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In Depth Look of Hong Kong - Past, Current & Future
In Depth Look of China - Past, Current & Future
To succeed in business in Hawaii, you must understand the islands
How to Do Business with China, through Hong Kong & Setting up Business in China?
Hawaii Failed Business Image and Continue Missed Opportunities

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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

Johnson Choi on Hong Kong investments with Hawaii filmmakers - Asia in Review host Jay Fidell in a discussion with Johnson Choi, President of the Hong Kong.China.Hawaii Chamber of Commerce on his recent (July 2010) trip to Shanghai and Hong Kong and on Hong Kong investments with Hawaii filmmakers http://vimeo.com/13994279 or download video click: http://www.hkchcc.org/johnsonchoithinktec0710.mp4

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

(approximate $ exchange rates: US$1 = HK$7.8, US$1 = RMB$6.8)

View China 60th Anniversary Video and Photo online

Holidays Greeting from President Obama & Johnson Choi http://www.youtube.com/watch?v=pNk4Z4lUV-k   http://www.facebook.com/video/video.php?v=219896871983&ref=mf

View Our Conference call with President Barack Obama on Nov 3 2010 4:30pm EST http://www.youtube.com/watch?v=slMhUhS3wJg

Wine-Biz - Hong Kong Brand Hong Kong Video

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)

http://www.apec2011usa.org/

AmCham Shanghai launches latest Viewpoint - U.S. Export Competitiveness in China - on the 2010 Washington, D.C. Doorknock - Please download report in PDF format: http://www.hkchcc.org/viewpointusexport.pdf 

HK is doubling the Professors' pay to US$25,806/month - looking for 1,000 professor http://www.hkchcc.org/job_opportunities.htm

December 1, 2010

Hong Kong*: Financial Secretary John Tsang Chun-wah said on Monday Hong Kong’ economy was enjoying steady growth - but warned of higher inflation in future. Speaking to the Legislative Council Panel on Financial Affairs, Tsang said Hong Kong’s economy had benefited from strong economic growth in the mainland and other parts of Asia. The economy had been buoyant in the first half of the year. “Real gross domestic product [GDP] grew by 7.1 per cent in the first and third quarters of the year compared with the same periods a year earlier,” Tsang said. “Given the strong growth so far, [and] even allowing for some possible deceleration in the fourth quarter, economic growth this year should exceed the forecast of 5 to 6 per cent predicted earlier this year. “[Therefore] I have raised the full-year GDP growth forecast to 6.5 per cent,” he said. But the financial secretary warned that Hong Kong would also face higher inflation next year. “The second round of quantitative easing by the Federal Reserve in the US has lowered the [value of the] US dollar and further driven up the prices of food, energy and other commodities,” he noted. Tsang said fears of higher inflation had become a major concern for Asian economies and that he will closely monitor inflation, especially its impact on those on low incomes. Tsang said Asian countries were also concerned about the increasing risk of asset bubbles and volatility in financial and currency markets following the qualitative easing. He also reiterated that the government was determined to curb excessive speculation in Hong Kong’s residential property market.

Gold medalist urges support for Asian Games bid - Asian Games 2010 cycling gold medalist Wong Kam-po speaks at the Legislative Council’s Home Affairs Panel meeting on Wednesday where he urged lawmakers to support the city's bid to host the 2023 Asian Games.

Lack of projects darkens outlook - Only 700 new homes were sold in the first 25 days of this month, a 60 percent decrease from the 1,651 deals in October. "Deals for new homes will fail to reach 800 for the month," said Jeffrey Ng Chong-yip of Hong Kong Property, who also expects fewer than 1,000 deals in each of the coming months. As for the past seven days, the impact of new stamp duties of up to 15 percent on homes purchased and sold within six months could be felt in transactions for new homes, which declined for the second straight week. Fewer buyers also showed interest in checking out open houses at the weekend. "Fewer than 10 new homes were sold through us on Saturday and Sunday, compared to a usual range of 20 to 30," said Patrick Chow Moon-kit, head of research of Ricacorp Properties. Of these, four were at Festival City II in Tai Wai. Chow said new home sales will dip further as no new projects are scheduled to be launched next month. The value of transactions this month declined only 12 percent to HK$13.5 billion so far. An average of HK$19.4 million was booked for each transaction, more than double the HK$9.3 million in October. "Many of those new homes sold in November were worth more than HK$10 million," added Ng. Meanwhile, most buyers stayed away at the weekend. "Most buyers are expecting a further cut in home prices, while a few sellers are willing to give discounts," said Midland Reality sales director Gary Yeung Wing-kin. There were only 1,550 groups visiting 15 major estates of preowned homes at the weekend, the largest weekly fall since 2008 at 26.7 percent. It also marked the fourth straight weekly decline. Sentiment in the secondary market is also declining, with transactions down by half from a week ago, said Chow. About 20 percent of homeowners have pulled out of the market, with many switching to letting instead. Deals in the coming month will continue to come under pressure, especially for units with prices ranging from HK$5 million to HK$10 million. "With the impact from the new cooling measures, fewer than 1,000 pre- owned homes will change hands in December," said Ng.

HK IPOs roll on, US$2.8b deals launched - Asian initial public offerings had a strong start to the week, with two deals worth US$2.8 billion priced in Hong Kong on Monday, as issuers make a last minute push to raise funds before markets close for year-end holidays in about two weeks. Asian issuers have largely shrugged off the Korean tensions and Ireland’s debt crisis, emboldened by continued strong fund inflows into the region. Chongqing Rural Commercial Bank, which will trade under the listing code 3618, set a price range of HK$4.50-6.00 per share for its Hong Kong IPO, aiming to raise up to HK$12 billion (US$1.5 billion), according to a term sheet seen by Reuters. Huaneng Renewables Corporation priced its’ Hong Kong IPO at HK$2.98-3.98 per share to raise up to US$1.3 billion, according to its term sheet seen by Reuters. Asia has dominated the world IPO market this year, accounting for 62 per cent of the US$241.2 billion raised through globally, according to Thomson Reuters data. Hong Kong’s stock exchange has been an IPO hot bed, raising about US$48 billion so far this year. Chongqing Rural Commercial Bank planned to issue 2 billion shares, the term sheet said. Morgan Stanley and Nomura Holdings are handling the sale. Huaneng Renewables plans to issue 2.486 billion shares, the term sheet said. Morgan Stanley is the sole global coordinator.

Flexible hours are being pushed so working parents have more time with their kids - a call that follows a survey showing about a third of Hong Kong's people spend only an hour a day with families. Yet more than half of the 1,930 respondents to the survey by the Hong Kong Young Women's Christian Association are generally satisfied with their personal lives, and almost all gave a "pass" mark to their family relationships. The respondents - most of them in two-parent, two-children "nuclear families" - were interviewed from July to October and asked to grade personal and family life satisfaction on a scale of one to seven, with three a "pass" level. The study found 32.8 percent spend less than seven hours a week at dinner, talking or in leisure activities with the family. They rated their personal and family lives at 4.32 and 2.9 respectively. Those who spend more than 21 hours a week involved in family activities recorded personal and family satisfaction at 5.48 and 3.52 respectively. "Mutual understanding and mutual respect can be cultivated through daily communication, which are the keys to a harmonious family," said YWCA social work supervisor Emily Lee Man-shan. Shared responsibilities go a long way to making a happy family, Lee added. So the government should introduce more family-friendly policies such as flexible working hours to achieve a balance between work and the family. A couple with a baby under three years of age should be able to get some extra leave and subsidies, Lee said. Despite perceived needs, 53 percent of all respondents are generally satisfied with life, with an average 4.94 points, while 93.2 percent grade family life at 3.2 - just above the "pass" level. Those aged 19 to 39 are less happy both in personal and family lives, possibly because of emotional, employment, and marriage problems. Ms Ho, with a 10-year-old son and an eight-year-old daughter, said she felt strain when the latter was diagnosed with dyslexia two years ago. But her husband, a civil engineer, shares chores. They take turns to pick up the children from school, and their son helps tutor his sister. "We sit down and reach major decisions together," she said. "My daughter's studies have improved and we are more united than before."

More Bank of China (Hong Kong) branches will be authorized to collect subscription monies and process applications for the Bank of China (3988) H-share rights issue. Processing counters at seven more branches will open today, in addition to the 20 that are currently collecting applications, BOCHK corporate banking and financial institutions deputy general manager Chan Man said. "We may add eight to 35 branches to handle rights issue applications when needed," he said. The inquiries and form submission take 15 to 20 minutes on average. BOCHK got 145,000 applications for the rights issue, of which 89,000 are provisional allotment letters and 56,000 excess application forms, as of Saturday. Most mistakes in the application forms related to the payee name, as the payee accounts for provisional allotment letters and excess application forms are different. To help make filling in forms easier, the branches offer seals of the account names to shareholders. In the 10 days between November 17 and 27, the deal's registrar Computershare Hong Kong Investor Services received over 20,000 inquiries about the rights issue, the registrar's managing director Pamela Chung Kong-hung said. About 70 percent of BOC shareholders are expected to take up the rights, and half of them have already submitted applications, Chan said. The subscription closes on Friday. The rights issue of Industrial and Commercial Bank of China (1398) kicks off tomorrow.

 China*: A set of data published by the People's Bank of China shows capital inflows jumped in October, reinforcing the government’s rationale for a slew of monetary tightening steps.

Seoul considers Beijing's call for talks - China's Vice Foreign Minister Wu Dawei called for emergency talks on Sunday to diffuse tensions on the Korean Peninsula. South Korean and US forces pressed on with massive military drills on Monday as regional powers considered a call by China for emergency talks following North Korea's attack on a southern island. China’s proposed emergency consultations come amid global pressure on Beijing to take a more aggressive role in the stand-off between the rival Koreas and try to rein in ally Pyongyang using its leverage as its largest source of aid. Washington and Tokyo were non-committal, saying they would consult with Seoul, which was sceptical of the proposal to sit down with North Korea around a table, effectively rewarding the North for bad behavior. The reclusive North was previously offered massive aid in return for disarmament pledges that went unmet. “The six-party talks cannot substitute for action by North Korea to comply with its obligations,” a State Department spokesman said, referring to disarmament talks which North Korea abandoned two years ago. “We have called on China to urge the DPRK (North Korea) to restrain its provocations and responsibly act in the interests of peace and stability.” The call for two Koreas, the United States, Japan, and Russia to meet at a forum hosted by China must be reviewed “very cautiously” in view of North Korea’s provocations, Seoul said. Both Beijing and Pyongyang have been pressing regional powers to return to talks in some form or other for the past few months in a move analysts say is aimed at extracting concessions. China, which agreed with South Korea that the situation was “worrisome,” suggested the emergency talks for December. It did not say whether Pyongyang had agreed to join. South Korean President Lee Myung-bak was scheduled to address the country to speak about the country’s response to the North’s shelling on Tuesday of its western island of Yeonpyeong. Four people were killed in the attack. The island lies 3 kilometres (2 miles) from the disputed sea border. Yang Moo-jin, of the University of North Korean Studies, said the possibility of immediate additional provocations by the North was low, citing the massive drills by the South and US forces and the start of Chinese diplomacy to defuse tension. The nuclear-powered USS George Washington, which has 75 warplanes and a crew of more than 6,000, is taking part in around-the-clock drills in waters west of the Korean Peninsula but well south of the sea border disputed by the North. North Korea kept up the tension at the weekend by reportedly moving missiles to frontline areas and warning of retaliation if its territory is violated. South Korea’s financial authorities expect jitters to remain in the markets for some time but without long-lasting effects but were braced for possible volatile swings in capital flows. The South Korean won posted the largest weekly drop in over five months on Friday and was expected to stay weak, analysts and dealers said. The few remaining residents of Yeonpyeong about 80 kilometres (50 miles) from the mainland South had to evacuate to air raid shelters temporarily on Sunday when the military issued a warning for a possible renewed artillery attack by the North. But in Seoul, life carried on normally for the city’s more than 10 million residents, with downtown shopping districts jammed with people despite the freezing temperatures, and cafes decked with Christmas decorations doing brisk business. “I am worried, but not that worried that I need to stay at home,” said Eunhye Kim, an usher showing people from a packed theatre. “They don’t really want to make war ... there’s no gain for either side.”

Golden decoration of rabbit at a shop in Suzhou City of east China's Jiangsu Province. According to the Chinese traditional lunar calendar, it is still two months to go to embrace the Year of Rabbit, however, business operators in China have been busily engaged in promoting rabbit-related products in a hope to boost sales.

Singapore's pro-trade agency International Enterprise (IE) Singapore on Monday opened its 10th Overseas Center (OC) in China's Hubei province. Based in Hubei's capital city Wuhan, the new OC will focus efforts on Central China, in particular Hubei, Hunan and Jiangxi provinces. The center will bring IE Singapore and Singapore Economic Development Board under one roof to facilitate trade and investment activities. It will assist Singapore-based companies to explore business collaborations and opportunities with the Chinese enterprises, help increase in-market knowledge of these companies as well as to build networks with the local governments and businesses. It will assist Chinese companies to explore international operations from Singapore, and help increase the companies' familiarity of the international marketplace. "The establishment of the Singapore Center in Wuhan is timely," said Sam Tan, Singapore's Senior Parliamentary Secretary for Trade & Industry, and Information, Communications & the Arts, "Singapore- based companies have the relevant expertise and experience to share and contribute to the developing needs of Central China in various industries," he added. In 2009, there were a cumulative number of 287 Singapore projects in Hubei with cumulative actual investments reaching 770 million U.S. dollars. Singapore's actual foreign direct investments into Hubei amounted to 138 million U.S. dollars. IE Singapore currently has Overseas Centers located in China's Beijing, Chengdu, Chongqing, Dalian, Guangzhou, Hong Kong, Qingdao, Shanghai and Xi'an.

China's 840KM Shijiazhuang-Wuhan high speed rail work begins to be completed end of 2011 - Workers lay down tracks for the Shijiazhuang-Wuhan high speed rail in Xuchang, Central China’s Henan province, Nov 29, 2010. Construction work on the Xuchang section of the 840 km railway began on Monday. The whole line will be finished at the end of 2011, connecting two capital cities - Shijiazhuang of North China’s Hebei province and Wuhan of Central China’s Hubei province. It is designed to reach a speed of 350 kilometers per hour, cutting the running time between Xuchang and its neighboring city Zhengzhou, more than 80 kilometers in distance, to a few minutes.

Super Girl death during surgery probed - China authorities have launched a probe into the death of an aspiring pop singer during plastic surgery - an incident that has sparked concerns about the dangers of going under the knife. Wang Bei, 24, a former contestant on Super Girl - China's smash-hit answer to American Idol - died on November 15 during "facial bone-grinding surgery" in Wuhan. "The Ministry of Health has tasked the Hubei health department to investigate and verify the situation ... and to announce results of the probe to the public without delay," an official said. Wang, whose good looks made her a popular contestant on Super Girl, died in an "anesthetic accident" as she was having surgery, Xinhua News Agency reported earlier. Her "jaw suddenly started bleeding during the procedure, blocking her windpipe and causing her to suffocate." Wang's mother was having the same procedure at the clinic when her daughter died. News of her death and commentaries about it plastic surgery have been followed avidly across China, where three million people go under the knife each year, according to figures published by state media. Surging demand has led to untrained doctors operating, "which is risky and irresponsible," said Zhang Huabin, a professor of plastic surgery at Guangdong Medical College. The health ministry has also ordered increased supervision in the industry.

November 30, 2010

Hong Kong*: Szeto Wah was last night re-elected chairman of the Hong Kong Alliance in Support of Patriotic Democratic Movements in China for the 21st time. But unlike past elections, he did not attend the annual meeting - he is in hospital fighting late-stage lung cancer, which has spread to his bones. Szeto's absence was inevitable, colleagues said, because chemotherapy and medication have weakened his immunity, increasing the risk of infection. In a statement released after his re-election, the veteran activist said: "I have no regret for all the work I have done for the alliance." The political group was founded to promote democracy and rehabilitation of the victims of the Tiananmen military crackdown in June 1989. But it was branded subversive by Beijing. Alliance member and Democratic Party chairman Albert Ho Chun-yan revealed the extent of Szeto's deteriorating health. "Cancer cells have invaded his bones, he is suffering great pain every day," he said. Szeto's condition has been fluctuating amid frequent treatment, Ho said, but as the alliance's chairmanship post was largely ceremonial, it imposed little burden on him. Other core members of the group have taken on his responsibilities. "He is exerting great effort to fight such a serious illness. But he still insists on working for the alliance," Ho said. Szeto's diagnosis of stage-four lung cancer was confirmed about a year ago. After last night's election, unionist lawmaker Lee Cheuk-yan and activist Richard Tsoi Yiu-cheong remain vice-chairmen. Three key standing committee members did not seek re-election. They were Andrew Cheng Kar-foo, Andrew To Kwan-hang and "Long Hair" Leung Kwok-hung. Cheng, a former democrat, broke from the Democratic Party after it endorsed the government's political reform. Leung and To, both of the League of Social Democrats, said on previous occasions that the alliance had gone soft on Beijing. Leung caused bitterness among alliance supporters when he said Szeto backed the government's reform package because "cancer had gone into his brain".

Kuk chief's land to take waste from rail project - A massive area in Lung Kwu Tan, the ancestral home of Heung Yee Kuk chief Lau Wong-fat, was cleared and leveled for future dumping of waste soil from construction of the Hong Kong-Guangzhou high-speed rail line. The 85,000-square metre site in Lung Tsai, south of Lung Kwu Tan village in Tuen Mun, looks like barren land with trees chopped down and the site bulldozed. But in months, it is likely to be heaped with piles of soil. The site, partly owned by Lau, an executive councillor and chairman of the kuk, which represents indigenous inhabitants, was rented by village chief Lau Wai-ping two months ago. "There is no planning [control] on this site and this makes it possible to receive the earth from the ongoing cross-border express rail construction," Lau Wai-ping said. "This is good for everybody, as these materials are clean and they can be reused in other construction projects. Keeping them here is better and much cheaper than moving them to a landfill or the mainland." Lau disclosed his plan when asked about the clearance at a site which green activists say was a butterfly hot spot. Over the past decade, the site has degenerated due to gradual man-made destruction such as dumping and tree-cutting. Lau did not say how he could get the soil from the HK$60 billion rail project contractors and how much he would earn from the earth storage. Under the construction waste charging law in Hong Kong, it costs HK$125 to dump a ton of such waste in a landfill. According to the environmental impact assessment report for the rail link, at least 9 million cubic metres of unwanted construction waste generated from building 26 kilometres of tunnels will require disposal. Some of it might be used for construction of an artificial island for the proposed Hong Kong-Zhuhai-Macau bridge, cement plants and an ongoing reclamation project in Taishan in the western Pearl River Delta. Lau said waste would be stored at the Lung Tsai site for about two years and then handed back to Lau Wong-fat, who he understood had always wanted to develop it for housing. The area could have 100 villas but Lau Wong-fat declined to comment. The village chief also recently commissioned workers to remove more vegetation on the site, which used to house a golf driving range and a kart course. Trying to diffuse his fellow villagers' worries about possible environmental nuisance from the storage operation, which is just 50 metres from the nearest village houses, Lau Wai-ping pledged that any material would not be stacked too high and surface run-offs would be properly controlled. But the land clearance has sparked concern from green activists who have monitored changes at the site, known for rare butterfly sightings - such as the Redlace Wing - over the past decade. Dr Cheng Luk-ki, the research head of Green Power, said the site had been damaged at different stages over the past decade. Photographs taken by the group since 1997 show how it was turned from a once-green field into concrete and then a dumping site. Cheng suspected that damage was deliberately done to pre-empt any attempt by the government to impose a zoning control. "By trashing the site before any future zoning is imposed, all existing uses on the site can be kept and therefore allow more room for the landowner to develop in the future," he said. Cheng said there were well known examples of damage being inflicted on ecologically sensitive sites before a zoning plan came into force. He cited Sham Chung, one of the largest freshwater wetlands in Hong Kong. The group wrote to the Lands Department, Environmental Protection Department, Planning Department and the Drainage Services Department to inquire if the work at Lung Tsai was authorised, and if they had received any development proposal. The Planning Department said since the site has no zoning cover, any land-use change had to be scrutinised by the Lands Department. It also refused to disclose if a zoning plan was being drawn up for the site, as it said this was sensitive information. Lands officials did not reply to inquiries made on Friday. The Environmental Protection Department said it found no illegal dumping activities at the site or breaches of environmental ordinances in an inspection on Friday. "We will maintain liaison with the department concerned and continue to monitor the situation," a spokesman said.

HK blooms as back door for books likely to ruffle mainland feathers - Wang Shaoguang says many books about the Cultural Revolution were published in Hong Kong. When Shen Zhihua wrote a book in the 1990s about Mao and Stalin's connection to the Korean war, based on declassified files from Russia, the mainland's censors blocked his attempts to have it published. But come Hong Kong's handover in 1997, the history professor at Shanghai's East China Normal University hit upon the idea of taking advantage of the "one country, two systems" policy and had the book published in Hong Kong in 1998. Freedom of publication in the city allowed it to become a back door for the publication of books on sensitive topics of modern Chinese history that were banned on the mainland. Demand for them rose especially after 2003, when Beijing allowed individual travel to Hong Kong. Since then, more than 46 million mainlanders have visited Hong Kong without joining tour groups. Customers from the mainland zero in on books depicting details of power struggles within the Communist Party and party bosses' private lives - big sellers for small bookshops and news-stands around the city. But mainlanders also seek out intellectual titles based on serious academic research. Chinese University Press, one of Hong Kong's major publishers specialising in books on modern Chinese history and politics, has brought out 30 books in this area since the handover, 28 of them in Chinese. It published fewer than 10 titles before 1997. How Did the Sun Rise Over Yan'an? - a critical account of the ideological mass movement initiated by the Communist Party in 1942 - has sold nearly 20,000 copies and been reprinted nine times since its publication in 2000. "The book is one of the most popular titles we published in recent years. Its sales volume is really impressive, as it is not easy to sell 2,000 copies of a serious title in Hong Kong," Angelina Wong Lai-fun, the business manager of Chinese University Press, said. Even the hefty series The History of the People's Republic of China - distributed by Chinese University Press - has fared reasonably well. Seven of the 10 volumes planned have hit bookshelves since 2008. Buyers have snatched up more than 1,000 copies of each one. Cosmos Books, which published Shen's book on the Korean war, has produced nearly 80 books on contemporary Chinese history and politics since 1998. Much of the vitality of this industry can be attributed to readers from the mainland anxious to read what they cannot back home. "Individual travellers from the mainland have emerged as the major buyers of those books," Wong said. "One of their major activities during their visits to Hong Kong is shopping at bookshops." Shen, a frequent traveller to Hong Kong for academic exchanges, estimated that mainlanders account for 70 per cent of buyers of intellectual books on modern Chinese history - although a large proportion of the books, like his own, are in traditional Chinese script only, not the simplified script used on the mainland. Terri Chan Kim-man, deputy general manager of Cosmos Books, said mainlanders bought many of her company's books on modern Chinese history, which sell in the range of several hundred to nearly 20,000 copies. Shen said Hong Kong's advantage in publishing works on contemporary Chinese history was aided by a trend in Taiwan in the past decade of "desinification", which aims at severing the cultural kinship between the mainland and the island. He is one of the academics who spearheaded the publication of The History of the People's Republic of China, which was funded by Chinese University's Research Centre for Contemporary Chinese Culture. The aim, he said, was to publish a series of books on the country's post-1949 history that would be objective and grounded in evidence-based academic research. "When I discussed the idea with Chinese University academics, we immediately came up with the idea of publishing them in Hong Kong. Where else can we do the project except in Hong Kong?" Shen said. Professor Chen Fong-ching, an honorary senior research fellow of Chinese University's Institute of Chinese Studies, who backed the publishing project, said the series could break even although the number of target readers was rather small. Wang Shaoguang , director of the Universities Service Centre for China Studies at the university, said the mainland had imposed restrictions since the 1980s on books relating to the Cultural Revolution. "That's why many books about the Cultural Revolution were published in Hong Kong," he said. Shen's book Mao Zedong, Joseph Stalin and the Korean War was eventually published on the mainland in 2003.

Liberals to back Tien despite rift - The Liberal Party will continue to support Michael Tien Puk-sun despite his break with the organisation almost two weeks ago, party elders said yesterday.

 China*: Two Chinese fishery patrol boats were spotted yesterday off islands at the centre of a bitter dispute between Beijing and Tokyo, Japan's coast guard said. The two vessels began cruising in waters close to the island chain - known as the Senkaku Islands in Japan and the Diaoyu Islands in China - at about 7:40am, a coastguard spokeswoman said. "They are still navigating off the Senkaku Islands, and our patrol ships and airplanes are warning them by radio not to enter Japanese territorial waters," she said. It was the second time in eight days that Chinese patrol vessels sailed around the disputed waters. The previous Sunday, two Chinese fishery patrol vessels - including a new one that Beijing says is its fastest and most sophisticated to date and is equipped with a helicopter - were spotted near the disputed islets. That day, the spokeswoman said, Japanese patrol ships repeatedly warned the two vessels not to enter Japan's territorial waters, but the ships, which were identified as Yuzheng 310 and Yuzheng 201, repeated responses such as "we are conducting a justifiable mission". "The two vessels came as close as 23 kilometres to the islands," the spokeswoman said. She said the ships had not entered what Japan considers its waters. It was not immediately clear how close they were this time. Both Tokyo and Beijing claim the potentially resource-rich islands, along with their surrounding waters. However, Japan has traditionally had more of a presence in the area and administers the islands. A tense territorial row broke out in September after Japan arrested a Chinese trawler captain following a collision in the area between his boat and Japanese coastguard ships. He was eventually freed, but the dispute brought ties between the two neighbours to their lowest point in years. The arrest sparked serious protests from China, which cut or dramatically reduced political, cultural and economic exchanges with Japan. The two countries have since worked to get their relationship back on an even keel. After the incident, Beijing sent fishery patrol boats to the disputed waters several times, the last time on November 20, before withdrawing them the following day.

Beijing makes offer to host emergency talks - State Councillor Dai Bingguo (left) with South Korean President Lee Myung-bak during talks in Seoul yesterday. China seeks six-nation meeting on Korean crisis - China offered to host emergency talks between the six nations involved in the stalled nuclear disarmament negotiations over North Korea - Beijing's first concrete move in the crisis sparked by the North's fatal bombardment of a frontline island held by the South last week. The proposal was announced by Wu Dawei , China's top North Korea envoy, in a hastily-arranged briefing yesterday afternoon. It came a few hours after the nuclear-powered USS George Washington sailed into the Yellow Sea to take part in a US-South Korean naval drill opposed by Beijing. "The Chinese side, after careful study, proposes to have emergency consultations among the heads of delegations to the six-party talks in early December in Beijing to exchange views on major issues of concern to the parties," Wu said. He emphasized that the consultations did not amount to a formal restart of the stalled six-party negotiations, which aim to end North Korea's nuclear programs, but "we do hope they will create conditions for their relaunch". The proposal met with a cautious reaction from countries involved in the talks - the two Koreas, Japan, the US, China and Russia. South Korea's Foreign Ministry said Seoul would "very carefully" consider China's suggestion of talks. Japan was likewise. "We want to respond cautiously, while co-operating closely with South Korea and the United States," Kyodo quoted Deputy Chief Cabinet Secretary Tetsuro Fukuyama as saying.

An official signboard reading "Environment-friendly architecture, environment-friendly future" at a subway station in the capital. It appears Beijing may have softened its stance on the issue of verification of developing countries' emissions reductions. Climate talks a stepping stone to new deal - Delegates meet for UN's Cancun conference without much hope of progress on big issues. As delegates from nearly 200 countries gather today in Cancun, Mexico, for the year's biggest UN conference tackling global warming, international climate negotiations appear to be at one of the lowest points in their 20-year history. The discord and widespread pessimism that have shrouded the climate talks over the past year continue to hover over the Caribbean beach resort, with a new, legally binding pact on carbon emission cuts - something negotiators have been working towards for the past five years - remaining far out of sight.

CR Cement embarks on expansion course - Lending curbs not stopping mainland company from doubling production capacity - The river cargo terminal which is used by China Resources Cement to transport its product. Calls to curb the massive loan growth on the mainland are not stopping China Resources (SEHK: 0291) Cement Holdings from building what will become possibly the world's biggest cement plant and doubling production capacity. "By 2012, we will have the world's biggest cement plant in Fengkai," said the company's strategic development director, Max Yu Zhongliang. The state-owned firm's plant in Fengkai, Guangdong, started operation last year. Its annual production capacity is four million tonnes, which would double to eight million tonnes in January, Yu said. By 2012, the plant would have an annual production capacity of 12 million tonnes of cement, 9.3 million tonnes of clinker and 4 million tonnes of concrete, he said. Currently, the largest cement plants in the world have annual production capacity of 10 million tonnes, and there are four plants, all on the mainland. Three are owned by Anhui Conch Cement (SEHK: 0914). The fourth, in Pingnan, Guangxi, is owned by China Resources. The total investment in the Fengkai plant is 5.5 billion yuan (HK$6.4 billion), with 1.4 billion yuan yet to be invested, Yu said. "We have no problem obtaining bank financing," he said. People's Bank of China adviser Xia Bin has called for a slowing of the nation's loan growth to reduce the excessive liquidity fuelling inflation. New loans totalled 9.5 trillion yuan last year, which would fall to 7.5 trillion yuan this year and 6.5 trillion yuan next year, Yu said. "There will still be loan growth, but slower growth." From June to 2012, China Resources would almost double its annual production capacity from 36.7 million tonnes of cement to 70 million tonnes, 20.2 million tons of concrete to 42 million tonnes and 25.2 million tonnes of clinker to 55 million tonnes, Yu said. "In future, mergers and acquisitions are definitely the way to expand our production capacity. In three to five years, revenue from acquired plants will equal revenue from plants built by us," he said. He said it would be impossible to build new plants following the government move to curb overcapacity in September last year, he said. The cost of acquiring one tonne of annual cement production capacity was 400 to 450 yuan, he said. This year, China would have 200 million tonnes of new cement production capacity while 110 million tonnes of obsolete capacity would be eliminated, giving a net addition of 900 million tonnes, Yu said. Next year, there would be 150 million tonnes of new capacity while 150 million tonnes of obsolete capacity would be removed. More than half of China Resources' output is for the booming domestic infrastructure sector. "The pace of infrastructure construction in China will triple in the coming decade," Yu said. In the railways sector, 1,800 kilometres of tracks were built in the past five years. This will rise to 4,000 kilometres of high-speed and 4,000 kilometres of ordinary tracks each year in the next five years, Yu said. One kilometre of high-speed railway would need 20,000 tonnes of cement, said Hu Song, a business director of China Resources (Holdings), the state-owned parent of China Resources Cement. The Fengkai plant boasts another world record - the world's longest conveyor belt at 39.8 kilometres. It carries gravel from a quarry to the plant. The two billion yuan belt would be lengthened to 48 kilometres in the first quarter of next year, Yu said. He said it cost 25 yuan per tonne for trucks to transport gravel, but the conveyor belt would cost only eight yuan per tonne, which would drop to five yuan when it was lengthened. The Fengkai plant is next to the Xijiang or Western River. China Resources invested 1.2 billion yuan in a cargo terminal to transport cement from the plant by river. It was seven times cheaper to transport cement by river compared to trucks, Hu said. Next year, the river terminal would start shipping fine stones, or aggregate as it is known in the industry, to Hong Kong as a raw material for construction projects, Yu said.

CNOOC (SEHK: 0883) is to bolster its presence in South America by agreeing to pay US$3.53 billion for a 30 per cent stake in some assets that beleaguered oil major BP is selling to help pay for the damage caused by the oil spill in the Gulf of Mexico. China's dominant offshore oil and gas producer, through its 50 per cent-held Argentinian unit Bridas Corp, has agreed to join partner Bridas Energy Holdings to buy 60 per cent of Pan American Energy from BP for US$7.06 billion. CNOOC gained its first foothold in South America in March by buying the half stake in Bridas Corp for US$3.1 billion. The remaining stake is held by the founding Bulgheroni family through Bridas Energy. Bridas Corp already owns 40 per cent of Pan American, which has assets in Argentina, Chile and Bolivia. CNOOC said in a statement the latest acquisition would raise its oil and gas output by 10.1 per cent to 738,000 barrels of oil equivalent (boe) per day, and proven reserves by 14.4 per cent to 3.41 billion boe. The deal, expected to be completed by June next year, will be 70 per cent financed by cash and 30 per cent by bank loans. CNOOC last month raised its annual output target for this year to 319 million to 329 million boe, 14.7 per cent higher than the previous target of 275 million to 290 million boe, if mid-points are compared. After its failed attempt to acquire United States oil firm Unocal Corp in 2005 for US$18.5 billion because of stiff opposition from politicians in Washington on national security concerns, CNOOC has changed strategy by buying non-controlling stakes in overseas assets. Unocal was taken over by rival bidder Chevron Corp. CNOOC bought a 45 per cent interest in an offshore oil project in Nigeria for US$2.26 billion. Last month, it struck a deal to buy one-third of a shale oil and gas field in the US for US$1.1 billion. Pan American booked a net profit of US$630.2 million last year. At US$7.06 billion, the 60 per cent stake acquisition represents a price-historical earnings ratio of 18.7 times. This compares with CNOOC's own ratio of 15.1. CNOOC said Pan American is a fast-growing company, with oil output rising 47 per cent and gas production climbing 101 per cent in the past eight years. Citing data collected from research firm Herold, CNOOC said its latest purchase price represents 9.1 times the value of its reserve on a per boe basis, lower than 10.7 times of the median price of 19 transactions recorded in Latin America.

Coffee revolution hits the home of China's finest tea - Customers drink coffee at a Beijing outlet as Starbucks and other large players in the global coffee market jockey for position in China. An agrarian revolution of sorts is under way in the prefecture of Pu'er, source of the world famous Pu'er tea, located in the southwestern part of Yunnan province, bordering Laos, Vietnam, and Myanmar. In the hilly and misty terrain for which the area is known, farmers have, until now, mainly cultivated tea and oranges. But times are changing and Kui Wenshu is among a pioneering group of farmers who have chopped down the orange trees in their orchards to plant coffee. Though she does not personally like the bitter taste of coffee, Kui is happy with her brave decision, since the green beans she now cultivates will earn her more than 50,000 yuan (HK$58,124) this year - much more profitable than cultivating oranges or tea. Earlier this month, she and about a dozen other coffee farmers in the village were introduced to Howard Schultz, founding president and chief executive of the US-based coffee chain Starbucks, during his trip to the province. The company plans to build a farm in Pu'er and will hire and train local farmers to grow coffee. "To be honest, we never heard of Starbucks before, but everyone feels this is a big opportunity," said 30-year-old Kui. She is probably right. Coffee production in Yunnan, which amounts to 90 per cent of the total output in China, is set to boom as the local government and Starbucks signed agreements early this month to jointly develop the industry. According to the agreement, the coffee acreage in the province will be increased to 100,000 hectares from the current 26,700 hectares by 2020, while the annual output of green beans will reach 200,000 tons by then, more than five times the current 38,000 tons. With its warm, wet and mild weather, Yunnan is one of the few ideal places in the country to grow coffee, especially Arabica, a bitter, earthy variety. "We believe Yunnan has the potential to provide the finest quality of coffee," said Schultz, vowing to bring the relatively unknown China-made coffee onto the shelves in the 17,000 Starbucks shops across the world. Aside from the climate factor, the country's growing appetite for coffee is another important reason that persuaded the coffee giant to set foot in China. Despite a centuries-old tea-drinking tradition, the country's thirst for coffee is surging. According to the China Coffee Association Beijing, consumption of instant coffee has grown 30 per cent annually in recent years, while that for brewed coffee has grown 15 to 20 per cent a year. Last year, Chinese people drank nearly 50,000 tons of coffee, compared with 200,000 tons of tea. Coffee was introduced into modern China by Swiss-based coffee maker Nestle in the 1980s. For many years, it was seen by most Chinese as a high-class gift for friends rather than a daily beverage of personal choice. "There were cases in which people who did not like coffee dumped the contents of the glass jars in which it was sold but kept the jars to drink tea," said Ji Ning, president of the Beijing-based Coffee Association. In the 1990s, coffee shops started to emerge in big cities, playing an important role in promoting a coffee culture and appealing especially to white-collar workers and expatriates. But today the circle of coffee lovers is expanding to embrace well-off middle-aged people as well as a much younger group of people born in the 80s and 90s. Ji said instant coffee is still the dominant product in the China market. Unlike their parents, who often make tea themselves, young people prefer something more convenient because of their faster pace of life. The increasing influence of Western culture is also a reason for the fast spread of the coffee-drinking habit among younger Chinese. Every Chinese consumes an average of four cups of coffee annually compared with more than 500 cups a year consumed per person in Europe and the United States - which means growth potential in China is huge. Eyeing that vast market, foreign and local companies are bidding against one another for a bigger share of the developing pie. Starbucks said earlier this year that China will become the second-biggest market behind the US for the company and pledged to raise the number of mainland stores from 400 to 1,000 in coming years. Hong Kong-based China Resources (SEHK: 0291) has also rolled out a plan to open 1,000 more outlets in the country. Fast-food operator McDonald's announced it would add McCafes to the existing outlets in the country. And Swiss-based food giant Nestle plans to increase production lines in its roasting plant in Dongguan to offer more products domestically.

SM Group, the Philippines largest retailer plan: Be 'shark in pond' with malls in smaller cities in China - SM Group will invest 3 billion yuan ($451 million) to build the world's largest free-standing shopping mall in Tianjin Binhai New Area. Philippine group to put $1 billion into building five shopping centers. SM Group, the Philippines largest retailer, will invest more than $1 billion in the Chinese market to open one shopping mall a year for five years to cash in on growing consumer power in the emerging market. "We will start one mall every year in the next five years, including the one in Tianjin this year, all of them in second- or third-tier cities," SM Group President Hans T. Sy told China Daily on Friday at the groundbreaking ceremony for its planned shopping mall in Tianjin. The company will invest 3 billion yuan ($451 million) to establish the world's largest free-standing shopping mall in Tianjin Binhai New Area, the Philippine group's biggest investment in China. The mall, to be completed by 2013, will have 530,000 square meters of floor space - larger than 64 international standard football fields - and is meant to serve as a one-stop destination in keeping with SM's philosophy of providing shopping, entertainment, food and leisure. Within five years, SM Group plans to open new malls in second- and third-tier cities such as Suzhou, Chongqing, Zibo, and the Xinjiang Uygur autonomous region. "Since Beijing and Shanghai have already been very competitive in the shopping-mall sector and these cities don't offer enough property for us to open large-scale shopping malls demonstrating our philosophy, we want to increase our presence in China by expanding in second-tier cities, " said Sy. "Why be a fish in the sea, when you can be a shark in a pond," he added. The company said it expects sales in China will equal 10 percent of its net sales in the Philippines by 2015, up from 5 percent this year. SM Group, founded by the Philippine's wealthiest man, Henry Sy Sr, in 1958, has holdings in its core business shopping centers and other sectors including supermarkets, department stores, banking, real estate development, and tourism. It has 44 large-scale shopping centers in Asia and has set up shopping centers in Xiamen, Jinjiang, and Chengdu since it entered the Chinese market in 2000. Other mall developers also see potential in the Chinese market. Star Mall Group, a real estate and investment company in Turkey, announced a plan in August to open 10 shopping malls in China over the next 10 years. Bulent Ulusoy, the chief executive officer of Star Mall Group, said the 10 projects are expected to involve a total investment of $2 billion and will include new shopping malls in Shanghai and Wuxi.

