announced a plan to raise up to 75 billion yuan through a rights issue in Shanghai and Hong Kong, offering a 0.7 rights share for every 10 existing A and H shares. The bank also steadily improved its credit asset quality to mitigate future risks, as non-performing loan ratio dropped 28 basic points to 1.22 percent, while NPL provisions rose to 204.72 percent from 175.77 percent six months ago. Meanwhile, CCB plans to open a branch in Toronto.

Cities think big - but can they all really win? Zhengzhou's new area will be twice the size of Manhattan - Zhengdong exhibition centre and hotel. Despite Zhengzhou's big spending, Wuhan is favoured to dominate the region's economy. As she opens the doors to a new exhibition and conference centre, Sun Sihan, a smartly dressed public-relations official for the city of Zhengzhou, is flushed with pride. "We have the largest conference hall in Asia," she beams, displaying a cavernous room that at 34,000 square metres is nearly five times the size of Old Trafford, the world famous Manchester United football ground in Britain. The exhibition centre and the walkways, gardens, lake and car parks that are part of its development area cover 69 hectares, making it larger than Vatican City. Built at a cost of 2.2 billion yuan (HK$2.52 billion) four years ago, its vast lobby boasts imported Italian stone walls, while the hallways are filled with fresh-cut flowers. The last time the conference centre, which was entirely empty on a recent hot weekday morning, was filled with people was last year when Zhengzhou hosted a national pharmaceutical industry event. The conference centre is one of many attractions on show at Zhengdong New Area, a recently created district within Zhengzhou, the capital of the relatively poor inland province of Henan. Still under construction, the new town eventually will cover 115 square kilometres, almost twice the size of New York's Manhattan Island, and cost 150 billion yuan, funded by the local government and property developers involved in the project.

The Zhengdong exhibition and conference centre is the largest in Asia at 34,000 square metres. It has not been filled with people since a pharmaceutical conference last year.

If not quite yet the next Hunt for Red October, the prospects for a new generation of Chinese nuclear-powered attack submarines are exercising the minds of analysts now scrutinising the People's Liberation Army's naval build-up. For the first time the Pentagon's annual report on China's military, released last week, mentions such a vessel, referring to five Type 095 nuclear attack submarines being launched in the "coming years". The Type 095 is the long-awaited third generation of Chinese nuclear attack submarines to counter the "hunter killers" that form the backbone of US submarine supremacy, exploiting stealth, speed and endurance to perform a range of tasks from espionage to more traditional naval blockades and the firing of cruise missiles. The PLA's first two generations - the Han class and the Shang class - were considered far from perfect despite the input of Russian technology. "Even if a modern submarine is almost silent, that is still too noisy," said one retired Western submariner with experience in Asian waters. "Operational stealth is everything ... and when the Type 095 is launched, all eyes and ears will be looking to see if the PLA has finally reached the standards of US, French, British and Russian nuclear subs." Just when the Type 095 is ready for launching is far from clear. The reference in the latest report surprised some analysts, coming after several years of speculation that has yet to yield open evidence of such a vessel nearing completion or even under construction. "Many of us were surprised to see this submarine mentioned, as there has been no sign of progress," said one Asian military attache. "If the Pentagon has something fresh, there is no sign of it in the report, and they've been keeping it to themselves." Both Chinese and foreign analysts note that the PLA's submarine program is traditionally one of its most secretive, even more so than its much-vaunted missile development. US military officials providing background briefings on the report provided no extra details, saying only that China appeared to be building a fleet with a range of capabilities, from its large Jin-class nuclear-powered missile submarines, capable of launching a nuclear ballistic missile at sea, to smaller but stealthier diesel-electric submarines. The report noted that five Jin-class submarines - expected to be based at the South Sea Fleet's new underground submarine base near Sanya , Hainan - are expected to be in operation soon. Google Earth images surfaced last week purporting to show the Huludao shipyard in Liaoning back in March, the traditional home of PLA nuclear submarine construction. Only two Jin-class submarines are visible. China has been steadily modernising its ageing, obsolete fleet and, with 60-odd vessels already operating, will soon have more submarines than the US. But the US is expected to hold the edge for many years when submarine technology, stealth and operational capabilities are considered. Japan has a significantly smaller fleet, but its vessels are considered to be exceptionally silent. "There is more to submarines than just numbers," said William Murray, a retired submariner and associate research professor at the US Naval War College. "You have to remember that the best submarines out there now are impossible to find... China may indeed get there at some point, but in terms of the technology required, there is no substitute for time, money and experience. "It might well be the case that when Type 095 is finally launched, further generations will still be needed to catch up on the stealth of other nations' submarines, however excited Chinese netizens get." He added, however, that the scale and apparent success of China's expanded ballistic and cruise missile programmes showed that, in a military context, industries were capable of fast technological expansion. Gary Li, a PLA analyst at the International Institute of Strategic Studies in London, said previous "new generation" submarines had generally delivered updates and tweaks of existing designs rather than creating entirely new vessels. "The big question is when the Type 095 will be ready ... and there is nothing out there yet to suggest it will be soon," he said. Even so, the prospects of both the Jin and Type 095 classes in operation across the western Pacific are being noted by planners at the Pentagon, who must cope with budget cuts for years to come. The latest report says, for example, that the endurance of China's nuclear-powered ballistic missile and attack submarines will significantly extend the reach of the PLA navy beyond a Taiwan invasion scenario. Wary of weapons that seek to deny US warships access to areas that cover traditional allies such as Japan, South Korea and even Australia, Pentagon strategists are increasing deployments in the region. They are also seeking to work more closely with allies, who are also expanding submarine fleets, on joint patrols and anti-submarine warfare operations, considered a long neglected military craft. China is expected to pay close attention to joint US-South Korean anti-submarine drills planned for next month in the Yellow Sea.

Aug 23, 2010

Hong Kong*: Talks between Dragonair and its flight attendants over working hours - resumed yesterday in an effort to ward off industrial action - were deadlocked last night. The parties reopened talks at 3pm yesterday after a third of the airline's 1,200 cabin crew approved industrial action in a vote on Thursday. But the Hong Kong Dragon Airlines Flight Attendants Association said the airline management had not come up with any new proposal to ease the attendants' workload. Secretary Michelle Hong Kam-chu said the union would soon discuss the form and date of industrial action if the airline showed no sincerity in resolving the matter, adding a strike was almost the only option. "They cannot keep repeating the same line, they must come up with some new suggestions," she said. Dragonair has proposed paying cabin crew five times the regular hourly rate on top of their basic pay if they are told upon landing in Hong Kong that they have to stay on duty. But the union says they should be entitled to the extra pay even if they are informed the night before.

Three new visions for arts hub unveiled - Pick-and-mix approach to designs risks a mishmash in West Kowloon, critics warn.

  New ideas for the West Kowloon arts hub were unveiled yesterday, and this time the canopy is green. Trees and open space triumph over trophy buildings in concept plans from three leading architects, and all give a nod to Chinese cultural elements. They won praise for their sensitivity and for preserving sea views, but critics warned the authorities' intention to pick parts of all three designs for its final blueprint would create a mishmash on the harbourfront site. Now, six years after three blueprints for the project went on show and four years after the government pulled the plug on them, these three new plans are being exhibited and public comment invited once again. The plans for the HK$21.6 billion arts hub come from Rocco Yim Sen-kee, Rem Koolhaas and from Norman Foster - whose competition-winning original design, dominated by a giant canopy, bit the dust in 2006. In a consultation lasting three months, members of the public will be asked to say which elements of each plan they like best. "One of these overall concepts will emerge as the basis for development. At the same time, we may very well incorporate some bright ideas of the other two plans to form one master plan," West Kowloon Cultural District Authority chairman Henry Tang Ying-yen said. A spokeswoman for the authority said the public's views would serve as a reference when it selects the final design, which is expected to be submitted to the Town Planning Board next year. Architect Bernard Lim Wan-fung, president of the Hong Kong Institute of Urban Design, said it would be better to ask the public to pick one plan. Lawmaker Cyd Ho Sau-lan agreed, saying that otherwise "the final blueprint will become a mishmash of different styles". Tang said the project's planner would ensure the integrity of the final master plan. British architect Foster - no stranger to Hong Kong, having designed the HSBC (SEHK: 0005) headquarters building and the main terminal building at the Chek Lap Kok airport - features a huge urban park with 5,000 trees in the west of the site, occupying almost half the area. "This park, unlike other cities' parks, is located right at the waterfront. From it, you will be able to wander through to the far end of the peninsula in shade and enjoy that spectacular view of Hong Kong Island," a senior executive of the Foster team, Spencer de Grey, said. "It will be a park for everybody, where all sorts of activities can be developed." A cluster of hotels wraps around the Western Harbor Tunnel portal at the tip of the site as a buffer to reduce noise pollution. The plan shrinks the space allotted to theatres to build more educational facilities. Blocks of flats up to 20 storeys high are placed along Austin Road in front of existing luxury blocks. Arts and cultural facilities are scattered throughout the site. The retail and commercial area gives a taste of Tsim Sha Tsui's Nathan Road "golden mile". An elevated skyrail connects various points in the site with neighbouring districts; there is an "ecobus" service too. Foster won an international competition in 2002 to design the arts hub with a concept featuring a large canopy. It sparked controversy in part because bids to build the hub would have to be for the entire project, leading to concerns a single developer could dominate the project. The high cost of maintaining the canopy was also a concern. Hong Kong architect Yim, who created the winning design for the new government headquarters at Tamar, said he had been inspired in his West Kowloon concept by the passion of Hong Kong people for the Qingming Riverside Landscape by Northern Song dynasty painter Zhang Zeduan. "Like the diverse activities taking place on the riverside, you will find it a surprising experience to stroll through the arts hub, which encourages you to learn and explore," Yim said. "You won't have to be an art lover to go there. But when you are there, you will fall in love with art." Yim places a Xiqu Centre for Cantonese Opera close to the old district of Jordan to entertain old people passionate about xiqu - Chinese opera. A grid of small streets linking the arts and cultural facilities reflects the character of the city. Trams shuttle visitors between the facilities and hotels that sit among blocks of flats. Under green roofs extending from the art facilities to the waterfront are cafes and small shops. Visitors lacking the price of a concert ticket can visit floating pontoons for street performances on the waterfront. Dutch architect Koolhaas, taking inspiration from the design of old New Territories settlements, divides the arts hub into three villages - for visual arts, arts performances and a market. The flagship museum known as M+ would be a large visual arts "factory" accommodating not only exhibitions but also work and living spaces for artists. A village in the middle of the site features a cinema, flats and facilities for small-scale entertainment. Facilities on the site are connected with the exits to nearby MTR stations. A bridge for pedestrians, cyclists and cars links the site with Austin Road. Water taxis serve the hub from the Star Ferry pier in Central. "What we want to do is to create a Hong Kong utopia. On one hand you benefit from the modern metropolis and on the other hand you got the intimacy of the smaller scale," said Koolhaas, known in China for his iconic design for the new CCTV headquarters in Beijing, to which many residents of the capital objected fiercely.

A sorry history of ideas being thrown away or argued into oblivion - Foster's vision of a giant canopy for the site died in a welter of questions about who would build it and the cost of maintenance. We've been here before on the arts hub. Six years ago the government consulted the public about three proposed designs. An exhibition was opened featuring models of three shortlisted ideas from property developers on how to implement British architect Norman Foster's winning concept for the project, with its controversial canopy covering 55 per cent of the development area. There was strong resistance to the idea of a single developer getting the whole project, and to the canopy. The public also objected to the high development density the property developers proposed. A month after the launch of the consultation, the Legislative Council voted in favour of scrapping the single-developer approach and the canopy even though it was a signature feature of Foster's design, which the government had declared the winner of an international design competition in 2002. The then chief secretary, Donald Tsang Yam-kuen, at first refused to change the government's plan. Not until after the Executive Council in late 2005 approved dropping the single-developer approach and stipulated that one-third of the land would be reserved for arts and cultural facilities did Tsang's successor, Rafael Hui Si-yan, announce the scrapping of the canopy and a return to square one. Eight years after the first chief executive, Tung Chee-hwa, mooted developing a world-class integrated arts, cultural and entertainment district in West Kowloon, the government started all over again. It formed a consultative committee which, a year later in 2007, submitted a report recommending that the arts hub feature a mega-museum - referred to as M+ - as well as 15 performing arts venues and at least three hectares of outdoor piazzas and an exhibition centre. Three months later, it unveiled for public consultation a plan for what would be a self-sustaining cultural district run by a new statutory authority, which was duly formed and given the name West Kowloon Cultural District Authority. It started work in late 2008. Five month ago Graham Sheffield, formerly head of London's Barbican Arts Centre, was appointed to head the authority.
 

Top-end gadgets with prices to match at tech fair - Visitors take in the hi-tech offerings on the first day of the computer festival at the Convention and Exhibition Centre. Bargain hunters who didn't fancy paying HK$10,000 for a 3-D notebook tried their luck at an alternative fair in Sham Shui Po. The city's annual four-day computer fair opened its doors in Wan Chai yesterday with a feast of top-end gadgets and all the latest 3-D gear. But for those unwilling to shell out HK$10,000 for a 3-D notebook at the Hong Kong Computer and Communications Festival, a second computer fair opened in Sham Shui Po on Wednesday, offering an alternative for bargain hunters. Among the product debuts at the Convention and Exhibition Centre in Wan Chai was Lenovo (SEHK: 0992, announcements, news) 's 21-inch 3-D notebook, which converts images and videos from 2-D to 3-D. Priced at HK$10,900, the notebook has yet to hit the stores. Preorders were also being taken for a Toshiba netbook, which has dual touch monitors like a Nintendo DS, priced at HK$10,880. And local brand Olevia, trying to steal some market share from the Japanese and Korean firms, released a 3-D television at HK$16,800. "It's the first TV in town that is capable of sourcing 3-D materials from the internet," Martin Wong, of Olevia distributor South China House of Technology, said, adding that 3-D products could only be found at the Wan Chai event. Several tablet computers also made their debut at the Wan Chai fair. While an iPad starts at HK$3,888, similar products made on the mainland that use older versions of Google's Android system were on sale for less than half that price. Amaze PC tablets were selling for HK$680, with 2GB of storage and running Android 1.6. The HaiPad, which supports 3G, was priced at HK$1,280. For gadget freaks, there's a HK$480 USB microscope that can enlarge objects by up to 230 times their original size. Or a HK$25 electric candle that can be switched on and off by blowing on it. Shrewd shoppers were quick to find discounted items at the fair. Mos Fong Kai-kwong, of distributor Muse Digital, said Toshiba 2GB SD cards priced at HK$1 sold out in 10 minutes at his stall, while a mainland customer spent more than HK$40,000 on over 100 high-end memory cards. But the Sham Shui Po event seems to be the true domain of the bargain hunters. One student arrived at 5am, hoping to be first in line when the doors opened - nine others were already waiting. Samuel Cheng Chi-yan, 22, said customers at the Sham Shui Po event received tokens to redeem for discounted items according to their place in the queue.

 China*: An extra 25 billion yuan (HK$28.56 billion) in fresh capital is likely to flood mainland stock exchanges after Beijing raised the amount corporate annuities can invest in equities as it tries to revive the market. The central government will soon allow the mainland's annuities, which hold 252.5 billion yuan in assets, to invest a maximum 30 per cent in stocks, up from the current 20 per cent, according to the 21st Century Business Herald. Last week, the insurance regulator widened insurers' access to equities, which is likely to bring 400 billion yuan to the market. The markets are one reason for the move. The Shanghai Composite Index has slumped 19.4 per cent this year as Beijing embarked on monetary tightening to contain inflation and curb asset bubbles. The benchmark index lost 1.7 per cent to 2,642.31 points yesterday. "Fresh capital inflows have always proved an answer to a weak market," West China Securities trader Wei Wei said. "But it seems that a strong rebound is unlikely now that investors are wary of a worsening economic situation." The corporate annuities system works in parallel with the country's pension system, under which employers and workers contribute funds for employees' retirement on a voluntary basis. Only 15 per cent of employers in the nation participate in the corporate annuities system, according to Chen Liang, a division chief with the Ministry of Human Resources and Social Security. Given the country's under-resourced national pension system, Beijing has been encouraging companies to contribute more to workers' retirement funds. Executives had expected corporate annuities to reach one trillion yuan by the end of this year. In 2008, the China Securities Regulatory Commission said it would give corporate annuities wider access to the stock market as it tried to talk up the then-beleaguered market. The China Insurance (SEHK: 0966) Regulatory Commission had long been cautious about increasing the equity investment cap for the nation's 130 insurers, spooked by risk concerns. But the CIRC said last week that insurers could invest up to 25 per cent of their assets in mainland-listed A shares and mutual funds, up from the previous limit of 20 per cent. As mainland banks refrained from resuming their lending spree, the A-share market was hit by a liquidity drain amid a huge capital outflow. The loan binge last year caused an illegal inflow of 1.2 trillion yuan worth of loans to the market in the first half, according to Wei Jianing, a researcher with the State Council's Development Research Centre. "The market will be slumbering for a while," said Shenyin Wanguo Securities analyst Wei Daoke. "It is likely to swing in a narrow range amid low buying interest." The newspaper also reported that corporate annuities would be allowed to invest as much as 95 per cent of their assets in bonds, up from the current 50 per cent.

Foreign policy on back burner in Australia's election - Australian opposition leader Tony Abbott (bottom left) with former prime minister John Howard at a Chinese Liberal party fund-raising dinner in Chatswood, north of Sydney. Three years ago, China was at the forefront of the Australian general election with Labor contender Kevin Rudd wowing local Chinese Australians and impressing outside observers by sometimes electioneering in fluent Putonghua. It didn't hurt either that his daughter Jessica was married to Hong Kong-born Albert Tse. The young couple joined Rudd on the campaign trail, and focused their efforts on the Sydney electorate of Bennelong, held by the long-standing conservative prime minister John Howard. The newlyweds campaigned hard, notably at a joint appearance at the Eastwood Chinese Senior Citizens Club, where Jessica Rudd gave a speech in Putonghua, and Tse spoke in his native Cantonese. Team Rudd's affinity with China, China-related foreign policy, Chinese language and Chinese-Australian voters was a clear theme of the national campaign. Fast-forward to 2010, and things are very different in Bennelong, now held by Labor's Maxine McKew. Hugh Lee, president of the Eastwood Chinese Senior Citizens Club, says he will base his voting decision in today's general election on the merits of his local candidate rather than the merits of the federal parties and their foreign policies. Lee says he misses Kevin Rudd, deposed as prime minister in a party-room coup in June. "I think he's a good leader and I respected him a lot when he was prime minister. It doesn't matter what position he's in, he's still fighting for his future and that makes him a good role model in Chinese philosophy." Lee added: "We are minorities here [in Bennelong]; Chinese, Korean, Indonesian, Indian and Sri Lankans. Based on my encounters with the candidates, I have a feeling Ms McKew is more accommodating of minorities, and she listens.

Air China may take off into the corporate flying market for the Rich - An Air China venture with the Beijing city government would follow a business joint venture between Beijing Capital Airlines and Capital Tours in May. Demand high for business jets among the busy and the rich - Beijing-based Air China (SEHK: 0753) may establish a corporate jet joint venture with the Beijing city government to tap surging demand for business and luxury travel across the mainland. The potential of the country's business jet market has prompted state-owned airlines and international business jet operators to ramp up services. Corporate jets provide shorter check-in times at airports for executives and affluent people and offer flexible flight schedules for multiple-destination trips. The Air China venture, reported by China Business News yesterday, comes after HNA Group's Beijing Capital Airlines, a business jet joint venture between the carrier and the Beijing city government's Capital Tours, was incorporated in May. Air China currently operates less than a handful of corporate jets, said a spokesman for the carrier. Capital Airlines has 24 corporate jets on hand and plans to acquire more. Air China declined to comment on its proposed joint venture. With top executives and the super rich increasingly shunning long check-in queues on commercial flights, more global carriers are offering private jet services. British Airways has offered an intra-US business jet service through a joint venture with Cessna since June, while Lufthansa has a private jet division operating throughout Europe. "When you look at business aviation on a global basis, China is definitely the brightest star in terms of market potential," said Lester Ingram, chief operating officer of Hong Kong Aviation Group, one of the largest business jet operators in Asia, controlled by hotel magnate Michael Kadoorie. The business jet sector is still in its infancy in the mainland, with only approximately 60 jets registered in the country, said Ingram. That is a far cry from the 11,000 business jets registered in the United States. Ingram predicted the number of business jets in China will jump to 200 in five years' time. In a bid to capture a share of the lucrative market, Hong Kong Aviation Group is in talks with several mainland airlines to form a business jet joint venture, Ingram said. It is also studying a plan to set up a maintenance facility joint venture for business jets on the mainland. "In 12 months, we would aim to have some capacities on the mainland," he said. Under mainland aviation regulations, foreign companies cannot operate aircraft registered in China. "The business jet market has undergone extraordinary growth over the years as mainland people have started to realise the benefits and convenience of business jets," said Chris Buchholz, Asia-Pacific president of Universal Weather and Aviation, an American-based company that provides ground handling and flight permit services to business jets in Beijing, Shanghai and Guangzhou. However, the market is underserved due to limited infrastructure, air space management and expensive handling fees, Buchholz said. There are only a handful of business operators, namely HNA Group, Air China, Citic Group and Shanghai Airlines. Unlike the US or Europe, which allow business jets to take off from any legal airports, on the mainland business flights are restricted to certain airports only. Many of these airports already have heavy traffic and suffer from congestion, meaning business jets suffer flight delays. "Since the major airports in Beijing and Shanghai are so congested, the airports charge a business jet a landing fee on a par with a Boeing 737," Buchholz said. But in Los Angeles, in contrast, a business jet does not have to pay a landing fee at the various secondary airports. Beijing Capital International Airport (SEHK: 0694) and the two airports in Shanghai each account for one-third of the total business jet movements across the nation.

Guangxi in major push for regional trade - Nanning in Guangxi province is receiving major investments to upgrade port and airport facilities. It wants to boost trade with Vietnam and Southeast Asia and has ambitions of becoming an aviation hub. Fangchenggang port on the south coast of Guangxi was built in 1968 at the height of the Vietnam war to ship military supplies to the conflict-torn country. The cities of Nanning , Chongzuo and Fangchenggang reaped the benefits of that lengthy battle. Today, these same cities in the Guangxi Zhuang Autonomous Region are involved in more peaceful pursuits with the Southeast Asian country. Vietnam has become Guangxi's biggest trading partner, prompting the region to embark on building ports, railway and roads to expand its trade with other Southeast Asian nations as well. Over the next two years, 150 billion yuan (HK$171.40 billion) will be invested in infrastructure in the Beibu Gulf Economic Zone , a region within Guangxi that includes the three ports of Fangchenggang, Beihai and Qinzhou , as well as the provincial capital, Nanning. Today the biggest investor in Fangchenggang is Hong Kong. Power producer CLP owns 70 per cent of the largest foreign-invested power station in the port city, said Qin Yongfang, an official at the Investment Promotion Bureau of Fangchenggang. Fangchenggang's cargo capacity will expand from 60 million tonnes at the end of this year to 100 million tonnes by 2015, said Fangchenggang Port general manager Xie Yi.

Aug 21 - 22, 2010

Hong Kong*: Hong Kong saw a 31.9 percent year-on-year rise in visitors in July, reaching its highest monthly level of 3.14 million, the Tourism Board of the city said on Thursday. The arrivals base for comparison this July is relatively lower, given that visitor arrivals in the same month last year were impacted by the A/H1N1 influenza. However, the gain in visitor arrivals in July was strongly encouraging, with arrivals surpassing the July 2008 figure by 15.8 percent. The Chinese mainland led the growth with arrivals from there up 40 percent on the same period last year, to more than 2 million visitors, the highest monthly figure for the market. The significant growth was attributed to the fact that summer is a popular travel season among mainland visitors and the implementation of Individual Visit Scheme measures in Shenzhen which has made it easier for Shenzhen residents to visit Hong Kong, said the Tourism Board. Long-haul arrivals rose steadily by 10.6 percent while the short-haul market grew 22.3 percent. As the economy improved and flight capacity increased, South and Southeast Asia arrivals grew 40 percent, while those from Taiwan rose 10.4 percent as a sign that the effect of direct cross- strait flights is stabilizing. As for emerging markets, arrivals from Russia, the Middle East and India rose 86 percent, 47.5 percent and 44.9 percent respectively. For the first seven months of the year, total arrivals stood at 19.99 million, up 24.4 percent on the same period last year.

467 Dragonair cabin staff back walkout - Carry-on duties and carry-on baggage key issues as both sides gear up for more talks. Time is running out for Dragonair in its tussle with its flight attendants over working hours. More than one-third of the airline's 1,200 cabin crew gave their union the go-ahead yesterday for industrial action, so a full-blown strike could happen as early as this month. Even if only a quarter of the 467 cabin crew who voted yes took part in a strike, it would severely disrupt operations at Dragonair, which experienced serious flight delays last month because of bad weather and tightened air traffic control on the mainland. But despite the high voting rate, which the Hong Kong Dragon Airlines Flight Attendants Association said was beyond its expectations, the union said it would only resort to a strike if the management failed to offer a better solution to ease the workload of the cabin crew.

A senior Beijing official in Hong Kong said he was unaware of any plans to revive national security legislation under Article 23 of the Basic Law, amid intensifying speculation that the issue is about to reappear. But Hao Tiechuan, director general of the department of publicity, cultural and sports affairs at the central government's liaison office, said while the news media should monitor government, priority should be given during social unrest to helping authorities resolve crises. Speaking at a lunch meeting of the Hong Kong Journalists Association - an ice-breaking event and the first time a senior Beijing official had been invited as a guest - Hao was asked to comment on speculation that attempts to enact a security law would soon be revived. "I note there were newspaper reports about the national security legislation but I personally have not given a thought to this issue," he said. When pressed again, Hao said: "Both you and I learn from newspaper reports about discussion and speculation on legislative work to enact Article 23. Apart from that, I haven't had other information." This was the first time any official from the central or Hong Kong government had commented on the topic. Recently, intensifying rumours have suggested that Chief Executive Donald Tsang Yam-kuen is under pressure to revive the controversial bill, shelved in 2003 after half a million people protested against it. Mainland researchers have recently increased efforts to sample public opinion in Hong Kong, and some have said the central government is concerned that reintroduction of the bill could destabilise a political truce, secured as a result of Beijing's deal with the Democratic Party over constitutional reform. Hao, who in June dismissed the party's compromise reform package as an "unnecessary addition" without legal basis days before the deal was reached, sidestepped questions on whether he had blundered with a Chinese nursery rhyme. "When two little goats approach the middle of a bridge spanning a river, both will fall into the river if neither is willing to budge," he said, without elaborating. "I think you won't want me to be the goat falling into river." In a speech on legal issues which journalists face when covering crises and social unrest, Hao said the international norm was for governments to control press freedom in the public interest, although recognising the rights of the fourth estate. "In time of crises in social order, resolution of the crisis and restoration of order is the top priority," he said. "Assisting the government in crisis management measures is the top priority of the media and monitoring the government comes second," he said. But association chairwoman Mak Yin-ting told journalists after the meeting: "The mission of journalists is to inform the public under any circumstances." However, she welcomed the dialogue between the liaison office and journalists.

Employers and unionists thrashing out Hong Kong's first statutory minimum wage rate are deadlocked over HK$2. Both sides say they have already made a big compromise on their earlier positions - with unions saying they will accept HK$30 an hour and bosses HK$28 - and are not prepared to budge any further, people familiar with the negotiations say. Unions said earlier they wanted HK$33, while business groups said employers could only afford HK$25.

Thousands pack Sham Shui Po as computer festival begins - No entrance fees, HK$1 bargains, free cold drinks - it didn't take much to pack thousands of people into four Sham Shui Po computer malls yesterday to seek cheap deals at a week-long festival sale competing directly with a similar event which begins in Wan Chai on Friday. The Golden Computer Arcade, Golden Computer Centre, Golden Computer Plaza new wing and New Capital Computer Centre kicked off their monster summer computer festival on a HK$1 million budget - with retail prices similar to or below cost - in a bid to bring in the punters before the Hong Kong Computer and Communications Festival starts on Friday. It worked. Golden Computer Centre, which recently experienced its lowest vendor occupancy rate in its history, was so packed with thousands of bargain hunters that shoppers could hardly move. Visitor numbers tripled from normal days, vendors said. Sales at CompuMark System Trading, a shop offering monitors and TV sets, exceeded HK$100,000 in three hours, or four times more than on a normal day, proprietor Sam Ho said. "The overlapping of the two festivals is good because it attracts people's attention," he said. The shop would also participate in the Wan Chai event. More than 300 bargains are offered daily at the Sham Shui Po fair. Yesterday, 20 sets of Philips speakers, priced at HK$29, one tenth of their retail price, sold out in 10 minutes. Sixty Phillips headphones and computer mice at HK$1 each went out the door in about the same time, and 60-gigabyte netbooks, each at HK$1,899 or HK$200 below cost, also sold out. There are more bargains today, among them 15 AOC 42-inch LCD TV sets at HK$3,999 and 60 Viewsonic 19-inch monitors at HK$599. Although the products are cheap, they come at a price: the first shoppers arrived to queue outside the Golden Computer Centre at 5am yesterday, and all 300 tokens which enable one to buy one of the limited-offer items, were gone by 8.30am. Tsang Yick-chui, 48, started queueing with his wife and son at 7am to buy two BenQ 19-inch monitors and a netbook for HK$2,998. "The monitor at home didn't break down," he said. "But it's so cheap I want to get an additional one." Alex Lee, a 19-year-old student, said he planned to buy a HK$299 external hard disk and would also attend the Wan Chai fair.

Lantau school digs in over noise complaints - Appeal over playground noise order rejected - Lantau International School in Pui O now has about 200 pupils. The stand-off between an international school on Lantau and neighbouring villagers is set to worsen following the government's dismissal of an appeal by the school against a noise reduction order. Two villagers say the dismissal vindicates their complaints about what they say is unbearable noise emanating from students, but Lantau International School on South Lantau vows it will continue its fight. It is the second time an appeal by the school against a noise abatement order has been dismissed. The Environmental Protection Department issued an initial order in March last year. That ordered the school to ensure that noise made by its pupils did not exceed 60 decibels from September 2009 to February 2010. Failure to comply with such an order can incur a fine of HK$100,000 and a HK$20,000 daily fine for each day noise exceeds the limit.

Death knell for HK's role as middleman after 60 years - Taiwan's legislature backs free trade agreement with Beijing - The death knell sounded this week on Hong Kong's six-decade role as a middleman across the Taiwan Strait with the final seal of approval on the landmark free trade agreement between Beijing and Taipei. The island's legislature approved on Tuesday the Economic Co-operation Framework Agreement (ECFA) after a marathon debate and numerous protests. The agreement between the two governments was signed earlier this year. Hong Kong now faces the difficult task of forging a new strategy to take advantage of the growing ties between the two markets, but commentators warn that it is expected to take time and effort. The deal, which further liberalises trade barriers between the mainland and Taiwan, will fuel competition and effectively certifies the end of Hong Kong's role as a bridge in the flow of people and goods and trade. It is due to take effect early next year. The vice-president of the Chinese Manufacturers' Association, Eddy Li Sau-hung, said that some Hong Kong entrepreneurs were in talks to co-operate with Taiwanese investors to break into the mainland market, particularly the service sector. "Hong Kong can no longer play its middleman role," he said. The agreement is about "the political integration between China and Taiwan". The ECFA, which grants Taiwanese greater access to the mainland's insurance, financial and banking sectors as well as reducing tariffs, draws the two sides of the strait to their closest point since the Kuomintang fled to Taiwan in 1949. However, some pro-independence supporters on the island suggest the agreement is a Trojan Horse to hide Beijing's true ambition of reuniting with the island. The ECFA calls for Beijing to lower tariffs on 539 imports from Taiwan valued at US$13.8 billion, or about 16 per cent of the island's exports to the mainland last year. In return, Taiwan will slash tariffs on 267 items from the mainland worth US$2.86 billion, or about 10.5 per cent of the mainland's shipments to Taiwan last year. The two sides have also signed an accord to co-operate on intellectual property rights.

China Telecom portal links Hong Kong businesses to mainland tourists - Chen Shuang, whose hometown is Guangzhou, is a television producer in Beijing. When she visited her parents earlier this month, she first flew to Hong Kong for a quick stopover to buy presents and, in just three hours, spent a small fortune. Looking to corner a sizable chunk of the market created by the likes of Chen, China Telecom Corp (SEHK: 0728) has launched a one-stop portal, "Best in" (www.114.com.hk) , where visitors can book hotels, highlight the best dishes of a restaurant and find out more about the fun spots in places like Tsuen Wan that are usually not frequented by mainland tourists. An estimated 150 million frequent visitors from the mainland will come to Hong Kong in the next five years, spending HK$200 billion on accommodation, entertainment and shopping. The number of non-tour-group tourists from the mainland has been increasing 16 per cent annually since they were allowed to travel to Hong Kong as individuals in 2003. Last year, mainland visitors totalled 17.96 million, of whom 10.59 million were individual travellers, spending HK$20 billion among them. Mainland tourists who spent a night in Hong Kong last year on average spent HK$6,620, statistics from the Hong Kong Tourism Board shows. For those whose stay was even shorter without spending a night here, the average figure was HK$2,352. China Telecom's portal will also serve as a gateway for Hong Kong businesses to reach mainland consumers who cannot travel to Hong Kong. Currently, only 53 cities among the 660 on the mainland are covered by the individual travel scheme. The number of frequent individual travellers last year exceeded 10 million, representing just about one-60th of the mainland's 600 million urban population. For businesses that want to reach out to this huge market, China Telecom charges HK$1,000 per month as a registration fee. Those that want more than just to be found on the portal and are seeking to actually buy and sell through it are required to pay HK$1,500 per month. Deng Xiaofeng, chairman and chief executive of China Telecom (Hong Kong) International, said: "The portal will help Hong Kong businesses tap into the enormous mainland market." Online business-to-customer and customer-to-customer deals on the mainland have been growing rapidly in recent years, reaching 263 billion yuan (HK$300.92 billion) last year, up 108 per cent from the year before.

Hong Kong people must brace themselves for even higher prices for food because of widespread flooding in the mainland and an appreciating yuan. Prices have also risen sharply north of the border. In a move to stop an "increasingly serious" food supply situation, Premier Wen Jiabao told the State Council yesterday that the government will expand production to ensure stable supply and prices of vegetables. Vegetable prices fluctuated sharply in some large cities because supplies were affected by floods. The price of eggs has increased for 12 straight weeks, and now costs 8.57 yuan (HK$9.80) per kilogram, up 1.7 percent from last week. Fresh milk in 10 provinces rose to 2.93 yuan per kilogram, up 0.7 percent from last week, and 27 percent higher than a year ago. Locally, the price of chicken has risen by as much as HK$10 a catty, and duck costs HK$4 more. "Floods and droughts in the mainland in recent months significantly reduced the supply of livestock," said Hong Kong Livestock Industry Association chairman Kwok Sze-hing. "Coupled with the high yuan exchange rate, prices could rise 20 to 40 percent by the Mid-Autumn Festival next month." Poultry vendor Wong Wai-chuen said the retail price of a small chilled chicken rose from HK$22 to HK$26 per catty and a large one now costs HK$50 per catty instead of HK$40. Chilled duck is up 36 percent to HK$15 per catty. Eggs from the mainland have risen 30 percent since June. Eateries are also feeling the pinch. "We're under pressure to push up prices because commodities like oil, salt and sugar have been costing more in recent months," said Simon Wong Ka-wo, chairman of the Hong Kong Federation of Restaurants and Related Trades. About 20 branches of Tai Hing Roast Restaurant recently raised the price of their set meals - ranging from HK$40 to HK$50- by HK$1, or up 2-3 percent. Elsewhere, Hong Kong noodle factories are paying 7.5 percent more for wheat after Russia banned grain exports as harvests have been hit by a drought. And the yen's rise to 15-year highs against the US dollar - to which the Hong Kong currency is pegged - has driven up the price of Japanese food. Inflation in the mainland rose to a 21-month high of 3.3 percent last month. "Under the continuous pressure from the mainland's inflation, the hike in food prices will trigger a chain reaction and push up the prices of other commodities," said Li Kui-wai, associate professor of economics and finance at City University of Hong Kong. Li expects inflation in Hong Kong to reach 3 percent by year's end.

Shares of CITIC Pacific (0267) closed at a 15-week high yesterday after the conglomerate's first-half net profit almost doubled, easily beating a market forecast of a 17 percent gain.

Cheung Kong Infrastructure (1038) - part of the empire of tycoon Li Ka-shing - is looking to pay up to 2 billion (HK$24.27 billion) for a rail line in Britain.

 China*: Higher home selling prices helped mainland developer Shui On Land (0272) post a first-half net profit of 1.58 billion yuan (HK$1.81 billion), almost double that of the same period last year. Earnings per share were 31 fen. An interim dividend of 6 HK cents was declared. Operating profit climbed 423 percent to 1.17 billion yuan before the revaluation of property investment. Contracted sales surged 175 percent to 2.78 billion yuan in the six months to June 30, with a total gross floor area of 135,800 square meters delivered. The average selling price rose 108 percent to 21,200 yuan per square meter. Shui On had a fair value gain from revaluation of investment properties of 1.46 billion yuan - 7.3 times the 199 million yuan year-on-year. The firm aims to raise 6 billion yuan from property sales this year, and the target in the second half is 4.5 billion yuan, said chairman Vincent Lo Hong- sui. A total GFA of 334,600 sq m will be launched in the second half, with a project in Foshan coming on stream within two weeks. Turnover jumped 134 percent to 3.12 billion yuan. Its net gearing ratio jumped 32 percent as of June 30 from 23 percent at the end of last year. "The gearing ratio is still lower than other developers ...We aim to keep it at under 65 percent," said chief financial officer Daniel Wan Yim Keung.

Strong demand has been reported for yuan- denominated corporate bonds issued by US fast- food giant McDonald's - which is making history as the first non-financial multinational firm to offer such debt issues in Hong Kong. The burger chain is issuing 200 million yuan (HK$228.86 million) worth of bonds, after Beijing gave non-mainland incorporated firms the green light to do so. Standard Chartered is the sole arranging bank. McDonald's is offering the three-year bonds, with an annual coupon of 3 percent, to institutional and professional investors. The bonds were welcomed by institutional investors in Hong Kong and overseas, said Sundeep Bhandari, StanChart's regional head of global markets, Northeast Asia, adding that "they were multi-times subscribed in a very short time." Although the bond issue is relatively small, it will strengthen Hong Kong's status as a yuan offshore center, Bhandari said. "The funds will provide working capital to support the growth of McDonald's in China, including the opening of restaurants," the fast- food chain said. It plans to open between 150 and 175 outlets in the mainland. McDonald's has some 1,100 restaurants employing 60,000 staff nationwide. The State Administration of Foreign Exchange allowed McDonald's to raise 200 million yuan, a source said. "The company will invest the yuan raised in Hong Kong in its mainland business through foreign direct investment channels, in the way Hopewell Infrastructure (0737) will do," the source said. Hopewell Infrastructure raised 1.38 billion yuan in July after launching the first yuan- denominated corporate bonds in the SAR. The two-year bonds offered via Bank of China (Hong Kong) (2388) pay interest of 2.98 percent per annum. However, a banking source said the toll-road and infrastructure firm is waiting for approval to send the yuan across the border.

A Chinese company could be lining up a bid for Potash Corp of Saskatchewan, after a US$39 billion BHP Billiton offer was rejected, according to JP Morgan. China is "dependent upon potash exports so they are a big customer of Potash Corp", said asset manager Ian Henderson. Potash Corp, the world's largest fertiliser maker, this week rejected a US$130-a-share offer from BHP, describing the bid as "grossly inadequate". Rival bidders may include Vale, Rio Tinto Group and groups in Russia and China, the world's biggest user of fertiliser with about 30 per cent of global consumption, according to Macquarie Group analysts. In the absence of a higher BHP bid, Potash Corp sees the best alternative offers coming from businesses backed by China or India, or companies such as Vale, people familiar with the matter said. Likely bidders from China are Sinochem Group, the nation's largest chemical trader, China Investment Corp, the sovereign wealth fund, or Sinofert Holdings (SEHK: 0297), the Hong Kong listed fertiliser company in which Potash Corp has a 22 per cent stake. "China has been acquiring production across a number of commodity classes," Macquarie analysts led by Duncan McKeen wrote. "Given that it is still a large net importer of potash, it may be a logical buyer." A concern for Potash Corp would be that Chinese companies move too slowly for the Canadian takeover code, they wrote. BHP, the world's biggest mining company, has arranged US$45 billion of loans for its now hostile bid, the most debt to finance a takeover since February 2008. BHP is seeking to take control of Potash Corp to become the leading producer of fertiliser, betting on rising demand as global food needs grow. "What we've got on the table is a full offer and that's the only thing that I can talk about," BHP chief executive Marius Kloppers said yesterday. "I can't speculate about anything else."

100 billion yuan (US$14.7 billion) China's Alliance drives promotion of electric cars - An alliance of sixteen of the largest State-owned companies wants to accelerate development of electric vehicles in China, a move which underscores the country's ambition to be a world leader in new energy vehicles. The alliance, formed on Wednesday, is gearing up to invest 100 billion yuan ($14.7 billion) on electric vehicles by 2012, according to media reports. Guided by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), the alliance was formed by almost all the major players in the related sectors, including the country's top three oil majors, top two power grid operators, and two major automakers - China FAW Group Corp and Dongfeng Auto Corp. The alliance aims to speed up research and development in vehicles, fuel cells and charging systems, as well as setting some unified standards, said SASAC Minister Li Rongrong. China has already made some progress in areas like auto parts and fuel cells, and should take further steps to build internationally competitive Chinese electric car brands, Li said. Early in 2008, the central government launched a national campaign aimed at getting 1,000 electric vehicles on the roads in at least 10 cities each year to encourage people to buy electric cars. In June, the Ministry of Finance kicked off an incentive policy in five pilot cities - Shanghai, Shenzhen, Hangzhou, Changchun and Hefei - providing subsidies of 60,000 yuan for a pure electric vehicle, and 50,000 yuan for a plug-in hybrid vehicle. Chinese automaker and batterymaker BYD, a company which Warren Buffett has invested in, launched its first battery-powered car in 2008 and formed a joint venture on electric cars with German automaker Daimler in March. The consulting firm McKinsey & Company said the US is the most likely to spearhead a movement toward electric cars from gasoline-driven cars. McKinsey ranked the US first in its electric-vehicle index, ahead of France, Germany and China. Many western European countries have invested heavily in the development of green energy technologies. Li said the alliance is open to other companies, both domestic and overseas. Use of cleaner energy vehicles is in line with China's aim at improving energy efficiency and cutting pollution, said Dai Yande, deputy director of the Energy Research Institute (ERI) affiliated with the National Development and Reform Commission. "It is hard for the country to achieve its energy and environment targets without environmental friendly cars," he said. Use of cleaner energy vehicles not only reduces China's reliance on imported oil, but also helps the country cut greenhouse gases emissions, he added. China has pledged to reduce its carbon intensity by 40 to 45 percent in 2020 from the 2005 level. The country has also set a target of raising the use of non-fossil energy to 15 percent of total energy consumption. Car sales in China are expected to reach 17 million this year, up 30 percent from last year, China Passenger Car Association said in July. The alliance will help promote the use of electric cars in China, and the establishment of industry standards will be of immense benefit, said Wang Liusheng, an analyst at China Merchants Securities. However, the alliance should include more automakers, such as China's biggest auto manufacturer SAIC Group and BYD, he said. "Otherwise, the effect will be limited across the total automobile industry."

Geely's Volvo gets a Chinese parking place in Shanghai - A customer examines a Volvo S90L sedan in Beijing. Zhejiang Geely Holding Group Co Ltd has got the necessary approval to set up a production facility in Shanghai for Volvo cars, sources said on Thursday. "Jiading will host the facility," said Jin Jianzhong, Party secretary of Jiading district in Northwest Shanghai, in a telephone interview with China Daily. "We have reached an agreement with Geely on the matter and will provide a series of favorable policies for producing Volvo cars," said Yu Jianhua, deputy director of the Jiading Industrial Zone and Asset Management Committee. However, both of the officials refused to disclose further details about the project, and said the local government and Geely will make a formal announcement in this regard soon. A source familiar with the project said the National Development and Reform Commission has already cleared the plan. Jiading district government said on its website that Geely will set up the new facility in the Jiading Industrial Zone with an annual capacity of 300,000 vehicles. The plant will produce Volvo's three-door, four-seat hatchback C30 and mid-sized five-door estate car V70 in 2012. The company will also locate Volvo's China headquarters, research and development center as well sales and sourcing center in Jiading. Work on the facilities is expected to begin in the first quarter of 2011 and is likely to be completed by the second half of 2012.
Jiading has already provided a 16,000-square meter workshop to Volvo for its temporary research and development center. By the end of this year, 200 to 300 engineers will work at the facility to develop cars for the Chinese market. Analysts said Jiading, which is also home to Shanghai Volkswagen and several auto parts makers, will be an ideal location for Geely as it is China's automobile center and not located too far from Geely's headquarters in Hangzhou. The automobile segment is the pillar industry in Jiading contributed nearly 38 percent or 18 billion yuan ($2.65 billion) to the district's industrial output in the first quarter. This February, Geely's subsidiary Beijing Geely Wanyuan International Investment Co signed an agreement with Jiading government's Shanghai Jia'erwo Investment Co to establish Shanghai Geely Zhaoyuan International Investment Co for the planned Volvo project. Earlier this month, Geely completed the acquisition of the Volvo car brand by paying $1.8 billion to Ford Motor Co, the biggest takeover by a Chinese automobile company overseas.

Cruel plight of rural girls in vice trade - Young prostitutes, many of them rural girls who dreamed of a better life, wait for clients in Wuhan, the provincial capital of Hubei. With her painted eyebrows, dress and long, hennaed hair, worn in curls, 20-year-old Xiao Min looks like a university student. She always smiles at people and listens to others carefully, just like the girl next door. But her seeming naivety masks a cruel reality. Xiao was forced into prostitution nearly four years ago. It is a story she says is not unusual for hundreds of thousands of rural girls. In 2007, Xiao was a 16-year-old schoolgirl who had just graduated from a junior high school in a town in Xiangfan , Hubei . That summer she met her best friend, who quit school at 14 and left for a better life in Wuhan , the provincial capital. Xiao began dreaming of a future in Wuhan after hearing from her friend that it was a city full of fun and job opportunities. "My friend looked very fashionable and could afford a cellphone, cosmetics and jewellery," Xiao said. "I felt very jealous and wanted to go with her immediately. "Both my parents worked in Guangdong and only came back home once a year. They just left me alone. They didn't believe in supporting a daughter studying at college. All they wanted was for me to make money in the city and come back to marry a man at 22 or 23." As soon as she arrived in Wuhan, Xiao was taken to a hair salon and raped by its operator. "The girl [her friend] and the other girls were all under the control of the men," she said "They just sat next door while I was raped." Xiao said she was forced to become a prostitute after the men took nude photos of her and threatened to hurt her family if she ran away. Eight months later, the men were arrested for trafficking drugs but Xiao kept moving from one hair salon to another, still working as a prostitute. "It's too late to restart my life," Xiao said. "I've already lost my virginity and I don't want to be a factory worker. Why not take advantage of our beauty and get rich?" Many of the girls working as prostitutes in hair salons and massage parlours are, like Xiao, the children of migrant workers. The mainland's rapid economic development has seen more and more people leave their villages to work in distant cities, leaving their children in the care of grandparents who provide food and lodging but cannot address the children's physical and psychological problems. The children they leave behind are easy prey for brothel operators. According <147,1,0>to statistics from the All-China Women's Federation, there are now 58 million children who have been left behind in rural areas. Xiao said young prostitutes could earn more if they dressed as schoolgirls. "I once made more than 1,000 yuan [HK$1,145] a day," she said. "I can guarantee at least 200 yuan a day even now, during an anti-prostitution campaign." Ye Haiyan , the founder of the China Grass-roots Women's Rights Centre, said the youngest prostitute she had met was only 14. "We called her `little bean'," Ye said. "She sent 3,000 yuan back to her parents in her rural hometown for the first year and 10,000 yuan in the second year. Her parents cared little about what she did in Wuhan, even though they knew she was working in a hair salon. They're happy that their daughter is in the business for easy money and fancy clothes." No official data shows the true scale of under-age prostitution on the mainland and it can only be sensed from sporadic reports by local media. The China Youth Daily reported in April last year that 11 girls under 18 - three of them just 13 - were lured or coerced into a prostitution ring in Xishui county, Guizhou. In December 2008, Lu Yumin , a taxation official in Yibin county, Sichuan , bought the virginity of a 13-year-old girl for 6,000 yuan. The penalty for Lu's "inappropriate behaviour" was 15 days' detention as an "administrative punishment" and a 5,000 yuan fine. In 2002, a court in Kunming , Yunnan , jailed one girl for four years and handed down suspended sentences to nine others, aged between 16 and 18. They were accused of involvement in an informal prostitution racket involving over 50 schoolgirls.

Taiwan IT giant Foxconn plans to hire up to 400,000 new employees in the mainland over the coming year, partly to keep up production despite cutting maximum overtime hours, officials said on Thursday. The company, a major supplier to brands such as Apple, Dell and Nokia, said the expansion plan, coming after a series of suicides this year, will boost its work force to 1.3 million. “We’re not sure if that can be done, but that’s the direction we’re aiming for,” Foxconn spokesman Arthur Huang said. The planned increase will come about mostly in the central provinces of the mainland as the company seeks to scale back the size of its biggest facility in Shenzhen city, he said. Louis Woo, an assistant to Foxconn CEO Terry Gou, confirmed in a statement that the company intended to add 300,000-400,000 new employees over the next year. “This estimated increment is, in part, a result of reducing maximum overtime hours allowed for employees in line with Chinese government regulations and the company’s goal of giving employees increased time outside of the workplace,” he said. “It will be adding new employees to ensure that operations will be maintained at current production levels following the implementation of the reduced overtime program.” A total of 13 mainland employees have committed suicide this year at Foxconn plants and an affiliate by jumping from buildings, including 10 in Shenzhen. Labour rights activists have blamed the suicides at Foxconn – the world’s largest maker of computer components – on tough working conditions in its factories. But company founder Gou has said none of the suicides was directly work-related and that he was cleared by authorities of any wrongdoing in the period leading up to the suicides.

China Mobile replaces CEO, shares dip on weaker outlook - China Mobile (SEHK: 0941) is banking on a leadership change and value-added services like music downloads to reignite growth, after reporting quarterly earnings that beat expectations but were still sluggish. The world’s biggest mobile carrier said its longtime chief executive Wang Jianzhou is stepping down and will be replaced by vice-president Li Yue, in a highly anticipated move to pave the way for new, younger leadership at the company. China Mobile has been moving into what it considers higher value complementary areas with bigger growth potential than traditional voice services. Such initiatives include developing a mobile search technology with state-run Xinhua news agency and buying Shanghai Pudong Development Bank to boost its electronic payment business. “China Mobile is probably the best bet for investors right now because it doesn’t have any of the baggage that its competitors have,” said Frank Zhu, an analyst at SinoPac Securities in Shanghai. “Li is also a veteran at the company, having worked his way up, and his appointment is probably a good move as he’s still relatively young.” The move solidifies Li’s ascent in the company and comes after the state-run parent of China Mobile, China Mobile Communications Corp, named him as its new president in May. Revenue from value-added businesses such as music and book downloads rose over 13 per cent and contributed almost 30 per cent to China Mobile’s operating revenue in the first half of the year, helping to lift the company’s second-quarter profit by 7 per cent. The market was unimpressed with the leadership change and profit and instead focused on erosion of basic metrics, with China Mobile shares dropping 3 per cent in afternoon trade after the results came out, underperforming a 0.2 per cent rise for the broader market. More than 30 million China Mobile shares changed hands, up 50 percent compared with the 90-day average. Despite the mainland’s position as the world’s biggest mobile market with nearly 800 million subscribers, growth for China Mobile and its competitors has been slowing as revenue from voice calls declines amid increasing cellphone penetration rates. To maintain their growth, China Mobile and smaller rivals, China Unicom (SEHK: 0762) and China Telecom (SEHK: 0728), have been trying to attract users to their 3G services to grow revenue and recoup a combined $21 billion spent building networks last year. China Mobile’s 3G network is based on a homegrown mobile standard called TD-SCDMA, and had 10.5 million users at the end of June, up from 3.4 million last year. China Mobile posted an April-June net profit of 32.12 billion yuan (HK$36.70 billion), up from 30.1 billion yuan a year ago, and roughly in line with the average forecast of 30.42 billion yuan from three analysts surveyed by Reuters. But China Mobile chairman Wang Jianzhou warned in a statement that the group faced “new challenges amid the already high mobile penetration rate and the intensifying competition in China’s telecommunications market”. Monthly average revenue per user, or ARPU, a widely watched industry indicator, fell to 72 yuan in the first six months of this year from 77 yuan for all of last year, amid intense competition. Earnings before interest, tax, depreciation and amortisation (EBITDA) margin, a key indicator of a telecoms operator’s profitability, fell to 50.7 per cent from 51.6 per cent a year ago. China Mobile’s results could set the tone for those of rivals Unicom and China Telecom, who are also expected to post declining or flat profits when they report their earnings next week. China Mobile is the world’s largest mobile operator by market capitalisation and number of users. Its subscriber base of over 500 million users is bigger than the population of the United States, Australia and Germany put together. Despite worries about growth in its home market, China Mobile shares have risen about 16 per cent this year compared with a 3 per cent decline in the benchmark Hang Seng Index. Before the Thursday drop, shares rose this week to their highest level in a year as investors flocked to a blue-chip stock seen as a safe-haven amid broader market weakness.

Taiwan's parliament on Thursday passed a controversial bill to open local universities to mainland students, but with a number of restrictions to prevent them taking jobs from locals.

Disgraced former Shenzhen mayor Xu Zongheng has been stripped of his Communist Party membership and official position, paving the way for his prosecution.

Asian consumer spending seen at US$32 trillion by 2030: ADB - Developing Asia’s middle class is rapidly increasing its size and purchasing power, and will be an increasingly important force in global economic rebalancing, a report by the Asian Development Bank said. Consumer spending in Asia is likely to reach US$32 trillion by 2030, powered by the emergence of a rising middle class in the fast growing economies of China and India, the Asian Development Bank said on Thursday. Contributing 43 per cent of worldwide consumption in the next 20 years, Asia will assume the traditional role of the US and European middle classes, the Manila-based bank said in a report released in New Delhi. It estimated Asian consumers spent about US$4.3 trillion, or about a third of OECD consumption expenditure in 2008. “Developing Asia’s middle class is rapidly increasing its size and purchasing power, and will be an increasingly important force in global economic rebalancing,” chief economist Jong-Wha Lee said in the ADB’s 2010 report on key regional indicators. Nearly 56 per cent of the population, or about 1.9 billion people, have pulled themselves into the ranks of those earning US$2 to US$20 per day in 2008, the ADB said, with the number growing by around 205 million in India from 1990 to 2008, second only to the mainland. But it cautioned that more than 75 per cent of India’s middle class remain in straitened circumstances, and at risk of falling back into poverty if hit by a major economic shock such as the global financial crisis. Economic growth in the mainland added 800 million people to the middle class between 1990 and 2008, when spending in Asia rose almost three-fold versus marginal increases in other regions, it said. The rise of the middle class in Asia could sharpen environmental and health concerns that until recently were more typical of wealthier parts of Asia and the world.

Aug 20, 2010

Hong Kong*: The government would increase land supply next year in an attempt to stabilise the property market, Secretary for Development Carrie Lam Cheng Yuet-ngor said on Wednesday.

A greenery-filled West Kowloon terminus for the Express Rail link can complement the next-door cultural district, the MTR Corp says. Three hectares of public open space with greenery will top the four-story underground West Kowloon terminus of the Guangzhou-Shenzhen-Hong Kong Express Rail Link, project general manager Paul Lo Po-hing said yesterday. It will occupy about 27 percent of the 11-hectare space where the terminus for the express will be situated. And the MTR will try its best to coordinate with the masterplan of the West Kowloon Cultural District, when it is decided early next year, Lo said, because open space right next to the terminus offers "great flexibility." Offering an update on the terminus now that foundation work has started, Lo said a plaza on the west of the terminus would be a barrier-free open space and easily accessed, even by the disabled. "The greenery area will be about three hectares," he said. "That is the size of about three football fields. It can serve as a fresh air sanctuary in the city." Because there is not much greenery in Kowloon overall, he added, it was decided to have the roof of the terminus covered by greenery and for people to walk atop it. "It is a people-oriented design." He also said people could enjoy themselves in the plaza, though it would not suit large-scale activities. Lo also underlined that the upper floors of the terminus - able to take 15 trains at a time - will have glass panels to let in as much natural light as possible, and the facility will be packed with energy-saving devices. Special fluorescent tubes will use 20 percent less electricity than normal tubes, he said, and a rainwater-collecting system and filters are to provide water for cleaning. Seeking to fend off worries that the West Kowloon terminus will not fit with the masterplan for its cultural neighbor, Lo said the corporation was in close liaison with the West Kowloon Cultural District Authority. But the MTR Corp had to call for tenders for building the terminus this year as the aim is to have the express service up and running in 2015. Against this, there will not be a final design for the West Kowloon Cultural District until next year. Still, he said, the MTR Corp's plan is for people to be able to walk to the cultural district through a barrier-free open space or a pedestrian subway from Austin MTR station. So the terminus "won't pose any obstacle." The West Kowloon Cultural District Authority will unveil plans from three architectural firms on Friday to commence a second round of consultations. A winner is expected early next year.

Hung Hom homeowners with property on the market raised their asking prices by up to 10 percent right after yesterday's auction. This contrasted sharply with the situation just days earlier when potential sellers slashed their asking prices after the government introduced new measures to cool the market. The cost of the site at Hung Hom Bay amounted to HK$9,597 per square foot, far higher than the average price of around HK$6,600 to HK$7,500 psf for large secondary projects nearby. "Flour is now more costly than bread," said Patrick Chow Moon-kit head of research at Ricacorp Properties. Knight Frank expects completed homes at the site to sell for up to HK$15,000 psf. An owner selling a 770-square-foot flat at Harbour Place, adjacent to the bay lot, raised the asking price by 8.6 percent to HK$6.3 million, or HK$8,182 psf, according to Centaline Property. Another seller at Laguna Verde lifted the asking price by 7.1 percent to HK$10.5 million, or HK$9,276 psf. Chow expects more potential sellers to pull their homes off the market and wait for prices to shoot up. In Ho Man Tin - where a second site went under the hammer yesterday - Midland Realty said homeowners phoned in to raise asking prices by 3 to 5 percent. Hong Kong Property said that homeowners at high-end projects such as Celestial Heights and Parc Palais had already raised prices by up to 10.7 percent after the auction for a prime plot on The Peak last month. The agency expects the high prices fetched yesterday to boost transactions in Ho Man Tin. But rival Centaline said deals may remain sluggish for a while as potential buyers and sellers take a wait-and-see altitude. Midland Realty director Jeffrey Ng Chong-yip is conservative about future prices as the official curbs may still be influencing homebuyers' decisions. "It is still a user-led market, and the demand will help set the price range," Ng said. He believes that the aggressive bidding at the auction reflected developers' strong need to replenish their land banks. Realtors, surveyors and analysts generally believe developers are upbeat about the homes market.

The government raked in a massive HK$7.61 billion at land auctions yesterday - but the surprisingly high prices left a question mark over its new curbs to cool the sky-high market. Experts believe more curbs will be brought in if home prices keep rising. Cheung Kong Holdings (0001) stepped in to win both urban sites, taking a Hung Hom Bay plot for HK$3.51 billion - up 98.3 percent from the opening bid - and an Argyle Street plot for HK$4.1 billion, 43.5 percent above the trigger price. The price of the Hung Hom plot shocked market watchers, said Patrick Moon-kit Chow, Ricacorp Properties head of research. "The result really far exceeded expectations," said Chow, "and the one in Argyle Street looks quite reasonable." The Hung Hom site had been estimated to fetch up to HK$2.7 billion, while the Ho Man Tin plot's price was only lower than one estimate in a poll of six surveyors and a realtor. Cheung Kong deputy chairman Victor Li Tzar-kuoi stressed the auction results should not be references for future property prices, given the special attractions of the two sites. "The views are the major reasons we sought these plots - 90 percent of units in the Hung Hom Bay project will have sea or Central city views," Li said. A similar proportion of the flats in the proposed project in Argyle Street will offer green views. Li said there will be some homes smaller than 1,000 square feet at the two developments. He noted buyers for Cheung Kong's units are mostly end- users, with an insignificant number of confirmor sales. On Friday the government acted to cool prices by banning the resale of homes before a deal is completed, and the Hong Kong Monetary Authority lowered the loan-to-value ratio for homes worth HK$12 million to HK$20 million to 60 percent, from 70 percent. Buyers must spend no more than 50 percent of monthly income on a mortgage. The maximum loan-to-value ratio for first-time buyers was lowered from 95 percent to 90 percent. Polytechnic University professor Eddie Hui Chi-man said the new curbs proved unable to contain rising home prices or deter developers from making bids yesterday. Hui said the government should devise targeted measures to help the grassroots. "It may need to consider increasing land supply for smaller units." The auction of more sites announced last Friday will add an extra supply of 540 homes, a negligible amount. But Hui acknowledged the government is effectively selling plots on a regular basis to meet market demand. A Kowloon Tong site will go under the hammer in two weeks, followed by three sites in Fan Ling, Chai Wan and Hung Hom. Boosted by the auction, real estate stocks rose. Cheung Kong gained 1.06 percent, while Sino Land (0083) and Kerry Properties (0683) - which formed a consortium - rose 3.61 percent and 1.31 percent. After the auction, Easyknit International (1218) released the initial price list for its single-building One Victory in Ho Man Tin. Prices range from HK$3.85 million to HK$9.44 million, or HK$9,778 to HK$11,010 per square foot. Lands Department deputy director and auctioneer Graham Ross said the government is "pleased to note the strong interest in the sites," but he declined to comment on the property curbs.

Hong Kong lenders and certain financial institutions are now allowed to tap the mainland's 48.8 trillion yuan (HK$55.83 trillion) interbank bond market on a trial basis, as part of the yuan cross-border settlement program. The announcement came in an unprecedented move from the People's Bank of China. Beijing's move yesterday allows eligible institutions outside the mainland - including global central banks and the Hong Kong Exchange Fund - to make use of their yuan holdings to diversify into mainland assets. These also include commercial banks and insurers in both Hong Kong and Macau. And it is expected to spur inflows from abroad and at the same time consolidate Hong Kong's position as a yuan offshore center, experts said. The new scheme will also reduce the central banks' reliance on US bonds, as they can diversify their portfolio into yuan interbank bonds, they said. US bonds currently account for more than 50 percent of the portfolio of most central banks. The Hong Kong Monetary Authority said it will "follow up with the PBOC accordingly." Bank of China (Hong Kong) (2388) and Bank of East Asia (0023) both also immediately said they will apply for investment quotas. "We will definitely invest in the [interbank bond] market but we need to look into what procedures and quotas we could have before we apply," BEA deputy chief executive Brian Li Man-bun said. The new rules may help the lender broaden the scope of its yuan investments and hedges better, Li said. "This will further promote the development of yuan trade settlements in Hong Kong, and enhance the attractiveness of yuan offshore business here," HKMA chief executive Norman Chan Tak-lam said. The authority will "liaise closely with the mainland central bank on the implementation," he said. "Today's announcement is significant as it moves yuan dealings beyond trade-related transactions," HSBC Holdings (0005) Hong Kong chief executive Mark McCombe said. "Yuan trade transactions of 20 billion yuan in the second quarter this year are a drop in the ocean compared with the 8.7 trillion worth of yuan bonds issued in China last year." The transaction volume of interbank spot bonds amounted to 32.7 trillion yuan this year as of July, from 48.8 trillion yuan in 2009, according to data from China Central Depository & Clearing. "It starts with institutional investors but soon the retail investors could benefit. Yuan trades in Hong Kong would be just like the US dollars being traded in London," said Andrew Fung Hau-chung, Hang Seng Bank (0011) general manager and head of investment. CITIC Bank International economist Liao Qun said the new system paves the way for a faster "mini- qualified foreign institutional investor" scheme that will better suit retail investors. Under the pilot scheme, each institution will receive quotas according to their individual situation.

Cathay Pacific is investing HK$5.5 billion to create what is billed as the world's largest air cargo terminal in terms of designed throughput. The seven-story terminal - the third for Hong Kong International Airport - will occupy 10 hectares at Chek Lap Kok. It will increase total handling capacity by around 50 percent to 7.4 million tonnes a year, according to Development Bureau figures. Siemens, which will equip the terminal, points to the facility having an annual capacity of 2.6 million tonnes in the initial phase, with operations starting in early 2013. This may reach 4.8 million tonnes in 2017, when the facility becomes fully operational. "Not many cities experience the challenge of limited space as well as fast expanding cargo volume like Hong Kong," Siemens chief executive Denis Leung Siu-cheung said. "We need to be efficient to face the fierce competition from other regions." The Airport Authority estimates cargo volume will reach eight million tonnes a year by 2025. So it gave Cathay Pacific the franchise in 2008 to invest in, design, construct and operate the terminal under a 20-year deal. The Hong Kong Air Cargo and Asia Airfreight terminals are handling 2.6 million tonnes and 1.5 million tonnes respectively each year. A spokesman for Cathay said the airline, along with sister firm Dragonair, recorded year-on-year growth of 18.1 percent in cargo and mail last month. That came to 157,374 tonnes, or 43.3 percent of freight handled at the airport. Siemens project manger Frank Fernschild said the new terminal will minimize handling and waiting time for trucks, with land-use efficiency over 25 tonnes per square meter. Hong Kong International has been the world's busiest international cargo airport for the past 14 years. It handled 3.4 million tonnes of freight last year, or 35.3 percent of the total value of the SAR's external trade.

Terminus buries roads to link with district - An artist's impression shows the arch of the proposed terminus of the express railway, from which pedestrians will be able to get a good view of the cultural district. Pedestrians are a major beneficiary of the MTR Corp's plan for the multibillion-dollar West Kowloon terminus of the Hong Kong-Guangzhou high-speed railway, which it unveiled yesterday and which will go to public tender before the end of the year. The plan calls for roads that separate the terminus from the West Kowloon Cultural District, such as Austin Road, to be put underground, allowing pedestrians to walk to the cultural district without impediment. Yet inbound travellers wanting to catch a train to Central will have to walk for about 10 minutes in the open to Kowloon station, although the walk to Austin station for connections elsewhere will take only about two minutes. A large piazza planted with vegetation will front the western exit and part of it will be designated for public performances. The MTR's general manager for the high-speed link, Paul Lo Po-hing, said the station would be a landmark. "It will be a place for people to spend their leisure time, to relax, and to enjoy the green features and open areas with their friends and family," he said. Most of the 11-hectare terminus, the final stop on a national high-speed rail network that will extend to Beijing, Shanghai and beyond, will be underground. It will rise about 15 metres above ground - about five floors of a residential building - with four of its five storeys burrowing 20 metres below ground. The building will form an archway over which pedestrians will be able to walk. The highest point will provide a view across the cultural district. Lo said that as well as glass ceilings, which will allow sunlight to penetrate two floors underground, the terminus would use other energy-saving features, such as seawater cooling plants for air conditioning and a rainwater harvesting system. Preparatory work on the station, which began in January, precedes work on the West Kowloon Cultural District, plans for which will be released on Friday. But an MTR spokeswoman said the terminus design factored in flexibility for future integration with the cultural district. Options were available in the terminus and Austin station for possible subways linking to other buildings, while space had been set aside to allow mainland and Hong Kong immigration clearances to be carried out on the same floor. Yau Tsim Mong District Council chairman Edmond Chung Kong-mo said the design was better than he had expected. "The terminus looks bright and spacious, and the greening features extend all the way to Yau Ma Tei," he said. "I think residents in the neighbourhood will welcome it." About three hectares of the public space around the terminus will be covered in vegetation. However, it is not known whether the public will be allowed to walk on the grass. An engineer opposed to the project, Civic Party member Albert Lai Kwong-tak, said there was still much concern in the community about the connection between the terminus and its neighborhood.