November 29, 2010

Hong Kong*: A banker yesterday went on trial for the fraudulent selling of structured products linked to Lehman Brothers - the first such case in Hong Kong. Cheung Kwai-kwai, 47, who was the Bank of China's personal financial services manager, denies nine counts of fraud and inducing others to invest HK$5.12 million and US$215,000 (HK$1.67 million) between February 2005 and February 2008. The six complainants, aged from 40 to 78, were a car mechanic, proprietor of a trading company, part-time security guard, retired vegetable hawker and retirees. Only one of them had a secondary school education. The prosecution claims they were persuaded to buy the minibonds when they renewed their fixed deposits or used other bank services. The proprietor was identified as Lau Ka-yiu who invested HK$3 million for the Constellation Series 56. The first witness was Siu So-chun, 62, a retired Po Leung Kuk maid who has known Cheung since 1990 because her son attended a kuk nursery. According to senior public prosecutor Jonathan Man Tak-ho, Cheung handled Siu's fixed deposits. He alleged Cheung twice persuaded Siu to purchase Minibond Series 17 and 34, respectively, for US$30,000 in February 2005, and US$35,000 in January 2008. She assured her they were secure investments and principal-protected. Furthermore, the interest rate was higher than a fixed deposit. Siu was not informed the products were related to Lehman Brothers, the court heard. "When she said the principal was guaranteed, I thought it was safe," Siu testified. She has since been compensated for her losses. "I told her `you don't need to show me the document, I believe in you.' I knew her for so many years, nothing went wrong previously," Siu said. The prosecutor alleged some of those who purchased the minibonds were told they were low-risk products "similar to fixed deposits but with a higher interest rate." Cheung was also accused of making false representations that the minibonds belonged to entities such as HSBC, MTR Corp and Coca-Cola, and that customers could only lose one-seventh or one- eighth of the principal invested if any entity went wrong. Two university witnesses will testify that the minibonds and the minibond Constellation Series were credit-linked notes and not principal-protected, and investors could lose part and possibly all of their investment. The 20-day trial continues on Monday before Judge Garry Tallentire.

A sight that's no longer for sore eyes - For years all you could do was look at it. Now you can swim there as well - For years, the seven beaches along the Rambler Channel west of Tsuen Wan have embodied a contradiction: stunning views but filthy water. Pollution was so bad in the 1990s that the government withdrew lifeguards and put up banners warning people not to enter the water. Now, more than a decade after the beaches were closed, new sewage and water treatment facilities have improved the water quality to such an extent that the government has deemed it clean enough for swimming. Lifeguards will return to four of the beaches next summer and the rest will be reopened by 2013, when changing rooms and other facilities are built. Water quality at Anglers', Approach, Casam, Gemini, Hoi Mei Wan, Lido and Ting Kau beaches has improved by 70 per cent since 2005, according to figures released earlier this month by the Environmental Protection Department (EPD). That improvement comes thanks to a new water treatment plant in Sham Tseng and the opening last year of a sewage system in the villages along Castle Peak Road, which had previously relied on leaky septic tanks. So far, 210 of the area's 400 village houses have been connected. "These seven beaches have been subjected to different sources of pollution from every direction since the 1990s," said Elvis Au Wai-kwong, the EPD's assistant director of water policy. Raw sewage flowed directly into the sea from restaurants and houses, a problem that intensified as the population near the beaches increased from 26,000 in 1996 to 37,000 today. The improvement in water quality has been dramatic. In 1997, more than 1,500 Escherichia coli (E coli) bacteria were found in 100 millilitres of water gathered at Ting Kau Beach. Today, the count has dropped to 141. Lido and Hoi Mei Wan beaches are even cleaner, with E coli counts of 87. Water at a beach must have an E coli count lower than 180 for the EPD consider it suitable for swimmers. Hong Kong's most popular beach, Repulse Bay, has an E coli count of 11, and the city's cleanest beach, Hap Mun Bay in Sai Kung, has an E coli level of 3 - a reminder that, despite recent improvements, the Rambler Channel beaches remain the most polluted in Hong Kong. The problem is that, even though most local sources of pollution have been eliminated, the harbour's currents take dirty water from other parts of the city and send it towards the Rambler Channel, according to Dr Paul Shin Kam-shing, a marine pollution expert at City University. For that reason, pollution levels will remain steady at the Rambler Channel beaches until levels are reduced in Victoria Harbour. That won't happen until 2014, when the last outflow of raw sewage from Hong Kong Island - about 450,000 cubic metres a day - is finally treated. That hasn't stopped swimmers from taking a plunge at the closed beaches, which already attract several hundred people on summer weekends. One 61-year-old swimmer has visited Lido Beach every day for two years. "I live in Tuen Mun but I don't like the beaches there - they're too dirty," he said. "I can see for myself that the water here is good. Besides, the scenery is great and there's never too many people."

Seventeen cooked food stall operators were cleared yesterday of colluding in a stall auction. Five judges at the Court of Final Appeal rejected a plea by the authorities, which won their case at the first trial, but lost at the appeal court, with reasons to be handed down later. Neither the Independent Commission Against Corruption nor the Department of Justice would comment on the decision. The ICAC said it respects the court ruling, while a department spokeswoman said it will await the reasons for the judgment before commenting. Nineteen stall operators were accused of conspiracy to defraud after holding two meetings before a restricted food stall auction at Tai Po in 2004. They were asked by the Food and Environmental Hygiene Department to move from the Old Market to the newly built Tai Po Hui Market, and given priority to take part in the restricted auction. During the meetings, the operators pre-allotted the stalls among themselves, and at the later auction, the stalls were sold at the upset - or minimum - prices, which had been fixed at 75 percent of the market rent. The authorities claimed the operators had dishonestly made the auction appear competitive. Government lawyers said a loss ensued because similar stalls were sold at prices 180 percent higher than the upset price. Also, the operators were warned of possible prosecution if they made bids dishonestly. But the operators' lawyers argued that the agreement not to compete in the auction did not involve dishonesty because it was a commercial agreement in an open market. Oil companies were given as an example of a cartel. Senior counsel Martin Lee Chu-ming said that although the agreement affected public policy, it did not involve misrepresentation and fraud. The operators had been jailed from six months to one year, but an appeal court overturned the convictions of 17 of them. One of the original 19-member group died, while another pleaded guilty. One of the 17, Cheung Chi- keung, said the government should not have required the stall operators to bid in the first place.

Standard Chartered (2888) is not joining a possible pact among three other big British banks to cut bonuses, a spokesman told Bloomberg yesterday. The London-based lender said the deal would be unfair to its staff as 97 percent are working outside Britain, said spokesman Jon Tracey. The lender employs more than 5,000 people in Hong Kong. Senior executives from StanChart, HSBC (0005), Barclays and Royal Bank of Scotland last week discussed a possible agreement to cut bonuses, according to The Times. Britain's Financial Services Authority was also in the deal, which offers to cut the overall level of bonus payments without putting a cap on individual bonuses. All four banks would commit to a fixed total amount for small business loans next year, according to The Times. The British government has been seeking to force banks to disclose the number of staff with big paychecks. New European Union rules call for top managers in financial firms to defer up to 60 percent of their bonuses for three to five years and stipulate that half of the bonuses must be paid in shares instead of cash.

Heung Yee Kuk chairman Lau Wong-fat - embroiled in a scandal in September over reports that he failed to declare a series of property transactions - will seek re-election as a village representative of Lung Kwu Tan in Tuen Mun after all. The kuk chief made the decision to defend the leadership post of his home village, which he has held for five decades, despite earlier indications he was considering retirement. Lau, also an executive councillor, filed as a candidate yesterday as the two-week nomination period ended for village-representative elections in the New Territories. Kent Lau Tung-hoi and Lau Kwok-ming, both merchants, filed candidacy on November 13 for the two positions as indigenous-inhabitant representatives in the village, which has 503 registered voters. The seats are currently held by Lau Wong-fat and Lau Wai-ping, who also filed candidacy yesterday. Lau Wong-fat said he decided to seek re-election because of encouragement by fellow villagers.

Arts and humanities academics fear changes to the way university funds are allocated could see their disciplines lose out as yet greater emphasis is placed on science and medicine. The changes are planned for the 2012-13 academic year and will see HK$750 million per year taken out of a total block grant of HK$10.8 billion for the city's eight publicly-funded universities. At present, each university receives a fixed block grant for their operational costs, and has total discretion in deciding how the grant is allocated between faculties. The HK$750 million in funding taken out will be put into a central bidding pool and the Research Grants Council will decide on the final allocation. The dean of the Faculty of Arts at Baptist University, Professor Chung Ling, said the proposed change would weaken universities that thrived on the arts. "It's totally unreasonable. A big chunk of money that we use to pay for overhead costs like staff salaries and utilities would be withdrawn. It's reasonable for universities to bid for grants to conduct research due to scarcity of resources. But the block grant is mostly used to sustain the operations of a university. "Arts and humanities disciplines will lose out, as science and medical subjects have concrete research outputs that give them an edge in the bidding process," she said. The Research Grants Council (RGC) set aside HK$324 million in general research funds in the last academic year for bidding by the city's eight institutions. Arts and humanities projects have the lowest bidding success rate. Physical sciences came first with 57.3 per cent or 160 out of the 279 applications securing grants. Second came business projects, with 91 out of 256 applications succeeding. At the bottom was the arts and humanities, with 26.5 per cent or 57 out of 215 applications getting the green light. The proposed funding change came on the heels of another new funding scheme, which was amended after vehement opposition. Under that scheme, up to 8 per cent of first-year arts-degree student places would have been put up for competitive bidding among all tertiary institutions. It prompted the most strident complaints from arts and humanities departments worried that they would be phased out due to their lower bidding power. "Among all the universities, only we have an anthropology department," said Chinese University arts dean Professor Hsiung Ping-chen. "We only have around 20 students now; taking away several of our places will have a big impact on us.'' According to figures from the University Grants Committee (UGC), there was a 25.5 per cent drop in first-year student enrolment in the arts and humanities from 3,729 in 1999 to 2,791 last year. Arts deans and university researchers have long lamented that even before changes in how government funds are allocated, there has been a decline in institutional support to arts and humanities subjects. A case in point was the launch of the area-of-excellence scheme by the UGC in 1998, which academics said favoured scientists and medical researchers. Professor Kam Louie, arts dean at the University of Hong Kong, said some research funding open for bidding was not available to arts and humanities researchers. "Croucher fellowships, which give out quite a lot of money, are just for science people," he said. Launched in 1996, the Croucher fellowship offers full financial support for senior researchers to devote a year to full-time research and get a break from teaching and administrative responsibilities. "Humanities researchers don't need laboratories or a big team of research assistants. What they need most is time. It's ironic that this fellowship is not available to those who need it most," Louie said. The General Research Fund under the RGC does allow researchers to bid for projects. Gordon Mathews, an anthropology professor at Chinese University, said waning institutional support for the arts was not conducive to the morale of its academics. Mathews said the standing of an academic in Hong Kong was mostly measured by the number of papers published and grants secured. "I might take five years to write a book. But I might have to set it aside and write more papers, with lesser scope, to satisfy the system. I love my students enormously, but I am frustrated by the overall management of universities and the shortsightedness of the UGC." A UGC spokesman said: "There is general consensus among institutions that the system should change, and genuine competition will help to ensure effective allocation of research resources."

 China*: "Best ever" Asian Games close - The largest ever Asian Games lowered its curtain in a festive closing ceremony on Saturday night as host China showed its overwhelming prowess by sweeping 199 gold medals.

Out with a bang - Let there be no doubt. China knows how to stage a sports event - and wrap it up in style, as these performers showed in Guangzhou yesterday at the closing ceremony of the 16th Asian Games. The Beijing Olympics dazzled the world and this was the biggest Asian Games ever.

Chinese delegation take part in closing ceremony of Asian Games - Chinese basketball player Wang Zhizhi holds the national flag at the closing ceremony of the 16th Asian Games held at the Haixinsha Island in Guangzhou.

"Best ever" Asian Games close with China dominant as never before - Sheikh Ahmad Al-Fahad Al-Sabah, president of the Olympic Council of Asia, hailed the Guangzhou Asiad "a huge success" and "the best ever" in history.

Splendid performances during closing ceremony of Asian Games - Actors performed at the closing ceremony of the 16th Asian Games held at the Haixinsha Island in Guangzhou, south China's Guangdong Province, on Nov. 27, 2010.

Fireworks displayed during closing ceremony of Asian Games - Fireworks are seen during the closing ceremony at the 16th Asian Games at the Haixinsha Island in Guangzhou, China, Nov. 27, 2010.

China beats South Korea to win women's volleyball gold - The Chinese women's volleyball team came from two sets down to win the women's volleyball gold medal, the last gold at the Asian Games Saturday.

Chinese national flag raised at closing ceremony of 16th Asian Games - Chinese national flag is raised at the closing ceremony of the 16th Asian Games held at the Haixinsha Island in Guangzhou, south China's Guangdong Province.

China's southern Hainan island's development as an international tourist destination, InterContinental Sanya Resort is set to grab a big slice of the travel pie - Overlooking Sanya's sparkling coastline, every room of the InterContinental Sanya Resort offers a stunning view of the sea. Ever since the Chinese government announced on Dec 31, 2009, that it planned to build the southern island province of Hainan into an international tourist destination, sharp-nosed hoteliers have been gearing up to expand their footprint in this region. Atlanta-based InterContinental Hotels Group launched the InterContinental Sanya Resort in July on Serenity Coast, located on Luhuitou Peninsula in Sanya, raising the number of hotels operated by the hospitality giant in Hainan to four. Swathed in pristine white sands and surrounded by majestic mountains, the resort has seen an encouraging upturn in business, says Tony Marrinan, general manager of InterContinental Sanya Resort. "In Sanya, the high season for tourism is between November and April, but we have seen a good season right after opening," Marrinan says. Dai Zheng, vice-president of Qunar.com, an online travel search engine, expects that in addition to the crowds of the upcoming festival season, many business events will also be held here. All this is good news for InterContinental. However, as international hospitability giants, including Hilton and Riz-Carlton, already own addresses in the city, and more are expected soon on the market, the competition will heat up. Ma Nan, marketing manager of Beijing UTS International Travel Service Co Ltd, says the travel profile of Chinese tourists has changed dramatically. Not only are they more demanding but also they spend more time at their destinations. According to Daodao.com under TripAdvisor, about 34 percent of Chinese travelers choose budget hotels, while 26 percent prefer four-star hotels and 16 percent, five-star accommodation. InterContinental is a prestige brand, but, "We are not in the business of selling rooms with golden faucets or Hermes soaps", Marrinan says. "Of course, every high-end hotels can provide comfortable beds and beautiful rooms. But the major selling point of this resort is that we are the only hotel in Sanya who can say every room, no matter regular or luxury, faces the ocean. This is something money cannot buy." Located close to Sanya's sparkling coastline, every room offers a stunning view. Some villas even offer garden-like bathrooms where guests can shower while surrounded by plants under a crystal clear sky. But such glamour is not restricted to the gorgeous villas and can also be found in the ordinary rooms. Guests can dream, read or enjoy music and movies while soaking in their bathtubs and at the same time feast their eyes on magnificent views of the ocean, twinkling stars and dazzling fireworks. The resort's Chinese restaurant stands about 100 meters from the shore. The resort offers 343 rooms, including 24 beachside villas, a presidential suite and 12 executive suites, besides five swimming pools, eight restaurants and bars, and the soothing SPA InterContinental. Marrinan says: "When people come to visit our resort, we want to send them back with great memories and experiences." As most of their guests are families, Marrinan says the resort also offers professional childcare services to allow the adults some time of their own. "Family-oriented activities include swimming, fishing or catching crabs on the beach," he says. "Cooking classes that teach how to make the famous Hainan chicken are also popular with families." Sanya is also a popular conference destination, and the InterContinental is positioning itself in this segment, too. The resort has a pillar-less ballroom and seven meeting rooms. The ballroom can accommodate up to 450 guests for cocktails or 300 for a banquet. And all meeting rooms are equipped with soothing natural light to provide the right inspiration for breakthrough ideas. "We are also trying to encourage more companies to launch their luxury products, for which our hotel's dcor and ambience offer the perfect backdrop," Marrinan says. Chinese, especially from Beijing, Shanghai and Guangdong province, dominate the guest list, accounting for about 80 percent of the total. "(The) International market for Sanya's tourism is still small," Marrinan says. "Now, some resorts in Sanya are seeing more Russian visitors, thanks to their country's long cold season." He says that while US and European visitors are also quite significant to Sanya's tourism, the popularity of Hainan as an international beach travel destination has still not caught on. He adds that the key to the expansion of their business is an improvement of airline capacity and the service quality of both domestic and international airways.

Fireworks company - Panda Fireworks Group, the only market-listed Chinese fireworks firm aims to sparkle - Panda Fireworks Group seeks more mergers and acquisitions for domestic and global expansion - Panda Fireworks Group, the only market-listed Chinese fireworks firm, and the one responsible for the displays at the Beijing Olympic Games, Shanghai World Expo and Guangzhou Asian Games, will seek more mergers and acquisitions (M&As) for domestic expansion, and will bid for contracts at all major international sporting events. M&A is a shortcut to gain permits for selling fireworks, which are listed as hazardous goods, at various locations in the country, said chairman Zhao Weiping. The company, which started as an export business in 1989, has seen domestic sales quadruple during the past two years. Having entered the domestic market in 2007, after the gradual lifting of a ban on fireworks in major cities in 2006, Panda has obtained permits to sell its goods in seven cities. It usually takes about three years to build a warehouse and logistics chain, due to strict standards for hazardous goods, and a market presence, Zhao said, predicting stronger domestic growth in 2011 after racking up growth of around 20 percent this year. Revenue will also be stronger after a merger with the Hunan-based fireworks company Bongxi, which it acquired for 62.7 million yuan ($9.5 million) in April. Birthday celebrations and corporate events may create a huge market for fireworks, once the market matures and more products become available, Zhao said, adding that Panda is considering commercial fireworks shows as another source of revenue. The company has been responsible for government-funded Chinese New Year firework displays in Guangzhou during the past decade. The company's participation in the Beijing Olympic Games, Shanghai World Expo and Guangzhou Asian Games, has brought benefits in the form of brand building and an enhancement of its innovation strength, Zhou said, adding that "the Beijing Olympic Games turned fireworks into value-added cultural products". At a display at the Great Wall during the Beijing Olympics, Panda used chip technology to guide the fireworks and ensure more accurate positioning and lower smoke levels. Panda will also invest in its research institute for new technology and environmental applications, Zhao said. Zhao and the company's design director are part of the design team for a display at the Guangzhou Asian Games. The company is spending about 2 million yuan on its creativity workshop every year. The Chinese fireworks market, estimated at 23 billion yuan a year, is bigger than all combined overseas markets, which stand at 3 billion yuan on a Free On Board basis, and are almost exclusively served by Chinese exports, Zhao said. The company's export business had been in decline since 2007 due to the global economic recession, and only started to recover last year. However, it will take a long time for it to return to the pre-crisis level, Zhao said. After winning a bid to provide fireworks for events in Macao and Dubai last year, Panda is now focusing on the Shenzhen Universiade (also known as the World Student Games) next year, and all other major international sports events, he said.

November 28, 2010

Hong Kong*: Fitch boosts Hong Kong's credit rating - Fitch ratings agency has boosted Hong Kong’s credit rating to its second-highest ranking, applauding the city’s fiscal strength that helped it through the global financial crisis. The agency upped Hong Kong to AA+ from AA with a stable outlook, saying the financial hub’s international reserves would likely rise to US$300 billion by the end of 2012, up from US$266 billion at the end of September. “Hong Kong’s sovereign creditworthiness is underpinned by its strong external financial position, solid public finances, a well-regulated and capitalised banking system, its dynamic and flexible economy and strong standards of governance,” Fitch said in a statement on Thursday. John Tsang Chun-wah, the financial secretary, said on Friday that the government would “keep a close watch over world economic developments and take appropriate precautions against any possible adverse impact on Hong Kong.” Hong Kong has rolled out a series of measures aimed at cooling the city’s soaring property market, which has raised fears about asset bubbles. Fitch last upgraded Hong Kong’s long-term foreign-currency sovereign rating to AA from AA- in 2007, the government said.

Third of Chinese medicine products in Hong Kong may have to go - As a deadline looms, non-licensed products will be pulled - Traders and producers say they need more time to comply with the registration process for Chinese medicine products. Small operators say they cannot afford laboratory tests. A third of Chinese medicine products on sale may disappear from shelves on Wednesday when a compulsory registration law takes effect. Eleven years after the Chinese Medicine Ordinance was passed, new rules will apply from Wednesday when all non-licensed products must be withdrawn from sale. With the deadline looming, just two-thirds, or 11,280 of 16,730 products have temporary licences needed to stay on sale, the Health Department said. Of these, just 15 per cent are covered by permanent licences - the eventual goal for all products. While the registration process began in 2003, traders and producers say they still need more time to comply. Smaller operators say they cannot afford the expensive laboratory tests required to ensure the medicines are safe and work as stated. Practitioners complain that the department is slow processing applications, and does not understand details of the Chinese medicines. Hong Kong and Kowloon Chinese Medicine Merchants' Association chairman Jack Pang Cheung-hi said that of 100 applications he submitted, only about 60 were approved. "The department is still working on the remaining 40 per cent. What should I do on December 1? Throw everything into the sea?" Lam Ching, chairman of the Society of Hong Kong Professional Registered Chinese Medicine Practitioners, said the government was bureaucratic. "Even if we use the same herbs, but change the supplier, we have to submit an application all over again," he said. Temporary licences can only be granted after products are proved safe in three tests covering heavy metals and toxicity, pesticide residue and microbial limit. To get full registration, producers or importers must also prove the products' quality and efficacy. Smaller traders complain that the new rules could lead to large manufacturers dominating the market, limiting the choice for consumers. Hong Kong Medicine Dealers' Guild chairman Wong Ping-ming said: "A laboratory test costs HK$100,000. If I have 10 products, it will cost me HK$1 million." He said Chinese herbal products, which were made from natural plants, were not as stable as Western drugs that were created from chemical formulas. "Even two tomatoes can look very different from each other. They can have a slight variation in vitamin content, but we cannot say that one is of a poorer quality." Hong Kong Chinese Medicine Practitioners' Rights General Union chairman Yu Kwok-wai is concerned about efficacy tests. He said most Western drugs were developed by big pharmaceutical companies that could afford to commission large-scale scientific studies. "But a lot of Chinese medicinal recipes are just passed down from our grandfathers, and we simply do not have the resources to do any systematic efficacy studies." The groups urged the government to provide subsidies for those who could not afford the laboratory tests, and to be more flexible over rules in order to preserve the Chinese medicine industry. Wong said Hong Kong was one of the first places in the world to attempt to control Chinese medicine. "There are no precedents and no universally agreed standards. The government should allow more buffer time for us," he said. But Society of Hospital Pharmacists of Hong Kong vice-president William Chui Chun-ming said the Chinese medicine traders had had plenty of time. If some could not make the deadlines, it might be because these companies were on such a small scale that they were "unable to produce drugs that can satisfy the current safety needs". "We can't show mercy, because nobody wants adverse events to happen," he said. Chinese medicine had to keep pace with the times, and "it is time to eliminate companies that are not up to standard", he said. From December 1 next year, all Chinese medicine products will need to carry labels that specify, among other things, their ingredients, country of origin, registration number and expiry date. They will also need to include a detailed package insert that lays out dosage, methods of use, functions and side effects.

Maritime industry calls for a boost - Hong Kong slipping as competition increases - A coalition of maritime industry groups, including Hong Kong shipowners and seafarers, is calling for the government to establish a policy bureau to strengthen Hong Kong's position as an international maritime centre. The call is among a package of nine proposals made by the alliance of four organisations to stave off growing competition from Singapore and Shanghai. The alliance, comprising the Hong Kong Shipowners' Association, Hong Kong Seamen's Union, the Institute of Seatransport and the Hong Kong Logistics Management Staff Association, says Hong Kong's status as a maritime centre is declining. "If the situation does not change, the development of Hong Kong's maritime industry, as well as its economic development and prosperity (SEHK: 0803, announcements, news) , will be hampered," the members warn in their proposal. The measures also include a call for joint government and maritime sector action to "formulate a comprehensive strategy" to develop the maritime sector and further concessions from the mainland government for vessels flying the Hong Kong flag. Ships registered in Hong Kong already enjoy concessionary charges when calling at mainland ports as well as favourable terms when employing mainland crew. The alliance also wants more money allocated for maritime-related education, saying that Singapore already fully subsidises tuition fees for students taking maritime courses. "More resources should be allocated to local educational institutions to organise more maritime courses within a shorter time frame to nurture high-quality nautical graduates and maritime professionals for the various maritime service industries." Doing this may help recruit a younger generation of local maritime professionals, the four alliance members said. The coalition has invited a further 21 organisations to a meeting on December 7 for discussions to find further ways of developing Hong Kong's maritime sector. The meeting will be one of the largest involving shipping and related organisations for years. Proposals drawn up by the meeting will then be submitted to the government, while the coalition will also seek a meeting with the Transport and Housing Bureau which oversees the maritime industry. The event will be the latest attempt to pressure the government to take action to help support Hong Kong's maritime sector since June, when shipping magnate George Chao Sze-kwong made several proposals for government action. These included the creation of a dedicated shipping minister or the upgrading of the Marine Department into a policy bureau. Lee Kwok-keung, head of the Amalgamated Union of Seafarers, said the planned meeting had been inspired by two things. First, 2010 was the International Maritime Organisation's Year of the Seafarer, with both maritime unions and the government organising events to increase public awareness of the importance of the maritime industry. Also, the central government in Beijing had repeatedly stressed its support for Hong Kong developing its role as an international maritime centre, he said. Pointing to the threat posed by other maritime centres, a discussion paper produced by the alliance said Hong Kong has already dropped to fourth place among the world's busiest container ports behind Shanghai, Singapore and Shenzhen. "This ranking may drop even further. The issue of finding ways of maintaining and upgrading the status of Hong Kong as an international maritime centre is of the utmost urgency," the paper said. As a result the four think Hong Kong should find ways to develop maritime-related services such as shipbroking, chartering, ship finance, arbitration and legal services rather than relying on trying to boost cargo and container throughput. Turning to shipbroking specifically, they said while Hong Kong had a healthy shipbroking community, Shanghai relaxed controls in July, which allowed nine foreign shipbroking houses to register their braches in the city. Singapore introduced a 10 per cent preferential tax rate for shipbrokers from April, down from 17 per cent. An indication of the industry's scale is that in London net income from shipbroking topped £948 million (HK$11.59 billion) in 2008. Consequently, while both Singapore and Shanghai were aggressively expanding their positions as international maritime hubs, if Hong Kong continued to do nothing, ultimately it would lose its status as a global maritime centre, the four warned. Vicky Yip Yan-pik from the Hong Kong Seamen's Union, thought it was "most important" the government created a "policy bureau to take charge of maritime matters". She said people with expert knowledge of the maritime sector are needed to oversee its development, rather than the current situation where administrative officers at the Transport and Housing Bureau are responsible.

Memorial trail considered for Bruce Lee - Designer Jimmy Yuen Gi-tsun (left) and Bruce Lee Club chairman Wong Yiu-keung with a route for a Bruce Lee memorial path. Fans are getting their nunchakus ready to celebrate the 70th anniversary today of the birth of legendary kung fu star Bruce Lee. But it will take more than a few swings of the deadly hinged weapons wielded by the star in his movies to break a deadlock over plans for a museum at his final home in Kowloon Tong. Enthusiasts do, however, have something to look forward to, as the government is planning an exhibition featuring memorabilia of the star at the Heritage Museum, and is considering a Bruce Lee memorial trail. Commissioner for Tourism Philip Yung Wai-hung said a Bruce Lee memorial path linking the star's former homes, schools and film locations was being discussed. The authority had exchanged views with the Bruce Lee Club and the two had similar ideas about the trail, he said. Club chairman Wong Yiu-keung said the fan club proposed 10 locations for the memorial path. "I hope it will become a new tourist attraction ... it'll also be a birthday present for Bruce Lee," he said. Starting from the Bruce Lee sculpture at the Avenue of Stars, the trail would run to the car park at Ocean Terminal where the star had a well known set of photographs taken. It would continue along Nathan Road and Waterloo Road, including stops at schools he attended: Tak Sun School, the former site of La Salle College and St Francis Xavier's College. Locations of his former homes are also included, but new buildings have already replaced the ones Lee lived in. The last stop would be at Tuen Mun's Tsing Shan Monastery where Lee filmed scenes for Enter the Dragon in 1972. It may take fans half a day to travel along the Kowloon part of the path, and another half a day to reach Tuen Mun. Yung said yesterday the government had yet to reach agreement on the design of the Kowloon Tong home with billionaire philanthropist Yu Panglin, who offered to donate the 5,000 square foot villa. Yu wants three basement levels, but only one such floor is possible under the current plot ratio, the formula that determines building density. "Due to city planning concerns, the possibility of fulfilling Yu's requirements is very low ... Kowloon Tong is a low density area and any big development needs to be approved," Yung said. The commission has collected about 100 items related to the star and they could be exhibited in the Heritage Museum by 2012, he said. "The exhibition may feature duplicates of movie scenes." Born in San Francisco, Lee was educated in Hong Kong before he moved to the United States. He returned to the city and filmed trademark works Fist of Fury, Game of Death and Enter the Dragon. Lee died in 1973 aged 32. A cinema at the Hong Kong Film Archive today will show four of his early films: The Kid (1950), A Son is Born (1953), Thunderstorm (1957) and The Orphan (1960).

Direct subsidy schools launched a counterattack after criticism of financial malpractice ahead of Monday's showdown before the Legislative Council. Direct Subsidy Scheme Schools Council chairman Lam Kin-wah called the attacks "unfair" and blamed some of the anomalies on the Education Bureau's unclear guidelines. Lam said after an urgent meeting with school representatives that most do not agree with the allegations of misuse of government funding and school fees. The schools should have flexibility in management and allocation of resources. Earlier in the day, Lam told a radio program: "No standards are set for many things. While it [the bureau] didn't mention them before, it now says we have omitted this and that. So I found that the Education Bureau - as lawmaker Cheung Man-kwong said - is shirking its responsibilities." He called for better communication with the bureau. His remarks come a day after the bureau released the names of schools found with varying degrees of irregularities in an audit report last week. Nearly all of the city's 72 direct- subsidy schools audited over the last school year were on the list. Secretary for Education Michael Suen Ming- yeung said he will wait until the meeting of Legco's Public Accounts Committee to answer questions. The director of audit's report said that, contrary to the bureau's guidelines, one school used surplus funds to speculate in the market. The bureau later identified it as Good Hope School. However, discrepancies have been found in the Chinese and English versions of the guidelines. The Chinese version states that speculative investments such as buying local equities are banned while the English version says they are "not recommended." The bureau said last night it will follow up on the discrepancies found. It said schools will comply with guidelines if they do not use funds, which are not immediately required, to speculate in the market. The report also criticized five schools for not informing parents of financial data, including major items of income and expenditure, when seeking their consent to increase school fees. One school - which a source named as St Paul's Co-educational College Primary School - proposed to increase fees by 25 percent for 2009-10 without telling the parents of its estimated accumulated operating reserve up to 2008-09 of about HK$15 million. The amount was sufficient to cover 27 percent of the school's estimated operating expenses for 2009-10, the report said. Lam said the bureau told schools to keep reserves worth at least two to three months of operating expenses and it did not ask them to inform parents of their reserves. He said reserves are needed for urgent repairs and maintenance, pay rises, in case income slumps with a fall in student enrollments and for development plans. St Paul's Co-educational College in MacDonnell Road and its primary school in Wong Chuk Hang said in a joint statement they have taken steps to enhance transparency in financial reporting and will continue to uphold prudent financial management.

Top French diplomat in HK suspended - The top French diplomat in Hong Kong and Macau has been suspended and recalled to Paris, a consulate spokeswoman said on Friday. “He left Hong Kong on Monday,” the spokeswoman said. Marc Fonbaustier, 46, France’s consul-general for Hong Kong and Macau, was recalled over conduct that would “likely not meet the requirements of professional conduct for a French diplomat”, foreign ministry spokesman Bernard Valero said in Paris. Fonbaustier, who is married and has three children, was appointed to the post last year. “The Consul-general of France for Hong Kong and Macau was recalled and immediately left his post,” the ministry spokesperson said. “He is suspended from duty. An administrative investigation has been started based on the circumstances behind the decision." The ministry did not elaborate on the reasons for his suspension.

Brazilian miner Vale SA has received approval to list on the Hong Kong stock exchange; a source told reporters on Thursday, bringing the global miner closer to its biggest customer, China. Hong Kong Stock Exchanges and Clearing approved Vale’s application at a scheduled meeting and gave permission for Vale’s depository receipts to be traded on Hong Kong stock exchange, the source said. Vale, which will become the first depository receipt to trade in Hong Kong, is not raising any money through the listing. Vale’s listing is a coup for the exchange and some bankers expect the approval to pave way for more global companies to issue depository receipts in Hong Kong and access the deep pool of liquidity available in Asia. “The listing is scheduled for early December,” said the source, who was not authorised to speak about the matter as the decision was not public yet. A Vale spokeswoman said the company had received no official confirmation of the listing approval in Hong Kong and could not comment on the issue. A Hong Kong stock exchange spokesman declined to comment. An increasing number of global companies are seeking to list in Hong Kong, which is seen as a gateway to China. A Hong Kong listing would provide Vale direct exposure to Asian capital markets. China, the world’s biggest consumer of iron ore, accounts for more than a third of Vale’s revenues. Hong Kong has been a hotbed for IPOs this year, with US$48.7 billion raised through initial public offerings. Some of the high profile names that were admitted to the Hong Kong stock exchange this year include, Russian aluminium company Rusal and skin care products retailer L’Occitane. J.P. Morgan is the sole sponsor for Vale’s Hong Kong Depository Receipts (HDRs) and the bank will arrange for some Vale shares listed on overseas exchanges to be transferred to Hong Kong in the form of receipts. Vale’s shares and depository receipts are already traded in New York, Sao Paulo, Paris Euronext among others. A Hong Kong listing will enable its shares to be traded across more time zones. Vale’s bigger rivals BHP Billiton and Rio Tinto are listed on Australia stock exchange.

Cheung Kong executive may face inquiry over 'misleading' remarks - A Cheung Kong (SEHK: 0001) director has run into trouble after making what he claims were casual remarks online that could have led readers to believe a project his firm was selling had immunity from the government's measures to combat speculation. The government has asked the Real Estate Developers Association to look into the issue, while a legislator wants the government to freeze the second phase of sales at of the project, Festival City in Tai Wai. At issue are threads posted by Cheung Kong Real Estate director William Kwok Tze-wa on Sina Weibo last Friday, hours after the government measures were announced. "Buying Festival City II will not be affected by the new government measures. 12 o'clock is coming soon. Quick quick quick ... The world of speculation is welcoming you," the posts said. Kwok also wrote: "If Hong Kong people do not buy, those rich people from the mainland should buy. And they should buy those of high quality. Merely by the appreciation of yuan, one can make big money. Hong Kong's real estate [prices] can soar by 40 per cent in the future."

Art sales highlight flourishing Asian market - Pablo Picasso's Mere Tebant un Enfant is unveiled yesterday as one of the 21 paintings in Sotheby's inaugural selling exhibition of Impressionist and Modern art. Another month, another busy week in Asia's increasingly hectic art calendar. At least six art auctions and sales are set to hit Hong Kong and this time it is Western works of art that are grabbing the attention of the region's buyers. At Christie's week-long autumn sale at the Convention and Exhibition Centre which runs until next Thursday, two Western paintings due to be offered in the Old Master and 19th Century art sale in New York in January are on display - the first time the auction house has shown paintings in this category in Hong Kong. The two works - View of Mestre by Italian master Canaletto, with a presale estimate of between US$2.5 million and US$3.5 million, and Master of Hounds by French painter Jean-Leon Gerome, which is expected to fetch between US$700,000 and US$1 million - are on exhibit during the auction period. Simultaneously, Sotheby's is to hold its inaugural selling exhibition of Impressionist and Modern art in Hong Kong at the Grand Hyatt from today till Sunday. The 21 paintings on show, priced between HK$15.6 million and HK$196 million, include works by Claude Monet, Pierre-Auguste Renoir and Pablo Picasso as well as Marc Chagall. Korean auction house Seoul Auction will also stage a selling exhibition of Impressionist and Modern art from tomorrow till Monday at Pacific Conference Centre, while Est-Ouest Auctions of Japan is offering some Picasso works alongside some Modern pieces at its fine art sale today at JW Marriot. United Asian Auctioneers, a consortium formed by Beijing Hanhai Auction, One East Larasati from Singapore, K Auction from Korea and Asian Art Auction Alliance based in Hong Kong, will offer works by Andy Warhol and British artist Julian Opie, alongside many other Asian contemporary art pieces at tomorrow's sale at the Hong Kong Exhibition Centre. The influx of Western art to the Hong Kong market is a response to Asian buyers' increasing interest in expanding their art collections. Christie's Asia chairman Ken Yeh said he had observed a significant increase in the number of mainland buyers participating in New York and London sales, bidding for Impressionist and Modern paintings priced from US$10 million to US$20 million. He said most mainland buyers bought Impressionist and Modern art as investors and collectors.