Beauty legend: winners of Miss Hong Kong Pageant.

 China*: Taiwan's parliament on Tuesday approved a historic but controversial trade deal with the mainland which is expected to bring the two former rivals closer than ever before. Getting the Taiwanese legislature’s approval was seen as crucial in terms of securing legitimacy for the Economic Co-operation Framework Agreement (ECFA) – by far the island’s most wide-ranging accord yet with Beijing. “The ECFA is extremely important to Taiwan if it hopes to avoid being marginalised economically amid an increasing number of trade blocs,” said Cheng Ching-ling, a legislator with the pro-Beijing Kuomintang (KMT) party. The mainland is Taiwan’s largest trading partner, its largest investment destination, and now also home to a growing number of Taiwanese people.

China Everbright Bank shares closed up 18 per cent on their Shanghai debut, trumping first-day performance forecasts for the US$3 billion IPO.

GM and China's SAIC to develop engines for small cars - Thomas Stephens, General Motors vice-chairman of global product operations, right, and Hu Maoyuan, chairman of Shanghai Automotive Industries Corp ( SAIC), arrange a model during the signing ceremony of 'Global Next Generation Advanced Powertrain Technology Co-development' on Wednesday in Shanghai. General Motors will co-develop engines and transmissions with mainland partner SAIC Motor, seeking to draw on the allure of the fast-growing mainland market ahead of a highly anticipated IPO. The joint development deal, announced by the two automakers in Shanghai on Wednesday, will help GM meet demand for small city cars in emerging markets and cut the costs of developing fuel-saving advances for the US market, where it faces the challenge of meeting tough new fuel economy standards by 2016. The agreement also marks the first expansion of the GM-SAIC partnership in the country since the mainland automaker took control of what had been a 50-50 joint-venture in Shanghai GM by buying an additional 1 per cent stake from GM in December. They also announced at the time that they would take their successful 12-year partnership to India with plans to make small cars and commercial vehicles through a 50-50 joint venture. GM is expected to announce plans for a public offering of stock in a filing with securities regulators as soon as Wednesday that will allow the Obama administration to reduce its 61 per cent stake in the automaker. Asked about SAIC’s interest in GM’s IPO, SAIC chairman Hu Maoyuan said: “We cannot comment on whether we will participate in GM’s IPO before we study the details of the IPO.” Analysts have said potential investors in the top US automaker will be looking in part at how it manages a strategy for sustained growth in the mainland auto market, now the world’s largest. Engine and transmission systems – known as vehicle powertrain systems – are typically the most expensive parts of a new vehicle programme with costs in the hundreds of millions of dollars. GM and SAIC will develop engines with displacements from 1.0 to 1.5 litres in a collaboration of engineers in Detroit and at their engineering and design joint venture in Shanghai. The engines will twin direct injection and turbocharging to boost fuel efficiency and performance, GM said in a statement. Combined with the transmission also to be developed with SAIC, the new powertrain would improve fuel consumption by up to 20 per cent, it said.

The latest Pentagon report on China's military rise stresses the importance of expanded and sustained Sino-US military ties yet warns Beijing is seeking to use them to exploit "vulnerabilities" and weaken US alliances. China's expanding military operations and capabilities as well as periods of "friction and turbulence" highlight the importance of ties to the broader relationship, says a new chapter of the report, which is delivered annually to the US Congress. Despite commitments from senior political and military leaders, including President Hu Jintao , "a sustained exchange program has been difficult to achieve", it notes. "The result is an on-again/off-again military relationship that limits the ability of the two armed forces to explore areas of co-operation ... improved communications, and reduce the risk that misapprehension or miscalculation could lead to crisis or conflict," the report says. Its publication comes amid signs of worsening tensions. Beijing again shelved military exchanges earlier this year as the administration of US President Barack Obama approved its first arms sales to Taiwan - friction that has worsened with Washington raising its concerns over the disputed South China Sea and Hu delaying a planned visit to Washington. The report couches the potential future relationship in terms of finding shared interests rather than obvious differences - and moving them beyond "inevitable" spells of political turbulence. It also repeatedly quotes Obama on the importance of the Sino-US relationship and that the two countries were not "pre-destined to be adversaries". It stresses the need for mutually agreed rules of the road at sea to avoid future incidents and lists ongoing anti-piracy work and search and rescue as areas of potential co-operation. "While China has repeatedly stated its desire for improved US-China military-to-military relations, it has repeatedly sublimated this goal to others it perceives as more important," the report says. "Only when China determines that it is in its own interest to sustain engagement through periods of turbulence will it be possible to build a more solid foundation for military-to-military relations." Intriguingly, while the report highlights the need for ties it details, without commentary, "benefits China expects to gain". Apparently suggesting political and intelligence operations, it states that the PLA would be seeking insights on US intentions and capabilities and "to gain insights into potential US vulnerabilities" as well as US ties with other nations of interest to Beijing. "Senior political leaders in Beijing also pursue contacts with the Department of Defence to elevate China's status as a regional and world power," it says. "In this context, China's leaders seek to use `normal' defence relations with the United States ... to drive a wedge between the United States, its allies, and its partners, including Taiwan." Regional diplomats digesting the report yesterday said the references appeared to be a veiled warning to the US Congress to keep a close watch on the management of future ties, which it is mandated to monitor. "In a section devoted to the importance of the relationship, it stands out as a red flag," one Asian diplomat said. "The US wants ties, but not at any cost ... it is now going into this relationship with both eyes wide open."

Balance of power at risk, says Pentagon - Annual report sounds alarm over PLA's expanded presence in South China Sea. An expected increase in the PLA's presence in the South China Sea - including large ballistic missile submarines - risks upsetting the regional balance of power and a "delicate status quo", according to the Pentagon's latest report on China's military modernisation. An expanded naval presence to protect the five new nuclear-powered Jin-class submarines and five advanced Type 095 attack submarines to be based on Hainan Island over the next year was part of a broader effort to project the mainland's military power across Asia, far beyond the traditional target of Taiwan, the US Defence Department's annual report to Congress says.

China Coal Energy (1898) said it will raise annual coal output to 200 million tonnes by 2014 or earlier - twice the 108.56 million tonnes it produced in 2009 - to meet growing demand in the mainland. The country's second-largest coal producer plans to achieve its target by acquisitions, expanding and upgrading existing projects, as well as exploring new mines, said Yang Lieke, president and executive director. Yang said he sees the country's coal supply and demand maintaining an overall balance in the second half, although the growth of demand is expected to slow in tandem with economic growth in China. Meanwhile, the company said it is under great pressure from inflation and acclerating production costs for raw materials and labor. "It is inevitable that costs will keep going up," said chairman Wang An, adding that he sees growth in costs moderating for the whole year. Wang said his company's unit cost of sales for commercial coal increased 2.1 percent in the first half compared to the end of 2009. The cost growth in the second half should be maintained at the same level. China Coal's gross margin fell 2.4 percentage points to 26.6 percent in the first half, from a year ago. Its cost of sales increased by 59.5 percent, while revenue increased 54.3 percent. Wang said it is good news that the company has been selected to join the Hang Seng Index. "It will help us to attract more strong investors while encouraging existing shareholders."

Government 'listening' to overseas businesses - The government has vowed to "carefully listen" to the voices of foreign businesses based here, while at the same time, experts said there have been "improvements" on relevant policies, and international firms should focus on the big picture rather than small bumps in the road. Over the past three decades, huge amounts of foreign direct investment (FDI) have flown into China, helping make the nation the second largest foreign direct investment destination. However, adjustments by the government to foreign investment policies has caused many to express concern the nation is not as welcoming of foreign enterprises. This has resulted in a growing number of complaints over the past few months from these entities that the investment environment in China is deteriorating. Since February, Premier Wen Jiabao has confirmed eight times that China always welcomes foreign enterprises and will provides them with treatment equal to that of domestic companies, and the nation is always willing to receive feedback from them. He reiterated the stance most recently during his meeting with German Chancellor Angela Merkel. "There is no reason for China to bar foreign investment China should always welcome them - even when the nation becomes a developed nation," Wang Zhile, director of the Research Center on Transnational Corporations under the Ministry of Commerce, said. In 2008, China's foreign direct investment hit a historic high, but the size of the investment was still one third of that the US took in during the same period. "China needs quality foreign investment to optimize its economy," Wang said. Previously there were many assertions domestically that foreign investment would hurt the development of domestic firms and dominate some local industries, but the government never changed its position on foreign direct investment. In 1998, these guidelines identified "legally registered foreign enterprises as part of Chinese enterprises." And last December, the State Council also pointed out foreign enterprises "were encouraged to participate in mergers and acquisitions of State-owned enterprises." The most striking is the new foreign direct investment development guidelines launched this April, which include preferential policies for land use and tax. But many international enterprises are still worried the government is setting the bar higher for foreign investment and encouraging these entities to target the renewable energy, high technology and service industries in central and western areas of the country. Wang disagreed. "This is a result of the transformation of the economic development mode with China and foreign investors need to do more research on China and try to match their commercial focus on those changes," he said. "It's not wise of them to easily give up on the market."

Aug 19, 2010

Hong Kong*: The privacy watchdog is investigating five complaints against three telecommunications operators over the transfer of customers' personal data to other companies. It has not identified the companies. Smartone Mobile said it was being investigated for passing the details of customers who had not paid their bills to debt collectors, but did not know if that was one of the five cases under investigation. Privacy Commissioner Allan Chiang Yam-wang yesterday met Ha Yung-kuen, the Telecommunications Authority's acting director general, to discuss data sharing. The meeting came after Chiang on Friday called for the telecommunications and insurance watchdogs to follow the lead of the banking regulator and review the use of customers' personal data. This followed revelations by the Hong Kong Monetary Authority that some banks had sold customers' data to insurance companies, and comes amid the continuing row over sales of information about Octopus card users to third parties. A Smartone spokesman said the complaint against it involved the transfer of information including names, telephone numbers and addresses to debt-collection agencies. "The terms and conditions in the contract state that the companies will transfer a minimal amount of personal data to debt collection agencies if outstanding payments are involved," he said. The firm said it did not sell personal data to third parties, but it had conducted joint promotions with other parties in which promotional calls were conducted by its own staff. Data could be transferred to the third parties if customers consented. China Mobile (SEHK: 0941) said it did not sell customers' personal data to third parties and had not been informed by the privacy commissioner that it was under investigation. Hutchison (SEHK: 0013) Telephone Co did not respond to questions about whether it was being investigated, saying only that it collected customers' personal data in a lawful and serious manner. A CSL spokesman said the company never transferred personal data without the consent of customers. The Office of the Privacy Commissioner is preparing new guidelines on cross-marketing activities to replace one issued in 2004, which suggests only that data holders provide an "opt-out" option for customers unwilling to have their data shared. Calls have been growing for an "opt-in" requirement in which costumers would be asked when signing contract if they were willing for their data to be shared. Meanwhile, Wing Lung Bank confirmed it had provided the personal details of its credit card customers to an insurer. It said the activity had ceased in 2008 and the insurance firm had destroyed the records.

Welcome break as air quality best for 11 years - Pollution takes a summer breather - It's not been this good for 11 years - July's air pollution index recorded memorably low figures, and it's still low so far this month. Those white fluffy things above really were fair-weather cumulus clouds, and that bright ball in the sky was the sun. Long may it continue - the Observatory thinks it will. Long-suffering Hongkongers accustomed to covering their noses to ward off pollution had a welcome break last month. The air quality in July was the best recorded in 11 years and the trend has continued this month, apart from a short break early on. Steady winds from the south, where there are no pollution sources, and frequent heavy rain are the reasons for the clean air, environmentalists say. Not one of the 11 general air monitoring stations recorded a high air-pollution index - above 50 - at any time last month. The readings were low - 0-25 - for 5,974 hours or more than 70 per cent of the time and medium - 26-50 - for the rest. A total of 22 days had low air pollution, while the number of days with medium pollution was nine. This was better than both the previous month and the same month last year. In June, there were 649 hours, or 8.23 per cent, with an air-pollution index higher than 50. In July last year, a total of 919 hours, or 12 per cent of the time, had an index higher than 50 and there were four hours above 100. Roadside air pollution also improved. The three roadside stations in June recorded 148 hours, or 7 per cent, with the air pollution index reaching very high, between 101 and 200. But in July, there was no such high figure. The Observatory did not record any reduction in visibility from haze in July. Visibility is said to be reduced when it is lower than eight kilometres with no natural causes such as fog, mist or rain. High readings were recorded for several hours on August 4, 5 and 6 by some general stations, but apart from these the indices for all other days were below 50. Dr Cheng Luk-ki, division head of scientific research and conservation of Green Power, said the good air quality was due to the sea wind from the south, where there was no pollution source. "The wind speed is relatively high, which can disperse air pollutants. The rain in July also helped wash away the pollutants," he said. According to the Observatory, the total rainfall in July was 469.4mm, compared to 389.4mm in July last year. Cheng said Green Power records showed that when typhoons came from the east, the air pollution index often exceeded 100. "When a typhoon with a relatively high central speed enters an area 1,300 kilometres east of Hong Kong, the air pressure will begin to drop. There will be no wind or rain. This will bring poor air quality to the city," he said. Both of this year's typhoons so far had come from a southerly direction with not such a strong central speed, which prevented the air quality problem occurring. He said the southwest monsoon, which brings showers, also helped maintain air quality this month.

Companies own nearly a fifth of the unprotected sites in Hong Kong's country parks, and some of then have a record of damage or development. Land ownership records also show private companies have bought into other such pockets - next to or surrounded by country parks - that have minimal zoning protection. Evidence of the encroachment of potential developers into some of Hong Kong's most scenic and untouched places brought calls for the government to plug the planning loopholes immediately, including by imposing temporary zoning on all the sites simultaneously. This has already been done with a site at Sai Wan, surrounded by Sai Kung East Country Park, where the owner had begun excavations for a private retreat. The sites are among 77 nestled in or next to country parks that were not originally included in the parks because they were owned by villagers or farmers. Many of these have since abandoned them, leaving the way open for private companies to buy in. While most of the companies that have done so are not well-known developers, at least one owns multiple sites.

Hong Kong’s richest man Li Ka-shing snapped up two prime residential sites on Tuesday for prices well above market estimates, despite fresh government measures to cool the overheating property market. Li’s Cheung Kong (Holdings) (SEHK: 0001) first bought a 7,551 square metre waterfront plot in the city’s Kowloon district for HK$3.51 billion , with about 150 bids placed in just over an hour. The final price was nearly twice the opening bid of HK$1.77 billion, and translates into a per-square-foot price of HK$9,597, making it the most expensive land in the district. The whopping price also largely exceeded estimates of HK$2.30 billion to HK$2.82 billion from analysts polled by Dow Jones Newswires. The blue-chip developer then bought another auctioned site, a 7,326 square metre plot also in Kowloon, for HK$4.10 billion. The price was 43.5 per cent higher than the opening bid and above the top end of market estimate of about HK$3.90 billion. Developers remained upbeat despite a series of government measures announced last week to rein in Hong Kong’s soaring residential market. Home prices in Hong Kong surged nearly 45 per cent from their trough at the end of 2008, while prices of some luxury flats have returned to, or surpassed, the peaks of the 1997 property boom. “The new measures will not change the imbalance of supply and demand of residential buildings. The increase in land supply in recent months is not sufficient to satisfy the large appetite for residential flats,” Charles Chan, managing director for Savills Valuation and Professional Services, said. The government said on Friday said it would increase land supply and tighten mortgage lending to avoid a property bubble. John Tsang Chun-wah, the city’s financial chief, said the government would auction three more sites before March next year, regardless of whether developers tabled an offer equal to at least 80 per cent of the government’s minimum price – required under the city’s land auction rules. Two of the three sites will be auctioned in September, he said.

Hong Kong women's baseball player Sinney Cheuk Woon-yee - shot in the leg during a game in Caracas - returned to Hong Kong on Tuesday from Venezuela - Baseball player Sinney Cheuk Woon-yee, arrives at Chek Lap Kok airport from Caracas with her teammates on Tuesday.

Hong Kong said on Tuesday that unemployment fell to 4.3 per cent between May and July, with business confidence boosted by a stronger economy. The latest figures are down from 4.6 per cent in the April-June period and below the 4.6 per cent forecast by nine economists surveyed by Dow Jones Newswires. Hong Kong’s total employment climbed by 8,100 to 3,500,200, with new hiring in several sectors including retail, hotels and manufacturing, the Census and Statistics Department said. Secretary for Labor and Welfare Matthew Cheung Kin-chung said hiring sentiment among Hong Kong employers was growing on the back of “sustained economic growth”.

New energy giants eye USb$2 IPO in HK - China Huaneng Group Corp and Datang Corp, the country’s top power producers, plan to float shares of their renewable energy units in Hong Kong in offerings that could raise over US$2 billion, sources close to the deals said on Tuesday. The deals are unfolding as the mainland aggressively develops its renewable energy sector and the nation’s biggest power firms look to boost investment in the industry to drive future growth. Huaneng’s renewable energy unit, Huaneng New Energy Industrial Co, plans to raise US$1 billion to US$1.5 billion in an initial public offering as early as October, sources close to the deal said on Tuesday. China Datang Corp, the country’s second-largest power producer, also plans to float shares of its renewable energy unit in a Hong Kong IPO as early as December, sources familiar with the deal said. “The market still has appetite for new energy listings,” said Patrick Yiu, a director at CASH Asset Management. “Depending on the valuations, renewable energy shares may still be attractive given expectations of growth in the industry.” The wind power unit of China Huaneng Group plans to issue no more than 2.9 billion shares in Hong Kong at between 3 to 4 yuan(HK$3.42-HK$4.56) per share, China Daily said, citing a source familiar with the matter. In February, it was reported that China Huaneng Group planned to float shares of its wind power unit, aiming to raise US$1 billion from a Hong Kong initial public offering this year. China International Capital Corp (CICC), Goldman Sachs, Macquarie and Morgan Stanley were handling the IPO for Huaneng’s wind unit, sources said. Datang is planning to spin off China Datang Corp Renewable Power, which holds its wind and hydro assets. Datang’s IPO is being handled by Deutsche Bank and UBS. Datang Corp’s spinoff plan has already obtained approval from China’s National Energy Administration, the China Securities Journal reported in June.

Nearly empty hostels await mainland China pupils - Diocesan Boys' School's HK$120 million hostel can accommodate up to 300 pupils. The seven-storey hostel at Diocesan Boys' School has a big swimming pool on the ground floor, surrounded by floor-to-ceiling glass panes. The HK$120 million, Wi-fi-equipped structure, which also boasts an indoor basketball court and open-air garden, has places for 300 pupils. Just 70 will live there next year. The elite school, like several others in Hong Kong, has pumped a big sum into preparing for an influx of mainland pupils that they see as a way to boost their finances and combat falling enrolments. The catch is that mainland authorities have yet to give approval for pupils to study at Hong Kong schools, and there is no indication when, or whether, that will happen. "We hope that we can get mainland students to study the senior secondary curriculum here next year," Diocesan Boys' principal Terence Chang Cheuk-cheung said. His hopes are shared by Louise Law Yi-shu, principal of St Stephen's College in Stanley, where a HK$60 million, four-storey hostel with 150 places will be completed next year. Direct Subsidy Scheme schools - private schools that receive partial funding from the government but set their own fees and curriculums - have long been eyeing what they see as a lucrative market among newly affluent families in the Pearl River Delta. Impetus was given when Chief Executive Donald Tsang Yam-kuen said in his 2009 policy address the government would explore the feasibility of letting mainland pupils come to study in direct-subsidy, international and private schools. Principals say such children, whose parents would pay up to HK$100,000 a year for tuition and boarding fees, could help stem the tide of school closures and bring in cash to help attain Tsang's goal of turning education into one of six new economic pillars for the city. But educators cite differences between the local and mainland curriculums and a reluctance to let pupils receive their basic education outside the mainland as reasons for a lack of progress. At Diocesan Boys' in Kowloon City, Chang said the government should speed up the process. The school has offered an International Baccalaureate diploma programme since last year at HK$58,000 a year, as well as a Hong Kong Diploma of Secondary Education programme at HK$38,000 a year. About 70 pupils will pay HK$5,000 per month to live in the new hostel from September. Chang said he hoped the excess places would soon be filled by mainland pupils. More modest is the ambition of Fukien Secondary School, which has spent about HK$6 million to build a hostel at its Kwun Tong campus for 16 pupils and is looking for a vacant village school in Sai Kung to turn into dormitories for 30. Principal Lam Kin-wah, who is chairman of the Direct Subsidy Scheme Schools Council, said schools could charge a mainland pupil up to HK$70,000 a year for tuition and HK$30,000 for board. At his school, local pupils pay HK$12,000 a year to study a curriculum leading to the Hong Kong diploma - a replacement for the HKCEE and A-level exams - but mainland pupils would be charged HK$20,000 more. "Mainland students have to pay more per year as no public funding can be used to help pay for their studies," Lam said. At United Christian College (Kowloon East) in Kwun Tong, vice-principal Elsie Fung said a hostel offering 80 places, completed this year, was being used in the meantime as a leadership training centre for Form One students. She said the school received many inquiries from mainland parents, who would pay HK$21,000 per year for the Hong Kong diploma curriculum. St Stephen's, which models itself on the British system, offers the Hong Kong diploma at HK$50,000 per year and provides training in British etiquette. Law said the school planned to launch an International Baccalaureate course when its new hostel, which will charge HK$5,200 a month, was completed. Its hostel has places for 250, but the number will rise to 400 next year. "Mainland students have to pay HK$30,000 more in tuition a year, as there will be extra costs, like the employment of weekend hostel wardens. Local students usually go home on weekends," Law said. She said she and other principals of direct-subsidy schools met Education Bureau officials six months ago to discuss the nuts and bolts of letting mainland pupils study the senior secondary curriculum in Hong Kong. "We talked about how much in tuition and boarding fees will be charged," she said. "We discussed the actual difficulties of getting them here. One concern is that secondary kids are too young to be able to take care of themselves. "But my overall feeling after the meeting is that the mainland government is willing to open up." Law said it would be a win-win situation if it worked out. "Many mainland people are rich, and there's a high demand for our education," she said. "With mainland students studying alongside local ones, local students can learn from their Mandarin and mainland kids can learn from our English." While mainland students can come freely to study at universities in Hong Kong, primary and secondary pupils are restricted by mainland immigration laws. University Grants Committee figures show there are 4,562 mainland undergraduates at the city's eight publicly funded tertiary institutions, up from 3,658 in 2007/08. A 2009 report from the Bauhinia Foundation Research Centre on co-operation in education in Shenzhen and Hong Kong said the supply of secondary places in Hong Kong far outstripped demand, while there was a severe shortage of school places in Shenzhen. Up to 80 per cent of the mainland pupils interviewed for the report said they wanted to come to Hong Kong to study or for short-term academic exchanges. There are other signs of more integration in education between the mainland and the city. Under an agreement between Hong Kong and Guangdong, 36 Primary Six Hong Kong children graduating from Shenzhen schools have been admitted to secondary schools in Hong Kong for the school year that begins next month. It is the first time Hong Kong children educated at Shenzhen primary schools have been able to join the central allocation system for secondary school places. Cheung Chi-man, principal of QualiEd College in Tseung Kwan O, which will double its hostel places to 24, said the admission of mainlanders could help stem the tide of secondary school closures in Hong Kong. At St Paul's Co-educational College in Central and Western District, Kim Tsoi Kin-ming, the director of community relations, said 80 hostel places would be built in 2012, more than half of them reserved for non- local pupils. Fung Kai Public School in Sheung Shui has been pressing the government for more than four years to allow it to transform the now vacant Fung Kai No 2 Secondary School into a secondary boarding school aimed at pupils from the Pearl River Delta. Chief executive Ma Siu-leung said Hong Kong could not afford to lose the potential revenue from mainland parents eager to send their teenage children away to study. "If we take in 20,000 students every year and charge each HK$200,000, this means HK$4 billion every year," Ma said. "The concomitant revenue that can be generated in the tourism, medical and services sectors will be tremendous." Fung Kai is an aided school that has primary and secondary sections. It currently boasts 5,000 pupils, one-third being new arrivals from the mainland. The school, only 1.5 kilometres from the Man Kam To border crossing, has a 1.2 million square foot campus. Ma said it planned to transform the No 2 school into 20 hostel blocks, with an indoor swimming pool and gymnasium, for 450 pupils. "Mainland officials want children to receive their basic education in their own country, as the mainland curriculum puts more emphasis on political education," Ma said. "But the reality is that many mainland parents send their kids overseas for up to 300,000 yuan [HK$342,600] per year for their primary and secondary education. "Parents who believe in the Hong Kong brand would be eager to send their kids here, as they can visit their children whenever they want, as solo travellers." Education Secretary Michael Suen Ming-yeung said recently the government had been pressing cross-border education very hard every year with the central government. "We suggest that a trial scheme be rolled out in Guangdong province first," he said. "But so far, there's not much progress, and I think it's difficult for the policy to be implemented next year."

Legislator Dr Leung Ka-lau, who led public doctors in a fight for better conditions and pay, has chosen to leave the public medical sector after 24 years with the Hospital Authority.

 China*: Apple supplier Foxconn, battered by a spate of worker suicides this year, is trying a new approach to prevent more deaths after some 3 million square metres of safety netting in its mainland plants failed to deter a young female worker, who leapt to her death in Jiangsu. The world's largest electronics contract manufacturer confirmed to the South China Morning Post (SEHK: 0583) yesterday that rallies of more than 800,000 employees to send out anti-suicide messages will take place today at all Foxconn's mainland plants.

Book reveals secret code of officials' signatures - The unwritten rules of mainland corruption have just been written down, and they make interesting reading. If a senior official approves a project by signing his name vertically, it means "do it straight away", whereas a horizontal signature says "put it on the back burner". A full stop after the signature means "spare no effort on this project", while a circle indicates "it's useless even if I sign it". Lower-ranking officials have to learn the rule by themselves, and it's just one of many that have to be learned for a successful career in China's bureaucracy. Jiang Zongfu , a 41-year-old former vice-mayor of Linxiang , Hunan , has revealed the secrets of how to survive in mainland officialdom in his book My years as an official: an original record of my undercover life as a (county-level) vice-mayor. The 250,000-word book documents his experiences in five years as deputy chief of Linxiang, a county-level city under the jurisdiction of Yueyang , and uses the real names of Jiang's colleagues and superiors. He says the crux of survival as an official is to adapt to the hidden rules. "To be an official is a high-risk career," he said yesterday. "You have limited power but enormous responsibility, and things are especially cruel for grass-roots-level officials." He had to face all kinds of temptations, including money and lust, and "had my heart in my mouth for five years". Another secret he reveals is how officials avoid trouble after leaving a post. They give a red packet, containing money, to the local Discipline Inspection Commission, the Communist Party's anti-graft watchdog. The amount of the money given usually equals the largest bribe the official has received during his term in office. "In this way one could avoid being investigated," he said. Jiang, who describes himself as a "secret agent" in the government, finished the book on August 8 and is negotiating with a publisher. He wrote it while in hospital for three months after being removed as vice-mayor. He said one of the reasons he wrote the book was to put the spotlight on Linxiang - a small, well-off city with a population of about 500,000 - and provide a reference for the nation's political reform. Jiang said he was not sure whether the book could pass the censorship process, adding "it would be such a pity if it's banned". He also said he feared revenge for telling the truth. Jiang, a former journalist, said his entry into officialdom was abnormal and more of an accident. He was made vice-mayor in 2005 because of an online posting he wrote while a civil servant. It took the form of a letter to the party secretary of Yueyang and suggested several ways to improve Yueyang's travel industry. His removal as vice-mayor this year was also related to his online postings, which caused headaches for his superiors in Linxiang. In a January posting, he lashed out at internationally acclaimed filmmaker Zhang Yimou , describing his Impression spectaculars as wasteful and repetitive. In April, he criticised surging home prices and accused economists of colluding with property developers. The postings might not have been too sensitive on their own, he said by phone yesterday, but they coincided with two safety incidents in the town of Taolin, near Linxiang - an explosion in January and a school poisoning in April. He said Linxiang's party secretary thought his postings had attracted many reporters and could lead to more coverage of the two incidents, tarnishing the city's image. Jiang was told in May he would be transferred to Yueyang to become an assistant dean at a college. He said the fundamental reason for his removal was his character - straightforward and candid - which was not suitable for an official. Jiang said he felt lucky that his time in officialdom had not changed him. In the early 1990s he worked as a journalist for a Yueyang newspaper, exposing many inside stories about the workings of government and ending up on the local authorities' watch list. He said he was looking forward to a new life in academia. "In academia there should be more freedom of speech."

Taiwan legislators were aiming for a vote on Tuesday on a controversial trade pact with China, as anti-Beijing protesters rallied outside parliament, venting their concern over the sweeping agreement. The lawmakers were discussing the Economic Co-operation Framework Agreement (ECFA) article by article in preparation for a final vote on the crucial document – by far Taiwan’s most wide-ranging accord yet with the mainland. With an absolute majority in parliament for the Beijing-friendly Kuomintang (KMT) party, there seemed to be little doubt that the ECFA would be passed, and the only question was when.

Foreign direct investment in the mainland accelerated in July, rising 29.2 per cent over a year earlier, the Commerce Ministry reported on Tuesday, in a positive sign for the slowing economy. July investment totalled US$6.9 billion and the growth rate was up from the 20.7 per cent for the first seven months of the year, said ministry spokesman Yao Jian.

China and the International Atomic Energy Agency have signed an agreement to improve nuclear security in the region, the UN nuclear watchdog said.

The head of the World Health Organisation in China said on Tuesday widespread smoking in the mainland should be given the same attention as an outbreak of the deadly Sars disease.

Authorities in Gansu have proposed relocating residents of mudslide-ravaged Zhouqu town to Xinjiang as they draw up rebuilding plans.

China leapfrogs Japan as second-largest economy and is on track to overtake the United States for the No 1 crown - China has leapfrogged Japan to become the world's second largest economy - and is on track to overtake the United States for the No 1 crown. Japan's nominal gross domestic product for the second quarter totaled US$1.288 trillion (HK$10.05 trillion) - lower than China's US$1.337 trillion. China's growth surged 10.3 percent in the second quarter from a year earlier, while Japan expanded just 2 percent. And "the gap is going to widen" in future, said Shen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia. "It is not likely that Japan will retake the No 2 spot given the likely growth rates." The nation's surpassing of Japan is "a marker of its increasingly dominant role in the global economy," said Eswar Prasad, a senior fellow at the Washington-based Brookings Institution and former head of the China division at the International Monetary Fund. Quarterly comparisons between China and Japan are a little tricky because they do not take into account different seasonal patterns between the two countries, said David Cohen, head of Asian forecasting at Action Economics in Singapore. But leading analysts have no doubts about China taking over the global top spot. Goldman Sachs chief economist Jim O'Neill said it will overtake the United States, where annual GDP is about US$14 trillion, as the world's largest economy by 2027. A January report by PricewaterhouseCoopers predicts that moment will come even earlier, by around 2020. Beijing led the world out of last year's global recession with an economy that is more than 90-times bigger than when Deng Xiaoping ditched hardline communist policies in favor of free-market reforms in 1978.

China reduced its holdings of U.S. Treasury debt for a second straight month in June while the holdings of Japan and Britain rose.

Love is in the air - Chinese Style - The Double Seventh Festival, July 7 on the lunar calendar, now popularly known as Chinese Valentine's Day, gained popularity only in recent years, thanks to China's increasing commercialism that never stops making profit from tradition, according to researchers. Chu Dongai, a Phd in the studies of folklore at South China University of Technology, said the festival should be called "Girls Day." In ancient society, there was a tradition of single girls praying for wisdom, skills and deft needlework to the fairy Weaving Girl, heroine in a popular love story with a cowherd from the mortal world. The opinion is supported by Zeng Yingfeng, chairman of Guangzhou Folk Artists Association. Although the festival is related to the folk story between the Weaving Girl and the cowherd, it also showed the expectation of love and marriage of ancient society. People seem to care less about the cultural or historical significance of the festival, and they only want a reason to celebrate, a girl said about the ardor of the newly born Chinese Valentine's Day.

China's third largest steel mill Wuhan Iron & Steel Group is in talks with ArcelorMittal, the world's largest steelmaker to jointly develop overseas mining projects to gain more raw material resources and reduce cost risks. Peter Kukielski, head of ArcelorMittal's mining sector, visited Wuhan Steel last Thursday. ArcelorMittal is willing to work with Wuhan Steel on iron ore projects via joint development and investment, Wuhan Steel said on Monday. Wuhan Steel spokesman Bai Fang said the two sides are still in the discussion stage and nothing has materialized yet. ArcelorMittal has 26 iron ore mines with an annual production capacity of 51 million tons and aims to expand to 100 million tons by 2015, the statement said. The company is looking at plans in countries including Liberia, Senegal and Mauritania, Kukielski said in March. "Although ArcelorMittal is self-sufficient with iron ore now, they still aim to gain new iron ore resources working with Chinese steelmakers will help them to reduce risks," said Hu Kai, an analyst with consulting firm Umetals.com. "If European economy changes and cannot digest the expansion of iron ore supplies, ArcelorMittal can transfer it to China to manage risks." "It's a win-win situation. If Wuhan Steel is bidding for an iron ore project with competitors, the price will definitely be driven up. The joint development will help reduce cost risks for both sides," said analyst Xu Xiangchun from Mysteel.com. Wuhan Steel is a good potential partner as it has accumulated experience after years of going overseas, he said. Wuhan Steel has been seeking to invest in more overseas iron ore assets to cut its reliance on expensive imports. "We aim to be self-sufficient in iron ore supplies in three to five years," Deng Qilin, chairman of Wuhan Steel, said in March. Wuhan Steel in May received approval from the National Development and Reform Commission for two overseas acquisitions in Africa that are expected to contribute nearly 2 billion tons of iron ore deposits. Last October, Wuhan Steel agreed to buy more than 40 million tons of iron ore under a seven-year contract with the Venezuelan company at a "China Price" separate from what the big three global miners are charging. Wuhan Steel also acquired a 21.52 percent stake in Brazilian iron ore miner MMX Mineracao e Metalicos SA for $400 million last year. The company also received approval from the Australian government for a A$271 million ($249 million) investment in Centrex Metals Ltd in November, and also for a 60-percent stake in the iron ore rights to five Centrex projects in South Australia.

Beijing Xinfadi Agri-product Wholesale Market, the largest in northern China, will launch an international division on Aug 25, allowing traders from 16 countries to ply their produce in a specially constructed warehouse at the site in southeast Beijing. "We are trying to invite traders from 26 countries to our international division. More than 100 types of agricultural products are expected to be brought into Xinfadi," said Zhang Pengyi, vice-manager of the market. Some of the exotic origins of the new produce will include Thailand, New Zealand, Chile, South Africa, Malaysia, Ecuador, Russia, Peru and Pakistan. In 2009, China's imports of agricultural products totaled $52.7 billion, while exports stood at $39.63 billion. According to the Ministry of Commerce, China's imports of agricultural products rose 42.1 percent year-on-year to $26.52 billion in the first five months of 2010, and exports increased 22.2 percent to $17.79 billion. Consumer demand in some of China's key cities such as Beijing, Shanghai and Guangzhou is said to be growing for a wider selection of quality imported fruits and vegetables. Previously, most overseas suppliers imported produce to Xinfadi via Hong Kong, Guangzhou and Shanghai. With the establishment of Xinfadi's international wing, vendors can come straight into Beijing, said Zhang. Xinfadi currently supplies more than 90 percent of Beijing's fruit and vegetables from provinces including Hebei, Henan, Shandong, and even as far as Fujian, Yunnan, Hainan and Inner Mongolia autonomous region. It is believed to be one of the world's biggest wholesale food markets and provides a trading center for as many as 80,000 people every day, 24 hours a day, 365 days a year. Among those attending the Aug 25 opening will be large agricultural enterprises and supermarkets including Chaoda Modern Agriculture Ltd, Walmart Co, Auchan Group and Hualian Group. Xinfadi's international division is likely to extend its impact across North China if it focuses on convenient, competitive and efficient service, said Scott Rozelle, a Cheung Kong Scholar and guest professor at Renmin University in Beijing. It is believed the opening of the international division will also ease pressure on domestic production in the event of natural disasters. "Over the past two decades, China has made tremendous strides in the development of its agricultural markets both domestic and international," Rozelle said. "China's domestic agricultural markets have become increasingly more integrated (and) efficient ... (it) has some of the best agricultural commodity markets in the world." According to the visiting Stanford University professor, the market's plan should prove to be a mutually beneficial model. North China consumers will gain access to a broader range of quality agricultural products, producers and traders gain from direct buyer access and Xinfadi market will benefit by further establishing itself as a major agricultural marketplace.

Aug 18, 2010

Hong Kong*: Hong Kong women's baseball player Sinney Cheuk Woon-yee – who was shot in the leg during a game in Caracas – and her fellow team players left Venezuela on Monday.

The Consumer Council said on Monday its tests had found toxic chemicals and cancer-causing substances in some samples of nail polish sold in Hong Kong.

Rising school fees leave needy families feeling the strain - Fung Wai-ping, a mother of four children, is dreading the start of another new school year. Just like in previous years, when she received bills for school fees and textbooks, she knew it was time to knock on her neighbour's door to borrow money. With her youngest child starting kindergarten this month, her oldest starting secondary school and the other two in primary school, this year's bills are adding up to more than HK$10,000. "The fees are increasing all the time. There's no way I can pay the bills at once with my husband being the only one working and earning HK$10,000," she said. A survey last month by the Society for Community Organisation indicates Fung is not alone in her difficulties. Out of 106 needy families polled, 26 had children in kindergarten. Most said fees had increased, with an average rise of 5.8 per cent. Fung said her son's kindergarten fee had increased by HK$300 this year. She will receive HK$1,000 from the government's Pre-primary Education Voucher Scheme, but she still had to pay HK$2,000. "The government subsidies usually come a few months later," she said. "I wouldn't know what to do if my neighbour hadn't so kindly lent me the money all these years." The survey showed that a quarter of the 106 families borrowed money to settle school expenses, which on average were more than HK$2,000. Sze Lai-shan, a social worker with the organisation, said it showed government subsidies came too late, forcing some families into debt. Some were able to buy textbooks only after school had started, affecting the children's work. A rise in the price of textbooks is another burden on the families. More than 60 per cent of the families interviewed said they cost more than last year, with an average increase of 14.8 per cent. Au King-yan, 14, said publishers always changed editions. "I could have saved about HK$1,000 in buying textbooks if I were able to use my brother's old textbooks," she said. The organisation's report also said the criteria to apply for subsidies were too harsh. For instance, a subsidy for whole-day child care is only available to families with both parents working. Tse King-ling has just put her child in whole-day kindergarten but she was in despair after discovering she was not eligible for a subsidy because she had not yet found a job. "I had to put my little girl in whole-day child care in order to find a job to share the financial burden," she said. "How was I supposed to find one before that when I still had to look after her all day long?" The report said government subsidies also failed to cover expenses for extra-curricular activities, school uniforms and various learning materials. "The government has no idea how schools are requiring parents to pay various kinds of fees," Sze said. "Education is the way for these families to escape poverty."

 China*: Shares in Agricultural Bank of China were mixed on Monday after it confirmed it fully exercised its overallotment option in Shanghai to officially become the world’s biggest IPO.

Urgent food and medical supplies have been blocked outside a mudslide-ravaged area of northwest China, as rescuers ended the search for about 500 people still missing, authorities said on Monday. Floods destroy prefabricated hospital buildings in Yingxiu, Wenchuan county, the centre of Sichuan's2008 earthquake. Thousands of soldiers sent to Zhouqu, a remote town in Gansu province flattened by landslides a week ago, have stopped digging for bodies buried under sludge to prevent an outbreak of disease, the local government told reporters. Rescuers instead have stepped up efforts to clear the thick mud from the streets and drain floodwaters amid warnings of more torrential rain over coming days, said Zhouqu county government spokeswoman Yan Jinxin. So far, the official death toll stands at 1,248, with 496 others still listed as missing. Authorities said a new toll could be announced later Monday.

Tsingtao Brewery (SEHK: 0168) said on Monday first-half net profit soared nearly 30 per cent on year, as it casts its eye around for potential merger and acquisition opportunities. The nation’s oldest brewery said strong sales of its draft, bottled and canned beer as well as more efficient operations underpinned the 29.7 per cent jump in net profit to 830 million yuan (HK$948 million). Revenue in the first six months rose 9.3 per cent year-on-year to 9.8 billion yuan, Tsingtao said in a statement to the Shanghai Stock Exchange. The company also improved its supply chain, reduced purchasing costs and improved the production capacity of its plants, the statement said. The brewer said it would “actively seek” merger and acquisition opportunities in the second half of the year to increase its market share. Meanwhile the Economic Observer newspaper reported on Monday that Tsingtao plans to purchase a 45 per cent stake in Hangzhou Xihu Beer Asahi for up to 2 billion yuan. The report, quoting an unnamed official said Tsingtao plans to acquire the stake owned by state-owned Hangzhou Industrial Assets Management Co, and the purchase will not affect the 55 per cent stake held by Asahi Breweries. Asahi also owns a 19.99 per cent stake in Tsingtao Brewery. The purchase is still pending government approval, the paper said. Xihu is a famous beer brand in the affluent coastal province of Zhejiang. Tsingtao was established 107 years ago as a German-British enterprise in what was then the German treaty port of Qingdao. The mainland overtook the United States as the world’s top beer producer in 2002. Foreign brewers such as Carlsberg and US-based Budweiser have all invested heavily in operations around the country.

An explosion ripped through a fireworks factory in northeast China early on Monday, killing at least two people and leaving several missing.

A consortium of leading mainland companies plans to bid for a 30 per cent stake in AIG's Asian life insurance business, AIA, the 21st Century Business Herald reported.

R&D points the way forward for China - A visitor at the Youth Innovation Center at the Shanghai Expo. Chinese companies should focus more on innovation, said business strategy experts. It is hard to imagine any issue more central to Chinese enterprises today than innovation. Rising per capita incomes and wage rates will increasingly make it more difficult for Chinese companies to compete just on the basis of cost efficiency. The imperatives for a shift from a single-minded focus on cost reduction to a focus also on innovation are very strong and very clear. It is important to remember, however, that how companies must think about and manage innovation is changing rapidly. We focus here on the three most important dimensions along which companies need to re-think their approach to innovation: the rapidly growing imperative for 360-degree innovation; the rapidly growing imperative for frugal innovation; and the rapidly growing imperative for companies to collaborate with other firms in order to develop new products, processes and solutions. Tomorrow's global enterprises will have to figure out how to make innovation an always-on and 360-degree pervasive activity. Several disruptive forces are causing a steady decline in the half-life of technologies, products, services, processes and even entire business models. As such, innovation will have to be seen as an all-encompassing agenda touching every activity in the value chain. It will have to include innovation in how products and services are produced, distributed, marketed and sold as well as in how the company's organization itself is designed and managed. The first disruptive force is the ongoing march of technology, which continues to advance at an exponential rate. In 1990, if you needed to buy a book, you had to walk down to a brick and mortar store. By 2000, you could order one over the Internet and it would be delivered to your home in three to five days. Today, you can order it as an e-book and have it delivered instantaneously to your PC, PDA, cell phone or an iPad. The impact of rapid technological advancement is evident all around us - in autos, pharmaceuticals, clothing and even the lowly toothbrush. The second disruptive force is the all-around transparency created by the Internet. A company's actions are becoming increasingly visible to almost every stakeholder - customers, competitors, suppliers, shareholders, employees, alliance partners, the community, governments and social activists - in real time. A direct result has been that barriers to competitive imitation have rapidly gone down even as companies are now scrutinized and held more accountable by more stakeholders more frequently. The third disruptive force is the emergence of new competitors from non-traditional countries, who bring significantly lower cost structures and larger pools of research and development talent, are very ambitious, and are comfortable moving at great speed. The processes that have resulted in the emergence of new champions such as Huawei, BYD, Infosys and Tata Motors are still in the very early stages.

Getting schooled in big business - The entrance to China Europe International Business School in Shanghai. If China is to continue on its path to becoming the world's leading economy in the 21st century it will need first rate managers. But do its business schools have the capacity to deliver the same standard of business and management education as is available in the West? Certainly, business educational institutions such as the China Europe International Business School (CEIBS) in Shanghai, the Guanghua School of Management at Peking University, the Cheung Kong Graduate School of Business in Beijing and the Hong Kong UST Business School have made their mark. Many of these have significant links with major world institutions and attract the best lecturers globally. But is there sufficient strength in depth? Are the 184 business schools across the country up to the job of delivering the management expertise that China so badly needs? Dr Eric Thun, lecturer in Chinese business studies at the Said Business School at Oxford University, said there was now a shift in the balance of power in the provision of business education from West to East. "I think the environment has changed a lot over the last 10 to 15 years. There was an assumption you had to go to the West to learn about business but that is no longer the case. There are some absolutely top-notch programs in China. There are some business schools much more highly ranked than us in the global rankings," he said. MBAs (Masters in Business Administration degrees) were first offered in China in a pilot program in Dalian in Liaoning province by the State University of New York at Buffalo in the 1980s. As part of an initiative by the Ministry of Education, MBA courses were then established at 10 mainly technical and engineering colleges in 1991. It was another three years before China's major universities began to start offering them. Wu Changqi, associate dean and professor of strategic management at the Guanghua School of Management at Peking University, said China's shortage of management skills has been a major driver behind the growth of business schools in China. "I think to some extent management education in the West has peaked with the numbers declining but here in China there is still a shortage of managers and that is what is driving the growth of business schools," he said. He said potential MBA students are increasingly opting to study in China rather than go to the United States or Europe because they are worried they will get left behind in China's fast moving business world. "If they go to America for two years with things moving so fast here they worry they might lose contact with their companies which might be sponsoring them on their courses. For them it might be advantageous to remain in China," he said.

Hainan China aka "Hawaii of Asia" extends visa-free country list to 26 - South China's Hainan Province added five more countries to its visa-free list to attract tour groups, as the island hopes to expand its already burgeoning tourism industry, local authorities said in a press conference Monday. Tourists groups from 26 countries can enjoy visa-free access to Hainan for up to 15 days, after five countries: Finland, Denmark, Norway, Ukraine, and Kazakhstan, were included in the new policy, said an official of the provincial government. The minimum size requirement of tour groups from Russia, Republic of Korea, and Germany have also been reduced from five to two people, while their maximum duration of stay increased to 21 days. The easing of the visa policy is among the latest moves to promote tourism in Hainan, China's southernmost island province famous for its beautiful beaches and tropical sceneries.

Couples hold a group wedding ceremony in Lushan county, Central China's Henan province, Aug 16, 2010. A total of 77 pairs of newlyweds announced their marriage at the ceremony in Lushan during Qixi Festival, or Chinese Valentine's Day, which is the seventh day of the seventh lunar month and fell on Aug 16 this year.

Aug 17, 2010

Hong Kong*: Measures to cool the property market will have to be supplemented by concrete steps to increase housing supply, political parties said yesterday. Lawmaker Chan Kam-lam of the Democratic Alliance for the Betterment and Progress of Hong Kong said his party welcomed moves to curb property speculation. But the curbs failed to help many ordinary families who want to own a property at a reasonable price, Chan said. "The government should review its policies on the property market. At the same time, it should increase land supply and build subsidized flats under the Home Ownership Scheme," he said. Legislator Lee Wing-tat of the Democratic Party, which also supports the construction of HOS flats, said the new measures were not effective enough to cool the property market. He said the 500 extra flats to be built on three more sites that will be auctioned are not enough. "When there are only 10,000 new flats available this year, compared with about 20,000 flats per year in the past, an increase of 500 is laughable," Lee said. Michael Tien Puk-sun, of the Liberal Party, said the government is on the right track but is too timid in imposing the measures. Tien believes that increasing land supply to build more affordable flats is the key. He said the size of the homes should be limited, "otherwise it won't help the public who can only afford a flat valued at between HK$1 million and HK$2 million."

Five characters featured in a recent human interest series on ATV will act as judges at this year's Miss Asia pageant. The broadcaster hopes this will give the contest greater credibility. Three charity founders, a street guitarist and a congee hawker make up the chosen five, picked from among the 21 finalists of the series titled "The Hong Kong Top Ten Loving Hearts Selection Campaign." Lee Chung-hing has served the elderly residents of Oi Man Estate in Ho Man Tin a free congee breakfast every day for more than 20 years. The 57-year-old, who is one of the most popular finalists selected from among more than 200 nominees, said: "A winner [of the pageant] should be beautiful inside and out. We appreciate young ladies who aspire to make a difference in society with their talent." The five will join a distinguished panel of international judges which includes pianist Li Yundi and Australian architect Philip Cox. The new arrangement aims to clear doubts about the contest's credibility, which surfaced in 2008 after one of the biggest scandals in the city's beauty pageant history. That year, ATV scrapped the usual panel of judges in favor of public voting through the internet and mobile phones. But the station later announced there was a possibility of voting discrepancies after one of the contestants received 100,000 votes in an hour and was disqualified. The result was overturned a week later by ATV executive chairman Linus Cheung Wing-lam, and the show's credibility has been under a cloud since then. An ATV spokesman said yesterday the company has not decided if it will continue with the internet voting mechanism as "tremendous technical loopholes" remain unresolved. The broadcaster's potential largest shareholder - mainland tycoon Wang Zheng - also refused to comment on the previous scandal. But he did say this: "There will be an enormous breakthrough in this year's beauty contest." The new panel made up of outstanding members of the public should convince the audience, he added. Wang has been quoted as saying that he will turn ATV into the conscience of Hong Kong if he does obtain a majority stake of the station. Contestants for the pageant, aged between 16 and 26, are now being recruited from all Asian countries, with the deadline set at September 4. The final will be held in the mainland in late November.

Security experts will gather in Hong Kong next month as the city hosts the world's first Interpol conference on information security. The conference, to be held from September 15-17 at the police headquarters in Wan Chai, expects to see representatives from up to 188 Interpol member states discuss the increase in technology crimes. Interpol, which has in the past held events with the Hong Kong authorities, invited the Hong Kong Police Force to co-host the event. The news came as the police released the latest figures on technology crimes, showing sharp increases. For the first half of this year, 840 such crimes were reported, up 39 percent from the same period last year. Among them, 293 cases involved internet commercial fraud, which saw a 54 percent increase. Most involved online purchases. In some cases, the seller did not receive payment after goods were sent. In others, goods were not delivered, the police said. The number of cases involving unauthorized access to computers also significantly increased by 71 percent to 192 cases. The police said the public should be cautious as online transactions become more common. The prevalence of virtual game crimes, in the same period under scrutiny, also increased by 7 percent to 202 cases. Predators also picked on online game players by hacking into their accounts to steal virtual weapons. Senior superintendent Wong Ying- wai said it is important for the international community to cooperate in tackling internet crimes. In a globalized world, no country can be left out, Wong added. Technology crimes also affect both individuals and governments. Serious security breaches can also hamper the normal operation of government, he said. During the conference, security experts such as US Federal Bureau of Investigation cyber division assistant director Gordon Snow and mainland police representatives are expected to share their experiences. The officiating guests are Hong Kong Police Commissioner Tang King-shing and Interpol Secretary General Ronald Noble. Security experts from the Hong Kong disciplinary force are expected to participate.

The first local insurer to launch yuan policies says yuan-denominated products will dominate the Hong Kong insurance market in five to 10 years. But such products will remain insignificant at the moment because of limited investing channels, according to China Life Insurance (Overseas). "Three conditions are needed for a perfect yuan insurance market in Hong Kong - a freely convertible yuan, a large volume of yuan transactions and many yuan-denominated investment products," deputy chairman and president Liu Tingan said in Hong Kong. So, the local market needs at least five to 10 years to mature. Liu said the lack of diversified investment channels for local entities has limited the liquidity of yuan products as well as their returns. For those reasons, China Life (Overseas) is halting the launch of new yuan policies apart from the 10-year saving policy introduced last month, he said. But the prospects are bright, Liu said, pointing to the more than 20 million mainland tourists who spend 100 billion yuan (HK$114.39 billion) every year, and the increasing volume in cross- border trade settlements. Liu said Hong Kong should develop its bond market further and strive for investment channels so that the yuan can flow back to the mainland market as quickly as possible. "It could be a `mini QFII' [qualified foreign institutional investor] into the mainland equities market or QFII into its interbank market," he added. The local unit of China Life Group said total premiums for the first six months rose 93.5 percent while new premium income grew 125.5 percent from a year ago - to HK$5.98 billion and HK$5.08 billion respectively. It is targeting total premiums of HK$7 billion for the full year. "We hope to enhance long-term business development which can increase our embedded value," Liu said, adding the firm has hired Maria Ching Po-shan - a former AIG and Prudential executive - to be its business director. China Life (Overseas) has total assets of more than HK$35 billion, of which about 60 percent is in bonds and more than 20 percent in equities. Liu said the company is optimistic about the local market in the second half and has no plans to change its strategy. "Despite uncertainties, I believe Hong Kong will benefit in the second half from firms' higher profitability, ample liquidity flowing in on expectations of the yuan's appreciation as well as stable growth in the mainland."

It's taken 11 years, but by December we'll finally know that proprietary Chinese medicines on the shelves are safe. But do they work? We'll have to wait some more to find out. More than 80 per cent of the proprietary Chinese medicines sold in Hong Kong will lack scientific proof of their quality and efficacy when the law that regulates them finally takes effect in December, 11 years after it was passed. Lawmakers and pharmacists have criticised the government for compromising public safety by allowing unproven medicines onto the market without saying when the situation will change. From December 1, any sale, import or possession of unregistered proprietary Chinese medicine will be an offence subject to a maximum penalty of HK$100,000 and two years' imprisonment. The enforcement of a section under the Chinese Medicine Ordinance comes 11 years after the law was passed in 1999, and seven years after a registration system for these products was introduced in 2003. Although the 11,000 products that can continue to be sold in Hong Kong after December 1 will have their "safety" tested, they will not be subject to tests for "quality" or "efficacy". Quality refers to the medicine's ingredients, shelf life and manufacturing method, while efficacy means the drug's effectiveness for treating certain conditions. Some products may require clinical trials to prove efficacy. The Department of Health, facing repeated criticism over its slow progress on the matter, says it has yet to work out a timetable on when these products would eventually be tested comprehensively. Drug safety in Hong Kong has been a growing public concern after a spate of incidents in the past two years. In March, Po Chai Pills were found to contain cancer-causing chemicals. This came a year after a locally produced Western drug, Purinol, was contaminated with a rare fungus that killed eight leukaemia patients. The law that requires proper labels and package inserts will not come into force until a year later on December 1, 2011.

How many of Hong Kong's lawmakers should be allowed to hold foreign passports? Even the legislators with overseas passports are split on the question, reflecting a long-standing difference between Beijing loyalists, who take a patriotic stance, and businesspeople, who stress Hong Kong's status as an international city. The issue is a timely one, as 10 seats are due to be added to the 60-member Legislative Council in 2012. And over the debate looms the shadow of the Basic Law. Under Hong Kong's mini-constitution, 20 per cent of Legco seats may be held by holders of overseas passports, so the council's expansion would allow two seats to be added to the 12 now held by foreign nationals. Legislators and lawyers say a right granted by the Basic Law should not be taken away lightly and warn that legal action may result if the government keeps the number of those seats at 12, as it appears to want to do. Even if the status quo was maintained, the Constitutional and Mainland Affairs Bureau said, it would still "allow people who are not of Chinese nationality to continue to contribute to Hong Kong and to help maintain the image of Hong Kong as an international metropolis". Under Article 67 of the Basic Law, permanent residents of Hong Kong who are not of Chinese nationality or who have the right of abode in foreign countries may be elected to the Legislative Council, provided that the proportion of them does not exceed 20 per cent of Legco members. To fulfil this requirement, the Legislative Council Ordinance lists 12 functional constituencies that are allowed to be filled by holders of foreign passports - most of them constituencies related to business chambers and professional sectors. Directly elected seats are ineligible. The Bar Association is calling for the government to fulfil the Basic Law's allowance to the fullest extent, saying there should be no "unreasonable restriction" to people's right to be elected - a call it has made since the consultation on Legco reform. Lo Pui-yin, a council member of the association involved in constitutional affairs, said: "Should there be any legal challenge, although the government may say that that it has fulfilled the Basic Law's requirement of not exceeding 20 per cent, people might say they have reasonable expectations of its being fulfilled to the fullest extent, in light of the current arrangement." Civic Party lawmaker Margaret Ng Ngoi-yee, a British passport holder who represents the legal sector, said any rights guaranteed under the Basic Law "must not be lightly given away". But any legal challenge might have only a small chance of succeeding, said University of Hong Kong law professor Albert Chen Hung-yee, who is a member of the Basic Law Committee. That is because the government could say the 20 per cent cap was only a maximum and not a minimum requirement, Chen said. He said it would have technical difficulties in allocating the two slots among the five functional constituency seats for district councils that would be among the 10 seats added. Civic Party member Paul Zimmerman, who is Dutch, is contesting a district council seat in Pok Fu Lam. While saying he had no plans at present to run for a Legco seat through the district council route, he agreed that maintaining the status quo would be unfair to foreign nationals like him and Hongkongers with foreign residency. Dr Patrick Lau Sau-shing, a Canadian who represents the architectural, surveying and planning sector in Legco, said two new slots should be made available for the district councillors who will join Legco. Financial affairs commentator David Webb, who threatened in 2005 to seek a judicial review of the issue before an earlier reform proposal was voted down, said the government should allocate all the slots to the 14 foreign passport holders who win the 2012 election with the highest vote count, or designate the two new slots for the district council seats. But lawmaker Andrew Leung Kwan-yuen, a Federation of Hong Kong Industries representative who has a full British passport, saw no need to increase the number of slots for foreign passport holders, as Hong Kong's situation today differs from before the handover, when there were concerns about the city's future. Lawmakers will decide the details of the Legco reform after the summer recess.

The number of passengers using Hong Kong International Airport hit a record last month, climbing 17.5 per cent to 4.7 million, according to figures released yesterday by the Airport Authority. This compared with just over 4million passengers in July last year. The number of aircraft take-offs and landings also hit a monthly record, up 14.7 per cent year-on-year to 26,720 movements and an increase from 23,300 a year earlier. Cargo volumes also surged 24.5 per cent to 363,000 tonnes, against 292,000 tonnes a year earlier. But the increase did not top the monthly record of 364,000 tonnes handled in November 2007. Commenting on the figures, Airport Authority chief executive Stanley Hui Hon-chung said: "The market rebound during the summer holiday travel season has been particularly strong. July saw a high average load factor of close to 80 per cent for passenger flights at Hong Kong International Airport." He pointed out that both foreign and domestic airlines had added flights, launched services to new destinations or restored flights that had been cut as a result of the global financial crisis. This included Cathay Pacific Airways (SEHK: 0293), which started a three-times-a-week service to Moscow on July 13, two weeks after Hong Kong Airlines launched services to the Russian capital. Cathay Pacific also confirmed plans to add flights to cities including Sydney, Brisbane, Cairns, Auckland and Toronto from November and increase the number of weekly flights to Paris to 11 by December. Hong Kong Airlines is planning to launch services to Istanbul, Paris and Tokyo by 2011 as its new Airbus A330-200 aircraft are delivered. The total number of passengers using the airport in the first seven months of this year climbed 10.4 per cent to 29.2 million travellers. There also was a 33.3 per cent rise in cargo volumes to 2.3 million tonnes between January and July, while the number of aircraft movements increased by 10.4 per cent to 171,650 take-offs and landings. The Airport Authority said passenger traffic to and from the mainland and Southeast Asia performed particularly well last month, without giving figures. The body also saw a 29 per cent year-on-year increase in overall visitor numbers last year, while the number of Hong Kong residents travelling through the airport rose 21 per cent against July last year. On the air-cargo front, almost all of Hong Kong's major trading markets showed yearly double-digit growth in July. Exports, especially to North America and Europe, continued to be the dominant growth driver, surging 36 per cent over the same period last year. Import and transshipment volume also saw year-on-year growth of 23 per cent and 2 per cent respectively.

Probably the worst nightmare for any film director is to receive a call from your financier telling you that the plug is being pulled on your HK$40 million movie. That's what happened to award-winning director Mabel Cheung Yuen-ting one Christmas in the mid-1990s when she and her crew were stuck in the snow in the mainland's north scouting for locations. "It was a nightmare. We had already hired a whole team of people to identify locations in Changchun to shoot the film," Cheung said. "Then one day, the company called up and said they would no longer support the project and asked us to stop." But Cheung did not give up on the project. The Soong Sisters, a film about the three most influential sisters in China at the turn of the 20th century, was dear to her heart. She stayed on and completed the choosing of locations, flew back to Hong Kong and then waited outside various Christmas parties to talk to potential investors. "That was a hard time as it was Christmas and no one was in the mood to talk about film investment," she said. After a long wait, she finally found a Japanese film company to finance the movie, which was completed and went on to be a box office hit in both Hong Kong and Japan. The experience was a hard lesson that the life of being a director was not just about red carpet award presentations and cocktails at the Cannes film festival. "That is life: I did not take it as a nightmare but as a challenge. As a director, you always have to find investors to support your project,'' she said. Cheung had quite an easy start in getting funding for her first film, Illegal Immigrant, in 1984. As a film student at the University of New York, her script was good enough to convince Mona Fong Yat-wah, the boss of Shaw Brothers, to give her HK$1 million to complete the movie for her thesis. Illegal Immigrant, based on the real life stories of her migrant friends, eventually won Shaw Brothers five times its investment: a return of HK$5 million at the box office. It also won Cheung the best director award at the Hong Kong Film Awards and ensured her smooth entry into Hong Kong's film industry. She and her boyfriend, Alex Law Kai-yui, who was her classmate at the University of New York, have teamed up as producer and director in 11 films over the past 26 years. Their productions include the big box-office hit, An Autumn's Tale, in 1987, which was the best film at the Hong Kong Film Awards. Cheung's latest film, Echoes of the Rainbow, had a budget of HK$12 million but became a box-office hit early this year with receipts of more than HK$20 million. It depicts Hong Kong in the forward-looking 1960s through the eyes of a child. The film won the crystal bear award at the Berlin Film Festival. Cheung was born in 1950. Her father died when she was in secondary school and, as the eldest sister with three siblings, she had to work part-time to support her family after school. When she was young, she had dreamt of being a reporter so she studied English literature and psychology at the University of Hong Kong in a bid to improve her writing and communication skills. After graduating in 1973, she had a stint as a public relations officer at the Hong Kong Tourist Association. She later applied for a scholarship to a diploma course in drama and creative media at Bristol University in Britain.

Buying by directors rebounded last week after four quiet weeks, with 19 companies recording 98 acquisitions worth HK$1.04 billion. The figures were sharply up from the previous week's 15 firms, 60 purchases and HK$22.5 million in investment. Selling activity was flat, with seven firms posting 25 disposals worth HK$13.6 million. The number of firms and trades were consistent with the previous week's seven companies and 27 disposals while the sell value was sharply down from the previous week's HK$31.4 million. The huge buy value last week was because of purchases in blue chips Hutchison Whampoa (SEHK: 0013) and Cheung Kong (Holdings) (SEHK: 0001) worth a combined HK$1.01 billion. Li Ka-shing, the controlling shareholder of both companies, led the buying with 15.3 million shares of Hutchison from August 6 to 10 worth HK$903.7 million at an average of HK$59.06 each. The trades increased his holdings to 2.229 billion shares or 52.28 per cent of the issued capital. Li was one of three directors that bought Hutchison shares last week. Managing director Canning Fok Kin-ning picked up 1.2 million shares from August 6 to 9 at an average of HK$57.20 each, which boosted his stake by 25 per cent to 6.01 million shares or 0.14 per cent. Finance director Frank Sixt bought 150,000 shares on August 6 at HK$54 each, which increased his holdings by 300 per cent to 200,000 shares or 0.01 per cent. The purchases by the three directors totalling 16.6 million shares accounted for nearly 13 per cent of stock's trading volume. Meanwhile, Li bought 330,000 shares of Cheung Kong from August 6 to 10 at an average of HK$99.88 each, which increased his holdings to 976.1 million shares or 42.1 per cent. So far this year, Li has bought 14.8 million shares worth HK$1.5 billion at an average of HK$100.94 each. The shares of Hutchison and Cheung Kong closed on Friday at HK$62.85 and HK$101.70, respectively. There were also multiple insider purchases in Kaisun Energy Group, with four of the mining firm's five executive directors picking up a combined 420,000 shares on August 10 and 11 at an average of 68 HK cents each. The acquisitions were made after the stock fell 48 per cent from HK$1.31 on April 22. Chairman Joseph Chan Nap-kee bought 100,000 shares at an average of 68 HK cents each. The trades raised his holdings to 25.2 million shares or 1.2 per cent. He previously acquired 20.1 million shares on February 9 at HK$1.08 each and 200,000 shares on December 22 last year at 94 HK cents each. More bullish was Augustine Chow Pok-yu, who bought 200,000 shares at 68 HK cents each, which boosted his stake in the company to 5.8 million shares or 0.28 per cent. Chow previously acquired 700,000 shares in December last year at an average of 92 HK cents each. The two other buyers were Yang Geyan and Yang Yongcheng, with a combined 120,000 shares purchased at an average of 68 HK cents each. The counter closed at 68 HK cents on Friday. On the sales side, executive director Zhang Baoyi took some profits on the 324,000 shares he bought in mainland car parts manufacturer Zhejiang Shibao in June at an average of HK$2.53 each. Zhang sold 20,000 shares sold on August 11 at HK$2.98 each. The trades cut his holdings to 304,000 shares or 0.35 per cent. The disposal was made after the company announced on August 6 a 122.65 per cent gain in first-half earnings to 53.26 million yuan (HK$60.98 million). The stock closed at HK$2.90 on Friday.

 China*: Tsingtao Brewery Co., China's second-largest brewer by volume, said Monday its profit for the first half of the year climbed 29.74 percent year on year as sales of its high-end beers surged. Net profit totaled 830 million yuan (122 million U.S. dollars) in the first six months as sales increased 9.3 percent to 9.81 billion yuan. Earnings per share rose to 0.614 yuan, up 25.56 percent from a year earlier, the brewer said in a statement filed with the Shanghai Stock Exchange. The company attributed the profit growth to strong demand for its high-end beer and saw a rise of 26.7 percent in sales of the high-end beer from January to June. The brewer said it would increase production and continue to implement its current marketing strategy in the second half to snare a larger market share. The company will also "actively look for" merger and acquisition opportunities in the second half to expand its presence in the beer market, the statement said. The company's A-shares dropped 0.03 percent to open at 35.81 yuan per share Monday.