CSL, which launched Asia's first 4G network yesterday to cope with growing mobile broadband demand, will provide its new super-fast service to Hong Kong consumers early next year. The city's largest wireless network operator has started offering 4G connection, with internet download speeds of up to 100 megabits per second, to its enterprise customers. Based on the mobile broadband technology called Long-Term Evolution (LTE), the network was introduced by CSL ahead of early 4G frontrunners in the region, NTT DoCoMo of Japan and South Korea's SK Telecom. Joseph O'Konek, the chief executive at CSL, said over the past three years, the carrier had "spent several hundred million dollars, including for the spectrum", to set up its LTE infrastructure with the help of mainland telecommunications equipment maker ZTE Corp (SEHK: 0763). CSL, a unit of Australian telecommunications giant Telstra Corp, invested HK$523 million to acquire its 4G spectrum on the 2,600-megahertz band in January last year. Tarek Robbiati, group managing director of Telstra International, said CSL managed to fulfil the Hong Kong government's spectrum licence requirement on network coverage four years ahead of schedule since its 4G system now reached about 50 per cent of the city's population. LTE network users will be able to complete the download of a full high-definition movie at 26 minutes, compared with 132 minutes for an advanced 3G network based on the Evolved High-Speed Packet Access (HSPA+) technology. Downloading a DVD-quality video on an LTE network will take four minutes to complete, faster than the 18 minutes it would take on an HSPA+ network. The speed difference is not as discernible when downloading a 10-song MP3 file. That job would take 0.1 second on 4G and 0.7 second on the HSPA+ service's 42Mbps connection. O'Konek said the wide use of mobile internet devices and more rich online content being downloaded led CSL, which had 2.6 million subscribers as of June this year, to bet big on an infrastructure that combines LTE and HSPA+ networks. CSL estimated that its data traffic had increased by 65 times since March last year. ZTE and Samsung Electronics will provide the first LTE-ready devices on CSL's 4G network in the form of USB modems, or dongles, attached to laptop computers to get high-speed data access. CSL chief marketing officer Mark Liversidge said more 4G devices were expected to become available within the first half of next year, including a range of smartphones and media tablets. O'Konek said CSL had started discussions with Samsung, which has delivered the world's first LTE handset to United States-based 4G network operator MetroPCS. Wireless Intelligence forecasts Hong Kong to have 1.4 million 4G connections by 2015, while the mainland will have 57.9 million. It predicts CSL will have a dominant 40 per cent 4G market share that year.

Fast-food chain Fairwood Holdings (SEHK: 0052) says it will raise prices and step up automation to offset higher costs caused by inflation and the minimum wage legislation. The company saw its shares surge as much as 22 per cent yesterday after it reported net profit growth of 43.4 per cent to HK$70.7 million for the six months to September. Turnover was HK$811.1 million, up 4.4 per cent compared with the same period last year, thanks to higher average spending and better customer traffic. Despite expressing optimism about the outlook for next year, the fast-food chain admitted it was under mounting pressure from surging food costs, rising rent and the minimum wage legislation. Chief executive Raymond Chan Chee-shing said food and rent costs increased nearly 10 per cent over the past six months and might jump another 20 per cent to 30 per cent over the next half-year. The company also faced a sharp rise in labour costs as a result of the introduction of a wage floor rate of HK$28 per hour from next May. Chan expected labour costs to climb to 23 per cent of total costs next year from the current 21 per cent and profit margins to be dragged down to 4.8 per cent from 6.8 per cent currently. "We will raise the menu price by another 2 per cent to 3 per cent," he said. Rival Cafe de Coral (SEHK: 0341), the largest fast-food chain in the city, recently came in for criticism for cancelling the paid lunch break enjoyed by its staff after offering them a pay increase to meet the wage requirement. Fairwood said around 4 per cent of its 1,000-plus employees would receive a pay increase in accordance with the wage requirement. "For this moment, we do not have any plan to change our staff's working hours and lunch break arrangements," Chan said. The company offered a 3 per cent to 5 per cent pay increase to employees in the first half of this financial year and a similar percentage pay rise is expected in the second half, Chan added. Aside from raising menu prices, Fairwood will also step up automation and streamline processes in its restaurants and central food processing plant to cut costs and enhance productivity. The chain will also offer international cuisine to attract more affluent consumers. Fairwood operates 95 fast-food outlets in Hong Kong and 16 on the mainland. The profit from its Hong Kong restaurants reached HK$54.47 million while the mainland outlets contributed HK$9.82 million for the reported period. It plans to open eight to 10 restaurants in Hong Kong and five to six restaurants across the border during this financial year. The company proposed an interim dividend of 20 HK cents and a special dividend of 8 HK cents per share for the period. Its share price closed yesterday at HK$11.26, up 11.49 per cent.

Son of KMT chief gunned down on campaign trail - Lien Sheng-wen survives being shot in face, supporter killed - Lien Sheng-wen speaks on the campaign trail just hours before he was shot last night. The son of Kuomintang honorary chairman Lien Chan was shot in the head during a campaign rally outside Taipei last night, just hours before voters elect mayors of five municipalities in Taiwan today. The shooting of Lien Sheng-wen, 40, seen as one of the new generation of KMT leaders, marked the first bloodshed in what had been a relatively peaceful election, prompting an indignant Taiwanese President Ma Ying-jeou to order all-out efforts to protect candidates. Lien Sheng-wen, deputy campaign manager for Taipei Mayor Hau Lung-bin, who is running for a second four-year term, was about to make a speech at a rally in Yungho when the gunman leapt onto the stage. A spokeswoman for National Taiwan University Hospital, where Lien Sheng-wen was taken for emergency treatment, said he was shot in the left side of his face but his life was not in danger. "The bullet did not go through his brain and the patient remains clear in all senses and shows steady life signs," the spokeswoman said. Police said the gunman, identified as Lin Cheng-wei, 48, was arrested immediately. "He pressed the gun against the head of Lien and shot him," a police officer said.

 China*: Beijing education authorities have given strict orders to universities to keep a lid on canteen food prices despite rising costs. The Beijing Education Commission, which oversees more than 30 universities in the capital, said it had long ago ordered universities not to raise canteen food prices and recently stressed they should pay special attention to the issue in the face of soaring market prices. "We told them that if you lose money on canteens, we will give you subsidies, but you just can't raise prices," a spokesman said. He denied the move was linked to a riot in a Guizhou high school triggered by a rise in canteen prices, but he said that the city government was on high alert regarding the impact of rising food costs on students. "Many university students who study in Beijing are from poor or rural families and their lives will be greatly affected by price increases, which is the major concern of our policy," he said. Across the mainland, higher food bills are cutting deeply into the budgets of the working poor. In large cities such as Beijing, some residents have seen prices for basics such as rice, cooking oil and vegetables jump day by day over the past few months. High food prices have caught the attention of residents and ways to trim budgets have become hot topics online. One recommendation is for office workers to go to nearby universities for lunch. Canteen food prices, ranging from a 40 fen (45 HK cents) bun to 30 fen porridge, have been kept unchanged since 2007, the last time serious inflation stalked the mainland. The education commission has been giving subsidies to universities and is now considering raising them. It is also studying how to limit non-student visitors' access to campus canteens. An official in charge of the eight canteens at the North China University of Technology said they had been losing a total of 100,000 yuan to 200,000 yuan a month recently. "The education commission has told us repeatedly not to raise prices and we have been obeying the order by losing money," the official said. "To provide options for students from low-income families, all the eight canteens at the university have supplies of low-priced dishes, such as vegetables which cost 80 fen. A dish with meat is sold at 3.50 yuan and a bun for 40 fen. We also have to maintain the same portion sizes." The central government is facing a major task in taming runaway inflation - the consumer price index jumped 4.4 per cent last month, the biggest rise in more than two years. Inflation fears are always of concern to the government due to the potential for price rises to trigger social unrest. The inflation in the 1980s was one of the major reasons for the 1989 student movement in Tiananmen, analysts said. The State Council announced last week that it would move to stabilise prices by cracking down on speculators and boosting supplies of some staples from government stocks. Beijing also urged local authorities to provide food subsidies to the neediest families. It did not rule out price controls for key products such as vegetables, grain and coal and other energy supplies. The National Development and Reform Commission said yesterday it would conduct price checks in 18 provinces and cities from the end of this month to December 20, with the aim of stabilizing prices.

China wins men's basketball gold at Asiad - China's Wang Zhizhi (L2) and Zhu Fangyu hug following their victory over South Korea in the men's gold medal basketball game at the 16th Asian Games in Guangzhou, Guangdong province, November 26, 2010.

Members of China's men's basketball team throw Wang Zhizhi into the air following their victory over South Korea in the gold medal game at the 16th Asian Games in Guangzhou, Guangdong province, November 26, 2010.

Chinese foreign minister met with ambassador of the DPRK to China, and held phone talks with U.S. Secretary of State and ROK foreign minister Friday on the situation of the Korean Peninsula.

Beijing warns US and S Korea over drills - China says it will protect its coastline as US battle group heads for the Yellow Sea - US General Walter Sharp talks to South Korean General Yun Kong-yong during a tour of houses destroyed in a barrage of North Korean shells that hit Yeonpyeong island on Tuesday. China warned yesterday against military acts near its coastline ahead of US-South Korean naval exercises that North Korea said would put the peninsula on the brink of war. Beijing's warning came as Seoul named a career soldier as its new defence minister and Pyongyang appeared to launch its own artillery drills within sight of an island that it showered with a deadly missile barrage on Tuesday. Beijing also held phone talks with US Secretary of State Hillary Rodham Clinton on the tense situation, the Chinese foreign ministry said. Foreign Minister Yang Jiechi also spoke to his South Korean counterpart and met Pyongyang's ambassador to Beijing to discuss the situation. Yang urged Seoul and Pyongyang to exercise calm and restraint and solve problems through dialogue, the ministry said, according to Xinhua. Earlier, Beijing warned against military activity in its exclusive economic zone, echoing remarks it made a day earlier opposing the US-South Korean war games. "We hold a consistent and clear-cut stance on the issue. We oppose any party to take any military actions in our exclusive economic zone without permission," Foreign Ministry spokesman Hong Lei said in reply to a question regarding China's position on the US aircraft carrier George Washington participating in the joint naval exercises. The aircraft carrier's battle group was heading for the Yellow Sea for the four-day drill, which starts tomorrow - a show of force designed to deter North Korea. China strongly protested over an earlier round of drills in the region but had been largely mute over the latest exercises. Beijing could be withholding direct criticism to avoid roiling ties with South Korea and the United States, and to register its displeasure with ally North Korea. Pyongyang, unrepentant over its barrage that hit the island of Yeonpyeong, criticised "the US imperialists and South Korean puppet war-like forces" for what it called an exercise in "sabre-rattling". "The situation on the Korean peninsula is inching closer to the brink of war due to the reckless plan of those trigger-happy elements to stage again war exercises targeted against the [North]," its official Korea Central News Agency said. The aggressive language is typical of North Korean state media, but the heightened tension was enough to depress South Korea's won currency as much as 2.2 per cent. The stock market closed 1.3 per cent down, in line with the wider region. There was brief panic in Seoul in the afternoon when television reported sounds of artillery fire near Yeonpyeong. But the military said the artillery fire was distant and no shells landed in South Korea. The fresh artillery blasts from the North were especially defiant because they came as the US commander in South Korea, General Walter Sharp, toured the island to survey damage from Tuesday's attacks. US military officials said Sharp did not hear the blasts, though residents on other parts of the island panicked and ran to the air-raid shelters where they huddled earlier in the week. Tensions have soared between the Koreas since the North's strike on Tuesday destroyed large parts of the island, killing two civilians as well as two marines. The attack - eight months after a torpedo sank a South Korean warship further west, killing 46 sailors - has also laid bare weaknesses in South Korea's defence 60 years after the Korean war. Tuesday's skirmish forced South Korea's beleaguered defence minister to resign on Thursday, and President Lee Myung-bak yesterday named General Kim Kwan-jin, a former chairman of the Joint Chiefs of Staff, to the post. "[We] think nominee Kim, well respected for professionalism and conviction, is the right person for the post in order to restore trust from people and boost morale in the entire military," presidential-secretary Hong Sang-pyo said. The heightened animosity between the Koreas is taking place as the North undergoes a delicate transition of power from leader Kim Jong-il to his inexperienced son Kim Jong-un, who is in his late 20s. Parts of Yeonpyeong resembled a war zone yesterday and some residents fled the island for fear of more shelling from the North when the joint naval exercise starts, policeman Kang Sang-beom said. Fears spread to other frontline islands. Residents were on a knife edge on Baengnyeong Island - near the spot where, according to a multinational expert panel, a North Korean submarine torpedoed the South Korean warship in March. "It feels like the calm before the storm, ahead of the US-South Korea joint exercise that will begin on Sunday," a 37-year-old local government official said.

Modern Dairy suffers from sector's troubles - China Modern Dairy was one of the worst-performing stocks in the Hong Kong market yesterday as its trading debut was spoiled by concerns about mainland food safety and overall market malaise. The raw milk producer tumbled as much as 16.6 per cent in the afternoon before finishing down 13.2 per cent at HK$2.51. More than HK$750 million worth of its shares changed hands on the day. China Modern Dairy raised about HK$2.2 billion by selling 800 million new shares at HK$2.89 apiece. The offering price was at the low-end of an indicated range. "People usually avoid this sector," said Patrick Yiu Ho-yin, managing director at CASH Asset Management. "Investors are worried that there may be some negative impact from so many of the issues coming out from the dairy industry." Other mainland-based dairy companies have not fared well either with their new listings recently. Yashili International Holdings, a milk formula maker, listed on November 1 and is down 22.4 per cent from its offering price. Global Dairy Holdings came to market at the end of last month and is down 33.7 per cent from its IPO price. The mainland dairy market came under intense scrutiny in 2008 when half a dozen children died and a reported 300,000 became ill after consuming milk and formula later found to be contaminated with an added chemical called melamine. Dairy product makers have since taken steps to improve oversight of the milk they are using by consolidating procurement around large-scale farms. This trend stands to benefit China Modern Dairy, which sold over 95 per cent of its milk in the latest fiscal year to leading mainland dairy products maker Mengniu Group. China Modern Dairy said in a prelisting document that since its commencement of business it has produced high-quality raw milk which has never contained melamine. The dairy farmer has earmarked proceeds from its IPO to improve its production scale. It set aside about HK$882 million for importing dairy heifers from Australia or New Zealand and over HK$1 billion for building new farms and production facilities. China Modern Dairy was the 12th new listing this month on Hong Kong's main board and 85th so far this year. There were 68 new listings last year and 47 in 2008, according to data from Hong Kong Exchanges and Clearing (SEHK: 0388). The IPO pipeline has showed signs of a slowdown, however, amid waning investor sentiment. China Datang Corp Renewable Power and two other listing candidates aiming to take in over a combined US$3 billion through separate deals pushed back their fund raising plans because of poor market conditions, according to people familiar with the deals. The Hang Seng Index is down 0.95 per cent so far this month, headed for just its second monthly decline since June. "If the overall market is not so good and the current market still has attractive stocks to buy, it will drive out some of the capital from the IPO market," Yiu said.

China takes record number of gold medals - Feng Lanlan's karate title on Friday gave China its 184th gold medal at Guangzhou, ensuring the record for most golds at an Asian Games and China on course to reach 200.

North Korea said on Friday that impending military exercises by the South and the United States are pushing the region towards war, days after it shelled an island in the South.

Islanders dream of a taiga economy taking off - The return of land seized by the Soviets in 1929 points to a new spirit of co-operation in a corner of the far northeast. A novel "one island, two countries" solution to a territorial dispute in Heilongjiang on China's northern border could be about to pay dividends. The deal with Russia, consummated two years ago, sees the two nations sharing Heixiazi Island , long deemed undisputed Chinese territory. Such pragmatism is rare. The 327 square kilometre sedimentary island, where the Heilong and Wusuli rivers (known as the Amur and Ussuri in Russian) meet, was spoken of for decades as the reason that the Russian bear and the Chinese dragon could not get along. Since Russia handed back about half the island, Heixiazi has been seen as a symbol of a new spirit of economic co-operation. Officials are scrambling to draw up plans to develop the Chinese side of the island. Among their ideas are a free-trade zone, tourist resort, hotels and a shopping centre. They say the island is poised to become another investment hot spot, attracting capital from Japan, South Korea, Taiwan, Hong Kong and Macau, as well as from wealthy people on the mainland. "Heixiazi Island will become another large tourist resort like Hainan and a large border town like Shenzhen," said Fuyuan county chief Wang Jutang. The island, called Bolshoi Ussuriysky in Russian, was seized by the Soviet Red Army in 1929. For the past two years, the part of the island handed back to China has been under military control, with garrison stations the only structures and patrolling soldiers the only sign of activity on the wild landscape. Signs warn that it is a "prohibited military zone, not accessible to visitors". But officials are proceeding with ambitious development plans for the Chinese sector, even though talks with Russia on a joint development plan for the island are continuing. Under a plan worked out by the provincial planning agency and approved by the National Development and Reform Commission, the island will become a business and leisure hub in five years. The local government plans to invest 10 billion yuan (HK$11.6 billion) in development projects on the island and has earmarked more for infrastructure. Although Fuyuan county has a population of only 200,000, the partial return of the island triggered the building of an airport and 169 kilometres of railways. New roads and a deep-water harbour on the Heilong are also being built. An industrial park of about 13 square kilometres is planned, which the authorities hope will become home to factories making products for the Russian market. Local businesses are focusing on the opportunities that will be unleashed when a road across the island connects it to Khabarovsk, one of the largest cities in the Russian far east. Under an agreement to further co-operation, both countries agreed to joint development of boundary rivers, bridges, ports and connecting highways, rail lines and other infrastructure. Heilongjiang officials say Russia also plans to build more infrastructure in Khabarovsk. Hou Wei , deputy director of the Heilongjiang Tourism Administration, said both governments supported the plan and had agreed to speed up talks which resumed in late September. While China has seen territorial disputes in eastern and southern waters flare up this year, there are growing signs of goodwill across its northern border, with officials and soldiers saying people on both sides have become friends in recent years. "We often exchange greetings and gifts when we come across the border, where we are separated by two-metre-tall wire netting," said one soldier who drove Hong Kong journalists on a tour of the island earlier. But some can't erase memories of the fierce border war in 1968, when Mao Zedong mobilised the whole nation to prepare for nuclear war with the "Arctic polar bear". "We cannot celebrate until we get all the territory back," said one tourist. The island, under de facto Russian control but claimed by China, was the major point of the dispute between China and Russia in border negotiations. Talks began in 1964 and were suspended a few years later when the border war broke out. They resumed in 1987 when both nations were eager to forge closer ties in the face of growing assertiveness by the United States-led Western alliance. In 1999, then-president Jiang Zemin and his Russian counterpart, Boris Yeltsin, signed a border treaty in Moscow acknowledging all the treaties signed between the Qing dynasty and Russia. Jiang ceded more than a million square kilometres of land. Up to that point, Chinese communist leaders had denounced those treaties as unfair and declared them invalid. In October 2004, President Hu Jintao and the then Russian president, Vladimir Putin, signed a supplemental agreement to return half of Heixiazi Island to China. In autumn 2008, Russia turned over part of Heixiazi to China along with the whole of Yinlong Island, known in Russian as Tarabarov Island. The ceremony was low-profile, with only junior diplomats, local officials and border officers from both countries in attendance. "Why was it such a stark contrast between the ceremonies for the return of Hong Kong, Macau and Heixiazi Island?" the tourist asked. "The communist government was glorified over the return of the British and Portuguese colonies, and thus staged high-profile ceremonies. "Here, they feared they would be denounced and shamed as being as weak and incompetent as the Qing dynasty for accepting equally humiliating treaties and thus were very low-key in an effort to keep the event from having widespread exposure." Some overseas Chinese were furious at the signing of the two border treaties. Critics said they ended any hope of China reclaiming the lost land and condemned Beijing for selling out their homeland. But officials see the new spirit of co-operation as ushering in a new era of development for the northeast. "We have lagged far behind Guangdong in the past three decades because of the southern province's openness to trade and investment from Hong Kong and newly emerging economies in nearby Southeast Asia. Now we will catch up because of our link with Russia," said Sun Yao , the Heilongjiang vice-governor in charge of foreign trade. Sun said Heilongjiang's economy was larger than Guangdong's three decades ago but was now less than a fifth the size. "I can assure you that Heilongjiang will catch up with Guangdong in the next three decades because of the great potential of this region and Russia's far east thanks to both regions' rich resources and complementary economies," Sun said.

Wen, Central Asian peers push for co-operation - Premier Wen Jiabao met Russian and Central Asian prime ministers in the Tajik capital Dushanbe yesterday for talks on security and economic co-operation. The ninth prime ministers' meeting of the Shanghai Co-operation Organisation (SCO) - a security grouping consisting of China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan - agreed to press ahead with further regional co-operation, Xinhua reported. Assistant Foreign Minister Cheng Guoping said terrorism, separatism and extremism, together with drug smuggling and cross- border crime, posed serious threats to the region, China News Service reported. Tajik President Emomali Rahmon also called for further co-operation to fight terrorism and separatism, and promote regional and global development. SCO secretary general Muratbek Imanaliev said earlier that SCO military activities were mainly aimed at fighting terrorism and did not target any specific country. He said the SCO was not a military organisation and was focused on maintaining regional and global security and development. The SCO would continue to combat terrorism, separatism and extremism to maintain regional security in Eurasia, and especially in Central Asia, Imanaliev said. China blames terrorism, separatism and extremism - the so-called "three evil forces" - on the East Turkestan Islamic Movement, which seeks independence for Uygur-populated Xinjiang. In a meeting with Rahmon, Wen said China would expand co-operation with Tajikistan in economic issues and trade, electricity, transportation, minerals and border control. He pushed for the implementation of a co-operation agreement between Tajikistan and Xinjiang. Wen also met his Kazakh counterpart, Karim Masimov.

Splendid Rhythmic Gymnastics finals at 16th Asiad - Anna Alyabyeva of Kazakhstan grabbed gold medal of the individual all-around event of Rhythmic Gymnastics at the 16th Asian Games in Guangzhou, Nov. 26.

Huang Hua, pivotal in diplomacy, dies - Mao Zedong's former translator and longtime diplomat Huang Hua died, aged 98, of an undisclosed illness yesterday, Xinhua reported. Huang translated English for Mao in the years before the 1949 communist seizure of power and was later pivotal in China's foreign relations. Huang held the positions of vice-premier and foreign minister concurrently from 1976 to 1982. When Beijing returned to the United Nations General Assembly after two decades of absence in 1971, Huang was part of the Chinese delegation together with then foreign minister Qiao Guanhua. He was part of China's delegations to the Korean war armistice talks and the tentative initial contacts with the United States in Warsaw, Poland, in 1958. He was responsible for talking with former US national security adviser Henry Kissinger and drafting the announcement of the invitation of US president Richard Nixon to China in 1972. As foreign minister, he oversaw the formation of diplomatic ties with Washington in 1979 and toured the US with paramount leader Deng Xiaoping that year. He was also the first mainland foreign minister to set foot in Hong Kong in 1980. But he is most remembered in Hong Kong when he reportedly made a remark, together with former defence minister Geng Biao , that there was no need for the People's Liberation Army to be stationed in Hong Kong. After their remarks, the two were later given a public scolding by Deng for "mouthing nonsense".

Investors snapped up a shopping mall in Beijing for 6 billion yuan (HK$6.99 billion), reflecting strong demand for retail property and setting a new record for commercial real estate in the capital. Le Mall, developed by local company Huaxilemao, had been sold to Changchun-based Hong Kong Charter Group, a spokeswoman for Hong Kong Charter said yesterday. "Our businesses used to focus in the three northeastern provinces [Heilongjiang, Jilin and Liaoning]," she said. "Le Mall is our first project in Beijing." The previous record price for retail property in Beijing was Swire Properties' partnership with property fund Gateway Capital to buy a retail-hotel project in Sanlitun district for 4.8 billion yuan in 2007. The project has a retail floor area of 115,000 square metres and a hotel floor area of about 56,000 sqmetres. Although the project is in a better location, its development scale is 40.7 per cent smaller than that of Le Mall. "Le Mall, located in Haidan district, west of Beijing, is one of the largest shopping malls in the capital ... There is no [other high-end] development in the area," a retail agency in Beijing said. "The buyer is well known in developing luxury shopping malls in the three northeastern provinces. It has developed three shopping malls in Changchun, Shenyang and Harbin. It also has strong connections with global luxury brands. That's why it is willing to pay such a big amount for the mall." Le Mall is a seven-storey retail and office complex with a total gross floor area of 290,000 sqmetres. Tenants include the Jackie Chan Cinema, Pacific Department Store and luxury brand Burberry. Property agents estimate the mall can offer a gross rental yield of about 10 per cent. Gross yields in Hong Kong are 5 to 6 per cent. Alvin Yip, of property consultancy DTZ, said the sale was not a sign of a property bubble, citing strong demand.

HP has big plans for China - Ruey-bin Kao, Hewlett-Packard Co's managing director for China, speaks at an event in Beijing celebrating Hewlett-Packard's 25th anniversary in China. Firm eyes rural market, to build major service center in nation - Hewlett-Packard Co Ltd will build one of its biggest service centers and continue investing in the Chinese market, Ruey-bin Kao, the company's new chief in China, said on Wednesday in Beijing. Kao, former president of Motorola China, said he was very ambitious about HP's development in China. "The very first thing I will do after joining HP is to find two offices which are larger than 10,000 square meters for HP's expansion in China," said Kao. About 64 percent of HP's business is outside the United States in more than 170 countries and regions. According to Kao, China plays an important role in HP's global market, where it will build its largest and most vital outsourcing center out of a total of six global centers next year. "China's outsourcing and software service is only half of the world average," said Wang Jiping, manager of research firm IDC China. He said 70 percent of sales revenue in China's IT industry comes from hardware. "HP is following the general trend in which hardware PC companies are providing more software and outsourcing services in China," Wang said. "In this industry, China has a huge potential." Besides the service centers, HP will widen its PC portfolio and enhance distribution channels in China next year. According to earlier data released by IDC, due to quality scandals, HP's market share dropped from second to third place in China during the second quarter. "Next year, we will rebuild our brand and provide better PC services in China to win our customers back," said Kao. "We will launch our Palm handset and tablet PC products in China next year," Isaiah Cheung, vice-president of HP, said. Kao also said the company is cooperating with two major telecom companies in China to develop cloud computing. The company is going to combine its commercial and personal PC supply chain, which will share the same distribution channel. According to IDC, PC sales in China will reach 65.14 million units in 2010, with an estimated growth rate of 14 percent next year. "After a surge in sales during the economic rebound in 2009 and 2010, the growth rate will be lower than past years," said Wang from IDC. Wang also pointed out that the rural market will play a significant role for PC makers next year. HP will expand its distribution channels to 2,000 counties and 10,000 villages, according to Cheung.

Pretty models at 2010 Southwestern China Int'l Auto Show - The five-day auto exhibition, which kicked off here Friday, showcased more than 500 vehicles from over 100 motor manufacturers.

Scenery of Wanfohu Lake in E China's Anhui - Wanfohu Lake is located in Shucheng County, about 40 kilometers away from Hefei, capital of east China's Anhui Province.

November 27, 2010

Hong Kong*: Tony Tyler, Cathay Pacific Airways (SEHK: 0293) chief executive, could hear as early as next month if he could become the next director general and chief executive of the global airline lobby group, the International Air Transport Association said. Tyler (pictured) confirmed in an e-mail that there had been no decision yet, adding "but I guess I'll learn something at the IATA board meeting in early December". He did not respond to a follow-up e-mail asking if he would be prepared to swap Hong Kong for Geneva, IATA's Swiss headquarters. The association represents about 230 passenger and cargo airlines which operate 93 per cent of the world's scheduled air traffic. Insiders said Tyler was vying with Samer Majali, the chief executive of Gulf Air, for the airline industry's top job. IATA was unwilling to confirm how many candidates were in the running for the position. One source said a replacement for current IATA director general and chief executive Giovanni Bisignani would have to be agreed by February for the new head to be confirmed at the June annual general meeting in Singapore. Tyler is no stranger to IATA having been appointed chairman of IATA's board of governors in June last year at a time when the industry was reeling from the economic meltdown and facing environmental pressures. At the time, he said: "A toxic combination of low fares, a large drop in premium travel, and weak cargo loads is hitting the bottom line hard. IATA has some critical roles to play. It must protect the US$350 billion in industry cash flowing through its financial systems. It must also find even more efficiency gains - not just by airlines but throughout the industry value chain." Commenting about outside pressure on the industry's environmental performance, Tyler added: "The industry is committed to achieving carbon-neutral growth by 2020, but to achieve this, we need to focus on bringing governments on board". Coincidentally, he took over from Majali, who was then chief executive of Royal Jordanian Airlines, for the year-long assignment as IATA chairman. If Tyler moves from Cathay, where he has been chief executive since 2007, it would prompt a reshuffle of top management at the airline. Observers said Tyler had a good grasp of the issues facing the airline industry after helping to navigate Cathay through several challenges since he joined the airline's board in 1996. These included the Asian financial crisis, health scares and the global financial crisis. IATA spokesman Albert Tjoeng confirmed that Bisignani, appointed in 2002, would retire as director general and chief executive next year. "The IATA board of governors has established a search committee to find the successor to Bisignani. The successor will be presented to the IATA annual general meeting in June 2011 for approval," he said.

Pay workers for their meal breaks - Matthew Cheung Kin-chung, secretary for labor and welfare - Workers required to have lunch in their workplaces should be paid for the time taken regardless of whether they have to do any work, the labor minister says. But Matthew Cheung Kin-chung said it was not appropriate to regulate paid meal breaks across the board by legislation, and employers and workers should agree on terms of their own. Speaking in the Legislative Council about the Minimum Wage Ordinance yesterday, Cheung said that if an employee had to remain at a place of employment during his meal break, such time should be included in his hourly wage, irrespective of whether he was given anything to do. "Moreover, if meal breaks are regarded as working hours of the employee according to his employment contract or agreement with his employer, such hours must also be taken into account in computing the statutory minimum wage," he said. While the first statutory minimum wage of HK$28 an hour will be implemented in the middle of next year, Cheung urged employers to pay attention to their workers' morale. "All along, employers and employees have been able to agree on their employment terms having regard to the circumstances of individual enterprises and personal needs of employees, including whether meal breaks constitute hours worked by employees, and whether they are remunerated or not," Cheung said. He said employers should not alter anything in a contract without thoroughly consulting the workers. "If workers feel that their rights are infringed, they should contact the Labour Department without hesitation. We will definitely intervene and will ensure that workers' rights and benefits will not be harmed," he said. Cheung said the department would issue guidelines and samples of employment contracts to help employers and workers prepare for implementation of the minimum wage. He said there would be some adjustments under the new legislation, as wages would be calculated on an hourly rate, while at present most employment contracts calculate wages monthly. The government announced earlier that, with the minimum wage taking effect, it would begin to study the possibility of introducing standard working hours. Commissioner for Labor Cherry Tse Ling Kit-ching said yesterday it was a complicated matter requiring in-depth study, Tse, who will soon leave her post to become permanent secretary for education, said the relationship between employers and workers was good overall, despite sporadic disputes.

It wouldn't matter who won Marine Police site, says legislator - A luxury hotel, shops, restaurants and bars stand at the former Marine Police headquarters. 1881 Heritage never lacked controversy. Had Cheung Kong (SEHK: 0001)'s rival to the bid won in 2003, it too would have been caught up in the latest public storm, courtesy of the government's bungled attempt to get an accurate estimate of the exact size of the former Marine Police headquarters in Tsim Sha Tsui. "Had Sino Land won the site because it had the best heritage conservation scheme, it might also have been embroiled in this latest row on bonus gross floor space," said lawmaker Dr Patrick Lau Sau-shing, of the surveying and planning sector and a member of the Professional Forum. Since Li Ka-shing's flagship company won the government tender, the project has become the most frequently cited example of the government's failure in heritage conservation. The abandoned Grade 1 monument is now a network of a luxury hotel, shops, restaurants and bars serving high-end customers. When the government first offered the tender, five companies joined the bid in 2002. The winner would receive a 50-year land grant. The planning brief required the successful bidder to preserve the integrity of the historic compound, including the historic buildings and setting, the greenery and the slopes. But in the end, the hill and most of the mature trees disappeared. The heritage value of the site would have been better preserved if Sino Land had won the bid, based on the plan it had presented for the site, a government source knowledgeable about the project said. But a close examination of the information the then Tourism Commission released back in March 2003 shows Sino's development scheme, artist impression and master landscape plan were similar to the 1881 Heritage after completion. Sino did promise to keep the hill and trees in their original state. Cheung Kong won the project because it offered a bigger lump sum to the government - HK$352.8 million. In an effort to strengthen its bid, Sino also submitted its award-winning designs of the Fullerton Hotel and Far East Square in Singapore aimed at demonstrating its expertise at preserving and reusing heritage buildings. The other bidders did not show relevant experience, the government source said. But Lau thinks the government's failure in getting an accurate estimate of the gross floor area of the project would have made no impact on tendering prices.

Foreign ministry given Mid-Levels site, to grow - The Ministry of Foreign Affairs has been granted a 2,100 square metre site in western Mid-Levels for expansion. The government said yesterday that the site in Borrett Road would be granted to the ministry for a nominal sum of HK$1,000 to meet its need for more space. The site is zoned for government use. A proposed building on the site will include a new official residence for the commissioner, who will move from the top floor of the ministry's current home in Kennedy Road. "The additional premises ... will further enhance the capacity of the office in discharging its functions and responsibilities under the Basic Law," it said. The office already has two blocks in Borrett Road. According to the proposal, the new development will have only four stories above basements. The land lease runs to June 30, 2047 when the transition phase of Hong Kong's change of sovereignty ends.

Caterpillar, the world's biggest maker of construction equipment, hired Goldman Sachs to help it sell yuan-denominated bonds in Hong Kong, according to a person familiar with the matter.

The Census and Statistics Department of Hong Kong announced Thursday that the values of Hong Kong's total exports and imports of goods in October increased by 13.9 percent and 14 percent respectively year-on-year. In October, the value of total exports of goods increased by 13. 9 percent over a year earlier to 274.2 billion HK dollars (about 35.34 billion U.S. dollars), after a year-on-year increase of 24.1 percent in September. Within this total, the value of re-exports increased by 13.9 percent to 268.2 billion HK dollars in October, while the value of domestic exports increased by 11.2 percent to 6 billion HK dollars. Concurrently, the value of imports of goods increased by 14 percent over a year earlier to 296.4 billion HK dollars in October, after a year-on-year increase of 19.5 percent in September. A visible trade deficit of 22.3 billion HK dollars, equivalent to 7.5 percent of the value of imports of goods, was recorded in October. (one U.S. dollar is equivalent to 7.759 HK dollars)

 China*: China expressed concern on Thursday about South Korea's planned joint military exercise with the United States, and a foreign ministry spokesman refrained from singling out Pyongyang as being responsible for an exchange of artillery with South Korea. South Korea’s foreign ministry said earlier that a joint military exercise with the United States due later this month will send a clear message to North Korea, which shelled a South Korean island on Tuesday, killing four people and triggering a confrontation. “We have noted the relevant reports and express our concern about this,” a spokesman for the ministry, Hong Lei, told a regular news conference. In answers to repeated questions, Hong did not directly criticise the planned US-South Korea military exercises, instead noting China’s “concern” about them. Beijing was angered earlier this year by joint US-South Korea naval exercises off the South Korean coast that those two nations said were meant to warn North Korea. Beijing said such exercises could threaten its security and regional stability. Friction between Beijing and Washington over Chinese maritime claims and US naval activities has added to irritants between the two countries, which have sparred this year over exchange rate policy, Taiwan, Tibet and internet policy. Beijing – which has been urged by the United States and its regional allies, South Korea and Japan, to help rein in Pyongyang – was maintaining contact with Washington over tensions on the Korean peninsula, Hong said. When asked about the responsibility for the incident, Hong said: “We’ve noted that there are different views of the cause of the incident.” He did not single out North Korea for criticism. Hong’s remarks echo China’s response to the deadly sinking of a South Korean naval vessel in March, when it refused to blame North Korea for the incident, which killed 46 sailors. Most nations have condemned Pyongyang for Tuesday’s artillery attack, but Beijing’s initial response on Tuesday was more muted, calling for both sides to exercise restraint. The resumption of stalled six-party talks to persuade Pyongyang to abandon nuclear disarmament was “urgently” needed, Hong said, adding that all parties in the dispute in the Korean peninsula should “do more to ease” the situation. Chinese Foreign Minister Yang Jiechi had delayed a plan to visit Seoul this week due to scheduling disputes, Hong said. The delay could pose a setback for South Korea’s plan to pursue constructive engagement with China to use its influence over Pyongyang. Hong did not directly answer questions about whether China believes the shelling incident should be discussed by the UN Security Council.

China's central bank warns of risk of credit card debt - Credit cards debt 180 days past the due repayment date stood at 7.92 billion yuan (1.19 billion U.S. dollars) by the end of the third quarter, up 8.5 percent from the second quarter, according to a statement released Thursday on the website of the People's Bank of China.

China's current account surplus in the third quarter doubled from a year earlier to US$102.3 billion, leaving it adrift of the cap of four per cent of GDP floated by US Treasury Secretary Timothy Geithner. The surplus for the first three quarters, largely made up of China’s merchandise trade surplus, reached US$204 billion, the State Administration of Foreign Exchange said on Thursday. That equates to 5.1 per cent of Gross Domestic Product, based on GDP of 26.866 trillion yuan in the first nine months as reported by the National Bureau of Statistics and assuming an average exchange rate of 6.75 yuan per dollar. China chalked up a current account surplus of 6.0 per cent of GDP last year, down from a peak of 10.6 per cent in 2007. Yi Gang, a deputy governor of the People’s Bank of China, has expressed confidence that the surplus is on track to shrink to four per cent of GDP – a benchmark suggested by Geithner to indicate an economy is out of balance. But International Monetary Fund staff economists have said they see potential for significant surpluses to reappear over the medium term, albeit not on the scale of 2007. In the third quarter alone, China’s surplus was more than 7 per cent of GDP, calculated at a dollar/yuan rate of 6.7. The United States failed to win support for a numerical target for maximum current account surpluses and deficits at a summit of the Group of 20 major economies in Seoul this month. G20 leaders instead asked the IMF to carry out more work on indicative guidelines that would show an economy was unbalanced. SAFE calculated that China’s official currency reserves rose US$107.3 billion in the third quarter after exchange rate and valuation adjustments. Before adjustments, the reserves rose US$194 billion to a record US$2.648 trillion, by far the largest stockpile in the world, the People’s Bank of China reported last month.

China's Dalian Port raised a lower-than-targeted US$857 million after pricing its Shanghai IPO in the middle of its indicated range on Thursday.

Shanghai Expo's China Pavilion to reopen - Workers clean the plaza of Shanghai Expo's China Pavilion in Shanghai, east China, Nov. 25, 2010. Shanghai Expo's China Pavilion will reopen to the public on Dec. 1 and remain open for half a year, the Expo Bureau said. Shanghai Expo's China pavilion will reopen to the public on Dec. 1 and remain open for half a year, the Expo Bureau said Thursday. Exhibitions in pavilion will mostly remain the same as they were during the Shanghai World Expo which ran from May 1 to Oct. 31. Only an exhibition featuring stories behind China Pavilion's construction and operation has been added in the waiting hall, according to a statement from the bureau. Tickets for the pavilion are priced 20 yuan for adults, 15 yuan for students, disabled people, military servicemen and aged people. Children less than 1.2 meters tall will not need tickets, according to the statement. The pavilion will be open from 9 a.m. to 5 p.m. seven days a week. China Pavilion, one of the most popular pavilions of the Shanghai World Expo, received more than 10 million visitors during the six-month event.