Investments by Soho China (SEHK: 0410), the Beijing-based commercial developer, in Shanghai have grown to more than 6.19 billion yuan (HK$7.08 billion) after the company bought a third site in the city for 1.56 billion yuan. Soho yesterday won an auction for a retail and office site called Linkong Plot 15 in Shanghai's Hongqiao Linkong Economic Zone, a developing commercial area. The land price in terms of gross floor area is 7,250 yuan per square metre. The 86,146 square metre site, next to the Shanghai Hongqiao transport hub, could be developed into a retail and office project with a gross floor area of 250,000 sq metres. The developer estimates the construction cost of the project will be up to 1.5 billion yuan or about 7,000 yuan per square metre. The total investment cost, including land price and construction cost, is about 3.06 billion yuan. Chairman Pan Shiyi yesterday said the company would keep 20 per cent of the gross floor area for leasing, with the rest being released to the market for sale. "We prefer to keep retail space at the project as it offers stable rental income," he said. Construction work on the project will start in the second half of next year and is scheduled for completion at the end of 2013. The company has more than 14.8 billion yuan on hand after yesterday's purchase. "Many local banks are willing to offer property loans to us as our gearing ratio is low. We have no plan to seek financing in debt and capital markets," Pan said. Soho used to focus on the Beijing commercial market. However, the firm started to expand in Shanghai after acquiring the Exchange at Nanjing West Road from Morgan Stanley for 2.45 billion yuan a year ago. Soho launched the project and renamed it Exchange-Soho. That helped the developer to generate 2.18 billion yuan from sales of office units. The strong sales encouraged Soho to buy an equity interest in the Bund 204 site, its second project in Shanghai, for 2.25 billion yuan in June. Pan targets to increase investment in Shanghai to 50 per cent of the company's total investments over the next three to five years from 20 to 25 per cent. "We are focused on Beijing and Shanghai. We will continue to increase our investment in Shanghai. The return on investment in Shanghai is higher," he said. A Colliers International report showed the vacancy rate of grade A office space in Shanghai remained at 12.8 per cent in the second quarter. The capital value growth of the office sector continued to outpace retail sector growth of 1.9 per cent in the past quarter. The firm expects the significant increase in new office supply in Pudong, Huangpu, Jingan and Xuhui districts will lead to a sharp increase in vacancy rates by the end of this year and derail any immediate recovery in effective rental rates. Soho will announce its interim result on August 25. Its shares rose 1.1 per cent to close at HK$4.78 yesterday.

China becomes second largest economy as Japanese growth stalls - Japan lost its place to the mainland as the world’s No 2 economy in the second quarter as receding global growth sapped momentum and stunted a shaky recovery. Gross domestic product grew at an annualised rate of just 0.4 per cent, the government said on Monday, far below expectations of 2.3 per cent growth in a Kyodo news agency survey. The figures underscore the mainland’s emergence as an economic power that is changing everything from the global balance of military and financial power to how cars are designed. It is already the biggest exporter, auto buyer and steel producer, and its worldwide influence is growing. The country has surpassed Japan in quarterly GDP figures before but its passing of Japan in the second quarter is likely to mark the period in which the lead became insurmountable. The mainland's economy will almost certainly be bigger than Japan’s at the end of the current year because of the big difference in each country’s growth rates. The mainland is growing at about 10 per cent a year while Japan’s economy is forecast to grow 3 per cent this year. Japan’s nominal GDP, which isn’t adjusted for price and seasonal variations, was worth US$1.286 trillion in the April-to-June quarter compared with US$1.335 trillion for the mainland. The figures are converted into US dollars based on an average exchange rate for the quarter. Japan has held the No 2 spot after the US since 1968, when it overtook West Germany. From the ashes of the second world war, the country rose to become a global manufacturing and financial powerhouse. But its so-called “economic miracle” turned into a massive real estate bubble in the 1980s before imploding in 1991. What followed next was a decade of stagnant growth and economic malaise from which the country never really recovered. Prime Minister Naoto Kan now faces a long list of daunting problems: a rapidly ageing and shrinking population, persistently weak domestic demand, deflation, a strong yen and slowing growth in key export markets. In contrast, the mainland’s growth has been spectacular, its voracious appetite fuelling demand for resources, machinery and products from the developing world as well as rich economies like Japan and Australia. The mainland is Japan’s top trading partner and has been key in Japan’s recovery from the global recession. But the country’s rise has produced glaring contradictions. The wealth gap between an elite who profited most from three decades of reform and its poor majority is so extreme that it has dozens of billionaires while average income for the rest of its 1.3 billion people is among the world’s lowest. Japan’s people still are among the world’s richest, with a per capita income of US$37,800 last year, compared with China’s US$3,600. So are Americans at US$42,240, their economy still by far the biggest. Keisuke Tsumura, a parliamentary secretary at the Cabinet Office, told reporters that it would be misleading simply to compare quarterly growth figures for Asia’s economic powerhouses. “It would be correct and fair to compare the figures for the whole year,” Tsumura said. “It will be very misleading to simply compare quarterly figures.” “We should be concerned about per capita GDP,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. China overtaking Japan “is just symbolic”, he said. “It’s nothing more than that.” On a quarterly basis, Japan’s GDP – or the total value of the nation’s goods and services – grew 0.1 per cent from the January-March period, the Cabinet Office said. Consumer spending, which accounts for about 60 per cent of GDP, was flat from the previous quarter, the figures showed. Capital spending by companies rose 0.5 per cent, while public investment fell 3.4 per cent. “We are now seeing a pause of growth, especially on the domestic side,” said Masamichi Adachi, senior economist at JPMorgan Securities Japan. The outlook for this third is uncertain. Private consumption appears to be solid so far, helped in part by unusually hot weather, Adachi said. But a cooling global economy is dampening exports and production. A stronger yen, which hit a 15-year high against the US dollar last week, also poses a major risk for the country’s export-driven economy. Yen appreciation reduces the value of repatriated profits for companies like Toyota and Sony and makes their products more expensive abroad. The currency worries led Finance Minister Yoshihiko Noda to say last week that he is closely monitoring foreign exchange rates. Bank of Japan Gov. Masaaki Shirakawa released a similar statement to try to calm markets.

Time is said to be the great healer, but the pain of what 84-year-old Liu Shili endured as a prisoner of war of the Japanese more than half a century ago still brings tears to his eyes.

A panel of experts has drawn a blank in looking for a link between Synutra milk powder and three infant girls in Hubei province developing breasts. Tests of 42 samples of the milk formula produced by Nasdaq-listed Synutra International did not have traces of banned sex hormones, the Ministry of Health said yesterday. Samples tested included powder taken from the homes of the three babies - aged between four months and 15 months - who developed breasts. In response to parents and doctors voicing fears that hormones in Synutra powder caused the phenomenon, ministry spokesman Deng Kaihua said in Beijing that there was nothing abnormal about the level of hormones in milk powder from Synutra or other brands. The ministry had last week set up the nine-member panel of pediatric and glandular specialists and food safety experts to investigate the Hubei girls. The experts found endogenous estrogen and progestational hormone in samples all within normal levels. "Assessments by the Ministry of Health's expert panel found that the precocious breast development of the three Hubei baby girls has no link with their consumption of Youbo brand of Synutra milk powder," Deng said. The experts agreed that the development of the baby girls' breasts was abnormal but noted that no other signs of sexual maturity had been observed. Besides Synutra milk formula, the experts tested 31 samples of milk formula under 20 brand names produced by 14 firms. Hormones were all within an acceptable level. The probe came amid spreading fear in the mainland about milk powder produced by Synutra. Reports claimed that infant girls in provinces including Guangdong and Hubei have also developed prematurely after being fed Synutra milk powder. But Synutra issued a statement yesterday declaring that its products are up to standard and safe for consumption. It is also creating a fund of 10 million yuan (HK$11.4 million) to work with medical and research groups in Hubei, Guangzhou, Beijing, Shanghai and Chongqing to try to pin down causes of premature puberty. Hon Kam-lun, a pediatrics associate professor at the Chinese University of Hong Kong, said infant girls who show early signs of breast development but no other bodily changes of sexual maturation are not regarded as having "true" precocious puberty. He said early breast development could be due to exposure to exogenous estrogen, such as consumption of medications or food that contains it. It probably will not do much harm to the girls, he said, so long as parents consult pediatricians. Very few local kids have "true" precocious puberty, Hon added. That, he said, is a worrying condition, which could have various causes, including brain tumors. In Beijing, a researcher at the Chinese Center for Disease Control and Prevention, Yang Yuexin, cited medical literature as saying that the incidence of a child aged below eight having premature puberty is one in every 5,000-10,000 children a year. Parents should help their children's health with a balanced diet, she said.

China and Hong Kong opened their hearts to victims of the Gansu mudslide yesterday as flags flew at half mast and authorities pressed on with the fight to save survivors from more flooding. Public entertainment in the mainland was cancelled on the day of mourning for more than 1,200 people killed by the slide in Zhouqu. In a televised memorial service, 5,000 rescue workers and Zhouqu residents, wearing white paper flowers and some still clutching their shovels, bowed their heads in silence as a siren wailed at 10am. State TV showed coal miners in northern China and railway workers with their heads bowed. Cinemas and karaoke parlors were ordered to close and concerts were canceled. Websites switched to all-black formats. President Hu Jintao paid a silent tribute in Beijing, while other leaders and former president Jiang Zemin lamented the deaths. At least 1,239 people were killed as waves of mud and rock triggered by heavy rain crashed through Zhouqu on August 8, knocking down homes and other buildings. The government says 505 people are still missing. Troops and medical workers continue to clear debris, search for bodies and spray disinfectant. With more rain forecast, soldiers are working to clear debris from the swollen Bailong River, which flows through Zhouqu, and prevent more flooding. One-third of the town is still under water. The Ministry of Civil Affairs said at least 45,000 people have been evacuated. In Hong Kong and Macau, national flags and the SAR flags were flown at half mast at government offices. The Tourism Commission suspended A Symphony of Lights last night.

The owner of the recently restored landmark Fairmont Peace Hotel in Shanghai is to flex its muscles in the mainland's competitive tourism sector by buying 2.69 billion yuan (HK$3 billion) worth of assets. Hong Kong-listed Shanghai Jin Jiang International Hotels (Group), which runs about 550 star-rated and budget hotels around China, agreed to buy from its state-owned parent a variety of assets, including passenger transport services, warehouses and travel agencies. The deals help create a new business model for Jin Jiang, which will serve as a "listed platform" and flagship of the group to boost its competitiveness. Without revealing any details about the assets in question, Jin Jiang forecast that its revenue and net profit will be "significantly increased" as a result of the deals. Competition in the mainland's hospitality and tourism sector has intensified in the past few years, with many overseas hoteliers establishing properties in major cities such as Shanghai and Beijing. Jin Jiang said the newly acquired assets would complement the existing hotel operations, which would form a vertically integrated tourism industry chain. The group reopened the iconic Peace Hotel on the Bund last month after a two-year, 500 million yuan renovation, bringing back the luxury hotel's 1930s glory. Jin Jiang brought in Canadian partner Fairmont Hotels and Resorts as the manager of the 270-room hotel in an effort to rejuvenate the hotel's management and services and fend off competition. Under the agreement with its parent Jin Jiang International, the listed firm agreed to acquire 38.54 per cent of Jin Jiang Investment, which operates passenger transport and logistics services, for 2.08 billion yuan, and 50.21 per cent of travel agency operator Jin Jiang Travel, for 612.79 billion yuan. To settle the deals, the listed firm plans to issue one billion new shares to its parent, a move that will raise the parent's stake in the company to 72.15 per cent from 66.04 per cent at present. Jin Jiang will also pay a security deposit of 231.87 million yuan to the parent. The shares will be issued at HK$2.20 each, a 6.3 per cent premium to the last traded price of HK$2.07 on July 30 before the stock was suspended from trade on August 2. It also represented a 12.01 per cent premium to the average price of the H shares of the company for the five days to July 30. Some analysts said the acquisitions would allow Jin Jiang to expand its business portfolio and become more competitive. However, it was too early to predict the effects on its bottom line, they said. They added that the deals were exposed to uncertainty, as they required approval from the State-owned Assets Supervision and Administration Committee of the Shanghai municipal government and the State Council.

Aug 16, 2010

Hong Kong*: The city's monetary authority has told banks to further tighten lending to buyers of luxury homes and investment properties on concern surging prices are getting out of hand.

Reviled at home but relaxed in Hong Kong, Robert Mugabe stocks up on shoes and suits - There aren't many cities in the world where Zimbabwean President Robert Mugabe can spend a carefree day shopping. Hong Kong is one of them. The 86-year-old African leader went shopping in Tsim Sha Tsui yesterday - and suits and shoes were at the top of his list. Flanked by a team of officers from the Hong Kong police VIP protection unit, Mugabe - who is reviled by many in his country and viewed as a pariah by some in the global community - swept into Harbour City in Canton Road and headed straight for a high-class tailor's shop before moving on to a shoe and accessories outlet. A spokesman for the government's protocol division said the African strongman, who has been in power for 30 years, was not on an official visit. His daughter Bona is studying accountancy at City University. On Friday, Mugabe met President Hu Jintao in the Great Hall of the People in Beijing, having earlier in the week attended events surrounding Zimbabwe Day at the World Expo in Shanghai. He also met Vice-President Xi Jinping in Beijing before heading for Hong Kong. China has been a key international supporter for Mugabe despite domestic and international criticism of him in recent years which has seen him accused of practising racism against Zimbabwe's white minority. He has also been accused of human rights abuses and of ruining the country's economy. Mugabe, who led the former Rhodesia to independence three decades ago, derides his critics as "born again colonialists", and both he and his supporters claim that the country's problems are the legacy of imperialism and Western meddling. A fellow shopper, who asked to be identified only as a 40-year-old teacher from Hong Kong, was walking through the mall with his wife when he locked eyes with the Zimbabwean leader. "I looked him straight in the eye and he did likewise to me, then we both smiled. I obviously recognised him right away but pretty much everyone else had no idea who he was. There were some heavy-duty security people around him and as I stayed to look at him they made it quite clear that they were watching me. He looked pretty relaxed." A spokesman for the Hong Kong police said: "In general, the police would make appropriate security arrangements for visiting foreign dignitaries. Due to operational reasons, we cannot comment." Mugabe's wife, Grace, was at the centre of a diplomatic row in January last year when she was granted diplomatic immunity to escape assault charges for allegedly hitting British photographer and long-term Hong Kong resident Richard Jones as he snapped her shopping in Tsim Sha Tsui on January 15. The Department of Justice said Grace Mugabe was not prosecuted for the alleged assault because she was entitled to diplomatic immunity as the president's wife. She returned to the city in October. The family has a house in Tai Po.

 China*: China's electric power consumption in July reached 389.6 billion kilowatt-hours (kWh), up 13.94 percent year on year, the National Energy Administration (NEA) announced Saturday. The amount was 10.68 percent more than that in June, a statement on the NEA website said. Electric power consumption in the first seven months reached almost 2.4 trillion kWh, up 20.25 percent compared with the same period last year. Primary industry consumption grew 6.13 percent year on year to reach 56.6 billion kWh in the first seven months. During the same period, industrial use of electricity was 1.81 trillion kWh, up 22.69 percent, while tertiary industry power consumption stood at 249.1 billion kWh, up 15.39 percent. Household power consumption rose 13.07 percent to reach 283.8 billion kWh in the first seven months.

Foxconn Zhengzhou Branch to recruit 200,000 employees - Jobseekers deliver their resumes to representatives of the Zhengzhou Branch of Foxconn Technology Group in Zhengzhou, capital of central China's Henan Province, Aug. 14, 2010. Foxconn plans to recruit 200,000 employees for its Zhengzhou branch by the end of next year. A new Foxconn Technology Group factory in Henan Province began production on Aug. 2, as the Taiwanese high-tech giant has begun moving its factory production to inland China.

Pan Yong, a 22-year-old programmer who graduated from college in a small city in Henan province last year, never thought his simple idea of adding mobile-phone functions to an iPod Touch would trigger such a buzz in the technology world. He says poverty, not necessity, was the mother of invention for his Apple Peel, a device that can give the iPod Touch voice calling and text-messaging functions. "I could not afford an iPhone, so I hoped to use my iPod Touch to make phone calls and send text messages, that's it," Pan said on his way to Shenzhen's SEG Electronics Auxiliary Market. The market, one of the biggest trading centres for electronic products in the world, was where Pan and his elder brother, Pan Lei, bought most of the equipment they needed to make the prototype of their Peel. Pan Yong arrived in Shenzhen last summer, with his dream of turning an iPod Touch into an iPhone. He started his research in July, quit working at a firm making GPS products at the end of last year and finished the draft of the software for his device early this year. He said the most difficult part was not writing the software but figuring out how to make the case, which had to contain a battery, SIM card slot and other accessories. He had to learn the skills he needed on the job. The simple idea grew bigger and ran into difficulties when Pan Yong found that it would cost more than he had expected to make the case. "Early this year we found that making a few models would be costly so we decided to make 1,000 and sell the rest if they worked," he said. His brother quit his job and joined him in January, helping him to buy materials, contact manufacturers and communicate with the media. The brothers say they have the full support of their family, including their father, who is ill in a Tianjin hospital. "We can't afford to lose out and let other products copied from us become the first device of this kind to hit the market," Pan Yong said.

Indonesia, Turkey beating BRIC (Brazil, Russia, India And China) as leaders in growth - A worker arranges banknotes in the Bank Negara Indonesia in Jakarta. The Indonesian rupiah has surged recently against the US dollar. Upstarts performing better than largest emerging markets - Looking for something more solid than BRICs as investment destinations? Try Indonesia and Turkey. These two markets are beating the world's biggest emerging markets by almost any financial measure. Indonesia's equity index climbed 21 per cent this year and Turkey's rose 13 per cent, both hitting all-time highs lately. Credit-market rallies sent yields on the nations' foreign-currency debt to the lowest levels on record. The MSCI BRIC Index of shares in Brazil, Russia, India and China is still 42 per cent below its peak after losing 1.2 per cent in 2010. Less than two years after the global financial crisis prompted concern Indonesia and Turkey may default, investors are betting lower debt, growing populations and rising profit will spur economic expansions that led Goldman Sachs' Jim O'Neill to promote the BRIC nations in 2001. While China's gross domestic product is about 4.2 times Turkey and Indonesia's combined, they lead the "Next 11" smaller emerging nations with the most potential to affect world growth, O'Neill says. "There's a paradigm shift in the way both countries have been governed and in terms of economic performance," says Amer Bisat, the former senior economist at the International Monetary Fund and now a money manager at Traxis Partners in New York. They're "large, extremely systemically important and stable", he said. "The market is looking at them in a very different light." The largest emerging-market-stock mutual-fund managers boosted their holdings in Indonesia and Turkey to the top "overweight" positions among 21 markets in June on expectations the gains will continue. The fund managers are turning optimistic as profit growth outpaces share prices in both countries, leaving the Jakarta Composite Index and ISE National 100 Index trading at price-earnings ratios about 20 per cent below their pre-crisis peaks. Mark Mobius, chairman of Templeton Asset Management, last month said he planned to increase holdings of stocks in Turkey, where his firm already had more than US$1 billion invested. In June, he wrote on his blog that Templeton had a "positive take on investment opportunities" in Indonesia, while Antoine van Agtmael, chairman and chief investment officer of Emerging Markets Management, said the country was the most attractive among Southeast Asian markets. The bullish bets are a turnaround from 2008, when investors shunned Indonesia and Turkey as the global economy fell into the worst recession since the second world war. The Jakarta Composite and ISE National both sank more than 50 per cent and the nations' currencies weakened at least 15 per cent versus the US dollar. Uri Landesman, president of New York-based Platinum Management, is not so bullish. Turkey is unattractive for investors because political risks are rising, he says. The government voted in the UN Security Council against imposing new nuclear sanctions on Iran in June, and invited leaders of Hamas, a group branded as terrorist by the US, for talks in Ankara. For Turkey, "if they continue on their current course, politically and culturally, I see them moving away from capitalism towards being the kind of nation that's very unattractive to invest in", Landesman said. However, for Martial Godet, the Paris-based head of emerging-markets investments at BNP Paribas Investment Partners, Turkish stock valuations factor in the nation's political risks, while Indonesian companies have shown they can surpass earnings projections. Indonesian President Dr Susilo Bambang Yudhoyono oversaw economic expansion of at least 4 per cent during the recession. That helped the Jakarta Composite Index jump about 175 per cent from its 2008 low. Indonesia's US$540 billion economy may grow 6 per cent this year, fuelled in part by rising consumer spending among the nation's 240 million people, according to estimates from the IMF. The rupiah has surged 41 per cent from its 2008 low versus the US dollar. In Turkey, the lira has strengthened 21 per cent since March of last year, almost double the 12 per cent gain in India's rupee. The ISE National gauge of shares rallied nearly 160 per cent. Turkey's US$617 billion economy, home to about 80 million people, may expand 6.25 per cent this year, IMF estimates show. O'Neill, who coined the BRIC moniker, said Turkey and Indonesia "are definitely the leaders of the Next 11", which also includes South Korea, Mexico, Iran, Nigeria, Egypt, the Philippines, Pakistan, Vietnam and Bangladesh. Hedge fund Armored Wolf's Ronald Solberg recommends Turkish equities, the foreign-currency bonds of Indonesian coal miners and Turkish banks including Istanbul-based Turkiye Garanti Bankasi, along with local-currency government debt of Indonesia due in five and 20 years. "In terms of structural reforms, macroeconomic mix of policies and debt management, both countries have been doing the right things and are obviously seen in an improving light by foreign investors," said Solberg, a managing director at Armored Wolf. "They are following in the footsteps of the BRICs."

1,280 yuan (US$176) for breakfast, and not a scrap to eat - Li Mei, who serves a liquid breakfast for 1,280 yuan a month. We offer only one set menu between 7am and 11am. It doesn't list any food but has three beverages: aloe vera juice, strawberry milkshake with protein powder and a herbal drink with green and red tea concentrates. Most people say they don't feel hungry after they finish the three drinks, which are about 300ml each. They contain high levels of protein, fibre and the necessary vitamins but are very low in calories. The three beverages can help to neutralise the bad effects of fatty foods on your cardiovascular system and also aid digestion. Many of my middle-class clients and former colleagues from the IT business are overweight owing to a lack of exercise and constipated because they do not get enough fibre in their diet. They are forced to eat out every day either because of business or they're pressed for time. Our bodies are designed to make us want food that has been cooked and food with lots of calories such as red meat. But such a diet is not healthy and can lead to heart disease, high blood pressure, gallstones, type two diabetes, osteoarthritis and cancer. We have a variety of customers - from the elderly, overweight teenagers and their parents, housewives and businessmen to government employees. But people who need to manage their weight are our target customers. It's not difficult to make the beverages at home with a mixer and the right ingredients. But people who want to save time in the morning prefer to come to our cafe.

China Southern, China Eastern, Hainan Airlines and Air China joined forces to increase Airlift to Xinjiang - Farmers look over the livestock on offer at Kashgar's Sunday market, which is a magnet for rural people and tourists from around the world. Businessmen and tourists are also filling hotels in the provincial capital Urumqi. Unrest forgotten as tourists flock back to Xinjiang - Every Sunday morning herders and farmers head for the huge open-air market on the outskirts of Kashgar, the ancient Silk Road city in the mainland'smost westerly province, Xinjiang. The richer ones travel by truck or van, but most arrive on foot, walking for hours to buy or sell yaks and cows in an outpost that is nearer to Islamabad, Kabul and Moscow than it is to Beijing. Kashgar is more than 2,000 years old and predominantly Muslim. A strategically important gateway to China from Pakistan and Central Asia it has long been on the backpacker trail, but these days, with improved air and rail links, it has emerged as a major tourist destination. "I have never seen such a huge livestock trading market anywhere in the world. This old trading method seems to have been going on unchanged for more than 1,000 years. It's amazing," said Pierre Bouche, a French architect from Paris, who was spending two days in Kashgar before taking the less than two-hour flight to Urumqi, the capital of the Xinjiang Uygur Autonomous Region. "Uygurs are very friendly and they smile a lot," he said, adding that safety was not a major concern at all. Tourism in Kashgar is lively once more since the city was labelled a hotbed of unrest after nearly 200 people were killed in ethnic riots in Urumqi on July 5 last year. Close to the entrance of the livestock market, Patrick Buttard from Pontarlier in France, is trying to haggle down the price for some exotic Kashgar knives at one of the stalls selling handcrafted goods. Buttard said he would be spending three weeks in Xinjiang. "It is a great place for a holiday," Buttard said, adding he did not feel it was a dangerous place in which to travel. Another tourist from Istanbul said he came with a tour group of 30. Asked if he was worried about security after last year's bloody riots, he shrugged: "Why should I?" In Urumqi, Hoi Tak Hotel assistant general manager for food and beverage Benny Lai, who comes from Hong Kong, said tourists and businessmen started to return to Xinjiang in the middle of last month. "Now domestic and international tourists are back. Group tours from Hong Kong, Guangzhou, Beijing, Wenzhou, Germany, Australia and Canada are staying in our hotel. Occupancy rates are 90 per cent as July is the start of the peak travel season," Lai said. Most of them would stay up to 10 days, he said, adding that Kashgar was one of their destinations. To meet the demand for air services, daily flights from Urumqi to Kashgar have increased to eight, from four previously, In response to the central government's call for financial aid to help revive Xinjiang, one of the poorest areas on the mainland, big domestic airlines China Southern, China Eastern (SEHK: 0670), Hainan Airlines and Air China (SEHK: 0753, announcements, news) joined forces to increase services to the northwest region. China Southern said it would increase passenger capacity to 12 million over the next five years, from four million at present. PingTian Resorts, a wholly owned foreign enterprise headquartered in Urumqi, secured the rights to build a ski resort in the Tian Shan mountains four years ago, but construction was stalled by the global financial crisis and last year's violent ethnic clashes. "What we had last year was a tragedy. It does serve as a wake-up call," Thomas Ching, president and chief executive of PingTian Resorts, said. He said the central government's moves to revive the region's economy would encourage investors. "Many things have been happening. We have seen all sorts of roadworks and they are beautifying the city by planting more trees. Government officials are also talking about supporting enterprises for future growth," Ching said. He said previously the government had been very slow to repair roads and carry out other infrastructure work to improve access to PingTian's resort site, an hour's drive from Urumqi. "It is a completely different story today from last year. The road has been widened and a power plant is being planned," he said. When Ching, a Chinese-American, launched a road show in the United States recently, he said people did not consider Urumqi a dangerous city. Phase one of the resort on a 4,850-hectare site was originally meant to open by November 2007. Now construction will start next month and the first phase would open in November next year. When the whole project is completed by 2021, it will provide 1,617 flats, three hotels with 475 rooms, and 41,770 sq ft of commercial space. It aims to provide accommodation for 6,610 visitors, and expects to play host to 700,000 skiers a year. The first phase is costing US$140 million, but the whole project will need investment of around US$1 billion.

Aug 15, 2010

Hong Kong*: The city's monetary authority has told banks to further tighten lending to buyers of luxury homes and investment properties on concern surging prices are getting out of hand.

Skill takes Hong Kong world famous milk tea maker to doorstep of world domination - Law Dak demonstrates his tea-making style yesterday ahead of today's international contest. Machines now make the milk tea in most fast-food restaurants, but they're no substitute for the skilled hands and long experience of a cha chaan teng master. Such a master came out of semi-retirement yesterday and brewed off 11 rivals to be Hong Kong's entrant in a contest to find the world's top milk tea maker. "Speed instead of quality is what restaurants want now. I want to revive the traditional milk tea culture," Law Dak said after his win. The 56-year-old, who has worked in more than 100 cha chaan teng, or tea cafes, over four decades, said he was delighted to share the magic of the human hand in making tea - and to have his skill recognised. "I was a child labourer and had to do anything there, such as washing pots," Law said of his first job as a 12-year-old offering drinks in a traditional restaurant in Sai Wan in 1966. He passed through a series of restaurants as a casual staff member before an encounter with a cha chaan teng master in the late 1970s proved a turning point in his career. "He poured tea with his right hand and milk with his left hand at the same time ... I kept trying to do that when I worked the night shift. It was only after 10 years that my skill started to improve." The backward-and-forward motion eventually became Law's trademark too. But there was more to making the perfect brew; tea leaves of different sizes had to be chosen and mixed in the right proportions, and they had to be brewed for just the right amount of time. Only with long experience could a tea maker become a master. Asked where the city's best milk tea can be had today, Law recommended Sun Chiu Kee in Wan Chai, which he helped establish in the 1980s and still visits regularly. Law will compete in the International Kam Cha Competition during the Tea Fair at the Convention and Exhibition Centre today. His runner-up in yesterday's contest, Donald Tse Chung-tak, said repeated experimentation was the key to success. A salesman for a tea wholesaler, Tse, 30, said: "I make one to three pots every morning ... Try working with different types of tea every day. If the fire burns too fiercely, the tea will be bitter. If you pour from one pot to another too many times, the texture will turn rough."

Economic growth expected to slow after 6.5pc surge in second quarter - Economic growth in Hong Kong is expected to slow in the second half of this year after healthy exports and domestic spending helped second-quarter gross domestic product expand by a better than expected 6.5 per cent year on year. The encouraging results prompted a one-percentage point rise in the official full-year growth forecast to between 5 per cent and 6 per cent, roughly in line with the 5.5 per cent average growth predicted by many economists. On a quarterly basis, GDP rose 1.4 per cent, the fifth consecutive quarter of growth. Hong Kong's turnaround tracks that of major markets, including the mainland, Singapore, South Korea and Germany, which all reported growth in the second quarter. "The outlook for the second half is for the economy to gradually settle back to a growth path that is more or less in line with the past growth trend. Basically, we are still looking at rather solid growth momentum, even though we probably will be seeing some more deceleration in export growth towards the end of the year along with a weaker recovery in the global economy," government economist Helen Chan said.

Hong Kong pupils head north for a new class system - Fion Chan Chui-tung could barely utter a complete sentence in Putonghua or English a year ago. Now, after 12 months at Utahloy International School, a sprawling and pristine international school in Guangzhou, the Hong Kong teen converses effortlessly with her ethnically diverse schoolmates. Fion, 18, is one of a growing number of pupils who have upped sticks and headed north to study. Enrolment of Hongkongers in international schools in Guangzhou and Shenzhen is rising by 5 to 10 per cent a year. Parents who spurn prestigious international schools in Hong Kong in favour of mainland ones cite a list of factors: lower tuition fees, low living costs, a strict teaching regimen and bucolic campuses where not a word of Cantonese is spoken. Fion's mother, Luk Yim-fong, a businesswoman, transferred her daughter from Heung To Secondary School in Tseung Kwan O to Utahloy so that she would not be surrounded by Cantonese speakers. "Although Heung To offers Putonghua classes, all the students speak Cantonese after class," she says. "From my business dealings with multinational corporations like Samsung, even Korean businessmen speak fluent Putonghua. Mandarin is a language my daughter must master in order to thrive in future." Luk, who travels between the mainland and Hong Kong frequently, says the campus, in Zengcheng city in the Guangzhou countryside, offers facilities that local international schools cannot match because of a shortage of space. "The four-storey dormitory is surrounded by a pristine lake and lush greenery. I considered sending her to a school in Australia, but the tuition fees Down Under are double what is charged at Utahloy," she says. Opened in 2003, Utahloy became an International Baccalaureate-recognised school five years ago. It has two campuses, one in Baiyun district near Guangzhou's city centre for day-school pupils, the other in Zengcheng with boarding facilities. The 85-hectare Zengcheng campus can accommodate 400 boarders and boasts five sports fields, five basketball courts and an Olympic-size swimming pool. "I eat meals at a lakeside restaurant and ride a bicycle every day around the campus. I come back to Hong Kong on weekends," says Fion, who will sit the IB diploma next year and wants to study medicine in a Hong Kong university. Jonathan Shaw, diploma co-ordinator at the school, says it has a multiracial student body comprising Indian, Korean and European pupils. "With businessmen coming from all over the world to do business here, our founder saw a large untapped market. Many graduates go back to their home countries for further studies," he says. "Around 30 out of 1,000 students are from Hong Kong, a 10 per cent increase from last year's figure." According to the Ministry of Education, there were 15 international schools in Guangdong in October last year, with eight in Guangzhou and five in Shenzhen. Excluding the 18 kindergartens, primary and secondary schools of the English Schools Foundation, there are 16 international schools in Hong Kong. Guangdong Country Garden School and the American International School of Guangzhou also offer IB programmes. The American International School offers a preschool to Grade 12 curriculum. Joe Stucker, director of the school, says there are 51 Hong Kong pupils out of 950. The school, set up in 1981, emphasises community service, he said: "Elementary students work in orphanages in Guangzhou, and secondary students help construct housing for the underprivileged in Guangzhou four times a year." Guangdong Country Garden School has six campuses in the province, all of them near the high-end private residential estate Country Garden (Biguiyuan), resort-style housing blocks that are popular with Hongkongers. The school offers the IB and British A-level curriculums. Liang Yanfen, who works at the campus in Shunde district, says the school was set up to cope with the needs of Country Garden flat-owners. "Because of the cheap price, many Hong Kong people have bought houses in Biguiyuan. There are two Country Gardens in Shunde district - 293 students out of the 3,600 from the Shunde campus are from Hong Kong, compared with 285 last year." A boot-camp-like boarding culture at Guangdong Country Garden School stands in stark contrast to the permissive upbringing common among doting Hong Kong parents. Liang says: "We promote strict discipline and a rigorous physical training regimen. Smoking and dating are prohibited. No Cantonese is allowed. No internet, mobiles, MP3s or video consoles are allowed in dorms. Students can only watch the news at dusk. Bugle call comes at 6am. Students have to do marching every day in the morning. They need to tidy up their own beds and hand-wash their underwear. "There's internet in the libraries, but the computers are equipped with screening software, so that no Facebook or QQ can be used." He says some Hong Kong parents welcome the disciplinary approach to education so their children can be trained to be independent and resilient. "Hong Kong kids are pampered. They open their mouths only when their parents scoop up spoonfuls of rice. Here they can develop a strong physique and mind." Corence Wong Ping-yiu, general manager with the organiser of the annual Hong Kong International Education Expo, says the number of mainland international schools at last month's expo was well up on last year. "Seven international schools from Chinese cities like Beijing and Shenzhen joined this year, compared with four last year," he says. One of these was Oxstand International School in the Luohu district of Shenzhen. The school offers a Canadian curriculum. Graduates receive the Ontario Secondary School Diploma, accredited by the Ontario Ministry of Education. Eva Law, director of administration at the school, says the number of pupils from Hong Kong has risen 5 per cent a year in the past few years. She says its fees are 30 per cent less than those of international schools in Hong Kong.

The government said on Friday it would further increase land supply to avoid a property bubble, warning that prices of some flats are approaching historic highs. John Tsang Chun-wah, the city’s financial secretary, said prices in June were 8 per cent up from the end of last year, despite a series of measures the government introduced in April to cool the overheating market.

Hong Kong’s economic growth decelerated in the second quarter with gross domestic product rising 1.4 per cent from the previous three-month period, slower than an adjusted 2.1 percent growth recorded

TVB (SEHK: 0511) general manager Stephen Chan Chi-wan – who is under investigation for alleged corruption – on Friday morning reported back to the Independent Commission Against Corruption (ICAC) as part of his bail conditions. About 7am, Chan, accompanied by his lawyer, appeared at the ICAC headquarters, local media reported. He stayed there for about 10 minutes and did not make any public comment before leaving. Chan is out on ICAC bail, set at HK$500,000. In a March 11 operation, codenamed “Valiant”, Chan, TVB’s head of business development, TV producer Wilson Chan Wing-suen; TVB former executive producer Wilson Chin Kwok-wai; performer Leung Chi-cheong –who is also known as Ning Jin; – and Chan’s former personal assistant, Edthancy Tseng Pei-kun, were arrested by the ICAC. They are suspected of working for an advertising and production company that arranged jobs for TVB performers – such as ribbon-cutting ceremonies and performances at shopping malls. Although Ning Jin and Wilson Chin had their bail conditions lifted on Tuesday, Chan has to make reports to ICAC regularly and is yet to be released from his bail conditions. The ICAC investigation is continuing. No one has been formally charged in connection with the inquiry.

Billionaire Li Ka-shing has raised his stake in ports-to-telecom flagship Hutchison Whampoa (SEHK: 0013) for about HK$900 million, a disclosure from the Hong Kong Exchanges and Clearing (SEHK: 0388) showed. Li bought a total of 15.3 million Hutchison shares during August 6-10, raising his stake in the conglomerate to 52.28 per cent from the previous 51.92 per cent, according to the disclosure from the Hong Kong bourse. Li bought the shares at an average price of between HK$57.246 and HK$59.936 per share. Group managing director Canning Fok bought about 1 million shares at an average HK$56.75 each on August 6, a day after the company announced forecast-beating results, according to a disclosure from the Hong Kong bourse earlier this week. Director Frank Sixt bought 150,000 shares at HK$54 on the same day. Shares of Hutchison have risen 5.2 per cent so far this week, outperforming a 2.6 per cent decline in the broader Hang Seng Index.

Henderson Land Development (SEHK: 0012), the developer being investigated by the government over the sales of luxury flats at its 39 Conduit Road development, is set to relaunch the project on the market. The new sales campaign is expected to be low-key, with a company spokeswoman saying "the upcoming launch will probably not involve advertisements on television". The relaunch comes a month after police raided the offices of Henderson Land over the cancellation of flat sales at 39 Conduit Road. The company stopped marketing of the project after the raid. Henderson said in October it sold 24 luxury flats, one of them for as much as a record HK$88,000 per sq ft. Eight months later, it said 20 of the sales fell through, sparking accusations of market manipulation, and a government investigation. The company has denied any wrongdoing but analysts say the saga has tainted the company's public image. Henderson has insisted the transactions were genuine. The sales were to shell companies, which Henderson said was a common practice. The Commercial Crime Bureau seized documents related to the uncompleted sales at the luxury project in Mid-Levels. It has invited representatives of the developer to help with the investigation. The flats involved in the investigation are not included in the new sales campaign, which has been heavily marketed to local real estate agents. "Most big property agencies were invited [to the relaunch]. Nearly 50 staff from our company alone attended the flat viewing," Louis Ho, a director at Centaline Property Agency, said. Henderson Land, the flagship company of Lee Shau-kee, Hong Kong's second-richest man, has lost more than a tenth of its market value this year as it became the focus of government efforts to curb property prices. The government said on June 18 that regulatory and law enforcement authorities would investigate the Conduit Road transactions. The company declined an invitation to appear before a July 12 Legislative Council panel meeting. The controversy led to new rules governing flat sales. This week, the government said developers must make cancellations of flat purchases public within five working days of the sale contract being torn up. The company has not specified which flats will be included in the new sale campaign. But agents were given a tour of flats on the 12th, 20th, 38th and 61st floors.

The total assets of Hong Kong's Exchange Fund amounted to 1.913 trillion HK dollars (2,462 billion U.S. dollars) at the end of July, down 3.4 billion HK dollars over the end of June, the city's Monetary Authority said on Friday. The Monetary Base, comprising Certificates of Indebtedness, Government issued currency notes and coins in circulation, the Aggregate Balance and Exchange Fund Bills and Notes issued, amounted to 1.0249 trillion HK dollars. Claims on the private sector in Hong Kong were 135 billion HK dollars in July, while foreign liabilities, representing mainly obligations under repurchase agreements, amounted to 300 million HK dollars. (1 U.S. dollar equals to 7.77 HK dollars)

A vice-minister of foreign affairs is tipped to succeed Liao Hui as director of the State Council's Hong Kong and Macau Affairs Office, a position Liao has held since the handover in 1997.

Macao saw the per-capita spending of visitors reach 1,575 patacas (197 U.S. dollars) in the second quarter of 2010, increasing by three percent over last year, according to the figures released on Friday by the city's Statistics and Census Service (DSEC). Analyzed by place of residence, per-capita spending of Chinese mainland visitors took the lead, at 2,397 patacas (300 dollars), which was followed by visitors from Southeast Asia, Hong Kong and Taiwan, respectively amounting to 1,349 patacas (168.6 dollars), 1, 068 patacas (133.5 dollars) and 787 patacas (98.3 dollars), the figures indicated. In the second quarter of 2010, per-capita non-shopping spending (excluding gaming expenses) of visitors decreased by 20 percent year-on-year to 813 patacas (101.6 dollars), of which expenses on Accommodation and Food and beverage accounted for 46 percent and 34 percent respectively. Meanwhile, per-capita shopping spending grew by 49 percent to 761 patacas (95 dollars) in the period, with expenses mainly on Local food products (24 percnet), Clothing (18 percent) and Jewellery/Watches (17 percent). Per-diem spending of visitors amounted to 1,575 patacas (197 dollars) in the period, a year-on-year increase of 15 percent, with mainland visitors having the highest per-diem spending of 2, 397 patacas (300 dollars), the figures showed. In addition, the average length of stay of visitors shortened by 0.2 day to 0.9 day in the period over the second quarter of last year, and mainland visitors stayed an average of 0.9 day, according to the DSEC.

 China*: China still a focus for foreign direct investment - Some western commentators say China's foreign direct investment climate has worsened. But experts and entrepreneurs attending the on-going 5th Pan-Beibu Gulf (PBG) Economic Cooperation Forum disagreed. China is a better destination because of China's advantages, including its stable policies and continuous economic growth, said Wei Jianguo, secretary-general of the China Center for International Economic Exchanges (CCIEE) at the forum held in the capital city of south China's Guangxi Zhuang autonomous region.

China World Hotel offers option to use eco-friendly amenities - In an effort to become more environmentally friendly, one major hotel in Beijing has created a program that will reduce the hotel's carbon emissions while also benefiting the community. Named the Carbonless Meeting Program, the China World Hotel offers companies the option to set up business meetings in the hotel, which uses eco-friendly amenities, such as seasonal lunches served with ingredients purchased from local vendors, whiteboards to diminish the use of paper products and the option of renting a hybrid car for attendees' transportation. "Many hotels offer standard green packages," says John Rice, general manager of China World Hotel. "We've named ours carbonless because it emphasizes less emission and fewer meeting footprints. It's a program more than a package, with many different dimensions involved." The luxury hotel, located in the central business district, recently announced the availability of the program, which will cost 650 yuan ($95.8) per person and is comparable to the cost of a traditional meeting package. "Cost considerations come first, but I would encourage all hotels in Beijing to become more eco-friendly," says Alan Babington-Smith, director of Leadership Management International in China. Greener options within the hotel's program include cutting back on paper products and encouraging attendees to use their laptops. The hotel provides computer adapters for all attendees along with wireless Internet access and the use of PowerPoint. While many changes have taken place within technology, the hotel has overhauled their food menu, modifying traditional food and coffee breaks. Fair trade vendors and onsite chefs are used in order to cut back on excessive gasoline otherwise used to transport ingredients. Another creative quality of the meeting program is that the hotel has cut out the use of mints and plastic water bottles, a typical presence at meetings, and has instead opted to use a water pitcher infused with mint leaves to serve to attendees. "This kills two birds with one stone," Suemeng Chan, China World Hotel director of communications, says. "Attendees are provided with water and can refresh their breath the same way." One of the more luxurious features now available is the use of the Mercedes S400 hybrid series that can transport meeting organizers and attendees around Beijing and to the airport. The hotel's mission to cut carbon emissions also includes rewarding meeting organizers with a certificate of appreciation and handing out green-living guidebooks, so meeting attendees can further their eco-friendly educations. Since 2000, the hotel has enlisted in green efforts and over the past five years alone has achieved an 18-percent decrease in CO2 emissions. The hotel estimates that over a typical three-day 30-person business meeting, the new green standards can decrease Co2 emissions by 1,000 kilograms - an amount that would traditionally take 60 trees to absorb. Whether it is the use of hybrid cars or instead investing in small energy efficient light bulbs, the hotel is taking great strides to stay on top of the green trend. The Carbonless Meeting Program will also affect the community. The hotel plans to allocate 2 percent of its revenue from every carbonless meeting into a green fund to help community beneficiaries, such as the Hua Ao School in Shijinshan district. While plans are still being worked out, the school, which educates about 900 migrant children, would receive the hotel's funding to further self-sustainability programs and education. One idea includes growing an herb garden the students would take care of and then sell back to the community or hotel for profit. A second plan would include developing an education module to teach children at the school about environmental protection and, more specifically, ways to help preserve the earth. In an effort to become more environmentally friendly, one major hotel in Beijing has created a program that will reduce the hotel's carbon emissions while also benefiting the community. Named the Carbonless Meeting Program, the China World Hotel offers companies the option to set up business meetings in the hotel, which uses eco-friendly amenities, such as seasonal lunches served with ingredients purchased from local vendors, whiteboards to diminish the use of paper products and the option of renting a hybrid car for attendees' transportation. "Many hotels offer standard green packages," says John Rice, general manager of China World Hotel. "We've named ours carbonless because it emphasizes less emission and fewer meeting footprints. It's a program more than a package, with many different dimensions involved." The luxury hotel, located in the central business district, recently announced the availability of the program, which will cost 650 yuan ($95.8) per person and is comparable to the cost of a traditional meeting package. "Cost considerations come first, but I would encourage all hotels in Beijing to become more eco-friendly," says Alan Babington-Smith, director of Leadership Management International in China. Greener options within the hotel's program include cutting back on paper products and encouraging attendees to use their laptops. The hotel provides computer adapters for all attendees along with wireless Internet access and the use of PowerPoint. While many changes have taken place within technology, the hotel has overhauled their food menu, modifying traditional food and coffee breaks. Fair trade vendors and onsite chefs are used in order to cut back on excessive gasoline otherwise used to transport ingredients. Another creative quality of the meeting program is that the hotel has cut out the use of mints and plastic water bottles, a typical presence at meetings, and has instead opted to use a water pitcher infused with mint leaves to serve to attendees. "This kills two birds with one stone," Suemeng Chan, China World Hotel director of communications, says. "Attendees are provided with water and can refresh their breath the same way." One of the more luxurious features now available is the use of the Mercedes S400 hybrid series that can transport meeting organizers and attendees around Beijing and to the airport. The hotel's mission to cut carbon emissions also includes rewarding meeting organizers with a certificate of appreciation and handing out green-living guidebooks, so meeting attendees can further their eco-friendly educations. Since 2000, the hotel has enlisted in green efforts and over the past five years alone has achieved an 18-percent decrease in CO2 emissions. The hotel estimates that over a typical three-day 30-person business meeting, the new green standards can decrease Co2 emissions by 1,000 kilograms - an amount that would traditionally take 60 trees to absorb. Whether it is the use of hybrid cars or instead investing in small energy efficient light bulbs, the hotel is taking great strides to stay on top of the green trend. The Carbonless Meeting Program will also affect the community. The hotel plans to allocate 2 percent of its revenue from every carbonless meeting into a green fund to help community beneficiaries, such as the Hua Ao School in Shijinshan district. While plans are still being worked out, the school, which educates about 900 migrant children, would receive the hotel's funding to further self-sustainability programs and education. One idea includes growing an herb garden the students would take care of and then sell back to the community or hotel for profit. A second plan would include developing an education module to teach children at the school about environmental protection and, more specifically, ways to help preserve the earth.

2,000 kilometers of China's Inter-city rail projects approved - The National Development and Reform Commission (NDRC) on Friday approved a batch of inter-city rail transit networks, spanning more than 2,000 kilometers, to accelerate regional integration. The nation's economic planner said on its website that it has cleared the plan to build the network across central China, mainly in Henan province. The network is expected to link nine cities and has a total length of 496 kms. It also includes amendments on plans of the networks across the Pearl River Delta region, with a length of 1,478 kms, as well as metro lines in Xi'an, the capital city of Northwest China's Shaanxi province. "The plans are a continuation of China's supportive policy on infrastructure construction," said Ou Guoli, a professor at the business and management department of the Beijng Jiaotong University. "It will create huge investment opportunities and benefit industries like steel, cement and telecommunications," Ou said. According to Ou, the average cost of a railway transit system ranges from 100 million yuan to 200 million yuan per km. The cost is even higher for metro lines, with an average cost of 600 million yuan per km. China's urbanization has come to a certain stage when there are more and more requirements on transportation efficiency, indicating a speed-up in the country's rail transit system, Ou said. China has launched 31 metro lines in 10 cities. The State Council last year approved 79 additional metro lines in 22 cities, at an estimated investment cost of around 882 billion yuan. That in turn is expected to create huge demand for rail-related businesses, particularly, for train makers. China CSR, one of the two largest train makers in China, has teamed up with the Henan and Guangdong provinces to cash on the booming city rail transit system. "Two years back, we had an annual production capacity of 2,000 units. It still lags behind (the booming demand)," Zhao Xiaogang, chairman of China CSR, told Forbes China magazine in a recent interview. The Chinese company plans to ramp up annual production capacity to 3,000 units this year. French train maker Alstom has sold more than 1,200 trains to Shanghai Metro and over 400 in Nanjing. It also provides metro signaling systems for Beijing, Guangzhou and Shenzhen. Alstom said it is now looking for opportunities in the second-tier cities.

Copycats beat iPhone imitator to the market - Copycats are already muscling in on a new gadget that converts the iPod Touch into an iPhone. And that is even before the gadget, invented by a two-man team in Shenzhen, has hit the market. Now the inventors of The Apple Peel 520, 22-year-old programmer Pan Yong and his 25-year-old brother Pan Lei, have decided to start mass production to protect their "intellectual property". The tech world has been abuzz with talk of the device, which encases an iPod Touch - Apple's popular media player - and provides it with additional functions such as voice calling and text messaging by using a built-in SIM card slot and battery. Reports about the Apple Peel have excited many tech lovers since they first came out about a month ago. But many have remained sceptical because Yosion Technology - which the Pan brothers say is a two-man band - has not mass produced it and few people have seen an actual product. Pan Lei said at first they wanted to wait for Apple's approval and that because they did not have the manufacturing capabilities they planned to team up with manufacturers to turn their design into actual products. But things have changed since. The Pan brothers have suddenly found themselves facing a host of copycat competitors and have to move fast to protect their market. "We have been worrying about violating Apple's intellectual property rights. That is a big reason why we are reluctant to release it," said Pan Lei. "But now our top concern is how to protect our invention from other factories. They just copy and sell." Several factories on the mainland have already started to mass produce Apple Peel copies and plan to release them to the market. One company in Beijing, which has previously released several types of fake iPhone, will start to sell imitation "Appeal Peels" for 700 yuan (HK$800) apiece - twice the price of the original Apple Peel. The company hopes to sell 2,000 in the first week. Pan Yong, who first hatched the idea of adding phone functions to the iPod Touch 18 months ago, accused other companies of copying his design. "None of them was able to come up with anything like this until my design came to light. They are bigger and have more money and workers to turn this design into actual products. But they are shanzhai [copycats]. We are not." The Pan brothers admitted they had not applied for patents for their design - partly because they did not know how to do it. But the legality of the Apple Peel itself is also questionable. The "invention" is not recognised or licensed by Apple. To install it, users have to "jailbreak" (hack the software) of the iPod Touch and then install Yosion's software. The Pan brothers' plight is something shared by many individual mainland inventors in the face of a rampant copycat culture. Many inventors use or copy foreign firms' designs without a second thought, freely adding their own creative touches. But they then find their own designs being copied and imitated by others. Pan Lei said they had tried to ask local law firms how to protect their invention but none could give them a practical answer. "There are so many copycats out there in China. I think the practical thing for us to do is to move fast, find a good manufacturer and start to sell before everyone else," he said. Apple China declined to comment on the Apple Peel.

Guangzhou set to rise from its rubble - Yangji village, located in downtown Guangzhou, where reconstruction began at the beginning of July. - As part of an ambitious renewal project, this southern metropolis plans to create as much as 539 sq km of building land during the next decade out of the demolition of much of its old downtown, its urban villages and aging factories, a local official said on Friday. Chen Jianhua, vice-director of the city's office of reconstruction of old buildings, told a news conference that the plan is aimed at making way for new development and improving the living environment of residents in the capital city of South China's Guangdong province.

Heavy rain across western China has caused more mudslides and flooding, killing at least 29 people and trapping more than 10,500 in the latest natural disasters to hit the country.

A senior military strategist called planned US naval exercises in the region a provocation and accused the Obama administration of seeking to encircle China and pursuing a “chaotic” approach towards Beijing. The commentary in the top paper of the People’s Liberation Army (PLA) was China’s latest verbal broadside against Washington, which Beijing has accused of stirring tension in the region with a series of military drills near its borders. “On the one hand, it wants China to play a role in regional security issues. On the other hand, it is engaging in an increasingly tight encirclement of China and constantly challenging China’s core interests,” Rear Admiral Yang Yi wrote in the Liberation Army Daily. The Pentagon plans new joint naval exercises with ally South Korea that will send a US aircraft carrier into the Yellow Sea, between China and the Korean peninsula. Those exercises are intended to provoke “enmity and confrontation in the Asia-Pacific region,” Yang wrote.

China improving food safety, says USA's FDA - US FDA Commissioner Margaret Hamburg leaves a laboratory at the Shanghai Institute for Food and Drug Control on Friday. The head of the US Food and Drug Administration says China is improving its oversight of its exporters following a slew of scandals over bogus or substandard drugs and foods ranging from vaccines and infant formula to dog chow. FDA Commissioner Margaret Hamburg said on Friday that officials she spoke with during her first visit to China since she was appointed were pursuing a “common agenda” to improve manufacturing practices and regulation of complex supply chains for the food and drug industries. “I leave feeling very encouraged by the partnership we’ve developed here,” Hamburg said. “This is a priority for China as it is for the United States,” she said. Since US President Barack Obama appointed Hamburg last year, the FDA has taken swift action against companies selling bogus or dangerous products, seeking to restore its credibility. FDA officials say a skimpy budget and weak regulations keep them from going after companies that break the rules. Hamburg, who has spent her career working in public health, said the agency is focusing on prevention, given the complexity and enormity of the global supply chains for both food and drug products. The FDA has set up offices in three mainland cities, including Shanghai, and is co-operating in training and joint inspections, among other areas.

China Life and two other mainland companies may not proceed with bids for stakes in American International Group’s Asian unit AIA ahead of the unit’s planned IPO, a report said.

State Grid unveils ultra-high-voltage power line plans - A cyclist rides past electricity pylons in Beijing. State Grid Corp of China will build a network of ultra-high-voltage lines in northern, eastern and central China by 2015. State Grid Corp of China, the country's major power grid operator, plans to build a network of ultra-high-voltage (UHV) power transmission lines by 2020, linking major energy production bases with the nation's power-guzzling regions. Liu Zhenya, president of State Grid, said on Thursday that in order to improve the country's power transmission capacity, the company will complete the construction of a network of UHV lines in northern, eastern and central China during the 12th Five-Year Plan (2011-15). UHV lines are able to send more electricity over longer distances more efficiently than conventional lines, said Liu. "The accelerated development of such projects fits well with the needs of China's power industry." The capacity of UHV lines can reach as much as 1,000 kilovolts (kV). China's major power lines currently have a capacity of 500 kV. Cross-province power transmission capacity in China is expected to exceed 400 million kilowatts (kW) by 2020. The development of UHV lines can help meet that target, said Liu. Qian Zhimin, vice-administrator of the National Energy Administration, said that development of UHV lines can help the country better allocate its natural resources. Most of the country's coal mines are located in northern China and a large part of the country's water resources are in southwestern regions. Power generated in these regions can be sent to the high energy-consuming eastern and southern regions more effectively through UHV lines, he said. State Grid's first UHV line, with a capacity of 1000 kV, went into operation in January last year. It transmitted 15.75 billion kilowatt-hours (kWh) of electricity by the end of last month, according to the company. The line, linking Shanxi, Henan and Hubei provinces, has a total length of 640 km. The company's second UHV line, linking Sichuan province and Shanghai municipality, went on line in July this year. The project is designed to send 32 billion kWh of hydro power to Shanghai annually. It is expected to save 25 million tons of carbon dioxide emissions annually. Construction of UHV lines has evoked intense debate in the country. Some analysts said it is not worthwhile to build such projects, which are very costly. State Grid said earlier it planned to invest 100 billion yuan ($14.7 billion) in building UHV projects over the next three to four years.

Australia’s Telstra Corp has agreed to offload its stake in SouFun, the mainland's second-largest online real estate website, to two private equity firms and existing shareholders.

Beijing has given the 130 insurers on the mainland wider access to domestic and overseas securities, part of a bold step to encourage high-yield investments amid a stock market downturn this year.

China and Switzerland on Friday agreed to start free trade agreement (FTA) talks, as the two states celebrate their 60th anniversary of diplomatic ties. Chinese President Hu Jintao (R) meets with Doris Leuthard, president of the Swiss Confederation and head of the Federal Department of Economic Affairs, at the Great Hall of the People in Beijing, capital of China, Aug. 13, 2010. Chinese President Hu Jintao and his Swiss counterpart, Doris Leuthard, witnessed the signing of the memorandum of understanding on finishing the FTA feasibility study that was started in 2009. The two states will begin FTA talks as soon as possible, the Chinese Ministry of Commerce said in a statement. As one of the first Western countries to forge diplomatic relations with the People's Republic of China, Switzerland has become China's major trade partner in Europe. "Facing new opportunities, China-Switzerland relations are at a new starting point," Hu told Leuthard during their 30-minute meeting at the Great Hall of the People in Beijing. President Hu hailed the development of bilateral relations and pledged to further expand political trust and trade and economic cooperation. Leuthard conveyed her nation's condolences to China over the series of natural disasters the country has suffered recently. Leuthard also said Switzerland will stick to the one-China policy. In China for a working visit, Leuthard also said the two states should boost cooperation in finance, education, culture, environmental protection, tourism and on international affairs.

Zhou Dongyu plays Jingqiu in Zhang Yimou's new film The Love of the Hawthorn Tree, after being picked by the director from more than 10,000 young women and Dou Xiao plays the son of a general, Laosan, in the new film. Director Zhang Yimou looked far and wide for a woman who was not only pretty but also could portray innocence for the lead role in his new film, Liu Wei reports Successful as Zhang Yimou is, he still has to work hard to find his Ms Right. In casting for his new film, The Love of the Hawthorn Tree, Zhang interviewed more than 10,000 young women. The novel is called "the most innocent love story" by its numerous fans, and Zhang was looking for a woman who was not only pretty but also could portray innocence for the role of Jingqiu, the heroine of the tale. "She is not shaped to be innocent, and she does not know her beauty yet," Zhang says in a video the production company New Picture Film provides to China Daily. Set in 1975, a year before the end of the "cultural revolution" (1966-76), the novel follows the melancholy romance between the shy girl, Jingqiu, from a grassroots family and Laosan, the son of a general. The gap between their social status and the depressive atmosphere of that era provide a counterpoint to their emotions. Zhang sent several teams led by his assistant directors to major acting schools in Beijing, such as the Beijing Film Academy, the Central Academy of Drama and the Communication University of China. The scouts stayed in these schools for weeks, but of the candidates they suggested, Zhang's most frequent comment was "not even close". The search spread to six other cities around the country. The assistant directors videotaped every girl they thought might qualify for the role in various schools and brought thousands of video clips to Zhang. With the first day of shooting fast approaching, and the cast and crew were starting to get anxious. Zhang asked some of the potential candidates to come to Beijing for auditions but found them to be uninspiring.

Aug 14, 2010

Hong Kong*: Bank of East Asia (SEHK: 0023) has posted a 78 per cent increase in first-half net profit, and chairman David Li Kwok-po says the bank could even match its record profits of 2007 if the economy keeps up its current growth rate. It was welcome news for Li after some less than stellar results in recent years. Li also drew broadsides from shareholders earlier this year after his annual bonus soared even though the bank's 2009 profits were the second lowest in five years. Net profit for the six months to June 30 surged to HK$2.08 billion from HK$1.17 billion a year earlier, mainly due to a 65.9 per cent fall in impairment losses to HK$168 million. After stripping out impairment losses, operating profit was up 11.9 per cent to HK$2.14 billion. The bank also booked exceptional items worth HK$587 million, including the sale of 70 per cent of BEA Canada to Industrial and Commercial Bank of China (SEHK: 1398) for HK$230 million. Net fee and commission income rose 34 per cent to HK$1.36 billion from a year earlier, and was up 8.65 per cent from the previous half to offset a fall in trading profits. Net interest income climbed 13.5 per cent to HK$3.67 billion from HK$3.23 billion the previous year, and up 4.4 per cent from the second half of last year. The net interest margin widened by seven basis points to 1.84 per cent, helped by lower funding costs on the back of a share placement earlier this year. BEA China generated 45 per cent of the group's profits in the period. Deposits increased 41.6 per cent from a year ago and loans rose 17.9 per cent.

Diggers are lined up to be taken away by barge from a Tai Long Sai Wan site yesterday. The removal of the machinery, under supervision of the Agriculture, Fisheries and Conservation Department, follows a public outcry over a businessman carrying out large-scale clearing work for a private retreat near a pristine beach. A temporary zoning order is now in force that blocks all new development without prior permission in the area. How the diggers got there in the first place is still a mystery.

In an attempt to restore the territory's image as a tourist destination, the Hong Kong Tourism Board yesterday revived its "honest tours" campaign in Shenzhen by selling 200 yuan (HK$229) one- day tours to mainlanders. The tour includes a cross-border shuttle bus service, a square meal, and a ticket for either Ocean Park, Disneyland or The Peak. "Hong Kong will continue to work with Shenzhen to crack down on incompetent tour agents and staff, and re- establish visitors' confidence," HKTB chairman James Tien Pei-chun said in Huanggang. The "Honest and Quality Hong Kong Tour" campaign was first launched by the HKTB and the National Travel Bureau in 2006 to promote tours "without compulsory shopping, no extra charge, and no unwilling tour service." The promotion was launched after Hong Kong's tourism image was dented by videos showing tour guides berating mainlanders for not spending enough. So far, five service counters have been set up at Huanggang, and tour group information will also be displayed at other border crossings. The number of mainland tourists in Hong Kong increased by 34 percent in the first half of the year, compared to the 40 percent increase recorded in the same period last year, Tien said. Consumer Council executive director Connie Lau Yin-hing said the council received 652 complaints from mainlanders during the first half of the year. A total of 1,304 complaints were received last year. Shopping disputes accounted for most of these cases. Shenzhen tourism chief director Yi Nengquan said two tour agents were fined 100,000 yuan each for malpractices after spot checks in July. He said the highest penalty was a 500,000 yuan fine and a three-year suspension of an agent's tour license.

Plans for a memorial to Bruce Lee at his former home in Kowloon Tong may have to be scrapped unless the government and the owner break deadlock over the proposal, the martial arts legend's daughter says. Owner Yu Panglin and the government have been negotiating for more than two years over the project, but Yu has insisted on a three-level basement under the house as part of the memorial, which officials say would breach planning rules. Lee's only surviving daughter, Shannon, said she would appeal to Yu, who has offered to donate the HK$100 million property, to reach a compromise so the project could go ahead. "I do not know what will happen if a resolution cannot be found," said Lee, who has been involved in the planning. "It is possible that the project will have to be scrapped, which would be such a shame given the absolutely unique opportunity before us." Born in San Francisco, Bruce Lee made his name as a kung fu film legend in Hong Kong, starring in movies including Fist of Fury, Game of Death and Enter the Dragon. He died in 1973, aged 32. The plan to convert his former home into a museum has been in the pipeline for years.

Shellshocker: US$.15 a Hokkaido crabs at Hong Kong Food Fair - Thousands of shoppers scrambled for cut-price crabs, sashimi and other delicacies at the Food Fair yesterday. Ten Hokkaido crabs were snapped up for HK$1 each within 15 minutes of the opening. The five-day fair, at the Hong Kong Convention and Exhibition Centre, has attracted more than 740 exhibitors from 22 countries. Marketing manager Cheung Kwai- fong of the Japanese seafood firm U Food said each crab normally costs HK$510. Only 10 are available a day. "We aim to realize just a small profit but quick turnover," she said. Cheung estimated her company will sell food worth HK$1.5 million, 50 percent more than last year. U Food also offers 10 pieces of HK$1 salmon sashimi and 40 pieces of HK$1 Hamachi sashimi a day. On Kee Dry Seafood Corporation offers 3,000 whole braised abalones a day. Its executive manager, Poon Kuen- fei, said it might add 2,000 more a day if business is brisk. He expects sales of HK$800,000, more than twice last year's figure. Housewife Hoo Siu-siu, 43, who went to the fair with her two young sons, said she will spend HK$300 on snacks and instant food. "I am not really interested in the expensive seafood, even though it is cheap," she said. "I care more about my personal safety than the HK$1 crabs." But a woman called Yu, who came with her husband, said they spent HK$10,000 on bird's nest and royal jelly in two hours. Pulling a full trolley, Yu said she was happy to get such good products at bargain prices. Other must-buys include dried fish maw at HK$1,400 per kilogram, meter- long shark's fin at HK$800 a kilo and sea cucumber at HK$200. The fair ends on Monday at 6pm.

The relocation of the privately owned Maritime Museum from Stanley to pier No 8 in Central has been given the green light by the Planning Department. According to the relocation proposal, public viewing decks will be converted into an exhibition hall, resource centre and office. A new mezzanine floor will be added, to be used as a gallery. The new facilities, which will occupy an area of 4,200 square metres, will include storage space for artefacts, as well as a restaurant. The Harbourfront Commission endorsed the proposal as an interim arrangement last month, as some commission members had said the pier had limited room for the museum to expand in the future. The Planning Department, in a government paper to be discussed at a Town Planning Board meeting tomorrow, said it had no objection to the proposal. The department said that if the board approved the plan, the museum should be required to conduct an air-quality assessment to ensure the cafe on the roof would not be affected by emissions from ferries. Signs indicating free access should be provided on the cafe terrace. A landscape proposal for the roof should be subject to the approval of the board and the department's director, it said. The department also said the relocation would result in a loss of public space at the harbourfront. The museum was advised to explore the feasibility of providing an alternative area within the pier, with free access, for the public to enjoy harbour views. During the three-week public consultation, 2,168 comments were received, of which 122 were objections to the proposal. The objectors were concerned about the loss of public viewing decks and were worried that public access to the waterfront would be impeded. The department said the proposed ticket price for the museum of about HK$30 per person was generally affordable, and concessionary tickets for groups, families and students would be available. "Should the demand for ferry use increase in the future, premises could be brought back into ferry use, as modifications to be made for the proposed museum are reversible," the department said. The museum, currently at Murray House in Stanley, has to vacate those premises by February 2012.

Hong Kong's total exports volume of goods went up 23.1 percent in June compared with the same period last year, said the Census and Statistics Department (C&SD) of the Hong Kong government on Thursday. The volume of Hong Kong's re-exports of goods grew by 23 percent from June 2009, while that of domestic exports went up by 28.6 percent, said the C&SD. Meanwhile, the volume of imports increased by 24.1 percent year on year. In the first half of 2010, the volume of total exports of goods increased by 21.4 percent, with Hong Kong's re-exports up 21.4 percent, when compared with the first six months last year, said the C&SD. The statistics also showed that the prices of total exports of goods in June increased by 3.8 percent, with the prices of re- exports of goods up 3.7 percent year on year. Major destinations of Hong Kong's exports, including the United States, Japan, the Chinese mainland and China's Taiwan, recorded over 20 percent increase in June.

Resuming construction of Home Ownership Scheme (HOS) flats would not necessarily help stop the soaring prices of private residential properties, Housing Authority spokesman Anthony Cheung Bing-leung said on Thursday. Cheung, who is the chairman of the HA’s Subsidised Housing Committee, acknowledged people were very concerned about the supply and high price of residential properties. “But these concerns could not be solved simply by building more HOS flats – as their supplies are limited,” explained Cheung, who is also the president of the Hong Kong Institute of Education, said. He said that if the government decided to resume building HOS flats, it must ensure those flats would not overlap with private residential property. As the government is currently conducting a public consultation exercise to collect people’s views on the issue of subsidising home ownership, Cheung said public opinion should not only limited on the HOS scheme – they could also suggest other ways to help citizens buy property. Chief Executive Donald Tsang Yam-kuen, now preparing his policy address, has faced strong calls to help aspiring homeowners. In May, Tsang announced a public consultation on whether the government should subsidise people to become homeowners, and if so, who should be subsidised and what guidelines should be followed. Tsang will discuss the consultation’s results in his policy address in October. The consultation on subsidised home ownership ends on September 17. The HOS scheme began in the 1970s as part of a government policy to provide low-income people with public housing. The HA agreed to halt the production and sale of HOS flats in 2003.