The world in a port - cruise along the Pearl River - Take a cruise along the Pearl River to take in the abundance of neon light and feel the pulse of the bustling nightlife of Guangzhou. A visit to ready-for-the Asian Games Guangzhou throws up delightful surprises, from a laid-back colonial past to frenzied contemporary trade. Mu Qian reports. One week before the Asian Games seemed like a perfect time to tour Guangzhou, with the city getting ready to welcome guests but the frenzy yet to begin. The first advantage of the games for tourists, I noticed, was that whenever you were not sure of the way, there would be some volunteers nearby to help you. This happened to me from the moment I arrived at the Guangzhou Baiyun International Airport, where volunteers readily showed me the way to the Airport South subway station. This station, which had been put into use only a week earlier, was another positive outcome of the Asian Games. From here you can connect to almost any corner in the city. My destination was Shamian, a sandbank island in the Pearl River that used to be a foreign concession and is now famous for its colonial buildings. From the Huangsha subway station, it is a mere three-minute walk. I checked into the Guangdong Victory Hotel, a neo-classical building that used to be an HSBC bank in the mid-19th century. Located on the northern bank of the island, it is separated from the mainland by a canal. Walk around Shamian and you will see various Western-style buildings, including the Our Lady of Lourdes Chapel built by the French, and the former Czech Consulate. They were mostly built in the 19th century, but Shamian's history of foreign contacts dates back to the Song Dynasty (960-1279), when it began to serve as an important port for Guangzhou's international trade.

Giant gold nugget found in Xinjiang China - Weighing 1,840 grams, a nugget is measured 19cm long and 13cm wide in Altay, Xinjiang Uygur autonomous region, Nov 25, 2010. Australia is the home for nuggets, accouring for 80 percent of nuggets found around the world and owning the world's biggest rough gold weighing 235.87kg.

November 26, 2010

Hong Kong*: Proposals to help the poor and elderly so moved billionaire Li Ka-shing that he handpicked them for grants to turn the ideas into reality. The results of his Love Ideas, Love HK philanthropic campaign were announced yesterday, with grants awarded to 177 projects under the Li Ka-shing Foundation. The public picked 169 projects, divided into five grant categories - HK$25,000, HK$50,000, HK$100,000, HK$200,000 and HK$300,000. A total of HK$25.86 million will be awarded in grants. A project to help stray or abandoned animals won the most votes in the HK$300,000 category, while a project to restore the hearing of deaf people was the winner in the HK$200,000 category. The foundation did not say how many votes the winners received, but said that during the three-week polling period, more than 74,000 registered voters cast a total of 211,000 votes to support the projects they thought were meaningful to their community. Li, as a voter himself, allocated an additional HK$2.15 million for 12 ideas that he found innovative and moving. "Many projects demonstrated people's deep love and commitment to their communities. I am very moved by their innovation and dedication and am most honoured to be a part of their initiatives," he said, adding that he wished people would look through the projects again and give extra support. One project was initiated by the Fresh Fish Traders' School in Tai Kok Tsui to recycle used school uniforms. "A lady from Love Ideas, Love HK called me and said although we failed to get enough votes, Mr Li approved our project. I didn't know she was referring to Li Ka-shing," headmaster Leung Kee-cheong said. Many students of the cash-strapped Kowloon primary school did not have the money to buy uniforms, and some of them had to wear used, oversized uniforms donated by others, Leung said. "We feel very happy. And I have to say, despite all the criticism, this project is a nice one. There are people studying the content of every application, and there are people donating not only money but also real effort." Among Li's 12 handpicked projects, four were also voted in and as a result will receive twice the amount they applied for. A full list of the winning projects can be found at www.loveideas.hk. Grants will be awarded next month. Through the programme, Li wants to tap into the creative spirit of Hongkongers. Since its launch on September 15, the Love Ideas, Love HK programme has received a total of 1,029 project applications, among which 674 eligible projects were selected for the voting period from November 1 to November 21. The applications reflected a diversity of needs. In view of the overwhelming response, the foundation decided to launch a second round of the Love Ideas, Love HK program.

New HK$1,000 banknote raises the 'bar' on security - The new banknote features a horizontal bar that glows and appears to move when the note is tilted to make it more difficult to copy. For money-mad Hong Kong, it seems a simple banknote just isn't enough. The next batch of new notes will feature an eye-catching, moving horizontal bar feature in the top right-hand corner. When users tilt the banknote, the glowing bar appears to roll up and down. Officials say it will be inserted at a cost, but will make the bills more difficult to copy. The device has been used for the first time this year in some Pacific Ocean islands and African countries. The mainland has also used it on commemorative notes, but no Western countries have so far used the technology. Hong Kong Note Printing Limited general manager Francis Lau said: "Not many have adopted this feature because it's new. Special machines and inks are required and that can add to costs." Nevertheless, Hong Kong will press ahead with the more expensive option. "It's harder for people to make a counterfeit," Lau said. "It is also more user-friendly for Hongkongers because they can see the moving bar with their bare eyes." The bill issue will start with a new $1,000 note on December 7, followed by the $500 notes next year. Lau hoped they would be ready before the Lunar New Year, but the exact release date has yet to be confirmed. The issue will pump 100 million HK$500 bills and 70 million HK$1,000 bills into the economy. It is the first major revamp of the notes since 2003. There will also be new $20, $50 and $100 notes in the next two years, but the plastic $10 note will stay as is. Lau said the latest printing technologies will be used and the new banknotes will have the same colors and similar graphic themes as those currently in circulation. But they will be armed with more advanced security features. Each note will cost 60 HK cents to print, or an additional 10 HK cents, he said. Other features include a standardised enhanced watermark of a bauhinia on all notes printed by the three issuers - Standard Chartered Bank, HSBC (SEHK: 0005) and Bank of China. A windowed metallic thread on the back of the notes will also change its color from magenta to green when the bill is tilted. Thicker paper will be used and while current ones have a life span of three to five years, circulation time for the new ones could be a third longer, Lau said. Some Hongkongers will be disappointed there will be no new $20 or $50 notes ready to put into red packets next Lunar New Year. But Lau said the issuers have a stock of "old" notes ready for red packets that were printed previously but have not yet been circulated.

Ocean Park sees record attendance and revenues - Tourists queue up inside the park. Chairman Allan Zeman and park mascot Whiskers the sea lion must be sharing a smile after seeing Ocean Park hit a record 5.1 million visitors and HK$986 million in revenue in the past year. The aggressive home-grown theme park also planned to stretch its closing time from 6pm to 7.30pm early next year, following the opening of its Aqua City with music and firework shows after dark, its spokeswoman said. The extended hours will compete with those of rival Disneyland, which closes at 8pm. Through June 30, Ocean Park generated a yearly profit of HK$82 million, after deducting HK$33.8 million in interest payments to its commercial lenders and HK$137.6 million in depreciation and write-offs, according to its latest annual report released yesterday. Its total annual income was HK$986 million through June of this year. Last year's profit was HK$98.6 million, as Ocean Park shouldered only HK$8.3 million in financial costs, the spokeswoman explained. Ocean Park has set new attendance records six times in seven years, with mainland visitors accounting for almost 53 per cent of all attendance. The latest figure was a jump of 6 per cent from around 4.8 million visitors for last year. The spokeswoman attributed the rise in revenue to the increase in visitors, which boosted ticket sales as well as food, beverage and souvenir purchases. She said staff had grown by 60 per cent, to 1,300, compared with 800 back in 2006. The still-expanding park will hire an extra 650 people in the next couple of years. Legislator Professor Patrick Lau Sau-shing, who is also a member of Ocean Park's board, told the Legislative Council yesterday that the Hotel Development Project was proceeding smoothly. Tenders for the Ocean Hotel and Fisherman's Wharf Hotel were under review and details would be shared with the public once an award had been made, he said. Ocean Park took note of its strong reliance on customers from the mainland, saying in a statement yesterday that it had "strengthened its presence on the mainland by opening an office in Beijing, its third representative office on the mainland, and by conducting trade and media visits to key cities, such as Shenzhen, Guangzhou, Shanghai and Changsha . Other major source markets that the park visited last year include Korea, Taiwan, Malaysia, Singapore, the Philippines and India." The park also launched "the world's first-ever reciprocal admission discount programme for theme parks, zoos and aquariums", known as the World Attraction Fun Deal, the statement said. Regarding Hong Kong Disneyland, the South China Morning Post (SEHK: 0583, announcements, news) reported earlier that the rising yuan was not a big problem for Disney, but the city's many infrastructure projects were pushing up demand - and cost - for construction materials, including cement and steel. Costs in other areas would be cut so that Disney's expansion budget would not be exceeded, but the park had no plans to raise entry fees, a Disneyland insider said. Profitability - as measured by earnings before interest, taxes, depreciation and amortisation - was expected to return this year after a HK$70 million loss a year ago, according to the insider.

Public pressure from Hong Kong played a crucial role in yesterday's dramatic twist in the case of jailed melamine milk activist Zhao Lianhai , who will probably be released on medical parole, his supporters say. It is unprecedented for Beijing to release a mainland convict so soon following lobbying from Hong Kong. In an unusual move, Xinhua's Hong Kong branch said yesterday morning that a medical parole application from Zhao was being processed. Zhao, it added, had accepted the court verdict and not appealed. Just two weeks ago, upon hearing the sentence, Zhao was so furious that he took off his prison uniform and slammed it on the judge's desk. Medical parole is applicable to convicts who have served a third of their term. Since Zhao has been detained for a year, he could be released at any time. On Sunday, Xinhua's Hong Kong branch released another report that defended Zhao's controversial jailing on November 10, saying it was specifically addressing "concerns in Hong Kong". Beijing's Daxing District People's Court jailed Zhao for 2-1/2 years for "provoking quarrels and making trouble" by campaigning for the rights of victims of the melamine scandal, which made 300,000 children ill two years ago. Hong Kong politicians from across the spectrum, including pro-Beijing lawmakers and National People's Congress deputies, united in calling for Zhao's release. Li Fangping and Peng Jian , Zhao's former lawyers who were sacked unexpectedly on Monday, said they believed the public pressure from Hong Kong was a decisive factor in Beijing's decision to consider releasing Zhao. "Hong Kong is not only helping one person, but the conscience of China," Peng said. Hong Kong-based journalist Ching Cheong, who was jailed on the mainland for almost three years despite intense public pressure from Hong Kong, said the NPC deputies and members of the Chinese People's Political Consultative Conference (CPPCC) played a vital role. "As a result, Beijing had no choice but to make some concessions," he said. Legal scholar Ong Yew-kim said the decision was a face-saving move by Beijing, which was alarmed by the widespread outrage in Hong Kong but at the same time refused to correct its decision through legal procedures. "The latest development means Beijing has acknowledged that the court ruling was wrong but has no way to reverse it," Ong said. Li said he believed Zhao accepted the deal under immense pressure, but he would respect Zhao's decision. "It's a shame that the verdict cannot be changed through filing an appeal," he said. Xiang Qingyu , whose four-year-old son suffers kidney problems after drinking melamine-laced milk powder, respected Zhao's decision but said the campaign for victims' compensation would be hampered. Zhao's freedom is likely to be restricted after his release and he could easily go back to jail if he refuses to co-operate with the government, Li said. Zhao's wife, Li Xuemei, was under house arrest and denied permission to meet anyone yesterday. Calls to her home went unanswered. But yesterday's twist did manage to defuse the pressure from Hong Kong, with pro-Beijing politicians who had called for Zhao's release softening their stance. Lawmaker Ip Kwok-him of the Democratic Alliance for Betterment and Progress of Hong Kong, whose party joined the signature campaign, said it was "acceptable, although not the best solution". CPPCC delegate Lew Mon-hung, who planned to write to state leaders about Zhao's case, said after a meeting with the central government's liaison office yesterday that "at least the central government still cares about people's sentiments rather than being stubborn until the end". Other Beijing loyalists said medical parole was the most pragmatic solution. Democratic Party chairman Albert Ho Chun-yan said the central government was "masking its rude damage to the legal system with seemingly humane treatment". "Zhao was even deprived of his right to lodge an appeal," he said.

Gold medal-winning veteran cyclist Wong Kam-po passionately appealed yesterday to the public to support Hong Kong's bid to host the 2023 Asian Games. Wong told Chief Executive Donald Tsang Yam- kuen and local sports supremo Timothy Fok Tsun-ting that the SAR should set its sights on the event. "Even if you don't bid for the hosting rights, it doesn't matter. Please tell people the reasons why you don't bid for it," Wong said in Guangzhou. "Some may point out livelihood or [other] tentative issues. But we should set the direction [to host the Games]. What I don't want to see is that when Singapore and Macau bid for it, we then opt to join in the race to save face." Wong, again swarmed by the media, defended his men's road race title at the 2010 Games in Guangzhou on Monday. Earlier this month, a planning sub-committee chaired by Fok slashed its proposed budget for the 2023 bid by more than half to less than HK$6 billion, from the original estimate of HK$13.7 billion to HK$14.5 billion. Public consultation on the bid closes next Wednesday. Meanwhile, Tsang asked Wong to pass on his regards and support to cyclists Jamie Wong Wan- yiu and Diao Xiaojuan, who were both injured in last week's women's points race although plucky Wong went on to take silver in the event. Jamie Wong finished 15th in the women's 100-kilometer individual road race yesterday, while teammate Diao withdrew in mid-competition. "I am relieved to have safely finished the race ... but I regret failing to finish in the top eight," Wong said. The pair took heavy tumbles when several riders smashed into one another last Tuesday. Wong managed to get back on her bike and complete the race, but it later emerged she had fractured a rib in the pile-up. Diao, who dislocated her left shoulder, was immediately taken to hospital. After cheering for Wong and Diao in the women's road race yesterday, Tsang went to the rugby field to watch the SAR team claim silver before returning to Hong Kong in the afternoon.

Cheung Kong Holdings (0001), one of Hong Kong's largest developers, said it will help homebuyers acquire second mortgages from designated banks. The move is aimed at easing the burden on buyers who, after fresh government rules revealed last Friday, have to make a 40 percent downpayment for flats priced at HK$8 million and above. Prior to the new measures, only a 30 percent downpayment was required for the same flats. "The banks have already agreed on the terms to provide such loans for buyers for Festival City II," said real estate director William Kwok Chi-wai. Most units at the firm's Tai Wai project are priced above HK$8 million. Cheung Kong (0001) is now seeking permission from authorities to raise the size of secondary mortgages to 20 percent of a unit's value, up from 10 percent at present. Thus, the actual downpayment for a HK$8 million flat would be 20 percent, as opposed to 40 percent required under the new rules. If permission is granted, the developer's designated banks will offer second mortgages at prime minus 2-3 percent, Kwok said. "As a developer, we just wish to help those potential buyers who are suddenly short on their downpayment owing to the new measures," he said. "We are not a rebelling against the [government's] measures." Kwok said 91 percent of buyers at Festival City II needed a mortgage, but only 5 percent also required a second one. Property agents, however, were aghast. "It is completely goes against the government's property price curbs," said Hendrick Leung Lee-chung, a director and general manager of Centaline Finance. "The government has to clarify [what the purpose of its measures are] before secondary mortgages becomes a trend," Leung added. If the government really wants to help end users, it should beef up supply, such as building more public housing, said Henry Cheng Kar-shun, managing director of New World Development (0017).

E-mails to ministers? They will just ignore you - You know those e-mail addresses of our top bureaucrats? You can find them in the online phone directory of government officials. They're there to make you think our officials are close to the people who pay their exorbitant salaries. They want you to think you can reach them if you want to. But don't waste your time. It's all bull poop. Public Eye sent an e-mail to Secretary for Development Carrie Lam Cheng Yuet-ngor. Within minutes came this auto reply: "This message is to acknowledge receipt of your e-mail message. Thank you." We got two of those, one from her personal e-mail and the other from her bureau's e-mail. So we waited for a proper response ... and we waited ... and waited. We're still waiting, nine days later. The same thing happened when we e-mailed Secretary for Security Ambrose Lee Siu-kwong. That was many months ago. We're still waiting. Well, at least we got auto replies. One reader told us he didn't even get that when he wrote a letter to Lam. But let's give her the benefit of the doubt. Maybe she was away in cloud cuckoo land at the time. Or maybe she was simply too exhausted peering at the people from inside her chauffeured car. President Hu Jintao has told our leaders more than once to listen to the voices of the people. Hu may not understand that when you live in cloud cuckoo land the only voices you hear are your own. And those of the cuckoos, of course.

 China*: China's government widened its anti-inflation campaign on Wednesday ordering a crackdown on speculators it accuses of illegally pushing up commodity prices. The order comes as Beijing enforces measures announced last week to cool food prices that soared more than 10 per cent in October. Analysts expect Beijing to hike interest rates in coming months to rein in inflation even as Washington and other major developed economies try to shore up lackluster growth. On Monday, the government banned hoarding of oil and coal. “Illegal operators are using swindling, conspiring, price-fixing and hoarding to push up commodity prices,” said the cabinet’s National Development and Reform Commission in a statement. Local authorities are ordered to “severely investigate speculative activities and safeguard market and price order,” the agency said. Families spend up to half their incomes on food, and communist leaders see inflation as a possible trigger of unrest. Inflation so far is limited mostly to food, but analysts say price pressure could spread to other areas unless Beijing hikes rates and tightens credit. They blame money flooding through the economy from Beijing’s multibillion-dollar stimulus and two years of massive lending by state banks. Beijing is trying to guide China’s rapid expansion to a more sustainable level after growth eased to 9.6 per cent in the three months ended September, down from a post-crisis peak of 11.9 per cent in the first quarter. The government has ordered banks twice in the past three weeks to raise the amount of money they hold in reserves to rein in lending growth. Last week, Beijing promised to boost vegetable production, pay food subsidies to poor families and increase supplies of diesel needed by farmers and truckers. It said it might impose direct price controls if necessary. Wednesday’s announcement said speculators were driving up cotton prices, which have surged in recent months. It gave no details of other commodities believed to be targeted by price-manipulation. Energy industry analysts say the diesel shortage was caused in part by state-owned oil companies holding back supplies in hopes Beijing would raise retail prices in line with higher global crude costs. In Beijing, city officials will give 100 yuan in food subsidies to each of the capital’s 223,000 low-income residents this month, Xinhua news agency said. Local governments in other areas are handing out subsidies and giving money to university cafeterias to keep meal prices stable, Xinhua said. The government of Shaanxi province in the northwest has allocated 60 million yuan (US$9 million) to help subsidise campus meals, the report said.

Volvo drives ahead in China - A Chinese construction worker in a Volvo AB front-end loader digs in preparation for the construction of a highway near Khunjerab, Pakistan. Volvo's investments in China will expand its production and technology centers in the country. Construction equipment firm hopes to tap into emerging Asian economies - Swedish construction equipment provider Volvo Group is planning to invest more than $100 million in the expansion of products for emerging markets, most of it going to China, said the company's chief executive. "Volvo is committed to supporting our capacity and product offering in China and throughout Asia," said Olof Persson, president and chief executive of Volvo Construction Equipment, on Tuesday. "We will achieve this by a comprehensive program of investments in our Asian industrial operations, a strengthening of our dealer network, and an expansion of our products that are more closely tailored to the specific needs of customers in this region," said Persson at Bauma China, the biennial Asian construction equipment exhibition held in Shanghai. The company will set up a $30 million Volvo Technology Center in Jinan, Shandong province, and invest $50 million into expanding its joint venture production facilities in Linyi, Shandong province, by the end of 2012. The spending comes on top of the $30 million in investment made in the Volvo excavator facility in Shanghai since 2003. "Our business in Asia has doubled this year alone, with China as the pillar contributor," said Persson. The company's excavator business has increased by 135 percent this year. "We must recognize the needs of emerging markets led by China, which requires premium global products offering increased performance and productivity. There is a large proportion of customers who require reliable competitive equipment," he said. The Chinese government announced an investment of 4 trillion yuan ($602 billion) to stimulate the domestic economy in late 2008, with 83 percent of the package going to infrastructure construction. Booming demand led to a boost in the production of construction equipment in China to more than 234,000 units in 2010, accounting for more than half of the world's total. Statistics show that public infrastructure spending in China will grow by nearly 160 percent in the next five years, from the current 2.6 trillion yuan a year to 6.7 trillion yuan in 2015. Persson told China Daily that Volvo Group will continue to support the local premium customer segment with its established Volvo brand. The company's Shandong Lingong brand, a joint venture in which Volvo holds a 70 percent stake, will serve the larger mass market. "Volvo is well positioned in China to capitalize on the huge market opportunity and growth potential," said Persson. "Our dual brand approach offers a unique advantage to meet the needs of a much wider customer base. We will support this approach with products dedicated to this market, using local Chinese knowledge and leveraging an expanded Asian manufacturing footprint," he said.

US, China at odds over North Korea talks - US special envoy for North Korea Stephen Bosworth reads a statement to reporters before leaving his hotel in Beijing on Wednesday. A US envoy called on Wednesday for international condemnation of North Korea over its shelling of a South Korean island, a day after he ruled out resuming six-nation nuclear disarmament talks with the North while it works on a new uranium facility. Washington’s reluctance to resume the talks is at odds with China’s position, which is keen to get back to discussions as soon as possible. Stephen Bosworth has been conducting hurried consultations with North Korea’s neighbours, including China, after a US nuclear scientist reported visiting a new sophisticated uranium enrichment plant that could improve North Korea’s ability to make and deliver nuclear weapons. The situation was made more critical after North Korea on Tuesday shelled a populated South Korean island and the South returned fire.

Liu Xiang wins men's 110m hurdles gold at Asian Games - Liu Xiang of China won the gold medal of men's 110m hurdles in a season best of 13.09 at the Asian Games on Wednesday.

Some 1.2 million mainlanders will visit Taiwan in 2010, a spokesman for the Taiwan Affairs Office of the State Council forecast Wednesday. Spokeswoman Fan Liqing said the mainland-based Cross-Strait Tourism Exchange Association and the Taiwan Strait Tourism Association (TSTA) will meet in the near future to discuss issues concerning mainland tourists' individual visits to the island. "Both sides are researching the possibility of travel to the island by mainland individuals," Fan said at a news conference. Figures from the TSTA show 979,000 mainland tourists had visited Taiwan as of Nov. 4. Concerning the Typhoon Megi-triggered landslides in the island, Fan said the mainland and Taiwan spared no efforts in saving mainland tourists and managing the aftermath. The disaster on Oct. 21 left 20 mainland tourists dead on Taiwan's eastern coastal Suao-Hualien Highway. According to Fan, so far no data show that the tragedy has seriously effected tourism in the island. Fan expressed hope mainland-to-Taiwan tourism develops in a healthy and orderly manner, with related industries providing improved services for mainland tourists. In July 2008, Taiwan began to allow mainland tourists to visit the island on package tours for stays of up to 15 days.

A resident harvests vegetables grown on her rooftop balcony in Hefei, the capital of East China's Anhui province on Nov 23, 2010. City residents are joining the increasing number of people who are growing vegetables on their balcony to cut spending and enjoy pollution-free vegetables.

Property measures inspection launched - Implementation of real estate policy to be checked in nationwide blitz - China's two major ministries in charge of housing development are organizing a large-scale inspection across the country to check the implementation of existing real estate policies, paving the way for a proper adjustment for the next stage. The joint inspection, carried out by the Ministry of Housing and Urban-Rural Development and the Ministry of Land and Resources, will focus on local government's efforts in ensuring land supply, the construction of economically affordable housing and the cleaning-up of idle land parcels, according to industry sources. "Such an extensive inspection will also lay the ground for an accountability system for local government," said Lin Lei, marketing chief of the United States-based real estate brokerage firm Century 21st. According to the latest round of policy tightening, launched in September, local governments will be held responsible for any negligence in the implementation of the central government's real estate policies. The recent plan from the Ministry of Land and Resources show that the country's land supply will reach 180,000 hectares this year, an increase of 135 percent on the 2009 figures. For Liao Yonglin, director of the land-usage department at the Ministry of Land and Resources, the nationwide check will help the ministry decide whether to further increase land supply for 2011. "So far, the land supply plan is going forward as expected," Liao was quoted as saying by China Business News. Meanwhile, the China Banking Regulatory Commission has set up a special team to inspect the implementation of new mortgage policies in different cities. According to Nie Meisheng, director of the Chamber of Real Estate Developers in the All-China Federation of Industry and Commerce, the country's real estate tightening policy will continue into next year. "Property developers should not expect the tightening to end in the short term. In fact, it will probably remain a constant factor as the strengthening and improvement of policy will be a keynote in China's 12th Five-Year Plan (2011-2015)," Nie said. As a result of the continuous tightening, the property market in some cities has shown signs of cooling. According to the Beijing Property Transaction website, the average price of new projects opened in November fell 20 percent month-on-month to 16,662 yuan ($2,486) a square meter, hitting a six-month low. But in Shanghai, the trading price of property reversed a five-week drop and rose as high as 21,283 yuan a sq m during the week of Nov 15 to 21, according to report released by the Shanghai-based Uwin Real Estate Research Center. Compared with first-tier cities, property sales in second- and third-tier cities remain firm. Han Fei, marketing manger of Shimao Group, said that among four residential projects the company launched in Beijing, Tianjin, Yantai and Shenyang, the sales performance in the latter three cities was better than Beijing. "The tightening policies' impact on second- and third-tier cities is comparatively smaller, and more investors are now turning their eyes to smaller cities," said Han.

Ancient merchant ship unearthed in E China - Relics experts inspect an excavation site in Heze, East China's Shandong province on Nov 23, 2010. An ancient merchant ship built during the Yuan Dynasty (1271-1368), with a height of 1.8 meters, length of 21 meters and breadth of 5 meters, was unearthed and dug out from a construction site, and about 110 other relics were discovered nearby on Sept 20, 2010.

A piece of traditional porcelain unearthed from an ancient ship is displayed in Heze, East China's Shandong province on Nov 23, 2010.

US carrier sets off for Korean war drill - Ships on a collision course with Beijing - A US aircraft carrier is leading an armada of warships into the Yellow Sea after Tuesday's fatal North Korean artillery barrage. Chinese analysts and regional diplomats are expecting Beijing to protest at the presence of the USS George Washington for four days of US-South Korean war games starting from Sunday. They warn China is unlikely to condemn North Korea for the attack that killed two Marines and two civilians, pointing to lingering territorial disputes. Beijing yesterday urged North and South Korea to show "calm and restraint" and engage in talks as quickly as possible to avoid an escalation of tensions. "China takes this incident very seriously, and expresses pain and regret at the loss of life and property, and we feel anxious about developments," Foreign Ministry spokesman Hong Lei said. "China strongly urges both North and South Korea to exercise calm and restraint, and as quickly as possible engage in dialogue and contacts." He said China "opposes any actions harmful to the peace and stability" of the Korean Peninsula.

November 25, 2010 Happy Thanksgivings

Hong Kong*: Former Civic Party lawmaker Mandy Tam Heung-man on Tuesday pleaded not guilty in the Eastern Court to allegations that she had offered an advantage to voters.

Li & Fung expands in US with takeover of Oxford Apparel - Trading firm Li & Fung has agreed to take over American branded goods producer Oxford Apparel in a US$121.7 million deal, which will enlarge the group's portfolio in the United States. Li & Fung executive director Bruce Rockowitz said yesterday the deal would fill the missing piece of the jigsaw of the portfolio, which at present consists only of women's and children's wear. It is one of the group's biggest acquisitions in the US. "The Oxford deal opens a whole new area for us," Rockowitz said in an interview yesterday. "It is a higher-margin business than the sourcing ones." The deal will see Li & Fung take charge of designing, distributing and branding Oxford Apparel's branded and private label products including men's dress shirts, sports shirts, casual slacks, outerwear, sweaters, jeans and swimwear and western wear. The products are sold in department stores and through catalogue and online retailers in the US. Li & Fung, which faces higher sourcing costs and slow economic recovery in its core US market, is drumming up acquisitions to meet its target of having US$20 billion in turnover and US$1 billion in core operating profit by the end of next month. In the first six months of this year, the group's turnover stood at US$6.64 billion and the core operating profit was US$337.82 million. To add value to its services and fend off competition, Li & Fung said it would launch contemporary lifestyle collections with celebrities Jennifer Lopez and Marc Anthony by sub-licensing the products exclusively to Kohl's Department Store. The collections contain women's and men's fashion, accessories and will be extended into home products eventually. Li & Fung shares dropped HK$1, or 2.3 per cent, to HK$43 yesterday. The Hang Seng Index tumbled 627.88 points, or 2.7 per cent, to 22,896.14.

DFS Group, a leading duty-free retailer, has leased 45,000 square feet of retail space at Hysan Place, formerly the Hennessy Centre, in Causeway Bay. The company yesterday said it had reached agreement with Hysan Development (SEHK: 0014) to open a concept store at Hysan Place, which was expected to be ready in the second quarter of 2012. DFS will be one of the anchor tenants of the centre. The shop will be designed and stocked to appeal to younger shoppers, with the ground floor featuring an 18,000 sq ft beauty store. Explaining the reasons for picking the location, Ed Brennan, the chairman of DFS, said: "Causeway Bay is the leading shopping district for local residents in Hong Kong, and a major attraction for tourists." DFS operates two outlets in Tsim Sha Tsui and a shop at Hong Kong International Airport. The store at Hysan Place will be its first on Hong Kong Island. Hennessy Centre previously was one of the flagship properties in Hysan Development's portfolio. Japanese department store Mitsukoshi was the anchor tenant at the shopping centre for 25 years until Hysan Development demolished the building in 2006 and redeveloped it into Hysan Place. The project, located at 500 Hennessy Road, will be a 40-storey office and retail building, with a gross floor area of 710,000 sq ft. It will provide at least 15 retail floors, which are also scheduled to open in the second quarter of 2012. Helen Mak Hoi-lun, the director of retail services at property consultant Colliers International, said: "DFS Group has not had stores in Hong Kong for many years." She said the company's latest expansion in Causeway Bay showed that retailers were optimistic. With the increase in mainland visitors, she said, retail rents had grown every month so far this year. "Retail rents in the four shopping districts - Tsim Sha Tsui, Causeway Bay, Central and Mong Kok - have risen 15 to 20 per cent so far this year. Shop rents in prime locations have all increased more than 20 per cent, better than our previous forecast," she said. Mak expects the growth in retail rents in core shopping areas to continue next year.

Speculators may switch to office sector - As curbs on flats hit home, analysts say capital will be pumped into commercial market - New measures to curb residential property speculation have raised concerns about the risk of price inflation in the commercial sector. Hit by higher stamp duties levied on housing gains, some speculators may now decide to focus on short-term trades in the office and commercial markets - a response that could throw into doubt the government's strategy to cool property prices. While accepting that the stamp duties on quick resales introduced last week will slow the residential sector in the near term, investors and analysts believe capital will continue to flow into Hong Kong and property will remain a desired asset class. "Liquidity is the fundamental that the government cannot change," said Goodwin Gaw, the founder of Gaw Capital, which oversees private equity funds of more than US$1 billion. Given the ongoing strong liquidity, strata-title grade A office properties would be in favour in the short term since gains made on these investments will not be subjected to the additional stamp duty imposed on housing, Gaw said. The government on Friday announced it would levy an additional stamp duty on resale properties held for less than two years, with rates varying from 5 to 15 per cent of property values, depending on the holding period. This is in addition to the current stamp duty, capped at 4.25 per cent. The Hong Kong Monetary Authority also lowered maximum loan-to-valuation ratios for residential, non-residential and property under company names. The measures have had an immediate impact on demand, with transactions of secondary-market homes in 10 major housing estates falling nearly 80 per cent to just 14 completed deals at the weekend. In some popular estates, such as Taikoo Shing, Kornhill and South Horizons, there were no deals done at all.

Trial of TVB executives set for next June - TVB general manager Stephen Chan Chi-wan leaves the District Court in Wan Chai on Tuesday. Television Broadcasts (SEHK: 0511) Limited (TVB) general manager Stephen Chan Chi-wan and two other defendants on Tuesday pleaded not guilty in the District Court to accepting or offering advantages, and conspiring to defraud TVB and its celebrities. A trial date for Chan, his former assistant Edthancy Tseng Pei-kun, and TVB’s head of business development Wilson Chan Wing-suen, has been set for June 21 next year, local media reported. The three are each on bail of HK$100,000. The accused now face a total of five charges brought by the Independent Commission Against Corruption (ICAC) after prosecutors earlier this month decided to withdraw three further charges. The withdrawn charges related to the acceptances of advantages of about HK$15,111 in July 2009 and alternative counts of accepting or offering a bribe. Prosecutors made the decision after reviewing evidence against Stephen Chan and Tseng, now director of the Idea Empire Advertising and Production Company. The defendants are prevented from talking to witnesses - who include celebrities Charmaine Sheh Sze-man, Sharon Chan Man-chi, Skye Chan Sin-yeung - and TVB executives. The trial is expected to last 20 days. A total of 30 witnesses will testify and 100 pages of documents will also be submitted to the court. Last Tuesday, Stephen Chan was allowed to resume work at the television station - several months after he and his two co-defendants were charged in a bribery and fraud case. TVB said in a statement Stephen Chan would not be involved in managing or casting any celebrities employed by the television station because the charges brought against him by the ICAC relate to these activities.

Hong Kong's Mandarin Hotel to host dinner costing nearly HK$7,000 (US$900) per head - The Mandarin Oriental said on Tuesday it was planning to host a dinner costing nearly HK$7,000 per head. US-born chef Thomas Keller is being flown in by the Mandarin Oriental to cook for 450 diners – in what the hotel said would be Hong Kong’s most expensive meal this year. A top-priced, 11-course dinner during Keller’s November 29 to December 2 stay will set gourmands back HK6,888 each, excluding service. Slightly more frugal diners can enjoy lunch for just over HK$2,000. The hotel said it was flying over the three Michelin-starred chef, his seven-strong team and crate loads of ingredients for the four days. Tables have been booked for weeks, according to the hotel, which, in a statement, hails Keller’s food as “a work of art,” adding that “diners can expect to enjoy an exceptional menu full of flavour and life.” Keller, who runs the exclusive French Laundry and Per Se in the US, is laying on a French-American menu that ranges from oysters, caviar and truffles to chocolate brownies with wine to match. The cost of the Mandarin’s Keller dinner is far from Asia’s most expensive. According to Forbes Asia, which publishes an annual rich list, Bangkok’s Mezzaluna sold a 10-course meal in 2007 for US$30,000 (HK$233,400) a head. Singapore’s Les Amis charges an average of US$182 a head, while Tokyo’s Aragawa dishes up Kobe beef at US$800 a pound, Forbes said on its website.

 China*: The Hong Kong and Shenzhen governments on Tuesday launched stage one of a public consultation on transforming the restricted border zone in Lok Ma Chau Loop into a hub for higher education. The two-month public consultation would collect views from both Hong Kong and Shenzhen residents on the plan to develop higher education and research centres in the Loop Hong Kong deputy-director of planning Ling Kar-kan said universities and education institutions in both cities had showed an interest in developing schools in the area. Ling said the Loop could accommodate a school larger than the University of Hong Kong. “But how tertiary education institutions would be selected and how they would operate... that would need to be furthered discussed and studied,” he told local radio. The 87-hectare plot, between the Lok Ma Chau checkpoint on the Hong Kong side and the Huanggang crossing on the mainland, was formed by straightening the course of the Shenzhen River more than a decade ago.

Wen, Putin seek to break deadlock over gas prices - Premier Wen Jiabao leads his delegation prior to talks with Prime Minister Vladimir Putin. The two leaders will also attend a 13-state summit that aims to double the tiger population. Premier Wen Jiabao met Russian Prime Minister Vladimir Putin in St Petersburg yesterday to try to settle a long-running disagreement over gas pricing. Russia, the world's biggest energy producer, is eager to increase sales of oil, gas and metals to the world's fastest-growing big economy. But wrangling over gas prices has delayed construction of a key gas pipeline to China. Wen and Putin, who also talked briefly on Monday, met on the heels of Russian President Dmitry Medvedev's three-day visit to China in September, when he and President Hu Jintao launched a cross-border pipeline linking the world's biggest energy producer with the world's largest energy consumer. According to the Kremlin, the oil that Russia will send to its neighbour for 20 years starting from next year could be worth US$150 billion. Russia says that China should pay prices similar to those that Gazprom charges European customers, but Beijing wants a discount. The sides were about US$100 per 1,000 cubic meters apart, according to Chinese officials last week. "This topic will figure in the negotiations, but it is too early to speak of any possible results," Putin spokesman Dmitry Peskov said. Russia is due to start exporting crude oil to China next year via the new East Siberian-Pacific Ocean pipeline. Gazprom will sell 30 billion cubic metres of gas per year to China from 2015 via this route. Wen and Putin will also attend a 13-state summit that aims to save the tiger and double the big cat's population by 2022. Peskov said that 11 agreements, ranging from oil supplies and refining to intellectual property and border issues, would be signed during Wen's visit. "A large package of intergovernmental, interministerial and commercial agreements is being prepared for signing," the Russian government said, adding that the leaders would discuss joint work in trade, science and the environment. Putin said after yesterday's meeting that the Chinese yuan would start trading on Russian exchanges at the start of next month after China allowed the yuan to trade against the rouble in the interbank market from Monday. "This is a serious step towards creating better conditions for trade and economic relations," Putin said. In the wake of the global financial crisis, China and Russia have called for the US dollar's role in the financial system to be diluted. OAO Sberbank, Russia's largest lender, had reached an agreement with Export-Import Bank of China on opening a US$2 billion credit line, Putin said. The money would be used to finance "major joint economic projects," he said. Russia's Atomstroyexport nuclear reactor builder also signed a contract to build two more reactors at China's Tianwan nuclear power plant. Russia's first 1,000MW nuclear reactor at Tianwan in Lianyungang , Jiangsu , began operation in June 2007 after numerous delays, while a second went into operation in September that year. Russia has been competing for a slice of China's nuclear power market as Beijing plans an increase in the number of its nuclear power stations to reduce its dependence on coal. China overtook Germany as Russia's second-largest trading partner in the first six months.