Chief Executive Donald Tsang Yam-kuen said on Thursday more young people should join the construction industry. Tsang emphasised the importance of the industry during a visit to the Construction Industry Council Training Centre in Tin Shui Wai. “With the commencement of a number of major infrastructure projects in Hong Kong, construction manpower demands will rise in the coming years, providing our young people with plenty of opportunities,” he said. “I believe the government would spend about HK$50 billion on this industry, but we are lacking skilled workers. Once people join the industry, they could have a long career,” Tsang predicted. The training centre, which opened last September, trains people in the northwest New Territories. The chief executive also met trainees on different courses – including bricklaying, plastering and tiling, painting, plumbing and pipe-fitting.

The relaxing dim sum lunches enjoyed by city brokers may be replaced by a quick sandwich if a stock exchange plan to increase trading hours is approved. The two-hour-lunch trading break at the Hong Kong stock exchange could be cut to just an hour if approval is given to align the bourse's opening hours more closely with the mainland's stock exchanges. Hong Kong Exchanges and Clearing (SEHK: 0388) has proposed extending trading hours to 5.5 hours from four hours now. The city's exchange has some of the shortest trading hours in the world (the Philippines' exchange only trades 2.5 hours a day). Major markets such as New York and Nasdaq trade for 6.5 hours a day while London is open for 8.3 hours. The Irish and Frankfurt exchanges, which trade for 8.5 hours, have the longest opening hours. Singapore has proposed extending its trading time from 6.5 hours to 8 hours, while Tokyo would like to extend its trading time from 4.5 hours to 6 hours. HKEx chief executive Charles Li Xiaojia wants Hong Kong markets to open 30 minutes earlier to match the Shanghai and Shenzhen opening of 9.30am. The lunch break will be shortened from two hours - 12.30-2.30pm - to one hour - 12-1pm, meaning the afternoon trading session will then open at the same time as the mainland bourses. Market close will remain unchanged at 4pm. "HKEx is the world's largest listed exchange in terms of market capitalisation but we trade for almost the shortest time; only longer than Manila," Li said. "We have so many mainland firms dual-listing in both Hong Kong and Shanghai. It will bring in more trading volume." The new opening hours are subject to a public consultation to be held in October. This is not the first time the exchange has proposed extending hours. In 2001, it proposed an 11-hour trading day, including an evening session and scrapping lunch breaks. Not surprisingly that plan failed after stiff opposition from brokers. "Ten years ago, if we talked about the internationalisation of the yuan, people would ask you to see the doctor but now it is a hot topic," Li said. "Likewise, we believe closer links with the mainland market established over the past 10 years will help convince all to support a trading hour alignment with the mainland." Chim Pui-chung, legislator for brokers, said the proposal was acceptable. "It is good not to extend the closing time but only to shorten the lunch break. Brokers can decide if they want business or a long lunch," he said. But not everyone is happy. Louis Tse Ming-kwong, a trader at VC Brokerage, said the new trading hours would affect restaurant operators in Central. "I can accept a shorter lunch but lunch at 12 noon is too early for Hong Kong people. It is better to have the lunch break at 12.30," Tse said. Li said the extended hours would boost the competitiveness of the local bourse, which reported a second-quarter profit drop of 16 per cent to HK$1.13 billion as a result of decreased turnover amid the European sovereign bond crisis. The profit drop was the result of a 12 per cent slide in average daily turnover to HK$62.9 billion during the quarter, compared with HK$71.7 billion last year. HKEx's profit is closely related to market turnover because two-thirds of its income comes from trading and clearing fees. For the first half of the year, the exchange had a 3 per cent rise in profit to HK$2.26 billion. It paid shareholders a dividend of HK$1.89 per share, maintaining a dividend payout ratio of 90 per cent.

 China*: Xinhua said on Thursday it will develop mobile search technology with China Mobile (SEHK: 0941), the nation’s dominant carrier, potentially challenging current mobile search leaders Baidu and Google. China Mobile shares staged a late day rally after Xinhua reported the tie-up, closing up 2.44 per cent in Hong Kong after trading down for most of the day. Xinhua, the government-owned official state news agency, said it signed a framework agreement on Thursday with China Mobile, which controls more than two-thirds of the market, to establish a search engine company. It did not provide additional details.

Chinese actress Zhang Ziyi graces Bazaar magazine.

Beijing said on Thursday that overseas companies were treated fairly under its anti-trust law, dismissing complaints that the business playing field is skewed against foreigners.

The biggest relocation since the Three Gorges Dam was launched on Wednesday, with 330,000 residents moving to new homes, making way for a water project that will serve Beijing.

China Citic Bank said it plans to raise up to US$3.84 billion in a rights offer in Shanghai and Hong Kong in a bid to boost their defences against bad loans.

China’s consumer confidence rises in 5th quarters in a row - A shop keeper, right, counts sale items while a customer, left, chooses clothes at a shopping mall in downtown Beijing, . China's consumer confidence index rose in the April-June period for the fifth quarter in a row, the National Bureau of Statistics said on Thursday. China’s consumer confidence index rose in the April-June period for the fifth quarter in a row, boosted by a growing willingness in the countryside to spend as incomes rise, the National Bureau of Statistics said on Thursday. The index rose to 109 from 108 in the first quarter. “The survey results show consumer confidence has been rising since the second quarter last year, based on people’s optimistic judgment of the macro economic outlook,” the NBS and Nielsen, which conducted a joint survey of 3,500 people, said in a statement.

Heavy rains on Thursday compounded the misery of a Gansu town devastated by mudslides that have killed over 1,100, with new floods leaving hundreds missing and the stench of death pervasive. Thousands of soldiers and rescuers at the scene were battling to clean up roads blocked by cascades of mud and sludge unleashed by storms overnight, complicating the task of getting food, water and medicine to those in need. So far, 1,117 people have been confirmed dead in the disaster in Zhouqu, a town nestled in the mountains of Gansu province in China’s northwest. Another 627 residents went missing at the weekend, with three more overnight when six houses were swept away in the new downpours, state media said.

Australia’s largest airline Qantas Airways said on Thursday the airline was actively looking at opportunities to grow its low-cost subsidiary Jetstar’s operations in China. Jetstar’s Asia business grew capacity by 46 per cent in the region in the financial year 2010, Qantas chief executive Alan Joyce told reporters on a conference call. Qantas earlier reported a 4.3 per cent fall in its full-year net profit but said conditions were improving. Qantas said it expects recovering demand for air travel to lift earnings growth this year, but warned of volatile trading conditions. Australia’s largest airline, one of the few profitable global carriers during the worst downturn in aviation history, disappointed some investors by refusing to signal a return to dividend payments as tough economic conditions and stiff competition forced it to cut ticket prices. But its fast-expanding low-cost subsidiary Jetstar and profitable frequent flyer programme helped it ride out the worst of the global recession. “You have to look at this business as a portfolio. Things are definitely improving. Overall, it was a solid result. I am a bit disappointed in the lack of dividend,” said Constellation Capital Management investment analyst Brian Han. Sydney-based Qantas said its January-June net profit was A$54 million (HK$378 million) compared with a loss of A$93 million in the same period a year ago, according to Reuters calculations. Qantas shares fell 1.6 per cent to A$2.74 in Thursday’s trade, almost in line with a broader market fall of 1.4 per cent. Full-year net profit was A$112 million, down 4.3 per cent from a year ago. Underlying pretax profit was A$377 million for the year, at the higher end of management’s guidance of A$300 million to A$400 million and above a consensus of around A$345 million. Chief executive Alan Joyce said underlying pretax profit for the first half of the 2011 financial year would be “materially stronger” than a year ago but warned changes in fuel prices, foreign exchange rates and general trading conditions meant it was impossible to provide more specific forecasts. However, it said key markets were recovering. “International demand and yield across the business and leisure sectors continue to improve and domestic business demand is also strengthening,” he said, tipping an improvement in the Australian domestic leisure market despite stiff competition. Singapore Airlines last month reported a better-than-expected first quarter profit due to improving passenger and freight traffic. Qantas said international yields, the revenue it makes on each passenger for every kilometre travelled , still remained well below 2008 levels.

Aug 13, 2010

Hong Kong*: Chief Executive Donald Tsang Yam-kuen yesterday faced strong calls to help aspiring homeowners who have been priced out of the property market. The calls came from local members of the Chinese People's Political Consultative Conference, the nation's top political advisory body, attending a seminar on Tsang's forthcoming policy address. Chan Wing-kee, a CPPCC standing committee member, said nearly all the 37 delegates at the seminar hosted by Tsang wanted the Home Ownership Scheme to resume. "Provision of HOS flats could help ease grievances sparked by soaring property prices," he said. Chan, who made a fortune in the clothing industry, said many lower-to-middle income people had benefited from the home ownership scheme introduced in the 1970s. The government shelved the scheme - which enabled people to buy subsidised flats - in 2002 to reverse a slump in the market. There have been repeated calls for its resumption as property prices have risen. There might have been a problem with the implementation of the scheme in the late 1990s, which coincided with the Asian financial crisis, but that did not mean the scheme was no good, Chan said. Executive Council convenor Leung Chun-ying, who has queried the government's resistance to resuming the scheme, and Wharf (Holdings) (SEHK: 0004) chairman Peter Woo Kwong-ching were among those at the seminar. However, Walter Kwok Ping-sheung, a non-executive director of Sun Hung Kai Properties (SEHK: 0016) who also attended, said he told the chief executive that the scheme, because it involved a government subsidy, would hurt the city's economy and property market. In May, Tsang announced a public consultation on whether the government should subsidise people to become homeowners, and if so, who should be subsidised and what guidelines should be followed. He will summarise the consultation's results in his policy address in October. The consultation on subsidised home ownership ends on September 17. Talk during the seminar also turned to political reform. Chan said that functional constituencies merited retention in 2020, the earliest date for the attainment of universal suffrage elections for the Legislative Council. "But functional constituencies should be democratised in the way that all registered voters would be entitled to vote for candidates nominated by the bodies in the relevant constituencies," he said. Chan said the business community should unite to prepare for elections when "one man, one vote" was in place. "It is unwise to attempt to block the irresistible trend of universal suffrage," he said. But Chan called on the government to scrap the upper limit on election expenses to facilitate participation of pro-business candidates in direct elections.

HK tram operator wants to raise fare by 50 cents - The operator of Hong Kong's cheapest public transport wants to raise fares for the first time in 12 years. Hong Kong Tramways is asking passengers to pay 50 HK cents more per trip, raising the fare 25 per cent to HK$2.50, to help fund a multimillion-dollar plan it says will make trams more comfortable and efficient. Veolia Transport, the French owner of the century-old system on which users can travel almost the length of Hong Kong Island for a single fare, has proposed a wide-ranging upgrade that includes improvements to the rail and traction systems, more comfortable cabins and on-board broadcasting. Some commuters and lawmakers said a 25 per cent increase was excessive. They said people used the trams because they were cheap, and were not too concerned about comfort. Other users said they would pay the extra 50 HK cents if there was air conditioning. Tramways' move follows increases or applications for increases by several other transport operators. Its previous increase, in 1998, when it was owned by Wharf Holdings (SEHK: 0004), took the fare from HK$1.60 to HK$2, double the 1990 fare of HK$1. A persistent drop in patronage kept profit at about HK$2 million until 2007, when a rise in advertising income pushed it beyond HK$10 million.

The big are getting bigger. Just seven years ago, Sun Hung Kai Properties (SEHK: 0016) (SHKP) and Cheung Kong (Holdings) (SEHK: 0001) accounted for just over a third of the new private homes put up for sale. This year, seven out of 10 new homes will come from them - a near-doubling of their market share and a dramatic illustration of how the market for new homes is increasingly dominated by a handful of firms. One key reason for this concentration? Government policies that price land out of the reach of all but the biggest developers.

Land seizure rattles niche developers - Lantau plot owner questions why nothing has been done about other columbariums. Private columbarium developers in land lease disputes with the government were shocked yesterday to learn that the government had seized one such site on Lantau Island. But they said they did not believe the Lands Department's move to take back the 300,000 square foot plot at Tei Tong Tsai was the start of a citywide crackdown. The department refused to say if any similar action was imminent. Meanwhile, the owner of the Lantau plot said the move was unfair as it had not yet taken in any funeral urns and asked why nothing had been done about others that already had. A consultant working on a proposed columbarium in Ma Shi Chau said of the government action, formally known as re-entry: "I am a bit shocked as it is extremely rare for the lands officials to exercise that power. "Normally they will threaten it with a warning letter but they never really enforce it," said the consultant who did not want to be named. "I suspect the move is a deterrent. When there are 10 parties breaching rules, of course you will take down the worst one as a warning to the rest." Rita Poon of Lippo Star International, which was developing the Tei Tong Tsai site, said the seizure was unfair and had been so quick and determined that the company believed it was backed by influential parties. "What did we do? We just put some stones there and then the officers suddenly came and fenced our land," she said, adding that her views were purely personal. "Why didn't they resume other illegal columbarium sites already taking in urns?" The department has refused to comment because Lippo Star has indicated it might take legal action to reclaim the property it bought for HK$8 million. There are at least 20 suspected illegal private columbariums in Hong Kong, including some which have already taken in urns despite land lease disputes with the government. The Lantau action came after the owner missed a deadline to rectify land lease breaches. The site is being developed into a columbarium with 12,000 niches which the company hopes to sell for at least HK$38,000 each.

Pressure on judges, magistrates deplored - Legal profession speaks out on Bokhary case - Liberal Party members voice anger over the case. The Bar Association and Law Society said yesterday they deplored any attempt to bring public pressure on a magistrate or judge to change their mind in a review of sentence. They issued a joint statement expressing concern over recent public comments on the sentencing of Amina Mariam Bokhary for her third conviction of assaulting police. They said they were making the statement with a view to allaying any misgivings by the public and helping it to understand the court's approach. Magistrate Anthony Yuen Wai-ming sentenced Bokhary, a niece of Mr Justice Kemal Bokhary of the Court of Final Appeal, to a year's probation on August 2 for slapping a police officer after a car accident in Happy Valley on January 27. The sentence triggered a public outcry, with some saying it was too lenient and fearing Hong Kong's judicial system favoured the rich. On Friday, at a review hearing, the magistrate upheld his decision to place Bokhary on probation. The Department of Justice has asked the Court of Appeal to review the sentence for assault and refusing to give a breath sample after an accident. The joint statement read: "Whilst the joint legal professions recognise the right to freedom of expression, and that there may be a difference of opinion as to the charges brought and as to the sentence passed in any individual case, and that some in the community may consider a sentence to be too light or too heavy, any attempt made to bring public pressure on a magistrate or judge to change his or her mind upon a review of sentence is to be deplored." The professions emphasised there was a review and appeal process for reviewing and reconsidering the decisions of a lower court. The statement added that both the association and society were confident the rule of law was firmly established in Hong Kong, and that it was administered by a strong and independent judiciary. On Sunday, more than 200 internet users, wearing black to symbolise the death of justice, marched from the Legislative Council to Government House. About a dozen retired police officers, accompanied by some 20 members of the Liberal Party, made their way to the offices of the Department of Justice in Admiralty to express anger over the case. Barrister and former lawmaker Martin Lee Chu-ming feared the public outcry might lead to mob rule. A spokesman for the Department of Justice said it welcomed the efforts of the two professional bodies to help the public understand the court's approach and to allay any misgivings that people may have regarding the Bokhary sentencing. "The department wishes the community to know that it understands members of the public may have different views on the outcome of individual cases, and fully respects their right to freedom of expression. "However, it urges the public to respect and protect judicial independence and the rule of law in Hong Kong."

Make the most of the Hong Kong coast - Visitors to Hong Kong are often amazed to discover that this is a city for beach bums too. Even long-term residents seldom venture to more than a fraction of more than 150 shores. But with some imagination, a map and a little planning, there's a beach for every occasion and activity. Hong Kong's beaches have a little of everything for those who want to chill, try water sports, dine by the sand or just play in the water.

Hong Kong has some of the most beautiful beaches - "Hong Kong has so many great beaches but they're the most under-promoted, under-marketed things in the city," says Ken Howe, a surfer, self-confessed beach bum and entrepreneur who runs bars and restaurants at three beaches on southern Hong Kong Island. "Officials want visitors to stay longer in the city but we don't promote the more than 50 per cent of it that is either green or coastal."

Hong Kong Exchanges and Clearing (SEHK: 0388) (HKEx), the world’s most valuable exchange operator, reported a 16 per cent fall in quarterly net profit, roughly in line with expectations, amid declining average daily turnover as global stock markets cooled. Like its rivals Singapore Exchange and the Australian Stock Exchange, HKEx saw daily turnover fall in the second quarter as euro zone worries and fears of slowing mainland economic growth hit trading volumes. Competition from alternative trading platforms such as “dark pools” has also weighed on sentiment, pushing the company’s stock price down about 7 per cent so far this year. By comparison, the benchmark Hang Seng Index is down 2 per cent this year. “Apart from expanding our footprint in the mainland, attracting international listings has become a new HKEx growth driver,” the company said in a statement. “HKEx will continue reinforcing its global competitiveness in order to secure investors’ confidence and capital inflows from overseas markets.” HKEx, which overtook CME Group to become the world’s biggest exchange operator by market capitalisation, posted a net profit of HK$1.13 billion for the April-June quarter, lower than the restated HK$1.35 billion posted a year earlier. This represents earnings per share of HK$1.05, versus a restated HK$1.26 a year earlier. The result was roughly in line with an average forecast of HK$1.18 billion from four analysts polled by Reuters. Net investment income fell 51 per cent from a year ago to HK$157 million, hit by lower interest income and investment mark-ups, the exchange said. Weak markets hit HKEx and many exchanges globally in the last quarter. HKEx’s average daily stock market turnover, the key determinant of exchange revenue, fell to HK$62.9 billion in the second quarter from HK$64.8 billion in the first quarter and HK$72 billion the same quarter a year earlier. Regional rival Singapore Exchange posted a 13 per cent fall in net profit for the quarter ended June. However, new listings following Agricultural Bank of China’s (ABC) US$20.8 billion initial public offering in July in Hong Kong and Shanghai, could help lift stock trading interest and market turnover later in the year. Proceeds from IPOs in July soared on a global basis, hitting the highest level since the 2008 financial meltdown, according to Thomson Reuters data. The US$30.5 billion raised in July this year was the most since November 2007. Although competition has increased as more mainland companies choose to list on stock exchanges in the mainland where shares typically trade at a premium to their Hong Kong-listed peers, the loosening of restrictions on yuan trade in Hong Kong may offer new opportunities for HKEx. Mainland companies are expected to be able to issue yuan denominated shares in Hong Kong soon, helping them minimize foreign exchange risks in IPOs.

Britain attracts more students - The number of local students applying to study in Britain has risen sharply this year, likely because of a recovering economy, weak sterling and a dearth of Form Six places. The Universities and Colleges Admissions Service in Britain received 3,740 applications for places at colleges across the country from January to June this year, up 12.2 percent over the same period last year. Hong Kong students presently rank second for total non- European Union applications to British universities and colleges, and sixth worldwide, according to the service. Kathryn Chan Pak-yan, education marketing manager at the British Council Hong Kong, said: "Hong Kong families are increasingly aware of the benefits of studying in the UK to prepare young people for competitive careers in an international city where the English language and international experience are at a premium."

The former dean of the University of Hong Kong's medical school has been released early from prison. Lam Shiu-kum, convicted of misconduct in public office, has been released after serving 11 months of a 25-month sentence. He successfully applied for a pre-release employment scheme, requiring him to live in a correctional services hostel for six months under supervision. Lam pleaded guilty in September last year to one count of misconduct in public office for inducing patients to make donations and payments of almost HK$4 million to his company. A person close to Lam said: "He was never prepared to be jailed. It was a big shock to him when he learned about the sentence. "He had told his patients before the sentencing that he would be only away for a short while before going back to the clinic."

Hysan Development (0014) - the biggest landlord in Causeway Bay - expects moderate growth in rental income in the second half after first-half underlying profit edged up 1.2 percent. The firm plans to invest up to HK$2 billion in the next two years on its Hennessy Centre redevelopment and other renovation projects. It will spend about HK$50 million on refurbishing the retail podium of Leighton Centre to expand the area to 27,000 square feet from 23,000 sq ft. Construction is set to be completed in June. Grand Gateway, a commercial property in Shanghai in which Hysan holds a 10 percent stake, contributed about 10 percent of rental income. Excluding the revaluation gain from investment properties, the firm's underlying income in the six months to June amounted to HK$590 million and earnings per share were 56.15 HK cents. It declared an interim dividend of 14 HK cent per share. Turnover in its office sector dipped 1 percent to HK$380 million, but some new tenants are scheduled to move in during the second half, executive director Wendy Yung Wan-yee said. "The committed occupancy rate of offices was 95 percent but only 91 percent of tenants moved in, the rest will arrive in the second half," she said. The occupancy rate of its retail areas remained steady at 99 percent. Rental income from the retail sector went up 8.7 percent, backed by rising consumption and more mainland tourists. First-half turnover rose 3.1 percent to HK$877 million. Hysan shares dropped 1.2 percent to HK$24.80 yesterday.

After several days of searches, police and rescue teams on Wednesday afternoon found the body of a missing Air New Zealand pilot in Pat Sin Leng Country Park in Tai Po, a police spokesman said. Stephen Morrissey, aged 51, a co-pilot with Air New Zealand, went missing after hiking around Wong Chuk Chuen in Pat Sin Leng Country Park, Tai Po, on August 4.

Chief Executive Donald Tsang Yam-kuen met with 14 Hong Kong deputies from the National People's Congress at government headquarters on Wednesday morning to discuss this year’s policy address. Those attending included entrepreneur Peter Woo Kwong-ching, legislator Eric Li Ka-cheung, Executive Council member Leung Chun-ying; economist Lawrence Lau, Sun Hung Kai Properties (SEHK: 0016) non-executive director Walter Kwok Ping-sheung and Democratic Alliance for the Betterman and Progress of Hong Kong lawmaker Choy So-yuk. After the meeting, Choy said the discussion focused on topics relating to “people’s livelihoods, economic development, cross-borders issues, employment and youth problems”. Choi said she proposed relaxing restrictions on people receiving the old-age allowance, allowing domestic helpers in the mainland to work here, and setting up a mainland office for Hong Kong people, local media reported. The chief executive's policy address will be given in October.

Hong Kong manufacturers are worried about escalating salaries in the Pearl River Delta region after the Foxconn saga, a trade group said after its survey found most firms still cannot get enough workers despite offering higher pay. Stanley Lau Chin-ho, deputy chairman of the Federation of Hong Kong Industries, said Hong Kong industrialists had increased workers' monthly wages from an average 1,200 yuan (HK$1,374.63) in 2008 to 1,750 yuan now. Lau expected salaries to climb further, by at least 10 per cent, next year if the mainland government again increased the statutory minimum wage, which was raised by about 20 per cent in May. "The increase in staff costs has given us a lot of pressure, especially after Foxconn announced it would raise its workers' monthly pay to 2,000 yuan in October," Lau said. Earlier this year, a spate of suicides at iPhone maker Foxconn's Shenzhen factories prompted the Taiwanese firm to raise monthly wages by 30 per cent to 1,200 yuan on June 1 and promise another 66 per cent rise to 2,000 yuan in October. "It gives other workers the expectation of a salary level or increase similar to Foxconn's, despite the fact that most Hong Kong businessmen across the border are already paying more than the statutory minimum wage," he said. "Workers stand firmer when negotiating for salary rises." He said some firms had almost doubled salaries in just two years. If there were perceptions that salaries were still low, it should be because of other problems such as strong inflation which should be rectified by the government. The federation's latest survey of 61 Hong Kong entrepreneurs in June found that more than 80 per cent of them, despite offers of higher wages, still had difficulties in hiring staff. About 13 per cent of respondents said they had only about half the manpower they needed, the study showed. Slightly over 40 per cent said they were 10 per cent to 29 per cent short on staff. The federation hoped the central government would do more to keep migrant workers in the delta region. Lau said Hong Kong employers were also worried about other imminent labour-related laws. One will allow labour representatives' involvement in decisions on issues such as bonuses, salaries and benefits. Another will require firms to include staff in management. "We're willing to have more formal communication between employers and employees but we are afraid of measures that would create greater friction between them," Lau said.

Village houses attract more buyers amid rising prices - Rural homes with a better environment a cheaper option - Nelson Wong, the general manager of Hang On Development, says more and more people from Kowloon and Hong Kong Island are looking for village houses these days. With property prices in the city rising to their highest levels since 1997, village houses may be a better option for those seeking a better of quality of life but have a limited budget. "In the past, only local people in the New Territories would buy village houses. But more and more people from Kowloon and Hong Kong Island are looking for village houses these days," said Nelson Wong Tak-shun, general manager at Hang On Development, a developer of village houses. Sandra Liu, a customer services executive, moved to a village house in Sha Tin with her daughters and husband five months ago from an apartment in Ma On Shan. "This house has a better living environment. You can see the moon, you can hear the birds singing, and there is no annoying road any more. The location is also accessible," she said. Liu is planning to buy a 700 sq ft village house in the area for about HK$2 million. "It is impossible to buy a 700 sq ft flat in high-rises for HK$2 million," she said. "A 700 sq ft flat in Sha Tin costs at least HK$3.4 million. But the efficiency rate is only 70 per cent. I'd rather buy a village house, which is cheaper and has a high efficiency rate of 90 per cent." In the luxury residential market, the price differential between private housing and village houses is similarly pronounced. A 2,100 sq ft village house with a swimming pool, garden, parking space for two cars and designer interiors near Marina Cove in Sai Kung was sold for HK$25 million three months ago. A 2,070 sq ft flat at The Cullinan, a luxury residential project above Kowloon Station, has a price tag of HK$53 million. Its efficiency rate - the percentage of the usable gross floor area - is only 77 per cent, property agents say. A 2,191 sq ft unit at Celestial Heights in Ho Man Tin has an asking price of HK$23.8 million. Better air quality, high efficiency rates and provisions for keeping dogs are the big attractions for village houses. The improvement in infrastructure is also helping developers to attract buyers from other districts. "Central is only a 20-minute drive away from our new project, Hillwood, in Yuen Long," Wong said. "Downtown Yuen Long is only 3 to 5 minutes away." The quality of village houses has also been improving in recent years. "Earlier, developers didn't care about the design as selling village houses has never been a problem. The standard design is simple," he said, adding that the building quality of some village houses is also low grade. In 2006, Hang On decided to improve the design and amenities of its village house project. "We believed village houses could be priced 30 to 40 per cent higher if we increased the construction cost by 20 per cent to improve the quality. Our village houses were sold for HK$6 million after the improvement, compared with HK$5 million in 2005," Wong said. Hang On's latest project, Hillwood, was put up for sale in April, complete with Siemens appliances and CCTV security systems. Property management services were also offered, "which is rare in village house developments", he said. Better quality naturally means higher prices. In the first-batch sale of Hillwood, 18 out of 25 houses have been sold at an average price of HK$8.3 million - a record price for village houses in Yuen Long. One of the buyers was a financial executive who works in Central and paid HK$9.1 million for a house. Hillwood comprises 160 houses, making it the largest village house development. Hang On will raise prices by 10 per cent when it relaunches the project next month. The entry price for the project is about HK$3 million, which is the indication price of a 700 sq ft flat on the third floor with a rooftop. The average price of a three-storey village house is HK$8.8 million to HK$8.9 million. With a 2,000 sq ft garden the house will be worth more than HK$10 million. Village houses are tempting for those who want a spacious living environment at a reasonable price. But many people are cautious about buying village houses because of their lower resale value. "The secondary market in village houses tracks the broader property market. If the transactions in private housing are active, village house sales will be active as well," Wong said. Yuen Long, Sha Tin, Sheung Shui and Tai Po are districts with many village house developments. But Sai Kung village houses are the most expensive, Frankie Liu Chun-hung, sales director at Century 21 in the district, said. "It is close to urban areas but you can still enjoy a low-density living environment, which is very attractive. Forty per cent of buyers and tenants are foreigners." As the supply is limited, prices of village houses have risen 20 per cent this year, he said.

Another development saga in Hong Kong's beauty spot - Newly planted vegetation dots the site in Tsam Chuk Wan village and (right) the nearby stream is blocked by debris from the illegal work. Villagers called police and the Lands Department when diggers arrived on the site and started uprooting trees. Police halt work in country park enclave after workers level site and uproot trees - A heavily vegetated site in the centre of a Sai Kung village has become a construction zone in what looks like a rerun of the recent development saga at a Tai Long Sai Wan beauty spot. Building of houses in Tsam Chuk Wan village, next to the Sai Kung West Country Park and identified by the government this week as one of 77 country park enclaves, has been halted after a visit by about 30 police and Lands Department officials. Villagers had called police complaining trees were being felled on the site, long zoned for village development, which allows the building of houses for indigenous villagers. They also complained about construction debris blocking a nearby stream. Construction work, including the laying of foundations, was first noticed on the site, about the size of a football pitch, by villagers three to four months ago. Yvonne Macpherson, who has lived in Hong Kong for more than nine years and rents a house overlooking the site, said vegetation was cleared before workers brought trucks full of sand and diggers and began to level the site. But new vegetation replaced some of the work one to two weeks ago when a sign was erected declaring part of the land belonged to the government. Since then, another group of workers had moved in and planted hundreds of small plants on the sandy foundations, which villagers say was once heavily vegetated marshland. Police, called by villagers concerned by the felling of trees, ordered the work be stopped on Saturday. Resident Mark Galloway said officers told him the developer said he bought the site from the village head in order to plant trees. But Macpherson said: "That's just nonsense. Who's going to buy land at Hong Kong prices to plant trees? There were trees on it before." Details of the deal, including the identity of the buyer and seller, remain unknown. While the government says part of the site is government land and construction work has stopped, the issue of who has the right to build what, and where, is ambiguous. Some of the land is owned by the villagers, which could have given the village head the right to sell it to the property developer. When asked on Saturday if the land might be developed in the future, police told Galloway: "It's stopped - for the meantime." Sai Kung District Council vice-chairman Wan Yuet-kau said police were called when diggers arrived on the site and started uprooting trees. "I am not sure if the land belongs to a private developer or the government," he said, adding the government should clarify the situation. The Lands Department said it was notified about the work and plant removal last Saturday. "Police questioned the people involved and the works have stopped," a spokesman said, adding that it was investigating the case with police.

Two of five people arrested in March on corruption charges involving a top executive at broadcaster TVB were yesterday released unconditionally. Bail terms for former variety show producer Wilson Chin Kwok-wai and actor Ning Jin were scrubbed by the Independent Commission Against Corruption. That was after the two refused to go along with conditions applying to their bail. The ICAC claimed this does not mean the case - involving payments to performers - is over and said it will continue investigating. "It does not mean they are cleared," said one insider. But legal experts see the turn as a sign of the ICAC facing trouble in the case. University of Hong Kong associate law professor Eric Cheung Tat-ming said if the two refused to accept bail terms then "prosecutors can only release them if they do not have enough evidence." And lawyer Wong Kwok-tung sees the release of the two as a good sign for others in the case. "If you are involved in the same case, you will be feeling good about it," he said. The difficulty for prosecutors, he said, is that commissions for artistes, whether high or low, can be explained in many ways. Chin and Ning, along with TVB general manager Stephen Chan Chi- wan, head of business development Wilson Chan Wing-suen and advertiser Edthancy Tseng Pei-kun, were arrested in March on corruption charges. None has been charged. The case revolves around a shell company backed by Stephen Chan that allegedly cashed in by signing contracts for top TVB artistes, who were given a lesser fee than stipulated in the formal terms. The shell company is alleged to have accumulated up to HK$10 million over a number of years. Chin breathed a sign of relief over his unconditional release last night as he attended a movie premiere. He said he will still assist in an investigation, and added he has not been in contact with Stephen Chan. Meanwhile, Tseng and the two Chans remain on bail. ICAC officers went on a high-profile arrest spree in the early hours of March 11, with busts at various locations. Stephen Chan was hauled to his office at TVB's Tseung Kwan O headquarters. A TVB spokesman said yesterday that the two Chans and Ning remain suspended, while Chin resigned last month.

Taiwanese prosecutors on Wednesday raided the homes of several senior judges suspected of taking bribes from defendants in exchange for lighter sentences, local media said. It comes after three senior judges and a prosecutor were taken into custody last month, setting off yet another high-profile corruption case and costing judicial chief Lai In-jaw his job. The scandal prompted President Ma Ying-jeou to renew a pledge to build a clean government and set up a new watchdog tasked with fighting corruption. At least one serving judge and several retired High Court judges were targeted in the latest raid, the United Evening News said. Prosecutors were not immediately available for comment on the report. Taiwan has been hit by a string of corruption scandals in recent years, with the most controversial case implicating former president Chen Shui-bian and his family. Taiwan ranked as the 37th least corrupt society in the world last year, according to Berlin-based Transparency International, which issues an annual corruption perception index. In 2008 its ranking was 39.

 China*: Rescuers racing against a potential new deluge on Wednesday hurried to drain an unstable lake formed by China's worst mudslides in decades.

Mainland's industrial growth slowed further in July as Beijing clamped down on a credit boom, bolstering expectations it will ease monetary policy to shore up its economy.

China Everbright Bank has set the price for its Shanghai IPO at the top of an indicative range, putting it on course to raise up to US$3.2 billion, reports said.

A 50-year-old man was rescued on Wednesday from a flooded hotel in a remote area of northwest China, more than three days after he was trapped there by devastating mudslides, state media reported. The man, Wang Dianlan, was found on the second floor of the Fuxing Hotel in Zhouqu, which was devastated by a torrent of mud and rocks triggered by heavy rains at the weekend, the Xinhua news agency reported. Rescuers carry out a survivor from the debris at the mudslide-hit Zhouqu county in Gannan prefecture in Gansu province.

New Zealand dairy giant Fonterra said on Wednesday it is "100 per cent confident" in its milk supplies to a Chinese company under investigation over claims of tainted milk powder. Parents and doctors in Hubei province have expressed fears that hormones in milk powder produced by Synutra International have caused young girls to develop breasts prematurely. Synutra said the questionable milk powder was all imported from New Zealand. Fonterra confirmed in a statement that it supplied milk powder to Synutra, but said it was not the only supplier. “Fonterra is a supplier of milk powder to Synutra International but we understand Synutra sources some milk locally and imports whey powder from Europe,” the statement said. “Fonterra remains 100 per cent confident about the quality of its products.” The company said New Zealand has strict legislative controls on the use of “hormonal growth promotants” and they are not allowed to be used on milking cows. “The strict controls mean that it is not necessary for New Zealand milk or milk products to be routinely tested.” China’s health ministry has ordered food safety authorities in Hubei to investigate claims that milk powder has caused infant girls to grow breasts. Medical tests indicated the levels of hormones in three girls, ranging in age from four- to 15-months and who were fed the same baby formula, exceeded those of the average adult woman, China Daily reported on Monday. A fourth case was reported in Beijing, Xinhua reported on Tuesday. Synutra insisted in a statement that its products were safe and that no man-made hormones or illegal substances had been added during production. Fonterra also owned a major stake in the Chinese dairy company Sanlu, which was at the centre of the 2008 melamine contamination scandal in which babies died after drinking infant formula. Melamine was found in the products of 22 dairy companies in a massive scandal blamed for the deaths of at least six infants and for sickening 300,000 others in China.

Property tycoon bets on home prices to rise again - From her leafy, 11th-floor rooftop terrace at the headquarters of Soho China (SEHK: 0410), billionaire Zhang Xin scans the relentlessly expanding Beijing skyline she helped create. Zhang's avant-garde buildings - some sleek as chopsticks, others stepped like rice terraces - became part of the hottest real estate market on earth this year. Zhang says she is well aware of the chorus of investors and economists who predict that China's property boom is about to go bust, taking the global economy down with it. The doomsday scenarios do not intimidate Zhang, a one-time penniless sweatshop worker who ascended to Wall Street by defying the odds. She hopes to prove sceptics wrong again this year by betting hundreds of millions of dollars on new buildings in Beijing and Shanghai, Bloomberg Markets magazine reports in its September issue. "I don't see any bubbles," Zhang says. "The next few months will be a fantastic time to buy." Zhang, 44, personifies the explosive rise of China, from the poverty of Mao Zedong's communist rule to the riches of state-controlled capitalism in the world's third-biggest economy. At age 30, armed with a master's degree from the University of Cambridge in England and connections from working at Goldman Sachs Group in New York and Hong Kong, Zhang founded Soho China with her husband, Pan Shiyi. The company became central Beijing's biggest developer about a decade later in 2005 - and a favourite among investors. Zhang's ownership stake is worth about $2.2 billion, ranking her alongside Oprah Winfrey as one of the world's wealthiest self-made women, says Rupert Hoogewerf, whose Shanghai-based Hurun Report tracks China's rich. Economists began predicting a real estate bubble in China last year after the government pumped US$585 billion of stimulus funds into the economy. State-controlled banks went on a record US$1.4 trillion lending spree in 2009. That sent residential real estate prices soaring 68 per cent in the first quarter of this year compared with the same period in 2009, pushing the mainland past Hong Kong as the world's fastest-appreciating housing market, says property adviser Knight Frank. Beijing's skyline has shot up along with prices, leaving it with many unoccupied see-through buildings. Zhang, who early this year feared a bubble, now says her own research reveals that the property market is regaining its sanity. She says real estate prices have been cooling since April, following the government's lending restrictions, but are not headed for a collapse. "We know from our own experience the prices are staying flat," she says. Zhang says success in real estate has come down to guessing what the government will do next. In June, she gave her prediction at a JP Morgan Chase conference attended by almost 2,000 foreign investors in Beijing. "Everyone was so pessimistic, and I was saying that in the next six months or a year, prices will go up again," she says. "My guess is that it is austerity now, but at some point it will become stimulus again." If the former sweatshop worker is right, her latest property investments will likely prosper - as will China, perhaps sparing the global economy the threat of a double-dip recession.

Aug 12, 2010

Hong Kong*: Taiwanese snack tycoon Tsai Eng-meng said selling the Cha brothers' stake in ATV to the highest bidder is the only way out of the scramble for control of the station, warning that the ailing broadcaster may have to liquidate if it fails to repay a HK$50 million loan by the end of this month. According to Sing Tao Daily, sister newspaper of The Standard, the Want Want China (0151) chairman also revealed - at a briefing in Taiwan - that he has rejected repeated requests for talks by Wong Ching, via phone and text messages. Tsai said it is up to major shareholder Payson Cha Mou-sing to decide whether to sell his 10.75 percent stake in the station - held through Panfair with his brother - by auction to save the station. "The crux is Mr Cha has sold one thing to two people, to me and to another person," Tsai said. The offer by mainland property tycoon Wong - formerly known as Wang Zheng - to buy the 10.75 percent stake failed to get approval from the Broadcasting Authority by the deadline on August 2. Despite the deadline passing, Cha has not canceled the sale agreement and remains ambivalent about Tsai's recommendation for an auction. "The problem still lies on boss Cha's side since he hasn't terminated that contract," Tsai said. "I've bluntly asked him to say yes or no once and for all, but still no response." Although Wong has made it clear that he does not intend to bid for the stake, Tsai said Hong Kong charities will get from him HK$80 million - the price he is willing to pay for the Cha brothers' stake - while Payson Cha can save face by accepting the proposal. "Wong Ching's objection will make no difference," Tsai said. "If he doesn't take this chance, let me have the lead." Tsai said Wong should come up with HK$80 million to compete with him, resolving all bickering and the double-stake sale. Tsai said he could not talk with Wong who appeared to be acting as if he was the ATV boss asking for cooperation. "The problem now is you lead or I lead," Tsai said. He revealed that as he cannot own a majority stake in ATV, he has found a person of high standing in society as a partner, but noted it is not former ATV chairman Linus Cheung Wing-lam. Tsai said he is willing to remain a minority shareholder if Wong dares to accept the auction proposal and wins. But Tsai said he and Wong can be no "dream team" since the mainland tycoon has not brought ATV any advertising revenue since his high-profile cooperation agreement with mainland heavyweights, nor does Wong himself have any TV experience. Tsai said the board controlled by Wong's relatives immediately rejected his offer to give ATV HK$150 million to solve its financial stalemate on condition that the station's operations return to normal and CEO Nancy Hu Gin-ing resumes office.

iPhone imitator has tech world buzzing - A small electronics team from Shenzhen has the tech world buzzing with a new device that could add a new lease of life to Apple's iPod Touch while at the same time making a dent in sales of its iPhone. Apple, meet the Apple Peel 520 - pun intended - which the team says can turn any iPod Touch into an iPhone. The gadget is expected to move into mass production just as soon as it clears the small obstacle called intellectual property rights (IPR). The Apple Peel 520 is based on an idea that a 24-year-old mainland programmer came up with about a year and a half ago. It encases an iPod Touch - which is a media player, personal organiser and Wi-fi platform all rolled into one - and provides it with additional functions such as voice calling and text messaging by using a built-in SIM card slot and battery. Needless to say, it has caught the eyes of Apple product fans since it was revealed online late last month. It has also attracted the attention of popular US-based gadget sites such as Dailytech.com and Engadget.com, which translated the first review of a prototype of the Peel written by a Guangzhou-based technology company - one of two gadget websites to receive a copy. The Peel device (left) encases an iPod Touch, turning it into a phone. One thousand copies of the device have been made. The remainder are in a warehouse in Shenzhen. Yosion Technology, the company responsible for the Peel and which employs fewer than 10 people, told the South China Morning Post (SEHK: 0583, announcements, news) yesterday that the positive response its design had received so far had won it great interest from manufacturers. "We could start mass production overnight, but before we do, we and the manufacturers need to solve the possible IPR problem," a member of the team said by phone. The man, who said he was the firm's spokesman, said the idea for the Peel came from his 24-year-old brother, a young programmer who had just graduated from university. "He thought it was inconvenient to have a mobile and an iPod Touch at the same time and decided to combine them into one," the spokesman said. So his brother quit his job, borrowed some money from family and friends and started his one-man research and development effort in late 2008. According to Yosion and two early reviews, the Peel contains a good battery, dock connector, vibrator and a SIM card slot. It allows 4-1/2 hours of talk time and 120 hours on standby. But to have the device properly function as a phone, the reviews said users will have to "jailbreak" (break into the software of) the iPod Touch and then install Yosion's software. Both reviews said SIM cards used in an iPhone will also work in a Peel, which will help maintain high quality for voice calls. The Yosion spokesman said the firm wasn't too concerned about the IPR problem, as its main focus was the software for the device. "But the manufacturers [who have expressed interest] are concerned about violating Apple's copyright. So our top priority at this moment is to consult with legal experts," he said. Yosion said the online price for the Peel would be about 388 yuan (HK$445). Chen Hui , a Guangzhou photographer who bought an iPod Touch in 2008 for about HK$1,800 and an iPhone early this year, said he would not have bought an iPhone if the Peel had existed at the time. An iPhone 3G costs more than 4,000 yuan on the mainland. "It is worth a try to make the iPod Touch a phone at just one-tenth of the cost [of an iPhone]," Chen said. The Yosion spokesman said they had not contacted Apple as they were such a small team and did not expect to be given a channel to talk to the technology giant. Apple's offices in Hong Kong and Beijing could not be reached for comment yesterday.

In its toughest move yet against misuse of rural land, the government has taken back ownership of a country park enclave where a developer has built an underground columbarium in defiance of an official order. The plot of land at Tei Tong Tsai on Lantau Island is one of 53 sites next to or surrounded by country parks that were formally identified yesterday as being without zoning protection, meaning anything can be built on them if does not breach the land lease. The site, two kilometres east of the Big Buddha at Ngong Ping and part of the island's Buddhist heartland, was taken back on Monday after the owner defied the order to rectify land-lease breaches within a week. "We have found lease breaches on the lot but the lot owner has not rectified the situation despite warnings given by us," a Lands Department spokesman said. The department warned the landowner in February this year that the leased land did not allow columbarium developments. But officers could do nothing at the time as no urns containing human ashes were at the site. The move follows a long tussle between the government and the site's owner, Lippo Star International, which vowed yesterday to take court action to reclaim the property it bought in October for HK$8 million. "The government has no right to take away our land," director Michael Chiang Hon-man said. "We didn't break any law as the site comes with a licence for cremation and storage of urns." The company estimates it could earn at least HK$450 million if all the proposed niches are sold at the quoted price of HK$38,000. "We will not let the government take away our property unless it compensates us for our loss. We could have built 12,000 niches there," said Chiang, a member of the Hong Kong Institute of Architects' building committee. It was not clear last night if niches the developer claims to have already sold have been occupied and how the niche owners' rights will be affected. The government's resumption of the land came days after Secretary for Home Affairs Tsang Tak-shing met Buddhist monks from Tei Tong Tsai and Luk Wu to discuss the proliferation of private funeral ash repositories in the area. Monks, who fear the new facilities will destroy the area's peaceful ambience and attract excessive vehicle traffic, were preparing a petition about their concerns when a respected elder died last week, forcing postponement of their plans. Land registry records show ownership of the 300,000 square foot plot has already been transferred from Lippo Star, a British Virgin Islands-registered company, to the government. The department spokesman did not give details of the breaches attributed to Lippo Star, but a Tei Tong Tsai resident said a notice posted at the site suggested the current use might be in conflict with the agricultural use specified in the land lease. The seizure is expected to send a strong deterrent signal to developers of private columbarium scrambling for rural sites so as to profit from a city-wide shortage of urn niches, as the government consults the public over establishing a columbarium licensing system. Twenty-one suspected private niche storage areas were identified in April by the South China Morning Post (SEHK: 0583, announcements, news) , many of them involved in land-lease disputes over storage of human ash.

Haitong Securities launched a yuan fixed-income fund - the first of its kind approved by the local watchdog since Beijing and Hong Kong agreed in mid- July to liberalize yuan use in the city. The fund will be managed by Hai Tong Asset Management (HK) - a unit of Hai Tong (HK) Financial, which itself is the local unit of the mainland's second- largest brokerage. The fund will invest in only yuan- denominated assets outside the mainland and may raise up to 5 billion yuan (HK$5.7 billion) from the local market despite a lack of yuan-denominated paper, said Lin Yong, chief executive of Hai Tong (HK) Financial. Securities and Futures Commission deputy chief executive officer Alexa Lam conceded many mainland brokers and fund houses were keen on rolling out yuan-denominated products in the city. This, in turn, reflected strong demand for such issues in the local market, she noted. Bank of Communications Trustee said several pension funds it manages will be allowed to make yuan deposits. China Development Bank has 5 billion yuan worth of debt issues in the pipeline while Bank of China (3988) plans to sell more yuan bonds in Hong Kong next month, Bloomberg reported. Lin at Hai Tong expects yuan deposits to grow quickly in Hong Kong and exceed 200 billion yuan by 2011 as more related products are launched. Yuan deposits in the city reached a mere 89.7 billion yuan as at June 30. Meanwhile, Lin said Haitong hopes to become one of the first batch of companies to get "mini QFII" quotas to invest in the mainland market. "We have already seen signals, as the central bank vice president said last Friday the `mini QFII' would be approved soon," Hai Tong Asset Management (HK) managing director Daniel Li Pak-wang said. As for the fixed-income fund, the entry fee is 10,000 yuan, while the subscription fee has been set at 3 percent and the management fee at 1 percent.

Student activist Christina Chan Hau-man pleaded not guilty in the Eastern Court on Tuesday to assaulting a policewoman during a protest on New Year's Day. Chan, 23, was charged with slapping the face of policewoman Lam Yuet-ngai during a pro-democracy protest outside the central government’s liaison office. Giving evidence on Tuesday, Lam said that during the January 1 protest, some of the activists broke through a police cordon. Lam said that as Chan was trying to climb over a police barricade, the student’s right hand struck the right side of her face. The policewoman told the court she believed Chan had deliberately struck her, local media reported. Chan was among 10 young activists who broke through the cordon. After listening to evidence from Lam and other police officers, Magistrate Anthony Yuen Wai-ming said there was a case to answer. He adjourned the case until September 3. This is to give Chan more time to discuss her defence with her lawyer. Anthony Yuen is the magistrate who last week placed a senior judge’s niece, Amina Mariam Bokhary, on probation for a year. He spared her from jail for a similar offence – slapping a police officer – who blocked her from leaving after she had a car accident on January 27. Bokhary was charged under the Police Ordinance, which has a maximum penalty of six months in prison and a fine of HK$5,000. In the Offences Against the Person Ordinance, under which she could also have been charged, the maximum penalty is two years in prison.

Bus drivers on Tuesday were continuing their industrial action for a second day - after unionists representing the drivers failed to achieve an agreement on wage rises with bus companies. On Tuesday morning, 53 bus drivers with New World First Bus were taking industrial action, while a number of drivers with Citybus and Kowloon Motor Bus (KMB) continued their to work-to-rule action. This means they wait an extra 10 seconds at each bus stop after the last passenger boards. Despite the action, the Transport Department said services were operating normally. Public Light Bus transport officer Leung Cheong-kit said the action had not caused any problems. He advised the public to allow more time for travelling. “They should watch news broadcasts and consider using other transport,” he said. On Tuesday, about 60 bus drivers and maintenance workers with New World First Bus protested outside the New World First Bus depot in Chai Wan as part of their action. They called on management to increase their pay from 1.8 per cent to 2.2 per cent. New World First Bus Company staff union spokesman Chung Chung-fai said they had received signatures from nearly 100 bus drivers supporting their action. He said they would hold a meeting with members on Tuesday afternoon. “Industrial action is a long-term strategy. Even though the outcome of this action might not be that great, it doesn’t mean we won’t launch more later,” Chung told local media. He said the union would compromise when all its members could accept the bus companies’ pay offer. But New World First Bus operations and planning head William Chung said that due to rising oil costs and tunnel fees, an 1.8 per cent pay rise was the most his company could afford. A spokesman for KMB also said the company had reached a consensus with the union and most staff had accepted a 1.8 per cent pay rise. Transport Secretary Eva Cheng Yu-wah urged the drivers to consider the public. “Every year, bus companies adjust staff salaries according to the existing pay adjustment system. This year is no exception. Since May, the bus companies have met union representatives more than 10 times to come up with the proposed pay rise. I understand that most staff accept this proposal,” she said. Cheng said the government would mediate the dispute.On Tuesday afternoon, about 100 bus drivers and staff from New World First Bus, Citybus and KMB marched from Chater Garden to the Murray Building in Garden Road. Led by Secretary General of the Confederation of Trade Unions and lawmaker, Lee Cheuk-yan, they urged the government to intervene. They said the government also needed to monitor the activities of public transport companies more closely. Lee defended the right of drivers to seek a pay rise. He noted that the Labour Department had still not approached them with any offers of assistance.

Three more elderly people applied for legal aid yesterday to launch a court challenge to the residency requirement for "fruit money". Their applications to the Social Welfare Department for the HK$1,000 monthly old age allowance had been rejected because the payments were available only to elderly people who spent no more than 240 days a year outside Hong Kong. "The government must ease the residence requirement for the allowance," unionist lawmaker Wong Kwok-kin, who is helping the three, said. "Many old people who now live in the mainland contributed a lot during their prime in Hong Kong. They deserve the fruit money, to share the fruits of the economy." At least three others, helped by the Society for Community Organisation, have made similar applications. According to a study by the welfare group, more than 50,000 elderly people now live on the mainland without any government assistance. It estimated that a change in the residence limit would cost the administration an extra HK$600 million a year. About half a million elderly people receive the old age allowance. "I have lived in Shenzhen for more than 10 years. My savings are running out and the living costs there keep surging so I need about HK$2,000 a month," Lau Hung-man, one of the three applying for the legal aid, said. Many elderly people opt to live in the mainland as the cost of living is lower than in Hong Kong. "Many hoped to live comfortably there with HK$100,000 to HK$200,000 retirement savings but rising costs recently have wrecked their plans and they cannot find ways to make money," Wong said. The Court of First Instance ruled on June 21 that the requirement for a permanent resident to have lived in the city almost continuously for a year before being eligible to apply for Comprehensive Social Security Assistance was unconstitutional. "The ruling only applies to the CSSA and does not affect the requirement for the old age allowance," a Social Welfare Department spokesman said, adding that the government was appealing against the ruling. The Legal Aid Department said it was assessing the applicants' legal grounds and income and no application had been approved so far.

Trading in shares of consumer goods exporter Li & Fung (SEHK: 0494) was suspended on Tuesday pending a statement on a plan to take Integrated Distribution Services Group (IDS) private, the companies said in filings to Hong Kong bourse.
IDS, with a market capitalisation of HK$5 billion and controlled by Li & Fung Group, provides integrated services to its customers in Asia in areas including manufacturing, logistics and marketing. Li & Fung Group also encompasses exporter Li & Fung, convenience store operator Convenience Retail Asia (CR Asia) and luxury menswear retailer Trinity. Shares of CR Asia rose 8.4 per cent to HK$2.70 on Tuesday morning, the highest since April 2008. Trinity gained 0.76 per cent. “It was a bit of surprise to see a privatisation deal as we only expected to see some M&A deals,” said Alex Wong, a director at Ample Finance. “It will enhance the valuation of the company, but it doesn’t seem particular exciting.” Company executives were not immediately available for comment. Shares of Li & Fung surged 5 per cent on Monday ahead of the release of its first-half earnings on Thursday. Analysts generally expected the company to post strong growth as revenue increased, profit margin improved and newly acquired assets began contributing to revenue. Shares of IDS jumped 14.8 per cent to HK$15.42 on Monday, the highest since June 2008.

Photo taken on Aug. 10, 2010 shows an exhibit in the Hello Kitty exhibition in Hong Kong, south China. An exhibition on models and video games of the cartoon figure Hello Kitty unfolds its curtain in the Hong Kong International Trade & Exhibition Centre here on Tuesday.

 China*: Property prices in the mainland rose at a slower pace in July from the previous month, as efforts to curb speculative investment in the real estate sector started to bite.

Share prices may have slumped and the property market at a standstill, but consumer demand on the mainland is expected to remain buoyant as major department store operators report strong sales growth. With their buying power hit by the stock market slump or eaten up in mortgage payments, a growing number of mainlanders are watching their pennies like never before. Liang Aimei, taking her laptop computer to be fixed at a shop in Beijing, is one of them. "If I still earned several thousand yuan a day from my stock investments like in the good old days, I would simply buy a new computer," the 36-year-old said. Her last batch of stocks was bought in July last year. Since then, the market has fallen 23.5 per cent. "I took my parents and sisters on a trip before the stock market slumped last year. It was the first time they travelled. I wish I had not done that so I can have more money now," Liang said. "I have to change my shopping habits. I used to buy only from street vendors until I earned my first bucket of gold from the stock market. Then I began to shop in department stores. Nowadays, I've returned to the street vendors." When the nation's economic data for last month is released today, the retail sales figure is unlikely to provide any big surprises. While the economy is set to slow down in the remaining part of the year, few economists expect the retail sector to lose much steam. Even during the financial crisis when exports - the country's major growth contributor - were battered, retail sales held up well, indicating resilient domestic demand. Wage rises, policies to boost rural consumption and low deposit interest rates have encouraged many economists to forecast retail sales to rise about 18 per cent from July last year and a similar pace of growth will be maintained this year. But behind the growth, the real story is the widening wealth gap between the rich and poor. The rich - with the guts, luck, knowledge or inside information to reap from the stock and property market boom in previous years - are getting richer.

Washington told to keep out of South China Sea dispute by Philippines - The Philippines says Southeast Asian nations do not need US help to solve territorial disputes with Beijing over the potentially resource-rich South China Sea. Foreign Secretary Alberto Romulo said negotiations should be strictly between the Association of Southeast Asian Nations and Beijing - without the United States or any other party. On whether he supported US Secretary of State Hillary Clinton's recent statement hinting at greater US involvement in the dispute, Romulo said: "No." "It's ASEAN and China. Can I make myself clear? It's ASEAN and China. Is that clear enough?" Beijing insists it has complete sovereignty over the Spratly and Paracel islands in the South China Sea. However, the Philippines, Vietnam, Malaysia, Brunei and Taiwan have competing claims. At the ASEAN regional forum in Hanoi last month, Clinton said the United States has an interest in guaranteeing open navigation and free trade in the South China Sea. She also called for multilateral talks to resolve the issue. That position is opposed by the mainland, which wants to negotiate competing claims with each individual country. ASEAN wants the implementation of the "code of conduct"- a 2002 deal with Beijing that calls for peaceful settlement of the issue between all contending parties. But it is a non-binding accord. ASEAN has been pressing Beijing to make it binding. "We will continue to discuss it," Romulo said in Manila.

China launches remote-sensing satellite - The remote-sensing satellite, "Yaogan X", is sent into space aboard a Long March 4C carrier rocket from the Taiyuan Satellite Launch Center in Taiyuan, capital of north China's Shanxi Province, Aug. 10, 2010. The satellite is supposed to conduct scientific experiment, carry out surveys on land resources, forecast grain output and play a role in natural disaster reduction and prevention.

Expeditioners plug flags on a big sea ice in the Arctic, Aug. 10, 2010. China's fourth scientific expedition to the Arctic includes participants from France, the United States, Finland and Estonia to enhance international cooperation on the Arctic.

Sony, Panasonic slash TV prices in China - Sony Corp's and Panasonic Corp's ambitions for higher earnings this year depend on convincing Yin Weiguang, a retired construction worker in Beijing, that he chose the wrong television. "I don't really care about fancy features," said Yin, 55, who paid 2,799 yuan ($413) for a 32-inch set made by Skyworth Digital Holdings Ltd. "I just use it for basic entertainment: watching news, weather forecast and TV series." Sony and Panasonic, the world's two largest makers of consumer electronics, are slashing some TV prices by a third in China after being outsold 6-to-1 by Shenzhen-based Skyworth. Sony aims to double TV shipments in China this fiscal year, and Panasonic expects 50 percent growth in the world's second- largest market for flat-panel TVs. "The price battle in China will likely intensify as local manufacturers, South Korean makers and Japanese companies all fight for market share," said Yoji Takeda, who heads the Asian equity management team at RBC Investment (Asia) Ltd, which oversees $1.1 billion. "Prices will probably continue falling with increased market supply during the second half." In December, Sony offered a 32-inch set for 3,000 yuan, or 33 percent off the previous low price for that size, targeting customers in regional cities and rural districts, said Yuki Shima, a spokeswoman for the Tokyo-based company. To help cut costs, Sony has increased outsourcing of television production to Foxconn Technology Group, the world's largest contract manufacturer of electronics.

Rescuers digging by hand through thick mud in a remote town in Gansu on Tuesday found a man who had been trapped for more than 50 hours, as crews across the mainland struggled to reach survivors from flooding that has afflicted millions of people. The 52-year-old had been stuck inside a levelled apartment building following landslides in the northwestern province of Gansu that have killed hundreds and left more than 1,100 missing, according to Xinhua news agency. Rescuers with sniffer dogs discovered the man, who was in weak condition but breathing normally. The death toll jumped to 337 late Monday after Sunday’s landslides in Gansu – the deadliest incident so far in the country’s worst flooding in a decade. A debris-blocked swollen river burst, swamping entire mountain villages in the county seat of Zhouqu and ripping homes from their foundations.

Mainland carmaker Jianghuai Automobile said on Tuesday it plans to invest about 30 billion yuan (HK$34.37 billion) on production of clean-technology vehicles through a partnership with Yang Rong, an automobile tycoon who fled the country after being accused of economic crimes. Jianghuai will set up a 50-50 venture with the private equity unit of Yang's Far East Golden Resources Group and aims to make 1 million cars in the next eight years, Jianghuai said in a statement filed with the Shanghai Stock Exchange. The venture, based in the city of Tianjin, will also make car engines and batteries. The central government would invest more than 100 billion yuan to subsidise its fledgling environmentally friendly car industry over the next 10 years, according to official media. Other carmakers, including Toyota Motor, General Motors, Ford Motor and BYD Co, are all racing to develop electric and hybrid cars as the US and other governments set tough fuel economy and emissions standards. Yang, chairman of Far East, and the former chairman of Brilliance China Automotive Holdings (SEHK: 1114), BMW’s partner in the mainland, said in an interview last October that he was planning three multi-billion-dollar US plants to make 3 million clean-technology vehicles per year by 2017 and was seeking investors for a 60 billion yuan project in the mainland to make 6 million clean-tech engines. Yang, who is also called Yeung Yung, was at one time the mainland’s most influential carmaker, helping transform Brilliance from a stagnant state-owned auto factory into the country’s top maker of mini-vans. He fled the country in 2002 for the United States after being accused of economic crimes.

Mainland’s trade surplus ballooned to US$28.7 billion in July as exports hit a record high, government data showed on Tuesday, which is likely to intensify pressure on Beijing for a stronger yuan. Despite a slower growth in exports, the nation posted its biggest trade surplus since January last year as the value of the mainland’s overseas shipments reached a monthly record US$145.52 billion in July, customs authorities said. The data suggested mainland had so far seen little impact from the European debt crisis and weak recovery in the United States, as consumers continued to snap up televisions, T-shirts and leather shoes made in the mainland. July’s trade surplus compared with a surplus of US$20.02 billion in June and surpassed analyst expectations for US$19.6 billion. It also marked a sharp turnaround from March, when the country recorded a trade deficit. Exports grew 38.1 per cent from the same period a year ago, slower than in June, when they were up 43.9 per cent as steelmakers and other raw material producers accelerated shipments before the government scrapped tax rebates on some products last month.

Alibaba.com, the mainland’s largest e-commerce company, reported a 46 per cent rise in quarterly profit, beating analyst expectations.

Two mining giants of the mainland are set to align their prices for light rare earths nationwide in a move that will give the country more influence over international markets, state media reported on Tuesday. The co-operation will allow Baotou Steel High Tech Co – the supplier of 46 per cent of the world’s rare earth oxides – and Jiangxi Copper (SEHK: 0358) Corp to “virtually control” market prices, the China Daily cited analysts as saying. “Enhancing the concentration of the rare earth sector will benefit the mainland side and give it a bigger say in the global markets,” Yu Zhongsen, former Chinese Society of Rare Earths secretary-general, was quoted as saying. Jiangxi Copper is also planning to consolidate resources with two partners in the southwestern province of Sichuan, the second-largest source for light rare earths after Inner Mongolia, where Baotou is based, the report said. Mainland supplies at least 95 per cent of the world’s rare earths – 17 chemical elements essential for the making of iPods, wind farms, electric cars, missiles and a wide range of other products. Foreign companies and governments fear mainland’s efforts to control the rare earths market, if implemented, will deny them access to the much-needed metals and force manufacturers to shift their plants to the mainland. The country’s efforts – which include cutting export quotas, industry consolidation and crackdowns on illegal mining – had already driven prices higher, the report said. For example, the price of neodymium – a magnetic material used in headphones and hard drives – has risen 60 per cent since the end of last year to US$32,000 a tonne in August. The government has also capped production of rare earths this year at 89,200 tons, up only 8.36 per cent from last year. A draft plan for restricting mining rights to selected state-owned firms had been submitted to the State Council for approval, state media previously reported. In addition, it has stopped issuing new licences for domestic exploitation until June 30, 2011. Previous media reports also said the nation was considering even banning the export of certain elements and closing mines.

Aug 11, 2010

Hong Kong*: Leaders of the three rival design teams for the West Kowloon arts hub will explain their master plans to the public next week when they are unveiled after a year's work. The three design options will be presented at the Convention and Exhibition Centre from next Friday. The exhibition will feature three-dimensional models, photomontages and animated videos. Master's students in arts and architecture will lead guided tours to help visitors understand the display materials. On August 22, the leaders of the three architectural teams, Norman Foster, Rem Koolhaas and Rocco Yim Sen-kee, will explain their work at a forum at the exhibition centre. The exhibition will move to other venues in Kowloon and the New Territories during a three-month consultation period. The West Kowloon Cultural District Authority will conduct exit polls to find out the preferences of visitors for the features in each plan. But the visitors will not be asked to indicate which team's work they like best. Dr Chan Man-wai, the authority's executive director for project delivery, said yesterday: "The consultation is not a design competition. The architects are all our consultants, and we are free to use their ideas according to our contracts." Chan said it was likely that the authority would choose the design that contained the most features preferred by the public, rather than assemble a loose combination of bits and pieces of different plans. The team responsible for that design would then be appointed to draw up the final development plan next year. Carl Cheng Chi-ming, a member of the consultation panel, said the team appointed should be allowed to decide what elements to use in drawing up the eventual blueprint, provided it communicated its ideas to the public clearly. "After all, creativity is about a whole package of thought-through elements that have chemistry between them. A mix of the best things from different packages may not be good," the artist said. The plans, prepared by London's Foster and Partners, the Rotterdam-based Office for Metropolitan Architecture and local firm Rocco Design Architects, will set out the land use layout of the 42-hectare cultural district, including open space, arts facilities and transport connections.

Almost 1,350 hectares of rural land next to or surrounded by country parks in Hong Kong - some already in the hands of developers - has no zoning protection. It means owners can build whatever they want within the limits of the land lease. This emerged yesterday as it was learnt that rural leaders, spurred by an outcry over the defacing of a beauty spot on Sai Kung's Tai Long Wan coast, propose establishing a conservation trust to protect valuable sites. Tai Long Sai Wan was made subject to zoning rules on Friday but a government document seen by the South China Morning Post (SEHK: 0583, announcements, news) shows that 1,338 hectares in 53 similar pockets have no such plans. The sites include four listed among 12 sensitive areas in 2004 under a then new nature conservation policy but still lack any zoning or proposals to protect them better. The government earlier listed 77 such pockets of which 54 - now 53 - had no zoning protection but said it was not ready to give details. The Heung Yee Kuk, which represents indigenous villagers, has joined forces with green groups to form a working party on ways to set up a conservation trust. A series of meetings will be held soon on how such a trust could be organised and monitored, and how the funds could be raised and allocated, but there is no timetable for its establishment. The kuk and the green groups have been in talks for five years on how to resolve their differences on rural land preservation, but the latest move was given impetus by the row over excavation at a Sai Wan site by a businessman who bought the land for a private retreat. Environment officials are also conducting what they say is an urgent review on how to adjust conservation policy in response to mounting calls for more protection for the pocket areas. According to the detailed list of the distribution of these areas seen by the Post, the 77 pockets cover 13 country parks and two special areas. Many are both privately and government-owned. After the zoning plan for Sai Wan was gazetted on Friday, 24 of the 77 are covered by statutory zoning plans. The Sai Wan plan virtually freezes all new development in the area, which is left with two artificial ponds created by three diggers believed to have been illegally moved onto the site and which are still there pending government approval for their removal. Of the unprotected pocket areas, the Sai Kung East and West country parks have the most - 18. They are followed by Plover Cove Country Park with 12. There are none on Hong Kong Island. A site at Tai Ho on northern Lantau is the biggest at 277 hectares, while the Luk Wu and Keung Shan area, known for religious temples, is 155 hectares. Pockets recently bought up by developers include Hoi Ha and Lai Chi Chong where development plans remain unclear at this stage. In To Kwa Peng, the construction of small houses has begun after Lands Department approval. On Lantau, plots of land in Tei Tong Tsai were bought by an overseas-registered company, which is building an underground columbarium. A closed-door meeting attended by environment minister Edward Yau Tang-wah was held on Friday with members of the Country and Marine Parks Board to discuss the issues. Officials warn that resources constraints may slow the process of drawing up a zoning plan for the areas, and priority based on an area's accessibility and development threats has to be set out. "If officials believe a pocket faces a real and substantial development threat, high priority should be given," a person close to the meeting said. For areas under a lesser threat, consideration might be given to incorporating them into country parks. Environment and conservation officials are still reluctant to use the Lands Resumption Ordinance to buy the sites with public funds, because of the cost and implications for landowners' rights. Officials have also not made it clear whether the government would set up a conservation trust or fund to buy and maintain valuable sites. In response to questions, Heung Yee Kuk adviser Dr Yau Wing-kwong said a working group had been formed and hailed its formation as a "concrete step forward" towards establishment of a non-governmental conservation trust. "A non-governmental trust will be far more flexible in delivering the jobs than a government one," he said. Yau did not rule out that the trust could be used to buy or lease sites for conservation, support rehabilitation of abandoned farmland or village revitalisation. Green Power chief executive Man Chi-sum said the government should move as quickly as possible to plug planning loopholes in these pockets before they were threatened by developments. "Officials should also change their mentality so that not just those facing imminent threats should be covered by plans. Places that now seem safe also deserve better protection to minimise the possibility of being destroyed," he said. Riding on public sentiment to protect the pocket areas, Man said there had never been a better time to push for stronger planning controls on these sites, but this was a far from perfect and active tool. "What we need is a sustainable solution such as a conservation fund that will not just buy up or lease a site, but also actively manage it," Man said.

West China Cement plans to raise up to US$179 million in a Hong Kong initial public offering, a term sheet seen on Monday showed. West China, the second-largest cement producer in terms of production capacity last year in Shaanxi province, was selling 823.1 million shares, or 20 per cent of its enlarged share capital, at HK$1.21 to HK$1.69 per share, the term sheet said. The company, which plans to delist from London’s Alternative Investment Market, kicked off an IPO marketing road show on Monday, aiming to list in Hong Kong on August 23. The offering price range was about a 1.5 to 29.5 per cent discount to West China’s August 6 closing price on the AIM index, the term sheet said. The price range also valued West China at 5 to 6.9 times prospective earnings forecast for the current year by sponsors.

China UnionPay, BOC Hong Kong launch Shenzhen-HK cross-border autopay service - Dickson So (L), general manager of Bank of China (BOC) Credit Card (International) Limited, and Larry Wang, general manager of China UnionPay's Hong Kong Branch, attend the launch ceremony in Hong Kong, south China, Aug. 9, 2010. Bank of China (Hong Kong) Limited (BOCHK) and China UnionPay jointly launched brand new "Dual Currency Credit Card Shenzhen-Hong Kong Cross Border Autopay Service" on Monday, aiming to provide a convenient cross border payment service for customers who frequently travel between Shenzhen and Hong Kong. HONG KONG August 9 2010 - Bank of China (Hong Kong) Limited (BOCHK) and China UnionPay jointly launched brand new "Dual Currency Credit Card Shenzhen-Hong Kong Cross Border Autopay Service" on Monday, aiming to provide a convenient cross border payment service for customers who frequently travel between Shenzhen and Hong Kong. Cardholders could enjoy the autopay service to pay bills of public utilities, TV, telecom and Internet in Shenzhen, said the bank. Bill payments to designated merchants in Shenzhen include China Southern Power Grid, Shenzhen Gas Corporation, Topway Cable TV, Topway Broadband, China Mobile GoTone and China Telecom and China Unicom Mobile Service, etc., according to BOCHK. General Manager of China UnionPay's Hong Kong Branch, Larry Wang, said as economic interactions between Hong Kong and neighboring Shenzhen grew rapidly, a convenient bill payment service was highly needed. China UnionPay had officially launched the "China UnionPay Cross-Border Payment Service" on Friday, providing a brand new cross border payment platform for all the member institutions, he said. BOC Credit Card (International) Limited General Manager, Dickson So, said the cross border autopay service was one of BOCHK 's projects dedicated to enhancing Guangdong-Hong Kong co- operation. "In the course of promoting the Guangdong-Hong Kong co- operation, we always keep a close eye on the market demand and customer needs. We continue to learn from experiences and enhance our services, while committed to serving our customers better with quality services and innovative products," he said. According to BOCHK, cardholders can register their Dual Currency Credit Card at any of the 1,000 bank branches available in the designated POS Bank Network of Shenzhen Bankunion Easy Business Solution Financial Service Limited in Shenzhen for the autopay service. A service fee of 8 Chinese yuan (1.2 U.S. dollars) will be applied for every transaction. And before Feb. 28, 2011, cardholders can enjoy a waiver on the bill payment service fee. BOCHK, established on Oct. 1, 2001, is a leading listed commercial banking group in Hong Kong. It is also one of the three note issuing banks in Hong Kong. With over 270 branches, 510 ATMs and other distribution channels in Hong Kong, BOCHK offers a range of financial products and services to individual and corporate customers, said the bank. BOCHK is appointed by the People's Bank of China (the central bank) as the Clearing Bank for Renminbi business in Hong Kong. Last month, BOCHK was authorized as the Clearing Bank of RMB cashnotes business for Chinese Taiwan. China UnionPay, established in March 2002, is a bankcard association under the approval of the State Council (the cabinet) and the central bank. At present, Shanghai-based China UnionPay has 36 branches in China, and has opened more than 10 overseas representative offices and branches. China UnionPay has about 300 domestic and overseas associate members and has engaged in cooperation with more than 100 global financial institutions.

Zhang Ning (L), former Olympic badminton champion shakes hands with a girl in Hong Kong Institute of Education, Hong Kong, south China, Aug. 9, 2010. Seven former Olympic medalists visited Hong Kong on Monday.

One of the New World First Bus fleet stops in Gloucester Road, Wan Chai, on Monday. New World First Bus said its bus services were operating normally on Monday morning - despite some of its drivers going on strike.

Unionists assemble at the company's depot in Chai Wan to voice their claim for a 2.2 per cent pay rise. Some unionists among New World First Bus drivers are considering a prolonged battle with their employer - a tactic their pan-democratic parent union used in 2007 that helped it achieve its demands and gain ground against a rival union. The New World First Bus Company Staff Union, an affiliate of the Confederation of Trade Unions, said it would continue its strike today despite poor participation yesterday. The CTU's Citybus Employees Union will continue its work-to-rule. The CTU's Kowloon Motor Bus Staff Union, meanwhile, will also continue its action, in which drivers stay an extra 10 seconds at each bus stop. The First Bus staff union's chairman, Chung Chung-fai, said drivers would review the situation tonight to see whether the action should continue until the company meets their demand for a 2.2 per cent pay rise - instead of the 1.8 per cent accepted by the CTU's rival, the bigger and more powerful Federation of Trade Unions. The difference in pay is about HK$40 a month on average, but CTU unionists say that much more is at stake. It is a chance for the smaller union to win over FTU members and employers' recognition, which could in turn boost its status and bargaining power. Only 77 New World First Bus drivers took part in the strike yesterday, well below the union's estimate of 600.

Another Hong Kong yoga chain has closed on Monday due to financial difficulties. Beauty Yoga, a chain which opened in April and had yoga centres in Tuen Mun and Sheung Shui in the New Territories, announced it had shut down due to cash flow problems. More than 30 members have pre-paid membership fees ranging from few thousand dollars to over HK$20,000. Most customers were female, aged 20 to 50 years old. They said they would report the case to police, local media reported. One member, who has already paid HK$10,000 in fees, said she was not surprised by the news. “On Sunday, I heard the yoga instructors saying the company owed them a few months' salary,” she told local media. It is the third yoga chain to close in Hong Kong this year. Planet Yoga – a yoga chain with three outlets and 13,000 members – closed suddenly in May, after Yoga Yoga International in March.

 China*: Hu's US visit delayed amid raised tension - Beijing postpones preparatory talks - President Hu Jintao's long-anticipated visit to the United States now looks unlikely to happen any time soon, as Beijing has postponed preparatory talks with Washington amid heightened tensions between the two nations. Hu has twice "happily" accepted President Barack Obama's invitation to visit the US some time this year. While the two sides have never formally announced a date for the trip, it was widely understood in diplomatic circles that both countries wanted it to take place next month. Chinese diplomats with knowledge of the situation said the two governments originally hoped to complete preliminary negotiations by lower-level officials around now and finalise the deal by the end of this month. The talks are an essential part of preparations for Hu's visit. However, the relationship between the two powers has deteriorated fast in recent months. They have bickered over North Korea and the South China Sea. Beijing now believes the US is trying to contain it in Asia, and views America's challenge to its sovereign rights over the South China Sea as an infringement of China's "core national interest". "So far, diplomats at the lower level have not completed their negotiations, and no further talks have been arranged in the coming weeks, so a visit by the president next month is highly unlikely now," one of the Chinese diplomats said.

Huge potential seen for China Post-Tom venture - China Post and Tom Group aim to create the biggest e-commerce services provider on the mainland. More than a decade since it was founded during the short-lived dot-com boom, Tom Group (SEHK: 2383) appears to have landed a deal that could anchor its future growth. Tom, the diversified Chinese-language media arm of Li Ka-shing's business empire, last week announced a joint-venture agreement with China Post that aims to create the mainland's biggest e-commerce services provider. That venture, Beijing Ule E-Commerce, will be formally unveiled in the capital today, creating an industry benchmark for the fast-growing online retail market. Its potential is certainly huge, based on the sheer scale of China Post's existing infrastructure. It is the kind of nationwide set-up that major domestic shopping platforms, such as Taobao and Amazon China, do not possess. With a network of 46,000 post offices, 36,000 Postal Savings Bank branches, 150,000 workers, 56,000 delivery vehicles and 17 aircraft, China Post will provide the sales channels, warehousing, logistics support and transaction fulfilment for its 51 per cent-owned joint venture. "E-commerce is a natural step forward for China Post," Tom chief executive Ken Yeung Kwok-mung said. "The joint venture will target a lot of brand-name manufacturers that do not have the capacity to do e-commerce across the country or in a specific city or region." Launch customers of the Ule shopping platform will be led by Nike, Adidas, Samsung Electronics, Avon, Shiseido, Giordano (SEHK: 0709) and LG Electronics. Tom, through its Shenzhen New ECLink subsidiary, is the joint venture's exclusive information-technology systems provider. It has also committed to investing 200 million yuan (HK$229.38 million) in marketing and promoting the Ule platform nationwide. Yeung said he was well aware of what critics, and possibly competitors, were saying about the venture on various mainland blog posts. "They doubt that a state-owned enterprise like China Post can execute this strategy. They said China Post knew logistics, but didn't know e-commerce. They also doubt Tom will be able to leverage all these resources," Yeung said. "They will be surprised." Analyst Chen Shousong of research firm Analysys International said China Post, apart from its logistics expertise, "has the advantage of call-centre operations and strong distribution outlets that cover difficult-to-reach lower-tier cities and rural areas". "Tom also has a good understanding of online shoppers based on its experience with Eachnet." Eachnet is the only mainland e-commerce platform that offers imported Taiwanese food products through a deal with the Taiwan External Trade Development Council. Tom runs the site, which was originally acquired by eBay in 2003, under a 2006 joint venture with the US online auctions giant. However, Chen said the China Post-Tom venture "will not have a significant impact in the short term on the domestic online retail sector", which is forecast this year to reach 404.8 billion yuan - about 2.85 per cent of the country's total retail market. More than 1,000 China Post outlets in 18 cities across Henan province will initially support the Ule shopping platform. Goods from more than 1,500 merchants can be bought, accessed through a phone-order service hotline and through gift cards distributed nationwide. Yeung said the market might have had some difficulty grasping Tom's vision as it made strategic acquisitions, secured key alliances and fine-tuned operations over the past 10 years, but that was about to change. How Tom employs all its expertise in the new joint venture may help forge its identity over the long term. "We have an opportunity to open up China Post's resources to the rest of the world," Yeung said.

Wails of grief echoed through a town half buried by a landslide two days ago, as relatives washed mud-covered bodies pulled from the ruins and desperately hunted for survivors.

A Chinese warship arrives at Pireaus Port of Greece, Aug. 9, 2010. Two Chinese naval warships destroyer Guangzhou and frigate Chaohu, which are part of the fifth Chinese naval escort flotilla, arrived on Monday at Pireaus Port for a visit to Greece.

Soong Ching-ling (1893-1981) was the Vice President of the People's Republic of China. In 1915, She married Sun Yat-sen, a great revolutionary and statesman, who led the 1911 Revolution that overthrew the imperial Qing Dynasty (1644-1911). Soong spent most of her time and energy in maternal and pediatric health care, preschool education and other women and children's issues. The former residence of Soong Ching-ling locates on the north bank of the scenic Houhai, or the Rear Lake, in downtown Beijing. The residence was once a garden of one of the Qing Dynasty's princes' mansions. Covering more than 20,000 square meters, it is a quiet and exquisite courtyard. Soong moved to this mansion in April 1963, she worked, studied and lived here until she passed away in 1981. The state council listed Soong's residence as a key historical and cultural relic under state protection in 1981. So far more than 3.5 million people home and abroad have visited the former residence of Soong Ching-ling.

Rupert Murdoch’s News Corp said on Monday that it will sell control of its three mainland TV channels to a fund backed by the country’s No 2 media company, in a pullback from the market after years of difficulty. The deal would see China Media Capital acquire a controlling stake in News Corp’s Xing Kong, Xing Kong International and Channel Mainland China channels, along with its Fortune Star Chinese movie library, News Corp said in a statement. Established last year, China Media Capital is a private equity fund with 5 billion yuan (HK$5.72 billion) in assets under management and a focus on investments in the media industry. It is backed by Shanghai Media Group (SMG), the country’s No 2 media company and the dominant player in Shanghai, as well as China Development Bank and China Broadband Capital. The move could mark the beginning of a wind down for News Corp in the mainland’s tightly controlled media market, which has proved highly frustrating to the company and its western peers after numerous limitations and restrictions by Beijing. The terms of the deal were not disclosed, but the three channels combined were generating no more than US$50 million annually in revenue at the time of the deal, said Vivek Couto, a media analyst at Media Partners Asia. “News Corp, after two decades in China, has done the inevitable in the last few years,” Couto said. “They see the best option to grow in the market is to make sure the business is in control of local hands.” Couto predicted that China Media Capital could eventually sell off the company, or even take it public. “This partnership is an extension of our long-term cooperation with News Corp,” China Media Corp chairman Li Ruigang, who is also president of SMG, said in a statement. “The entry of Chinese capital into the international media market will help facilitate its changes and development. Today’s agreement represents a first step into that direction.” News Corp and global rivals like Time Warner and Viacom held out great hopes for the mainland when they launched TV channels there starting in the late 1990s, hoping to attract mass audiences in a nation with 1.3 billion potential viewers. But their efforts have been met largely with disappointment, as the mainland has limited their mass distribution largely to the southern province of Guangdong and strictly limited their ability to attract audiences in other parts of the country. A year ago, News Corp conducted a major overhaul of Star TV, its Asia flagship based in Hong Kong, in a move that many saw as acknowledgement of the company’s growing emphasis on India and its lack of progress in the mainland.

Aug 10, 2010

Hong Kong*: Owning a car has not lost its appeal to those who can afford to buy one. The growth in the number of private cars has continued unabated for the past two decades - and it has accelerated in the past three years. The latest traffic census shows more than 10,000 licensed vehicles have been added to the city's roads every year since 2007, and in May the number of private cars passed 400,000 - more than two-thirds of all vehicles in Hong Kong. With an ad-hoc cross-border vehicle licensing scheme coming into place and the opening of more roads and bridges, the number of private cars can only rise further. In time, the increase will come not from local vehicles, but mainland cars under a mutual agreement between Guangdong and local authorities over the opening of the border for vehicles from both sides travelling on temporary permits.

Plain packaging of cigarettes is among options the government is looking at to exert further pressure on the tobacco industry following a ban on duty-free cigarettes and extensions to smoke-free areas. But authorities will first draw on overseas experience, including in Australia, which in April became the first country to pass plain-packaging legislation for tobacco. Under the Australian law, tobacco companies will only be able to print their brand names in a standard font, colour and size on cigarette packages from July 1, 2012. The only picture that can appear on the package is a graphic health warning. Tobacco Control Office head Dr Ronald Lam Man-kin (pictured) said academic studies proved that plain packaging successfully reduced some people's urge to smoke. "This is one of the directions we will keep in view. We understand that it will involve many issues, such as trademark and copyright, so we will learn from overseas experience first," he said. Dr Judith Mackay, senior adviser to the World Lung Foundation and a policy adviser to the World Health Organisation, said plain packaging could de-glamorise smoking by removing recognisable colours, logos and inducements to smoke from the packet. She expected that it would be hard to implement such a policy in Hong Kong, because it would probably face a legal challenge from the tobacco industry. "But if the tobacco industry protests, it must mean that the law would have an impact. If the industry doesn't `scream', then a measure is probably not worth taking," she said. Tobacco Association of Hong Kong executive secretary Deanna Cheung Kin-wah declined to comment on the issue, because the government was only at a very preliminary stage of considering the possibility of imposing plain packaging in the city. As well as plain packaging, the office will also examine outdoor smoking bans. Lam said that, for example, in Singapore and Canada, smoking was forbidden outside within a certain radius of building entrances. But he said as that would involve the interests of many parties, the idea was preliminary and they would now "keep a close eye on international developments". He said Hong Kong's tobacco control efforts were working well, as indicated by a University of Hong Kong survey in January and February. Of 1,383 people polled, more than 90 per cent supported the smoking ban, and more than 70 per cent said they inhaled less second-hand smoke in bars and clubs since the extension of the ban to six types of entertainment venues last year. The survey included 359 smokers, of whom 38 per cent said they smoked less or had given up in the past year. More than half of those who said they smoked less said it was because the smoking ban had made it inconvenient to continue the habit, while 32 per cent said it was because of the 50 per cent increase in tobacco tax last year. Lam's comments came days after the government implemented a ban on duty-free cigarettes at all border controls last Sunday, and ahead of the extension of the smoking ban to 129 outdoor transport hubs on December 1. To prepare for the ban, the office will offer talks to station managers in the coming months, briefing them on the exact borders of the smoke-free areas under their management. Lam said these managers would not be responsible for prosecuting smokers, as this was the job of tobacco control officers. The ban is an extension to last September's measure, which prohibited smoking at 48 covered transport interchanges. Lam said the office had received 416 complaints about smoking at these hubs since September and issued 159 fixed-penalty tickets.

Hong Kong is bracing for commuter chaos today as bus drivers stage their first strike in 21 years - all for an average of just an extra HK$40 a month. Bus drivers have long threatened to strike during wage negotiations with their employers around this time every year. At worst, the drivers previously have resorted to working to rule to press their case. This time, though, one of the unions says it is fighting for more than just HK$40 a month and that conflict will arise every year unless the bus companies change their negotiating tactics.

Ming-era porcelain factory left to rot in undergrowth - Land dispute stymies conservation plan for Tai Po site - The Conservancy Association's Peter Li examines relics on the Wun Yiu kiln site left to the elements. Part of the site is private land subject to villagers' claims to build small houses. A porcelain kiln site in Tai Po that once thrived during the Ming and Qing dynasties has suffered neglect and damage over six years since a conservation plan was shelved because of land ownership problems. With no protection other than a wire fence, the Wun Yiu kiln site, on densely wooded slopes, lies exposed to the weather. A visit by the South China Morning Post (SEHK: 0583) last week after recent heavy rainstorms found fresh abrasion marks on the slopes, and pieces of porcelain bowls and plates scattered around. Some pieces were apparently washed down the slope from within the fenced area, which was declared a monument in 1983. A hole had been cut through the fence large enough to let a person enter. There was no watchman and people could tread on hundreds of pieces of bowls lying outside the fenced area, or even take them away. The 1,500 square metres of government land fenced in is only 3 per cent of the old porcelain factory's five hectares, which includes private land. Apart from a handful of porcelain samples and display boards in the adjacent Fan Sin Temple, little information is available on the site. Archaeological investigations at Wun Yiu in 1995 and 1999 discovered key elements of porcelain production, including clay quarrying pits, water mills, an animal-driven grinder and clay-soaking tanks. The excavation also found 5,000 to 6,000 pieces of broken bowls, plates, basins, incense holders and other items. The Man and Tse clans started the industry in Wun Yiu in the 1430s in the Ming dynasty, employing hundreds of workers and exporting products to Southeast Asia. It thrived until the 1930s, when competition from machine-made wares killed it. "It was a very big factory ... It's proof that Hong Kong was not just a fishing village but an important crafts hub," an archaeologist wrote in a 2000 publication of the Leisure and Cultural Services Department. Conservancy Association campaign manager Peter Li Siu-man said he had written to the government to call for better protection. "The community has higher aspirations for heritage conservation than before," he said. "It's time the government revisited the shelved museum plan." The plan dated to 2001 when the defunct Culture and Heritage Commission, a high-level advisory body, proposed a Wun Yiu site museum "of regional to world-class importance". In a reply to the Post, the Antiquities and Monuments Office said it inspected the kiln site on July 28 and had already arranged for repairs to the broken fence. The office said minimal intervention for underground remains was "normal conservation practice", but it admitted a conservation plan had been shelved because villagers had not shown support for it. The plan, introduced in 2004, recommended a minimum-intervention approach for the relics, development of a heritage trail and conversion of a nearby abandoned school into an on-site display centre. "The villagers strongly indicated that the AMO should not implement any measures unless their village small house applications could be resolved," the office said. Tai Po Rural Committee chairman Man Chen-fai said he did not understand why the stalemate had continued for years. "We do not object to conservation, but the conservation zone should not cover areas already zoned for village houses. If it is the case, there should be compensation," Man said. Peter Li said the government should come up with a policy for dealing with heritage and ecological sites on private land, because land ownership had repeatedly been an obstacle to conservation. The chairman of the city's Archaeological Society, Cheng Kai-ming, said Wun Yiu was a pillar of Hong Kong's early industrial development and deserved much better protection than it was getting. "The government should pay attention not just to historic buildings but also to archaeological sites. Wun Yiu makes an ideal on-site museum that can appeal to tourists, with all its history and relics," Cheng said.

The cautious chief of HSBC Asia-Pacific - A celebrity maybe, but Peter Wong plays safe - Peter Wong has the rare distinction of having his signature on both HSBC and Standard Chartered banknotes. Peter Wong Tung-shun, HSBC (SEHK: 0005, announcements, news) 's Asia-Pacific chief executive, is something of a reluctant celebrity. He is known not only as the face of the bank in Hong Kong, or because his signature is on both HSBC banknotes and notes issued by Standard Chartered, where he headed local operations until 2005. He is also a housewives' favourite. Hong Kong's Chinese-language newspapers commonly refer to Wong as "The banking Tony Leung" - "yin hang Leung Chiu-wai" in Cantonese - because of his strong resemblance to the handsome, if somewhat mature, Hong Kong actor. Wong does not appear to like this subject. Normally, he is a model of composure, with an expression that shifts subtly between benign smile and twinkly grin. But at the mention of that Tony Leung issue, he squirms ever so slightly in his seat. "How did you know about this?" he asks, looking horrified for a split second. "Who told you?" HSBC's non-Chinese staff are probably not aware of Wong's heart-throb status, and one suspects he would prefer to keep things that way. Still, he is used to the attention. Wong has been stared at in Hong Kong's streets since 1984, when, as the head of Citi's local mortgage business, he starred in a three-month series of television ads promoting the American bank's home loans. "I was forced to do it," he says. "I did not want to." Apart from its sweeping view of Hong Kong's skyline, Wong's office is definitely not show-off territory either. He loves golf, and there is a framed photo of him standing next to Tiger Woods at a tournament, looking chuffed. But there is no antique furniture or extravagant art. The calligraphy painting on his wall is by his friend Tang Shuangning, the chairman of China's Everbright Bank and a somewhat well-known calligrapher. Despite his obvious humility, Wong has a very big job to do. Last week, alongside unveiling first-half profits that more than doubled to US$6.76 billion compared with the same period last year, the bank's chief executive Michael Geoghegan said he would channel the bank's resources towards growth in Asia. So, for this latest phase of HSBC's development, Wong is firmly in the driving seat. Expect him to drive carefully.

HSBC Holdings (0005) today launches its first yuan certificates of deposit to meet the growing demand for yuan- denominated products. Subsidiary Hang Seng Bank (0011) is also introducing yuan CDs today after announcing the move last week. HSBC's six-month CD for a minimum of 50,000 yuan (HK$57,339) offers an interest rate of 2 percent per annum. The yield is on par with Hang Seng's retail CD that carries progressive rates of up to 2.25 percent per annum. owever, it is higher than HSBC's own preference rates of up to 1.41 percent per annum for new time deposits, ranging from three to 12 months, according to an HSBC spokeswoman. Previously, only private banking clients could enjoy a rate of 2 percent per annum by subscribing to a one-year yuan institutional CD worth at least 500,000 yuan, issued by CITIC Bank International and underwritten by HSBC. Analysts said the liquidity of CDs gives them an edge over time deposits. "Normally, you get your interest together with principal only when a time deposit matures," said Daniel Chan Po- ming, BWC Capital Markets chief economist. "But you can sell CDs to a bank or a third party [before maturity]." But Chan also noted that the secondary market is currently immature. He said the two large lenders are willing to offer higher rates amid competition caused by increased interbank and investment uses for the yuan. Terence Chong Tai-leung, associate professor in Economics at the Chinese University, said HSBC and Hang Seng may suffer losses at this stage just to capture market share from BOC Hong Kong (2388). He said the lower threshold of 50,000 yuan can give retail CDs a wider reach than comparable institutional products. Chong believes the regulated interest rate levels in the mainland will cap local yuan products' returns. Haitong's assets management arm will today announce details of the first retail yuan fund in SAR. The threshold will be 10,000 yuan and investments will center on yuan-denominated bonds. Hang Seng Bank earlier applied to the Securities and Futures Commission for a yuan-denominated retail fund, with an expected threshold of 20,000 yuan.

 China*: China has ordered more than 2,000 companies in 18 industries including cement, coking, iron, paper and dyeing to shut outdated manufacturing capacity by the end of September, state media said on Monday. The factories targeted for closure were either highly polluting, highly energy-wasting, or did not meet safety requirements, the Ministry of Industry and Information Technology announced in an order on Sunday, the Shanghai Securities News and other official newspapers reported on Monday. Firms that fail to comply with the orders could face penalties including having their sewage treatment licences revoked, lending curbs, or even having their business licences withdrawn, it said. “This is what we call ‘supply-side adjustment’,” Qing Wang, an economist at Morgan Stanley in Hong Kong, said in an e-mailed comment. Such adjustments will likely have a direct impact in terms of weaker readings for key economic indicators including industrial production and power usage, but do not indicate a deterioration in the country’s economic fundamentals, Wang said. “This is because closing down inefficient, polluting enterprises have fundamentally different implications to a sharp slowdown in investment, consumption, or exports caused by demand shocks.” The nation, faced with serious environmental problems and pressure on resources, has been seeking to upgrade its manufacturing sector, implementing stricter energy efficiency and pollution targets and forcing the closure of wasteful capacity. Beijing has pledged to cut nationwide energy intensity – the amount of fuel needed to generate each unit of gross domestic product – by 20 per cent within five years, from the 2005 level. The latest data suggests energy intensity fell a total of nearly 16 per cent in the past four years, putting its five-year target within reach. The companies affected by the latest curbs include the parent company of Guangxi-based Liuzhou Iron and Steel and a cement-making unit of Jilin Yatai (Group) Co, which is based in the northeast of the country. In a parallel initiative, the industry ministry is working to consolidate the steel sector by closing small mills and raising production standards, focusing on shutting mills that produce less than 1 million tonnes of crude steel or 300,000 tons of higher-end steel a year.

China marks Beijing Olympics 2 years later - Volunteers present flowers at the sculpture of the late honorary life president of the International Olympic Committee (IOC) Juan Antonio Samaranch, during a ceremony to open a commemorative exhibit for Samaranch in front of the National Stadium, known as Bird's Nest, Aug 8, 2010. The day marked the two-year anniversary of the opening of the Beijing Olympics.

They make up the 200-million-strong workforce in the nation's manufacturing heartlands and have been known for decades for their diligence, tolerance and plain living. So why are the migrant workers on the mainland still so poor after close to three decades of double-digit economic growth? Chen Xingping, a 45-year-old cleaner from Sichuan who earns 1,200 yuan (HK$1,375) a month mopping the marble floors of a Shenzhen department store frequented by the city's Prada-wearing elite, says he doesn't have an answer to that question. Mainland sociologists blame unreasonably low statutory minimum wages and heavy taxation that offer little in the way of social welfare protection.

A visitor takes the speedslide at the new water park at the National Aquatics Centre, better known as the Water Cube, in Beijing. The park opened yesterday as Asia's largest indoor water park to coincide with the two-year anniversary of the start of the Beijing Olympics.

Red ribbon leads AIDS orphans to summer camp - Zhang Ziyi poses for photos with camp members after presenting them gifts at an opening ceremony of a summer camp for AIDS orphaned children in Beijing on Sunday. - Super stars of sports and art littered an opening ceremony for a summer camp where 100 AIDS-orphaned children would kick off a five-day tour from the Bird's Nest in Beijing on Sunday. The tour, organized by China Red Ribbon Foundation (CRRF), a non-government organization (NGO) is aimed at calling for more efforts and support from all social sectors to help AIDS left orphans, whose parents have lost their lives to or suffering from HIV AIDS. Huang Mengfu, deputy chairman of the Chinese People's Political Consultative Conference (CPPCC), china's top advisory body, and honored chairman of the Foundation said at the ceremony that the society must give equal care to the AIDS-affected children to their peers. China's renowned Hollywood actress Zhang Ziyi was awarded the ambassadorship of the foundation. Zhang said her newly-shot film the legend of Magic gave her a further understanding of AIDS sufferers. "I have a taste to communicate with AIDS people by myself by co-staring with a AIDS infected boy in the film and now I further understand the importance to respect and help this group of people," Zhang said. The film depicts the love story of two AIDS sufferers starred by Zhang and Hong Kong star Aaron Kwok (Guo Fucheng). The 100 camp members come from Shangcai county of Henan province and Liangshan Yi Autonomous Prefecture of Sichuan Province, where the Foundation established a project respectively to accommodate and give education to the children. The foundation hoped to raise fund the worldwide by inviting more world-renewed celebrities like Zhang to this platform. The tour also includes a wandering at the Shanghai expo to let the children have a taste of the national event joy. The foundation is funded by founding enterprises and other individuals. Sunday marks the two year anniversary of the opening the Beijing Olympics. Former Olympic diving champion Tian Liang and swimming champion Qian Hong attended the ceremony to give the campers an Olympic inspiration.

Five years ago, many Chinese regretted they had not invested in the stock market. A year ago, many regretted they hadn't bought more flats. Today, they're wishing they had the cash to collect antiques and paintings. While the mainland stock market remains sluggish and the housing market waned after harsh government policies were adopted to slash sky-high property prices earlier this year, art has attracted the investment interest of entrepreneurs. Poly International Auction, a top auction house on the mainland, saw a turnover of more than 3.3 billion yuan (HK$3.78 billion) in its spring auction this year, the highest total for Chinese artworks in one season. And the spring sales of Sotheby's Hong Kong set a record of about HK$2 billion, exceeding its trading volume for all of last year.

Lovers of Chinese tea can expect another price increase due to a poor harvest as a result of extreme weather on the mainland since the end of last year. Other factors are the growing demand in affluent mainland cities for top-quality tea, and a strong yuan, which is expected to appreciate more, some of the city's leading tea houses say. In April and July, retail prices of a variety of Chinese teas rose by 30 to 50 per cent. LongRun Tea Group said the price of its pu-erh, would rise by about 10 per cent next year to reflect the poor harvest in Yunnan , which was struck early this year by the worst drought in 60 years. Group vice-president Colman Chiu Chun-pong said the best pu-erh was kept for years before being sold so there was usually a time lapse for price increases. But the retail price of the popular dark tea had already risen by five to 10 per cent this year from last year due to the overall increase in the price of tea leaves. He said the extreme weather in different areas across the country had undermined harvests and raised the cost of tea leaves by about 30 to 50 per cent this year. But Chiu said his company had increased prices by only about 20 per cent instead of completely shifting the extra cost onto customers. Vivian Mak Wai-lan, director of the MingCha tea house, which supplies tea to luxury hotels and targets high-end retail outlets like Seibu, says the overall supply of tea had halved this year. This, and the strong yuan, would force MingCha to raise the retail price of one of its top teas, Phoenix Oolong, next year by about 23 per cent from HK$260 for 55 grams to HK$320. In April, the tea house raised the price if its top-grade tea, Premium Loong Cheng from HK$1,280 for 90 grams to HK$1,880. Mak said strong demand for Chinese tea in affluent mainland cities had also pushed up the price. "Don't think the premium grade tea is mostly for Hong Kong people - this is no longer the case. Nowadays, mainland customers look for the top-grade items and are willing to pay. To us, the major headache is to source the top-grade tea leaves instead of really being concerned about the price," she said. But Mak said the company had taken on most of the extra costs to avoid upsetting customers. "Bear in mind that a lot of our customers are hotels, so we have to keep our price stable," she said. One of the city's oldest and best known tea houses, Ying Kee, is also feeling the pinch. The retail price of its supreme Loong Cheng, a top grade of green tea, has risen 35 per cent from HK$280 for 75 grams to HK$380 since April due to cold weather, frost and snow in Zhejiang during early March. Similarly, the retail prices of rosebud have risen to HK$80 for 75 grams this year from HK$60 last year. The retail price of chrysanthemum tea rose from HK$20 for 75 grams to HK$30. Like MingCha, Ying Kee said it was cautious about raising its price to avoid driving away long-time customers. "Of some 50 tea products, we have selected only about one-third to increase the price and hope that we can boost the sales of other products to make up the extra cost," a Ying Kee spokeswoman said. Thomas Woo Chu, executive managing director and general manager of the Hsin Kuang Restaurant chain, said his restaurants had bought up three times the normal stock of tea leaves since early this year once he heard of a possible rise in prices. Pu-erh and Pheony are the chain's most popular teas. "Our regular customers who come to have tea and dim sum would easily spot it if we change to a lower grade of tea leaves for a cheaper price, so we insist on not doing so. Once we heard of a possible rise in tea leaves, we tried to source tea leaves everywhere so that the extra stock could last for another six months to one year," Woo said. "Hopefully, tea prices will be stable by then."

China's burgeoning dairy industry is expanding into the clean green pastures of New Zealand as it seeks to put the melamine poisoning scandal behind it. The country of four million in the Southern Pacific - which brands itself and its produce as "pure" - is seen as the perfect investment opportunity for an industry that was hard hit by the melamine scandal in 2008. Mainland-backed Bright Dairy and Natural Dairy (NZ) Holdings are both eyeing New Zealand's dairy assets, and the scale of foreign investment in the country's most profitable sector is raising eyebrows. It is not hard to see why mainland players are looking offshore. In 2008 milk powder produced by Sanlu Group was found to have been adulterated with the industrial chemical melamine, causing the deaths of at least six children and making more than 300,000 others ill. The melamine scandal was one of several "incidents" in China's food sector in recent years. Mainland food producers' use of pesticides and other chemicals has also come under fire. Ironically, Sanlu, China's third-biggest dairy producer, had a New Zealand partner, dairy giant Fonterra, which held a 42 per cent stake. Sanlu was declared bankrupt in December 2008. Fonterra is the world's largest dairy exporter, with between 33 per cent and 40 per cent of the global market. It is New Zealand's largest business and accounts for a large chunk of the country's gross domestic product and foreign exchange earnings. The two new entrants into the New Zealand market are very different companies. Bright Dairy, China's third-largest dairy operator in terms of volume, is 65 per cent owned by Bright Food (Group), a state-owned company based in Shanghai. Bright Dairy was the first mainland dairy producer to venture offshore. Last month it announced a 382 million yuan (HK$438.07 million) investment in New Zealand's Synlait by taking a 51 per cent stake. Synlait, 22.5 per cent owned by Japan's Mitsui, said Bright Dairy would only focus on the processing business. Analysts said Bright Dairy was putting its brand on the finished product of Synlait, as a way to restore the trust of mainland customers. The deal gives Synlait access to the huge China market where Fonterra chief executive Andrew Ferrier expects demand to triple over the next decade, to be worth about US$70 billion. But they warn that Chinese consumers' trust in locally produced milk products has been shaken and will not be restored overnight. "It will take quite a long time for the industry to get sales back to the level they were at before the melamine scandal," said analyst Wang Jianhui at Southwest Securities. "Consumers' trust and confidence will recover only after the government sets up a more comprehensive monitoring system for food safety." Bright Dairy reported net profit of 122 million yuan last year, bouncing back from a 286 million net loss in 2008, but some analysts remained sceptical. "[Its] 2009 sales growth remained unexciting," Goldman Sachs analyst Deng Yifan wrote in a report. "[That] implies bumpy expansion in the post-melamine scandal era." The Synlait acquisition, which hinges on regulatory approval, offers Bright Dairy good quality sources of milk powder and infant formula. While the 382 million yuan is not a big cash investment, it is an important step for Bright Dairy. While Bright Dairy's foray into the New Zealand market has met with little or no criticism, a separate deal involving Natural Dairy, formerly a Hong Kong-based engineering company, is meeting more resistance. The receivership of a group of farms controlled by the Crafar family has raised fears of deep-pocketed Chinese bidders buying prime New Zealand real estate. UBNZ Assets Holdings - which is 20 per cent owned by Natural Dairy - agreed in May to buy 16 Crafar dairy farms. Natural Dairy has applied to buy the remaining 80 per cent of UBNZ Assets, which already owns four farms purchased from the Crafar family interests in February. That has brought the deal to the attention of the Overseas Investment Office (OIO). which is studying Natural Dairy's bid. "The Government has very suddenly woken up to the concern that the upside from the dairy industry - which is considered economically vital to New Zealand's future - might be lost to other players if this country does not hurry up and get its act together," wrote business commentator Fran O'Sullivan in the New Zealand Herald last week. "The dairy industry is responsible for around 25 per cent of exports and has the potential to be a strong long-term economic growth driver for New Zealand as global demand gradually grows on the back of a snowballing world population." Prime Minister John Key questioned the rising tide of foreign money flowing into the sector last month. "If we ended up in a position where New Zealanders are tenants in their own country, I can't see how that would be in New Zealand's best interests," he said. The plan has also drawn criticism from both the Green and Labour political parties. But Natural Dairy vice chairman Graham Chin said people "need to keep a sense of proportion". "In the last 12 months the OIO has approved the sale of 80,000 hectares of land to foreign interests, our OIO application only relates to the purchase of just 8,615 hectares out of more than 2 million hectares of dairy farmland in New Zealand. It involves only 25,000 cows in a national herd of around 5 million cows," he said in a statement. Federated Farmers president Don Nicolson said he could see why foreign investors were drawn to the dairy sector, which had massive potential.

The World Expo in Shanghai celebrated its 100th day of operations yesterday, coinciding with the second anniversary of the opening of the 2008 Beijing Olympics. But while the Olympics' jaw-dropping opening ceremony remains fresh in many people's minds, the expo - with 84 days to go - is rapidly fading from Shanghai's collective consciousness. The entire city was scrubbed clean and residents were on their best behaviour for the expo's opening on May 1; now the grime and bad habits seem to be sneaking back. Like the Olympics, the expo was billed as a game-changing international event, one that would elevate the city's status and living standards, and instil a heightened sense of civic pride. When the city won the hosting rights way back in 2002, a massive propaganda campaign was launched intending to ensure locals would behave in a "civilised" manner to match the massive investment in transport infrastructure and renovation of old buildings. It was a relatively simple task for Beijing to keep the capital spick and span for the 17-day Olympics. Shanghai officials have realised that keeping nearly 20 million people enthused about a six-month-long expo is another matter entirely. Privately, some of them admit that it is proving difficult to maintain public interest for an event over such a long period of time. The picturesque, tree-lined backstreets of the French Concession are awash with litter, particularly once the sun has gone down. An army of street-sweepers toils against the tide, seemingly round the clock, as food stalls and fruit vendors simply deposit their junk on the pavement outside. The expo site has become known for its massive queues, with visitors waiting patiently for hours on end to get into the various national pavilions. Locals witnessing examples of undesirable behaviour invariably blame it on uneducated tourists from the countryside or recently arrived migrants - conveniently turning a deaf ear when the offender is speaking in Shanghainese. The situation within the expo park is not a whole lot better, either. Even official media outlets have started recounting tales of visitor misconduct - even tourists urinating inside national pavilions, despite the toilets dotted around the site. Pavilion staff recount similar tales - and worse - with a strange mixture of glee and revulsion. But expo misbehaviour isn't limited to domestic tourists. An Italian couple were apparently recently politely asked to leave after they were spotted copulating on the grounds of one European pavilion. And what about Shanghai's trademark pyjamas? The municipal government spared no effort promoting the idea that residents wearing nightclothes on the street didn't conform to the image of a "cultured city" that officials were keen to project. In the months leading up to May 1, acres of newsprint were devoted to this subject alone, and a host of grass-roots initiatives were implemented to try to stamp out the supposedly backwards practice. Endearingly - and to the relief of those who celebrate diversity - nobody has taken a blind bit of notice.

Outdoor advertising company Clear Media (0100) saw first-half net profit surge by 172 percent to HK$77.3 million, thanks to growing mainland consumption and the opening of the Shanghai World Expo. "To facilitate the Shanghai World Expo, the group has added 3 percent more bus shelters in Shanghai. Revenues from Shanghai rose by 42 percent to HK$92 million in the first six months," said chief operating officer Harrison Zhang. Revenue at the company rose by 11 percent to HK$585 million. No interim dividend was offered. Chief executive Han Zihing forecast a strong performance in the second half as well, especially since orders so far have already reached 80 percent of the annual target. Meanwhile, revenue from the bus shelter business in Guangzhou declined by 7 percent to HK$74 million. This came as Clear Media relocated bus shelters and dismantled around 4percent of them for November's Asian Games in the city. But the firm has already raised Guangdong selling prices by about 20 percent ahead of the Games.

Aug 9, 2010

Hong Kong*: Indonesian and Hong Kong government officials have moved to address the imprisonment and exploitation of Hong Kong-bound Indonesian domestic workers at recruitment agencies. The moves come after a Sunday Morning Post (SEHK: 0583) report last month highlighted the problem. In Hong Kong last week to discuss the issue, Laode Ida, deputy speaker of Indonesia's House of Regional Representatives, said: "We were aware of the article on Indonesian domestic workers, and we are going to change policies to make a better situation for the placement and protection of Indonesian domestic workers." The report described Hong Kong-bound Indonesian domestic workers held in prison-like conditions at recruitment agencies in Indonesia - often locked away from the outside world for months or even years - as they are trained and taught Cantonese in preparation for jobs in the city. "To some extent, this can be called slavery," Laode said. "This is a very controversial issue. As a Muslim country, we are not allowed to let our people suffer under slavery, but on the other hand, poverty is still trapping Indonesian people."

Creators of 3-D sex movie in Hong Kong aim high - Actress Leni Lan, producer Stephen Shiu Jnr and director Christopher Sun watch the playback of 3-D Sex and Zen with specially made glasses. Revealing costumes and giggling filled the HK$5 million set as the serious business of filming the first wholly Hong Kong-made 3-D movie got under way in a secluded Yuen Long studio yesterday. It may be a category III sex movie, but the making of 3-D Sex and Zen is no laughing matter for its creators, who are aiming high as they put together the city's first full 3-D production - and what they hope will be the world's first 3-D erotic film release. In the process, they aim to revive a genre that was highly popular in the city's film industry two decades ago. Although shooting of the HK$25 million movie began yesterday at Clarence Film Studio in Yuen Long, its producer, Stephen Shiu Jnr, said it had already generated interest at film markets, including Cannes in France. The film is unlikely to get past mainland censors, but Shiu said the absence of that market would not harm the film's success. "We are almost closing deals with some markets including Japan, Korea, Southeast Asia and some pay-TV channels in Hong Kong," Shiu said, adding there was also European and US interest. "It is rare for a film with no major international stars to garner so much business interest at such an early stage." The film will be shot in 60 days and is due for release in May next year. In Hong Kong, Shiu said the number of cinemas showing the film would not be decided until it was completed. But he was confident the film would be shown at a number of 3-D-equipped cinemas. "Many from Hong Kong and China have great expectations for the movie," he said. "Although the film probably won't be shown in China, a lot of mainland tourists will watch this film here," the film's director, Christopher Sun Lap-key, said. More filmmakers are going down the 3-D path after the huge success of James Cameron's 3-D epic Avatar, in the hope of bringing audiences back to cinemas. But the locally made film is not the only porn movie in production using 3-D technology. Earlier this year, Italian director Tinto Brass announced a 3-D remake of his 1979 erotic feature Caligula, and Hustler is to release an Avatar porn-spoof This Ain't Avatar XXX 3-D. The local production, whose full title is 3-D Sex and Zen: Extreme Ecstasy, is a period drama, based on the 1991 production Sex and Zen, which holds the record as the highest-grossing category III movie in Hong Kong. It took more than HK$18 million at the box office. The film's producer, Stephen Shiu Yeuk-yuen, Shiu Jnr's father, said 3-D was the future for the film industry and he expected his son's version could only be better. Loosely based on a piece of classical Chinese erotic literature, The Carnal Prayer Mat, written by Li Yu in the 17th century, 3-D Sex and Zen stars two Japanese adult-video actresses, Yukiko Suo and Saori Hara, and mainland actress Leni Lan. It tells the story of a young man who, after divorcing his wife and being introduced to the erotic world of a duke, realises that his ex-wife is the love of his life. Shiu said the storyline had little resemblance to the original, but three classic sex scenes from the 1991 production would be remade in 3-D. Sun said pre-production began 14 months ago - much earlier than for a standard film. Pictorial storyboards, instead of words-only scripts, had to be drawn for the 3-D shoot. Standard films are less precise and scenes can be improvised. "Everything must be pre-visualised," Sun said. Sun said one of the trickiest aspects was creating sets for the 3-D effect. The film's main set was the duke's playhouse, built in a cave. The HK$5 million set spans thousands of square feet and uses distinctive objects and layers to create depth of view. "We use 60 to 80 per cent more lighting support than ordinary films, so the set-up is much more time consuming," Sun said. He would not give away too many details of the movie, but he did promise orgies, swinging and some very graphic sex scenes. Baptist University's film academy head Cheuk Pak-tong said there was always an audience for erotica in Hong Kong. He expected the movie to generate interest since it was the first large-scale erotic film to be made for a while. But he doubted whether 3-D technology would improve the film's quality. "It will enhance the viewing pleasure, but the quality really depends on the performances," Cheuk said. Bryan Chang Wai-hung, chairman of the Hong Kong Film Critics' Society, said storytelling was critical in all films, whether 2-D or 3-D.

A raid on Hong Kong's first known "meth lab" last month led to concerns that the city may now be, like the rest of southern China, a top exporter of a key component of the stimulant drug methamphetamine. The operation, based in a Kwai Chung factory, was capable of producing 200kg of high-grade methamphetamine worth HK$150 million in just three days. Police are at pains to play down the significance of the raid - despite the danger of such drug production centres springing up - or to suggest that it signals a growing trade in the drug here. But other reports suggest differently. Last weekend, New Zealand customs broke up a drug ring that smuggled up to NZ$17 million (HK$97 million) worth of pseudoephedrine, which arrived over 12 months at Auckland International Airport in machine parts imported from Hong Kong. Ephedrine or pseudoephedrine is a key component in the manufacture of methamphetamine.

Thousands of Form Five leavers seeking to enrol in Project Yi Jin programs queue outside an admissions centre in Kowloon Bay yesterday. Some started queuing on Friday night and registration continues today. The programs offer a qualification comparable, but not equivalent, to getting five passes in the HKCEE.

 China*: A military-funded research program has produced a technically advanced fuel cell that promises to allow the mainland's diesel submarines to run more efficiently and quietly.

Digital artist pursues animated quest for universal message - Cedrick Chan, a Chinese-American digital arts director, has worked on projects for leading cinematic lights such as George Lucas and Zhang Yimou but has shifted focus to the mainland in the past two years and is preparing to make a 3-D movie with Yian Studios and the China Film Group. He wants to make an international movie that echoes universal human feelings and at the same time helps lift the country's animation industry. What is the idea behind this 3-D movie? I am thrilled to potentially be the director of China's first 3-D animated movie co-produced by Yian Studios, a Shanghai-based media company, and the China Film Group. We all have Chinese roots and feel it is an exciting time to be in China for many reasons. The No1 reason for me is, as a story-teller, there are many Chinese stories to tell to the world. I know I am not a local so I am not going to tell stories from the perspective of a local, but I do have a unique perspective as an ABC (an American-born Chinese). I know how the West thinks and I know many Chinese people want their own Star Wars and Avatars. The problem is they are obsessed with being Chinese. Is Star Wars a movie about being American? The key is it is not just an American story. It is a universal human story. When you are obsessed with China, China, China, you are not going to tell a story for the global masses. You will maybe fill a couple of niches. Just as if a story is only about America, it will generally only hit people in America. But movies such as Star Wars, The Lord of the Rings and Avatar, they are about the universal human condition, they are not about America. The type of movie we are after is an international movie. To get the big international box office you cannot just make a Chinese movie. Can you reveal what the movie is about? I will not get into the details, but a lot of Chinese movies are set in the past and modern stories are limited in scope and subject matter. I have challenges telling stories of China's past and I am limited by the present. What does that leave? The future. I want to tell stories about what China could be like in 20 years and beyond. Do you have any challenges making that movie in China? I will work with Yian Studios, the China Film Group and the International Technological University to bring the best of the best in the world to China. For example, we are in talks to bring the head of DreamWorks Artist Development to China. So I am not worried about the training, knowledge or experience. I am worried about the culture. I have been on the mainland for two years. Foreigners find it very frustrating to work here because they do not understand the culture and the different ways of thinking. On the other hand, the people in China say, "This is China and this is how we do things here". The clash of two cultures now is my biggest worry. Do you feel you can conquer those challenges? You look at Xi Yang Yang (The Happy Sheep and The Grey Wolf) and others, and that is the state of Chinese animation right now. It is terribly exciting right now because we have tremendous opportunities for development and growth. China just needs the right environment to grow and that means changing things a bit. I have been here long enough to know how the East and West come together and we just need to put the elements together. Chinese and foreigners should set aside their egos a bit and find the best of Chinese and foreign methods to create something even better. This movie is an incredible opportunity. What are the Chinese animation artists you work with like? A lot of studios I deal with want to save money so they hire people who have little or no professional training. For me, this is crazy. Many do not have any real artistic sense and I have to do large international movies and projects with them. Many are missing fundamentals - human anatomy, colour theory, and design basics. I am working with International Technological University to reinforce the fundamentals and new technology to do my productions in China. This is a constant process. So you are training professionals and changing the industry? When you go through a studio like Pixar, it is just fun. When I walk into the studios here, people are sitting unhappily in their cubicles. It is not an animation firm. It is a factory. That has got to change for China to do better work. That is what I want to bring more of to China. We need to have a greater sense of play. I talk to animation artists and they love animation. That is why they are doing it, but when they are at work they have lost their passion. You do not see the passion at work. When I work on my movies there is a sense of passion and pride. I want to be proud of it. Even if it is just two seconds, I want to look at it and say I am not ashamed for the world to see this. Artists are easy. If you give them something they can believe in and are passionate about, they will work hard. I want to treat my artists fairly and well. If they are not happy, what is their work going to be like? That is why I do everything I can to integrate education, training and play in my productions.

Mainland stocks get green light - Mainland stocks are increasingly catching the fancy of brokerages, most of whom are veering round to the view that better days lie ahead for these stocks.

Chinese patent traditional medicine first time passes U.S. FDA crucial clinical trials - A China-made pill to treat cardiovascular conditions has been tested safe and effective by the U.S. Food and Drug Administration (FDA), and, hopefully, will be marketed in the U.S. as early as 2013, a pharmaceutical company said here Saturday. Tianjin-based Tasly Pharmaceutical's Compound Danshen Dripping Pill, had passed the U.S. FDA's Phase II clinical trials in July, one step closer to getting into the U.S. and European drug market, the company's president Yan Xijun told a press conference in Beijing. Clinical trials of the drug, composed of herbal extracts, was conducted in 15 test centers in the U.S. over the last three years and had "generated positive results," Yan said. With domestic sales of more than one billion yuan (about 148 million U.S. dollars) last year, the drug was the first Chinese patent traditional medicine to pass Phase II trials of the FDA, known for its strictness in approving drugs. The FDA has also approved the drug to enter the Phase III trials, Yan said. FDA Phase II trials gauge the effectiveness of a drug and its side effects and risks, while Phase III trials are more extensive. Once Phase III is complete, a pharmaceutical company can request FDA approval for marketing the drug in the U.S. Yan said the Shanghai-listed Tasly would build 50 to 70 clinical trial centers worldwide in the next 12 to 18 months for the Phase III trials, adding that he expected the pills to enter U.S. and global drug markets within three years. Compound Danshen Dripping Pill is mainly used to treat angina and coronary heart diseases. Already more than 10 million people worldwide take the pills annually, according to Tasly Pharmaceutical. Previously, the drug had been approved by drug watchdogs in Canada, Russia, Republic of Korea, Vietnam, Singapore and some African countries.  Exports of traditional Chinese medicine (TCM) in the global market were valued at 1.46 billion U.S. dollars, Wang Guoqiang, director of the State Administration of TCM , said Saturday. Wang, also vice minister of the health ministry, said the number of countries and regions which recognize the advantages and special features of TCM in treating modern diseases were on the rise and many countries were seeking cooperation with China on TCM. Traditional Chinese medicines are mostly mixtures of a number of ingredients or medical plants such as herbs, which makes them much more difficult to explain and analyze in a quantitative sense than western drugs. One major obstacle Chinese drug firms face when obtaining market approval in the U.S. and European countries is how to explain how traditional Chinese medicines work using a scientific language that appeals to Westerners. China has so far signed more than 90 pacts that partially or exclusively touched on TCM cooperation with more than 70 countries and regions.

China eyes the dream factories - wants to do more than just provide the pretty faces - The film Shanghai starring Gong Li and John Cusack was a successful collaboration between China and Hollywood. But now, China wants to do more than just provide the pretty faces. The film industry in China has grown in epic proportions in recent years. As studio owners get hungry for a bigger slice of the pie, they are casting their nets further afield. Next stop? Hollywood. Early this year, it was rumored that a company from China was among the bidders for Miramax, a Disney subsidiary. By all accounts, it failed "in the competition" then, but that was just the first round. Disney has since confirmed Miramax has indeed been sold, but we still do not know if a Chinese party had been among the contenders. Ben Ji, president of Angel Wings Entertainment, a Beijing-based film financing and production group, told China Daily it had been a company backed by a provincial government. He should have the inside information. Ji has clocked 20 years working in film, television and the Internet and was with Warner Brothers' international distribution division overseeing the Chinese market for movies such as The Matrix and Troy. He was also the first local executive and country manager for Walt Disney Studios in China. He stopped at actually naming the Chinese company, but says he is optimistic about the prospects of firms in China owning a piece of Hollywood, sooner or later. His reason is simple: China has the money and needs a bigger market. And Hollywood has the traditions of drawing on foreign funds, and of skirting the strict laws on media ownership. China's box office has grown by 25 percent yearly for the past five years. The revenue of the first six months in 2010 is 4.8 billion yuan ($780 million) - roughly the gross takings of a whole year in 2008. Observers say the film industry will romp home with at least a record 10 billion yuan this year. But, compared with the $9.9 billion domestic revenue of the US film market in 2009, it is still miniscule. The reason is clear. Few Chinese films have broken into the overseas markets other than those in Southeast Asia. It is also apparent the time is ripe for Chinese film companies to start thinking bigger and further, and some are already paving the way for future ambitions. A few are taking on more active roles in co-productions with Hollywood for a start, investing in projects rather than just offering talent and location. The most recent example is The Karate Kid, a remake of the feel-good classic starring kungfu superstar Jackie Chan and Jaden Smith, Hollywood big-wig Will Smith's young son. The China Film Group invested $5 million in the film, co-producing with Sony Pictures. Huayi Brothers, the biggest private media group in China, set up an international department four years ago and already boasts recent co-productions such as The Forbidden Kingdom and Shanghai. Again, Forbidden Kingdom's main draws were martial arts masters Jet Li and Jackie Chan while Shanghai depended largely on the charismatic charms of actress Gong Li as well as those of veteran actor Chow Yun-fat. In Beijing, the government is playing its part in pushing the influence of Chinese culture worldwide - which may serve to provide the impetus for more such cooperation. "You can tell the government's aspiration to promote Chinese culture by the mushrooming Confucius Institutes overseas," Ji says. "And Hollywood is arguably an effective channel to achieve that goal, thanks to its distribution network and global influence." But the possible purchase of a Hollywood studio, especially a major one, may be beyond the means of a private enterprise, says a senior executive of a Hollywood studio who would rather remain anonymous. "It would be a great challenge for an entertainment company to buy a major Hollywood film studio," he says. "Take Metro-Goldwyn-Mayer as an example. By the end of next year, any buyer who wants it will need to fork out $4 to 4.5 billion to pay off its debts in order to complete the equity transfer." Hollywood tends to welcome buyers within the industry but it has seen some transactions that have bucked that trend. For example, Universal was bought up by the French environmental service company Vivendi SA, and the Coca Cola Company used to own Columbia. "In view of these, it seems what Hollywood really cares about is not who buys its studios, but who has the deepest pocket." Yin Hong, professor of film and television studies at Tsinghua University and a senior expert on the industry, agrees. "Local entertainment companies are not likely to have the capital needed to buy a big Hollywood studio. They need to aim for the smaller, independent companies." Ji has his views on which Hollywood studios that ambitious Chinese firms should target. "The six major studios are not purely film companies, many of them are media conglomerates with huge capital revenue. Their purchase is a complicated process involving complex equity transfers and the Federal Communications Commission. At the moment, it is just not practical." The most cost-effective way, Ji suggests, is to buy into small independent production companies such as Lionsgate and Summit, or studio subsidiaries such as Miramax. "These may not have the powerful financiers and distribution channels of the big studios, but their production capabilities, brands and own unique systems targeting niche groups are also valuable." And somebody is waiting, listening and ready to make a move. Qin Hong, chairman of Beijing-based film studio and theater chain Stellar Megamedia, confirms that Stellar's Hong Kong-based holding company SMI Corporation has acquired Australian visual effects and CGI company Photon. Photon's portfolio includes the Baz Luhrmann-Nicole Kidman epic Australia and Superman Returns. "The acquisition gives technological support for Stellar's films," says Qin. "More importantly, Photon already has well-established links with Hollywood. Hopefully, Stellar will have more direct contact with the Hollywood studios through this network." But Qin is also cautious about the Chinese film industry's global strategy. "It is extremely important to identify which part of the target company is most valuable - whether it is the library, brand, distribution channels or creativity," he says. "We will not buy a Hollywood studio before we are fully prepared." And if that means plenty of research, observation and more homework, Ben Ji agrees wholeheartedly. "Take Marvel, for example. The most valuable part is its characters, not the merchandise. "We need to work with professional US legal and audit firms before making any decision." Although Qin Hong believes buying a Hollywood studio will provide a quality platform to promote Chinese culture, he says his first priority would be still to strengthen the brand name before anything else. "If you are in too much of a hurry to label the company as a carrier of Chinese culture, that may draw hostility from the US audience, and may eventually even destroy the brand." When Sony bought Columbia in 1989, the deal stirred a cultural backlash in the States, but Sony eased the criticism by operating Columbia as a purely American company and avoided using it to promote anything Japanese. The knee-jerk reaction to a Chinese company buying up a piece of Hollywood may be worse. "There are more differences in ideology, the social system and in core values. Even more so than with Japan," Ben Ji says. "Keep it as pure business, and it may just work."

Aug 8, 2010

Hong Kong*: Rule protecting Sai Wan scenic site takes effect - Defaced beauty spot Tai Long Sai Wan came under better protection yesterday. A temporary zoning order in effect blocks all new development without prior permission in the area - where a businessman wants to build a private retreat. The Town Planning Board gazetted the Sai Wan development permission area plan designating the site for "unspecified use", pending further study of what uses should be allowed.

Dragonair attendants demand better terms - Cabin crew are apparently not reaping the benefits of rebounding profits at major airlines - more than 100 Dragonair flight attendants vented their frustrations over long work hours and "unfair" employment conditions yesterday. In a sign that all is not well among carriers despite increasingly full business-class and first-class seats and surging inflight sales, about 150 protesting flight attendants, chanting "Dragon Air, Never Fair", rallied at the airport, calling for more humane working conditions and fair compensation. Winnie Poon, chairwoman of the Dragon Airlines Flight Attendants Association, said cabin crew were often called on to do extra shifts at the last minute.

Children’s garments retailer Boshiwa International Holding aims to raise US$200 million to US$300 million from a Hong Kong initial public offering in September, sources said.

Hong Kong’s benchmark Hang Seng Index finished up 0.59 per cent at 21,678.80, its highest close since mid-April, as Hutchison ended up 9.7 per cent.

Tycoon Li Ka-shing has pledged a third of his assets to his charity foundation - just days after 40 US billionaires signed a pledge to give away more than half their wealth. Li announced yesterday that his Li Ka Shing Foundation will unveil a new project in September. He was speaking at a press conference to release interim results for Cheung Kong Holdings (0001) and Hutchison Whampoa (0013). The new project, involving innovation, creativity and the internet, will operate in Hong Kong, but Li did not give details. The foundation and government departments will be in partnership. Asked if he would join the US billionaires in giving more than half their wealth to charity during their lifetimes or even after their deaths, Li said: "I'm still very healthy, and I am very satisfied with what I am doing. "The Li Ka Shing Foundation is like my third son. I fill it with real cash and it's equal to all the fortune I had in the 80s." It also represents one-third of his wealth today, he added. In March, Forbes magazine ranked Li as the world's 14th richest man, with US$21 billion (HK$164 billion). The US billionaires, led by Microsoft founder Bill Gates and investor Warren Buffett, launched their "Giving Pledge" donation drive on Tuesday. The campaign aims to invite wealthy individuals or families worldwide to give to charity. The tycoon, known as Superman for his ability to generate cash and power, may be on the list of the world's wealthy they are going to approach. Li said his foundation has already spent a lot of time and effort in exploring opportunities to expand its support of charity. More than 80 percent of the fund has been used in Greater China. In the past three years, HK$5.2 billion to HK$5.3 billion has been donated, including cash for five mainland hospital projects. "I have spent more than HK$10 billion in the past 30 years," Li said. "In the next 10 years, the foundation will be spending more than that. While wealth is desirable for a gentleman, he takes it as a natural course. I also use it as a natural course. I work very hard spending it on charity." But Li said he has been keeping a low profile and will not talk of his achievements if he is not asked. And in past few years, he has not been using his name on buildings he has funded. "You will do the same if you treat the place as your home," Li said. "Hong Kong is my home." With the disparity between rich and poor causing anger in society, Li said he has been using profit from his groups to fund the foundation. The foundation, a Hong Kong and Canada-based charitable organization, was founded in 1980 after Li's Cheung Kong (Holdings) acquired Hutchison Whampoa the previous year. Buffett, chairman of Berkshire Hathaway, said he has contacted 70 to 80 of the wealthiest people in the United States to ask them to join the program. He is giving the greatest part of his fortune, estimated at US$47 billion by Forbes, in annual installments to the Bill & Melinda Gates Foundation. The fortune of Microsoft chief Gates was put at US$53 billion in March.

According to government projections, the number of males per 1,000 females in the Hong Kong population in 30 years' time will be seven to 10. This has raised concerns that many women will find it difficult to get married when the time comes. Luckily, the ratio in the mainland is similarly out of proportion, but there they have more males than females. A friend of mine said the women of today are different. They can take up men's jobs, but men have fallen behind - so much so that they can't even do their own jobs well. My friend and I each have a son, so we both have a mission to nurture men of the next generation. With changes in society, men's physical power has become less important. Women's skills in languages and human relationships have become more prominent. In our generation and the previous one, society in general gave more importance to men than women. Males received more opportunities for education and nurturing, with many poor families giving preference to schooling boys. But now, men and women are equal. Girls also mature earlier and perform better at school, hence female university students always outnumber males. In addition, there are now more single-parent families, with children generally living with their mother. But boys lack a father as a role model and this hampers personal growth. Our generation grew up in large families, with father as breadwinner. We learned the obligations of a man to his family. We were also taught to be manly - such as hiding pain and real men do not cry. That instilled in us qualities of perseverance and persistence. Though it does not seem appropriate to teach boys to be manly when men and women are equal, I still think it is useful for building character. At least, the father has to set an example by fulfilling his obligations toward the family and be a role model for his son. Media guru KK Tsang, CEO of GroupM, takes a candid look at life.

Cheung Kong Holdings (0001) posted a 4 percent rise in interim net profit to HK$11.9 billion on the back of stronger property sales and the contribution from associate Hutchison Whampoa (0013). Excluding Hutchison, the developer headed by Li Ka-shing reported 1percent growth to HK$8.7 billion. The firm's core profit, which excluded proceeds from Hutchison, Central Park Towers II and property revaluation, rose 10 percent year-on-year to HK$6 billion. Cheung Kong declared a dividend of 50 HK cents, unchanged from last year. Asked whether his two mega firms would raise dividends in the future, Li said: "If there's no timeframe, yes for sure, but I can only say I'm very optimistic about raising dividends next year." Li is "very confident" about many of his firms and will certainly increase his stakes. Cheung Kong's local home sale contribution beat market forecasts and rose 2.6 percent to HK$5.8 billion, with major bookings from La Mer, the two phases of Celestial Heights and Phase 1 of Festival City. Revenue from home sales amounted to HK$18.6 billion, boosting the firm's total revenue to HK$20.3 billion, up 31 percent year-on-year. Total profit contribution from Hutchison was HK$3.2 billion, up 12 percent. Deputy chairman and managing director Victor Li Tzar-kuoi said "there is nothing concrete to see in any half year," noting Cheung Kong chose to book proceeds from Central Park Towers II in the second half. Li Ka-shing did not say if the local property market is becoming unhealthy, but reiterated his belief that a buyer should be financially at ease. "If someone needs to borrow a lot of money to buy a flat, I would tell him not to," he said. The ability to pay a 50 to 60 percent downpayment is a prerequisite. The two Lis said properties are worthwhile investments in the long run. Victor Li rejected allegations that Cheung Kong was inactive in land auctions because it was worried about the property market. The developer has maintained a land bank of around 200 million square feet in the mainland and some 40 million sqft in Hong Kong, enough for five to six years. "If you bought too many plots, it would amount to land hoarding, which is not nice," said Victor Li. Cheung Kong has no plans to spin off its businesses in the mainland, where turnover fell by 25.5 percent to HK$2.6 billion.

Restaurant chain Tao Heung Holdings (0573) claims it will not be overly affected by the appreciation of the yuan as higher costs of food will be offset by better business in the mainland. There are 13 Tao Heung restaurants across the border, with another one due to open in September. Together, they form about 18 percent of the company's total turnover. But the group is hoping to raise the figure to 25 percent next year. "The mainland economy is in a take- off stage and the country has made a fast recovery from the economic crisis, so people's spending power is higher," chief executive officer Eric Leung Yiu- chun said. With rising rentals and commodity prices, Leung said the business environment this year was tough with first-half sales in Hong Kong falling by 2-3 percent year on year. But the firm is unlikely to raise menu prices to make up for the shortfall. Instead, it will cut costs, minimize kitchen space to make more room for tables, and introduce more offers to lure customers. Around 29 percent of Hong Kong turnover is spent on paying its 4,000 staff around HK$24 per hour following a 5 percent pay rise this year. This is slightly higher than the industry average.

 China*: Beijing now has the world's third-busiest airport, surging past Chicago, Tokyo and Paris as the mainland shrugged off the global economic slowdown. Beijing Capital International Airport (SEHK: 0694)'s ranking puts it behind Atlanta and London's Heathrow in terms of domestic and international passenger numbers in 2009, according to a report by Airports Council International, a Geneva-based international airport association. Passenger traffic rose 16.9 per cent year on year to 65.37 million last year at Beijing airport, which jumped five places to knock Chicago from the third place. The facility may also oust Heathrow from the No 2 spot later this year, reflecting the impact of industrial action by British Airways staff and a volcanic eruption in Iceland on air traffic to and from London. In the first six months of this year, Beijing handled 35.05 million passengers, up from 30.1 million in the same period last year, while Heathrow's passenger volume shrank 3.5 per cent year on year to 30.1 million.