Chinese travelers arrive in Los Angels on explore-the-world trip by driving China-made Dongfeng Passenger Vehicle - A group of Chinese travelers have arrived in Los Angeles in their effort to "explore the world" by driving through more than 20 countries from China. The "explore the world" event is sponsored by Dongfeng Passenger Vehicle Company in China. "I feel proud to be a Chinese driving a China made car to explore the world," said Yu Xiaofeng who drove a Dongfe ng S30 all the way to Los Angeles from Mexico City. Before Yu and his group, no other China made cars have ever been driven on the freeways in the United States. "I am proud of the Chinese made Dongfeng car," Yu told a group of reporters in a hotel close to the Los Angeles International Airport (LAX) Monday, adding that he has experienced no mechanical problems from Mexico City to the U.S. With the English sign of "Explore the World", two Dongfeng cars have met no trouble all the way from Texas to Phoenix, from Salt Lake City to Las Vegas and from San Francisco to Los Angeles. "Those cars have proved to be as good as other cars running on the freeways in the U.S. and other countries," said Yu, adding that some times he has to drive over 1,000 kilometers a day under poor weather conditions, and sometimes on very bad road conditions in countries such as Kazakhstan. The only trouble he had was in Kazakhstan when he had flat tires on both sides at night because of the poor road condition.

Chinese 100m sprinter makes history at Asiad - Hosts China claimed a historic gold medal at Asiad on Monday as sprinter Lao Yi became the first Chinese to lift the men's 100 meters title at Asian Games. With the absence of Qatar's Samuel Francis, who set an Asian record of 9.99 seconds in 2007, Lao was the favorite of the race and clocked 10.24 seconds to win the title. Francis was disqualified in the semifinals due to false start earlier Monday. "I am very excited," said the winner. "I did a lot of preparation before the Asian games. I had expected to break the national record, but I failed this time."

NATO chief Secretary General Anders Fogh Rasmussen eyes closer ties with China - NATO Secretary General Anders Fogh Rasmussen (R) speaks during an exclusive interview with Xinhua News Agency at the NATO headquarters in Brussels, capital of Belgium, on Nov. 22, 2010. Though NATO does not mention China in its new Strategic Concept approved just days ago, NATO's chief says he looks forward to strengthening ties between China and the Western military alliance. In an exclusive interview with Xinhua on Monday, NATO Secretary General Anders Fogh Rasmussen said NATO and China should talk and consult with each other in a number of areas as China becomes an emerging force. As NATO reaffirms its commitment to the principles of the U.N. Charter and China is one of the permanent members of the U.N. Security Council, "more regular contacts" should be conducted between NATO and China in the future, he said. NATO has gradually stepped up its ties with China in recent years and NATO Deputy Secretary General Claudio Bisogniero visited China last year, he said. "I would very much like to further operate these political consultations. And I think that could be the next step," the NATO chief said. On the Strategic Concept which was unveiled at the Lisbon summit three days ago and is to guide NATO for the next decade, he said that compared with the concept unveiled in 1999, NATO members pledged to improve their capacities to counter emerging threats coming from missiles, cyber and terrorism. Realizing that there is no military solutions solely to conflicts, NATO needs to enhance partnerships and engage with major players around the globe, Fogh Rasmussen said.

China order eases Rolls-Royce woes - A visitor attends an aviation exhibition during the Airshow China 2010 in Zhuhai on November 17. British engine maker Rolls-Royce won a US$1.8 billion order from Air China (SEHK: 0753), offering some respite to the company which had been hit by safety fears over another of its engines. The world’s second-largest maker of aircraft engines said on Monday it had received an order from Air China to provide Trent XWB engines for 10 Airbus A350 XWB aircraft and Trent 700 engines for 10 Airbus A330 planes. Those are different engines to the Trent 900, one of which failed on a Qantas Airbus A380 flight this month, forcing the aircraft to make an emergency landing. The Trent XWB is the only engine that can power the Airbus A350 XWB planes, making the order an inevitable follow-on from the purchase of such an aircraft. Still, the company will hope today’s order will ease some of the negative publicity surrounding it following criticism by Qantas and others over its handling of the QF32 flight. It is under pressure to clarify how many Airbus A380 planes must have their engines replaced and how long that will take. “Bearing in mind confidence is at a low then any good news has to be positive for the price. We should welcome it for what it is, a very large order for a well-proven set of engines,” said BGC analyst Howard Wheeldon. “In troubled times such as this, it’s super news and it’s great news for the UK in terms of exports as well,” he added. Earlier in November, Rolls-Royce won a US$1.2 billion order from China Eastern Airlines (SEHK: 0670). That deal coincided with a trip to Beijing by British Prime Minister David Cameron, who is looking to double Britain’s trade with China by 2015. Rolls-Royce is already well established in China, where it has a 56 per cent share of the market for large civil aero-engines. The company has had more than US$4.5 billion worth of orders for Trent 700 engines since the start of July.

Liu maintains gold medal monopoly in women's walk - China's Liu Hong, left, celebrates with bronze medal winner Li Yanfei after clinching the gold medal in the women's 20km walk in Guangzhou on Tuesday. Liu Hong defended her 20-kilometre walking title in style on Tuesday to maintain China's gold medal monopoly in women's race since it was introduced to the Asian Games in 1986. Local athlete Liu, who took bronze at the last year Berlin World Championships a year after finishing fourth at the Beijing Olympics, clocked a season’s best of 1 hour 30 minutes and 6 seconds (1:30.06) on the course outside the Aota Main Stadium to win gold. Japan’s Masumi Fuchise took silver in 1:30.34, with Li Yanfei, also of China, claiming bronze in 1:32.34 in a race which featured just six competitors. “We were well prepared,” said Liu, who with her teammates have been training under the watchful eye of legendary Italian coach Sandro Damilano in northern Italy. “We can predict all the conditions that might happen in the competition so I’m not surprised to get two red cards,” she said of the warnings she received for failing to keep minimum contact with the track. “It’s quite normal in race walking competition. We have a full plan and I was confident.” The mainland pair, Fuchise and the second Japanese competitor Mayumi Kawasaki quickly built up a lead on the two other competitors in the race, South Korean Jeon Yeong-eun and Tun Kay Khing Myo Tun of Myanmar. The quartet went through the 6-kilometre mark neck-and-neck, but by the halfway mark Kawasaki had fallen half a minute off the lead pace of 45 minutes 12 seconds. Two kilometres further on and it was Li, the East Asian Games champion, fifth this year’s world race walking cup in Chihauhau, who fell out of gold medal contention, slipping 17 seconds back from the lead duo of Liu and Fuchise. Fuchise, who was seventh at the Berlin worlds, stuck with the local favourite until the 16-kilometre mark. But the 23-year-old Liu then moved up a gear and motored away from the Japanese walker, putting 15 seconds between the two of them in the space of 2 kilometres. “In the first half, I closely followed Fuchise and in the last four kilometres I began to go at my own pace,” Liu said. Liu’s tactics mirrored exactly those of her teammate Wang Hao, whose spurt with 4 kilometres to go ensured him gold in the men’s 20-kilometre race walking event on Sunday. Inside the Aota stadium, Uzbek Yuliya Tarasova remained in pole position in the heptathlon standings with just one of the seven events left, the 800 metres, which will be raced in the evening session. The 24-year-old Asian champion picked up from where she left off on Monday after top-scoring in the first four events, dominating the opening long jump with best of 6.24 metres. Tarasova, whose overnight total of 3,570 points was 353 clear of Japan’s Yuki Nakata, then managed a best of 39.18 metres in the javelin to take her points tally to 5,146. Nakata threw furthest in the javelin, her effort of 44.67 metres consolidating her second place on 4,814 points, now 332 off Tarasova. India’s Pramila Gudandda sat in third spot on 4,745 after throwing 41.61 metres in the javelin. On the opening day of competition, Tarasova upstaged all her rivals by clocking 14.02 seconds for the 100 metres hurdles, managing 1.74 metres in the high jump and 12.92 metres in the shot put, and timing an impressive 24.12 seconds in the 200 metres.

High-end house prices in Shanghai and Beijing are forecast to overtake values in Hong Kong in five to 10 years time, according to UBS. Shanghai and Beijing's luxury home prices may increase 15 per cent each year to overtake Hong Kong in the next five to 10 years, Joe Zhang, deputy head of China investment banking at UBS, said. The mainland's tightening measures would not stop prices from rising and might only delay the gains, he said. Monetary policies might also be eased over time to avoid a rise in unemployment, Zhang said. "It doesn't matter what the government is doing, whether we have 100 new measures or 10,000 new measures," he said. "In the long term, all these are noises and will disappear, and only one variable matters - money supply." The mainland, which last month raised interest rates for the first time in three years, suspended mortgages for third-home purchases and pledged to speed up trials of property taxes to restrain foreign capital and cool property prices. The central bank also ordered lenders on Friday to set aside larger reserves for the second time in two weeks, draining cash from the financial system to limit inflation. The country's M2, the broadest money supply measure, rose 19.3 per cent last month from a year earlier, the most since May. Prices of luxury homes in Beijing and Shanghai, or the top 5 per cent to 10 per cent of each market, will continue to climb as values of mid- and low-end real estate were also rising, Zhang said. Home prices rose for a 17th month in October gaining 8.6 per cent from a year earlier, the government said. Hong Kong announced more measures on Friday to curb speculation after prices surged more than 50 per cent since the start of last year. The city imposed extra stamp duties and increased deposits for home purchases, a day after the International Monetary Fund warned that asset inflation could derail the city's economy. Residential home values in Hong Kong have jumped 52 per cent since the beginning of 2009 and surpassed a 1997 peak, according to an index compiled by Centaline Property Agency. The mainland is unlikely to introduce further property-specific measures as the government shifts its policy focus to controlling inflation, Citigroup said in a report last week. More than 1 trillion yuan (HK$1.17 trillion) would likely go into other areas if the government screened out property investment and speculation demand, Citigroup forecast. There are signs the government measures are starting to have an effect. The increase in October home prices was the slowest in 10 months, official data showed, while sales volume dropped 11 per cent.

Chinese premier holds talks with Russian counterpart - Chinese Premier Wen Jiabao and his Russian counterpart Vladmir Putin exchanged views on further expanding and deepening bilateral ties.

Family of the 58 victims killed in a high-rise fire last Monday in Jing'an District will receive 960,000 yuan (US$144,546) each in compensation and subsidy, a local official said this afternoon. And the 71 injured and other residents who suffered damages will also be compensated based on injuries and losses. "We will fully pay for their damages according to market prices," said Zhang Renliang, Jing'an District director. Zhang said residents can choose certain products on a list or can ask a third party to evaluate their properties and offer collected evidence for later compensation. Apart from the gutted building, two adjacent buildings whose residents are sheltered in nearby hotels are getting exterior cleaning and repair, but their residents can not move back until experts have finished an assessment, said Zhang.

A banner ad for switching mobile carriers without changing numbers is seen at a China Unicom outlet in Haikou, south China's Hainan Province. Hainan and Tianjin Municipality yesterday launched the service that allows mobile phone users to switch among different carriers with numbers remaining unchanged. The move, expected to encourage competition in the telecommunications market, is the first time Chinese users have access to "portable" numbers among different carriers. However, to protect China's own 3G technology and industry, China Mobile's 3G users are not allowed to switch, according to the Ministry of Industry and Information Technology.

Swan paradise in E China's Shandong - The lake, which is an ideal habitat for swans in winter, attracts thousands of swans from Siberia every year to spend winter.

A to-be-retired soldier pats his patrol dog at a farewell ceremony held at Ningxia Paramilitary Police Corps in Yinchuan, Ningxia Hui autonomous region, Nov 23, 2010. More than 160 soldiers of the corps are to be retired from military service.

November 24, 2010

Hong Kong*: Home sales are plummeting, and the government is being criticised for hurting not only speculators but end users with its latest measures to cool the property market.

The Ministry of Finance will sell 8 billon yuan (HK$9.33 billion) worth of sovereign bonds in Hong Kong next Tuesday, starting with a tendering process by institutional investors. p to 5 billion yuan will be allocated for institutional investors in tenors of three, five and 10 years, with bidding carried out through a coupon-based tender system for price discovery. The coupon yield for each series of bonds will accordingly be set to the highest bid for interest rates accepted during the competitive process, a Hong Kong Monetary Authority spokesman said. The other 3 billion yuan will be allocated to retail investors in two-year tenors through bank sales, the ministry said, without disclosing details. This is the second yuan-denominated sovereign bond sale by the Ministry of Finance in the local market, but the first time that a tender system will be used for price discovery. Last time, in September 2009, all prices were set through bookbuilding. The tender arrangement is a way to help set up a transparent bidding system as well as create a better yield curve for the bond market, the HKMA said. Institutional bidders need to send their bids through the authority's Central Money markets Unit between 9.30am and 10.30 am next Tuesday. Results and the final interest rate will be announced before 5pm the same day. For the retail portion, the HKMA said it has not decided if the institutional yield offered will be used as the sole reference. "Details would depend on the Ministry of Finance's decision, which will be out soon," said Shou Fugang, chief executive of the Bank of Communications Hong Kong - arranger of the bond sales. Hong Kong's Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung said the government will hold further talks with the ministry to have it issue bonds regularly in the territory. Analysts were cautious on the bonds. "Whether the second sales of sovereign bonds in Hong Kong could activate the bond market is too soon to tell," said Marshall Mays, founder of Emerging Alpha Advisors, a fund management company covering 15 Asian markets. Bank of China Hong Kong (2388), BoCom Hong Kong and the Industrial and Commercial Bank of China (Asia) are joint lead managers and bookrunners for the retail portion of the bond issue.

Error nets HK$1.5b bonus for developer - Cheung Kong gets extra space, cheaper premium - Cheung Kong (Holdings) (SEHK: 0001) gained an unexpected bonus in its redevelopment of the historic Marine Police headquarters in Tsim Sha Tsui: an additional 1,310 square meters of valuable floor space not counted in the original survey. And when the government negotiated a deal with the company last year for it to pay a premium for exceeding a limit on new construction during the site's makeover, it got another bonus: a charge of HK$63,100 per square meter instead of the market price of HK$1 million. In all, the property giant apparently netted a windfall of HK$1.5 billion, a review of the project shows. In response to inquiries, the Lands Department gave no details of how the premium was assessed. Neither did it say why and how officials incorrectly measured the size of the historical buildings in the first place. When Cheung Kong subsidiary Flying Snow won the tender in May 2003 to revitalize the abandoned Grade 1 monument, the floor space in the existing buildings was estimated at 4,300 square meters. But building plans displayed for public inspection after completion of the project, now dubbed 1881 Heritage, show the existing buildings contain 5,610 square meters - almost a third more space than the original estimate. This astonished a leading surveyor, who said these days mistakes of such magnitude are almost unheard of. "If you're talking about surveys conducted decades ago, I can understand it because the equipment used in those days was not as advanced as what we are using today. But when the case is only a few years ago, I don't understand how it happened," Charles Chan Chiu-kwok said. Chan, managing director at Savills Valuation and Professional Services for Greater China, said the average price of retail properties at Canton Road last year was HK$1 million per square metre, making the extra space in the historical buildings worth more than HK$1.3 billion.

Controversy as Wong makes history - Korean team cry foul as veteran HK cyclist claims third straight road-race gold - Wong Kam-po became the most successful road cyclist in Asian Games history when he won his third individual road-race title in controversial fashion yesterday, becoming the only rider to successfully defend the title. South Korea's Park Sung-baek, who was third at the Doha Games four years ago, was first across the line in the 180-kilometre, nine-lap contest in Guangzhou, clocking four hours, 14 minutes and 54 seconds, and beating Wong in a photo-finish. But Wong immediately raised his right hand to register a protest. A judges' review found Park had interfered with Wong's sprint finish and the Korean was relegated to 19th place. Park's coach, Cho Keon-haeng, said the judges' committee was stacked against his rider. "There are three to four referees from Hong Kong, and one or two from China, which makes Chinese referees the largest proportion of the whole officials' team," Cho said. "Even if Wong was not from Hong Kong, let's say he was a Japanese rider, their final decision would still go against Korean riders, as the chief judge is Japanese." Cho said his rider was innocent. "Park crossed the finish line first He was just a bit off his original line and did not do it on purpose. And why should a sprinter keep straight in the final moment anyway? The wind was quite strong and changing direction. "They gave the medal to Wong because he's from Hong Kong." Wong disagreed. "I knew that I had a good chance to win because I have a fast enough sprint. Park was obviously swerving at the end of the sprint, and I was sure he broke the rules." Wong said he was "a little worried but confident" while waiting for the judges to consider the case. "I didn't think too much during the wait," he said. "No matter what the result was, even if I only got second place, I would have been pleased and would have respected the judgment. I feel very happy in all." Takashi Miyazawa of Japan was promoted to second place while the bronze went to China's Zou Rongxi. Wong, 37, won the same event at the 1998 Bangkok Games and in 2006 in Doha. With a bronze at the 2002 Pusan Games, he has now clinched four road-race medals in four consecutive Asiads. No one else has won more than two medals in the event. Wong's victory gave the Hong Kong delegation their eighth gold medal and their fourth in cycling. While the victory was a perfect ending to Wong's fifth Asian Games campaign - as a 24-year-old he took part in the 1994 Games in Hiroshima, where he came fourth behind three riders from Kazakhstan - he was undecided on whether he would take part in the same event at the Incheon Games in 2014. "I will continue to ride if I am capable of doing so," he said. "I don't think age is a big problem if I enjoy riding. But I would also like to say the youngsters are coming up very strongly in the Hong Kong team and many of them are ready to take over the baton from me." Hong Kong coach Shen Jinkang said he considered Wong to be a true hero after watching the veteran lift his third Asian Games title. "He is 37 years old and I don't know how many cyclists here today are this age," Shen said. "When Wong won his first title in 1998, he was referred to by the media as the `Asian Cycling King'. Honestly speaking, he did not live up to that reputation until he won his third title here today. It is an unbelievable victory for a cyclist at such an age. "I was a bit worried about his fitness as he made at least five attacks throughout the race, but though all these efforts were in vain, he was able to make a strong sprint to the finish. "This was the most difficult race of his three victories, and he once again provides a great role model as a true sportsman for many Hong Kong people." Wong's next target will be qualification for the London Olympics in 2012, and with the points race - in which he won silver in Guangzhou - being dropped from the Olympic program, he intends to focus on the individual road race.

Directors win for good governance - Justin Chiu Kwok-hung won as a non-executive director of a non-Hang Seng Index company at the Institute of Directors awards yesterday. The Hong Kong Institute of Directors unveiled the winners of its directors of the year awards yesterday, highlighting the positive relationship between a company's good governance and its performance. "Companies with a good corporate governance standard are among the first to stand out and reap the fruit of prosperous times," said Kelvin Wong, the institute's chairman. "The awards wish to honor those who achieve sustainable growth adhering to an extremely high standard of corporate governance in today's vastly competitive business environment." Among companies listed on the Hang Seng Index, China Resources Enterprise (SEHK: 0291) and Esprit Holdings (SEHK: 0330) won in the corporate boards category. Edward Chow Kwong-fai of Cosco Pacific (SEHK: 1199) was named a winner in the non-executive director category. Thomas Jefferson Wu, managing director of Hopewell Holdings (SEHK: 0054), and Lu Dongshang, chairman of Zhaojin Mining Industry, were among the winners in the executive director category for non-Hang Seng Index constituents. Justin Chiu Kwok-hung, chairman of ARA Asset Management (Fortune), won as a non-executive director. It was the 10th year the awards were held, and 12 winners were announced overall. The theme for this year was "Better Corporate Performance Through Strengthened Corporate Governance". Next year's theme will be "Enhance Director Professionalism through Board Self-Appraisal System". Professor Chan Ka-keung, the secretary for financial services and the treasury, said effective corporate governance by Hong Kong's boards and directors plays a crucial role in the city's development as a financial hub. "Thanks to our robust regulatory regime, Hong Kong's local financial system has emerged from this global financial crisis without any systemic problem," he said. "We will continue to improve our regulatory framework to enhance Hong Kong's status as a first-class international market."

Brokers will have to get used to taking shorter lunch breaks and going to work earlier after the Hong Kong stock exchange yesterday announced it would extend trading hours from March next year. Securities dealers will take an hour-and-a-half lunch break from March 7 next year and around a year after will just have an hour to finish their lunch. They currently have a two-hour break from 12.30pm. They will also have to start work earlier because trading hours will begin at 9.30am instead of 10am. Extending the trading hours will help the exchange stay competitive, Hong Kong Exchanges and Clearing (SEHK: 0388, announcements, news) chairman Ronald Arculli told reporters, adding that the decision to introduce longer trading hours had been well received following consultation with the financial industry. Rather than cutting the lunch break to just one hour next year straight away, Arculli said it will be easier for everyone if it was reduced by half-hour next year and another half-hour the year after. From March 7, 2011, trading will be from 9.30am to noon and then from 1.30pm until 4pm. And from 2012, trading begins at 9.30am until noon, starts again at 1pm and finishes at 4pm. If turnover goes up significantly, the shareholders of the exchange including the government are likely to be impressed with Charles Li Xiaojia, who has taken up the baton from Paul Chow Man-yiu as chief executive since late last year and has been pushing for reform of trading hours. Major markets such as the New York Stock Exchange and Nasdaq trade for 6-1/2 hours a day. The Irish and Frankfurt exchanges, which trade for 8-1/2 hours, have the longest opening hours. After the changes to opening hours in Hong Kong are completed in 2012, the bourse will trade for 5-1/2 hours from the current four hours. Li wants Hong Kong markets to be more closely aligned with the trading hours of Shanghai and Shenzhen bourses. Most brokers have anticipated the change. There have been some protests over the shorter lunch breaks and concern that longer trading hours may not really result in higher stock turnover, however. Many fund managers and brokers use the long midday break to discuss business with clients and opponents of the plan to change trading hours worry it may disrupt opportunities to hold these meetings. Christopher Cheung Wah-fung, chairman of the Hong Kong Securities Professionals Association, said he supported the decision to have longer trading hours and shorter lunch breaks. "I do think that introducing a one-hour lunch break straight away would be pushing it a bit for many brokers," said Cheung. "It's better to do it one step at a time and this would allow them to get used to it and also we can see if turnover really changes as a result of longer trading hours." Ricky Tam Siu-hing, the chairman of the Hong Kong Institute of Investors, supported the decision to cut the lunch hour break because he said it would bring the local market more in line with the trading hours of its regional peers. "It can reduce volatility and make the [transition] from the morning session to afternoon session smoother," Tam said. The Hong Kong market currently lags the mainland and Japanese stock markets in reopening following the lunch break. That has led to some knee-jerk trades by investors taking stock of regional trade movements. "Brokerage houses welcome [the change] because they can have more business but for the stock brokers they may have to work more," Tam said. "They may have to change their working pattern."

 China*: Hong Kong Airlines, controlled by the mainland's fourth-largest airline Hainan Airlines, is planning to raise HK$5 billion with a share flotation in Hong Kong. The move is aimed at funding aircraft acquisition that will increase its fleet beyond 40 aircraft by 2012, Yang Jianhong, president of Hong Kong Airlines said. The carrier, which operates more than 30 routes from the city, has ordered 33 widebody aircraft from Airbus - 18 Airbus 330s and 15 A350s this year. It also has 30 A320s on firm order for future delivery. The total cost for the planned purchase will exceed US$6 billion, Yang said yesterday on the sidelines of a press conference announcing company events to celebrate 100 years of aviation in the city next year. With aviation industry growth rebounding this year, Hong Kong Air has been able to move back into the black. In the first half, the carrier generated an operating profit that amounted to "tens of millions", said Yang. The profit still does not match the airline's huge capital commitment for its aggressive expansion plan, which is why it needs to tap the capital market for funds. Two to three international investment banks are in talks with the airline over the initial public offering (IPO), scheduled in the third quarter of next year, Yang added. Grand China Airlines, the parent of Hainan Airlines, has also dusted off its listing plan, which had to be shelved two years ago as a result of the economic crisis, Yang added. "Grand China aims to raise more than HK$10 billion in Hong Kong in the first half of next year," he said. The application for its IPO as a "red chip" company - a mainland company registered overseas - has been approved by the State Council, Yang added. The listing will bring HNA Group's listing vehicles in Hong Kong to four, along with Hainan Meilan International Airport and Hong Kong International Aviation, which is doing a back-door listing through a Hong Kong-listed toy company. Grand China is the holding company of Hainan Airlines, China Xinhua Airlines, Shanxi Airlines and Changan Airlines. Hong Kong Airlines operates mainland routes to Beijing, Shanghai and Hangzhou, and regional routes to Denpasar, Tokyo, and Moscow. It now operates 18 aircraft. The company's headcount has grown to 1,200. It recruited 700 people this year, of which 300 to 400 are cabin crew. It will hire more than 400 people, including cabin crew and ground service workers, next year. The carrier will also recruit 80 pilots next year after adding 130 pilots to its team this year.

Tesco to flood China with hypermarkets - Shoppers visit a Tesco store in Beijing. Tesco, the world's No 3 retailer, plans to quadruple revenue in China to about £4 billion (HK$49.54 billion) over the next five years by more than doubling its number of hypermarkets to more than 200. The British group said on the second day of a trip with analysts to Asia that its expansion in China would deliver significant levels of profitability and returns, though it did not provide figures or target dates. Tesco runs 82 hypermarkets and four "Lifespace" shopping malls stretching along eastern China. A business of more than 200 hypermarkets would be similar in size to Tesco's operation of its largest "Extra" stores in its main British market. China offered an "unrivalled opportunity in a large, rapidly growing market", Tesco said in slides published on its website, noting the country will have 221 cities of more than 1 million people by 2025, compared with 35 in Europe now. But some analysts warn about the cost and risk, as rivals such as Walmart and Carrefour are also expanding in China and Tesco's returns on overseas investments have fallen. Yesterday, the group said overseas returns were starting to improve and would build as economic recovery grows and its assets mature. Tesco said it aimed to have more than 150 leasehold hypermarkets by 2014-15, as well as around 50 freehold "Lifespace" shopping malls, each with a hypermarket, and to have a further 30 malls under development. It confirmed plans to invest about £2 billion in "Lifespace" malls, which are mainly aimed at second- and third-tier cities, over five years, with development partners providing a further £3 billion to £4 billion. The malls, whose Chinese name Le Du Hui means "Happy Fun Shopping Place", typically occupy 75,000 square metres spread over four floors, with a Tesco hypermarket at the bottom and other shops, restaurants and a cinema on upper levels. Tesco said around 600,000 customers a week were visiting its existing four "Lifespace" shopping malls and the average occupancy rate was 89 per cent.

In a dramatic twist, jailed tainted-milk activist Zhao Lianhai will be released on medical parole, Xinhua News Agency announced early today - just hours after he sacked his lawyers and forfeited his appeal.

World's largest pearl shines for $301m - The world's largest luminous pearl is displayed in Wenchang, South China's Hainan province, Nov 21, 2010. Weighing six tons and 1.6 meters in diameter, the pearl is the largest ever discovered and estimated to be worth two billion yuan ($301.197 million).

Maple leaves are seen at Quancheng Park in Jinan, capital of east China's Shandong Province, Nov. 21, 2010.

China's former Olympic and world champion Liu Xiang finished first in heat one to reach the men's 110 meters hurdles final at the Asian Games Monday. The 27-year-old, who was definitely the focus of all media and spectators on the track, clocked 13.48 seconds with ease. The time topped the total ranking of the two heats. "I feel really good," said Liu, the Asian record holder whose personal best was 12.88. "I wanted to say thank you to the fans, and I hope I can do better in the final." Liu said before the Asian Games that he was still bothered by the foot injury but he was in a stable form now. He also said he expected to run within 13.40 at the Asian Games. Liu limped off the field of the national stadium Bird's Nest in the Beijing Olympic Games even before he started running in the first heat to defend his glory, leaving millions of Chinese fans dumbfounded with the blow. He was later treated in the United States, accepting surgery on his right Achilles' tendon. Another famous Chinese hurdler Shi Dongpeng also qualified for the final by finishing second in heat two in 13.89, but the result could only ranked fifth. South Korean Park Taekyong finished in 13.68 to rank second, while the third was Saudi Arabia's Ahmed Khader A Almuwallad, who clocked a personal best of 13.69. The men's 110m hurdles final will be held on Wednesday.

Youku seeks $169 million from IPO - Youku.com Inc, China's biggest online video company, said it plans to raise $169 million in an initial public offering in the United States, one week after its competitor Tudou Holdings Ltd filed for its own initial public offering (IPO). Youku.com will offer 15.4 million American depositary receipts (ADR) at $9 to $11 each, the Beijing-based company said in a filing with the Securities and Exchange Commission. Proceeds will be used to upgrade technology, buy videos and expand sales and marketing, the prospectus said. Shanghai-based Tudou, China's second-largest provider of online videos, filed on Nov 9 to sell $120 million of shares in the US. The two companies are raising money after the number of Internet users in China surpassed the entire US population. Four of this year's 10 best-performing IPOs on New York exchanges are from companies based in China, where the economy is forecast to expand more than four times as fast as the US in 2011, according to the International Monetary Fund. Sales at Youku.com and Tudou have each more than doubled this year. "It provides another opportunity for investors seeking high-growth exposure to the Chinese marketplace," said Josef Schuster, the Chicago-based founder of IPOX Capital Management LLC, which oversees $3 billion. "The story is driven by the growth prospects and the underlying economy." Goldman Sachs Group Inc of New York is leading Youku.com's offering, the prospectus said. China had an estimated 420 million Internet users at the end of June, according to data from the government-sponsored China Internet Network Information Center. The US population is about 311 million, according to the Census Bureau's website. China's online video market more than doubled to 621 million yuan ($94 million) in the third quarter, according to Beijing-based research company Analysys International. Youku.com had the largest share at 23 percent, followed by 19 percent for Tudou. Google Inc's YouTube, the world's most popular video site, is inaccessible in China. Youku means "excellent and cool" in Chinese. The company had previously raised $110 million from investors, including Chengwei Ventures, Brookside Capital, Maverick Capital and Sutter Hill Ventures. Its last round of private equity funding from existing investors raised $40 million in December. Revenue at Youku.com increased 135 percent to 234.6 million yuan in the first nine months of 2010, according to its filing, while Tudou's sales more than tripled. Neither company has been profitable in the past three years. www.Youku.com's ADRs, each representing 18 Class A ordinary shares, will trade on the New York Stock Exchange under the ticker YOKU, according to the filing.

November 23, 2010

Hong Kong*: Hong Kong students will be able to apply to mainland universities from 2012 without taking a national exam. The Education Ministry in Beijing said the change, to take effect when the city's "3-3-4" education system begins, would bring the two systems closer together and boost academic exchanges. Parent and teacher groups welcomed the decision, saying it would provide more choice for students. "For parents, the cost of sending children to the mainland for studies is much more affordable than overseas," said Henry Chan Sing-tat, secretary of the Hong Kong Parents Association, as there was a growing demand for local students to study on the mainland. "[Hong Kong] students nowadays will also find it easier to adapt to life there because they have learned Putonghua in primary and secondary schools," he said. Choi Siu-wan, 21, a Hong Kong student studying in Quanzhou who sat the entrance exam in 2007, said waiving the requirement would attract more locals like herself to mainland universities. But she also felt there was a disadvantage. "Without going through the process, you would not know what the mainland curriculums are like. It would be difficult to transit to a mainland university course then." The decision was made in response to a proposal by National People's Congress member Fanny Law Fan Chiu-fun during the annual plenary session in March. The Education Ministry said it had consulted Hong Kong's Education Bureau, the Hong Kong Examinations and Assessment Authority and some secondary school heads. There was general support for the proposal, it said.

Financial Secretary John Tsang Chun- wah has warned that the government has a few more measures up its sleeve to fight against property speculation. His warning came hot on the heels of his announcement on Friday that an additional stamp duty of between 5 to 15 percent is to be levied on residential properties purchased and resold within 24 months. This is on top of the current stamp duty, capped at 4.25 per cent. The Hong Kong Monetary Authority also reduced the amount banks could lend to buyers of homes worth HK$12 million or more, from 60 percent to 50 percent of the price. Writing in his blog yesterday, Tsang said society as a whole could suffer a big blow if the government does not deflate the property bubble in time. "Doubtless to say, we will definitely not sit back and do nothing against the risk that might affect our economy and financial stability. "We will closely monitor the market and roll out more measures again if needed." The new levy, which requires Legislative Council approval, will be imposed at a rate of 15 percent for flats sold within six months or less of purchase, 10 percent for those sold more than six months but 12 months or less after purchase, and 5 percent for those sold more than 12 months but 24 months or less after a deal is struck. The extra duty would be levied on flats acquired on or after last Saturday. In response to worries that the proposed measures might affect owner- occupiers who have to sell their flats due to urgent financial necessity, Tsang said: "I have been skating on thin ice in dealing with the risk of a property bubble. "On the one hand, I have to consider home owners' interests, but on the other hand, I have to manage the risk." He said safeguarding the welfare of the public mattered most. "If a nest overturns, no egg will be left intact," he wrote. "We have to actively reduce the risk of a bubble and put forward preventive measures in unusual times." Executive Council convener Leung Chun-ying said he found the measures effective, but it would take some time to gauge their long-term effect. While market watchers expect property prices to drop due to the government's measures, Leung believes prices may also be affected by external factors, including low interest rates overseas and the second round of quantitative easing policy in the United States. Democratic Party lawmaker James To Kun-sun said he will urge the government, at today's Legco's joint meeting of the financial affairs and housing panels, to only require sellers, but not buyers, to pay the extra stamp duty as sellers are the ones who might gain from speculation. The government can consider either adding a sunset clause for the levy or scrap it later when necessary, he said.

The long-awaited competition law is not expected to take full effect until 2014 at the earliest, Undersecretary for Commerce and Economic Development Greg So Kam-leung says. Before that a string of procedures needs to be completed, including establishing a commission to investigate anti-competitive activities and a tribunal to act on the commission's findings, and drawing up guidelines on how the law should operate. Despite worries from business, the bill has general support. It is expected to be passed by the Legislative Council before July 2012. So said a phased approach would be adopted to get the law working. "The first phase is primarily about building the institutional framework. We envisage that the first phase will take a year or more to implement subject to progress of the setting up of the commission and the tribunal as well as their respective work on the preparation for the various guidelines and court rules." A competition commission would be set up to investigate anti-competitive conduct and a competition tribunal with jurisdiction to hear and determine applications filed by the commission. In the second phase, guidelines will be established, after a consultation. "This will pave the way for decisions on what can and cannot be done and exceptions and exclusions on business agreements under a competition law," So said. He said other countries' guidelines would be consulted. The final phase will see the new bodies delivering judgments and imposing penalties. Some business leaders and legislators are worried about "steep and unreasonable" penalties, but So said the proposed maximum - 10 per cent of the global turnover of the business unit in the year of contravention - was in line with international standards. "Penalties rarely reach 10 per cent in the European Union, for example," he said. "For a fine to have any deterrent effect on businesses at all, the court must be free to hand down an appropriate amount." Multinational corporations were accustomed to this approach, he added. The bill would tackle two major types of anti-competitive behaviour. The first rule covers practices including price-fixing and market-sharing. The second combats abuse of market power, such as predatory behaviour by competitors. So said that while penalties would be imposed only on the business unit breaching the law, the court would be looking at the involvement of a parent company in the anti-competitive conduct in question, including whether the parent company had sufficient control over subsidiaries. Other than public enforcement through the tribunal, alternatives would exist to resolve small-scale contraventions. Individuals could make commitments to the commission to stop anti-competitive conduct. The commission may issue an infringement notice before a case is brought. Highlighting worries expressed by small and medium enterprises, So said de minimis approach and other measures, including allowing a transitional period for businesses to make necessary adjustments, would provide protection. People with experience of small and medium enterprises would also be appointed as commission members. Some companies fear the complaints mechanism could be abused, but the commission will be able to refuse to investigate complaints it considers trivial, misconceived or lacking in substance. So said the new law would not apply retrospectively. As with the introduction of other new laws, observers expect the first few cases after the bill has come into effect to have a substantial impact. So said it "would be a great pity" if the business sector hindered the progress of the bill. "The bill will bring economic benefits to consumers and the business sector in the long run by preserving the competitive nature of our economy," he said. "This bill has been prepared with the benefits of the implementation experiences of other competition law jurisdictions. We believe that it presents good and balanced measures while catering to the environment in Hong Kong." The Legco bills committee has scheduled 37 meetings for scrutiny of the terms. Committee chairman Andrew Leung Kwan-yuen said extra meetings would be inserted during the Legco's summer recess next July if progress was too slow.

Top athletes back bid to host Asian Games - Children with T-shirts showing the number 2023 back the Hong Kong bid. Leading athletes including Olympic windsurfing champion Lee Lai-shan voiced their support for the city's bid to host the 2023 Asian Games amid apparently growing public support. The good performances of Hong Kong athletes at the current Games in Guangzhou was probably due to the high level of competition and experience gained during the East Asian Games in the city last year, said Malina Ngai Man-lin, chairwoman of the Elite Athletes Association. Ngai won a bronze medal in rowing at the 2004 Games in Hiroshima. "If the Asian Games can be held in Hong Kong, we can provide a goal for young athletes who otherwise would not have the opportunity to attend the Games," she said. "No amount of training can substitute for the experience of top-class competition in a major event." She said hosting the event would also encourage the sedentary population to be more active and inspire youngsters who might otherwise be led astray by temptations such as drugs. Thousands of Hongkongers would be mobilised to help out, which would instil the importance of volunteerism, she said. "The level of sports participation will not dramatically increase just by hosting the Games, but it is definitely one good way of stimulating interest in the next decade." Lee, who clinched gold at the 1996 Olympic Games in Atlanta, said: "Hosting the Games can encourage a lot of young people to do more sports. I'm now a mother of two and I also hope my children can have better health and build up good personalities through sports training." Retired swimmer Sherry Tsai Hiu-wai, who has taken part in three Olympic Games and holds several Hong Kong records, said that looking back on her 16-year career, the most memorable and meaningful moment was when she competed for Hong Kong in the East Asian Games last year. "It was really touching when Hongkongers cheered for me." Current sports stars offering their support include footballer Lee Kin-wo, sprinter So Wa-wai and badminton player Amy Chan Lim-chee. The association surveyed about 280 elite and student athletes last month, and about 75 per cent of them said hosting the Games would raise the standards of athletes, and promote sports development. Public sentiment for a Games bid was negative in September when the government announced the idea. On November 9, the administration announced it had slashed its proposed budget from the original estimate of between HK$13.7 billion and HK$14.5 billion, to less than HK$6 billion. Last week, the home affairs chief, Tsang Tak-sing, said the brave and outstanding performances of Hong Kong's athletes, as well as Guangzhou's success in hosting the Games, had prompted a positive change among Hongkongers. The observation was in line with a poll of 500 adults last week by the YMCA of Hong Kong. It said about half of them supported a bid now that the government had lowered the cost. This was 12 percentage points more than a survey it conducted a month ago. The association said the success of the Hong Kong athletes may have been a factor. The city's athletes have won seven gold medals so far in Guangzhou. The 10-week public consultation for a Hong Kong bid to host the Games ends on December 1.