Beijing rule change may spark gold boom - Retail buyers are shifting their wealth into gold and rules are changing to let foreign players and local banks tap growing demand, giving the country more say over global prices. China's moves to free up its gold market open the way for foreign players and local banks to tap growing demand for the precious metal, offering citizens a more attractive investment and promising to boost the country's clout over global prices. With the Shanghai Composite Index down 20 per cent this year, and gold prices still up 9 per cent despite a correction from an all-time high hit in June, more retail investors are buying bullion as they diversify their wealth. A clampdown on rampant property speculation could also drive investors to shift some hot money into gold, which many see as a sign of status and good fortune, as hopes for more Chinese demand pushed gold to a two-week high above US$1,200 an ounce this week. "What's happening in China right now is that a lot of wealth is being switched out of the property markets into the gold market," said Mark Pervan, senior commodities analyst at ANZ in Melbourne. "This is an ongoing theme. This theme is likely to put a very high floor of price on the gold market. The property investor is very concerned the government is trying to cool that market. They've made a lot of money in property." Investors have long bet that China will eventually overtake India as the world's top consumer, and Beijing's move to allow more domestic banks to export and import bullion underscores the hunger for gold among the country's burgeoning middle class. More foreign firms are likely to become members of the Shanghai Gold Exchange and analysts also expect Beijing to ease curbs on gold investment products such as exchange traded funds. Although China is the world's largest gold producer, it still requires imports as demand can easily outstrip domestic output by more than 100 tonnes annually. China's share of global gold demand jumped to 11 per cent in 2009 from 5 per cent in 2002, when the Shanghai Gold Exchange opened, and consumption is likely to double in the next decade from around 420 tonnes as income grows, the World Gold Council says. The People's Bank of China said this week it would allow banks to hedge bullion positions in overseas markets, urge banks to lend more to domestic gold firms looking to go abroad, and actively develop more yuan-denominated gold derivatives. China is likely to let second-tier institutions such as Minsheng Banking Corp and China Merchants Bank (SEHK: 3968) join forces with the four major state banks that are already allowed to offer such services, bringing the number to at least eight. "China's gold market is going to play an important role in the global gold market," said Albert Cheng, Far East managing director of the World Gold Council. "It will become more accessible for both international and domestic players. Investors in China will benefit from greater availability of physical gold and gold-related financial products. Naturally this is very positive for gold." Analysts say China wants more banks to trade with overseas counterparts, reduce their reliance on the Shanghai Gold Exchange for hedging and invite more foreign banking institutions to trade on the Exchange, where trading volumes have risen by more than half in the first half of this year. Five banks, including HSBC (SEHK: 0005) and Standard Chartered, are members of the Shanghai Gold Exchange. Most gold investors trade via the exchange but banking sources say more clients are chasing products such as gold saving accounts and gold bars, while hedging services to miners have gone up - suggesting a growing shift from equities or property markets. Beijing has repeatedly stressed its determination to curb speculative demand and rein in overly fast price rises in the real estate market despite a slowdown in economic growth. "Investment demand for gold is expanding very fast, as we are now in a bull market and prices will rise in the mid- and long-term," said a state bank wealth manager specialising in precious metals in Guangzhou. "No matter if it's the stock, property or gold market, Chinese people always flock in when prices are rising." Will China boost reserves after announcing the new measures? The answer may be no because Beijing will focus on bringing more gold into the country to satisfy demand, rather than stirring up global prices through official purchases. China has increased its official gold holdings by more than 400 tonnes in the past few years to 1,054 tons - the world's sixth largest.

China's PLA opens missile base; S China Sea in range - A new missile base has been operating in northern Guangdong for a month amid rising tensions over the disputed South China Sea. The base in Shaoguan was garrisoned by the PLA Second Artillery's 96166 unit weeks before last Sunday's 83rd anniversary of the founding of the People's Liberation Army, the Shaoguan Daily and a local government website said. The Second Artillery is the PLA's strategic missile force. While the reports did not directly mention the missile base and gave no details about the 96166 unit, the news still attracted a great deal of attention from military observers. They believe the base will be equipped with either DF-21C ballistic missiles or CJ-10 long-distance cruise missiles - both said to be capable of precise strikes over more than 2,000 kilometres, effectively putting Taiwan as well as the Paracel Islands and Spratly Islands in the disputed South China Sea within range. China has territorial disputes with Vietnam, the Philippines, Indonesia, Malaysia and Brunei over islands in the South China Sea. The PLA set up a similar base in nearby Qingyuan, Guangdong, in June last year, according to an earlier mainland media report. Both Shaoguan and Qingyuan are in mountainous areas in northern Guangdong - ideal locations to hide strategic missile forces. The Washington-based Project 2049 Institute says Beijing plans to build yet another missile base, in Sanya, Hainan, soon. There is speculation that another missile could be deployed in Shaoguan - the DF-21D, an anti-ship ballistic missile dubbed the "carrier killer" whose existence has been widely reported but never confirmed. If China can successfully develop an anti-ship ballistic weapon such as the DF-21D, it will achieve a significant advance in weapons technology. The US and the then Soviet Union agreed never to pursue such weapons as part of arms-limitation agreements. Its key flaw is that to fire one in a time of conflict would risk a catastrophic miscalculation by an enemy, who could mistake the missile's flight for an incoming nuclear weapon, and respond accordingly. Flying in an arc through the upper atmosphere, ballistic missiles are traditionally used to hit large fixed positions, such as cities, rather than a single moving target. The Project 2049 report, released this week, says the operations in Shaoguan "could complicate the strategic calculus in Asia, and the disputed South China Sea in particular". The report says that the Second Artillery plans to finalise the design of the DF-21D by the end of this year and "the establishment of a permanent deployment capability often coincides with the design finalisation of a new missile". Alexander Huang Chieh-cheng, a professor of the Graduate Institute of International Affairs and Strategic Studies at Tamkang University in Taipei, said the PLA's new deployment would make its neighbours in Southeast Asia nervous. "The PLA's every move has its own specific strategic intent. "But this time, I don't think it wants to threaten Taiwan," he said. "With many areas of the South China Sea able to be covered by its DF-21 series missiles, Southeast Asian countries, especially those with territorial disputes with Beijing, would strongly feel the threat of a rising China." Shanghai-based military expert Ni Lexiong said the establishment of the two missile bases was a hint that the missile force would play a role in defending Beijing's core interest in the South China Sea. However, Hong Kong-based military observer Ma Dingsheng said it was far too early to determine the real aim of moving the missile force's bases to Guangdong, because the move was not yet finished. "The move just shows the real mobility of the missile force, which is capable of responding to our national strategic requirements in various regions. But I don't think it's a significant strategic change," he said. "The outside world, especially the US, always exaggerates the power of the DF-21C and -21D. In fact, so far we can't find any concrete evidence to prove the missile could accurately hit a moving target at sea out to a range of 1,500 to 2,000 kilometres."

Apple is in talks to buy software maker Handseeing, an executive at the mainland company said on Friday, a deal that would mark the iPhone maker’s first Chinese acquisition.

Nasdaq held a special ceremony on Thursday to celebrate the five-year listing anniversary of Baidu Inc., the largest Chinese company listed on the New York-based stock exchange.

Rejected China green power developers blast UN rulings - Mainland wind and hydropower project managers have criticised the executive board running the UN’s Clean Development Mechanism for decisions which they alleged were arbitrary and non-transparent. Developers behind the 19 mainland wind and hydropower projects rejected by a UN-backed clean energy investment panel have accused the board in charge of making arbitrary and non-transparent rule changes. Most said they had no choice but to reapply to try to earn internationally tradeable carbon offsets they said were needed to make their projects viable. At its meeting in Bonn, Germany, at the end of July, the executive board running the UN’s Clean Development Mechanism (CDM) examined the documentation of 19 mainland CDM applicants. The panel said none of them managed to pass muster, even after revisions. A manager at one of the rejected projects, the Mudanjiang Xiaoguokui wind power plant in the Heilongjiang province, accused the executive board of moving the goalposts. “The EB [executive board] has changed the rules and we didn’t know about that when the projects were first proposed,” he said. The CDM encourages investors from industrialised countries to fund clean-energy projects in the developing world by offering carbon credits known as certified emission reductions (CERs). The CERs can then be traded or used to comply with binding Kyoto Protocol emissions targets in rich nations. The mainland has generated more than half of the CERs so far in the scheme, but it has been widely criticised for exploiting the mechanism and flooding the market with cheap and dubious credits from projects that do little to reduce carbon dioxide emissions. Mainland applicants have also been accused of deliberately under-reporting tariffs paid for renewable power in order to pass the CDM’s tough “additionality” test, designed to ensure that projects would only be viable if they receive CERs. The board, which has been under pressure to get tough on ”sub-prime carbon”, stripped 10 mainland wind farms of CDM financing at the end of last year, prompting angry reactions from mainland officials. Lian Xingtan, chairman of the Shuanghekou hydropower project in Chongqing, said the EB’s standards were unrealistic. “Their standards are totally divorced from reality. We started our application in 2006 and they use 2006 rates of investment and 2009 power tariffs to make their calculations.” One developer blamed the auditing company responsible for drawing up and submitting the project documentation. UN-approved auditors are known in UN jargon as “designated operational entities” or DOEs. But Lucy Deng, technical manager in charge of CDM accreditation with auditors Det Norske Veritas in Beijing, the DOE behind one of the rejected projects, said many of the problems were a matter of bad timing. “The EB issued an ‘information note’ saying that if the tariffs for wind and hydro projects in certain provinces exceeded its new benchmark they would be rejected,” she said. “We actually cancelled a number of projects when we knew of the decision, but the rejected ones were submitted before the information note was issued.” Despite tougher CDM rules, project managers insisted their projects would not be viable without CDM accreditation. “Since the project was rejected, our expected return on investment will be cut massively,” said Wang Chaofeng, manager of the Nanlinghe hydropower plant in Yunnan.

China Everbright Bank, which is looking to raise roughly US$3 billion in Shanghai, will submit a price range of 3.0-3.3 yuan per share to the securities regulator for approval.

China's Queen of developers bets against bubble - Zhang Xin says Beijing is very sensitive to public opinion, which is why "people like us have the responsibility to talk honestly". Soho China's Zhang Xin exudes style, confidence - From her leafy, 11th-floor rooftop terrace at the headquarters of Soho China (SEHK: 0410), billionaire Zhang Xin scans the relentlessly expanding Beijing skyline she helped create. Zhang's avant-garde buildings - some sleek as chopsticks, others stepped like rice terraces - became part of the hottest real estate market on Earth this year. Zhang says she is well aware of the chorus of investors and economists who predict that China's property boom is about to go bust, taking the global economy down with it. The doomsday scenarios do not intimidate Zhang, a onetime penniless sweatshop worker who ascended to Wall Street by defying the odds. She hopes to prove sceptics wrong again this year by betting hundreds of millions of dollars on new buildings in Beijing and Shanghai. "I don't see any bubbles," says Zhang. "The next few months will be a fantastic time to buy." Zhang, 44, personifies the explosive rise of China as the world's third-biggest economy. At age 30, armed with a master's degree from the University of Cambridge in England and connections from working at Goldman Sachs in New York and Hong Kong, Zhang founded Soho China with her husband, Pan Shiyi. The company became central Beijing's biggest developer about a decade later in 2005. Soho China's shares are up about 17 per cent on the Hong Kong stock exchange this year, compared with a single-digit fall in the Bloomberg Asia Pacific Real Estate Index, which includes 191 property stocks. Zhang's ownership stake is worth about US$2.2 billion, ranking her alongside Oprah Winfrey as one of the world's wealthiest self-made women, says Rupert Hoogewerf, whose Hurun Report tracks China's rich. Economists began predicting a real estate bubble in China last year after Beijing pumped four trillion yuan (HK$4.58 trillion) of stimulus funds into the economy. State-controlled banks went on a record 9.7 trillion yuan lending spree. That sent residential real estate prices soaring 68 per cent in the first quarter of this year compared with the same period in 2009, pushing mainland China past Hong Kong as the world's fastest-appreciating housing market, says property adviser Knight Frank. Beijing's skyline has shot up along with prices, leaving it with many unoccupied see-through buildings. In the central business district, 37.5 per cent of office space was vacant in the second quarter, according to property advisory firm Jones Lang LaSalle. "This is a serious bubble," says Andy Xie, formerly Morgan Stanley's Asia-Pacific chief economist, who now works independently in Shanghai. "The alarm bells are ringing." If China's real estate takes a dive, so will its economy, analysts say. Property investment and related industries make up about 20 per cent of the country's gross domestic product, Citigroup research shows. The economy, which expanded 10.3 per cent in the second quarter, may slow to 5 per cent in the third period if housing plummets, says Jim Walker, chief economist at Hong Kong-based Asianomics. A slowdown would reverberate throughout Asia and beyond, especially to countries that supply iron ore and other commodities that have fuelled China's boom. "Commodity suppliers such as Australia and Brazil will be hard hit," Walker says. "They are incredibly China dependent. It could result in the double-dip recession people are talking about." China's economic rulers moved earlier this year to engineer a soft landing. In April, the State Council, led by Premier Wen Jiabao, began imposing stringent restrictions on lending to curb speculation, particularly on luxury dwellings. While Zhang says government managers will prevent a crash, she would prefer they let the market dictate demand. Unlike most of her rich Chinese peers, who keep a low profile to stay on good terms with officials, Zhang has been very public in her criticism of government policies. "The market should be making the decision to buy or not to buy, not be told by the government," says Zhang, who lives with her husband and two sons, ages 10 and 12, in a 32nd-floor penthouse in her Jianwai Soho development in Beijing. "The government is very sensitive to public opinion and that's why people like us have the responsibility to talk honestly about what is happening. That would hopefully help to get the truth to the decision makers." Zhang, who was born in 1965 as China was about to plunge into the chaos of the Cultural Revolution, is an unlikely billionaire. Her parents, who were both translators at Beijing's Bureau of Foreign Languages, separated during Mao's crackdown. As part of the Communist Party's forced exodus of intellectuals to work in the countryside, Zhang and her mother ended up in a rural part of Henan province. In 1979, they found their way to Hong Kong and lived in a single room just big enough for two bunk beds. They shared a bathroom with other families. For five years, from age 14, Zhang toiled in small factories making sleeves, collars, zippers and electrical parts. Zhang and Pan develop buildings for Chinese much like themselves: entrepreneurs. Many of their rivals put up conventional offices, to be leased mainly to multinational tenants, or grandiose villas and luxury apartments with swimming pools for China's super rich. The duo conveyed their more practical side with the name Soho, which stands for small office, home office. The company says it has developed 2.3 million square metres of real estate - including about a fifth of Beijing's central business district. Zhang's high-end units can cost more than 60,000 yuan a square metre. Profit surged last year more than eightfold to 3.3 billion yuan. "They focus on sectors which hold long-term promise," says Mark Mobius, executive chairman of Templeton Asset Management, which is Soho China's largest institutional investor, with a 4 per cent stake. "They have high sensitivity and a great sense of style." Zhang is now expanding her empire again, dismissing the China bears. In June, she paid 2.25 billion yuan for a 22,500-square-metre plot of vacant land on the Bund, Shanghai's stately colonial-era waterfront strip. Two weeks later in Beijing, she started marketing a futuristic 485,000-square-metre commercial, retail and entertainment complex that is shaped like interlinked cocoons. It will be designed by London-based Pritzker Prize-winning architect Zaha Hadid. Zhang feared a bubble early this year but now says her own research reveals that the market is regaining its sanity. She says prices have been cooling since April, following the government's lending restrictions, but are not headed for a collapse. Success in real estate has come down to guessing what the government will do next, she says. In June, she gave her prediction at a JP Morgan Chase conference attended by almost 2,000 foreign investors. "Everyone was so pessimistic, and I was saying that in the next six months or a year, prices will go up again," she says. "My guess is that it is austerity now, but at some point it will become stimulus again."

Guangdong's top political leader has reached out to Cantonese speakers in an apparent attempt to placate the public after hundreds took to Guangzhou's streets to defend the dialect. Communist Party chief Wang Yang told a meeting on Wednesday to mark the 100-day countdown to the Asian Games that there was no question of Cantonese being banned, the semi-official China News Service reported yesterday. "Even I am learning Cantonese. Who would dare do away with it?" he reportedly told an applauding crowd at the meeting. In defiance of government orders, hundreds attended rallies in Guangzhou over the past two Sundays against an official proposal early last month to switch prime-time programming on the main channels of Guangdong TV from Cantonese to Putonghua. There was a parallel march in Hong Kong on Sunday. The rare joint campaign was the first to bring Cantonese speakers in Hong Kong and Guangdong together in defence of the dialect, which they say has been increasingly marginalised on the mainland. Wang said up to 40 per cent of the protesters were students who did not understand the real situation and were therefore easily misled. "We hope [everybody] could be vigilant about being used," Wang was quoted by the Dongguan Times as saying. "Before the Asian Games, some people who have ulterior motives ... want to stir up trouble, so we must guard against that. The world is not a peaceful place." Wang's comments were the first from the province's most senior official since the demonstrations were held. On Sunday, Guangzhou authorities accused protesters of holding illegal assemblies, and detained at least 20 people, including several Hong Kong journalists, for allegedly causing public disorder. Three remained in custody. Observers say Wang's apparent support of Cantonese is an effort to placate the public and ensure the protests would not escalate and jeopardise his political career. Wang, a likely candidate for the Politburo Standing Committee in 2012, reportedly pledged last month that the Cantonese culture would not "die in our generation". Guangzhou-based human rights lawyer Liu Shihui said Wang, an astute politician, was trying to calm raw nerves while showing that the authorities would not condone further protests. "Saying he was learning Cantonese was a pacifying act, but people were at the same time detained and accused of having ulterior motives," Liu said. Some people were not convinced Wang's support for Cantonese was culturally motivated. "His tone of voice shows he is a very arrogant person, and whatever he says, no one may oppose," a message on Twitter said. Like many southern Chinese dialects, Cantonese is considered by some linguists as a separate language from Putonghua because of their mutual unintelligibility.

A visitor shows his electronic reservation ticket in the Shanghai World Expo Park in Shanghai, east China, Aug. 6, 2010. Electronic reservation tickets are taken test application in China Pavilion on Friday.

A staff member of China Pavilion helps a visitor pass the entrance with her electronic reservation ticket in the Shanghai World Expo Park in Shanghai, east China, Aug. 6, 2010. Electronic reservation tickets are taken test application in China Pavilion on Friday.

An instructor (R) corrects the gesture of a hostess candidate at the Southern Medical University's Shunde campus in Shunde, Guangdong province, August 5. After 40 days of training, 380 out of 550 candidates will be selected as volunteer hostesses of the 16th Asian Games, which will be held in the provincial capital of Guangzhou from November 12 to 27, 2010.

China's online game vendors to be hit hard - Kingsoft promotes one of its online games at an international network exposition in Beijing. Vietnam's curbs on Internet cafes to slash Chinese gaming profits. BEIJING - Vietnam's ongoing national crackdown on online games will impede Chinese players in the country, where Chinese vendors make up a large chunk of the market share. Many Chinese online gaming firms said they have suspended their marketing activities and stopped launching new games in the Southeast Asian country. Vietnam's Ministry of Information and Communications launched a new regulation on Aug 3 restricting Internet access in Internet cafes and banning online game advertisements. The new regulation was aimed at reducing and preventing juvenile crime in the country. Government officials said they hope to crack down on games with violence, gambling and pornographic content and create a game rating system, according to Vietnam News. Zhang Wenbing, vice-president of Chinese game vendor Kingsoft Group, said the Vietnamese government's crackdown on online games will disrupt the company's marketing activities in the country. Kingsoft currently operate four games in Vietnam and controls 60 percent of the market. "I think the ban will have some impact on our games operated in the local market," Zhang said. But he also noted that the company is still optimistic about the Vietnamese market, which contributed 15 percent of the company's total revenue. Wang Lei, co-founder of Linekong, one of China's major online game vendors, said the company has "suspended plans to launch several new games in Vietnam because of the new regulation". Linekong currently is operating a popular online game called "Journey to the West" in Vietnam, which accounts for about 10 percent of the market share. Wang said Vietnam contributed nearly one tenth of the company's overseas revenue. He said the direct impact of the new regulation is unclear. China's online gaming firms took over 70 percent of Vietnam's online game market, according to industry experts. Big Chinese online game companies such as Kingsoft, Giant, Shanda and Perfect World are all running online games. "The new regulation will have a significant impact on Chinese companies," said an official from Chinese online game company Perfect World who declined to be named. He said the Vietnamese government has actually stopped approving new games and the potential losses for Chinese gamers would be "huge". According to the data from Vietnam Internet Network Information Center, the number of Vietnamese internet users had reached 22 million last year, about one-fourth of the total population. Online gaming attracts about two to three million people in Vietnam, according to local media reports. "Although the time limit will not directly impact the sales revenue of Chinese online gaming companies, it will become a problem to launch new online games in Vietnam, and impact Chinese companies' long-term profits," said Tao Qinzhu, an analyst from research company Frost & Sullivan. Tao said Vietnam's crackdown will result in a decline in the company's sales of virtual items, which are the major revenue generator for Chinese online game vendors.
Yu Bin, an analyst from Dratio, a Chinese research firm, said many small Chinese online game firms may have to quit the Vietnamese market due to the new regulation. "From this pending regulation, we can tell the determination of the Vietnamese government to (control) the online gaming market, but it also indicates that the government is using an introverted attitude to deal with crime," Yu said.

Aug 7, 2010

Hong Kong*: Standard Chartered Bank (Hong Kong) plans to strengthen its loan business and enlarge its share of the deposit market in the city as it attempts to boost growth.

Swire net profit rises 332% on strong contribution by Cathay Pacific - Robust results prompt company to raise interim dividend - Swire Pacific (SEHK: 0019) yesterday reported that its underlying profit jumped 135 per cent to HK$8.91 billion in the first half of this year, driven by the sharp increase in earnings from Cathay Pacific Airways (SEHK: 0293). The strong results prompted the company to raise its interim dividend to HK$1 per A share from 60 HK cents a year ago. It set its B share interim dividend at 20 HK cents, up from 12 HK cents previously. Turnover grew 7.47 per cent to HK$12.84 billion during the period. Including an investment property revaluation gain, Swire Pacific's net profit surged 332 per cent to HK$13.95 billion from HK$3.23 billion a year earlier. The solid growth in its underlying profit was largely driven by Cathay, which contributed a profit of HK$2.08 billion compared with HK$277 million in the first half of 2009. Swire Pacific also recorded a HK$2.55 billion gain on a revaluation of its previous interest in the Hong Kong Aircraft Engineering Company (Haeco (SEHK: 0044)). The firm owned a 75.85 per cent interest in Haeco after it acquired an additional 15 per cent stake in the company from Cathay Pacific during the period. In the property division, underlying profit grew 33 per cent to HK$2.46 billion. The recovery in the Hong Kong office market and a robust retail market boosted its gross rental income by 9 per cent to HK$3.9 billion. Rental income from its office portfolio in Hong Kong increased 7 per cent to HK$2.12 billion as the company enjoyed positive rental reversions and low vacancy rates. The office vacancy rate was only 2 per cent at the end of June. Income from retail properties grew 8 per cent to HK$1.47 billion. Its shopping malls in Hong Kong were virtually fully let. Retail sales grew 18 per cent, reflecting the continued strong recovery in consumer demand. Martin Cubbon, executive director at Swire Pacific, yesterday said the outlook for the office market was very good and office rental reversions would remain positive in the second half of the year. In May, Swire Pacific scrapped its HK$20.84 billion initial public offering for its property arm, Swire Properties, due to the soft and unstable stock market. Chairman Christopher Pratt said the company did not have any immediate plan for a Swire Properties IPO. "We may do it when the stock market is stable and trending to good," he added. Swire Pacific's mainland property business has improved. Rental income from Sanlitun Village in Beijing surged 37 per cent in the first half to HK$164 million. The occupancy rates of The Opposite House in Sanlitun Village ranged from 65 to 70 per cent in the first half, compared with 30 to 35 per cent in 2009. "We will have more downtown development on the mainland," Pratt said. He estimated about 30 per cent of the company's investment property portfolio in terms of floor area would be on the mainland after the four major projects were completed. In terms of asset value, about 20 per cent of the portfolio will be on the mainland. Shares in Swire Pacific dropped 0.05 per cent to close at HK$98 yesterday.

Hong Kong's CLP Employees test-drive an electric car for free - CLP managing director Richard Lancaster watches as lawmaker Audrey Eu Yuet-mee and CLP director Paul Poon test an electric car. Employees of a large Hong Kong company will soon get the chance to test-drive an electric car for free. Appropriately enough, the firm is CLP Power (SEHK: 0002), the city's biggest electricity producer, which hopes to gather data that could be useful in planning a network of facilities for charging such vehicles. About 10 of Mitsubishi's iMiev four-seater electric cars will be available to all staff - regardless of rank - for weekend test drives under the six-month scheme. Starting from August 21, CLP employees can sign up to drive the cars on a Saturday and Sunday. They will be allowed to keep the cars over the weekend and drive them back to the firm's depot on Monday morning. There will be no limitation as to where the car can be driven, but drivers will be advised to plan their trips beforehand and, in particular, obtain information about locations where electric vehicles can be charged. CLP announced the scheme yesterday and invited lawmakers to try the vehicles, which are touted for their low cost of operation. A 20 kilometre trip from Mong Kok to Tai Po costs only about HK$2.80 in electricity charges, compared with about HK$23.80 in fuel costs for a petrol-driven car. However, the high price of the car - about HK$500,000 - remains a major obstacle to its promotion. A spokeswoman for CLP said the company would acquire four more electric vehicles by the end of this year, including minibuses and trucks. They are being purchased to help the firm to assess the charging needs of such commercial vehicles. The company has created so far a network of 21 places across Hong Kong equipped with charging facilities, and it said it would gradually provide more as the number of electric vehicles in the city grew. Meanwhile, the Japanese Chamber of Commerce and Industry wrote recently to Secretary for the Environment Edward Yau Tang-wah expressing its concern about the slow development of the network of charging points in the city. The chamber wants the government to accelerate the introduction of electric vehicles and the building of charging facilities.

OOIL 654% rise in net profit to US$1.28 billion for the first six months of this year - Orient Overseas (International) Ltd's Stanley Shen and Ken Cambie announce the company's interim results at the company's offices. Sale of property unit lifts bottom line at OOIL - Orient Overseas (International) (SEHK: 0316) Ltd saw its shares climb to their highest level this year after the company unveiled a 654 per cent rise in net profit to US$1.28 billion for the first six months of this year. Shares of the Tung family-controlled shipping company rose 1.5 per cent yesterday to close at HK$63.65. They were up from HK$36.35 on January 4. The net profit was buoyed by the sale in January of the firm's mainland-focused property arm, Orient Overseas Developments, which contributed slightly more than US$1 billion to the result. By comparison, the firm reported an interim net loss of US$232 million last year. Revenue climbed 32 per cent to US$2.73 billion in the first six months against more than US$2.06 billion a year earlier. Ken Cambie, OOIL chief financial officer, said the company would issue a 40 US cents special dividend out of the proceeds of the property sale in addition to an ordinary dividend of 11.5 US cents. He said the resurgence in the company's fortunes followed strengthened demand in the first half at its container shipping subsidiary, Orient Overseas Container Line. Overall, OOCL saw an 11.6 per cent rise to 2.23 million teu (20-foot equivalent units) in the number of containers loaded aboard its container ships in the first half against nearly 2 million teu in the same period a year earlier. The average revenue per teu climbed 24.2 per cent to US$1,133, while the average load factor rose 14 per cent to 83 per cent. Cambie said that despite the recovery in the first six months of this year, total container liftings and revenue per teu were still down compared with the pre-crisis boom in the first half of 2008. He also pointed out the global recovery in the container shipping sector had led to a shortage of large container ships that could be chartered from other owners which could constrain OOCL's growth. The carrier returned 32 chartered container ships to their owners last year in an effort to cut costs and capacity during the downturn. By comparison, the firm would take delivery of six 8,600 teu ships between April next year and the first half of 2013 that were ordered from Shanghai's Hudong-Zhonghua Shipyard in 2007 at a cost of US$724.2 million. Turning to prospects for the second half, he said: "Should second-half demand for consumer products and semi-finished goods prove to be as strong as is being anticipated, conditions for the container industry should remain positive for the remainder of the year and into 2011." But he warned that "the likely strength of consumer demand in the second half of the year remains unclear". "Freight rate levels continue to be fragile" because of the "significant risk" posed by the number of new vessels due to be delivered to global shipping lines this year which could depress freight rates. Cambie believed there were other risks that had yet to be felt on consumer demand and container shipping. These included the full effects of the sovereign debt crisis in Europe, slow growth in OECD countries and the withdrawal of government stimulus packages. But he also expected OOIL would consider merger and acquisitions out of the downturn.

The Democratic Party, which backed the government's political reforms after they were modified, and the Civic Party, which strongly opposed them in any form, have both seen their support rise since the vote on the issue. At the same time, the Civic Party has knocked a key supporter of the package, the Democratic Alliance for the Betterment and Progress of Hong Kong, out of second place in the monthly Chinese University survey. The Democrats, who retained their top spot, recorded an increase of 3.8 percentage points in the telephone poll of 894 adults conducted from July 20-23, to 15.8 per cent. Support for the Civic Party rose by more than half to 9.5 per cent while the DAB slipped a fifth of a percentage point to 9.1 per cent, and into third place, compared with the previous poll, conducted from June 8-11, two weeks ahead of the Legco vote on the reform package. The poll by the university's Hong Kong Institute of Asia-Pacific Studies has a margin of error of plus or minus 3.28 per cent. A majority remained politically uncommitted, with 57.7 per cent expressing no preference for any party, compared with 59.5 per cent in June. The Democratic Party's support was 12 per cent in the previous survey. On June 25, the party gave its key eight votes to the reform package after Beijing accepted its amendment to allow more than 3 million voters to elect five lawmakers in the functional constituency for district councils in 2012. Democratic Party chairman Albert Ho Chun-yan said the increase in support was probably related to political reform. "The public saw the political courage and commitment of the party in pushing a breakthrough from political stagnation, as we had suffered a lot of pressure," he said. Civic Party leader Audrey Eu Yuet-mee said the party's opposition stance on reform, and the greater support it received reflected the public's position towards the government package. The two political camps also saw different ups and downs in support. Pan-democrats received a rise of 2.3 per cent in support, to 31.5, while the pro-establishment camp saw a 0.6 per cent decrease to 10.8 per cent. While the most respondents, or 31.2 per cent, deemed the wealth gap to be the most urgent problem that society has to tackle, supporters of the two political camps had different priorities. The gap between rich and poor remains the most pressing concern for more than 30 per cent of supporters of the pan-democrats and those without a solid political stance. In contrast, 46.9 per cent of the pro-establishment camp said society should cope with economic development first, and 21.9 per cent listed the wealth gap as their biggest concern. A month after Legco endorsed the reform package, 21.4 per cent of the democratic camp's supporters said democracy in politics was urgently needed while 4.2 per cent of pro-establishment respondents agreed. Professor Wong Chack-kie, an associate director of the institute who conducted the poll, said the findings showed a cross-camp consensus in tackling the wealth gap. He noted that Chief Executive Donald Tsang Yam-kuen said last month that after the passage of the constitutional reform proposal, livelihood was now the greatest priority of the government. "From the responses of the pro-democracy respondents, how to put the [political] agenda aside remains a challenge for the government," Wong said.

Amina Mariam Bokhary, the niece of a top Hong Kong judge, will face a hearing on Friday afternoon to examine whether her controversial sentence of probation for a year for her third conviction for assaulting a police officer should be increased. The hearing will be in the Eastern Court before presiding magistrate Anthony Yuen Wai-ming. It follows a public outcry this week over Bokhary’s sentence – which many people believe is too lenient. The sentence sparked accusations that wealthy and well-connected people often receive lenient treatment from the courts.

Hutchison net profit HK$6.45 billion for the first half of the year, jumps 12pc, beats forecasts - Hutchison Whampoa (SEHK: 0013), billionaire Li Ka-shing’s ports-to-telecoms flagship, said first-half earnings rose 12 per cent, beating expectations, on good earnings growth in port and retail operations and a narrowed loss at its 3G telecoms unit. Hutchison, whose businesses include telecoms operator 3 and Watsons retail stores, has benefited in recent years by one-off gains that helped shield its bottom line from the worst of the global economic downturn. “The operating environment of the group’s businesses has been positive and as a result they are able to report solid improvements in underlying businesses and results,” the diversified group, one of the top conglomerates in Asia-Pacific by market capitalisation, said in a filing to the Hong Kong stock exchange on Thursday accompanying its results. “In the current economic environment, the group will continue to focus on operational and financial disciplines while investing where good opportunities to expand its core businesses arise,” the conglomerate said. It reported a net profit of HK$6.45 billion for the first half of the year, up 12 per cent from the HK$5.76 billion recorded a year earlier. The result beat a HK$4.4 billion average market forecast from a survey of four analysts by Thomson Reuters. Total revenue from ports and related services grew 14 per cent to HK$17.7 billion during the period. EBIT rose 35 per cent to HK$6.07 billion. Its Retail division reported sales growth of 8 per cent to HK$57.5 billion with EBIT up 54 per cent to HK$2.85 billion. Hutchison recorded HK$4.65 billion in disposal gains in the first half of last year from the merger of its Australia 3G business with Vodafone. Its loss-making third generation (3G) mobile phone service, which has long been a drag on earnings, was nearing a turnaround. Losses at its 3G business 3 Group narrowed to HK$998 million for the first half, from a HK$5.45 billion loss the same period a year earlier. Last week, the company’s Husky Energy unit posted a 23 per cent drop in quarterly profit, missing analysts’ estimates. It lowered its output forecast because of falling production at its White Rose field. Hutchison’s controlling shareholder Cheung Kong (SEHK: 0001) Holdings booked a 4 per cent rise in first-half net profit to HK$11.9 billion, with increased contributions from property sales, rental and management businesses. Hutchison and Cheung Kong shares are down 0.7 per cent and 3.7 per cent so far this year, respectively, compared with 1.5 per cent decline by the benchmark Hang Seng Index.

Two Octopus cardholders applied to the Small Claims Tribunal on Thursday demanding compensation from the smart card issuer for selling their personal data.

Chinese luxury wannabes try to raise their profile - A customer walks into a Shanghai Tang boutique in Hong Kong in this file photo taken in 2007. Shanghai Tang is a designer of brightly colored chic clothing featuring Chinese themes founded in Hong Kong and now with stores worldwide. Billionaire investor Warren Buffett, often dubbed the Oracle of Omaha, has seen the future of fashion in the most unlikely of places, bearing a "Made in China" label better known for its cheap than chic. "I threw away the rest of my suits," beams Buffett in the 2007 video, adding that he and Microsoft founder Bill Gates are fans of Chinese suit maker Trands and would be great salesmen for the company based in the northeast Chinese city of Dalian. Trands is one of a handful of emerging Chinese brands that someday hope to take on the likes of Gucci, Armani and Prada in the lucrative luxury goods market. Sales of luxury goods in China grew 12 percent in 2009 to $9.6 billion, accounting for 27.5 percent of the global market, according to Bain & Co. In the next five years, China's luxury spending will increase to $14.6 billion, making it the world's No 1 market. Buffett's endorsements may make for fun Internet fodder, but analysts point out that the emerging crop of Chinese luxury wannabes face a long uphill battle in taking on the global heavyweights which have more than a century of history and huge marketing muscle. Compounding the problem is a longstanding association that equates the "Made in China" label with poor quality and mass-market goods, versus the more exclusive cachet of the "Made in Europe" moniker. "In the short term I don't think any Chinese luxury brands can compete with the international ones in terms of marketing, brand culture, design and quality," said Marie Jiang, JLM Pacific Epoch analyst. China is expected to become the world's biggest luxury goods market in five to seven years, fueled by increasingly wealthy and brand-conscious consumers who want the best of everything, said a survey by The Boston Consulting Group in January. That market has been largely dominated to date by the big Western names, most of which have shops in Shanghai and Beijing and are starting to look at smaller cities as well. But home-grown brands such as Trands are trying to raise their profile both at home and abroad to get a piece of the lucrative luxury pie. Ports, another luxury fashion maker founded in 1961, made its own splash by wooing celebrities and sponsoring clothing for the 2006 movie "The Devil Wears Prada." Aspiring Chinese luxury brands may face their toughest battle on the homefront, where shoppers often prefer big international names such as France's LVMH or Hermes that carry more prestige and more than a century of history. One of the few brands to gain anything approaching an international following is Shanghai Tang, a designer of brightly colored chic clothing featuring Chinese themes founded in Hong Kong and now with stores worldwide. "They are brand conscious, it is a little bit of a show-off attitude and what we have seen is that when they have money, they tend to spend on well-known brands," said Renee Tai, an analyst with CIMB-GK Research, referring to Chinese consumers. Chinese brands could face an even rougher road ahead as global brands, well aware of China's rapidly growing wealth, launch major expansion campaigns in the country that include opening stores in second and third-tier cities. Louis Vuitton will open one of its largest stores in the world in Shanghai this year. In the past year, LV has opened stores in second-tier cities of Xian, Xiamen and Tianjin. London's upscale department store Harrods is also rumored to be in talks with Shanghai's municipal government to open its first store outside the United Kingdom. International brands are also adapting to China, with Hermes rolling out a new brand, "Shang Xia" offering luxury accessories at cheaper prices just for China. "They face competition and I think in terms of them being able to take a dominant share of the market, that's sometime off," said Stephen Mercer a partner at KPMG Shanghai. He said Chinese luxury brands could succeed in niche areas such as spirits and jewelry, with Moutai, a Chinese spirit that was served to Richard Nixon during his famous China trip during his presidency, as one such example.

"The Karate Kid" premieres in Japan.

 China*: The head of China's official carmakers' association said full-year car sales will surpass 15 million units this year, a conservative forecast signalling a potential dramatic downturn in the coming months. China Association of Automobile Manufacturers (CAAM) secretary general Dong Yang's projection implies car sales in the world's biggest car market will grow at least 10 per cent by volume this year. This is down sharply from 48 per cent growth in the first six months and last year's 45 per cent rate. More significantly, it signals a potential contraction of as much as 20 per cent in the second half of the year when compared with the strong, stimulus-fuelled sales volumes in the latter part of 2009. Carmakers have already started hitting the brakes. Shenzhen-based BYD, which counts Warren Buffett as a major shareholder, said this week it had slashed planned output for the year by a quarter to 600,000 vehicles from 800,000.

Mainland's banking regulator has instructed lenders to test the impact of a fall in house prices of up to 50 per cent in key cities where prices have risen sharply, sources said.

Italian fashion house Versace expects to post higher sales this year on the back of its restructuring and the mainland’s growing appetite for luxury goods, its chief executive said. In an interview, Gian Giacomo Ferraris said he remained confident about a return to profitability next year, thanks to a more efficient distribution network and brand repositioning. “We are optimistic about 2010, we have raised our full-year revenue target to €280 million (HK$2.9 billion) from €270 million and are on track to meet it,” the 53-year-old Ferraris said. Versace, whose evening gowns have been worn by film stars Drew Barrymore and Penelope Cruz and pop diva Madonna, is undergoing an overhaul after being hit hard by the downturn.

Mainland’s insurance regulator said it will allow insurers to invest up to 20 per cent of their total assets in equities, confirming earlier reports.

China Everbright Bank said on Thursday it expected this year’s profit growth to be the fastest among its peers and said its strategic investors include some major state-owned firms. China Everbright (SEHK: 0165) Bank said on Thursday it aims to double net profit in two years as the lender unveils a more ambitious plan to woo investors for its roughly US$2.9 billion Shanghai initial public offering. That compares with a previous target set earlier this year to double earnings in three years and quadruple total assets in four years, mainland’s 11th-biggest lender by assets said in a statement. The Beijing-based lender also expected this year’s profit growth to be the fastest among its peers and said its strategic investors include some major state-owned firms such as China State Shipbuilding Corp, China Minmetals Corp and China Datang Corp. Everbright Bank is joining other mainland lenders in a rush for cash after they lent a record 9.6 trillion yuan (HK$11 trillion) last year to support Beijing’s economic stimulus and as the banking regulator tightened capital rules to pre-empt a rise in bad loans. Strategic investors had made a rush for Everbright Bank’s IPO shares, leading to a huge oversubscription and signalling strong demand for the IPO, which could be the country’s second-largest this year after Agricultural Bank of China’s (ABC) more than US$20 billion offering last month. Everbright, controlled by Central Huijin, a unit of mainland’s US$300 billion sovereign wealth fund, hopes to price the IPO at between 3 and 3.2 yuan apiece, or 1.5-1.6 times forecast book value in current year, two people familiar with the deal said on Monday. Underwriter China International Capital Corp said in its research report that fair market value of Everbright Bank shares should be 3.52-4.08 yuan, representing price/book ratio of 1.81-2.1. Everbright Bank completes pre-marketing on Thursday and will set final pricing for its IPO shares on August 11. It aims to list in Shanghai on August 18.

Acer, the world’s No 3 PC brand, said it aims to book revenue of US$2.5 billion in the mainland next year and expects to become Asia’s No 2 PC brand, helped by a deal with mainland’s Founder Technology Group. Acer would gain access to Founder’s channel network and operate the mainland company’s marketing efforts, while Founder would run Acer’s after-sales services and provide support for its PC manufacturing operations, it said in a statement late on Wednesday. “What Acer really wants from this agreement is to gain access to Founder’s PC distribution network,” said Jenny Lai, an analyst with CLSA. “It’s very difficult to break into China’s distribution network, especially in the smaller cities, and this should help them gain market share there.” Former Founder chief executive Lan Ye would join Acer as general manager of its Founder business operations, Acer added. Acer sold about 512,000 PCs in the mainland for a market share of 3.2 per cent in the first quarter of this year, while Founder sold 991,000 PCs for a 6.3 per cent market share, according to research firm Gartner. In Asia, Acer ranks behind mainland’s Lenovo Group (SEHK: 0992), global leader Hewlett-Packard and Dell, research firm IDC said in July. Revenue from the mainland made up about 5 per cent of Acer’s total sales of US$4.9 billion in the first three months of this year, according to figures posted on the company’s website. The announcement came after Acer posted a quarterly profit that matched market expectations on Wednesday.

Huawei Technologies failed to reach agreements to buy two United States assets last month even though it offered at least US$100 million more in each case, according to people with knowledge of the matter. The sellers doubted Huawei's ability to win US government approval to buy software supplier 2Wire and Motorola's wireless-equipment unit, the people said. Huawei failed in its latest attempts to expand in the US, where the Shenzhen-based telephone-equipment maker has previously encountered opposition based on national security concerns. In 2008, it dropped a bid for computer-equipment maker 3Com Corp after the US began investigating whether a deal would give China access to anti-hacking technology used by the US government's defence department. "There is still some scepticism in the US about any potential sale of technology assets to a Chinese company," said Wilson Chai, an analyst at Mirae Asset Securities. "After years of trying in the US, Huawei hasn't made any significant breakthroughs in that market." Huawei spokesman Bill Black declined to comment, as did a Motorola spokeswoman. Huawei was founded more than 20 years ago by Ren Zhengfei, a former official of the People Liberation's Army, and that connection raised concerns for US lawmakers during the attempted purchase of 3Com with co-bidder Bain Capital. Nokia Siemens Networks beat out Huawei in agreeing to buy the Motorola unit for US$1.2 billion on July 19. To help close the gap on the Huawei offer, which was about 10 per cent higher, Nokia Siemens let Motorola keep an additional US$150 million in accounts receivable, cash and some other assets, one of the people said. Motorola was also allowed to retain most of the patents for its wireless network infrastructure business. On July 26, Pace, a British maker of television set-top boxes, announced plans to buy 2Wire for US$475 million. Huawei failed to win with its higher offer on concern a transaction would be slowed by the US government review process, a person familiar with the deal said.

Liverpool manager Roy Hodgson talks to the media during a press conference at the team's training ground on Wednesday. Liverpool is up for sale by its American owners and has attracted interest from the China Investment Corporation (CIC), a sovereign wealth fund for the authorities in Beijing, according to reports in British nerwspapers. The mainland is funding a bid to buy Liverpool Football Club as Beijing seeks to extend its rapidly growing global influence into the world of British sport, according to reports published on Thursday in British newspapers. Beijing’s overseas investment arm China Investment Corp (CIC) is providing funds for the bid fronted by businessman Kenny Huang to acquire the top sporting brand, reported Britain’s The Times and Guardian. The news is a dramatic twist in the saga of troubled Liverpool, whose unpopular American owners put the Premier League club up for sale in April, weighed down by more than 200 million pounds (HK$16 million dollars) of debt. CIC’s emergence as a bidder for Liverpool sets up a takeover battle, with the company pitted against a private equity group and a wealthy Kuwaiti family for control of the club, according to The Times. CIC’s bid values the club at between 300 million pounds and 350 million pounds, said The Times, citing insiders. If the takeover attempt succeeded, CIC would end up owning the majority of the club. The company would expect to make money by building a bigger stadium and developing the club’s Asian fan base, said The Times. Speculation has been mounting about sports tycoon Huang’s interest in the club, and he was forced to issue a statement on Wednesday denying reports he had made a formal bid. “Mr Huang would like to emphasise that he has registered interest in investing in Liverpool FC but has made no formal bid,” said a statement from his representatives, public relations firm Hill & Knowlton. Huang, the head of Hong Kong-based investment company QSL Sports Ltd, is believed to want to secure an early agreement to give manager Roy Hodgson time to bring in reinforcements before the end of the transfer window. He is believed to have spoken to senior figures at Anfield to express his seriousness about a buy-out, in the hope that it will help persuade top stars like Fernando Torres that the club does have a better future. On Tuesday, Liverpool chairman Martin Broughton announced that “several” potential buyers had submitted bids to buy Liverpool. “It still remains the objective to conclude a deal before the end of the transfer window [August 31],” he told the Guardian. Liverpool is just the latest Premier League side to be targeted by overseas investors. Clubs already in foreign hands include Aston Villa, Birmingham and Manchester United. Liverpool was put on the market by American co-owners Tom Hicks and George Gillet in April, and the club owes 237 million pounds to its principal lender the Royal Bank of Scotland. CIC was established to invest overseas some of China’s massive foreign exchange reserves – which stood at US$2.447 trillion dollars at the end of March – partly to gain better returns.

A Taiwan Perry Class frigate launches a surface to air missile during the military exercises in 2003. A newspaper report on Thursday in Taiwan quotes an unnamed senior officer as saying that the US Navy will sell Taiwan two more Perry class frigates, that are about to be decommissioned, for US$20 million each. A Taiwanese newspaper reported on Thursday that the US will sell the island two warships, a move that would almost certainly anger China and further undermine Beijing’s already tense relations with Washington. The report, in the mass circulation Apple Daily, quotes an unnamed Taiwanese senior officer as saying that the US Navy will sell Taiwan two Perry class frigates, about to be decommissioned, for US$20 million each. The ships’ sale will be formally approved by the State Department late this year or early next year, the paper quoted the officer as saying. Taiwan’s defence ministry and the de facto US Embassy in Taipei declined to comment on the report. Any new sale of US military hardware to Taiwan could be expected to incense China and Beijing sees third country involvement in the island’s defence as interference in its internal affairs. Long dormant tensions between Washington and Beijing resurfaced last month when US Secretary of State Hillary Clinton told an Asian forum in Hanoi, Vietnam, that the US regarded settlement of a series of territorial disputes between China and several Asian countries in the South China Sea as being in America’s national interest. The Foreign Ministry in Beijing described those comments – and Clinton’s demand that the disputes be resolved through multilateral negotiations – as “an attack”. China prefers to address the disputes bilaterally because it believes the approach works to its advantage. Washington transferred recognition from Taipei to Beijing in 1979 but is legally committed to helping Taiwan defend itself against possible attack from the mainland. A multibillion dollar sale to the Taiwan of US command and control systems and other sophisticated armaments led to a freeze in formal contacts between the US and China militaries when it was announced earlier this year. Perry class frigates were designed in the US in the 1970s. They can be used to launch submarine-hunting helicopters. China’s submarine deployment in the Taiwan Strait – the 100-mile-wide body of water separating the island from the mainland – is a major concern in Taipei.

A mainland steel executive was jailed for leaking commercial secrets to employees of Anglo-Australian miner Rio Tinto who have since been jailed, a court official said on Thursday.

Yu Woo-ik, the South Korean ambassador to China. China and South Korea are expected to start talks on a free trade agreement next year, a mainland newspaper on Thursday quoted Seoul’s ambassador to Beijing as saying. The discussions would follow the wrapping up of four years of feasibility studies on the deal in both countries, China Daily quoted ambassador Yu Woo-ik as saying. South Korea and China have been jointly studying a trade deal for years but policymakers in Seoul are wary of a backlash from the politically powerful farm lobby who would face stiff competition from cheap products from the mainland. China is South Korea’s biggest export market led by steel and electronic products.

A model wearing a wedding gown on a yacht of St. Valentine International Sailing Club. Yacht training schools are springing up in the country's major costal cities as more and more people look to enjoy a nautical life. Images of cruising yachts in movies are still associated with the unattainably luxurious lifestyle of the exceedingly rich by many Chinese mainlanders. But with a wider range of sailors-to-be now taking professional lessons and obtaining their sailing licenses, private yacht voyages with family and friends are becoming a realistic recreational option for many. "For this year's summer session of courses, we have the highest number of enrollees so far - 40," says Wang Qiaoyu, with Yinhai Yacht Driving Training School at coastal city Qingdao, Shandong province. "It's double that of previous years." Located at eastern Qingdao's yacht marina and opened in 2005, the school is among the country's first to train future mariners for noncommercial sailing. Yacht training schools have mushroomed in the country's major costal cities. At present, there are more than 20 schools and 2,000 licensed sailors, says Li Daze, an official in charge of issuing yacht licenses with the China Maritime Safety Administration (CMSA). "The country's economic development and increasing openness to foreign exchanges have made yachting a more recognizable recreation," he says. According to Li, the yacht business takes off once an area's per capita GDP has reached $5,000, which applies to a considerable number of Chinese cities. But not only are the rich thinking about yachting. Even post-1990 high school graduates like Li Haoran, now a trading major freshman at a Qingdao university, are getting their licenses. Xin Xianlei, who runs Yinhai International Yacht Club and the school, says the learners are largely divided into three groups: those who do it for fun, those as a social activity and those for work. "As to the last kind, they're people who operate yachts as their jobs," Xin says. Dalian-based Peninsula Morning Post reported that the monthly wages for a private yacht driver was 5,000 to 6,000 yuan ($738-886). While in Hainan province, where the yachting business is booming, it's up to 10,000 yuan, Xin says. Piao Jing, 30, an employee with Xin's yacht club, finished the courses last year and has over one year of yachting experience. "I used to think that yachts had nothing to do with me," He says. "Now that I'm trained to work with them and I know more about them, I think yachting isn't beyond the reach of ordinary people. It will just take time for it to become more popular." He says that the number of yachts is rapidly increasing around Qingdao harbors, especially after hosting the 2008 Olympic sailing events. Xie Silin started learning to sail this June with four colleagues from Qingdao Waterwish Boat Manufacturing LTD, a pleasure boat manufacturer. Xie says he is learning for his own pleasure besides work. Jenny Zhao, 39, a Qingdao native, is the only woman trainee in Xie's class. "Sailing a yacht is like driving a car in slow motion," Zhao says. "It's even easier because the traffic is much lighter than on the road." But she adds that the sea is a much more complex environment than the blacktop, thus the training fee of 12,000 yuan is reasonable. Before learning to drive a yacht, Zhao and others take lessons on seamanship, safety, and boat mechanics. Zhao expects to obtain her license and cheerfully envisions a family voyage, which is the reason she enrolled for the lessons. She doesn't think that yachting is a luxury. "To enjoy the offshore delights you need to sail a boat," she says. However, instead of buying a boat, Zhao says she will rent. "Considering the extra cost on berthing and maintenance, no small amount, I'm thinking to rent several times a year," she says. While renting provides an economical approach to sailing, most of those taking the courses are planning to buy. "The price of smaller yachts varies between 100,000 to one million yuan," Xin says. "And if shared among like-minded friends, the expenses might be reasonable. I know two groups of fishing-lovers who bought boats recently, each member paid 40,000 to 50,000 yuan." Outdoor sports lover Ron Gao, a 42-year-old investment consultant, drives from Beijing to Qingdao every week to attend the classes. "With more encouragement from the policy-makers, I believe yacht ownership will increase faster than that of the cars," he says.

Chint Group to invest in Gansu solar power projects - Power equipment manufacturer Chint Group Corp said it will invest 22 billion yuan ($3.25 billion) to build two solar power projects in Gansu province to expand its portfolio in new energy sectors. Zhejiang-based Chint has signed an agreement with Gansu provincial government to build a solar power plant in Lanzhou with capacity of 1 gigawatt (gW) and a solar module manufacturing venture in the city with initial manufacturing capacity of 200 megawatt (mW), said a company statement. But the company did not disclose when the project would come on line. At present, solar power projects completed or under construction in Gansu exceed 100 mW. The investment by the Chint Group would boost those numbers significantly, said analysts. China plans to develop 13 solar power projects in the western region as part of a government plan to cut emissions and boost energy investment in the area. The government is tendering bids to develop similar projects in six provinces, which will have a combined capacity of 280 mW, said the National Development and Reform Commission in July. This is the second tender since the country opened bids to build a 10-megawatt solar power plant in Dunhuang in Gansu province last year. In line with the rapid development of China's solar power industry, an increasing number of enterprises have strengthened their focus in the area. The country has now become a center for the global solar power industry, said analysts. Some overseas companies are also eyeing the huge market in China. Late last year, Arizona-based First Solar Inc agreed to build a solar power plant in Inner Mongolia together with the local government. However, some analysts are worried about Chint's ambitious investment in solar energy. Shi Pengfei, deputy president of Chinese Wind Energy Association, told China Daily that the cost of solar energy production is even higher than wind energy, which should be carefully considered. "Compared with cost of 0.3 yuan per kilowatt-hours (kWh) of coal-fired power, the cost of electricity produced by solar power could be as much as 1 yuan per 1 kWh. The government must pay 0.7 yuan to make up for the price gap. I'm not sure whether it is worth doing." Shi said that development of new energy industries cannot follow the rule of "the more, the better".

Aluminum Corp of China (Chinalco), China's largest aluminum producer, is eyeing rare earth mines in Guangxi Zhuang autonomous region to bolster reserves, sources familiar with the matter said on Wednesday. A model of an Aluminum Corp of China (Chinalco) plant at the company’s headquarters in Beijing. Chinalco has initiated discussions with the Guangxi Zhuang autonomous region government to develop rare earth mines with local miners. Chinalco has initiated discussions with the Guangxi State-owned Assets Supervision and Administration Commission (SASAC) to develop rare earth mines with local miners, and also participate in the processing projects, said the source on condition of anonymity. Chinalco Vice-president Lu Yongqing confirmed that the company was in talks with the Guangxi SASAC, but said nothing has been finalized yet. China supplies more than 95 percent of the global output of rare earth oxides and sits on half of the reserves in the world. Apart from Guangxi, most of the rare earth output is from the Inner Mongolia autonomous region as well as Jiangxi, Guangdong, Hunan, Fujian and Sichuan provinces. The government has indicated that it wants big companies to spearhead the consolidation of the nation's rare earth sector, which has been largely undervalued by over-exploitation and poor management. Rare earths, comprise of 17 elements, which are used in many high-tech sectors like wind turbines, hybrid cars, missiles and mobile phones. Industry sources said Inner Mongolia-based Baotou Steel Rare Earth High-Tech Co has led rare earth consolidation in northern China, while Jiangxi Copper Corp and Ganzhou Rare Earth Mineral Industry Co will take up the mantle in Sichuan and Jiangxi. But the consolidation pace has not been progressing as expected since the 123 rare earth mines are spread across the nation. Guangxi is a region with rich rare earth resources that are yet to be developed. Analysts said Chinaclo's move is in line with the government's plan to keep most of the rare earth mining under the ambit of State-owned enterprises. Earlier media reports suggested that the government had identified several large State-owned miners for the rare earth exploration business. "Rare earth accounts for a small proportion of Chinaclo's business. The move to gain rare earth mines is a strategic plan and in line with the government thinking," said Liu Minda, an analyst with Huatai Securities. The Ministry of Land and Resources said in March that production of rare earth would be capped at 89,200 tons in 2010, up 8.36 percent from 2009.

Dams strained as rains continue to pound NE China. Rains in northeast China's Jilin Province continue to add pressure on the already strained reservoirs, many of which have had to discharge water or risk embankment breaches.

A panda sticks out its tongue to the camera, August 3, 2010. Pandas receive physical and mental care during the hot and humid weather at the giant panda breeding and research center in Chengdu, capital of Southwest China's Sichuan province. They spend more time in air-conditioned rooms and are provided with fresh bamboos.

A keeper plays with a giant panda to stabilize its mood at Chengdu giant panda breeding and research center, Aug 3, 2010.

A panda takes a rest under the shade of a tree, Aug 3, 2010.

Aug 6, 2010

Hong Kong*: The government yesterday sought a review of the non-custodial sentence handed down to the niece of a top judge following her third conviction for assaulting a police officer, on the grounds it is manifestly inadequate and wrong in principle. The appeal by the Department of Justice follows a similar request by police. There was a barrage of criticism from police officers, legislators and the public after Amina Mariam Bokhary, 34, whose uncle is Mr Justice Kemal Bokhary of the Court of Final Appeal, was put on probation for a year on Monday. Bokhary admitted slapping Police Constable Tang Man-wai when he tried to stop her leaving the scene of an accident on January 27 in which her car hit a coach head-on in Stubbs Road, Happy Valley. The magistrate, Anthony Yuen Wai-ming, put her on probation for a year and referred to her "good background, well-off family [and] outstanding academic achievement". He noted that she suffered from bipolar disorder which needed treatment and had been affected by alcohol.

Prudence Chan quits, says no laws broken - A senior executive of the MTR Corporation (SEHK: 0066) will take over as Octopus chief executive from Prudence Chan Bik-wah, who resigned yesterday amid a credibility crisis over the selling of cardholders' personal data. Chan, who will stay on with the company for six months to assist four investigations into its privacy policies, said the issue could have been better handled but insisted that no laws were broken. David Tang Chi-fai, the MTR's head of property projects, will serve as acting chief executive. A new chief executive unrelated to any of the five shareholders needs recruiting soon. Octopus cardholders will get nothing for the sale of their personal information, but tens of millions the company earned will go to the poor and underprivileged. The Octopus Card board announced yesterday that all money generated from the sale of private data since 2002 will be donated to the Community Chest. The company does not yet know just how much it will be - an audit is needed - though HK$44 million is confirmed to have been earned since 2006. The decision was made despite calls for the money to be spread around the 2.4 million cardholders involved. The HK$44 million is equivalent to about 16 percent of what the charity group raised last year. The Community Chest said better economic times meant it raised HK$278 million last year against an initial target of HK$202 million. That was a record for the charity, and now Octopus is going to give this year a wildcard boost. Social workers said the money from Octopus will help modest-sized community service groups. "The amount is not huge for big organizations such as Caritas and Tung Wah," Hong Kong Council of Social Service chief research officer Anthony Wong Kin-wai said. "But there are groups that are smaller in size." He said the annual expenditure of a social work service community with a staff of 20 runs to between HK$4 million and HK$5 million. Society for Community Organization organizer Sze Lai-shan said it was hard to say what effect the Octopus money would have on social organizations. But it was good that Octopus was handing it over. "Besides the lack of financial support, a shortage of manpower and other resources can impede the operations of social work organizations," Sze said.

New privacy commissioner Allan Chiang starts his five-year term with a call for authorities to consider making the misuse of personal data an offence. Amid calls for his appointment to be cancelled, new privacy commissioner Allan Chiang Yam-wang started work yesterday by asking the government to consider making the misuse of personal data an offence. The HK$44 million sale by Octopus Cards of cardholders' details to third parties exposed lax regulation of private information, Chiang said, echoing concerns held by his predecessor, Roderick Woo Bun. He was met outside his office by a group of democrats who said he should be removed from the job because of a post office privacy row when he was postmaster general.

StanChart plans sales New Product in China via Agricultural Bank - Standard Chartered HK chief executive Benjamin Hung (left), chairman John Peace and chief financial officer, Asia, Julian Fong present the bank's interim results. Standard Chartered plans to sell new products to customers of Agricultural Bank of China after investing HK$3.9 billion in the rural behemoth's initial public offering last month. While truly strategic co-operations between the mainland's biggest banks and their Western IPO investors are rare, Standard Chartered chief executive Peter Sands said the bank wanted to provide new credit services to small and medium-sized companies that do business with Agricultural Bank. He said that Standard Chartered's Hong Kong office was working on a range of financial market products that Agricultural Bank, which raised over HK$170 billion in its offering, could sell. Speaking as Standard Chartered unveiled an 11 per cent increase in first-half profit, Sands said that the bank had "no immediate plans" to increase its stake in Agricultural Bank. "The immediate focus is working through a set of areas where we want to do business co-operation, like providing services to their SME client base," he said. "In Hong Kong, we have a team working on providing financial markets products for them in support of their business." Lower bad-loan charges and good results in India meant net profits rose to US$2.1 billion from US$1.93 billion in the year-earlier period. But Standard Chartered's shares dropped 2.9 per cent to 1,807 pence by 1.47pm in London as investors took fright over the bank's cautious outlook on the world economy and noted its earnings missed analysts' forecasts, partly due to plunging profits in Hong Kong. While many banks globally have regained strength in recent months, Sands warned the world may be heading into a double-dip recession. "The imbalances in the world economy remain acute," he wrote in a statement with the results. "Deleveraging in the West is now happening in the both the public and private sectors, particularly in Europe. This will inevitably be painful. "Our markets - Asia, Africa and the Middle East - are bouncing back. But to sustain that momentum they need the West to grow too." Low interest rates in Hong Kong during the first half meant the bank made less money from lending in the city. Pre-tax profits slumped 11 per cent to US$511 million, from US$576 million. India, for the first time, contributed the lion's share of group earnings, with profits before tax gaining almost 19 per cent to US$624 million. But in a Hong Kong media briefing, chairman John Peace denied that the bank was more focused on nurturing Indian business than improving performance in Hong Kong. "Hong Kong is a key part of our future and our growth story," he said. In Britain, the United States and Europe, Standard Chartered's pre-tax profits slumped 62 per cent to US$123 million. That was partly down to losses in its private banking businesses, as its wealthy customers shied away from complex financial products. Across the bank, bad-loan losses fell from US$1.1 billion this time last year to US$437 million. That trend was magnified at HSBC (SEHK: 0005), which more than doubled its first-half profits. This came largely on the back of sharply reduced bad-loan charges in its troubled US subprime lending unit. Standard Chartered increased its first-half dividend 10 per cent to 23.35 US cents a share.

Cathay orders 36 jets as profit soars to HK$6.8b - Carrier eyes better second half after eightfold rise in earnings. Cathay Pacific Airways (SEHK: 0293) posted an eyebrow-raising net profit of HK$6.84 billion for the first half of the year, more than eight times the figure in the same period last year, as it rode a recovery in passenger numbers and cargo. The strong result, which surprised analysts, has prompted the company to launch a HK$73 billion acquisition of wide-body aircraft, the largest single investment by the carrier. "I can say with confidence we have a strong belief in our business model and the future in Hong Kong [as an important air hub]," Cathay chairman Christopher Pratt said at the post-results press conference yesterday. The airline entered a preliminary contract to buy 30 long-range Airbus A350 jetliners, powered by Rolls-Royce engines, at a catalogue price of HK$60.84 billion. The aircraft will be delivered between 2016 and 2019. Cathay also intends to exercise the options to acquire six General Electric-powered Boeing 777s at an estimated cost of HK$12.48 billion, bringing the outstanding firm orders for the twin-jet planes to 18 from 12. The new aircraft will replace existing B747 and A340 jets as well as accommodate future passenger demand growth, Cathay chief executive Tony Tyler said. The airline has an option to buy 30 additional A350s in the future. Although the global economic outlook remains uncertain, air traffic demand in the Asia-Pacific has seen a boom over the past six to nine months. Cathay's net profit jumped to HK$6.84 billion from HK$812 million a year earlier, way above the market consensus of HK$4.5 billion and even surpassing most analysts' full-year predictions. "Generally, our business in Hong Kong is more profitable in the second half than in the first half [owing] to seasonality reasons," Pratt said. Cathay would like to see a better second half, given that forward bookings in the next several months remained strong, he said. Cathay employees will receive an ex-gratia payment of 14 days' salary as an advance profit share in the light of the positive result. Shares in Cathay soared 3.9 per cent to HK$18.08 yesterday. Stripping out the one-off gain of HK$2.165 billion from the disposal of its stakes in Hong Kong Air Cargo Terminals and Hong Kong Aircraft Engineering Company, fuel-hedging losses and contributions from subsidiaries, operating profit for Cathay's core business comes in at HK$4.19 billion. Passenger revenue increased 25.7 per cent to HK$ 27.41 billion, while cargo revenue jumped 63.1 per cent to HK$ 11.84 billion. Meanwhile, Cathay's cargo joint venture with Air China (SEHK: 0753) is expected to take off in October, two months behind schedule owing to longer than expected approval times. The obstacle for Cathay is a slowdown in cargo demand, especially from the financially strapped euro zone, Nomura Securities transport analyst Jim Wong said. In the first half, nearly 30 per cent of sales were generated by the cargo division. Cathay will begin to take delivery of 10 B747-8 freighters from January. Fuel costs increased 51 per cent to HK$13.1 billion owing to a more than 40 per cent increase in jet fuel prices.

Now is not the time to talk about a pay cut for undersecretaries and political assistants, Executive Council convenor Leung Chun-ying says. His remark came after political parties called for a pay freeze or pay cut for the appointees. An appointment committee headed by Chief Executive Donald Tsang Yam-kuen will soon announce whether the salaries of the nine undersecretaries and nine political assistants will be adjusted. "It is not time to talk about a pay cut," Leung said. "In the government team, the pay levels of different positions are linked with one another." The monthly salaries of bureau undersecretaries range from HK$197,453 to HK$211,557, while those of political assistants range from HK$126,933 to HK$155,139. Their salaries were cut by 5.38 per cent under a voluntary pay-cut proposal in June last year, when the government announced a reduction of the same percentage in senior civil servants' pay.

Poly (Hong Kong) Investments, the locally listed vehicle of state-owned conglomerate China Poly Group, is raising as much as HK$3.62 billion in a top-up share placement to finance land bank acquisitions. The company is offering 350 million new shares at between HK$8.68 and HK$9.05 each, representing a discount of between 4 per cent and 8 per cent to the last closing price of HK$9.43 on Tuesday. Poly (Hong Kong) shares were suspended yesterday and will resume trading today.

 China*: In a move that might look odd to outsiders, some 40 professors at a Shenzhen university recently competed for the post of chuzhang - a mid-level official title in the mainland's bureaucratic system. But their motivation was at least clear to Professor Zhong Zhixian , the director of Jiangxi Normal University's Institute of Curriculum and Instruction. "The mere title of professor won't give you much on the mainland, but as a scholar with an official rank you have much more power," he said. Lavish perks - ranging from housing subsidies to large expenses allowances, fully paid overseas trips and even personal chauffeurs - beckon academics up the bureaucratic ladder. The average basic salary for a professor on the mainland is less than 25,000 yuan (HK$28,600) a year, with the bulk of their income coming from various bonuses, grants and subsidies. Official perks would be a welcome supplement for most. So while it might look bizarre, Zhong said, competition for bureaucratic positions was common at most mainland universities. Academics with an official rank also get to decide which staff and courses survive and have better access to funding. At mainland universities, it is bureaucrats, not scholars, who have the greater say in the way things are run. Every public university has a Communist Party secretary who is the top decision-maker in the institution, and very few of them have an academic background. "Bureaucrats play the central role in almost everything - from setting majors and curriculum development to performance assessment to distribution of funds, to promotions," Zhong said. As a result, mainland universities are not autonomous entities, unlike their counterparts in most other countries. The government pulls the strings, controlling both power and money. It also sorts universities into three tiers, from provincial-departmental level to vice-ministerial level to differentiate their levels of importance, so that resources can be distributed accordingly.

Messy schedule for holidays raises hackles - Authorities have arranged probably the most bizarre holiday schedule yet for mainland workers this autumn. As usual, certain weekends are to be worked, allowing weekdays adjacent to holidays to be taken off. But with the Mid-Autumn Festival, which follows the lunar calendar, falling midweek on September 22 this year, and the National Day "golden week" national holiday starting nine days later on October 1, the powers that be have decided to chop the schedule into eight parts. National Day ranks second only to Lunar New Year, and in working out the complex schedule the authorities have heard complaints from employees whose hopes of a long holiday have been dashed. And companies with international clients say that their operations have been messed up. "We receive very few e-mails and calls on Friday and Monday, let alone weekends," said Zhou Yan , who sells plastic fabric to overseas clients for Zhejiang Yuli Plastic Co in Haining , Zhejiang. "I have nothing to do at all on weekends." Vivien Zheng, an executive assistant at the Beijing office of international executive search firm Heidrick & Struggles, said her company simply discarded the official schedule whenever a weekend was moved to accommodate a festival. "There's no point in working on weekends for us, so we'll have a 16-day holiday this year," she said. Some have scoffed that as the country becomes more internationally connected, the planning of holidays remains mired in the planned economy era. "It's ridiculous to make it so complex," said Chen Jiangjie , a worker at Zhejiang Ocean Shipping, a company specialising in international logistics. "Why can't colleagues just take turns having a week off in September or October? This way work is much less affected and everybody gets a complete holiday." But he is sure the official schedule will be strictly followed in his company, since it is state-owned. Unlike Western holidays, which mostly fall on a fixed workday, many Chinese holidays fall on different days each year because traditional festivals are set according to the lunar calendar. And from 2008, the Ching Ming Festival, Dragon Boat Festival and Mid-Autumn Festival were added as public holidays. There is only one public holiday for Mid-Autumn Festival and three for National Day. But traditionally the State Council juggles weekend schedules to make the former three days and the latter seven days. An official from the National Development and Reform Committee was quoted by Xinhua as saying that the arrangement this year was made to balance work and rest. He said people could use annual leave to combine the public holidays for a long break. But many private company employees do not get paid annual leave, so "golden weeks" result in mass travel on public transport and huge jams at tourist hot spots. Shi Qing , who works in the marketing department of China International Travel Service, said packages to the United States and Canada between September 18 and October 10 had sold out. "Routes to Europe and America are most popular for this period since it's one of the longest holidays of the year," she said. Li Shuang , vice-general manager of BTG Outbound Tours, said his company still focused on packages that lasted seven days, in conjunction with the official National Day break. "After all, only employees at foreign-invested companies have the benefit of packaging the two holidays with their annual leave, so we expect only a small number of people taking a longer than usual holiday."

Everbright's IPO proves popular - 30 strategic investors had committed up to 60 billion yuan - China Everbright Bank is finding major support for its IPO shares reserved for strategic investors, and could raise US$2.9 billion. China Everbright (SEHK: 0165) Bank's initial public offering shares reserved for strategic investors have been hugely oversubscribed, signalling strong demand for the potential US$2.9 billion offering as stock markets recover. The bank said 30 strategic investors had committed up to 60 billion yuan (HK$68.65 billion) for their portion of the 6.1 billion share offer, in what could be the second-largest mainland flotation this year after a US$20.8 billion fund-raising effort last month. "Everbright Bank is healthier than Agricultural Bank [of China] by many standards and is selling much fewer shares, so if the pricing is reasonable, it would be natural for the lender to attract more interest from strategic investors who are often state-owned and cash-rich," said Ye Yunyan, an analyst at Galaxy Securities. "The recent rebound in the stock market also helps boost demand for the IPO, as investors get less pessimistic about the long-term prospects of the banking sector." All major state-owned mainland lenders have announced massive fund-raising plans after the banks, together with smaller lenders, lent a record 9.6 trillion yuan last year to support Beijing's economic stimulus and as the banking regulator tightened capital rules to pre-empt a rise in industry bad loans. The offering is Everbright Bank's second major fund-raising since August last year. The bank raised 11.5 billion yuan in a private placement then but said it could still face a shortfall. Its capital adequacy ratio, a key measure of lenders' ability to absorb potential losses, stood at 10.39 per cent at the end of last year, compared with the 11 per cent minimum required for mid-sized listed lenders. Everbright hopes to price the offer at between three yuan and 3.2 yuan a share, people familiar with the deal said. Everbright, controlled by Central Huijin Investment, a unit of the country's US$300 billion sovereign wealth fund, could expand the offer by 15 per cent to seven billion A shares through an over-allotment. It is placing half the total offer shares with strategic investors including long-term customers, shareholders and mainland companies. Everbright Bank chairman Tang Shuangning, a former vice-chairman of the China Banking Regulatory Commission, had said the strategic placement and the over-allotment option were designed to limit any negative impact that the offer could have on the stock market.

The World Trade Organization has reportedly ruled in China's favor in a dispute with the United States over imports of mainland chicken. The commerce ministry has received the final ruling from the WTO, which is expected to come into effect soon and help open up the US market for China's finished chicken breast exports, the China Daily reported yesterday. "It [the final ruling] will be announced in one or two months, and the result is ... China wins," the report said, citing an unnamed source within the ministry. A ministry official confirmed China had received the ruling, but declined further comment. Beijing says Washington is breaking international trade rules through measures including an appropriations bill, which it says result in a complete ban on imports of Chinese poultry. The WTO set up a panel in July last year to examine the complaint following Beijing's request. China and the United States halted imports of each other's poultry in 2004 over fears about the spread of bird flu. Imports of some US poultry products to China have since been resumed but mainland officials have complained that the United States continues to hold up reciprocal imports of Chinese poultry.

A dancer performs torch relay during a ceremony for the 100-day countdown to 16th Asian Games in Guangzhou, south China's Guangdong Province, Aug. 4, 2010.

Aug 5, 2010

Hong Kong*: The government on Wednesday asked the Octopus card company to deal decisively with “management and corporate governance” issues following recent revelations. Octopus Holdings chief executive Prudence Chan Pik-wah remained tight-lipped about her future even as a survey reflected the growing sentiment for her to accept responsibility for the private data-selling fiasco and step down. Chan refused to comment on her future yesterday as she made her way to work. Speculation has risen that the company's board will meet this week to decide the fate of Chan and several other senior executives involved in the sale of the personal data of Octopus card users to third parties. An Octopus spokeswoman said a meeting will be held soon but that the date has yet to be confirmed. Hong Kong Research Association said nearly 70 percent of the 1,073 people aged 18 or above it polled in the five days to Monday felt Chan should be held accountable for the scandal and resign. Nearly 90 percent said they could not accept the sale of their personal data to a third party. Octopus also said consultant DeloitteToucheTomatsu is to carry out an independent review of the data protection policies and practices of the firm and its subsidiaries. Deloitte will also submit an independent auditor report on subsidiary Octopus Cards as required by the Hong Kong Monetary Authority.

Police have asked the Department of Justice to review the sentence handed to the niece of a top judge who avoided prison after a third conviction for assaulting an officer.

24,000 in final fight for study options - New diploma system will end Form Six scramble - About 24,000 students will dash around the city today in pursuit of study options, with 35,000 Form Six places being contested by around 59,000 candidates who fulfilled the minimum entrance requirements. But scenes of students scurrying between schools and central admission centres with their result slips will be consigned to history after the Hong Kong Examinations and Assessment Authority releases results for the Form Five public exam for the last time today. Results for 122,387 Hong Kong Certificate of Education Examination (HKCEE) candidates, 6,860 more than last year, are released today. Of these, 73,805 are students at day schools taking the exams for the first time and 33,246 are self-study candidates. The rest are repeaters at day schools, and various other types of candidate. A total of 56,451, or 71 per cent, of day-school pupils have obtained the minimum qualification for Form Six, up by 347 from last year. The minimum entrance requirements for Form Six are six marks out of 30 for six subjects, including Chinese and English, with a pass carrying one mark. A total of 34,820 places are on offer. With the percentage rise in the number of Form Six places (4 per cent) greater than the rise in the number of eligible candidates (0.7 per cent), Lit Ho-cheung, director of Hok Yau Club's student guidance centre, said the fight for Form Six places would be eased this year. "But the 24,000 students who could not gain a Form Six place must consider different factors thoroughly before making a decision," he said. "A series of study pathways are available for them like vocational courses, associate degree programmes and switching to the second year of the new senior secondary curriculum." This is the last year in which pupils will take the HKCEE. They will now stay in secondary school for a sixth year and sit for the Hong Kong Diploma of Secondary Education, which replaces A levels. The two systems will operate in parallel until 2012. A candidate with 14 marks can usually secure a Form Six place. A total of 26,583 candidates scored 14 marks or above this year, down by 18 from last year. Sixteen students obtained 10 distinctions, compared with 13 straight-A students last year. Francis Cheung Wing-ming, secretary general of the authority, commended the performance of special needs students. "A total of 21 of them scored three As to eight As," he said. Overall performance in Chinese and English was slightly worse than last year. The pass rate for Chinese fell from 71.6 per cent to 70.9 per cent; the pass rate for English dropped from 66.9 per cent to 65 per cent. The Hong Kong Federation of Youth Groups has set up a 24-hour hotline until tomorrow. Hsu Siu-man, supervisor of the federation, said they had so far dealt with more than 2,000 cases requiring counselling. She said some parents had paid up to HK$10,000 in advance to programme providers even though the results had yet to be released. "They paid a deposit of around HK$3,000 to HK$4,000 for a programme and they applied for three different ones for a sense of security." Jao Ming said he was worried about his son's prospects. "My wife has already applied for leave today to accompany him. We have paid HK$300 so far for a place with the Vocational Training Council. If he scores below 10 marks, we hope he can switch to the new curriculum."

Cathay Pacific Airlines posts record profit - Cathay Pacific airways said on Wednesday that it posted a net profit of HK$6.84 billion for the six months ended June, despite the interruption of aviation traffic earlier this year when ash from an Icelandic volcano shut down swathes of European airspace. Strong freight traffic and a recovery in passenger flow lifted first-half earnings at Hong Kong’s dominant air carrier Cathay Pacific Airways (SEHK: 0293) to a record, as it said it could order up to 30 new aircraft. Cathay’s profit outlook for the second half is positive as analysts expect premium passenger numbers for Asia’s No 4 carrier by market value to rise faster even as freight volume growth slows from its breakneck pace in May. “If present trends continue, we expect our financial results to continue to be strong in the second half of 2010,” Cathay Pacific chairman Christopher Pratt said in a statement. “Our results would be adversely affected, and very quickly so, by a significant further increase in fuel prices or any return to the recessionary economic conditions of 2008 and much of 2009.” Passenger demand is back and now exceeds 2008 levels, taking Cathay’s load factors to the highest June on record, as the aviation industry recovers from a difficult few years of low demand and shrinking volumes. With demand strong, the company said it would order up to 30 new aircraft from Airbus, a unit of EADS, boosting its total number of planes by about 18 per cent. Cathay shares rose 1.6 per cent on Wednesday ahead of the results and have risen 22 per cent this year, outperforming a nearly 2 per cent fall on the broader market. The International Air Transportation Association (IATA) said in June that global airlines would turn a US$2.5 billion profit this year with the Asia-Pacific taking the lead as Asian economies excluding Japan expand nearly twice as fast as global gross domestic product (GDP). Cathay posted a net profit of HK$6.84 billion for the six months ended June, up from HK$812 million a year ago, despite the interruption of aviation traffic earlier this year when ash from an Icelandic volcano shut down swathes of European airspace. That represents the best-ever six-month profit for the company and beat an average forecast of HK$4.13 billion from six analysts polled by Reuters. “The results are much higher than expected and beat all forecasts on the street,” said Jim Wong an analyst at Nomura International. “It will give a good push to its stock after the lunchbreak.” Larger rival Singapore Airlines, the world’s No 2 airline, also posted a strong profit for the first-quarter ended June. Cathay’s earnings for the first half of the current year were boosted by stronger-than-expected freight volume, disposal gains from the sale of its shares in Hong Kong Aircraft Engineering Co and Hong Kong Air Cargo Terminals, and a higher profit contribution from associate Air China (SEHK: 0753). Controlled by conglomerate Swire Pacific (SEHK: 0019), Cathay owns an 18 per cent stake in Air China, which in turn holds nearly 30 per cent of Cathay. The number of passengers carried by Cathay rose 8.5 per cent to 13 million in the first half of this year from a year earlier. Cargo and mail tonnage increased by 24.4 per cent in the same period.

The war of words over ownership of ATV dragged on yesterday as mainland property tycoon Wong Ching offered an olive branch to shareholder Tsai Eng-meng, which the Taiwanese snack tycoon rejected. The pair are embroiled in a battle for control of the television station. Speaking at an ATV event yesterday, Wong pleaded for Tsai's understanding and offered an apology, saying he had made mistakes. He hoped Tsai would give ATV another three months to repay the HK$50 million that Tsai loaned to the troubled broadcaster instead of enforcing a loan deadline at the end of this month. Wong has an agreement with brothers Payson Cha Mou-sing and Johnson Cha Mou-daid to buy their interests in two companies, Pelaka and Panfair, which control a majority of ATV shares. Pelaka holds 51 per cent of voting shares in Antenna, ATV's largest shareholder with 47.58 per cent of the station's shares. Panfair holds 10.75 per cent of ATV's shares. Wong, who has pumped HK$200 million into ATV, said his deal with the Cha brothers was still valid, contradicting a remark by Tsai that it expired on Monday. Last week, the courts granted Tsai an extension of an injunction that stops Wong from acquiring shares from the Cha brothers. Wong said that he had made some mistakes and was ready to meet Tsai and discuss future collaboration. A partnership between him and Tsai would be a "dream team". But Tsai said after Wong made his remarks that the agreement between Wong and the Cha brothers had ended on Monday. He said the Cha brothers had made a deal to sell their Pelaka and Panfair interests to Wong last April for HK$83 million - HK$50 million less than the price they had offered to Tsai. The Cha brothers' office did not comment. Tsai rejected Wong's apology, accusing him of destroying ATV's management by appointing his relatives to the board and sacking chief executive Nancy Hu Gin-ing for no valid reason.

Zimmerman in bid for Hong Kong district council seat - Activist Paul Zimmerman brushed aside concerns about language barriers as he announced his bid for a Southern District Council seat yesterday with the backing of Civic Party political heavyweights. Admitting that his far-from-fluent Cantonese was a campaign weakness, the 52-year-old Dutchman (pictured) said his knowledge of and passion for the city counterbalanced this shortcoming. The seat in the Pok Fu Lam constituency was vacated by Ronald Chan Ngok-pang, of the Savantas Policy Institute. He was regarded as the top aide to Regina Ip Lau Suk-yee, the institute's chairwoman, independent lawmaker and former secretary for security. Chan left the council in May to become the chief executive's special assistant. Zimmerman's campaign launch was bolstered by core leaders of the Civic Party. All five party legislators, including leader Audrey Eu Yuet-mee, stood on stage in support of the campaign. Zimmerman, who has played an active role in conservation affairs in recent years, laid out his election platform with a series of community planning goals. He will be up against Chan's colleague Ellis Lau Ying-tung, Savantas financial adviser. As an Ip protege, the 26-year-old Lau's campaign has the influential support of the Savantas chief. The by-election will be held on September 5. Nominations close on Thursday.

It is a popular notion that Hong Kong's political power is concentrated among a relatively small business and professional elite. An examination of the people serving on the city's influential statutory boards does little to dispel that belief. About one-tenth of the nearly 3,500 non-official seats on 247 statutory bodies are held by a group of Election Committee members who nominated Donald Tsang Yam-kuen for chief executive in 2007. After Tsang was elected, the number of Election Committee members with roles on statutory authorities more than doubled. The statutory bodies - organisations such as the Airport Authority, the Town Planning Board and the Urban Renewal Authority, set up to give advice on policies and deliver services - are an integral part of Hong Kong's governing structure. Deciding who sits on most of those bodies is the prerogative of the chief executive. When Tsang was re-elected to the position in 2007 - in the first-ever contested election for the post since the handover - he pledged that his government would be one that "represents all social strata and one that strives to balance the interests of all sectors". Tsang was clearly the favourite of the 800-seat Election Committee; 641 members nominated him, while just 132 backed his challenger, Alan Leong Kah-kit. At the time, Tsang's nominators held 159 seats on statutory bodies. After the election, that number more than doubled to 343. Leong's nominators also increased the number of seats on statutory bodies they held, from 29 to 49 - a rise of nearly 70 per cent. Turning to one's supporters for advice and to fill key positions is hardly unusual. In most democracies, the winning party generally looks to its backers and trusted allies to ensure its policies are carried out. Still, critics argue that this demonstrates Tsang's preference for distancing himself from his detractors. "He is inclined to appoint people who supported him in the chief executive election and who he considers like-minded," said Chan Kin-man, an associate professor with Chinese University's department of sociology. "The practice is commonplace around the world, including in many Western democracies, but it poses a big problem for governance in Hong Kong, which is not a full democracy, as the chief executive does not have the popular mandate enjoyed by elected leaders in other countries." Chan said Tsang's nominators mainly came from the business sector and the wider establishment, adding that their predominance on statutory bodies would ensure smooth passage of government policies. "By doing so, the government relies on a very narrow support base and runs the risk of putting itself in an antagonistic position against the wider community," Chan said. Among those 343 statutory body seats occupied by Tsang's nominators at the end of May, 184 were appointed for the first time after the 2007 election. A number are on bodies with substantial power and resources, such as the Airport Authority, the Tourism Board and the West Kowloon Cultural District Authority. During the 2007 chief executive election, six of 24 non-official members of the Tourism Board at the time nominated Tsang for chief executive. After the election, four of the six were reappointed and were joined by another five Tsang nominators. At the Town Planning Board, which is responsible for formulating, monitoring and reviewing town plans and planning policies, nine of 32 non-official members at the time nominated Tsang; in March 2008, one of them was appointed board vice-chairman. Five others were reappointed to the board, while the other three stepped down when their terms expired. In March this year, another two joined them. Currently, five serving board members are Tsang nominators. At the Urban Renewal Authority, which decides the priorities of urban renewal projects, six of 14 non-executive directors backed Tsang's candidacy. Another three supporters joined them in November 2008. Most of the positions secured by Leong's nominators are on less powerful bodies, such as the Independent Police Complaints Council, the Productivity Council, the Arts Development Council, the Guardianship Board and the Buildings Appeal Tribunal Panel. A spokesman for the Home Affairs Bureau, which is responsible for appointments to statutory bodies, said appointments were made taking into account candidates' ability, experience, integrity and commitment to public service. "There is no connection between a person's preference in the nomination of the chief executive and his or her appointment to a statutory body," the spokesman said. But Leong is not happy with the distribution of seats. "The pro-democracy camp has a substantial pool of talent waiting to serve on statutory bodies," he said. "Hong Kong suffers because Tsang is cutting this talent from statutory bodies by adopting a policy of distancing himself from those in the camp. This policy is absolutely regrettable." However Chan Kam-lam, a lawmaker from the Democratic Alliance for the Betterment and Progress of Hong Kong who serves on four statutory bodies, said his appointments had nothing to do with his nomination of Tsang. "My appointments should have strong links with my capacity as a legislator and my party background," Chan said. It is not just seats that have gone to Tsang's nominators - since the election, 70 of them have been awarded the city's top honours: the Grand Bauhinia Medal, Gold Bauhinia Star, Silver Bauhinia Star and Bronze Bauhinia Star since 2007 - more than a fifth of all the top awards given out in that time. Leong's supporters have five medals.

Hong Kong-listed ChinaVision Media Group may buy the 50 per cent stake in Microsoft’s MSN China joint venture held by another local partner, a report said on Wednesday.

Standard Chartered beat expectations with record half-year profit of US$3.12 billion as bad debts more than halved and its key Asian markets fared better than those in the west. Standard Chartered said on Wednesday pretax profit rose 10 per cent from last year and was just above the average forecast of US$3.06 billion from eight analysts polled by Reuters. The bank, which is based in London but makes about four-fifths of its profit in Asia, said impairment losses on loans dropped to US$437 million from US$1.09 billion a year earlier as charges shrunk in the Middle East and elsewhere, to extend a trend shown by rivals including HSBC (SEHK: 0005). Standard Chartered had a record first quarter but said that economic uncertainty had hurt demand for some wholesale banking products in May and June.

Hongkong and Shanghai Banking Corp and its affiliate Hang Seng Bank (0011) vowed to boost their headcounts and keep assessing payrolls in a rapidly narrowing labor market. Hongkong Bank will hire at least 300 people in the mainland this year - including equities specialists - while Hang Seng will add up to 600 staff in Hong Kong and China. "We have many vacancies," said Hang Seng vice chairman and chief executive Margaret Leung Ko May-yee. "If we're to meet our hiring forecasts, we'll hire 400 people locally and 200 in the mainland." But Leung noted it was difficult to lure financial talent - especially for frontline jobs - in the face of intense interbank competition. She said staff with potential or departments with higher turnover have been getting a second increment after the bank introduced performance-based pay hikes and bonuses in April. Despite several recruitment fairs, the Asia- Pacific arm of HSBC (0005) managed to recruit just 364 staff in the first half of the year. Chief executive Peter Wong Tung-shun conceded hiring the right people was challenging. "As wealth moves from West to East in the coming years, many people will scramble for employees. With high turnover, we will pay more attention to salary surveys," Wong said. Hongkong and Shanghai Banking Corp had a return on shareholders' equity of 23 percent in the first half. As interest rates look set to rise next year, deposit spreads will increase to keep ROE at a high level. Wong noted total loans rose by 24 percent in the rest of Asia during the first half. They grew by 17 percent in Hong Kong. Commercial banking loans surged 42 percent year-on-year owing to conservative lending last year, increased regional capital and trade flows, and investments in the mainland. HSBC shares closed up 1.8 percent at HK$82.50 on the back of good interim results.

 China*: Mainland automaker BYD Co – backed by US billionaire Warren Buffett – on Wednesday cut its sales target for the current year by 25 per cent, as demand in the world’s largest auto market shows new signs of slowing. The announcement comes after BYD said last month it would delay its planned US$420 million mainland listing due to concerns about the weak stock market. BYD, which sold 289,014 vehicles in the first half, or 36 per cent of its original full-year target of 800,000 units, said it now aimed to sell 600,000 vehicles this year, according to a statement from the company. The company sold nearly 450,000 vehicles last year, or 1.7 times the sales volume the previous year, on strong demand for its popular F3 sedan. However, Wang Jianjun, a spokesman at BYD’s auto sales unit, said in the statement he expected government subsidies for fuel-efficient and green energy cars were likely to boost its sales in the second half of the year. Beijing announced plans in June to offer subsidies of 3,000 yuan (HK$3,400) for purchases of cars that have 1.6 litre or smaller engines and consume 20 per cent less fuel than current standards. The official Shanghai Securities News reported on Wednesday that the government would spend over 100 billion yuan subsidising vehicles using green energy in the next ten years, citing a draft plan by the Ministry of Industry and Information Technology. The mainland overtook the United States for the first time last year to become the world’s biggest vehicle market, but data shows that the country’s sales have started to slow in recent months. The nation’s auto sales in July totalled 1.06 million units, up 17.2 per cent from a year earlier, but down 6.7 per cent from the previous month, according to figures from the China Automotive Technology and Research Centre. Buffett put BYD, which stands for Build Your Dreams, into the international spotlight when he bought a nearly 10 per cent stake in the company in 2008. In May, BYD and German luxury car maker Daimler announced a joint venture to mass produce an electric car in the mainland. BYD claims to be the sixth biggest car maker in the country and its future plans are focused on electric or hybrid vehicles.

Premier Wen Jiabao, centre, tours the flood-hit Jilin province, where a bridge and two dams are threatened by floating islands of trash. Flooding has hit areas all over the mainland hard this year. About 875,000 homes have been destroyed, 9.61 million people evacuated, and 22 million acres of crops ruined, according to the state flood control office. Giant trash islands threaten bridge, dams in Jilin, Vast floating islands of rubbish and debris, accumulated after torrential rains and flooding, are threatening to topple a bridge and jam two big dams in Jilin, state media reported on Wednesday. One layer of garbage covering 15,000 square metres had lodged under a bridge in the northeastern city of Baishan and was blocking water flow, the China Daily reported.

Iran’s oil minister will travel to Beijing to seek investment in new oil refineries, the oil ministry news website SHANA announced on Tuesday.

China Everbright (SEHK: 0165) Bank’s IPO shares reserved for strategic investors have been hugely oversubscribed, signalling strong demand for the potentially US$2.9 billion offering as stock markets recover. Thirty strategic investors have committed up to 60 billion yuan (HK$69 billion) for their portion of the 6.1 billion-share offering, China Everbright Bank said in a statement on Wednesday, in what could be the second-largest mainland offering this year after Agricultural Bank of China’s (ABC) US$20.8 billion initial public offering last month. All major state-owned mainland lenders have announced massive fundraising plans after they lent a record 9.6 trillion yuan last year to support Beijing’s economic stimulus and as the banking regulator tightened capital rules to pre-empt a rise in industry bad loans. Everbright Bank, controlled by Central Huijin, a unit of the nation’s US$300 billion sovereign wealth fund, plans to sell 6.1 billion yuan-denominated A shares, and could expand its IPO by 15 per cent to 7 billion shares through an overallotment. It is placing half the total amount of IPO shares to strategic investors who include its long-term customers, shareholders and some reputable mainland companies. Everbright Bank hopes to price the IPO at between 3 and 3.2 yuan apiece, two people familiar with the deal said on Monday. Assuming the shares were sold at 3 yuan apiece, the strategic placement in the IPO was about 6.7 times oversubscribed, based on a Reuters calculation. Everbright Bank this week kickstarted investor roadshows in four major cities, including Beijing and Shanghai. The bank aims to list on the Shanghai Stock Exchange on August 18.

Photo taken on Aug. 4, 2010 shows the spot of the final assembly of the Seagull 300 light multi-functional amphibious plane from the production line in Shijiazhuang, capital of north China's Hebei Province. The Seagull 300, the first of its kind in China to have independent intellectual property rights, is going through test flight before its maiden flight in the latter part of Aug, 2010.

French Nuclear power firms move into top gear in China - A third-generation nuclear reactor built by French company Areva in Taishan, Guangdong province. BEIJING - Global equipment makers are rushing to corner a slice of the fast growing nuclear power sector in China and the resultant opportunities in what analysts estimate to be a market in excess of 1 trillion yuan ($148 billion). Domestic nuclear companies are also in the fray and are competing with global players to take advantage of the huge opportunities in China. Dongfang Electric Corp, one of the three largest power equipment makers in China, said over one-fourth of its revenue now comes from the nuclear power sector. "The past two years has been a boom time for China's nuclear power sector. We bagged a lot of orders and have started deliveries," Tang Hongju, head of Dongfang's nuclear department, told China Daily. But Tang said the pace of new orders has diminished in the past six months compared with the same period in 2009 as the government has not approved too many new projects. Power systems provider Rolls Royce expects nuclear power to be a major growth engine for its energy business in China. The company, which is better known in for its aerospace business, has supplied instrumentation and control systems for the Qinshan nuclear power plant in Zhejiang province and the Ling Ao nuclear power plant in Guangdong province. It is also exploring further cooperation with Chinese partners, according to its Chief Executive John Rose. He said Rolls Royce products help ensure safety and increase the efficiency, reliability and lifespan of nuclear power plants. French nuclear power group Areva, which has taken part in several nuclear power projects in China, said while the rapidly growing sector does not benefit the company itself, there are gains for some of its foreign sub-suppliers. Areva has participated in six of the 11 nuclear power reactors currently in operation in China. Nearly 20 of the 24 reactors currently under construction in China use Areva technology, while the French company is directly participating in four of the 20 reactors. The company is also looking for possible opportunities in areas like joint uranium exploration and mining, conversion, fuel fabrication and waste management in China. Nuclear power equipment providers are witnessing "unprecedented opportunities" in China and hence should take steps to meet the higher technology and environmental requirements, said Zhou Xiujie, a nuclear power expert. Some analysts, however, feel that domestic equipment makers stand to gain more, as the government is planning to increase the ratio of indigenous development in nuclear power equipment manufacturing. To increase local production in nuclear power equipment, output should be regarded as a national strategy, National Energy Administration head Zhang Guobao said recently.

Aug 4, 2010

Hong Kong*: The Travel Industry Council (TIC) said on Tuesday it would decide later this month whether to revoke the licence of tour guide Li Hau-chun, after an incident where she was caught on video berating mainland tourists. Li, also known, as “Ah Chun”, and Golden Win International Travel Services – the travel agency she was working for as a freelance tour guide, have submitted reports to the council. TIC chief executive Joseph Tung Yao-chung said on Tuesday the council, which is responsible for regulating outbound and inbound travel agents under the Travel Agents (Amendment) Ordinance, would study reports and complaint letters from the group of mainland tourists before making a decision. In March, Li had scolded the tourists from Anhui during a two-day visit to Hong Kong for not spending enough at a jewellery store. A tourist from the group, known as Wang, had recorded the incident and uploaded the seven-minute clip on the internet in July. Li apologised to the public during a press conference last week. She said she had lost her temper, but explained that her job was difficult as she only earned a commission from sales and a tip of HK$50 per passenger. Li came to Hong Kong from the mainland 10 years ago. She is a single mother with a 17-year-old daughter.

Liverpool’s major creditor, Royal Bank of Scotland, on Monday denied they were in talks with a Chinese businessman over the sale of the Premier League club. But a source close to Chinese businessman Kenny Huang told reporters talks to buy Liverpool’s 237 million pound (HK$2.9 billion) debt with RBS were under way as a first step towards a purchase deal for the 18-times English champions. British media have widely reported that Huang, a Guangdong-born US citizen who already has interests in Chinese baseball and US basketball, had approached the bank as part of a scheme to eventually acquire control of the club. But an RBS spokesman said: “We are not in talks with any bidder about the sale of Liverpool football club.” Asked about the denial, the source insisted Huang wanted to buy the Anfield club, who were put up for sale by unpopular American owners Tom Hicks and George Gillett in April. Huang, chairman of the Hong Kong-based QSL Sports Group, has not commented on the deal but appointed a British media relations firm to represent his interest in the five-times European champions. Liverpool’s owners, who bought the club in February 2007 from former owner David Moores for 218.9 million pounds, instructed Barclays Capital to find a buyer in April and appointed British Airways chief Martin Broughton as chairman to oversee the sale. Barclays Capital refused comment on Monday. The American duo have faced intense criticism and hostility from Liverpool fans, with frequent demands for their removal, after loading the club with huge debts. Huang issued a statement in March denying comments attributed to him in the British media about the future of then Liverpool manager Rafa Benitez but declining comment on his interest in purchasing the club. He also owns a minority share in the US basketball team Cleveland Cavaliers. Media reports have linked Syrian businessman and former international footballer Yahya Kirdi with a deal for Liverpool, who suffered a dismal campaign last season, finishing in seventh place and missing out on a lucrative Champions League spot.

HSBC (SEHK: 0005) has more than doubled its first-half profits, but bowed to political pressure by keeping a tight lid on pay and bonuses for its investment bankers. Thanks to a sharp decrease in bad-loan losses stemming from its crippled American subprime lending business, HSBC's first-half net income leapt 102 per cent from US$3.34 billion to US$6.76 billion. HSBC also returned to profit in North America for the first time since mid-2007. Despite the bumper results, HSBC earmarked just 21 per cent of the investment bank's revenues to reward the unit's well-heeled traders and mergers and acquisitions advisers for the first half of 2010, its investment banking chairman Stuart Gulliver said. HSBC's investment bankers pocketed 35 per cent of the money the division made in 2008, Gulliver said, and 24 per cent in 2009. When asked what proportion of revenues the investment bankers would take home for the full year, Gulliver added: "There will be a lower payout ratio than in previous years." HSBC seems parsimonious in contrast with top investment banks Goldman Sachs and Morgan Stanley, which earmarked 43 and 47 per cent of revenues, respectively, for pay costs in the first half of 2010. Earlier this week British chancellor George Osborne urged British banks, including London-headquartered HSBC, to lend more cash to small businesses instead of hoarding profits to enrich staff. HSBC recorded a US$492 million pre-tax gain in its US business for the first six months, compared to a US$3.7 billion loss this time last year. And while the bank's cash-strapped American customers are still failing to repay loans, the tide is finally turning. In North America, where HSBC closed its consumer lending arm last March, bad loan charges fell from US$8.6 billion this time last year to US$4.6 billion. HSBC has ratcheted up US$32.5 billion of loan impairment charges, which reflect the difference between the original value of debts and the amount the bank thinks customers can repay, in the past two and a half years. Chief executive Michael Geoghegan declined to predict when HSBC would stop taking charges on its American loan book. "We are making steady progress in running off our non-core [US] portfolio," he said. In the first six months, HSBC made a profit in all its major markets. On a pre-tax basis in US dollars, earnings rose 18 per cent in Europe and 15 per cent in Hong Kong. Geoghegan, who moved his office from London to Hong Kong in January, also stated his often-repeated mantra that emerging markets, especially Asia, would fuel the bank's future growth. He reiterated his bullish stance on China's economy, even though some analysts are fretting that the mainland property bubble could burst and that local governments, which borrowed heavily to fund economic stimulus projects, could default on trillions of yuan worth of loans. "Some cooling off is possible, however I am confident that the authorities in leading economies like China can and will continue to deliver sustainable growth," he said. HSBC shares, which closed for trading in Hong Kong before the results announcement, rose 5 per cent to £6.76 (HK$82.34) by midday in London. The bank paid a 16 US cents a share dividend for the half year.

Miss Hong Kong 2010 Toby Chan poses after winning the annual beauty contest in Hong Kong, south China, Aug. 2, 2010.

The Immigration Department has been urged to provide more training for its staff after 72 per cent of those polled by the Privacy Commission incorrectly answered a question on data protection, while nearly half said they had not read all the key policies and guidelines. Roderick Woo Bun - who has just stepped down as privacy commissioner - made the recommendation in a report released yesterday, assessing the department's level of compliance with the privacy law with regard to its handling of information stored in smart identity cards. While Woo was satisfied that the Immigration Department had generally been doing a good job of protecting and maintaining personal data, he noted a few problem areas. For instance, two in five staff who took part in the survey said they had never received any privacy protection training. Of the 297 immigration staff who handled applications for the smart ID cards introduced seven years ago, 213 failed to list what data protection principles were breached if an old application form - with personal data that was meant to be disposed of - went missing. Most of them had served in the department for eight years or more. The department said training in personal data protection was carried out continuously on the job and for new staff, but not conducted in the strict sense of lectures in classrooms. Woo also found that immigration officers transferred people's data to the Tobacco Control Office using a crude cut-and-paste method. The control office needs immigration staff to provide addresses of those prosecuted for smoking in unauthorised areas. But because the Immigration Department's computer system did not allow this data to be singled out, officers had to extract addresses manually from ID card application forms. "Apart from the possible data accuracy issue ... the commissioner is equally concerned about the unnecessary production of an image of the original application form," the report stated. "At least three audit trails reports ... had to be reviewed simultaneously and manually ... to check for any irregularity. The commissioner does not believe it is feasible in practice to cross-examine all these bulky printouts regularly to detect irregularities in a consistent manner." The immigration department said it would explore methods to improve the system and security audit reports for record-keeping and monitoring purposes. Woo has spoken out in the months leading up to his retirement. He investigated the high-profile case involving the Octopus cards issuer, which revealed last week that it had made HK$44 million by selling cardholders' data to third parties. This came shortly after an exchange of words with the director of the Audit Commission, Benjamin Tang Kwok-bun, who said Woo had spent too much on unnecessary office space and farewell dinners. Meanwhile, a consensus is emerging across parties in calling for the extension of criminalisation under the privacy law after the government announced a review of the ordinance. The announcement, issued by acting chief secretary Stephen Lam Sui-lung, hinted that there is a need to step up penalties under the Personal Data (Privacy) Ordinance, and to make some cases criminal offences, after the Octopus case. Political parties showed general support for the idea, but said further consultation was needed to decide how far the changes should go. Now, it is only a criminal offence if a person does not comply with an enforcement notice issued by the privacy commissioner after investigation. Unlawfully obtaining, disclosing or selling personal data is an offence under the Data Protection Act in Britain. Lam said the government will submit a report on possible changes to the law by the autumn.

A TVB screen grab (left) shows Amina Bokhary (right) slapping an officer after her Stubbs Road crash. The niece of a top judge was spared jail yesterday after being convicted of assaulting police for a third time. The decision brought a mixed response from police unions but sparked an outcry on a radio talk show. Amina Mariam Bokhary, 34, whose uncle is Mr Justice Kemal Bokhary of the Court of Final Appeal, was put on probation for a year by Magistrate Anthony Yuen Wai-ming for slapping a police officer after a car accident on January 27. Yuen said assaulting police and failing to take a breath test, which Amina Bokhary also admitted, were serious offences that usually called for immediate custodial sentences. "But ... the defendant has a good background, a well-off family, good education and outstanding academic achievement ... with a first-class honour in bachelor of business administration," he said. "And most importantly, [she] has caring and concerned parents." The Eastern Court magistrate, who heard earlier that Bokhary suffered from bipolar disorder that she tried to control with alcohol, added: "Unlike other criminals, you're not a bad person but a sick person ... with limited insight into your illness." The Junior Police Officers Association said it respected the decision, although it would not deter assaults on police. The Police Inspectors Association said the decision was not surprising given evidence about Bokhary's mental condition. But a retired traffic policeman said on Commercial Radio's phone-in programme last night that the ruling "seems to suggest that some upper-class people can be immune from punishment". Another former police officer called on the government to appeal.

The Education Bureau wants students with low marks in the final Form Five public exam results - being released tomorrow - to opt for vocational programs rather than repeating Form Five.

Hang Seng Bank chief Margaret Leung says the bank's capital adequacy ratio of 12.9 per cent is higher than the recommended level. Hang Seng Bank (SEHK: 0011, announcements, news) said yesterday it would only consider lifting its dividend payout after a key central bankers' meeting in October, which may affect the bank's tier-one ratio, a core measure of a bank's financial strength. The bank paid higher dividends in 2007 and 2008 but cut them last year ahead of a repayment of HK$2.5 billion in subordinated debt in June. It had also decided to subscribe for a rights issue earlier this year by its mainland partner, Industrial Bank, to maintain its shareholding and avoid dilution. Hang Seng's capital adequacy ratio, a key benchmark of capital compared to risk, was 12.9 per cent as of June 30, down from 16.3 per cent six months earlier. "We are quite comfortable with this level," Hang Seng chief executive Margaret Leung Ko May-yee said. "In any case, it is higher than the level recommended by the government but we want to be prudent and will revise our dividend payout after October." A Basel III conference of finance ministers and central bankers will meet in October to discuss key capital standards for banks.

Compensated dating will be one of the hot topics at the 4th Asian Conference on Sexuality Education next week. The controversial issue, along with sex education, will feature in the workshop series on the last day of the three- day conference. The Family Planning Association of Hong Kong, marking its 60th anniversary, is holding the city's first international conference on sex education from August 12 to 14 at the Hong Kong Institute of Education, which is the co-sponsor. Under the theme "Today's sexuality education for tomorrow's generation," the conference will explore challenges and emerging issues and exchange ideas for promoting sex education. Workshops on skill-building are open to the public and organizing committee chairwoman Lina Yan encouraged teachers and parents to join. "It's not like parents don't want to teach their children about sex, they just don't know how," Yan said. "We may not be able to provide an absolute answer but we hope that through the sharing of experience, we can help teachers and parents face and solve these problems." The committee expects around 250 participants, including 33 speakers and 214 delegates from 25 countries and regions, including China, Hong Kong, Taiwan, Japan, the United States, Britain, Australia and Indonesia. Sex education experts will discuss topics such as crisis intervention in unplanned teenage pregnancy and the needs and development of homosexual youths. One of the five major categories for the conference will be addressing the unmet needs of vulnerable groups such as gays, lesbians and marginalized youths. Education officer-in-charge Grace Lee Ming-ying said most current resources focus on campus education, but there are other young people outside schools who may hold wrong concepts about sex and have a negative effect on society. "We hope they can develop healthy sexual values and critical thinking for better decision-making, especially now that information on sex is so widespread," Lee said. A special feature in the program is a Cantonese opera which shows how family attitudes towards sexuality and society's concept of social class affects youngsters' notions of love.

 China*: Guangzhou has become the third city in China to introduce higher quality petrol, similar to Euro IV standard petrol used in Europe. The city allowed sales of Yue 4 standard petrol from August 1 and would introduce Yue 4 standard diesel next year, aiming to reduce vehicle emissions by 15 per cent, the China Petrochemical News reported on Tuesday. Beijing introduced Euro IV fuel before the 2008 Beijing Olympic Games and Shanghai adopted the cleaner fuel in November last year, ahead of this year’s Shanghai Expo. Guangzhou will host the Asian Games in November; one of Asia’s largest sporting events. The rest of China was required to use Euro III standard petrol from January this year and Euro III diesel from June next year.

Mainland’s biggest military supply provider, Jihua Group, has set the price range for its Shanghai initial public offering to raise as much as 4.05 billion yuan (HK$4.64 million). Jihua Group, which has a 75 per cent share of mainland’s market for military and police garments, among other equipment, set a price range of 3.08 to 3.50 yuan per share for its planned 1.157 billion A-share IPO, it said in a filing to the Shanghai Stock Exchange on Tuesday. After the IPO, the price to earnings ratio for the shares will be between 26.87 times to 30.53 times its net profit for last year, the firm said. Beijing-based Jihua, which will trade under the ticker symbol, said it needed about 3.25 billion yuan to help it fund five projects to expand production of military garment, boots, cloth and special protection equipment as well as to improve its research ability. Jihua made an attributable net profit of 453 million yuan last year, down slightly from 466 million yuan in 2008, with unchanged earnings per share (EPS) of 0.17 yuan. Jihua’s IPO comes as the mainland stock market starts to recover from months in the doldrums. The benchmark Shanghai Composite Index rose over 10 per cent in July, and gained another 1.3 per cent on Monday. Swiss bank UBS has been appointed Jihua IPO’s lead underwriter.

China and Taiwan have a "long way to go" to build up military trust after Beijing reportedly offered to consider removing missiles pointed at the self-ruled island.

A gold jewellery shop at the newly built underground shopping centre, Zhong Min Bai Hui Shopping Mall, at Xiamen. Ordinary mainlanders have displayed a large and growing appetite for gold, both as jewellery and as an investment. Mainland’s central bank will allow more domestic banks to export and import gold as part of a series of steps to encourage more liquid trade, it said on Tuesday. The People’s Bank of China also said that it would allow banks to hedge their bullion positions in overseas markets; urge banks to lend more to domestic gold firms looking to go abroad; and actively develop more yuan-denominated gold derivatives.

China instant noodle company to sponsor New York Yankees baseball team - The New York Yankees baseball team has reached a four-year sponsorship agreement with an instant-noodle company from the mainland. Uni-President Enterprises will get field-level signage between first base and the right-field foul pole. The Yankees say the company will also have a full-page ad in the team’s game program. Uni-President will support the QSL China Baseball League, the Yankees said on Monday. The Yili Group, a dairy company based in China, sponsored the Yankees in 2007.

PLA launches five days of major air exercises - Member of the People's Liberation Army conduct training exercises during a demonstration for journalists at a military base on the outskirts of Beijing. The Army began extensive war games on Tuesday over the provinces of Shandong and Henan in an exercise defending the nation's capital. The People's Liberation Army (PLA) launched major air defence exercises on Tuesday, highlighting rising capabilities that are seen as tipping the balance of power in east Asia. The drills involve more than 10,000 service members, including those from naval and army aviation units and land-based air defence forces, according to the China News Service (CNS). CNS said the war games would run for five days over parts of the provinces of Shandong and Henan south of Beijing. They will include three simulated attacks and one live-firing exercise designed around the scenario of defending the capital from an air assault. No rehearsals were held for the exercises, which will emphasise real-time responses to unplanned events and the integration of units under separate commands, CNS said. About 100 aircraft of seven different types will take part, along with air defence missiles and artillery units. Amid a boom in defence spending, Beijing has lavished funds on its air force, navy and missile forces in recent years as part of a gradual shift away from ground units. The widely respected Stockholm International Peace Research Institute estimates total expenditures on the 2.3 million-member PLA, including funding for arms imports and defence research and development, reached nearly US$100 billion last year. New additions to its air forces include SU-27 fighter-bombers purchased from Russia and produced under license on the mainland, along with the home built latest-generation J-10 fighter that Beijing touts as a breakthrough for its sprawling defence industry manufacturing capabilities. Such hardware and the adoption of more effective training and tactics is widely seen as strengthening the nation’s ability to assert its territorial claims over Taiwan and the South China Sea. Military planners from New Delhi to Washington have taken note, fuelling calls for more attention to developments and increased regional co-operation with the US military. While tensions with Taiwan have declined under the island’s relatively pro-Beijing administration, China has grown increasingly vocal in protesting US naval operations off its coast. Beijing repeatedly criticised last month’s joint US-South Korean exercises in the Yellow Sea and recently elevated the South China Sea – over which it claims complete sovereignty – to its list of high priority territorial claims. Such moves coincide with a willingness to send its navy further from shore, including the unprecedented dispatch to join an anti-piracy flotilla off the coast of Somalia. As troops readied for Tuesday’s exercises, two of those ships, the destroyer Guangzhou and frigate Chaohu, docked in Italy as part of a three-nation goodwill cruise, Xinhua reported. Overseas visits and more realistic exercises are both aimed at boosting the PLA’s ability to project power and improve co-operation between its different branches, said Russell Smith, an analyst with Jane’s and former Australian defence attache in Beijing. “These are opportunities to practice conducting joint operations. I think you’re going see more reorganising and restructuring in the PLA to emphasise this,” Smith said.

China Investment Corp may invest up to US$25 billion in Indonesia, an Indonesian minister said on Tuesday, potentially providing a huge boost to the country's FDI.

Retail sales of passenger cars on the mainland rose 15.4 per cent last month from a year ago but declined 3.4 per cent from June, as growth in the world's biggest vehicle market continues to cool from the red-hot levels at the beginning of the year. Deliveries of cars, sport utility vehicles and multipurpose vehicles came in at 822,300 units last month, the semi-official China Automotive Technology & Research Centre (Catarc) said yesterday. The lacklustre sales figures came despite new efforts by dealers to clear out growing inventories by offering discounts. The average stockpile period, a measure of the time between vehicle production and registration, lengthened to 58 days from 55 in June, Catarc said. Domestic car production exceeded sales by 1.29 million vehicles in the first half of this year, the centre said last month. "Despite dealers' promotion efforts, monthly car sales may fall from year-earlier levels as early as September," Daiwa Institute of Research analyst Ricon Xia said. "The abnormal car sales surge we had last year was caused by temporary policies." Average car prices fell 2.08 per cent in June from a year earlier and were down 1.66 per cent from May, an official with the National Development and Reform Commission said last month. "Prices in the car market are trending down steadily," the official, Cheng Xiaodong, wrote in a blog post on Sina.com. Despite the cooling trends in the market, manufacturers pushed an average of three new models per week into the market last month. A further 20-plus new models are set to hit dealerships in the next two months, traditionally a slow sales season, Cheng said. This raises pressure on dealerships with growing inventory backlogs to offload old models through price cuts. Overall retail vehicle sales, including trucks and buses, came to 1.06 million units in last month, up 17.2 per cent from a year ago but down 6.7 per cent from June, according to Catarc data. In addition to markdowns by dealers, government incentives have affected sales in the car market. Beijing has been offering subsidies starting at 3,000 yuan (HK$3,433) to promote purchases of fuel-efficient cars with engines of 1.6 litres or smaller. The central government announced in June long-anticipated subsidies for producers of up to 60,000 yuan for battery-powered cars and 50,000 yuan for plug-in hybrids. Carmakers including General Motors and Honda are still counting on rising Chinese sales to help offset falling demand in Europe and a slowing US recovery. Full-year demand may climb 17 per cent to 16 million vehicles, the State Information Centre said in April. "Even if annual sales growth comes down to 20 per cent, it's still a very good rate," Xia said.

Mainland railway experts believe China is ready to test the world's first prototype "vacuum train" - capable of speeds of more than 1,000km/h and possibly ready for commercial operations within a decade. Researchers at the National Power Traction Laboratory of Southwest Jiaotong University told the Beijing-based Legal Evening News testing would begin on an initial prototype running at 600km/h to 1,000km/h within "two to three years".

Taiwanese hi-tech manufacturing giant Foxconn opened a new assembly plant in a central area yesterday, state media said, as the troubled firm begins to move its operations inland to limit soaring labour costs. Foxconn, which was accused of mistreating workers following a spate of suicides at its Shenzhen factories, plans to mainly produce Apple iPhones at the new US$100 million plant in Henan province. Construction of the plant, owned by Futaihua Precision Electronics (Zhengzhou), a wholly owned subsidiary, will begin on August 20 and is expected to take a year, Xinhua said. For the time being, about 500 workers, many of whom have worked at Foxconn's production hub in Shenzhen, are manning an assembly line in a temporary workshop and living in dormitories nearby, the report said.

Despite a lacklustre opening early last month, the demand for Shanghai-Nanjing high-speed train tickets has been steadily picking up, with seats now hard to come by on many departures. Early complaints about the high prices and longer-than-publicised journey times led to a flurry of media reports of empty carriages and some trains each running the 300-kilometre route with just a single passenger. However, Shanghai Railways Bureau officials hit back this weekend, saying all the trains on the route are running at full capacity - transporting more travellers than the pre-existing D-class express trains did. The high-speed link between the two cities was launched on July 1 amid a blaze of publicity, but officials soon found themselves the butt of online mockery. Advance ticket sales for the service were suspended less than a week later to "optimize" scheduling.

Aug 3, 2010

Hong Kong*: Fares on red minibus routes that pass through the Western Harbour Tunnel may be raised in two weeks after a set of new tolls took effect yesterday. Operators of seven minibus routes will meet today to discuss the increase, expected to be between 50 cents and HK$1. Lai Ming-hung, of the Taxi and Public Light Bus Concern Group, said drivers would have to pay up to HK$1,500 a month in extra costs if they did not raise fares. "Still, I think five of the seven routes that now pass through the Western Harbour Tunnel may swallow the extra costs, because many of their services overlap that of buses." Traffic at the Western Harbour Tunnel was scarce yesterday morning, although not much different from a usual Sunday, when the toll for cars and taxis increases by HK$5 to HK$50 and HK$45, respectively. The Transport Department expects the toll rise to push about 2,600 vehicle trips a day to the already congested Cross-Harbour Tunnel and Eastern Harbour Tunnel, but the League of Social Democrats said that will not be the only impact. "The toll rise sets a very bad example for other public utilities. Taxis, buses and minibuses have all applied for fare rises," said the league's Edward Yam Liang-hsien. League members joined a slow-drive protest yesterday. The convoy stopped at the tunnel's toll plaza on the Kowloon side and submitted a petition to the operator demanding that the toll rise be suspended. Authorities were still assessing an application by taxi drivers to increase fares. This would add HK$2 to the flag-fall price, which is currently set at HK$18. Kowloon Motor Bus applied for an increase of up to 8.6 per cent the day Western Harbour Tunnel announced its toll rise. Taxi and KMB fares were last raised about two years ago. The government said in March that the Cross-Harbour Tunnel's toll - the cheapest of the three crossings - may have to be adjusted. More than 120,000 vehicles use the Cross-Harbour Tunnel each day -the same volume as the other two tunnels combined. The Democratic Alliance for the Betterment of Hong Kong said it may advise the government to build a fourth crossing to alleviate tunnel traffic or build an extension that branches off from the Cross-Harbour Tunnel to Central. The government is expected to release findings of a study on ways to regulate tunnel traffic before the end of the year.

Hundreds gather in Hong Kong to protest against what they see as an encroachment by the national language, Putonghua, on Cantonese.

Hundreds of people gathered in a Guangzhou park yesterday in defiance of government orders not to rally as part of a campaign to defend Cantonese. About 20, including several journalists, were taken away by police for questioning. The journalists, three from Now TV, two from Cable TV and one from Reuters news agency, were detained for nearly six hours, one of them said. "We were told we were being formally summoned for allegedly causing public disorder," said Lam Kin-shing, the Guangzhou correspondent for Cable TV. About 200 people attended a parallel rally in Hong Kong. The rare joint campaign was the first to mobilise Cantonese speakers in Hong Kong and Guangdong in defence of the dialect, which they say has been increasingly marginalised on the mainland. In downtown People's Park in Guangzhou, amid a heavy police presence, more than a hundred supporters congregated yesterday afternoon, participants said. They were cheered and joined by dozens of onlookers before police ordered them to leave. Hundreds more gathered outside the park, unable to get in while police were clearing it, said writer Ye Du, who was among them. Many supporters were dressed in white, the colour chosen by activists to symbolise their efforts to maintain their cultural identity. Conflict between protesters and the authorities has noticeably escalated, with a statement posted on the Guangzhou police website accusing protesters of holding illegal assemblies. It said police had to detain and investigate those who ignored their orders. "Guangzhou police stressed that they would punish those who were unreasonable and created trouble," the statement said. As hundreds of police marched into the park, they were booed by onlookers. There were scuffles between police and protesters, some of whom were detained and taken away by police. "They are beating people," many shouted. "We protest. We protest." Others screamed: "Police, go away!" and: "F*** his mother, persist against all odds," emulating the obscene rallying cry reportedly used by Ming dynasty national hero Yuan Chonghuan. Guangdong authorities last month upset Cantonese-speaking natives by removing a plaque with the phrase inscribed at the base of his statue in Dongguan. Police closed the park after all protesters and visitors had been removed. Many protesters walked to the nearby pedestrian zone in Beijing Road to continue their campaign. Police cordoned off the normally busy shopping street with crowd control barriers. Many activists had already been warned not to attend the rally by Guangzhou police. Yesterday, several were taken out for "coffee" by police - a euphemism for soft detention. "I told the police that, especially before the Asian Games, they should listen to the people's voice and not suppress them," said Ye Du, who was detained by police at a cafe for four hours. Phone calls to Guangzhou police went unanswered yesterday. The parallel rally in Hong Kong at Southorn playground in Wan Chai was attended by about 200 supporters. They marched to the government headquarters in Central. Among them were a handful of mainlanders. Two covered their faces with medical masks, and said they were afraid of facing reprisals back home if they were recognised.

Cigarette duty's HK debut goes up in smoke - Travellers spot border loophole and buy tobacco in Lo Wu-bound areas. Travellers wishing to bring more than 19 cigarettes into Hong Kong found a legal loophole yesterday - the first day that a new regulation covering duty-free tobacco came in force. Instead of buying cigarettes in duty-free shops in the Hong Kong-bound checkpoint areas, where staff would then escort them to pay tax, numerous travellers opted to stock up on cartons of cigarettes away from the duty-free shops, in the mainland-bound area of the Lo Wu border control. Because the mainland does not have restrictions on duty-free tobacco, their luggage would not be checked on their way out. One man, who bought three cartons of cigarettes, said he planned to bring some cartons back to Hong Kong. "[Hong Kong customs officers] do not check regular-looking travellers like me. They usually target those who carry large bags and, thus, look like smugglers," he said. Another man, who bought four packs of cigarettes, said he would put two packs into his wife's handbag and keep two packs himself.

Mainland tycoon Wong Ching, who is battling for control of ATV, has revealed that he has injected more than HK$200 million into the troubled broadcaster. But he has yet to take control of any shares. He says he has been receiving convertible bonds since his first payment in September last year and he does not know whether they can be converted into shares. His comments yesterday followed an ATV statement on Saturday that the Broadcasting Authority had approved the station's change in its shareholding structure, which would allow Wong to become the biggest shareholder, with 52.42 per cent of the shares. The authority later issued a clarification, saying that a decision was pending. Wong is involved in a tussle with Taiwanese tycoon Tsai Eng-meng for control of the station. Describing himself as "still a volunteer" at ATV, Wong, who is also known as Wang Zheng, said he had had no knowledge of the statement and clarification before reading a newspaper report yesterday. "I really have no idea why ATV issued such a statement," Wong said. "I was not disappointed with the authority's denial. I abhor the conflict surrounding the possibility of me becoming the biggest owner of ATV." His rival Tsai controls all non-voting shares and 49 per cent of the voting shares of Antenna, which has a 47.58 per cent take in ATV. Wong, who is a member of the Chinese People's Political Consultative Conference, wants to take over the ATV stake owned by Payson Cha Mou-sing and his brother, Johnson Cha Mou-daid. This would include the 10.75 per cent held by the Cha brothers' company Panfair, and holdings of their other company Pelaka. Pelaka holds 51 per cent of the voting shares of Antenna. Tsai has filed litigation saying such a deal would hinder an earlier agreement that would give him control of ATV. This resulted in an extended court interim injunction being issued last Friday preventing the Chas from completing a share deal with Wong. Restrictions were not imposed on Wong. Democratic Party legislator Lee Wing-tat, deputy chairman of the Legislative Council's information technology and broadcasting panel, said: "The Broadcasting Authority and the Commerce and Economic Development Bureau have a responsibility to tell the public what they know about the share disputes among the ATV leadership." Talking about the court case, Wong said he hoped the row would be settled soon. He said it had cost him HK$10 million in legal fees. "I would rather pay this amount for a month's salary for all station staff." Wong has made a series of high-profile gestures, such as getting mainland corporations to sign agreements with the broadcaster. He has named the chairman of Prosperity (SEHK: 0803) International Holdings, Wong Ben-koon, as a partner to take over ATV. Yesterday he was named "active advocator" of the station's first Hong Kong Loving Hearts Campaign, which will allow members of the public to vote for people who have contributed to society. He attended the event with James Shing Pan-yu, a relative who is on the board and was recently appointed executive director. Speaking later, he said direction, not money, was the biggest problem for cash-strapped ATV. "It should be a broadcaster reflecting Hong Kong's conscience. In five years' time, I hope ATV can be the station for foreigners who are interested in Asia."

Stifling heat piles on misery in cage homes - Wu Chik-fun and her grandson, Fung Sai-ming, watch the thermometer rise in their cubicle home. "I always feel dizzy ... because it's so stuffy," Wu says. The temperature inside cage homes or cubicles can be as high as 38 degrees Celsius, up to seven degrees hotter than outside, because of poor ventilation and the crowded environment, a survey has found. The annual study by the Society for Community Organisation covered at least seven old districts and showed that the temperature inside cage homes or cubicles was on average 34.8 degrees, up from 34 degrees last year. The measurements were taken between July 21 and last Saturday, when the Observatory said the temperatures across the city ranged from 23 to 32 degrees.

 China*: The Zhejiang government is considering the construction of a second Hangzhou Bay bridge for rail transport in a bid to forge closer ties between its industrial sector and the economic development of Shanghai. The proposed bridge would provide a rail link between the northern Ningbo district of the eastern coastal province and Shanghai, at an estimated cost of some 30 billion yuan (HK$34.37 billion) according to Zhou Jiangyong, who is the chairman of the Ningbo Hangzhou Bay New Zone Administration. The provincial government and the Ministry of Railways were studying the feasibility of the project and it would likely be written into the nation's 12th Five Year Plan (2011-2015) for economic and social development, Zhou told reporters.

A mainland envoy who was shoved to the ground by a pro-independence politician on his last visit to Taiwan shrugged off the incident as he returned to the island yesterday.

Shanghai World Expo may break the 28.6 billion budget, mayor says, vowing to open books - Shanghai mayor Han Zheng has admitted the World Expo may go over its 28.6 billion yuan (HK$32.8 billion) budget because of high operating costs. In an interview with Taiwan CtiTV, the mayor defended the massive budget - already the largest and most expensive in the history of expos - and vowed to open the accounts books after a thorough audit. Han's remarks were the first confirmation of widespread rumours that the expo's budget was spiralling out of control, and made an ironic contrast to the part of the official slogan that says "run the expo with thrift". To date, officials have stated only that the 5.28 sq km park had cost 18 billion yuan to build, and the fair's operating budget would be 10.6 billion yuan. No breakdown of either figure has been issued. Some unofficial estimates have put the total cost - including the massive indirect investment in upgrading the city's transport network and regional links, plus major renovations of key landmarks - as high as 400 billion yuan, equivalent to the country's annual military budget. Han dismissed such estimates. "If they keep saying so even after I give out the real budget, I will just turn a blind eye to the rumours." His admission of operational costs running beyond their 10.6 billion yuan budget appear to contradict assurances by Shanghai Communist Party secretary Yu Zhengsheng that the expo would break even. But it reflects a clear acknowledgement of the extent of the extra measures organisers put in place to draw crowds to the 184-day event - which passed its halfway point on Saturday - following a disappointing opening month. Visitor numbers picked up sharply in June after organisers added live entertainment, increased staff levels to ease the flow of queues at the most popular pavilions and boosted marketing in nearby provinces. Income from ticket sales is also likely to have been affected by the city's decision - announced by Yu before the May 1 opening - to give away about 10 million free tickets to residents, one per household. The total number of visitors passed the 35 million mark yesterday - a significant milestone given the target attendance of 70 million. Officials warned at the weekend that large numbers of tourists coming to the city during the second half of the expo period were likely to increase the strain on the traffic network. Currently about 360,000 tourists arrive in the city daily, of whom 150,000 travel on group tour buses. However, official gate figures are widely viewed with scepticism among staff at national pavilions, with many privately stating they believe the statistics are being inflated. The record attendance for an expo was in Osaka, Japan, in 1970, which drew 64 million visitors.

Search giant Google Inc has embarked on a hiring spree in China, despite its recent problems with the government that saw many top engineers and executives leaving the company. Experts, however, said on Friday that the recruitment drive would not help the company regain the lost market share in the short-term. Google lost ground in the Chinese search engine market to Baidu and other players, as its standoff with the government remained deadlocked. Google intends to hire more people to bolster its existing team and said the opening will be in its research and development, product management, user experience designer, sales, operation, recruiter and marketing sections. The search giant added 2,000 more employees in the first half of this year across the global and currently has staff strength of around 22,000. The recruitment plan comes after the government renewed Google's Internet Content Provider license earlier this month. Analysts said the move is the first step by the search giant to regain market confidence in China.

More girls than games at China's top computer game show - A girl poses in a cage at ChinaJoy expo, where video games took a backseat to the girls. At the door to a major computer game expo in Shanghai, visitors are greeted by columns of girls in white boots and miniskirts, the name of a computer parts maker emblazoned on their chests. A bit farther on, amid the blaring music and pulsing lights, 40 more models in bikini shorts, tiny tanktops and hard hats shill for an online security company, handing out small locks in boxes designed to resemble condom packs. Government regulations announced last month barring online gaming companies from using sex to promote their products had little impact at ChinaJoy, the country's largest annual digital entertainment exhibition which ended yesterday. "The most eye-catching part of the exhibition is the show girls," said Feng Gong, senior director for Internet portal Zol.com.cn, owned by US broadcaster CBS Corporation. "The pretty girls and products complement each other and the combination is just perfect," said Feng, whose company is sponsoring a Miss ChinaJoy pageant, which allows website users to vote for their favourite booth model. Video games taking a backseat to show girls is a phenomenon at exhibitions across Asia, but participants say China is taking it to a new level.

China successfully launched its fifth orbiter into space at 5:30 a.m. Sunday, as a part of its indigenous satellite navigation and positioning network. The satellite was launched from the Long March 3I carrier rocket. It is the 126th flight for the country's Long March series of rockets. The satellite will join another four satellites in orbit to form a network that will eventually consist of 35 satellites. The system, code named "COMPASS", is a crucial part of the country's space infrastructure for providing navigation and positioning services in transportation, meteorology, petroleum prospecting, forest fire monitoring, disaster forecast, telecommunications and public security among others. China started building its own satellite navigation system to end its dependence upon the U.S. GPS system in 2000, when it sent two orbiters as a double-satellite experimental positioning system. The system is designed to provide navigation, time and short message services in the Asia and Pacific region before 2012 and will be capable of providing global navigation services by 2020.

Emirates Airlines' A380 passenger plane of the United Arab Emirates (UAE) arrives at Capital International Airport in Beijing, capital of China, on Aug. 1, 2010. Emirates Airlines launched its first A380 service in China, flight EK306/307 between Dubai and Beijing on Sunday.

China's manufacturing growth eased to a 17-month low last month, as a result of the government's efforts to curb property speculation by tightening credit and reducing investment. This is in line with economists' consensus expectation, indicating a continued slowdown in both economic and export growth. The latest data comes amid a People's Bank of China statement that reiterated Beijing would stick to a relatively loose monetary policy in the second half. But the PBOC also emphasized it will implement policies flexibly. The purchasing managers' index fell for the third month in July to 51.2, from 52.1 in June, the state-backed Federation of Logistics and Purchasing said. But the PMI, based on a scale of one to 100, still stayed above 50 reflecting growth. Production, new orders and purchasing prices all declined in July, with only the employment index going up. "There is a large possibility that the speed of growth of both investment and exports will further decline as their foundation is not stable enough," said government economist Zhang Liqun, citing the federation's report. Zhang forecast stable economic growth in the second half, with full-year GDP to remain at 9.5 percent. The PBOC said it will keep the banking liquidity at an "appropriate" level by "reasonably" combining open- market operations and tools like the reserve requirement ratio, the central bank added. Citi Investment Research economist Shen Minggao also expects Beijing to maintain current macroeconomic policies until the end of the third quarter at least, as long as there is no sharp decline in the property market or export growth. Bank of America Merrill Lynch Hong Kong economist Lu Ting said Beijing will ramp up spending on public housing and other public works to stabilize growth. But it will stay on track with control of bank lending growth and property tightening measures.

China's land supply up 135% in H1 amid worries on property prices - Photo taken on July 3, 2010 shows the urban area of Hangzhou, a tourism destination famed for its Xihu Lake and also the capital city of east China's Zhejiang Province. China provided 56,000 hectares of land for residential use in the first six months of 2010, up 135 percent over the same period last year, according to the Ministry of Land and Resources. A significant increase in the availability of land for housing was reported in areas like Guizhou Province, Beijing, Jiangxi Province, Heilongjiang Province and the Ningxia Hui Autonomous Region, said a statement on the ministry's website. The land and resources management departments at various levels have been working hard to ensure land supplies, especially for indemnificatory housing, shantytown relocation housing, public rental housing and middle-sized and small apartments, the statement said. The departments will work hard to ensure land supplies for public residential purposes, it added. China implemented a series of measures to rein in soaring home prices and curb property market speculation in April. The measures included tighter scrutiny of applications for financing, limiting of loans for third-home purchases and higher down payment for buying second-homes. Latest data indicated the red-hot property market has started cooling as average housing prices in 70 major cities fell 0.1 percent in June from May.