United States Insurers missing out on the benefits of technology - Most insurers in the United States are letting consumer technology such as smartphones and social media networks get ahead of them, creating a challenge to attract a new generation of customers who are not interested in doing business with agents the way their parents did. However, it has also created an opportunity for companies such as Allstate and State Farm which have embraced interactive technologies as a way to extend their brand's reach to children of the 1980s and 1990s. "You're not going to get any more mortality (business) with the things you're doing now" among the younger generation, said Douglas French, managing principal of Ernst & Young's insurance advisory practice, told reporters recently. While the insurance industry is known for many things, a focus towards the young and/or hip customer is not one of them. In some ways this contrasts strongly with what banks are doing which includes offering cheque deposit via mobile phones and pushing the internet to replace branches for much of their business. Underwriters usually aim their pitches at a middle-aged customer seeking an aura of confident authority about matters like health and property. While that has continued to work among a segment of the market, branding experts say there is a missed opportunity. "It's a buggy whip mentality. Everything is moving more and more to high-tech electronic online interface and particularly with this generation," said Robert Passikoff, president of brand loyalty and customer researcher Brand Keys. "They're still looking at this as a commodity ... if we can get the price down low enough, people will come to us and I don't need a lot of friends on Twitter and Facebook." There are some companies in the industry that have been more aggressive with their push into new media, though mostly in vehicle insurance. Executives say car insurance lends itself to new media because the transactions are in some ways simpler than other insurance lines. Allstate has a suite of mobile applications for smartphones that offer services such as home inventory lists and roadside assistance requests. "A very significant number, up to a majority, of wireless users will have these devices with them and they expect to be able to interact with companies through these devices where they are," said Bob Wasserman, vice president of e-business for Allstate. "You start to think about what this device can do and you build other capabilities." State Farm is just as active, with prominent links from its home page to Twitter, Facebook and Flickr feeds and a suite of mobile applications for customers, though they are still just a supplement to the company's traditional network of agents in storefronts across the country. Berkshire Hathaway's Geico is also aggressive in mobile, and offers an application that lets people obtain rate quotes by taking a picture of their driver's licence among its lineup of phone applications. No matter what channel they are using, the car insurers seem to have picked up on an idea that other insurers have missed: younger customers don't want to go to an agent's office and don't want to be sold products where they already know they can get a better price elsewhere. Passikoff said that shift in thinking could take a decade for insurers to really make, but some say that may not be sufficiently aggressive. "I don't see the industry moving fast enough," said Bill Chrnelich, a partner in PricewaterhouseCoopers' insurance practice, in a recent interview. "This industry isn't focused enough on that change in their sales and distribution."

StanChart hopes high for yuan bonds - Over 60 billion worth of yuan bonds could be issued in Hong Kong next year, and may even surpass local currency bonds in three years' time, Standard Chartered (Hong Kong)'s regional head of capital markets for Northeast Asia Tee Choon Hong said.

 China*: China has put its ties with other Asian nations on a fast track as it competes with the United States for influence in the region. In recent weeks, US President Barack Obama visited Indonesia while US Secretary of State Hillary Rodham Clinton visited Cambodia. Around the time of these US visits, China's National People's Congress chairman Wu Bangguo visited Indonesia, Cambodia and Thailand, signing several deals with these countries. "That both Hillary Clinton and President Obama have been on important Asian visits recently is an indication of the seriousness with which the US is treating the region and the effort the US is making to cement its influence," said Hugo Williamson, managing director of consultant Risk Resolution Group. But unlike the US, China is offering its neighbours tangible benefits of alliance, such as high-speed railway and infrastructure investments. China and Thailand are in advanced talks over a high-speed railway that will pass from southern China through Laos to Thailand, but the plan awaits full confirmation. In October, the Thai parliament approved a framework for further negotiations with China on a high-speed railway in Thailand, the Bangkok Post reported. The plan would see China build rail lines in Thailand up to the Thai-Malaysian border, with trains running at 250 kilometres per hour. The project is estimated to cost US$23 billion to US$27 billion. The first section to be built would be a link between Bangkok and Nong Khai in northeast Thailand on the Thai-Lao border, Thai Transport Minister Sophon Sarum told media this month. Sophon said this 615-kilometre section would cost 208 billion baht (HK$52.93 billion). Construction began on the section between China and Laos in October, according to China's Ministry of Railways' website. The high-speed railway that will operate between China, Laos and Thailand in the next few years is part of China's long-term plan to have a high-speed railway from China all the way through Malaysia to Singapore. In September, Malaysian Prime Minister Najib Razak proposed a high-speed rail link between Singapore and the Malaysian capital Kuala Lumpur, but this is yet to be officially approved by both nations. The proposed high-speed rail link between China and Thailand will integrate other Asean members with China physically and spread prosperity (SEHK: 0803) from the wealthier to the less developed Asean nations, said Pavin Chachavalpongpun, a Thai researcher at the Institute of Southeast Asian Studies in Singapore. "It will boost economic activity. More importantly, it will boost the tourism industry. This is a very effective way of promoting intra-Asean plus China economic activity," Pavin said. Professor John Wong, an adviser and former director of the East Asian Institute in Singapore, said: "High-speed rail is suitable for Southeast Asia. It will shorten the time in moving people and goods." A high-speed railway will have greater economic and social impact on the region than air travel because trains stop at multiple places, while air travel is just between two cities, Wong said. Air travel is also more expensive and transports fewer people, he said. "The problem is money and the cost. If China provides loans, that will help," Wong said. China has expressed willingness to invest in a high-speed railway in Thailand. The scope of this investment was discussed during Thai Deputy Prime Minister Suthep Thaugsuban's visit to China in July, according to Thai media reports. China and Thailand are ready to jointly invest in the proposed high-speed railway in Thailand, Thai Prime Minister Abhisit Vejjajiva told Chinese Premier Wen Jiabao at the opening ceremony of the 2010 Asian Games in Guangzhou on November 12, Thai media reported. "China is now a capital-surplus country. It can provide economic aid and loans," Wong said. The proposed high-speed railway pushed by China notably bypasses Vietnam but goes through Laos and Thailand to the Malaysian border instead. The Vietnamese government, meanwhile, is planning its own 1,570-kilometre high-speed railway between Hanoi and Ho Chi Minh City. Vietnam will adopt Japanese high-speed rail technology for its project, which would cost US$55 billion and take 10 to 15 years to build. A Chinese system would require a fraction of the cost and time, the South China Morning Post (SEHK: 0583) earlier reported. "Vietnam is particularly conscious of its problems with China because of history and geography," Wong said. Over the past 2,000 years, China and Vietnam have often been at war, the latest being the Sino-Vietnamese war in 1979. Vietnam and China still have lingering territorial disputes over the South China Sea, which the Vietnamese call the East Vietnam Sea, Wong said. "In Vietnam, some quarters are still anti-China, but other elements are quite neutral. They want China's investment, tourism and trade." China has said it may help in the construction of a 257-kilometre rail link between Phnom Penh and Ho Chi Minh City with an estimated cost of US$600 million, according to media reports. Then there is Cambodia, one Southeast Asian country where the US and China are keenly fighting a "hearts and minds" campaign, Risk Resolution's Williamson said. Cambodia is highly reliant on international aid, but Western aid comes with governance and human rights strings attached, which can be difficult for Cambodian leaders to stomach, he said. "China, by contrast, has employed a no-strings-attached approach to its aid and support. This is a strategy China has successfully utilised in Africa over the last decade to gain influence, providing considerable aid and investment under a policy of political non-intervention, in contrast to the strict aid conditions Western countries enforce," he said. In early November, Wu Bangguo met Cambodian Prime Minister Hun Sen in Phnom Penh, when the two nations announced a US$1.6 billion deal on developing Cambodia's infrastructure over the next five years. Within the next five years, Cambodia and China will have 23 joint projects, Cambodian government spokesman Khieu Kanharith told reporters, with initiatives funded by China to include dams, bridges and railways. Wu's visit to Cambodia came just days after Clinton's visit, when she urged the nation not to become "too dependent" on China. Wu also visited Indonesia just days before Obama arrived there. On November 8, one day before Obama arrived, China signed US$6.6 billion worth of deals with Indonesia in Jakarta, including infrastructure, energy and agricultural projects. "It will be the biggest breakthrough for China if it can win the friendship of Indonesia as it is the biggest Asean country," Wong said. In the past, Indonesia was the biggest obstacle for Southeast Asia to improve relations with China, partly because it feared it would lose foreign investment to China, he said. During Suharto's rule from 1965 to 1998, relations between Indonesia and China were at best lukewarm because of China's friendly relations with Indonesian communists during the rule of Suharto's predecessor Sukarno, Wong said. Indonesia was the last Asean country to recognise China in 1990. Pavin said: "China is rising and it would be crazy for Asean nations not to engage economically with it."

Equities brace for tumble - The latest tightening measures by Hong Kong and China will weigh on local stocks this week, and the correction may last longer if further curbs are imposed, analysts said. "The negative news in the past couple of days has set the stage for a retreat this week," said Kenny Tang Sing- hing at Redford Securities. "The correction may come to an end after that if there is no more uncertainty from curbing measures." Kingston Lin King-ham, director of OSK Securities, expects Hong Kong stocks to open lower to absorb the shock from the Friday announcements, before gradually recovering. "It would not be surprising to see a 300-point plunge in the Hang Seng Index today," Lin said. Although Beijing and Hong Kong have set up defenses to curb "hot money," capital inflows from the US quantitative easing remain overwhelming, Tang said. "Speculation may become less active for the moment, but excessive money continues to be the backdrop for the market," he added. Insurance and mainland banks will see a strong rebound after consolidation, noted Tang, who expects the HSI to move between 23,000 and 24,000. In the runup to the end of the year, the benchmark may repeatedly test the resistance level of 25,000, said Ricky Tam Siu-hing at Champlus Asset Management. "The consolidation may last longer, to January 2011, after a huge 20-percent rally between August and early October," Tam said. "Any other possible restraining policies, like a rate hike, can prolong the period of corrections." After the frequent public listings, share placements and rights issues absorbed some of the abundant capital recently, another wave of "hot money" will shift to equities from the property market due to the local curbing measures, Tam added. Shares of local developers and lenders will see immediate pressure if property transactions and mortgage applications weaken. He said the shopping spree up to the end of the year will give a lift to retailers and consumer-related sectors. The People's Bank of China also said on Friday it will raise the required reserve ratio for financial institutions by half a percentage point. "The increase in RRR indicates that another hike in interest rates is unlikely," Lin said. "That would clear the cloud and give the stock market strong support."

Bright future poses threat to giant telescope - Light pollution could hamper research at showpiece space-watching centre, scientists warn - The LAMOST telescope in Xinglong county took more than a decade to complete. Now scientists say they are worried light pollution from Beijing could ruin their research. On top of a mountain close to Beijing sits LAMOST, a monster of a telescope capable of peering deep into space. Scientists using it say they will be able to make major contributions to our understanding of the universe. They could discover the structure of the Milky Way and even measure the echoes of sound waves from the Big Bang. The telescope is the result of a 300 million yuan (HK$350 million) project that took more than a decade to complete. It is not only the best of its kind in the world, it is also a symbol of China's emergence on the international stage as a globally competitive space superpower. "It certainly is a major project for China on the international scene," said David Silva, director of the Arizona-based National Optical Astronomy Observatory in the US.

Rise in spending power is luring major developers - Booming trade at a Beijing mall. Mainland retail sales in the year to October rose 18.6 per cent as a growing economy spurred spending. Policy risk is driving both developers and foreign investment funds away from the mainland residential market and towards commercial property, say analysts. And it is a trend that, once under way, could continue for several years. In addition to the "push" factor of increased risk caused by the introduction of measures aimed at curbing the growth in home prices, the shift in focus has arisen because of the rise in consumer spending power. Beginning in April this year, the government in Beijing has announced a series of measures to take the speculative heat out of the residential market, included the tightening of residential development loans to developers, increasing mortgage rates and cutting mortgage loans to individuals. Norman Krone, president of NK Real Estate Advisors, a Florida-based property consultant with an office in Shanghai, says this is leading developers and investors to put greater emphasis on retail real estate. He believes the trend will last for many years. A number of big developers are currently raising their investments in retail properties in Beijing.

Global Dairy, a Heilongjiang-based formula milk producer, will invest HK$350.9 million to establish its first dairy farm to ensure stable supply and quality of raw milk. The dairy product manufacturer, which listed on the Hong Kong stock exchange in October, said the farm would be able to supply 45 to 50 per cent of the raw milk consumed by the company after it comes on stream at the end of next year. The company is one of many mainland dairy products makers, including Mengniu and Yili, that have been trying to strengthen the supply chain since a tainted-milk scandal rocked the industry in 2008. Global Dairy said the farm, on the outskirts of Wuchang city in Heilongjiang, will cover 333,000 square metres and be able to carry up to 10,000 cows. It is estimated to generate up to 42,000 tonnes of fresh milk and 20,000 tonnes of bio-organic fertiliser annually. "Building dairy farms is a missed lesson for all Chinese dairy companies," said Zhao Yu, chief executive of the company. In the the past, most dairy companies on the mainland relied heavily on private milk collection stations as their major source of raw milk, investing very little in building their own farms. In 2008, a wide range of dairy products made by local companies were found to contain the banned chemical melamine. At least six babies died and hundreds of thousands of others suffered from kidney stones and other diseases. Investigations revealed that some farmers and milk collection stations added the chemical to raw milk before selling the product to dairy companies. Major companies such as Mengniu, Yili and Bright Dairy vowed to build more self-run farms as well as expand the existing ones following the scandal. Modern Dairy, the largest milk supplier to Mengniu, will list in Hong Kong on Friday. The company, which runs 11 farms and has 72,000 cows, says the demand for high-quality raw milk in China is soaring. Global Dairy plans to acquire more land for dairy farms. It will also seek new ways to collaborate with local dairy farmers by managing their cattle and sharing profits with them. The company has three brands - Daqing, Emilon and C plus and its products are sold in 21 provinces.

WorldHotels, the global hotel branding and services company, plans to double its portfolio of member hotels on the mainland by 2014, by exploring the potential in the country's second-tier cities. Roland Jegge, vice-president of WorldHotels Asia Pacific, said he expected the number of affiliated properties on the mainland to reach 50, with an aggressive expansion into cities such as Kunming and Ningbo. "The plan is to develop fast in secondary cities," Jegge said. "When we sign a new hotel, we always ensure that it doesn't cannibalise or eat into business of the existing partners." The buoyant tourism sector on the mainland encouraged WorldHotels to rev up its expansion, and it sought an annualised growth of 20 to 30 per cent in the coming years, Jegge said. This year it saw sales growth of 52 per cent in its mainland business. The Frankfurt-based company has a collection of 450 independent hotels and offers business and leisure travellers access to the affiliated properties through the SRS - a global hotel reservation and sales network. It has also embarked on a new strategy that allows affiliated hotels to use the WorldHotels brand. The affiliated properties are normally independent from international brands such as Marriott or Hilton, and are self-managed. Jegge expected by 2011 five mainland hotels would use the WorldHotels name. "We are talking to them," he said. "In future, I hope half of our partners will use the brand." Under the new model, the affiliated partners would retain their independence while being able to use WorldHotels in their signage.

Maoye in 405 million yuan expansion - Mainland department store operator Maoye International Holdings (0848) is on the expansion path, with a subsidiary buying into another department store and supermarket chain.

Calligraphy scroll goes for 308 mln yuan at auction - A rare hand scroll copy of ancient Chinese calligrapher Wang Xizhi's work fetched a staggering 308 million yuan ($46.40 million) at the China Guardian autumn auction in Beijing on Saturday. The high auction price is only second in the history of Chinese mainland art market to calligrapher Huang Tingjian's hand scroll, Dizhu Ming, which was purchased for 436.8 million yuan in June. Wang, who lived in the Jin Dynasty around the 4th century, is traditionally acclaimed as the Sage of Calligraphy. However, none of his original works exist, making this cursive script, named Ping'an Tie (Safety Wish Script), especially rare for its high quality copy and the clear history of the succession of its collectors, which date back to the Yuan Dynasty (1271-1368). The script copy formerly constituted nine lines of characters. But it was torn into two parts, and the 24.5-cm-long, 13.8-cm-wide piece that was sold on Saturday is the first part with four lines composing 41 characters. Although it was impossible to find out the exact year it was created, archaeologists believe the scroll came out in the 7th century, or even earlier. One of the earliest records of this script dated back to a book named Jiang Tie, which was compiled between 1049 and 1063. Later the cursive script was passed on and on by distinguished collectors of the Yuan, Ming and Qing dynasties, with all the seals of the collectors' names printed on it. "The exact record of who passed on the artwork to whom is a decisive factor for its price," said Li Feng, assistant to the director of the Shanghai-based Minsheng Art Museum.

61 models contend for Miss Model of World in S China - A total of 61 models coming from 61 countries and regions took part in the final competition Saturday.

Thousands of people mourn victims in Shanghai high-rise blaze - Sunday is the seventh day since the disaster, a day the Chinese believe the dead would revisit their families before leaving for good.

November 22, 2010

Hong Kong*: The Hong Kong government's new cooling measures may curb short-term property speculation in the medium to lower end of the market, but its effect on luxury homes could be limited, agents say. A day after the authorities, taking aim at "flippers", announced an additional stamp duty of up to 15 per cent on property transactions and cut the amount banks can lend to property buyers, a new luxury residential project in Mid-Levels recorded better-than-expected results. The first day of sales at Azura, a Swire Properties project, offered 79 flats priced between HK$30.4 million and HK$58.8 million. At the end of the day, more than 20 flats had sold. Agents said the result was better than expected and showed the impact of the new austerity measures might not be as severe as feared. "It's really not bad in light of the prices of these units," said Eric Cheung, director of Ricacorp Properties. He said the government measures mainly targeted speculative trading, and there was still strong demand from end users.

Chief Executive Donald Tsang applauds casino mogul Stanley Ho Hung-sun after pinning a Grand Bauhinia Medal to his lapel. Nobel laureate Professor Charles Kao Kuen was also among the seven winners of the city’s highest honour. In all, Tsang presented 286 medals, some posthumous, to city heroes, public servants, the great and the good yesterday.

Personal bankruptcies fell to an almost 10-year low last month, according to the latest figures from the Official Receiver's Office. Bankruptcy petitions in October fell about 17 per cent to 584 from 704 in September. It was the lowest monthly figure since December 2000, when there were 573 petitions filed. Of the petitions last month, 41 were submitted by creditors - the lowest number since the 39 in June 2007. For the first 10 months of the year, the number of bankruptcy petitions totaled 7,717, down more than 44 per cent compared to the same period last year. There were 13,872 petitions between January and October last year and 15,784 for all of 2009. The Official Receiver's Office did not provide any analysis of the improvement. Government figures seem to suggest the Hong Kong economy has been recovering from the global financial crisis in 2008. During the economic downturn in 2002, the number of monthly personal bankruptcy petitions regularly rose to more than 2,000, compared to 780 for all of 1996 and 829 for all of 1997, when Hong Kong returned to Chinese rule. With the impact of the global financial crisis in late 2008, the number of personal bankruptcies rose again, peaking at 1,872 in March last year. The number fell to around 1,000 later in the year as the economy started picking up. Hong Kong's economy expanded 6.8 per cent in the third quarter from a year earlier. Last week, the government revised up its full-year gross domestic product forecast for 2010 to 6.5 per cent growth from a previous forecast of 5 per cent to 6 per cent.

Arts hub does not need a forest, say local architects - Hong Kong does not need a forest on the waterfront, say top local architects who looked at the merits of three entries to design the West Kowloon Cultural District. The architects gave their lowest score to renowned UK architect Norman Foster, who vowed to give Hong Kong its own version of New York's Central Park with 5,000 trees. They dubbed a plan by Dutch entrant Rem Koolhaas the most creative but said it might run foul of government bureaucracy, leaving the design of local architect Rocco Yim Sen-kee as the safest option. The remarks were made by members of the Hong Kong Institute of Urban Design, which was set up by outspoken and influential architects, planners and engineers in June. After meeting the three design teams, they broke their silence as a three-month public consultation winds up. Foster likened his plan to include over 5,000 trees to Central Park in New York. His team also designed a flexible arrangement of art facilities, expressed in rectangle boxes that can be relocated easily. Institute president Professor Bernard Lim Wan-fung, an experienced Town Planning Board member, said the plan looked pleasing to the public and the government but he had reservations. "A central park is located at the heart of the city, surrounded by residential developments and it should be very accessible," Lim said, "Is the one designed by Foster a real central park? "We see no passion. If we have to oust one from the competition, it would be Foster's." He said it was always tempting to opt for an easy way out. "But let's think twice. Do we still want a city without character? We have already lived with it for the past few decades." Institute council member Ivan Ho Man-yiu said the site did not need a forest to function as an urban lung, as it was on the waterfront. "The most important thing is we don't see a cultural identity. We only see a commercial site plus a park, things that are already built in London, Manhattan and Chicago," he said. Instead of setting a zero carbon emission target for the art hub like Foster, Koolhaas reserves two ventilation corridors onsite to allow the summer breeze to blow in from the harbor. The plan drawn up by Koolhaas conforms least to planning requirements set by the art hub authority. He proposes a suspension bridge outside the hub and hovering above the Yau Ma Tei typhoon shelter to solve traffic congestion, parks with free management, fewer developments and much smaller development sites. Institute vice-president Vincent Ng Wing-shun said: "You may think it's unrealistic but it brings us imagination and the extrapolation of the city's character, including the old markets and the low buildings in Jordan. We appreciate his spirit in challenging the government's framework." Ng said Koolhaas' design would take longer to implement and would spark controversy. He said the team would have to demonstrate that the bridge would not contravene the Protection of the Harbour Ordinance. He noted that old markets could not be created instantly but had to grow over time. Developers would also argue against the small development sites. The group of architects saw Yim's design as much safer. Although he proposed art pontoons on the harbor, which could draw opposition for reducing the harbor surface area, his plan followed the development density set by the authority. "His design is the most cosmopolitan," Lim said. The public space, including parks, squares and stone staircases, is shaped by cultural venues and interconnected with main streets and small avenues. There are alternate spaces for performance, for rest and for accommodating crowds. They are also specially located to take in the city's landscape such as the Peak and the Convention and Exhibition Centre. Yim is the only designer to put the planned Xiqu Centre for Cantonese opera near Kowloon Park, being convenient for the elderly coming from old neighborhoods. Institute member Franklin Yu said: "He [Yim] knows the place and he has included delicate details. The drawback is, the details will be lost if the plan is coarsely merged with other plans or it is not materialized with care." Spencer de Grey, leader of Foster's design team, rejected the comments. He said their park concept, integrated with the existing neighbourhood, would be a venue for outdoor cultural activities and a response to the city's climate by offering extensive shade. "We've been here for over 30 years. We know Hong Kong well," he said. Koolhaas said his bridge design was an additional idea to enhance the hub and would not delay the project. Small development sites were intended to avoid massive and homogenous developments like the nearby Elements and to allow diverse developments that addressed the needs of people. Hongkongers were becoming more vocal and his design provided public space for them, he said. Yim could not be reached for comment yesterday.

Property speculators slapped with up to 15pc extra stamp duty - Buyer numbers for a Cheung Kong property project in Tai Wai were 70 per cent down. The government slapped additional stamp duty on property speculation yesterday in a desperate move to rein in rampant home-price inflation. The monetary authority lowered the mortgage ratio for costlier flats. Properties purchased from today onwards and sold within six months will incur a 15 per cent stamp duty. This is in addition to the current stamp duty, capped at 4.25 per cent. The new levy will come down to 10 per cent for transactions between six and 12 months after purchase. It will be levied at a rate of 5 per cent on sales after that, Financial Secretary John Tsang Chun-wah announced. "The seller and the buyer are jointly liable for paying the special stamp duty," Tsang said. The new levy will only affect properties bought from today onwards. At the same time, the Hong Kong Monetary Authority reduced the amount banks could lend to buyers of homes worth HK$12 million or more from 60 per cent to 50 per cent of the price. The maximum mortgage ratio for properties priced between HK$8 million and HK$12 million was cut from 70 to 60 per cent. It remains unchanged, at 70 per cent, for less expensive homes - which are generally bought by end-users.

Police raid ICAC, arrest three graft-busters - Force's unprecedented action against anti-corruption body may deepen rift between the two. Police arrested three graft-busters on suspicion of perverting the course of justice during an unprecedented raid on the headquarters of the city's anti-corruption body yesterday. The raid - the first of its kind since the Independent Commission Against Corruption was established in 1974 to root out rampant corruption in the police force - will deepen the long-standing tension between the two forces, with many veteran anti-graft officers expressing concerns over the high-profile nature of the arrests. A large crowd of journalists and onlookers gathered as about 40 police stood guard outside the North Point headquarters while other officers conducted the raid. "By making such a high-profile arrest, it is like the trial for the arrested investigators has started with everyone knowing about the case already," a high-ranking anti-graft officer said, adding that it might have an impact on future co-operation between the two bodies. The arrests came after a trial was stopped in June when lawyers for the defendant presented a secret recording of six hours of conversations between him and ICAC officers. Cheung Ching-ho, who had earlier been offered immunity in return for testifying against a warrants trader and three others accused of market manipulation and money laundering involving HK$100 million, was himself charged in the case when he refused to give evidence. When Cheung appeared in the District Court in June, charged with conspiracy to defraud in manipulation, his lawyers argued that the tape showed the officers had been coaching him on his evidence. The trial is on hold pending the result of an application for a permanent stay of proceedings. The tape was turned over to the police and the commercial crime bureau launched an investigation. The recording was also sent to the bureau's technology crime division for examination. Police in four unmarked vehicles arrived at the ICAC headquarters in Java Road at about 10am yesterday. The vehicles left at about 5pm after officers had spent seven hours conducting an investigation in the building. Without naming the ICAC, police said in a statement that they "have arrested three Chinese males aged from 37 to 45 in the North Point area for the offence of perverting the course of public justice". "As active inquiries are ongoing at this stage, it is not appropriate to make further comments in relation to the case," the police statement said. The ICAC later confirmed it was assisting the police in investigating a suspected case of perverting the course of public justice, and would render full co-operation. A person familiar with the investigation said the three men were all graft-busters, but no high-ranking ICAC officer was involved. Not identifying the ICAC was an apparent effort by police to avoid deepening tension between the two forces. In response to complaints about the size of the team sent for the raid, a police spokeswoman said "appropriate manpower was deployed to perform crowd management duties" to ensure the order and safety of the crowd gathered there. But ICAC officers did not accept this. "There were also hundreds of reporters waiting outside ICAC headquarters early this year for TVB (SEHK: 0511) executive director Stephen Chan Chi-wan and only a few police were sent there. Why was there such an inappropriate scale of police manpower deployed outside the ICAC yesterday?" one officer asked. "The police raid yesterday was similar to the scale of a nightclub raid in which triad members are arrested," a veteran ICAC officer said. Tension between the two forces dates back to the establishment of the ICAC in the 1970s, when its actions against police led to thousands of police officers protesting outside ICAC headquarters over alleged persecution. The rift between police and the ICAC widened in 2002, when anti-graft officers arrested Senior Superintendent Sin Kam-wah, deputy head of the narcotics bureau, on suspicion of accepting free sex from prostitutes. Cheung Ching-ho, whose case is linked to yesterday's raid, was among five people arrested by the ICAC in 2008 for trying to manipulate the derivatives market. He was originally offered immunity from prosecution but later refused to testify and was charged with conspiracy to defraud. If his application for a stay of proceedings fails, he will come to court on March 28 for a trial expected to last three weeks. The four others included warrants trader Raymond Ng Chun-to and his wife, a solicitor. In April this year, they were jailed for between two years and four years. Ng, 42, was convicted on four counts of conspiracy to defraud and one of trying to pervert the course of justice, and jailed for four years. His wife, Cheng Yuen-yi, was convicted on 17 counts of laundering proceeds of the scheme totalling HK$103.86 million, and sentenced to three years in jail. Leo Lam Sze-hang and Polly Sun Chor-fun, who acted under the instructions of Ng and his wife, were jailed for 28 months and two years, respectively.

Michael Tien splits from Liberals, citing principles - The Liberal Party is going through its second major split in as many years after senior member Michael Tien Puk-sun quit because of differences over issues of principle. The split shows the weakness of the party, which is torn between a wish to woo broader popular support and a struggle to retain the backing of the business sector whose views it is meant to represent.

Richard Suen's claim for helping Sands in Macau to be retried - The case is to go for retrial after Las Vegas Sands and its chairman Sheldon Adelson appealed. The Nevada State Supreme Court overturned a US$58.6 million judgment in favour of Hong Kong businessman Richard Suen Chi-tat for helping casino developer Las Vegas Sands win a Macau gambling licence. In an 18-page order released on Thursday in the US, the court partly affirmed and partly reversed decisions made by a district court judge in Las Vegas in the lead-up to the 2008 jury trial of Suen's lawsuit against Las Vegas Sands. The higher court handed the case back down to the district court for a retrial. The decision marks a partial victory for Las Vegas Sands, which last year paid US$42.5 million in a separate case to settle out of court with another group of Macau businessmen claiming to have helped it secure a gaming licence in 2002. In the company's appeal against the Suen judgment, the state supreme court ruled the lower court had improperly admitted hearsay statements from former Las Vegas Sands president William Weidner. It also said the district court had failed to instruct the jury on presumptions of "governmental regularity". In a victory for Suen, the high court said his charge of breach of contract by Las Vegas Sands, originally dismissed by the district court, could proceed at the new trial. Las Vegas Sands and its chairman Sheldon Adelson were contesting the May 2008 decision of a jury to award US$43.8 million to Suen and his Round Square Co as compensation for consulting services he provided, including arranging a meeting in Beijing in July 2001 between Adelson and then vice-premier Qian Qichen. The court later added US$14.8 million in interest payments to the jury's award. The New York-listed firm, parent of locally listed Sands China, had made no provisions for paying the hefty sum to Suen. "The company believes that it has valid bases in law and fact to overturn the verdict," Las Vegas Sands said earlier this month. Suen launched his suit in 2004 on behalf of business associates including Zhu Zhensheng, George Chang, Steven Siu and Choi Yuen Yuen. Choi arranged the meeting in Beijing between Adelson and Qian, according to court filings. Suen testified that Zhu and Choi were high-ranking People's Liberation Army members. Suen contended he and his partners were promised a success fee equal to US$5 million plus 2 per cent of Sands' net profit in Macau. Adelson agreed that Suen should be compensated but said he could not pay him the alleged agreed success fee due to issues with the Nevada Gaming Commission and the Foreign Corrupt Practices Act, the court documents said. Adelson offered alternative compensation that was rejected by Suen, who then sued. No date has been set for the retrial.

47th Golden Horse Film Awards staged in Taiwan.

 China*: Profits of state-owned companies on the mainland surged 44.8 per cent from a year earlier in the first 10 months of this year, slower than the January-September pace, as cooling measures began to show. The state-owned enterprises (SOEs), excluding financial institutions, posted a combined 1.63 trillion yuan (HK$1.9 trillion) in net income in the 10 months to October, the Ministry of Finance said yesterday. The growth was slower than the 46.2 per cent year-on-year leap between January and September as Beijing moved to curb property speculation and close plants with overcapacity or pollution problems this year. Revenues rose 33.9 per cent year on year to 24.57 trillion yuan in the first 10 months, the ministry said. In October, revenues dropped 3.7 per cent from September and profits climbed 0.4 per cent. "Compared with September, industries including electronics, chemical, textile, petroleum and building materials reported profit increases last month, while tobacco, real estate, electricity, coal and transportation sectors saw net income declines," the ministry said. The financial performance of SOEs is under spotlight. As Li Rongrong, former head of the State-owned Assets Supervision and Administration Commission, put it at a forum in September: "When profits are poor, SOEs are scorned for their inefficiency. When they do well, they are attacked for making profits by taking advantage of their ties to government and their often monopolistic status." In the first three quarters, SOE revenues amounted to 21.91 trillion yuan, equal to 82 per cent of the mainland's gross domestic product. Major contributors included China Mobile (SEHK: 0941) and the three petroleum giants - China National Petroleum Corp, Sinopec (SEHK: 0386) and China National Offshore Oil Corp - all operating in government-protected industries from which private-sector competitors are excluded by regulation. Zhao Chen, a professor of economics at Fudan University, said: "In order to run a successful business in China, private company owners have to consider hiring senior executives with political connections or those who act as government advisers. "Without such resources, small and medium-sized companies face greater difficulty in accessing preferential treatment from the government, which could affect their ability to prosper and ultimately survive." Many economists suggest addressing the imbalance by reforming SOEs, including asking the firms to pay more dividends to contribute to the underfunded pension system. UBS economist Wang Tao said: "A key area of reform is SOE reform, though the proposal for the 12th five-year plan remained relatively vague on this subject, alluding to `strengthening the state asset revenue sharing mechanism'. Increasing the scope and rate of SOE dividend payments to the budget will be important, as will further governance reform and competition from the private sector. This is likely to be a subject of debate within the government, especially in light of the recent success the government had in relying on the SOEs during the global financial crisis."

Advanced Chinese ship near Diaoyus - The Yuzheng 201 sails near the islands yesterday. - Two Chinese fishery patrol vessels, including a new one that China says is its fastest to date and is equipped with a helicopter, were spotted in the East China Sea near the disputed Diaoyu Islands, Japan said. The discovery came just days after Beijing and Tokyo tried to mend ties. A Japanese coastguard spokeswoman said one of their patrol aircraft saw an advanced Chinese fishery patrol ship near the island chain at about 8.25am yesterday and discovered another small Chinese fishery vessel 20 minutes later. She said Japanese patrol ships repeatedly warned the two vessels not to enter Japan's territorial waters, but the ships, which were identified as Yuzheng 310 and Yuzheng 201, repeated responses such as "we are conducting a justifiable mission". "The two vessels came as close as 23 kilometres to the [Diaoyu] islands," the spokeswoman said, adding that the Chinese ships had not entered what Japan considered its waters. China and Japan both claim the uninhabited, potentially resource-rich islets, known to the Japanese as the Senkaku Islands, along with the nearby seas. Yesterday's maritime encounter came after Xinhua reported that China's first helicopter-equipped advanced fishery vessel, the Yuzheng 310, left Guangzhou on Tuesday for the East China Sea on a 20-day mission. The 2,580-tonne ship, with a crew of 60, was not China's largest fishery patrol vessel but was "the fastest and has the most sophisticated technologies", Xinhua said. It had earlier said Beijing planned to build more of such advanced fishery patrol vessels to protect its sea territories and fishing fleets working overseas. Niu Zhongjun , associate professor of international relations at the China Foreign Affairs University, said neighbouring countries should be prepared for a rising China equipped with advanced fishery patrol fleets. "I don't know whether the Yuzheng 310 has a special mission during its 20-day trip ... but I believe such operations will continue in the future as China would definitely send more advanced fishery vessels to the East and South China seas," Niu said. "All China has done is reasonable as it is rising and needs to perfect both its military and civilian defences." But he said Beijing also needed to increase transparency and enhance communication with neighbours to ease suspicions. "The role of fishery patrol ships is like the maritime police, protecting fishing fleets overseas and carrying out hydrologic monitoring, maritime search and rescue as well as other civilian missions," he said. The 954-tonne Yuzheng 201 was sent to the East China Sea after the Japanese coastguard arrested a Chinese trawler captain in September.

Japan may put troops closer to China - Tokyo defence focus on East China Sea islands - Japan may station troops on islands near China and boost defense co-operation with the US and other allies by lifting a ban on military exports. Both options are being considered for inclusion in a strategic defense review to be published next month - a fact that will stoke China's concerns about being contained by US and Japanese forces. Japanese officials say China's handling of recent tensions over the disputed Diaoyu Islands has hardened positions within the cabinet of Prime Minister Naoto Kan. Those tensions flared again yesterday when a Japanese surveillance plane spotted two Chinese fisheries patrol vessels off the Diaoyus, which Japan calls the Senkakus, and anti-China protests were staged in Osaka. The long-delayed review - the first for six years - will promote stronger and more flexible security co-operation with the US and other countries, particularly South Korea, India and Australia within the framework of Japan's pacifist constitution that limits the military to acting in self-defense. "I believe the outline will mark a turning point in our strategic and defense planning," said Professor Satoshi Morimoto, a well-connected former diplomat who is now director of world studies at Tokyo's Takushoku University. "There is a strong sense now that Japan has to react to an aggressive change in China's foreign policies. What is Japan's leverage to deal with China? That is what we are talking about now. "As China grows and becomes stronger, we can see that the main leverage we will have left is military."

The Mongolian government stunned the mining industry around the world with an announcement that it will revoke at least 254 mining licenses across the country on environmental grounds. The statement raises concerns over the future of the Mongolian mining sector which has become a hot investment story in Hong Kong due to the landlocked country's vast amount of untapped resources and its proximity to China. It has also highlighted the risks of investing in the immature democracy, which was part of the Soviet Union until 1991, said analysts. Mongolia's Minister of Minerals and Energy, Dashdorj Zorigt, told domestic media on Thursday: "To start with, 254 licences for gold mining will be cancelled." A spokesman for the government's foreign affairs department yesterday confirmed the reported comment was accurate. But he said the government would be unable to announce which miners were affected "until probably next week as the papers are only in draft form at the moment". Asian investors have been keen to buy stakes in Mongolian miners. There are nine companies on the Hong Kong Stock Exchange with major exposure to Mongolian assets and eight of these are in the mining industry. Hong Kong-based Iron Mining International, which owns Mongolia's biggest iron ore exporter and whose private equity backers include mainland sovereign wealth fund CIC and former Goldman Sachs investment banking supremo Fang Fenglei's Hopu Fund, is seeking to raise US$1 billion in a Hong Kong IPO. Graham Hancock, the World Bank's senior mining specialist in Hong Kong, said: "I think these [government] announcements demonstrate that despite all the hype about Mongolia's mineral potential and possible future as a major mining producer, there is significant risk. "Mongolia has a regulatory framework which is rapidly evolving and which has not yet matured. The evolutionary changes are causing disruption to exploration and mining and creating risks for investors." Coal miner Mongolia Mining Corp raised HK$5 billion in a Hong Kong IPO last month. Southgobi Energy, another coal miner, raised HK$2.7 billion in January. Southgobi chief executive Alexander Molyneux said his company's licences would not be revoked. A spokesperson for Mongolia Mining said that company's licences were also safe. Both companies' shares were unaffected by the news. But the announcement caused havoc for Mongolian miners listed outside Hong Kong. Toronto-listed Centerra Gold, which owns two deposits in Mongolia, plunged 7.3pc to C$16. 04 (HK$112.15) on Thursday. Yesterday it was down a further 1 per cent in early trading. Centerra said it could potentially lose four mining permits. But, it said, the deposits these permits covered were "not material" to earnings. Prophecy Resources, another Toronto-traded miner that owns coal deposits in Mongolia, fell 5.7 per cent by market close on Thursday. In early trading yesterday it was down further 6.9 per cent. Prophecy chairman John Lee said in an e-mailed response that his company was not affected by the ban. The Mongolian government spokesman added miners stripped of their licences would receive government compensation. He said licences were being revoked under a law passed in 2009 to protect Mongolia's forests and river basins.