Aug 2, 2010

Hong Kong*: It's a club whose members include many of the city's richest people - men like Stanley Ho Hung-sun, Li Ka-shing, Cheng Yu-tung, Lee Shau-kee and Gordon Wu Ying-sheung. And they want to know what you really think of them. Rocked by recent controversies, Hong Kong's real estate developers are looking for ways to clean up their image. So the Real Estate Developers Association (REDA) hired international public relations firm Ogilvy to do a wide-ranging "public perception audit". More than 60 industry groups, government departments, Legislative Council members, non-governmental groups and members of the property-buying public are being approached to take part in the poll which will take place later this year. The initial survey, the cost of which is under wraps, will take the form of face-to-face interviews. Later, a research group will talk to between 300 and 500 potential homebuyers. A letter from Ogilvy Public Relations Worldwide to would-be participants, a copy of which the Sunday Morning Post (SEHK: 0583) has seen, says: "This study is aimed at providing REDA the necessary information so that, with your input, REDA may map out a strategy to meet the challenges from the community at large when it comes to providing advice, guidelines and transparent communication on issues surrounding the highly important property sector. "Your expert input in this survey would be a very important element in helping REDA shape its future direction for the betterment of Hong Kong as a whole." The move comes amid growing pressure on the developers to clean up their act and offer more transparency in their dealings after a series of controversies and public disquiet. Pressure has mounted since April, when Financial Secretary John Tsang Chun-wah announced measures to make the property market more transparent. Developers now have to issue a price list and sales brochure at least three days before flats are sold. Then, in the wake of the scandal over the collapse of flat sales in Henderson Land (SEHK: 0012)'s Conduit Road development, further rules were introduced requiring developers to announce the expected date of completion of flat sales and to specify transactions that have collapsed. Michael Dunn, director of Ogilvy Public Relations Worldwide (Hong Kong), is leading a team of four who will carry out the "perception audit". He says it aims to map out a new communications strategy for the association, something it certainly needs. Founded by late tycoon Henry Fok Ying-tung under the Societies Ordinance in 1965 and with more than 500 individual and 300 corporate members, it has no website and offers little in the way of public information about the way it operates. Several requests for comment on this report made to association secretary general Louis Loong Hon-biu and vice-chairman Stewart Leung Chi-kin, who is also an executive director of New World China Land (SEHK: 0917), went unanswered. "The object of the audit is to gauge opinion and provide a barometer of opinion. We want to build an effective communications programme for REDA," Dunn said. "There are mixed messages out there. "Yes, there are people who are opponents of the real estate sector but there are voices out there - for instance some industry associations - which are supportive. This step is a positive move, there need not be any controversy or negativity about it." Asked about concerns that developers were aloof, opaque and uncommunicative in their dealings with the public, Dunn said: "It is never to late and never too soon to make the right move." He said it was not appropriate to release the list of specific organisations or individuals they would survey as they had "pretty much promised complete confidentiality to the people that we talk to which also means we don't report their individual comments back to REDA". Twenty-three of the people Ogilvy have approached so far have agreed to take part in the survey; six have not. Democratic Party lawmaker James To Kun-sun said the survey was yet more proof that the developers had a serious image problem. "When you put this together with [property tycoon] Henry Cheng Kar-shun's reported attempt to buy a newspaper [the Hong Kong Daily News], and noises they are making about 'giving back' to society, it is obvious that the developers know they have a real problem. They now want to use every avenue available to them to spin the story their way," To said.

Hong Kong Nursing mothers on the rise - Lam Wing-sze (left) feeds her son Kwok Lai-him and chats to Debbi Hansen-Lange and her son Jasper at the Quarry Bay Community Hall. Breastfeeding is becoming more popular in Hong Kong, but the training for nurses and doctors in hospitals is not keeping up with the trend. That's according to a survey by the Baby Friendly Hospital Initiative Hong Kong Association of eight public and 10 private hospitals, which found 3,700 more nursing mothers than last year. A total of 82,050 babies were born last year. Among mothers who stayed in hospital maternity units, 75.4 per cent indicated they would breastfeed their babies after they were discharged, a 1.5 per cent increase compared to a year ago. The results coincide with an earlier government survey that showed the proportion of Hong Kong mothers breastfeeding their babies has doubled in the past decade. Yet the increasing popularity of breastfeeding is not being matched by an increase in staff training. Only 64 per cent of obstetric nurses surveyed this year were trained to support breastfeeding, as compared to 73 per cent last year and 82 per cent in 2008. The proportion of obstetric doctors trained was even smaller: 0.4 per cent had the skills, down from 4 per cent last year. Hospital Authority chief manager of nursing Sylvia Fung Yuk-kuen attributed the phenomenon to high resignation rates among nurses, especially obstetric nurses. Many left or were transferred to other departments after they were trained. But she stressed that there were 60 breastfeeding consultants at public hospitals who were ready to help parents. From April, the authority stopped accepting free milk powder from manufacturers in order to keep commercial promotions out of public hospitals. The Health Department is also developing a multimedia e-learning education kit to equip medical practitioners such as obstetricians and family physicians with skills to support breastfeeding mothers. Meanwhile, dozens of mothers breastfed their babies in a community hall in Quarry Bay yesterday. They were among about 1,000 mothers who participated in the Hong Kong Breastfeeding Action Day. Yeung Chui-ping, who brought her nine-month daughter along, said she had to feed her child every two hours. Drinking mother's milk did not make the babies as full as when they were fed infant formula, she said. Nevertheless, she continued to breastfeed because it was healthier for her child. "I feel great. I'm a real woman," she said. Chan Hoi-yan, with her 11-month-old son, said working did not stop her from breastfeeding. She used 15 minutes of her lunch hour to eat lunch and spent another 45 minutes expressing breast milk.

Fung shui master Tony Chan Chun-chuen has launched another bid to stymie the Inland Revenue Department's attempt to recover almost HK$350 million in profits tax from him.

Is a holiday home really worth it? Resort-style properties in Phuket, like the Royal Phuket Marina, have attracted many Hong Kong buyers who want to own a holiday home. Many property owners fail to factor in how much time and money is needed - Everyone needs a place to live but no one needs a second home. So choosing which holiday home to buy and where should be enjoyable. Still, people routinely buy second homes that end up being less than they expected, or worse. The dynamics of second-home ownership often conspire against us, said Milton Pedraza, chief executive of the Luxury Institute, which does research on wealthy consumers. "People become slaves to their homes. They buy into the headlines and that makes them pretty miserable with their vacation homes." Pedraza said one common cause of second-home misery was that owners failed to factor in how much time and money were needed to maintain a place from hundreds, if not thousands, of miles away. People buying second homes should ask tough questions - of themselves. Why, after all, do you want a second home? What are you going to use it for? Do you have any idea how much it is really going to cost? Before you jump in, here's a look at what you should know before buying a second home. If the recession taught people anything, it is that the value of a home can go down. Vacation properties are certainly not immune. Beyond the ups and downs of the real estate market, Pedraza said most buyers underestimated the maintenance costs of a second home. "Think of the 20 to 25 suppliers who come to your house for air-conditioning, heating, landscaping, the pool man, the plumber - now you've got to procure those same suppliers for another property," he said. "If you have the money and it doesn't mean anything to you from an investment point of view and you can hire the staff, then fine." Realty expert Deb Howard said many people looked at the properties as a place for the family to gather and as something to leave to the children. But they still need to consider the carrying costs of the property. She says her first question to buyers is always what kind of lifestyle they expect to have. But her second is whether they need to rent the home to cover the costs. "Sometimes it's not the right decision," Howard said. "You're not going to use it enough. Or it's not going to meet your financial goals." What persuades people to buy a second home is usually a vacation. A second home, they think, will keep the party going with the added benefit of having a place of their own. "They only see the benefits - sitting by the pool, having a pina colada, driving into the driveway and leaving the Rolls-Royce there," Pedraza said. "They never figure the gate is going to be broken and they will need an electrician." (You will also be making your own pina coladas and cleaning out the blender.) And then there is the pressure to use the place. "People have high expectations of their usage," said Brian Sharples, chief executive of HomeAway, which runs several vacation rental websites in the United States. "The industry average is 30 days of use per year." When people realise how infrequently they are using their second homes, they often turn to websites to rent them. Sharples said the income could defray some of the costs, including taxes and maintenance. But renting out any home can be stressful, and you may not make enough money to justify the hassle. Since people do not use their second homes regularly, they cannot just walk in as if it were their primary residence. At a minimum, they have to open up the house when they arrive, make sure everything still works and close it down when they leave. Even if money is no object, you have to find people to do the repairs. A condo may seem a better alternative but you could end up with a neighbour from hell. Pedraza suggested timeshares or private residence clubs, where everything is maintained for you. But he acknowledged that these lack the cachet of a home. Some people are fine with this, realising they are fortunate to be in a beautiful place and happy to reap the benefits made possible by the wealthy people around them. Still, others can't easily accept this. They sue fellow homeowners because of the angle of their outdoor lights or the colour of their house. These are luxury problems, of course. The recession has shown the stress that houses can put on anyone. Before you plunge into a second home, ask why you are doing it. In the end, staying in a hotel could be a lot more relaxing.

A group led by Hong Kong billionaire Li Ka-shing's Cheung Kong Infrastructure Holdings Ltd has offered to buy Electricite de France SA's UK power networks unit for 5.8 billion pounds ($9.1 billion).

 China*: The People's Liberation Army will defend the country's sovereignty and development, Defence Minister General Liang Guanglie told a reception at the Great Hall of the People yesterday on the eve of the army's 83rd anniversary. "The PLA is now at a critical development stage as more arduous and onerous tasks are ahead of us," Liang said, according to the China News Agency. "We should strengthen our capability to deal with multiple tasks in today's modern battlefields and be determined to safeguard our national sovereignty, security and interests in development." It is rare for a PLA leader to make strong remarks about the army's determination to protect the country's sovereignty and core interests since former leader Deng Xiaoping ordered the army to keep a low profile - with the famous tao guang yang huei strategy of hiding brightness and nourishing obscurity as China started opening up to the world in 1978. Liang's speech came after the PLA held a series of military drills in the East China Sea, Yellow Sea and the disputed South China Sea, which were seen as a response to joint US-South Korean military exercises. Beijing has often stressed its historical sovereignty and core interests in the South China Sea, where it has been involved in territorial disputes with neighbouring countries. Liang said the PLA should be prepared for tough military struggles to protect the country's interests. "[The army's] development should be driven by the security requirement of our core national [interests]. "And we should enhance our preparations for big-scale and complicated military struggles." Liang also reiterated Beijing's policy to "peacefully reunify with Taiwan". Apart from Beijing-based PLA veterans, ambassadors from several countries were among guests at the reception. On Friday, Defence Ministry spokesman Geng Yansheng refused to comment when asked whether the PLA's war games were held as a response to the US-South Korean military drills. Analysts believe Geng's refusal to comment on why the PLA drills were held appeared to be a response to US Defence Secretary Dr Robert Gates and Secretary of State Hillary Rodham Clinton's claims that the South China Sea is among America's national interests.

Scientist Qian Weichang, who was renowned as an applied mathematician and physicist before becoming famous for his efforts in higher education, died in Shanghai yesterday, aged 98. Born in 1912 in Wuxi, Jiangsu, Qian was regarded as one of the pioneers of modern mechanics in China. He was respected not only for his outstanding achievements in physics but also his efforts in education reform while he was president of Shanghai University. "He was a diligent and talented person and most importantly thought highly of education and the cultivation of talent," said Jiang Jinsong, an associate professor at Tsinghua University's Institute of Science, Technology and Society. As president of Shanghai University (formerly the Shanghai University of Technology) from 1983, Qian devoted himself to the reconstruction of the university and higher education reform. In 1992, he pushed for mainland universities to introduce credit for previous study. Qian's catchphrase was that it was never too old to learn. "I began studying mechanics at 36, Russian at 44 and battery knowledge at 55," he said. "Computers couldn't scare me either." He was admitted to Tsinghua University to study arts in 1931 but switched to physics after the Mukden incident, which led to the Japanese invasion of Manchuria, only two days after he entered the university because he believed that science could save the country. Qian received his PhD degree in mathematics from Canada's University of Toronto in 1942. In 1946, he returned to China and served as mechanics professor at Tsinghua University, Peking University and Yanjing University. He was appointed vice-president of Tsinghua University in 1956 but was seen as a rightist because he criticised the removal of science majors in the 1950s. He was labelled an ultra-rightist in 1958, but this was redressed in 1983. During the Cultural Revolution, he worked at a Beijing steel company, invented the best hydraulic press in Beijing and was called professor by his workmates. He read books at night to avoid detection.

China's gross domestic product (GDP) is expected to expand more than 9 percent in 2010, Yi Gang, head of the State Administration of Foreign Exchange (SAFE), said Friday. Yi, also deputy governor of the People's Bank of China, the central bank, made the remarks in an interview with China Reform magazine, which is posted on the SAFE website Friday. China's GDP grew 11.1 percent in the first half of 2010 from the same period of last year. Yi said China's economic growth rate will eventually slow down because its economic base is expanding, while the country's development faces huge pressure in fields of environmental protection, resources and energy. "The restriction caused by environmental factors has been unprecedented, such as underground water, air, and carbon emission," Yi said. Yi said the priority of China's economy is the quality of the growth. "That's why we have to restructure and transform growth modes -- for improving the growth quality and the efficiency," Yi said.

In pictures: strong rain-triggered flood sweeps Jilin Province.

Students devote holidays to online business - Mao Changqin, a student engaging in e-commerce, shows delivery invoices of his online store on a single business day in his office at Yiwu Industry and Commerce Vocational College in Yiwu, East China's Zhejiang Province, July 29, 2010. Although a better half of the summer vacation has passed, many students of Yiwu Industry and Commerce Vocational College still stay on their campus, busy contacting and bargaining with customers of their online stores on taobao.com. Four online-business-founding classes have been set up since last September in Yiwu, east China's Zhejiang Province. At present, more than 1,200 students of the college do businesses through Taobao, so that several delivery companies opened business offices on the campus to provide services for them. According to the college authorities, more than 60 percent of their students are able to cover their living expenses by part time jobs, the income of which totaled over 25 million yuan (around $3.68 million). Taking full advantage of fast development of online business and abundant commodities produced in Yiwu, the college plans to combine the online business founding education with their vocational training programs, in order to provide "online business professionals" for local economy. The booming e-commerce in China has been changing people's lifestyle rapidly. Some young people are so enthusiastic on online shopping that they buy almost everything through online stores. According to the latest statistics issued by China Internet Network Information Center (CNNIC), the population of e-commerce users reaches 142 million as of the end of June this year, which means over one third Chinese internet users or one tenth Chinese do shopping online, more than 30 percent increase than that of last year. Abruptly developed online retail trade brings more job opportunities in China. Taobao, China's largest online auction website, announced in May that 1.06 million people work for online stores on its website. However, the vocation is more preferable by the youths. For example, half of the businessmen of Taobao are between the age of 20 and 32, among whom quite a number of recent grads open online stores as an online business founder.

Aug 1, 2010

Hong Kong*: The Kai Tak development will be served by an elevated rail line that will offer an internal transport system as well as connect to future MTR stations and possibly to nearby neighbourhoods. The government is assessing several routes for the rail system to be built on the 320-hectare site, which will contain a cruise terminal, residential, commercial and community facilities. John Chai Sung-veng, director of the Civil Engineering and Development Department, said yesterday it would connect to the Kai Tak and To Kwa Wan stations of the MTR's Sha Tin-Central link. "We are also studying whether it is possible to extend it to the surrounding old districts, including San Po Kong, Wong Tai Sin and Kwun Tong," he said. Patrick Kwong Hing-ip, project manager of the department's Kowloon development (SEHK: 0034) office, said it would be a challenge, because the areas were packed with buildings and streets were narrow. The government has studied projects in Sydney, Singapore, Tokyo, Vancouver and Miami. It found that while such systems cost billions to build, they also stimulate redevelopment and increase tourist appeal. Private vehicles will be discouraged in the Kai Tak development, which will be completed in three phases in 2013, 2016 and 2021. Meanwhile, Chai said the department would complete landslide prevention works at some 4,600 high-risk man-made slopes by the end of this year.

Kowloon Motor Bus and Long Win Bus yesterday applied for a fare rise of 8.6 per cent and 7.4 per cent respectively, despite a five-fold rise in their profit last year. If approved, the fare rises are likely to take effect on January 1. The fare for a trip will rise by an average of 52 to 85 HK cents. KMB and Long Win, which operates on North Lantau and at the airport, are both owned by Transport International (SEHK: 0062). The operator recorded a post-tax profit of HK$364.5 million from its franchised bus business last year, while the profit was HK$75.7 million in 2008.

Taiwanese "games girl" Da Yuan dispenses hugs to enthusiastic fans yesterday after the opening of the five-day Ani-com fair. Some fans queued for nine days to be first in line. Some may think it a little excessive to wait in line for a night and a day and another night for the chance to briefly hug a Taiwanese spokesmodel for a games company. But his 35 hours of queueing outside the Convention and Exhibition Centre were quickly forgotten when the gates of the Ani-com fair opened at 10am yesterday and 17-year-old Chow Tin rushed to the warm embrace of his shapely target. Wait a minute. That wasn't Da Yuan, but another "game show girl" for the Game One stall, Xiao Yu. "I'm happy to hug either of them," Chow said after realising the executor of his hugging coupon was not Da Yuan. Chow was one of more than 90,000 comic fans, game players, toy collectors and cosplayers who flocked to the opening day. Many had queued for hours, some for days, to increase their chances of picking the eyes out of the fair's limited-edition figures, new comics - and hugs. Chow managed to snap up two guitar-shaped gaming devices for HK$700 and resold them immediately for a profit of HK$80. But snapping up the embrace was the main goal for the student - an experienced hugger. Last Christmas he hugged "Yao Yao", another Taiwanese famous for her curves, at a mall function. And how did she compare with Xiao Yu? "Yao Yao was warmer," Chow said. "Shrek" Li was as single-minded as Chow, though his target was limited-edition figures - and he displayed far more patience. The twentysomething queued with nine friends for nine days to get their hands on an HK$800 limited-edition figure of Karl from Little Fighter Online. Their patience paid off; only 10 of the figures were available - and all were snatched up by Li's group, which also received two crystal figures of Karl for free. "The nine days of waiting is totally worth it," Li said. The leader of the group said they would keep one of the crystal versions and put the other up for auction online. "Together we spent HK$40,000 to HK$50,000," he said. The rapidly emptying wallets did not just belong to young singles; parents were equally willing to fork out for toys. One family spent HK$50,000 on Lego sets. "We have a big family," the mother said. "We're going to share with our grandchildren... Playing Lego will increase our IQ." Collector Yim Ka-leung, who has two 700 sq ft flats to house his toys, said he had an "unlimited budget" for the fair and had already spent HK$7,000 on limited editions of various toys, such as Lego and Iron Man. Those buying on a budget were not left out, with toy capsules, including Hello Kitty, Keroro and Dragonball, selling for HK$1, down from their original price of HK$6 to HK$18. Some 200,000 of the capsules will be available throughout the fair. The fair marked the Asia debut yesterday of X Box 360 Kinect, which drew curious crowds. And fitness conscious girls were drawn to Dance Central, which they saw as a fun way of getting into shape by dancing. Some boys weren't so keen: "It's very tiring to dance, I don't enjoy playing at all," brothers Tsang Lok-yin and Tsang Ka-Wing said. Cosplayers, or costumed role players, drew hundreds of amateur photographers to their competition. Last year's winner, Ruby Au Ho-yi, 24, spent a month and HK$600 to make an outfit featuring a character from the game Monster Hunter 3 Tri. "The most difficult task was to make a transformable weapon. It can turn from an axe to a sword," she demonstrated. Sales manager Lau Man-wai said Gamania's first-day sales exceeded last year's and reached HK$700,000. All 100 sets of online game Fantasy Earth Zero were sold out by 11am, Lau said. Brenda Leung of comic publisher Jade Dynasty said her customers had been spending an average of HK$3,000 each on collectibles.

Hong Kong Exchange Fund assets increase by HK$35.1 (US$4.53) billion during June - The total assets of the Exchange Fund, which are used to back the Hong Kong dollar, amounted to HK$2.2279 trillion at the end of June, the Hong Kong Monetary Authority (HKMA) said yesterday. The figure was HK$35.1 billion higher than the total at the end of May, with foreign currency assets and Hong Kong dollar assets rising HK$31.6 billion and HK$3.5 billion respectively, the city's de facto central bank said. The rise in foreign currency assets was mainly due to increases in unsettled purchases of securities and certificates of indebtedness. The rise in Hong Kong dollar assets was mainly due to valuation gains on Hong Kong equities. The performance of the fund, which exists to support the Hong Kong dollar's peg to the US dollar, has attracted criticism from legislators such as Regina Ip Lau Suk-yee, who have questioned the HKMA's investment decisions. Its foreign exchange losses totalled HK$24.3 billion as of the end of June, mainly due to the US dollar's gains against various currencies. For the same period last year, it had a HK$2 billion foreign exchange gain. Its losses on Hong Kong equities totalled HK$7.7 billion, compared with gains of HK$26.1 billion in the first half of 2009. Its losses on other equities totalled HK$10.2 billion, compared with HK$11.3 billion in gains a year earlier. But the fund recouped some of the losses through its bonds, where it gained a total of HK$40.8 billion in its fixed income portfolio, compared with a HK$14.4 billion loss for the year earlier period. HKMA chief executive Norman Chan Tak-lam said he expected continued volatility in financial markets. The authority would be watching the United States and Europe to see if they could "sustain the momentum of economic recovery and mitigate the adverse impact of the fiscal austerity measures at the same time." Large inflows in recent years have seen the fund accumulate massive reserves that are far in excess of what is required to support the peg. By law, the fund can invest in any securities or other assets that the Financial Secretary considers appropriate. In April, the Financial Times reported that the HKMA had plans to allocate some of the fund's reserves into alternative investments, covering private equity and hedge funds. It said the fund had already placed an unspecified amount of money with private equity giant Kohlberg Kravis Roberts, and both Bain Capital and Blackstone Group were in talks to receive funds. The HKMA declined to comment.

A 100,000-niche columbarium, surrounded by a green belt and farmland, is likely to feature in a now-closed border area in Lo Wu that may be opened up at the end of next year at the earliest. The existing Sandy Ridge Cemetery is to be transformed under preliminary zonings for the sparsely populated rural land, which has been closed to the public since the 1950s. It is among a dozen locations that are being studied to ease a chronic shortage of public urn niches. The zonings, announced yesterday, allow for low-density residential and commercial developments in designated areas. More than half the 2,300 hectares of newly opened land is set aside as conservation zones, green belts and country parks. The assistant director of planning, Raymond Wong Wai-man, said the Sandy Ridge Cemetery had the potential to host urn niches and cremation facilities. "There is a keen demand for urns in Hong Kong," Wong said. "The cemetery has been underused. If the impact on the landscape can be mitigated, we expect it to be able to supply 100,000 niches." The burial grounds, sitting on a 92-hectare hilly site, have existed for about 60 years. Only 30 per cent of the land is used for villagers' graves. The border was closed in 1951 during the Korean war to bar illegal immigrants. The Planning Department said that just 400 hectares of the 2,800-hectare border zone would remain closed, while zoning for a remaining 100 hectares would be decided later. It would become the largest among the existing eight public columbariums, which host 167,900 niches. The place was among 12 selected for a study on their suitability as columbarium sites, the Food and Health Bureau said. The study would examine the geographical conditions, infrastructure and impact on traffic and the environment. North District Council would be consulted, the bureau said. District councillor Hau Kam-lam said the community would welcome the proposal if it led to a better cemetery environment. "There should be a good design with landscaping and public open space, so people coming to worship their ancestors can relax and even go picnicking," Hau said. The border area is estimated to see a tenfold rise in population from 3,000 to 30,000 upon completion of the development. "The area is not intended for large-scale development or road construction," Wong said. The temporary zoning, which is divided into three parts, will empower the government to prevent unauthorised developments. In the west, the existing fish ponds and wetlands will fall under conservation zones, with Ma Tso Lung reserved for eco-lodge development. A "development corridor" is zoned in the Lok Ma Chau river loop area for commercial activities such as wholesaling, exhibitions and logistics. The central portion will hold two private residential sites, providing about 1,300 flats in buildings of up to six storeys. A large part of the eastern area will be zoned as a country park to form a continuous green belt with a national park in Shenzhen. About 30 per cent of the area to be opened was in private hands, Wong said. The land is mainly zoned for development corridors, agriculture, recreation and village houses.

Billionaire Li Ka-shing has offered to buy UK power grids from France’s EDF for £5.8 billion (HK$70.35 billion) in the biggest single European acquisition by a North Asian group.

The Western Harbor Tunnel Company would raise its toll charges with effect from Sunday, a company spokesman said on Friday.

DBS Group chief executive Piyush Gupta announces the bank's results in Singapore. He says the bank faces very aggressive pricing for deposits in Hong Kong. The Hong Kong operations of DBS Group Holdings, Singapore's largest bank, posted a 36 per cent increase in interim net profit despite booking a one-time goodwill impairment charge and expenses related to compensation over products linked to Lehman Brothers. Net profit in the first six months rose to HK$1.36 billion from HK$1 billion a year earlier. However, earnings for the second quarter plunged 31 per cent year on year, owing to a 72 per cent increase in expenses from the previous quarter after an agreement with the Securities and Futures Commission and the Hong Kong Monetary Authority to pay out HK$651 million to customers of high-risk constellation notes earlier this month. The bank said it had no firm forecast for any further expenses related to the remainder of the cases, and it would continue to approach each customer on a case-by-case basis. DBS also booked a goodwill impairment charge of S$1.02 billion (HK$5.81 billion) for its Hong Kong operations, attributing the decision to "noticeable and persistent strains" in wholesale funding markets that meant interest margins would continue to fall. Group chief executive Piyush Gupta said the writedown put the bank's Hong Kong assets at 2.2 times book value, compared with an average of 2 times among Hong Kong banks. "The dollar market is extremely tight, and there is very aggressive pricing for deposits in Hong Kong," he said. "But this does not mean we have a bearish view of Hong Kong." Amy Yip, chief executive of DBS Bank (Hong Kong), said the reduction in book value was necessary because the bank predicted that its cash flow position over the next five years "is not as good as we had assumed". The goodwill cannot be written up again later even if the carrying value of the book increases. "Loan margins have not expanded but the cost of funding has," Yip said, pointing out that competition was so intense that some banks were offering deposit rates of up to Hibor plus 100 basis points. Net interest income in the first six months fell 4 per cent from the year before to HK$2.22 billion as low interest rates continued to weigh on net interest margins, but non-interest income soared 44 per cent to HK$1.84 billion on the back of strong loan syndication and sales of treasury and wealth management products. The bank said pressures on margins were somewhat offset by strong loan growth, mainly driven by corporate demand and residential mortgages. Its market share in Hong Kong for loans increased 0.2 points from the previous quarter to 5.6 per cent. Overall net profit for the group fell to S$300 million in the second quarter owing to the goodwill impairment charge. Stripping out the one-time charge, earnings grew 30 per cent year on year to S$718 million.

Privacy Commissioner for Personal Data Roderick Woo Bun suggested the electronic payment company Octopus Holdings use a “reasonable font size” – producing text larger.

Hong Kong milk tea and comfort food an acquired taste on mainland China - Charlie Hau recreates a 1960s cha chaan teng in Shanghai. Pineapple buns, French toast with butter and stocking milk tea have sustained generations of Hongkongers, but the popularity of these home-grown culinary gems is now spreading. With more Hong Kong people working and living on the mainland, the city's distinctive cha chaan teng eateries are mushrooming on the other side of the border. And they are bringing the city's signature dishes to major cities. This is not only satisfying Hongkongers desperately looking for comfort food but is also spreading Hong Kong's food culture to the mainland. A survey conducted by the Census and Statistics Department two years ago showed 218,200 Hongkongers took regular working trips to the mainland. Shenzhen, Dongguan, Guangzhou and Shanghai were the most frequently visited cities. The number of Hong Kong people, aged above 18, living on the mainland now total 155,400 compared with only 91,800 in 2005. There is no official figure on the number of cha chaan teng on the mainland, but anecdotal evidence show they are plentiful and growing. "There must be at least one on every major street in Shanghai, and there certainly is one in every big shopping mall," Adeline Ding, a business executive and a milk-tea lover, said. Sin Man-dong, who runs a cha chaan teng at a high-end shopping mall in Guangzhou, estimates there are 200 in the southern city. Charlie Hau Kit-fai, another cha chaan teng owner, says the figure in Shanghai could be around 500. Difficulties in getting Hong Kong food across the border inspired Sin and Hau, both originally from the city, to start their business ventures. Cha chaan teng originated in Hong Kong with the idea of providing inexpensive Western food to local diners. Inspired by the Western way of serving food, meals come in a single serving - whether it is toast, instant noodles, fried rice noodles with sliced beef or rice with scrambled egg and shrimp. Set meals, which offer food and drink in one order, are another common feature in cha chaan teng, and it is this that differentiates cha chaan teng from traditional Chinese restaurants. The Chinese fast-food market recorded more than 15 per cent growth in 2008, according to Euromonitor. Driven by rapid industrialisation, smaller family sizes and frequent exchanges with Western culture, increasing numbers of urbanites are turning to fast-food restaurants and cafes. Sin and several friends opened Woo's Hong Kong Cuisine in Guangzhou's Tianhe district about a year ago. They are confident that as long as they are able to bring authentic Hong Kong taste to the diners, their business will prosper. Hau, a film production executive, encountered the same problem as Sin whenever he and his production crew were working on the mainland. "There are cha chaan teng here, but the taste is not right," he said. His cha chaan teng, Cha's Restaurant, was opened a year ago, with a classic retro interior, mimicking that of Hong Kong in the 1960s. In order to get the right historical look, Hau travelled extensively to look for the right tiles, tables and chairs, fluorescent lighting and wall clock. His efforts to ensure authenticity paid off, as the cha chaan teng broke even after two months. It attracts Hong Kong diners as well as locals who grew up watching Hong Kong television shows and films. The proprietors headhunted chefs and milk tea masters from Hong Kong to lead their kitchen and drinks counter. Sin imports Hong Kong-manufactured vinegar and spicy sauce, Schweppes cream soda and 375ml glass-bottle Coca-Cola. Hau also sells old-style Hong Kong drinks, such as Coca-Cola with ice-cream, which only a handful of cha chaan teng in Hong Kong are still serving. Sin, however, concedes a certain degree of localisation is needed to make his business successful. For example, he has spicy Sichuan food on his menu. "Many mainland consumers like spicy food. They must order at least one spicy dish. So we introduced a few dishes to suit local tastes," Sin said. At both cha chaan teng, Hong Kong diners account for 40 per cent of the customers, more than 50 per cent are locals and the rest are foreigners working on the mainland. Wei Baoying, a white-collar worker, is a frequent cha chaan teng patron. Her favourite food is pineapple bun with butter, or bo lo yau, and a glass of iced lemon tea. "Going to a cha chaan teng to have my favourite food in the afternoon lights up my day," she said. "It is only 10 yuan (HK$11.40) for a tea set, and I can get my favourite food: it is what the actors eat in the films." For Wei, the simple fare brings back sweet childhood memories. In those days, eating one freshly baked crispy-top bun from the small neighbourhood bakery was an essential activity every afternoon. "With the dominance of big bakery chains, there aren't many small bakeries left," she said. "Crispy-top buns are more expensive than before, and it makes the cha chaan teng afternoon set a bargain." Business executive Adeline Ding often catches up with friends at local cha chaan teng. A cup of stocking milk tea is an essential refreshment. The Hong Kong-style milk tea is addictive because of its smooth and strong flavour. "These cafes are not essential, but with their presence, I have more choices. I like it because the price is reasonable and they are centrally located," she said. The nature of cha chaan teng, Hau says, makes them a viable business even for novice cafe owners. "There must be a few essential items, such as milk tea and pineapple buns. Apart from that, there is plenty of room to design the menu, because the whole business is about the format and how we serve the food," Hau said. "Cha chaan teng food is simple; the only expertise needed is serving it the right way and with the right taste. Anyone who grew up in Hong Kong can do this business." Major fast-food chains from Hong Kong, such as Cafe de Coral (SEHK: 0341) and Fairwood (SEHK: 0052, announcements, news) , are established on the mainland. Ajisen, a specialist in Japanese-style food, is a popular eating place for families and white-collar workers. "The beauty of a cha chaan teng is its simplicity," Sin said. "It represents quick, and reasonably priced, tasty food. Diners come in, order food, eat and leave. It fits perfectly with the pace of Hong Kong. "For people on the mainland, a cha chaan teng is synonymous with Hong Kong. They have been watching films and television shows for many years that feature Hong Kong food and are curious about the taste. Some visit Hong Kong frequently, and they like eating at cha chaan teng. Some are from the inland and the northern parts of the mainland and they may not know our food well but they still want to try." The Guangzhou cha chaan teng owner thinks the popularity of the Hong Kong eateries on the mainland also suggests that mainland eating habits are changing. "They are getting busier, so they need to finish their lunch quickly, and many people are unable to have dinner at home, so a cha chaan teng is the right place for them to fill the stomach." Hau believes cha chaan teng will become more popular. "Basically we are serving Chinese food. I believe most Chinese people can acquire the cha chaan teng taste easily. It is far easier than asking them to eat sashimi," he said.

Hong Kong’s residential mortgage loans (RMLs) in negative equity were estimated to have risen 2.3 per cent to 310 cases by end-June from 303 cases at the end of March.

Travellers entering Hong Kong with a fresh pack of duty-free cigarettes will, from Sunday, have the choice of throwing away a single stick or spending 20 minutes on the paperwork necessary to keep it by paying the HK$1.20 duty required by border customs offices. The bureaucracy has led duty-free shops - who face a slump in their business - to appoint "ambassadors" to help customers through the rigmarole of paying duty on additional cigarettes. Until now, travellers entering Hong Kong have been able to bring in 60 cigarettes. But from Sunday they will be allowed less than a full pack. The shop operators hope that a duty-free pack will be so cheap compared to the price in Hong Kong that they will still get some sales. The drawback is that even with the help of the "ambassadors" it could take 20 minutes or more to fill in the forms and make the payment for that lone cigarette, said Simon Au Tze-kei, the merchandising and buying director of Free Duty, which runs shops at six border points. Au said he expected at least a 10 per cent decline in revenue. "We anticipate a huge decline in cigarette sales. We will downplay cigarettes and expand wine and spirits in an effort to pick up some of the lost cigarette sales," he said. Smokers said there were ways to get around the new arrangement. I Smoke Alliance convenor Lee Mer said she would now ask all her friends to buy her cigarettes as a "souvenir" if they happened to travel across the border. "Even if they throw a stick away, a duty-free pack is still a bargain compared to the price you pay in Hong Kong," she said. She said the new policy would have little impact on her smoking habit. "There are a lot of reasons why I smoke. Price is just one of the factors." University of Hong Kong nursing studies head Professor Sophia Chan Siu-chee, who runs several smoking cessation programmes, said while the new policy would be "useful to a certain extent" in pushing smokers to quit, raising the tobacco tax would be more effective. "We are uncertain about the exact impact on smokers, but every time the government introduces an anti-tobacco measure, more people call our hotlines," Chan said. A social worker who specialises in helping people to stop smoking said she did not expect an increase in demand in the short term, but she urged the government to devote more resources to such services as more people stopped smoking. The Customs and Excise Department has meanwhile stepped up its actions against tobacco trafficking. In the first half of this year, 3,647 people were caught for not declaring taxable tobacco products at border controls. Prosecutions in these cases led to the seizure of 1.57 million cigarettes, an increase of 31 per cent from the same period last year. The number of people caught not declaring taxable tobacco products when entering Hong Kong increased 34 per cent on the same period last year, when only 2,725 people were prosecuted. The statistics for the whole of 2008 was 3,715. At the same time, fewer people have declared bringing extra cigarettes into the city. A total of 3,517 people did so in the first six months of this year, down from 4,184 in the same period last year. A total of HK$854,000 in tax has been collected so far this year.

Hongkong Electric has unveiled its new solar energy system on Lamma Island Power Station. The largest solar power system in Hong Kong is expected to generate 620,000 units of electricity annually, accounting for 0.01 percent of Hongkong Electric's annual total power output, supplying power to more than 100 households. The company currently powers 560,000 households and businesses on Hong Kong Island and Lamma. The HK$23 million project comprises 5,500 solar power modules installed on rooftops of power plant buildings, covering an area of 8,470 square meters or slightly larger than a standard football field. Each module has a capacity of 550 kilowatts and gives a peak output of 100 watts. It takes eight panels to generate sufficient power for an air-conditioner. General manager for projects Frank Lau Fuk- hoi said about 80,000 units have been produced during the 29 days of testing, which began on July 1. The new system is expected to reduce carbon dioxide emission by 520 tonnes a year, equivalent to planting 22,000 trees, Lau said. He said the new generation of panels are 200 times thinner than conventional ones, and are more environmentally friendly. Hongkong Electric said it will consider extending the system to other parts of the station after reviewing its effectiveness.

 China*: Scientist Qian Weichang, who was renowned as an applied mathematician and physicist before becoming famous for his efforts in higher education, died in Shanghai yesterday, aged 98.

A digital revolution is overthrowing China's traditional reading habits, and one of the early casualties is a well-known Guangzhou bookshop. The total value of digital publications - on the internet, mobile phones, e-books and computer-based reading software - overtook that of traditional print publications on the mainland for the first time last year, according to a report by the General Administration of Press and Publication released this week. Fan Weiping, a director of the administration, said total sales of digital reading material had reached 79.9 billion yuan (HK$91.6 billion) last year and were growing rapidly. In the same vein, a recent nationwide survey by the Chinese Institute of Publishing Science found that nearly a quarter of the more than 20,000 people it surveyed, aged between 18 and 70, now read primarily in digital formats. The trend is even more obvious among young readers. Half of those aged under 29 read digital content. The survey also found that 91 per cent of readers said they would not buy printed books if they could read them in digital form. Joint Publishing (HK) - one of the most popular book retailers in Guangzhou - announced two weeks ago that it would shut its flagship store in the city and staged a fire sale of its remaining stock. It cited high rent, a lack of customers and changing reading habits among young readers as reasons for its closure. Established in 1994, the store has long been regarded as one of the city's best and is one of the few mainland shops that offers a wide range of books in foreign languages. Its fortunes have waned in recent years as more and more people have opted to read online or on mobile devices. It is not the only bookshop on the mainland that is struggling. Chen Fuming, a senior manager at one of the biggest private bookstore chains in Guangzhou, said the industry was facing what could well be its toughest test. "Even I myself now prefer to read fiction with my mobile phone," Chen said. "It's cheap and convenient." Nearly half the country's private bookshops have closed in the past 10 years and the situation is getting worse, according to recent mainland media reports quoting the Book Industry Chamber of Commerce under the All-China Federation of Industry and Commerce. Competition is also hotting up in the mainland's e-book market, with Shanda Literature launching its new Bambook reader, which promises access to what it claims is the country's biggest digital library, with three million books and more than 1,000 journals. It is taking on Hanvon Technology, which has as much as 90 per cent of the market. Hanvon sold 270,000 e-book readers last year and expects to sell two million this year. In Joint Publishing's Guangzhou Book Mall store, one reader with a basket of books said she regretted the disappearance of such an upmarket bookstore, but the growth of the e-book sector meant she was not particularly sad about it. "Many imported books I could only find here are now available online, with even better discounts," she said. "It is regrettable that we're losing this store, because I have been a regular customer for more than a decade, but it is no longer the only place where readers can find the books they want."

Automobile said on Friday it had received the nod from the mainland’s state planner for its purchase of Ford’s Volvo unit.

Li Shufu (center), chairman of Zhejiang Geely Holding Co, arrives for a news conference in Beijing earlier this year. The Geely-Volvo deal has won approval from the Chinese government.

Chinese Air Carriers' profits set to soar - China Southern Airlines Co passenger planes parked at Beijing Capital International Airport. July 30 2010 SHANGHAI - Soaring demand and fewer discounts have secured the profits of the nation's major airlines in the first six months, with China's aviation industry expected to stay well in the black for the rest of the year, said analysts. China Southern Airlines Co Ltd said in a statement to the Shanghai Stock Exchange on Thursday that its net profit in the first half is expected to skyrocket 5,000 percent from the same period last year. "Zooming travel demand in the first half and a record low performance during the same period last year will combine to make China Southern's profit jump 50-fold," said the Guangzhou-based carrier. China Southern reported a net profit of 38 million yuan in the first half of 2009, a drop of 95.3 percent over the same period in the previous year. In the first half, domestic carriers' passenger volume increased 18.6 percent year-on-year, while international passenger throughput rose 36 percent during the same period, according to the latest figures released by the Civil Aviation Administration of China (CAAC) on July 20. Li Jun, an analyst from Huatai United Securities, estimated in a report that the domestic aviation industry will make a combined pre-tax profit of around 5 billion yuan in the first half of this year, and this figure will reach a record of nearly 10 billion yuan in the third quarter. Hainan Airlines Co Ltd, China's fourth-largest carrier, said last Friday in a statement filed with the Shanghai Stock Exchange that its net profit for the first half may soar 100 percent from the same period last year. It attributed the improved performance to rising passenger volume and higher operating efficiency. China Eastern Airlines Co Ltd, the nation's second-largest carrier by fleet size, expects its net profit to increase more than 50 percent in the first half year-on-year. The carrier had a 1.17 billion yuan net profit in the first six months of 2009, and its net profit will exceed 1.7 billion yuan during the same period this year. China Eastern is going to release its half-year report in late August, and Luo Zhuping, board secretary of the Shanghai-based airline, said its results will be encouraging. "We are now in a key year for the aviation industry," said Luo. "After a series of mergers and acquisitions in the nation's aviation industry, there are fewer but stronger airlines operating across the nation, which guarantees our business volume and quality at the same time," he added. Luo added that yuan appreciation will reduce the carrier's debts as they are calculated in US dollars. "This will be another piece of good news for carriers," said Luo. The first six months is not a traditional peak season for the aviation industry, and the sector's solid performance will improve further in the second half of the year, said Li Lei, an industrial analyst from Citic China Securities. "A number of factors, including the economic revival, the ongoing Shanghai Expo and summer holidays will push up ticket prices while seat-kilometer utilization will hit a new high," said Li.

Riders fired up about bullet train that connects Beijing and Tianjin - Two years ago, on Aug 1, shiny bullet trains began to rocket like streaks of lightning between Beijing and Tianjin. The train, with a maximum speed of 350 kilometers per hour, reduced the traveling time between the megacities - from 75 minutes to merely half a hour. Now, every day around 50,000 passengers travel on the Beijing-Tianjin Intercity Railway. While many are occasional passengers, there are many who, like red blood cells in an artery, regularly ride the train between the two economic and cultural hubs of northern China. Zhang Zhimai, 68, is a native of Beijing but he has lived and worked in Tianjin for decades. As a senior engineer with the Tianjin Research Institute of Construction Machinery, he is a regular passenger on the bullet train and makes business trips between Beijing and Tianjin at least once a week. When METRO met Zhang in the first-class carriage, he was not making a business trip but traveling with his granddaughter. In addition to business trips, he frequently takes the train to visit relatives in the capital. Zhang could not conceal his satisfaction with the speed, environment and service of the trains. Because he is an elderly man, he said the attendants usually offer him particularly good care. "The service is brilliant," he said. "When I get on the train, the attendants often come to me and ask me whether I need help." Zhang's satisfaction was common among passengers. More than 10 Chinese and foreign passengers on the bullet train interviewed by METRO said they were impressed with the speed, environment and service provided. While occasional passengers were largely awed by the lightning speed of the trains, regular commuters were not so impressed, complaining that they still have to spend a lot of time getting from the train stations at either end to their ultimate destinations. Xu, an environmental technology engineer, lives in Beijing and travels two or three times a week from his home to his company located in Tianjin. While he takes a taxi from his home in Chaoyangmen, Dongcheng district, to the Beijing South Railway Station, it usually still takes him at least half a hour to get to the train. When traffic is congested, which is a common, the journey takes between 40 minutes and an hour. When he gets off the bullet train in Tianjin, he is met by a car sent by his company and he spends another 40 minutes or more getting to his workplace. Despite the bullet train, he says he is still spending more than two hours on his commute, usually leaving home at 7 am and getting back home at 8 pm. Compared with many other passengers, however, Xu is lucky. Jiang, a young lady in the medical appliances trade, travels once a week from her home in Beijing to Tianjin to meet clients. Every time, she has to spend a hour traveling to the Beijing South Railway Station and another hour after she gets off the train at Tianjin Railway Station. She says the total travel time is two and half hours to three hours. "If I commuted every day, I would be very tired," she said. In addition to wishing the congested cities at either end of the fast train were less gridlocked, passengers said they would also like to see the bullet train lower its prices for regular commuters. A second-class single ticket costs 58 yuan one-way, while a ticket on a slower train would cost only around 20 yuan and an intercity coach ticket 35. But while regular commuters would like to see the price to ride the bullet train lowered, occasional passengers thought it was good value for money. "We think the price is OK," said a middle-aged couple who had taken the train four times. Even though Xu's company pays for his ticket, he told METRO the price "is too high for ordinary people to accept". Jiang agreed. Like Xu, her company reimburses her tickets. But "the price is too high if I pay for the tickets out of my own pocket", she said. If a passenger commutes every day on the bullet trains, it would cost around 2,500 yuan a month (if there were 22 working days in a month). The expenditure would be enough to rent a two-bedroom apartment near the Beijing South Railway station. In spite of the relatively high ticket price, the railway made a loss of 700 million yuan (around $103 million) between Aug 1, 2008, and Sept 30, 2009. A loss is also expected for the second year. Two years ago, the intercity railway was hailed as a milestone to integrate the two major cities. Two years later, however, even though the train has brought a great deal of convenience to passengers, it has not made everyone happy and has certainly not made a profit.

Beijing reasserts its sovereignty over the South China Sea - For China, war games are steel behind the statements - China reasserted its "indisputable sovereignty" over the South China Sea a day after televising an unprecedented projection of its military power there - a sign Beijing is more ready to match its statements with steel. Defence Ministry spokesman Geng Yansheng said China would push for the resolution of differences over the South China Sea with "relevant countries" through dialogue and negotiation, but objected to them being internationalised. "China upholds resolving the disputes according to international law with related countries in the south sea through peaceful talks and friendly consultations," he said. Geng also said China would respect the liberty of ships and aircraft from "relevant countries" traversing the South China Sea in accordance with international laws. Until recently, Beijing would have limited itself to a routine expression of concern in the face of tensions over territorial claims in the waterway. This time it sent its three naval fleets - days after US Secretary of State Hillary Clinton declared at a regional summit in Hanoi that resolving the sea's territorial disputes was in the "national interest" of the United States and a "diplomatic priority". The naval deployment appeared designed to showcase China's military advancement and its raw power, according to diplomats and analysts. "We are seeing the region's big powers routinely flexing their muscles over the South China Sea at a very fluid moment," said one veteran Asian military envoy. "The neighbourhood is suddenly a very different place and we are entering a new era." China claims virtually the entire South China Sea and its strategic Paracel and Spratly archipelagoes. Vietnam also lays claim to the islands; Malaysia, the Philippines and Brunei lay claim to some of them. Show of force in PLA South China Sea drill in response to US-South Korean Exercise - War games a response to US-South Korean exercises, say analysts - Crack warships from the PLA's three naval fleets jointly exercised in the disputed South China Sea in a move that was hailed by the state media as unprecedented. The drills by the People's Liberation Army Navy in strategic waters on Monday come at a sensitive time; the United States and South Korea are conducting their own joint military drills off the Korean Peninsula. The US further angered Beijing last week by declaring that the resolution of disputes in the South China Sea is in the US' "national interest". The Ministry of Defence and state media did not mention the purpose of Monday's exercises. While it is normal for the PLA to conduct exercises before anniversaries - such as that of its founding on Sunday - experts on the mainland and overseas agreed that the sheer scale of the drills was exceptional. Gary Li, a PLA analyst at the London-based International Institute for Strategic Studies, said the televised display of so many missile tests was highly unusual. "It looks like [China] was clearly sending a message," he said. "I have never seen a senior Central Military Commission member actually participating in naval exercises, along with so many high-level officers. The deck of the observer ship was strewn with gold braid," he said. The news was only reported yesterday by China Central Television and the Ministry of Defence on its website. PLA Chief of General Staff Chen Bingde and naval commander Wu Shengli - both members of the Central Military Commission - supervised the exercises. Flagships of all three naval fleets took part in the war games, indicating the scale of the operation. Xu Guangyu, a senior researcher of the China Arms Control and Disarmament Association, said the three fleets regularly carry out [separate] exercises to mark the PLA's founding anniversary. "But of course, this time there is a strategic necessity to bring all three together for such a big joint mission," he said. State media did not say exactly where the drills took place or how many ships or sailors participated. "We must pay close attention to changes in [regional] situations and the development of our mission; prepare ourselves for military struggle," Chen was quoted by the state media as saying. The military channel of China Central Television showed selected footage of the drills. Luyang-class destroyers, Sovremenny-class destroyers and guided-missile frigates carried out synchronised warfare manoeuvres and test-fired several types of ship-to-air and anti-ship missiles, the footage showed. The CCTV report said the navy focused on how to conduct a precise strike in a complex environment amid sophisticated enemy electronic jamming. "It is a comprehensive and complex exercise in our history. The number of missiles fired and the intensity of the electronic warfare conducted are both remarkable." Military exercises are an important feature of Chinese military doctrine and often offer an important strategic insight into the PLA's intentions and capabilities. Analysts are divided on the exact motive for the latest exercise but agreed that it was a show of defiance against US dominance in Asia. Li said the exercises were probably a further reaction to the ongoing US-South Korean manoeuvres in the East Sea, given their apparently high degree of organisation. Significantly, the PLA was showing off a comprehensive array of long-range attack capabilities, including missiles launched from submarines and fast-attack craft. "It is a very strong message ... showing they can project force across a wide range of platforms in a very comprehensive and adaptable way," he said. Antony Wong Dong, president of the Macau-based International Military Association, said the gathering of main forces of the three fleets in the South China Sea was to show China's concern over America's involvement in territorial disputes in the troubled region. Conducting such co-ordinated manoeuvres of ships from all three fleets is rare for the PLA and would take time to prepare. But recently, the PLA demonstrated it had mastered the required capabilities to bring a separated force together to carry out co-ordinated missions. In April, the PLA navy carried out elaborate long-distance exercises to the southeast of Japan's offshore islands. "It's not that difficult for today's PLA navy to organise joint-fleet exercises at short notice," Xu said. China's rapid growing military clout has raised concerns in the region, particularly among nations that have unsolved territorial disputes with Beijing. A senior Vietnamese military official warned on Wednesday against an arms race in the South China Sea, noting a growing naval presence from a range of nations, including China. Lieutenant General Nguyen Chi Vinh, deputy defence minister, said China's military exercises were its own affair but they must not interfere with the territorial integrity of Vietnam's holdings in the sea's Spratly islands. "We never want to see an arms race in this area," he said. Countries like Vietnam "should be worried" if "concerned parties do not find a common understanding and direction ... and all want to impose their opinion on each other".

A warship launches missiles during a live-ammunition military drill held by the South China Sea Fleet of the People's Liberation Army (PLA) Navy in the South China Sea, Hainan province, July 26, 2010. The People's Liberation Army (PLA) Navy had conducted a large scale of live-ammunition training exercise in the South China Sea. During the exercise, warships and submarines from the Navy's South China Sea Fleet performed precision strikes on surface targets by firing guided missiles while surface warships conducted anti-missile air defense operations. A naval aviation fleet also participated in air control operations, which didn't specify the exact location of the training or the number of participating warships.

US lawmakers will hold a hearing on September 15 to consider action on China's exchange rate policy, a key House of Representatives committee said on Thursday.

Workers on Friday struggled to recover 3,000 barrels filled with hazardous chemicals that were swept into a river in Jilin province by floods, amid fears some had sunk.

China has overtaken Japan as No 2 economy, says forex chief - The mainland's economy expanded 11.1 per cent in the first half of the current year, compared with a year earlier, and is likely to log growth of more than 9 per cent for the whole year, according to Yi Gang, head of the State Administration of Foreign Exchange. China has overtaken Japan to become the world’s second-largest economy after the United States, the country’s chief currency regulator said in remarks published on Friday. The economy expanded 11.1 per cent in the first half of the current year, compared with a year earlier, and is likely to log growth of more than 9 per cent for the whole year, according to Yi Gang, head of the State Administration of Foreign Exchange (Safe). “China, in fact, is now already the world’s second-largest economy,” he said in an interview posted on his agency’s website, www.safe.gov.cn. Yi said the mainland’s growth rate, which has averaged more than 9.5 per cent a year over the past 30 years, was bound to slow over time. If the country could chalk up growth this decade of 7-8 per cent annually, that would still be a strong performance. The issue was whether fast growth can be sustained, he said. If the country expands by 5-6 per cent a year in the 2020s, it will have maintained rapid growth for 50 years, which Yi said would be unprecedented in human history. He said expectations of a stronger yuan, also known as the renminbi, had diminished. There was no basis for a sharp rise in the exchange rate, partly because the price level in the mainland had risen steadily over the past decade. “This suggests that the value of the renminbi has moved much closer to equilibrium compared with 10 years ago,” he said in the interview with China Reform magazine. Yi’s remarks carried an echo of a report by the International Monetary Fund on Thursday, which said the mainland authorities viewed the yuan right now as closer than ever to equilibrium. “At present, there is no basis for big fluctuations in the yuan. We have the conditions to keep a flexible exchange rate mechanism and we can keep the yuan basically stable at a reasonable and balanced level,” he said. Yi’s comments are unlikely to go down well in Washington, where lawmakers have scheduled a hearing for September 16 to consider whether US government action is needed to address Beijing’s exchange rate policy. The country scrapped the yuan’s 23-month-old peg to the US dollar on June 19 and resumed a managed float. The yuan has since risen only 0.8 per cent against the US dollar, and economists calculate that it has fallen in value against a basket of currencies. Beijing had no timetable to make the yuan fully convertible, Yi said: “China is very big and its development is unbalanced, which makes this problem much more complicated. It’s difficult to reach a consensus on it.” In the same vein, he said the mainland was in no rush to turn the yuan into a global currency. “We must be modest and we still have to keep a low profile. If other people choose the yuan as a reserve currency, we won’t stop that as it is the demand of the market. However, we will not push hard to promote it,” he added. The mainland has been encouraging the use of the yuan beyond its borders, allowing more trade to be settled in renminbi and taking a series of measures to establish Hong Kong as an offshore centre where the currency can circulate freely. But Yi said: “Don’t think that since people are talking about it, the yuan is close to becoming a reserve currency. Actually, it’s still far from that.” The country would stick to the principle of holding its US$2.45 trillion of international reserves in a mix of currencies and assets. The stockpile – the world’s largest – was so big that it was impossible to adjust its currency composition in a short space of time, he added. “We won’t be particularly bearish on the dollar at a given time or particularly bearish on the euro at another time,” he said.

Strategic shareholder Vodafone is considering selling its China Mobile (0941) stake which is worth HK$50 billion, according to British media reports.

Air China, the country's leading carrier, said late Friday that it would pay 814 million U.S. dollars to buy 10 Airbus 320-series passenger planes.

Last 10 winners of Miss China.

July 31, 2010

Hong Kong*: Hong Kong's population will swell to 8.89 million in 30 years, with the elderly making up a much larger proportion of citizens and the number of men to women also widening, say latest projections. The elderly population is projected to rise to 28 per cent of the population in 2039 from 13 per cent last year. There will also be fewer men to women. Last year there were 889 men to every 1,000 women but by 2039 the figure will fall to 744. The gap will be even bigger in the 25-44 age group, with just 631 men per thousand women as against 746 last year. Commissioner for Census and Statistics Fung Hing-wang said the imbalance of women to men was due in part to the huge population of domestic helpers. Another factor would be the influx of mainland wives of Hong Kong men, assuming that the 150 daily quota of one-way permits remained unchanged over the next 30 years. Asked if Hong Kong women would find it harder to find husbands, Fung said: "Marriage is about interaction, supply and demand. There are likely to be some adjustments." Fung said the ageing of the post-war baby boomers and of the influx of young mainlanders in the 1980s would contribute to the growing elderly population.

Jade Dynasty staffer Leung Hoi-ming holds a Nan Gong Wen Tian figurine at the 12th Ani-com & Games Hong Kong 2010. Limited edition figures, pseudo-models, comics and bargains - all are in place as the Ani-com comics fair kicks off today. More than a hundred people queued overnight outside the Hong Kong Convention and Exhibition Centre last night, with the majority saying that they were keen to buy figurines of online game or comic-book characters. Among the most expensive is one of Nan Gong Wen Tian - a character from Tony Wong Yuk-long's comic series, The Legend of Nan Gong Wen Tian. The HK$1,200 special edition figurine comes with a transparent arm, and only three are for sale at the fair, which runs until Tuesday. Others are cheaper but also in short supply. A replica of the sword used by Nip Fung, a character in Ma Wing Shing's comic Fung Wan, costs HK$350 but only 20 are available. Brenda Leung, marketing manager for Jade Dynasty, publisher of Wong's comics, said it was expected that business would increase by about 10 per cent from last year's HK$1 million. Lego fans will be able to see 12 local attractions made by Lego enthusiasts, such as models of Ap Liu Street, Wong Tai Sin Temple and the Hong Kong Coliseum, and can vote on their favourite one. Eddie Chow, in his 30s, made a Lego model featuring Tai Po's Lam Tsuen. The set, on which Chow spent more than HK$10,000 and which took a month to make, includes the famed wishing tree which has collapsed. Online gaming companies promise pseudo-models will be there. Online game developer Gamania has invited pseudo-model Da Da and four Taiwanese models. "Da Da will strip 10 items of apparel off herself and give them to the first 10 fans in the queue," public relations representative Kiko Li said. She did not say what the items would be but stressed the event would be suitable for people of all ages. Microsoft, the maker of X Box, has replaced Chrissie Chau Sau-na and Jessica C with another two pseudo-models - Debby Tsang and Kinki Lam. The organiser has ruled out promotional activities by Chan and Jessica C, because they are celebrities "well-known enough to cause a stir", the exhibitor was told. But the company's director of entertainment and devices, Chester Wong Kui-tim, said the replacement models would not adversely affect sales, which he predicted would increase by 40 per cent. X Box 360, a gaming device released two weeks ago, will be offered as part of a promotional package at Ani-com. For HK$2,969, the first 100 buyers will get a HK$2,300 X Box 360, a game, a console and a bicycle.

The MTR Corporation will today consider ways to rescue Octopus Cards' credibility and the future of the company's embattled chief, Prudence Chan Bik-wah.

Sino-Australian relations look to be on the mend with iron ore (above) from Down Under unloaded in Tianjin in March, and now a project between Chalco and British-Australian miner Rio Tinto in southeastern Guinea. Aluminum Corp of China (SEHK: 2600), the nation's biggest producer of the metal, agreed to pay US$1.35 billion for a stake in Rio Tinto Group's Simandou iron ore project in Guinea, making its first investment in the commodity. Chalco will acquire a 44.65 per cent stake by funding development over the next two to three years. The agreement follows an initial accord on the project with Chinalco, Chalco's state-owned parent, in March. Rio is working to repair ties with China, its biggest client, after scrapping a US$19.5 billion investment from Chinalco last year. Chalco, facing a 12 per cent drop in aluminium prices, will benefit from tapping what London-based Rio says is the world's top undeveloped iron ore deposit. "Chalco delayed a share sale this year and the stock performed badly," Owen Liang, a Shenzhen-based analyst at Guotai Junan Securities, said. "The company needs to convince investors of profit growth. The Simandou project will contribute substantially to profit after it starts." This will be Chalco's biggest overseas investment after it pulled a A$3 billion (HK$20.82 billion) bauxite project in Australia last month as market conditions deteriorated. Bauxite is the main raw material for aluminium. In February, the company agreed to jointly develop and operate a US$1 billion smelter in Malaysia with GIIG Holdings. "This project can also efficiently balance China's need for security of supply on the global iron ore market," said Xiong Weiping, chairman of Chalco and Chinalco. The Simandou project would be the foundation for future co-operation between the two companies, he said. Imports of iron ore by China, the biggest buyer, jumped 42 per cent last year to a record 628 million tonnes. The biggest suppliers, Vale, Rio and BHP Billiton, abandoned a 40-year custom of setting annual prices this year and raised rates twice as demand gained. "The project will contribute roughly 4.5 billion yuan (HK$5.15 billion) of profit a year, based on current iron ore prices," Guotai's Liang said. "It will also reduce the pricing power of the three biggest miners." Rio will retain a 50.35 per cent stake after Chalco's investment, and International Finance Corp holds 5 per cent. The Guinean government had an option to buy up to 20 per cent of the project and had "recently expressed a willingness to exercise that option", the two companies said.

A sharp increase in the number of expatriate executives moving to Hong Kong with their families helped drive a 10.9 per cent rise in rentals of luxury residential properties in the first half of this year.

The house at 20 Peak Road, surrounded by foliage, is a two-storey detached building completed in 1948. Sellers of a luxury house on The Peak are confident of achieving a record price following the positive result at this week's land auction. The Shang family, owners of the China Can Company, appointed property agency Jones Lang LaSalle to conduct a tender for the 62-year-old house at 20 Peak Road. The tender will close on September 15. In an auction on Wednesday, a site at Mount Nicholson Road on The Peak sold for the third-highest price on record in Hong Kong - HK$10.4 billion. "The accommodation value [land price per square foot] has a great opportunity to break the record for a residential site in town," Joseph Tsang Hon-ping, international director at the property agency, said of the Peak Road site. The most expensive site sold was 35 Barker Road on The Peak, for which Henderson Land (SEHK: 0012) chairman Lee Shau-kee paid HK$68,228 per sq ft last month. As the development potential of the project is small, Tsang expects the tender will only attract tycoons keen to build their dream home, rather than commercial developers. Lanbase Surveyors director Chan Cheong-kit estimates the 20 Peak Road site to be worth between HK$800 million and HK$900 million as it is in a prime location with panoramic views of Victoria Harbor and Central. "The land price per sq ft may reach HK$68,229, similar to the site acquired by Lee Shau-kee," he said.

 China*: Industrial and Commercial Bank of China (SEHK: 1398), the world's largest lender by assets, said it would raise up to 45 billion yuan (HK$51.48 billion) via a rights issue in Shanghai and Hong Kong, following fund-raising efforts by its Chinese peers. ICBC's board has passed a proposal to sell up to 0.6 shares for each 10 shares held by existing shareholders to replenish capital, according to a bourse filing on Wednesday. The plan is subject to approvals from shareholders and regulators. The rights offer would bring total fund-raisings announced by the largest lenders - ICBC, China Construction Bank (SEHK: 0939), Bank of China and Bank of Communications (SEHK: 3328) - to as much as 287 billion yuan. The fund-raising flood comes on the heels of last year's lending binge. After banks lent an unprecedented 9.6 trillion yuan, they now have to strengthen their capital bases to meet regulatory requirements. At the end of March, ICBC's capital adequacy ratio stood at 11.98 per cent, higher than the 11.5 per cent minimum required by the China Banking Regulatory Commission. The ICBC board of directors on Wednesday also passed a plan to privatise Industrial and Commercial Bank of China (Asia), which is a 72.4 per cent-owned subsidiary. Analysts with Citi Investment Research estimate that the deal, which is intended to streamline ICBC's Hong Kong businesses, would cost ICBC US$1.6 billion if the stake is priced at 2.5 times 2009 book value. ICBC sold a 75 per cent stake in brokerage ICEA Finance Holdings to Bank of East Asia (SEHK: 0023) at the beginning of this year and bought a 70 per cent stake in BEA (Canada). In Hong Kong, ICBC has a wholly owned investment bank, ICBC International. Analysts with Guotai Junan Securities estimate that the rights issue will be priced at HK$2.57, 56 per cent lower than the Tuesday closing price of HK$5.87. The analysts do not expect the fund-raising to have a major impact on the market, predicting that Central Huijin Investment, a major shareholder of ICBC and a subsidiary of the nation's sovereign wealth fund China Investment Corp, would probably subscribe to the shares. Separately, Agricultural Bank of China may topple ICBC as the company with the world's biggest IPO if it chooses to exercise a greenshoe option. ICBC completed the world's top initial share sale in 2006 when it raised US$21.9 billion. ABC raised US$19.2 billion in an IPO earlier this month, and boosted the size to about US$20.8 billion after selling a further 3.81 billion shares at HK$3.20 a share, it said yesterday.

China Show of force in South China Sea drill - War games a response to US-South Korean exercises, say analysts - Crack warships from the PLA's three naval fleets jointly exercised in the disputed South China Sea in a move that was hailed by the state media as unprecedented. The drills by the People's Liberation Army Navy in strategic waters on Monday come at a sensitive time; the United States and South Korea are conducting their own joint military drills off the Korean Peninsula. The US further angered Beijing last week by declaring that the resolution of disputes in the South China Sea is in the US' "national interest". The Ministry of Defence and state media did not mention the purpose of Monday's exercises. While it is normal for the PLA to conduct exercises before anniversaries - such as that of its founding on Sunday - experts on the mainland and overseas agreed that the sheer scale of the drills was exceptional. Gary Li, a PLA analyst at the London-based International Institute for Strategic Studies, said the televised display of so many missile tests was highly unusual. "It looks like [China] was clearly sending a message," he said. "I have never seen a senior Central Military Commission member actually participating in naval exercises, along with so many high-level officers. The deck of the observer ship was strewn with gold braid," he said. The news was only reported yesterday by China Central Television and the Ministry of Defence on its website. PLA Chief of General Staff Chen Bingde and naval commander Wu Shengli - both members of the Central Military Commission - supervised the exercises. Flagships of all three naval fleets took part in the war games, indicating the scale of the operation. Xu Guangyu, a senior researcher of the China Arms Control and Disarmament Association, said the three fleets regularly carry out [separate] exercises to mark the PLA's founding anniversary. "But of course, this time there is a strategic necessity to bring all three together for such a big joint mission," he said. State media did not say exactly where the drills took place or how many ships or sailors participated. "We must pay close attention to changes in [regional] situations and the development of our mission; prepare ourselves for military struggle," Chen was quoted by the state media as saying. The military channel of China Central Television showed selected footage of the drills. Luyang-class destroyers, Sovremenny-class destroyers and guided-missile frigates carried out synchronised warfare manoeuvres and test-fired several types of ship-to-air and anti-ship missiles, the footage showed. The CCTV report said the navy focused on how to conduct a precise strike in a complex environment amid sophisticated enemy electronic jamming. "It is a comprehensive and complex exercise in our history. The number of missiles fired and the intensity of the electronic warfare conducted are both remarkable." Military exercises are an important feature of Chinese military doctrine and often offer an important strategic insight into the PLA's intentions and capabilities. Analysts are divided on the exact motive for the latest exercise but agreed that it was a show of defiance against US dominance in Asia. Li said the exercises were probably a further reaction to the ongoing US-South Korean manoeuvres in the East Sea, given their apparently high degree of organisation. Significantly, the PLA was showing off a comprehensive array of long-range attack capabilities, including missiles launched from submarines and fast-attack craft. "It is a very strong message ... showing they can project force across a wide range of platforms in a very comprehensive and adaptable way," he said. Antony Wong Dong, president of the Macau-based International Military Association, said the gathering of main forces of the three fleets in the South China Sea was to show China's concern over America's involvement in territorial disputes in the troubled region. Conducting such co-ordinated manoeuvres of ships from all three fleets is rare for the PLA and would take time to prepare. But recently, the PLA demonstrated it had mastered the required capabilities to bring a separated force together to carry out co-ordinated missions. In April, the PLA navy carried out elaborate long-distance exercises to the southeast of Japan's offshore islands. "It's not that difficult for today's PLA navy to organise joint-fleet exercises at short notice," Xu said. China's rapid growing military clout has raised concerns in the region, particularly among nations that have unsolved territorial disputes with Beijing. A senior Vietnamese military official warned on Wednesday against an arms race in the South China Sea, noting a growing naval presence from a range of nations, including China. Lieutenant General Nguyen Chi Vinh, deputy defence minister, said China's military exercises were its own affair but they must not interfere with the territorial integrity of Vietnam's holdings in the sea's Spratly islands. "We never want to see an arms race in this area," he said. Countries like Vietnam "should be worried" if "concerned parties do not find a common understanding and direction ... and all want to impose their opinion on each other".

Bottles of water are stacked up for sale at a petrol station in Jilin city amid fears that tap water may have been contaminated.

 *News information are obtained via various sources deemed reliable, but not guaranteed

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