Chinese vice president visits housing project in Angola - Chinese Vice President Xi Jinping visits a social housing project constructed by China's Citic Construction Company in Kilamba Kiaxi, Angola, Nov. 20, 2010.

China Petroleum and Chemical Corporation (Sinopec), China's largest oil refiner, said Friday it has suspended diesel exports to relieve shortages in the domestic market. Sinopec also said it is seeking to import 200,000 tonnes of diesel. PetroChina Co., China's largest oil producer, plans to import 200,000 tonnes of diesel. Some 35,000 tonnes of it has already arrived. Insiders said China's diesel output in the first nine months soared, prompting the two oil giants to expand exports. Sinopec attributed recent hikes in the domestic price of diesel to hoarding, seasonal factors, transport factors and energy-saving measures. "The fundamental reason for the diesel shortage is the industry monopoly. Oil refiners are not keen to increase production because profit margins in the sector are relatively low," said Qi Fang, director of the Hebei Provincial Petroleum Industry Chamber of Commerce. "The two oil giants operate on a planned-economy basis, resulting in an unbalanced supply-and-demand situation. Supply and demand can easily outstrip each other as government planning cannot keep pace with changes in the market," Qi said. Statistics from the General Administration of Customs show China exported 360,000 tonnes of diesel in October - only slightly lower than the 368,100 tonnes it exported in September - even as diesel shortages worsened. Diesel imports in October rose to 400,000 tonnes, up from 250,000 tonnes in September.

Beijing is stepping up a crackdown on insider trading as rampant hot money flows into the roller-coaster stock market. The State Council expressed late on Thursday the government's determination to deepen its investigation of suspicious trades. The statement is likely to result in a withdrawal of some speculative funds from mainland exchanges. It was the first time the cabinet has publicly addressed the problem of insider trading. Analysts expect regulators now to unearth a series of scandals sooner rather than later. "The statement itself was symbolic rather than substantive," Kingsun Investment Management analyst Dai Ming said. "But it is a clear message to the big players: `Stop the nasty practices and behave yourself.'" The State Council also clarified the roles of the China Securities Regulatory Commission (CSRC) and four other authorities - the State-owned Assets Supervision and Administration Commission, the Ministry of Public Security, the Ministry of Supervision and the National Bureau of Corruption Prevention - in the fight against stock market irregularities. The statement is a sign that law enforcement departments, in addition to the CSRC, are deeply involved in the investigations, analysts said. The Shanghai Composite Index dropped 3.2 per cent this week, following a decline of 4.6 per cent last week. The falls followed a hefty gain of 20 per cent since late September. "Every time the authorities announced they would tighten oversight of market irregularities, bearish sentiment has set in," Dazhong Insurance fund manager Wu Kan said. "The statement could be read as a warning to investors that any wild rally now would be short-lived, since it would be against the government's will." The mainland market experienced a bull run between 1999 and 2001 before getting mired in a four-year bearish trend. In late 2000, a scandal involving the illegal practice of price rigging by fund managers was uncovered by Caijing magazine, resulting in a crisis of confidence. At that time, leading economist Wu Jinglian likened the stock market to a casino, warning retail investors of the risk in playing the market. CSRC chairman Shang Fulin is a strong advocate of weeding out market irregularities. The securities watchdog launched a high-profile national probe into financial institutions last year. The campaign has yet to pay dividends, however, since only a handful of unethical fund managers has been uncovered. Xinhua reported that the regulator was investigating 100 cases of suspicious trades in the first 10 months of this year, with insider trading suspected in 74 of them. Li Youhuan, a professor at the Guangdong Academy of Social Sciences and a researcher into fund flows, said the recent inflow of hot money was "unprecedented", as a strengthening yuan attracted speculative funds to the mainland's volatile stock market and its vulnerable real estate sector. "The bigger the funds are, the more likely they would collude with listed companies' executives and domestic fund managers to engage in insider trading," Dai said. "The money does the talking."

Google hiring more engineers in China - E-commerce war on the cards - Google China's headquarters in Beijing. Google has been on a hiring spree this year after losing many top engineers and executives. Search giant recruiting more engineers for challenges ahead - Internet search giant Google Inc has recruited its highest annual number of engineers in China this year, after the recent departures of many top engineers and executives. Many Chinese engineers still hope to work for Google, said Boon-Lock Yeo, head of engineering and research at Google China, whose public appearances in Shanghai have been rare since Google began redirecting traffic from the mainland to its Hong Kong site in March. "This year is the best year ever in hiring since we entered the mainland five years ago," said Yeo. He added that employment numbers are increasing every year, and the company has received a record amount of resumes from Chinese applicants since the start of 2010. Although he declined to reveal the exact number of people Google China has recruited, Yeo said "several hundreds of engineers" are currently working for the company. On Tuesday, Chinese media reported that Lin Bin, deputy head of engineering and research at Google China, had left the company to start his own business. Lin's departure demonstrates that the Internet search engine still faces staff turnover challenges, especially as five out of six deputy heads of the company's research and development (R&D) section have moved on. Yeo denied that Google China is facing a brain drain, stating that the younger generation of engineers are proving their abilities and doing a good job. "Compared with the average employee turnover rate of 20 percent in Chinese IT companies, Google experiences a far lower figure," he said. According to Yeo, Google's Beijing R&D facility, established in 2005, is the biggest of eight such centers in Asia. Its major task is to research and develop search innovations for both the local and international markets. The company established its Shanghai R&D center in 2007, with a focus on innovation in advertising. "Our commitment to China stays unchanged," Yeo said. He pointed out that search and advertising are still the two main R&D fields for the company. We also want to expand into mobile Internet, since it is a major sector," said Yeo, adding that almost all of the projects under development are related to mobile Internet use. Meanwhile, Google Shopping, a product-searching function, is another major research priority. The company launched its Chinese version of Google Shopping in 2009. Gu Xuemei, e-commerce director of Google China, said the company aspires to further develop product searching because "it is quite a cash cow". "We know many e-commerce websites provide product searching, such as Amazon in the United States and Taobao in China. Google may become marginalized in this area if people simply look to e-commerce sites when they search for goods," Gu said. "Google doesn't sell products, so we are quite neutral," said Gu, who added that, compared with some e-commerce websites which may give undue prominence to certain goods or companies, Google may make customers more comfortable. Advertisements contribute the biggest portion of revenue for Google, both in China and overseas, and the company said on Thursday it has more than one million AdWords advertisers worldwide and another million AdSense publishers globally.

Mild earthquake sets Shenzhen, HK trembling - A 2.8-magnitude earthquake with its epicenter in Deep Bay rattled Shenzhen and Hong Kong at 2.42pm yesterday. The Hong Kong Observatory received more than 100 reports from members of the public, jamming its hotline briefly. Most of the calls were from people living or working in Tuen Mun, Tai Po and Sheung Shui in the New Territories, near Shenzhen. Observatory scientific officer Woo Wang-chun said the tremor was a minor one that lasted a few seconds with at least one aftershock. The epicentre was about 30 kilometers northwest of the Tsim Sha Tsui-based Observatory. One woman working in a Kwai Chung office when the quake hit, said: "My colleagues and I were petrified for a brief moment before we recovered our composure and realised it was an earthquake." A Tuen Mun resident said: "The shake lasted for about two seconds. I thought a train had just passed by but the shake was less intense so I knew it was a quake." At the Hong Kong Open golf tournament in Fanling, some of the world's top players also felt the tremor. "I felt it on the 14th tee box and, to be honest, my legs were like jelly over the tee shot," world No10 Rory McIlroy told Agence France-Presse. "(I've) never felt one of those before." World No14 Ian Poulter, the clubhouse leader after the second round, said: "I bent over on the 14th tee and wondered what it was. I was just about to peg my ball up so I did feel a little tremor. "It just felt tiny. It was a bit strange but it didn't put me off." Lawmaker Miriam Lau Kin-yee s aid she felt the tremor when chairing a meeting at the Legislative Council Building. At first she felt dizzy, thinking she may have been ill but later learned that it was a quake. Woo said the quake was the second tremor to hit Hong Kong this year, following one in March. He said Hong Kong had recorded six tremors with epicentres within Hong Kong since 1979 and 57 quakes centred elsewhere that were felt locally. A spokeswoman for Guangdong's Seismological Station said the epicentre originated from a depth of about 23km. Shenzhen authorities released a press release an hour after the quake saying that it had not caused any damage and asked the public to stay calm. In central Shenzhen, thousands of students and white collar workers were evacuated from school and office buildings, fearing a stronger earthquake might follow. An office worker at the Great China International Exchange Square in Futian district said many of his colleagues left the building after the quake, and stayed outdoors for more than half an hour. "The building shook for about two to three seconds and we left our seats to go downstairs immediately," he said.

Playboy looks to cleaner image in Asia with brand apparel - Scott Flanders, chief executive officer of Playboy Enterprises, says the brand is strong in Asia. Hugh Hefner's iconic Playboy bunny is gearing up for a major hop into the mainland market, but instead of adult media the focus will be on marketing Playboy "with Chinese characteristics" as an apparel brand. "In America, Playboy makes people think about sex and Playboy Bunnies," said Alex Wang Chengjin, a Wenzhou businessman whose company Glory Rabbit International Investment recently acquired the rights to manufacture and sell Playboy-branded apparel and household goods across the mainland. "While Chinese people recognize Playboy as an international brand, they don't really understand what it is all about," Wang said. "So we have a lot of space to work with in terms of how ... we introduce the culture of the brand in the mainland," he said. Faced with declining publishing revenues in the United States, Playboy Enterprises is banking on non-media licensing ventures in China for future growth. A small litter of recent brand licensing deals - for mainland apparel with Glory Rabbit, for a pair of casino nightclubs in Macau with Sands China, and for a retail outlet in Taipei - are part of a broad repositioning of Playboy's business beyond the original men's magazine founded by Hefner in 1953. Asia, led by the mainland market, accounted for a third of Playboy's licensing revenue last year and that figure is expected to exceed 40 per cent this year, Playboy Enterprises chief executive Scott Flanders said. "We think there's still a lot of growth left, not only in China but in the rest of the countries in the region," Flanders said. "Our brand has a lot of resonance here." Playboy today opens its first casino nightclub outside the US, a 12,000-square-foot space on the top floor of the hotel tower at the Sands Macao that is "couples friendly" and offers "sophisticated fun adult entertainment", Flanders said. A larger Playboy Mansion facility is scheduled to open in the fall of 2012 inside a US$4 billion Sheraton/Shangri-La casino resort complex that Sands China is building on the Cotai Strip across from its Venetian Macao. Playboy's deal with Wang's Glory Rabbit represents a minimum US$50 million in licensing revenue over five years starting from January 1, according to Flanders. Glory Rabbit plans to open 2,000 to 3,000 Playboy-branded retail outlets in coming years, starting with major hubs like Shanghai and Hangzhou and branching out to second- and third-tier cities, Wang said. Acquiring mainland rights to the bunny logo and related trademarks from Playboy are part of the apparel firm's plan to "move up the value chain" from manufacturing to branded retailing, he said. Flanders said Playboy currently has "hundreds" of licensing agreements in place around Asia. "I would argue the brand is stronger in Asia than in the US," he said. "People know what the bunny ears are even where we have never published a single magazine. I think we have a cleaner image in the mind of the consumer in Asia as a result."

Trainee pilots to pay own way at China Southern Airlines - Asia's largest airline - China Southern Airlines, Asia's largest airline, plans to fast-track its pilot certification program by hiring high school and university graduates willing to pay their own 730,000 yuan (HK$852,000) tuition fees. The benefit to the cadet pilots is that they can enter a shorter training program, which lasts for two-and-a-half years versus the four-year program at traditional aviation colleges on mainland. Mainland carriers, which are set to double their fleet size to 5,000 aircraft by 2015, are struggling to fill the gap between their growing demand for pilots and the projected supply of aviators from existing training programs. Some 18,000 new pilots will be needed to fill the cockpits of the new planes nationwide by 2015, translating into a delivery schedule of 3,600 new pilots on average per year over the next five years. Of the eight aviation colleges on the mainland, only one institution provides flight training - the Civil Aviation Flight University of China - and it turns out only 1,500 pilots a year. The other seven teach only theory and need to send their students overseas to accumulate the flying hours required for a commercial pilot license - 250 flight hours. Industry veterans estimate that approximately 1,000 pilot cadets are sent overseas for flight training from the mainland every year. The existing training programs fall far short of meeting the demand from airlines, which sometimes tap the ranks of pilots retired from the air force or hire foreign pilots. The pay for pilots, from a new second officer to a captain, ranges from 200,000 yuan to 500,000 yuan a year, compared with HK$500,000 to more than HK$2 million for the pilots of top-tier international carriers. China Southern, the only mainland airline with a dedicated flight training school, has attempted to address the problem of pilot shortages. The Guangzhou-based airline company set up a flight training school in Perth, Australia in 1993 and joined forces with Beihang University in Beijing to run the Flying College of Beihang University in the same year. Some 180 are trained in Perth each year; others will be sent to Montreal and Toronto for flight training. China Southern needs to recruit 500 pilots a year over the next three years. A quarter of the pilots-to-be will be hired from the Civil Aviation Flight University in Sichuan, while the balance will be trained in Montreal, Toronto or Perth. It began recruiting self-paying pilot trainees in 11 provinces last month and will officially enrol them in July of next year. By doing so, it could increase the scope of pilot enrolment beyond its base and branch offices, and shorten the time it takes to train pilots. "Self-paid cadets are more motivated in their study, so that their pass rates are generally higher," said Hu Tao, director general of the pilot recruitment centre for China Southern. The drop-out rate was around 10 per cent among paid and sponsored students, he said. Training for the self-paying trainees lasts for three years at most, compared with the four-year program for the sponsored students, as the latter are required to finish the undergraduate programme in parallel with the pilot training program. In order to reduce the turnover rate of pilots, self-paying trainees have to enter a 15-year service contract with the company upon graduation. The condition aims to prevent pilots hopping to other carriers. The recruitment of self-paying pilot trainees has its limitations. For many, the 730,000 yuan tuition fee is not affordable and China Southern has to loan them the money. On the other hand, the entry requirements - mainly related to academic performance - are lower for self-paying trainees, which means the airline has to provide extra training in language skills, especially in English. In a bid to sustain the quality of self-paying trainee intakes, China Southern cut the entry number to 100 this year, compared to 300 in 2009, and 200 in 2008, Hu said. "We are the fourth-largest carrier in the world in terms of aircraft and passenger volume and are set to be the third in terms of passenger and volume traffic," Hu said. "We need to draw up comprehensive pilot training programs well in advance to make sure that we have sufficient pilots to fuel our expansion," he added. This month, China Southern agreed to buy six Airbus 330s and 30 Airbus A320s, at an estimated cost of US$3.77 billion. The sum is additional to the 57 billion yuan it had committed for aircraft acquisitions at the end of June this year, according to the company's financial report. "I am proud to say that our pilots' English-language skills are better than those of other mainland carriers," Hu said. In contrast to many of its rivals, China Southern does not employ interpreters on board, he said. Moreover, the pilot structure of China Southern is relatively young, with over 65 per cent of its pilots in their 40s. Only one in 20 of its pilots are retired air-force fliers. The idea of self-paying trainee pilots is unlikely to work in Hong Kong. The only institution that offers flight training in the city, the Hong Kong Aviation Club, only trains people to obtain private pilot licences allowing them to fly light aircraft. Someone holding such a licence would need extra training and a commercial pilot's licence before they could fly for airlines. That involves more written exams and 250 hours flying, compared with 40 hours for a private licence. Most private candidates go to Australia to accumulate the required flying hours. When Cathay Pacific Airways (SEHK: 0293) or Dragonair hires trainee pilots, the airline pays their rent and fees for instruction. The airlines also accept individual candidates who pay their own way.

The central bank yesterday raised the amount of funds mainland banks must keep on reserve for the second time this month, reflecting Beijing's desperation to contain soaring inflation. The People's Bank of China announced last night that all banks were required to set aside an additional 0.5 per cent of total deposits. They would be locked up from November 29, just two weeks after the central bank increased the reserve ratio by 0.5 percentage points. The surprise announcement yesterday was in line with speculation that consumer prices this month will be 5 per cent higher than a year ago. "The PBOC is under pressure, and it needs to do something to show its determination to tame inflation," said Lu Ting, a Bank of America Merrill Lynch economist. "However, it has no intention of killing growth by aggressively hiking interest rates, or imposing a lending squeeze. Raising the reserve ratio is the natural choice of the PBOC." The reserve requirement ratio is the percentage of total deposits that a bank locks up and cannot lend. A higher reserve ratio helps soak up capital to stop it from sloshing around the economy. It is the fifth time this year that the central bank has raised the reserve ratio. Lu estimates that the 50-basis-point reserve increase may drain about 350 billion yuan (HK$408.5 billion) from the banking system. After the latest increase, the mainland's biggest banks are obliged to hold 18.5 per cent of their funds in reserve. The latest move cemented economists' belief that the central bank would soon raise interest rates again to tame inflation. Beijing started a new round of monetary tightening in October when it increased lending and deposit rates by a quarter of a percentage point. The US Federal Reserve's second round of quantitative easing, or QE2, prompted the central government to take drastic action. High consumer prices risk becoming a festering political and social problem, rather than an economic topic. Consumer prices in October were up 4.4 per cent year on year, higher than economists' forecast of 4 per cent. "All signs are showing consumer prices would have grown even faster in November," China International Fund Management said in a report yesterday. "Price controls and taming inflation have emerged as buzzwords for the authorities and the media." The increase in banks' reserve ratio was also aimed at fighting the rampant inflow of hot money amid a strengthening of the yuan. Central bank governor Zhou Xiaochuan said earlier this month that China would create a "pool" to offset the negative impact from an influx of hot money.

Cultural & Creative Industry Expo held in Beijing - People stands in front of a fitting equipment during the 5th China International Cultural and Creative Industry Expo (ICCIE) in Beijing, capital of China, Nov. 19, 2010. The expo, displaying a large number of cultural and creative exhibits, was opened to the public for free.

November 21, 2010

Hong Kong*: The government on Friday unveiled its latest attempt to cool the red-hot property market, amid public anger at spiralling prices and fears highlighted by the IMF of a real estate bubble. Financial Secretary John Tsang announced a sliding scale of new stamp duties effective midnight Friday aimed at restraining what he called ”short-term speculative” inflows into the city’s property market. “These are extraordinary measures under exceptional circumstances. Our aim is to curb short-term speculative activities and to reduce the risk of any asset bubble,” Tsang said. The Hong Kong Monetary Authority also announced new restraints on mortgage lending, mostly aimed at the luxury end of the market. The measures, which had been flagged in advance, dented the Hang Seng stock index, with property developers’ shares falling as much as 2.5 per cent. The International Monetary Fund this week urged Hong Kong to rein in soaring prices, amid fears that overheating is spreading from high-end luxury properties to the general market. Under the levies outlined by Tsang, anyone reselling a property within six months of purchase would be subject to a hefty 15 per cent stamp duty. A 10 per cent duty would apply to sales within six-to-12 months and five per cent on sales within 12 to 24 months. The head of the Hong Kong Monetary Authority outlined another scale of measures that effectively lowers the proportion of an individual purchase that can be made with a mortgage -- mostly applicable to high-value purchases. “We are very concerned that the housing market and consequently the mortgage market will become even more exuberant, thereby exposing the banking system to higher risk,” said Norman Chan. Luxury home values recently topped their pre-1997 Asian financial crisis peak, according to government data released in October. Friday’s announcement marks the latest in a series of property cooling measures. Stamp duty on luxury property was hiked by half a percentage point in April to 4.25 per cent, while a number of government land auctions have been held to increase supply. But prices have crept ever higher, and are up 20 per cent in the past year. The IMF warned in a report on Thursday that, “depending on the amplitude of the upswing, the resulting downturn could prove both protracted and painful”. Concerns have been amplified after the Federal Reserve unveiled a massive stimulus package to kick-start the US economy, raising fears that a flood of speculative money could overheat Hong Kong’s volatile asset markets. The Hong Kong dollar is tied to the greenback, although the IMF reiterated its support for the city’s currency system, calling it a “robust anchor of monetary and financial stability”. Buggle Lau, chief analyst at Hong Kong property broker Midland Holdings, said the latest measures could show quicker results. “Last time, the government’s measures, including boosting land and property supply, were aimed at lower prices in the long term. The new stamp duty will no doubt dampen the enthusiasm of speculators,” he said. “It will force many of them to reconsider reselling to make quick bucks.” In October, Hong Kong’s leader announced a halt to automatic residency for wealthy property buyers, in a move that analysts said was aimed squarely at cash-rich investors from mainland China. At a rowdy legislative session that was dogged by about 200 protestors denouncing high property prices, Chief Executive Donald Tsang said: “Housing is currently the greatest concern of our people.”

Hong Kong should impose further credit policies and fiscal measures to curb rising property prices instead of changing the territory's dollar peg, the International Monetary Fund said yesterday. "Our solution is to tackle the property market directly ... and not change the peg," said Nigel Chalk, IMF head for Hong Kong. The global body warned that Hong Kong's accelerating asset inflation risks causing deflation and an extended economic downturn if the bubble bursts. The Hong Kong government is expected to outline fresh cooling measures - perhaps as early as today - concerning the property market, sources told The Standard. Contrary to many market commentators, the IMF said Hong Kong is not facing a property bubble for now. "We don't see a bubble in the property market, we don't see prices are deviating from fundamentals," Chalk said. But some economists and analysts believe there is a bubble, even if its impact is relatively small. Depending on the extent of the upswing, the resulting downturn could prove both protracted and painful, the IMF said in a report. The government should consider increasing stamp duty on housing and raising rates for higher- end properties if prices continue to rise, it said. Hong Kong home prices have climbed about 50 percent since the start of last year, surpassing a 1997 peak that was followed by a six-year deflationary slump. "We are fully aware of the risks of an acceleration of the credit-fueled asset cycle," Norman Chan Tak-lam, head of the Hong Kong Monetary Authority, said yesterday after the release of the IMF report. The de-facto central bank will introduce appropriate and timely prudential supervisory measures to ensure banking stability, he said. Since April, the government has raised stamp duty on some home sales, increased downpayment ratios, stopped offering residency to foreigners who buy property in the city and increased land auctions to boost supply. More fiscal support aimed at targeted groups may also help temper surging house prices, economists claim. The IMF also asked local regulators to ensure underwriting standards are rigorously complied with. Meanwhile, the IMF expects Hong Kong's economy to grow 6.75 percent for this year, before dropping to 5-5.5 percent growth in 2011. Inflation will hit 5 percent by the end of 2011, as higher property prices feed into higher consumer prices. As the local economy remains robust, the IMF urged the government to veer away from tax cuts and not to cut any government rents. William Hench, portfolio manager at US investment house Legg Mason, urged flexibility. Hench said the global monetary outlook could vastly change next year when the US housing and employment improves and the US Federal Reserve considers hiking interest rates.

The future looks a little rosier for staff at Sa Sa International Holdings (0178) - they are in line for likely pay rises of at least 3 percent next year. The move comes after the cosmetic retailer's net income surged 42.3 percent in the first half to HK$176 million, boosted by a robust retail market and the strong yuan. Sa Sa is also on a hiring spree, with more retail stores in the works. The company aims to add 25 stores in Hong Kong by the end of 2012. It already has 75 stores in the SAR with six more to open by March. Sa Sa is optimistic about prospects for continued growth in retail sales amid stable economic growth in the mainland and the rest of Southeast Asia, said chairman Simon Kwok Siu-ming. "We are confident of seeing double-digit sales growth in Hong Kong this Christmas," he said. But profit margin may be affected by inflation, as lease-renewal rents rose 14.5 percent in the first half, Kwok said. Net profit margin rose 1.4 percent to 8.4 percent in the first half. Retail sales increased 16.8 percent while same- store sales climbed 9.3 percent in the same period. Average sales per customer rose 10.2 percent to HK$268 in Hong Kong. Shares of Sa Sa rose as much as 23 percent during the day before closing up 19.55 percent at HK$8.56 yesterday. The surge came after the rosy results announcement and a one-for-one bonus share issue to existing shareholders, on top of an interim dividend maintained at 9 HK cents since the first half of 2009. Earnings per share jumped to 12.7 HK cents in the period, from 9 HK cents. Net profit reached HK$176.3 million for the six months ended September 30, compared with HK$123.9 million a year ago. Turnover rose 19 percent to HK$2.1 billion on improved sales in all markets. Sales in Hong Kong and Macau rose 17.5 percent, while mainland sales surged 40.7 percent. Singapore sales were up 16.7 percent, while those in Malaysia and Taiwan increased 14.9 percent and 8.8 percent, respectively. E-commerce revenue also rose 22.2 percent to HK$136.7 million on the back of a weaker US dollar. Sa Sa plans to have 100 stores in the mainland by the end of 2013, up from the current 20. The retailer has earmarked HK$130 million for store network expansion for the financial year ending March 31, and HK$170 million for the following year, Kwok said.

HK BMX star Wong makes off with gold - Hong Kong's Steven Wong reacts after winning the gold medal in the Men's BMX race at the Asian Games in Guangzhou on Friday. Hong Kong's Steven Wong won BMX racing gold at the Asian Games on Friday before setting his sights on the London Olympics as China's Ma Liyun took the women's crown. Wong clocked 30.337 seconds in his race, beating silver medallist Akifumi Sakamoto of Japan by 1.042sec with Japan’s Masahiro Sampei grabbing the bronze in 31.466. In the women’s event, China’s Ma Liyun timed 36.662 to finish 1.140sec ahead of Japan’s Ayaka Miwa, with China’s Yue Cong third in 37.916. “It has been a hard week. I’ve done pretty good and I’m happy,” said Wong, the five-time Asian championships winner. “It’s not an easy track. I just kept moving on, thinking nothing of the rank. It’s lucky to finish the laps safely. When I sprinted in the last section of the lap, I almost fell down,” he added. Wong confirmed he would be taking part in the Olympics in two years’ time. “Since I won many big events... it’s time for me to move on, so I’ll get ready for the London Olympics.” The 22-year-old, born in Belgium to a Chinese restaurant owner father and Belgian mother and raised in the European country, is the five-time Asian championships winner. He clinched his first All-China Games gold medal for Hong Kong back in 2005, having turned down an invitation from the Belgian national team seeking his services. Women’s winner Ma said she had a tough task despite a total of only three riders in the women’s final. “Although there were not so many riders in the race, the competition was fierce. It required a lot of skill and I’m satisfied with my performance. “My family and teammates were all cheering for me in the stands. They encouraged and supported me a lot.” But Ma, 22, who won the Asian championships this year, admitted there was still a gap to the top riders in the world. “China is one of the top teams in Asia but compared with the top riders in the world, we still have a long way to go. I have a lot of pressure.”

Executive Committee member of the Liberal Party Michael Tien Puk-sun said on Friday that after careful consideration he had resigned from the party because of idealogical differences. He said the recent Cafe de Coral (SEHK: 0341) wage dispute had triggered his decision as his views on the issue differed sharply from those of other Liberal Party members. Cafe de Coral - after the minimum wage law was passed in July – offered an hourly wage rise of between HK$2 and HK$3.50 to those on its staff earning between HK$22 and HK$25 per hour. However, to get the pay increase the company required its staff to forfeit their daily 45-minute paid meal break, which would equate to an overall cut in their net pay. After complaints from staff, public outrage and a planned boycott of the fast-food chain by various political, student, labour and religious groups, Café de Coral abandoned its plan to deprive staff of paid meal breaks. “I strongly disagreed with the profit-making [mentality] of Café de Coral – [aimed at] depriving its employees of benefits because of the minimum wage bill. So I supported the boycott.” he said. “But the lawmakers in our party, who represent functional constituencies, had no problem with what Café de Coral was doing. “After discussions with the party, we both agreed it was better for us to go our separate ways,” he said. Tien stressed that he was still enthusiastic about running in Legislative Council direct elections in 2012. Liberal Party chairwoman Miriam Lau Kin-yee said it was a pity Tien had left the party and she thanked him for his contribution. Tien had joined the pro-business party in 2008. He is a Hong Kong deputy of the National People’s Congress and chairman of garment retailer G2000. Tien is also the younger brother of former Liberal Party chairman and Tourism Board chairman James Tien Pei-chun.

HK buyers pay top dollar for high-price clubs - Exclusive and expensive, but private memberships are still a hot ticket - Joining a club in Hong Kong isn't so much an exercise in social networking as a crash course in financial and investment planning. A quick glance at the fluctuating cost of entry to some of the city's most prestigious clubs tells you why. Two years ago, in the middle of the global economic downturn, a second-hand individual membership at the Aberdeen Marina Club was worth about HK$1.2 million. Today, it would set you back somewhere closer to HK$2.15 million. At the Clearwater Bay Golf & Country Club, the price of admission has jumped to HK$4.5 million from HK$2.8 million two years ago. In fact, the going rate for a membership at Clearwater Bay on the secondary market has topped even pre-financial crisis highs , according to Athena Wong, director of Everfine Membership Services, which acts as a middleman between club members and potential buyers. One long-time member of Clearwater Bay Golf & Country Club said that five years ago it cost about HK$200,000 for a basic membership, which did not confer access to the golf and marina facilities. The price had now doubled to between HK$400,000 and HK$500,000. The club also offers marina and golf memberships, with the latter being the most expensive as there is a long waiting list for access to the 18-hole golf course. The club mainly appeals to locals and expatriates living in the nearby Sai Kung community, including mainlanders who have bought homes there and have business dealings in Hong Kong. "You do hear putonghua spoken more and more at the club," the member, who did not want to be identified, said. Wong described the secondary market for club memberships as active, with memberships snapped up whenever one became available. Buying a transferable membership traded on the second-hand market is the only way to avoid long waiting times to get into a private club. But not all clubs allow memberships to be bought and sold on the secondary market, such as the Hong Kong Jockey Club, the Hong Kong Country Club and the exclusive Hong Kong Club. Applicants often have to wait years, if not decades, to be accepted by these clubs. One Hong Kong Country Club member, who belongs to two other clubs, likened memberships to private schooling, saying the high prices reflected the lack of new land to erect additional club facilities. Louis Tam, general manager of Garway Membership Services, a go-between for buyers and sellers of club memberships, said improving incomes and a lack of new members-only clubs were keeping demand strong and prices high. "In the past 15 to 20 years, there have been no new private clubs, so membership prices should keep going up," Tam said. Everfine records show that the Hong Kong Golf Club, which has golf courses in Fanling and Deep Water Bay, is the most expensive, with the going rate for a corporate membership at HK$10 million. Aberdeen Marina Club and the American Club are among the most popular with the price of an individual Aberdeen Marina Club membership at about HK$2 million. A corporate membership at the American Club will cost you HK$1.85 million. Corporate memberships tend not to come on the market very often because they are used by companies to attract and retain senior executives and are usually only sold when a business is dissolved.

JP Morgan aims to be biggest player in Hong Kong fund management market - JP Morgan Asset Management has carved a niche for itself as one of the leading overseas fund houses in town, but chairman Paul Bateman has his sights set on the firm becoming one of Hong Kong's largest houses overall. The firm has been beefing up its presence over the past several years, expanding headcount from about 330 in 2005 to more than 500 this year and growing by 50 per cent in the Asia-Pacific region to an overall employee figure of 1,500. And it plans to continue adding staff throughout the region. "When you look forward 20 years, JP Morgan in Asia has to be as big relative to all the Asian houses as it is relative to the European houses and US houses today," Bateman (pictured) said in an exclusive interview with the South China Morning Post (SEHK: 0583). "That's a very, very big thing we have to achieve." Overseas fund managers have traditionally focused their attention on developed markets like the United States and Europe where the most demand exists for long-term investment planning. Many have since shifted resources to Asia, however, where economic growth looks brightest in an otherwise dreary global economy. The influx of new players and increased scale of old ones has ramped up competition in Hong Kong. The number of unit trusts and mutual funds authorised by the Securities and Futures Commission has increased over the past decade by 22 per cent to 1,968. JP Morgan Asset Management is no stranger to vying for market share in Hong Kong, having officially set up shop in 1974. Since then, it has tried to stand out from the crowd by growing from within the region and forging local connections. "We don't seek to run the business from London or New York," Bateman (pictured) said. "We seek to run the business with power and authority delegated to people in the region who are career-committed to the region." For example, he noted that the firm had seeded its mainland business with Chinese speakers from its Taiwan operations. They were tasked with co-ordinating with regulators and businesses to lay the groundwork for the firm's joint venture with Shanghai International Trust and Investment. Bateman said growth in the mainland market had come in ahead of schedule and the joint venture had already made a significant contribution to the firm's overall revenue, without specifying how much. It had US$8.6 billion assets under management in October this year, compared with just US$300 million at the end of 2005. "What was always a possibility became a reality," Bateman said. "And you have to believe that over a period of time the mutual fund business in China will be as big as the business in America and in Europe." He expected there would still be growing pains, however, given the rapid pace of wealth creation across the border. "It's a market that has a very short-term mindset," Bateman said. "Providing investor education in a way which informs people about the risks they are taking and encourages them to take the longer term view, when that is not their natural inclination, is a huge challenge." Mainland investors have struggled to adapt to long-term investing in part because of the up-and-down nature of domestic markets. The Shanghai Composite Index has been one of the world's most volatile equity benchmarks, with fluctuations of at least 60 per cent each year since 2006. It is the Asia-Pacific's second-worst performing benchmark so far this year.

Citigroup, along with China Asset Management, launched the "China Select Fund," which invests mainly in Chinese equities listed in China (A-share and B-share markets), Hong Kong, United States, Taiwan, Singapore and other countries.

Electronic components distributor AV Concept Holdings (0595) booked a net profit of HK$37 million for the six months ended September 30, a rise of 2.48 percent year on year. But revenue fell 5.4 percent during the six months to HK$1.17 billion, as the firm spun off part of its business to form two joint ventures last year.

 China*: The State Council, China's Cabinet, on Thursday ordered further measures in its crackdown on stock market insider trading. The measures include ensuring confidentiality of non-public information about listed companies and regulating government officials who have access to such information, according to a statement posted on the State Council website. The move involves the collaboration of multiple government agencies, including the China Securities Regulatory Commission, the Ministry of Public Security, the Ministry of Supervision and the State-owned Assets Supervision and Administration Commission. The State Council also called for registration of people who have privileged market-moving information and improvement of disclosure requirements for listed companies as well as rules concerning suspension and stock trading. "The effort to crack down on insider trading in the country's capital market is faced with a serious situation as it has become more hidden and complex since the trading launch of stock index futures," the statement said. China's stock market has been plagued by insider trading scandals over the past several years. Analysts said that illegal activities have often contributed to sharp market volatility, leaving millions of retail investors unprotected from fluctuations. Since 2008, the securities regulator has investigated 295 insider trading cases, accounting for 45 percent of the total cases filed during the period, according to its figures.
One of the most prominent cases of insider trading concerns Chinese retailing tycoon Huang Guangyu who was sentenced to 14 years for insider trading and market manipulation. Analysts said that regulators should ensure implementation of the measures. The watchdog's current punishments are largely symbolic, levying fines that are just a fraction of the amount made by illegal trading, they said. "China is not short of policies that target illegal trading. But the key is whether they can be implemented effectively," said Pi Haizhou, a Beijing-based financial commentator. "The regulator should reform the law by making punishment tougher and raising fines," he added. The Chinese stock market has been notorious for its fluctuations and stock valuations often reflect investors chasing momentum over value. The securities watchdog in recent years has rolled out a series of financial market reforms to reduce volatility and make investing in the stock market less of a rollercoaster ride, but in vain. The launch of trading in stock index futures this year is a major step taken by the regulator to make the Chinese stock market more like bourses of developed countries which provide investors sophisticated tools to hedge risks. But analysts warned that the new trading tool can also lead to more irregularities that potentially undermine the market if it is not well regulated.

Mercedes-Benz A-Class joins luxury product lineup in China auto market - MERCEDES-BENZ yesterday officially launched the newest young model, the A-Class, in Shanghai to further expand its customer base in China and ride on the growing demand for luxury compact cars. The A160 and A180 boast a perfect combination of Mercedes-Benz's innovative technology, pioneering expertise and youthful passion - as well as their exceptional values at 238,000 yuan (US$35,843) and 278,000 yuan respectively. With the highest standards of safety, practicality, and comfort offered by the youthful and dynamic A-Class, Mercedes-Benz aims to enable young elites to not only achieve, but also enjoy, their dreams under the three-pointed star. "In response to increased customer demand for luxury compact vehicles, we are now excited to launch the A-Class to the Chinese market, which will make the Mercedes-Benz brand even more attainable for Chinese customers," said Klaus Maier, president and CEO of Mercedes-Benz (China) Ltd. Mercedes-Benz introduced the A-Class in 1997, a pioneer in creating a brand-new luxury compact segment. And the A-Class has been leading the rapid development of the segment ever since. The A-Class has achieved accumulated sales of 2 million units worldwide, underlining its acceptance and popularity as the premium compact vehicle. Now the A-Class is brought to China to cater to more young elite customers who pursue the highest quality of life. "Mercedes-Benz has rejuvenated its brand image for the past few years, especially in China," said Bjorn Hauber, executive vice president for sales and marketing of Mercedes-Benz (China). "Mercedes-Benz is more than the S-Class. It has the high performance AMG, the very luxurious Maybach and the younger smart brand." With the newly launched A-Class as well as B-Class and GLK, Mercedes-Benz wants to make it achievable to younger people, who can grow with Mercedes-Benz. "These consumers can develop from A-Class, from B-Class to C-Class, E-Class and S-Class. When they grow more successful in their career, we want to be their partners. We want to enable our customers to stay with Mercedes-Benz," Hauber said. He noticed that four or five years ago, the customer base was mainly S-Class driven. Today, the customer base is much broader in terms of age group, personal wealth and why they want to use the car. The average age has dropped to below 40 in China, and you don't have to be an entrepreneur to dream of driving a Mercedes-Benz. At the "Are You Ready" themed A-Class launch event in the South Pier in Pudong New Area, the three-pointed star shone brightly in Shanghai amidst a dazzling state-of-the-art multimedia event. "Shanghai, as a modern city with a lot of activities, provides an ideal setting to launch the A-Class. It has a huge advantage in city driving because of its size and mobility in a metropolis like Shanghai," Hauber said. As Mercedes-Benz always believed that a Mercedes-Benz must be the best vehicle in its respective segment, the luxury car maker wants to offer premium vehicles also in the A-Class. Thanks to the customer-oriented design concept of Mercedes-Benz, the A-Class is the embodiment of sheer practicality. This spacious interior makes the vehicle flexible and large enough to meet a variety of daily needs. "Now, with the launch of the A-Class in China, Mercedes-Benz has become the brand with the most comprehensive young product lineup in the luxury auto market," Hauber said. Mercedes-Benz earlier introduced the smart brand to target younger elites with its sporty and stylish models. And the smart brand has been applauded by Chinese consumers and continued its upward flight in China in the first 10 months of this year. Through unique marketing initiatives and governmental support towards achieving zero-emission mobility, the lifestyle-oriented smart again witnessed its best performing month ever in China since its entrance into the market.

US companies still want to do business in China - A Minnie Mouse doll is seen at a field in Shanghai, where Shanghai Disneyland will be built. Many US companies have expressed their intention to invest or expand in China, according to a survey by the US-China Business Council. Many US companies said in a survey that they are committed to doing business in China, despite a federal commission report that criticizes China for its "highly discriminatory" economic practices. But the same survey, released by the US-China Business Council (USCBC) on Wednesday, echoed the tone of the report by the US-China Economic and Security Review Commission. In the survey, the US companies said they are increasingly concerned with barriers to accessing the Chinese market. The nonprofit organization based in Washington represents about 220 US companies selling goods and services in the Chinese market. According to the survey, 87 percent of respondents said that their operations in China posted revenue growth in 2009. Nearly 90 percent said that profit margin rates in China equaled or exceeded their companies' global margins. Their greatest worries do not only pivot around human resources, such as talent recruitment and retention, but also around administrative licensing and competition with State-owned enterprises. Council President John Frisbie said in a statement that for "many USCBC members, these concerns are less about real impact on current operations than they are about policy and regulatory trends that could seriously hinder foreign companies and discourage future investments, if the trends continue and the policies are fully implemented". Despite the complaints with China's trade policies, the frustration on Wednesday was also aimed at the United States. Jagdish Bhagwati, professor of economics and law at Columbia University, said the US has been continuously bashing China unnecessarily because China is moving toward an economy more focused on domestic consumption. Charlene Barshefsky, who was US trade representative during the Clinton administration, pointed out that the US does not have a strategy with regard to China. She said that if the US wants "to make progress with China, sometimes being quiet is better. Sometimes a discussion of a reasonable sort is better than overheated rhetoric. The (Obama) administration needs to sort out how it wants to deal with China". Beryck Maughan, a partner at Kohlberg, Kravis Roberts & Co, an alternative asset management company, disagreed with the strong China-bashing in the US. Is it China's fault to have a current account surplus once in the last 30 years? Is it China's fault that we (the US) have deficits with more than 60 countries, not just one? Is it China's fault that we are on a fiscally unsustained path, critically dependent on capital inflow to keep the economy going?" he asked. China recently has relaxed aspects of its trade policies. Last year, China removed a requirement that most of the components of wind power-related equipment be made within its borders. The move was made in the hopes of allowing foreign companies to compete in China's wind power market. The regulation had stated that all local governments use more than 70 percent locally made technologies and products in their wind power facilities. Premier Wen Jiabao has repeatedly said that foreign companies will not face discrimination in the country. He said the Chinese government will "unswervingly" continue its course of openness that will facilitate foreign investment in China. Wen said recently that the policy of encouraging innovation treats all businesses in China the same. It will not exclude foreign companies. He reassured foreign companies in September at the World Economic Forum in Tianjin that "China is committed to creating an open and fair environment for foreign-invested enterprises."

Dow Corning's $1.8b silicone production facility became operational in Zhangjiagang China - China's largest silicone production base became operational in Zhangjiagang on Thursday to serve fast-growing demand for the material in the country and throughout Asia. The integrated manufacturing site, operated by Dow Corning Corp of the United States and Germany's Wacker Chemie AG, involves a total investment of $1.8 billion and includes a siloxane plant and a pyrogenic silica plant. Siloxane and pyrogenic silica are key ingredients in the manufacture of finished silicone products. Silicone-based materials are used in nearly all sectors of China's economy, including automobiles, construction, electronics, power generation and distribution, solar energy, cosmetics and personal care products, and textiles. The Zhangjiagang joint facility is Dow Corning's third pillar after manufacturing sites in the United States and the United Kingdom, and will serve Asia-based customers, said Stephanie Burns, chairman of Dow Corning Corp. China is now the second-largest silicon market and will soon become the largest, Burns said. The total annual output of the production base is expected to reach 210,000 tons. "We are ramping up production over the next six to 18 months and the facility will be at maximum operation," said Dow Corning President Robert Hansen. China represents over 50 percent of Dow Corning's global sales and has been experiencing a double-digit growth rate, according to the company. For Wacker, one-third of its sales are generated from Asia where China accounts for 60 percent of revenue. Its sales in China reached 730 million euros ($996 million) last year, representing 20 percent of its global sales. Wacker also announced its plan to invest a total of 400 million euros in China by 2013. Burns predicted that high-tech industries, including advanced construction, such as green buildings, electronics, automobiles and renewable energy would be the growth points for silicone products. "We will work closely with local car producers who are gaining more momentum as China becomes the world's largest automobile market," said Jeremy Burks, president of Dow Corning in China. Despite global economic woes, the polysilicon business has continued to grow thanks to the development of the solar energy sector, according to the two companies. Dow Corning said it currently has no plan to build a manufacturing site in China, which will center on providing the material for the booming solar industry. Dow Corning said it is now investing $5 billion in the US, Europe and some parts of Asia to develop its solar-related business.

Air pollution in Beijing was so bad on Friday that the US embassy, which has been independently monitoring air quality, ran out of conventional adjectives to describe it, at one point saying it was "crazy bad." The embassy later deleted the phrase, saying it was an “incorrect” description and adding that it was working to revise the language to use when the air quality index goes above its highest point of 500, which means the air is considered hazardous for all people by US standards. The hazardous haze has forced schools to stop outdoor exercises, and health experts asked residents, especially those with respiratory problems, the elderly and children, to stay indoors. “We’ve cancelled 10 days worth of games since August,” said David Niven, chief operating officer of China Club Football, which runs extensive youth and adult football leagues in Beijing. “If the air is above 240 [on the air quality index], some of the schools will ask us to move football games indoors or cancel them altogether. Because of the bad air this year, we’ve had to cancel more games than ever before.” Health experts say that breathing polluted air can affect respiratory functions and worsen problems for those with asthma or allergies. Experts say Beijing’s frequently bad air has been even dirtier recently because a growing number of factories and villages on the outskirts of the city are burning coal for the winter and more than 1,200 new cars hit the roads each day. The capital underwent a massive cleanup in 2008 for the Olympic Games, such as planting thousands of acres of trees in and around the city, but has since allowed some factories to reopen and lifted some traffic restrictions, bringing pollution levels back up. “If the city’s planning was better, people from the outskirts wouldn’t have to commute for hours each day,” said Ma Jun, director of the Institute of Public and Environmental Affairs in Beijing. “Beijing needs to place more of a priority on the environment. The health of Beijing residents is no less important than the health of those athletes who were here for a few weeks.” “We can’t just expect wind, snow or rain to wipe out the pollution when it gets bad,” Ma added. “The city must take pollution more seriously and implement preventive measures.” When China’s air pollution index, which measures four major pollutants, is under 100, China considers it a “blue sky day.” According to the China Daily , Beijing experienced 285 blue sky days last year, compared to 274 in 2008. But in the first half of this year, Beijing saw 140 blue sky days, six less than the same period the previous year, it said.

Air China (SEHK: 0753) is to buy 20 passenger planes from Airbus in deal worth US$4.49 billion, the airline said in a statement filed with the Hong Kong stock exchange on Thursday. China’s leading carrier said it would acquire 10 Airbus A330 and 10 Airbus A350 series aircraft from the France-based aviation consortium, for which it would pay in cash installments. The A330s will be delivered in stages from 2013 to 2015 and the A350s from 2018 to 2020, Air China said in its statement. Airbus had granted Air China “significant price concessions” for the aircraft and the purchase will be funded by business operations, bank loans, and “other financing instruments,” the airline said. Air China estimated the acquisition would increase the capacity of its fleet by 18.6 per cent. The acquisition will “optimise the fleet structure of the Company and is in line with the market requirements [and] will deliver more cost-efficient performance and provide comfortable services to passengers.” Air China serves more than 120 domestic and international destinations with its fleet of more than 260 Airbus and Boeing jet aircraft, according to state media. “Air China has ordered more than 200 Airbus and Boeing planes so far. In last year, Air China carried 41.28 million passengers,” Xinhua news agency reported, quoting the airline’s website. The statement follows several major acquisitions by mainland carriers in recent weeks, including China Southern Airlines’ US$3.78 billion deal for 36 Airbus planes. The China Southern deal, for A320s and A330s between 2012 and 2015, was announced as President Hu Jintao arrived in France for three-day state visit. This week, Air China, China Southern and China Eastern (SEHK: 0670) – China’s three largest airlines – were among the reported buyers of 100 C919 airliners, the 190-seat jet built by the Commercial Aircraft Corporation of China (Comac). COMAC announced the deals at the Zhuhai air show, challenging industry giants Airbus and Boeing in what is expected to become the world’s largest aviation market. Airbus rival Boeing said earlier this month it expected China’s civil aircraft fleet to triple over the next 20 years. “China is one of the world’s fastest growing and dynamic aviation markets, driven by the urbanisation of China, the growth of its economy and an ever increasing personal wealth,” Randy Tinseth, vice president of marketing for the US aerospace giant, told a briefing in Beijing on Tuesday. Chinese airlines will need 4,330 new jets valued at US$480 billion over the next two decades, compared with global demand of 30,900 units during the period, he said. Last week, the head of China’s civil aviation administration offered an even more bullish forecast, saying the country would have up to 5,000 aircraft to transport passengers and cargo by 2015, according to state media. In September, Cathay Pacific (SEHK: 0293) said it had confirmed an order for 30 long-range A350 Airbus aircraft with a book price of US$7.82 billion – the biggest single order in the carrier’s history.

The disgraced head of China's main nuclear energy company was jailed for life on Friday for accepting almost US$1 million in bribes in an anti-corruption crackdown.

Beijing in talks with at least six buyers for JF-17s - Low-cost fighter jets spur interest from developing nations at show - At least half a dozen potential buyers are negotiating with Beijing to purchase JF-17 Thunders, fighter jets jointly manufactured by the mainland and neighbouring Pakistan, during the ongoing week-long air show in Zhuhai. Without specifying which countries were considering the aircraft, Zeng Wen , vice-president of the China National Aero-Technology Import and Export Corp (CATIC), was quoted by Flightglobal.com, the website of British aerospace weekly Flight International, as saying: "We're talking with six to eight countries about the JF-17. It is a low-cost solution for developing countries." CATIC is the sole company authorised to sell military aircraft overseas on behalf of the country's manufacturers. Asked to give more details about the would-be customers, CATIC president Ma Zhiping said: "It is too early and not appropriate to disclose the identity of potential buyers for the time being. I can only say at this stage that they come from countries ranging from Africa and South America to Asia and the Middle East." Zambia is known to be one of the potential buyers. "We consider the quality of the aircraft we are interested in first, before talking about their price," said Brigadier General Andrew Sakala, the country's air force commander. "The price of Chinese military aircraft is competitive. We have already bought six Z-9 helicopters from China, but for the moment, we are focusing on the JF-17." Sakala stressed that, as was the case with the Z-9s, his country would test several aspects of the JF-17 before closing the deal. Ma, who introduced the JF-17's functions to a handful of attaches with the Jordanian air force in front of CATIC's booth on Tuesday morning, said most foreign enquiries were about the general combat capability of the aircraft and its sale price. Attaches at the show from Bangladesh and Zimbabwe said they were keenly interested in Chinese military products, especially the JF-17. With a price as low as US$15 million each, the JF-17 is one of the fighter jets being considered to replace outgoing and obsolete military aircraft such as the MiG-21, Jian-7 and Northrop F-5, especially for developing countries such as Egypt, Ghana, Sri Lanka and Venezuela. But according to Antony Wong Dong, president of the International Military Association based in Macau, there are more potential buyers of the JF-17 than six or eight. He estimated at least 15 countries had representatives at the show. He added that the JF-17 Thunder could be the most popular fighter jet among developing countries at a time when their spending power and threat of conflict grows. The military representatives also seized the chance to visit a booth showcasing the L-15, an advanced trainer made by China. Representatives from more than 10 countries had already visited the L-15 booth by noon on opening day, one member of staff said. Air force commanders from at least four countries had taken a closer look at the simulated pilot cabin. China, apart from its huge economic development over the past three decades, has also been putting greater effort into researching and manufacturing military products for export. Zhang Hong , chief engineer of the L-15 trainer, said the aircraft was the best of its type in the world. It can serve as both a trainer and a fighter, which makes it particularly competitive given that its price tag is about one-tenth that of competing products. "As a result of showing more respect to talent, pouring in huge funding and more communication and co-operation with foreign countries on technology, China has made significant progress on the research and development of both military and civilian aircraft in the past few years," Zhang said. He said China should have long ago stopped trying to make money through blood and sweat in factories. "Instead, China should focus on the export of its strategic products," Zhang said. "After all, the sale of one aircraft is the equivalent of exporting a hundred million shirts."

US Energy Secretary Steven Chu announced the launch of a clean- energy initiative by China and the United States - one of the largest- ever research collaborations of two nations.

Chinese VP arrives in Luanda to visit Angola - Chinese Vice President Xi Jinping arrived in Luanda on Friday, kicking off his official visit to Angola.

Airbus A380 visits Tianjin - People perform lion dance in front of an Airbus A380 landed in the airport of Tianjin, north China, Nov. 19, 2010. It was the first time an A380 visited Tianjin.

Charming landscapes at Three Gorges scenery area - The Three Gorges scenery area of the Yellow River, which is located 20 km away from the Xiaolangdi Dam, has gained fame from tourists for its charming landscapes.

November 20, 2010

Hong Kong*: Guangzhou success changing minds on HK host bid - The bravery and outstanding performances of Hong Kong's athletes, as well as Guangzhou's success in hosting the Asian Games, had prompted a positive change among Hongkongers for the city to host the 2023 Asian Games, the home affairs chief said. Tsang Tak-sing said the government had found an increasing number of people now wanted to see Hong Kong host the event, following the opening of the Asian Games in Guangzhou last week. The 10-week public consultation for a Hong Kong bid to host the Games ends on December 1. Hong Kong's athletes had performed exceptionally well and had attracted public support for a possible Hong Kong bid, Tsang said. But it wasn't just the medals that swayed the public. The bravery shown by cyclist Wong Wan-yiu, who climbed back on her bike after sustaining a broken rib in a horrific pile-up and carried on to win a silver medal, had won the hearts of millions, he said. Public sentiment for a Games bid was unanimously negative in September when the government officially mentioned the idea of hosting the 2023 event, with many saying it would bring a huge financial loss. On November 9 the government announced it had slashed its proposed budget for the bid to host the Games from the original estimate of HK$13.7 billion to HK$14.5 billion, to less than HK$6 billion. Tsang said yesterday that the government had received increasing support from people, indicating that they would like to see the Games held in Hong Kong, due to the changes seen in Guangzhou as a result of the city playing host. "People now see positive factors, rather than just the money that needs to be spent," he said. "They see the city getting a facelift, infrastructure being upgraded and even an improvement in public manners." Tsang said Hong Kong had the ability to host the event with its present facilities and the expansion of road and rail networks with the mainland before 2023. "Although Hong Kong is a cosmopolitan city, we still need to keep working hard. We cannot stand still. We have to host events to stimulate commercial activities and attract tourists," he said.

Sixty Group plans US$75m listing - Italian retailer hopes IPO in Hong Kong will power mainland expansion - Sixty Group is the second Italian clothier in the past month to flag plans to list in the city, after Prada. Italian fashion retailer Sixty Group, the owner of the high-end casual wear brand Miss Sixty, plans to raise about US$75 million through an initial public offering in Hong Kong to expand its presence in China. Paolo Bodo, chief executive of Sixty Far East, said the group's China operation, Sixty China, would go public in the city either at the end of next year or in a couple of years when the company grew bigger. "We will do it," said Bodo, who is in charge of the group's businesses on the mainland, Hong Kong, Japan, South Korea and Taiwan. The company is discussing the listing timing with sponsors and investment banks and will make the final decision by next month. Sixty Group is the second Italian fashion company in the past month to flag plans to list in Hong Kong. Milan-based luxury brand Prada said last month that it was considering an IPO in the city next year, through which it hoped to raise up to €1.5 billion (HK$15.72 billion). European companies are drawn to the Hong Kong capital market because of the attractive prices they can obtain for their shares. "If we were listed in Europe, the price-earnings ratio we can expect is only something like eight or 10," Bodo said. "But in Hong Kong, the PE ratio could be as much as 20 to 25, which will provide more capital for our long-term development." In addition, the city is seen as the portal into the mainland, one of the fastest-growing and most sought-after markets for international fashion brands. "As far as I know, there are a number of fashion companies in Italy that are also interested in doing listings in Hong Kong. If we can make it, we will show them that it really works," he said. Founded by Wicky Hassan in 1989, Sixty Group operates several brands including Miss Sixty, Energie and Killah. Known for its fashionable denim collections, the group runs about 10,000 flagship stores, boutiques and selling points in department stores worldwide, including more than 200 on the mainland. It has eight stores in Hong Kong. The company said the sales revenue on the mainland would hit 350 million yuan (HK$408 million) this year, up 37 per cent from a year earlier. The revenue for next year is expected to reach 450 million yuan. Over the next two years, it plans to use the funds raised from the IPO to open 200 more shops in the country. About 70 per cent of them will be located in second- to fourth-tier cities, where the growth momentum is strong. While running most of its shops directly, it also plans to seek more partners and increase the number of franchised stores on the mainland to 30 per cent from the current 20 per cent. "We want to be more independent and more efficient in making decisions because everything is changing so fast in this market," Bodo said. "By going public, we will become a self-financed company and gain more independence to run our China business."

Hong Kong vital for Sino-US ties, US Consul General Stephen Young says - US Consul General Stephen Young says there are many former officials, academics or journalists who can help bolster Sino-US ties. There are many people in Hong Kong such as former chief executive Tung Chee-hwa who can play a part in helping to improve Sino-US relations, according to the top American envoy to the city. In a speech to the Asia Society which declared that the US "is back" in Asia, Consul General Stephen Young said US relations with Hong Kong were a model his government would like to see emulated around the region. Young, responding to a question on Tung's role as a semi-official diplomat, said it benefited both sides, adding that others - be they academics, journalists, non-governmental organisation members or former officials - could also help. "China doesn't have much of the concept of former officials because they kind of stay on the payroll forever. [Tung] is a former official. Over the years he has spent a lot of time in the US, he knows lots of people," Young said. "I think there are a lot of people who play this sort of role." Tung's long-standing diplomatic work with the US behind the scenes hit the headlines in September when he warned a senior US military visitor against attempting to contain China. At a dinner hosted by Young in August, Tung warned Admiral Robert Willard, head of the US Pacific Command, against missions by US aircraft carriers in the Yellow Sea amid heightened tension in the region. Since stepping down as chief executive in 2005 and being appointed vice-chairman of the Chinese People's Political Consultative Conference, Tung has been active in patching up Sino-US ties as head of his Chinese-US Exchange Foundation. In his speech, Young reiterated the wishes of President Barack Obama and Secretary of State Hillary Rodham Clinton to invigorate engagement with China. He also highlighted his country's connections to Hong Kong. And he reiterated Washington's stance of supporting Hong Kong people's "expressed desire" to introduce "true universal suffrage at the earliest possible date". Meanwhile, the Hong Kong government rejected a report by the US-China Economic and Security Review Commission published on Wednesday, which criticized Hong Kong's "delay" in introducing universal suffrage. "The USCC report on Hong Kong is based on an incorrect understanding of Hong Kong's constitutional position and history," the statement said. "We strongly disagree with the USCC's recommendation, which is made based on misguided and unfounded speculations."

Hong Kong's Independent Commission Against Corruption (ICAC) targets veteran Jockey Club members - The arrest of several long-standing voting members of the Hong Kong Jockey Club makes the scope of the ICAC investigation into alleged vote-buying for membership clearer. Among those picked up in a series of dawn raids by Independent Commission Against Corruption investigators earlier this week were a well-known member of the city's Indian community, Dipo Sani, and John Mackie, a long-time resident of Hong Kong and businessman. The two, in addition to 82-year-old American Stanley Freedman, were among 29 people arrested in an operation codenamed "Pilot" which began on Tuesday into suspected bribery connected with applications for Jockey Club membership. By last night, all 29 had been released on bail and no charges had been laid. A person familiar with the investigation also said that one of the so-called middlemen arrested on Tuesday, a local Chinese man, was caught up in the membership bribery case of former voting member John Hung. In the Hung case, the middleman was invited to assist the ICAC with its investigations but was not formally arrested. However, the person familiar with this week's arrests said Operation Pilot was not directly connected to the John Hung investigation, at the end of which Hung was jailed. The most recent investigation stemmed from a complaint alleging corruption in applications for Jockey Club membership, the person said. Former voting member Hung, an ex-chairman of Wheelock (SEHK: 0020), was jailed for two years in June last year for soliciting and accepting an advantage for taking HK$450,000 in exchange for helping a racing member gain full membership. The 29 people arrested this week were detained on suspicion of involvement in bribery related to Jockey Club membership in which applicants were asked for sums ranging from hundreds of thousands of dollars to nearly HK$1 million by middlemen for help with their applications. Among them, voting member Dipo Sani comes from a prominent local Indian family. Sani was involved in Rotary Club activities in the 1990s and became governor of the Hong Kong and Macau Rotary Clubs in 2000, taking a keen interest in encouraging young people to take up charity work during his term. Sani was also a member of the Americas Committee of the Hong Kong General Chamber of Commerce in 2005. A Jockey Club member who knows both Sani and John Mackie said: "The Sanis are a rich Indian family in Hong Kong. Dipo is well-known in the Indian community here. Dipo is a Hong Kong-born boy. He went to St Joseph's College. He also spent some time in Miami." Mackie, who is believed to be in his 70s, has been involved in the merchandising business, mainly importing golf clubs. "He handles a lot of horses as well," the member said. The ICAC investigation has re-ignited long-standing misgivings about the Jockey Club's membership application system. The club's 200 voting members get five racing application forms each season and two full-membership forms. It has 13,640 full and 7,7670 racing members. A spokeswoman for the club said yesterday that when the identities of the arrested voting members had been confirmed it would stop processing any membership applications connected to them. "The club will co-operate with the ICAC. In fact, the membership committee has reviewed relevant policies on a regular basis and will continue to do so," the spokeswoman said. People with a knowledge of the investigation say the problem of people attempting to buy memberships of the Jockey Club has been the focus of the club's security department for a number of years. Information has been passing between the Jockey Club and the ICAC on this for a long time. An experienced racing insider said authorities had been keeping tabs on several of those arrested for some time. He said Mackie was involved in merchandising in China. On the membership scheme in general, the insider said that the ICAC's corruption prevention department had looked at the Jockey Club's system for gaining membership and found there was not much transparency. "It [the system] is archaic and doesn't stand up to much scrutiny. It is strongly arguable that they should devise a whole new system of allowing members in. This one is asking for corruption," the insider said.

IMF backs HK peg, urges property curbs - Hong Kong should impose further credit policies and fiscal measures to curb rising property prices instead of changing the territory's dollar peg, the International Monetary Fund (IMF) said on Thursday. A surge in hot money inflows has fanned market speculation that Hong Kong might change its currency peg to the US dollar to damp inflation and avert a property bubble. “This is not a unique problem to Hong Kong. You see this kind of property price inflation in many of the economies in the region. You see this in Singapore, you see this in Australia, you see this in Taipei. All these economies have very different exchange rate regimes than Hong Kong has and they still have this property inflation,” said Nigel Chalk, IMF head for Hong Kong, via a video conference for the media. The IMF has projected Hong Kong’s economy will expand by 6.75 per cent this year before moderating to 5-5.5 per cent next year as consumption bounces back. “We will remain vigilant and continue to deal with the challenges created by the exceptionally accommodative monetary policies in developed economies,” Financial Secretary John Tsang Chun-wah aid in a statement on Thursday after the IMF’s comments. Hong Kong’s housing prices have risen about 50 per cent since the start of last year, while its Central business district is fast catching up with London’s West End in offering the world’s most expensive office space. Contrary to many market commentators, the IMF said Hong Kong did not face a property bubble for the time being. “We don’t see a bubble in the property market, we don’t see prices are deviating from fundamentals,” Chalk said. The IMF said it expected an inflation rate of 5 per cent by the end of next year as higher property prices feed into higher consumer prices. “Our solution is to tackle the property market directly... and not change the peg,” said Chalk. With prices in the luxury segment of Hong Kong’s property market at 10 per cent above levels seen in 1997, the IMF suggested further lowering of loan-to-value ratios for a wider share of the property market and proactively tightening further the limits on debt service ratios. The government should consider further increases in stamp duties on housing, especially for higher-end properties, if price inflation continues, he said.

HK's Chan Chun-hing wins mountain bike gold - Hong Kong's Chan Chun-hing celebrates on the podium after winning gold in the men's mountain bike race cycling final on Dafushan mountain at the 16th Asian Games near Guangzhou on Thursday.

Fast food chain McDonald's Corp yesterday raised the prices for its burgers, drinks and other snacks on the mainland by between 50 fen (58 HK cents) and one yuan to offset the higher costs of raw materials. It joins many other restaurants and food product manufacturers that have already increased prices or plan to do so as inflation picks up. In a McDonald's outlet in Beijing, the price for a double cheeseburger was raised to 12 yuan from 11 yuan yesterday. Fries were also a yuan more expensive than before. In another restaurant, the prices of McChicken and Filet-O-Fish sandwiches also went up by one yuan. A McDonald's hotline staff said the price increase varied from location to location, depending on their sourcing costs. Sophia Luan, a spokeswoman for McDonald's China, told Bloomberg the price increase was aimed at covering the higher cost of raw materials such as flour, sugar and oil. Other fast food operators, including KFC, Pizza Hut and Burger King, said their prices had remained unchanged over the past few months but many operators in the industry have increased their prices or considering doing so as costs mount. Wang Yong, who owns a Cantonese-cuisine restaurant chain in Beijing, said sourcing costs had increased by 10 to 12 per cent in the past six months. The rise in flour and sugar costs was sharper than other ingredients. "It's getting harder to run the business," Wang said. "Increasing prices is the last thing we would like to do but I'm afraid we have to do it if inflation stays high." The government has vowed to curb food inflation. Xinhua reported Premier Wen Jiabao as saying that the government was taking steps to cope with the problem. Interest rate increases, higher bank reserve requirements and more curbs on bank lending are among the possible measures, analysts say. The consumer confidence index released yesterday by the National Bureau of Statistics fell to 104 from 109 in the third quarter after climbing for five consecutive quarters. The main reason for the drop was that consumers were less willing to spend, according to a survey conducted by the bureau and Nielsen. The survey also found that an increasing number of consumers were concerned about rising prices, with people in rural areas and first-tier cities the most worried. Food prices, which account for a third of the consumer price index, have been the main driver behind the recent inflation. Almost 80 per cent of respondents in the survey said they expected food prices to accelerate next year.

Bluestar targets HK$12b in share offering - Robert Lu, the chairman of Bluestar Adisseo, talks via a video link from London at yesterday's press conference to announce the initial public offering of the company. Bluestar Adisseo Nutrition Group, an animal nutrition company majority owned by China National Chemical Corp, is tapping Hong Kong's equity market for HK$12.08 billion. According to the listing prospectus, state-owned ChemChina and private equity firm Blackstone Group own 80 per cent and 20 per cent of the company, respectively. Bluestar Adisseo's offering has been priced at an indicative range of HK$3.50 to HK$5.25 per share. At a video press conference from London at the JW Marriott in Pacific Place, the company said 40 per cent of the net proceeds from the share sale would be used to boost production capacity and upgrade its plants in Europe. Another 40 per cent would be used to develop its feed business, including potential acquisitions. The company, headed by Robert Lu, also said it would allocate 5 per cent of the net proceeds to repay short-term bank borrowings, including from Standard Chartered. According to reports by Bloomberg, China National Bluestar bought France's Adisseo Group for US$480 million in 2006. In October 2008, ChemChina completed its stake transfer deal with Blackstone, which saw the US private equity company pay US$600 million for a 20 per cent share in its subsidiary BlueStar. The company, which claims to be among the top three producers of methionine by capacity globally, also makes vitamins, enzymes and sulphur products primarily for feeding poultry, which it said was the fastest growing segment of the livestock industry. Methionine is a protein used in poultry feed. Bluestar Adisseo has 1,165 employees and five production sites in France, Spain and the United States. The company said it wanted to increase sales on the mainland and planned to build a production plant to make methionine in Nanjing. Trading of Bluestar Adisseo shares is expected to start on November 30. Although Hong Kong's initial public offering market is still sizzling, not all of the performances from newly listed companies have been impressive. Shirble Department Store Holdings fell 17.7 per cent below its offer price of HK$2.20, closing at HK1.81 on its trading debut. Citic Dameng Holdings - Citic Resources Holdings' manganese mining and smelting unit - is also not expected to perform well. According to Phillip Securities, which operates the only pre-listing trading platform in Hong Kong, Citic Dameng shares closed at HK$2.61 - 5.1 per cent lower than the offer price of HK$2.75.

Tai Wai launch is test of market's mood - Discounted prices ensure buyers show keen interest in Festival City's phase two - Festival City in Tai Wai. Phase two seems popular with would-be buyers, with prices below those in the first phase of sales in March. The upcoming launch of the second phase of flat sales at Cheung Kong (SEHK: 0001)'s Festival City project above the Tai Wai MTR station will provide the first test of market sentiment since last month's annual policy address by Chief Executive Donald Tsang Yam-kuen. Early signs are that since the release of a list of slightly discounted prices, enthusiastic would-be buyers are already queuing up. "It's conveniently located on the top of the Tai Wai MTR station, so I think it has potential," said Mary Wong after viewing the show flats. Wong and her husband, who live in Taikoo Shing, are considering spending at least HK$8.4 million for a flat in the development, which is expected to be completed in October. "The prices are reasonable and have potential to grow," said Wong.

Schools that receive HK$2.4 billion in government subsidies have been found spending the cash on items such as high- risk financial instruments and staff flats, according to the director of audit.

Health chiefs order bird flu tests at hospitals as city goes on high alert - Onlookers stare up at a parrot in the bird market at Mong Kok, where samples were taken for testing yesterday as the city reacted to its first case of bird flu for seven years. Patients who turn up at Hong Kong's public hospitals with a high fever will have to be tested for bird flu, health chiefs ordered yesterday. The move comes after a local woman infected with the H5N1 virus was moved into intensive care as the city's health minister Dr York Chow Yat-ngok denied there had been a delay in her diagnosis.

Child campaigner ends a 30-year crusade - Priscilla Lui joined Against Child Abuse in 1979, became director at 32 and spent decades furthering the cause of children's rights. When Priscilla Lui Tsang Sun-kai joined Against Child Abuse at the age of 28, she never imagined she would still be there at 60. But Lui, who will retire soon as director of the non-governmental organisation, said she got caught up in the meaningful nature of the work. "I love children. I really love children. They invigorate me, make me feel young, and instil in me a great sense of living," she said. "It breaks my heart when I hear news about children who had accidents while left alone at home, and being seriously injured from corporal punishment." Those sentiments led her into the role of a motherly figure to whom Hong Kong people have turned in the past 30 years when they needed advice on child protection. Those days will soon be over. Her contract ended when she was 55, four years ago, but it was renewed for five years. Now she thinks it is time she stepped aside.

 China*: Pakistan has confirmed it will buy Chinese missiles and flight systems to equip its 250 JF-17 Thunder jet fighters as it seeks to deepen military co-operation with Beijing.

As soaring food costs grip the nation, Beijing yesterday moved to tackle inflation with a round of new measures - and a vow to impose price controls if necessary. Hong Kong and Shanghai stocks earlier plunged over fears of such a move - the measures were announced after the markets closed - in addition to concerns that further tightening steps loom on the horizon. The moves come after Premier Wen Jiabao reportedly made tackling price surges a top priority following his visit to a Guangzhou supermarket last week. Announcing the four measures yesterday, the Cabinet said it aims to boost the supply of food and commodities as well as facilitate transportation. It will also try to curb speculative demand. In addition, local authorities will provide food subsidies for poor families as it tries to cool a double-digit surge in prices that Beijing worries could spark unrest. "We have to understand the importance and urgency of stabilizing market prices and take forceful measures," the State Council said after a meeting chaired by Wen. "When necessary, more temporary intervention measures will be implemented on prices of some important daily necessities and production materials." Those who hoard commodities and push up prices by illegal means will be punished harshly, the State Council warned. Bank of America Merrill Lynch China economist Lu Ting said Beijing clearly has price controls in mind. "The State Council says that it could temporarily intervene over the prices of some important consumer staples when necessary," he said. But this is not the right time to control prices of consumer staples as such measures will only infuse more fear and uncertainty, Lu warned. Societe Generale global strategist Dylan Grice described possible price controls in the mainland as "the worst thing you can possibly do. Price controls prevent rationing, price controls prevent the reduction in demand." Meanwhile, stocks of resource firms bore the brunt of yesterday's sell-off with the Hang Seng Index giving up 2 percent to close at 23,214.46 - the lowest since October 29, while Shanghai stocks fell 1.9 percent to 2,838.86. Analysts said it was a major correction. Linus Yip Sheung-chi at First Shanghai Securities expects the HSI to consolidate between 23,000 points and 24,000 before staging another rally. Adding to the uncertainty is widespread speculation that the People's Bank of China will raise interest rates as early as tomorrow. "It would be easier for banks [if rates were raised tomorrow], as they settle interest on the 20th day in the last month of a quarter, to make adjustments," an analyst told China Securities Journal. Daiwa Capital Markets chief Greater China economist Sun Mingchun concurred, adding that there could be three to four hikes from now till the end of 2011. "Beijing's attitude to inflation control is serious," Sun said, adding the decision will depend on the November data, with inflation unlikely to stay below October's level. But Wu Xiaoqiu, dean of the Finance and Securities Institute at the People's University of China, said a rate hike within this year is unlikely. "It usually takes six months to see if the policy is effective," he said. Some large corporations already have an answer to soaring costs. McDonald's Corp said it raised menu prices in the mainland. Rising material costs have prompted the fast-food chain to increase prices for some items by 50 fen to 1 yuan. A Big Mac now costs 15 yuan, which is around HK$17.50 - just marginally higher than its Hong Kong price tag of HK$17.30.

China's yuan is expected to be fully convertible during the next five years at the earliest, Lawrence Lau Juen-yee, chairman of China Investment Corporation's Hong Kong office, said.

Hong Kong International Airport, which had been crowned the world's best airport for more than 30 times, has once again been recognized with the bestowal of the " Best Airport in China" award in Shanghai, the airport authority said in a statement on Thursday. Reaffirming the excellence of Hong Kong International Airport's services and facilities, this was the fourth time in six years that the airport has received this accolade from leading travel publication Business Traveler China. Since the annual survey was launched in 2005, Hong Kong International Airport has also taken home the same award in 2006, 2007 and 2008, according to the statement. Hong Kong Airport Authority Chief Executive Officer Stanley Hui said the award "is a strong feedback on the ceaseless efforts made by our entire 60,000 airport workforce, including our business partners and government departments". "Winning this award has also reaffirmed our status as a preferred gateway to the Chinese Mainland, as well as an international and regional aviation center. We will continue to upgrade our facilities to ensure pleasant and seamless journeys for all travelers at the Hong Kong International Airport," he added. In addition to this recognition, the Hong Kong International Airport has received more than 10 other local and international awards related to airport facilities and services this year. These include being named "Best Airport" at the 21st TTG Travel Awards 2010, as well as being selected as "World's Best Airport" by the Airports Council International among airports with an annual passenger throughput of over 40 million.

China Gold looks overseas - China National Gold Group Corporation (CNGGC), the country's largest gold producer, will increase its annual capacity to 50 tons in five years, out of which 30 to 40 percent will be produced overseas, a company official said on Wednesday. The company is looking for overseas resources and aims to expand its foreign output to 20 tons by the end of 2015, Du Haiqing, vice-president of CNGGC, told China Daily at a mining conference in Tianjin. "We are looking for gold resources in Congo, Brazil, Russia, Venezuela, and Mongolia, and most of them are in the early stage of geological exploration," Du said. He said the company is fairly cautious about overseas investment but is also "active and steady". China Gold International Resources Corp, the overseas-listed arm of CNGGC formerly known as Jinshan Gold Mine, started the subscription for its IPO in Hong Kong on Wednesday, aiming to raise up to HK$2.4 billion ($309 million). Proceeds from the offering will be used to boost production capacity, acquire overseas gold and nonferrous metal resources, and replenish working capital. As much as 30 percent of the offering will be used in overseas investment, the company said. Du said the company's bullion output will reach a record 32 tons this year, up from 28 tons in 2009, to cash in on growing demand for the yellow metal in China. With around 70 mines across China, the company produces 10 percent of the country's gold, and its deposits will reach 1,300 tons this year, up from 275 tons in 2006. Bullion investments have risen sharply in the past few months as the realty market turned bearish. China, the biggest gold producer and third-largest gold consumer in the world, is expected to report higher output this year, Du said, adding that the country's gold output has already surpassed 320 tons this year. The nation's gold output in 2009 increased 11.3 percent year on year to 313.9 tons, and accounted for 13 percent of global gold production. Global demand for gold surged 12 percent year-on-year to 922 tons in the third quarter, driven by higher demand from India, China, Russia and Turkey, according to a report by the World Gold Council (WGC) released on Wednesday. Total demand will be driven by Indian and Chinese consumption, as well as higher demand for gold jewelry in the key Indian market. Additionally, ongoing concerns over fiscal imbalances allied to currency tensions will continue to support investment demand for gold, the WGC said.

Foxconn aims to spark electronics sales war - Company teams up with European giant to take on Suning, Gome - An employee looks at a laptop during a media event at the inauguration of the first Media Markt store in Shanghai. Metro AG, the world's third-largest retailer, aims to expand rapidly to win a share of China's consumer electronics market. Leading European electronics retailer Media-Saturn and Foxconn Technology Group, the world's largest contract manufacturer of electronics, on Wednesday fired the opening shots of the latest battle in the mainland's highly competitive electronics retail market. The two, who are aiming to shatter the dominance of local giants Suning and Gome, opened their first outlet in the mainland on Shanghai's iconic Huaihai Road. The store, Media Markt China, is a joint venture, with Metro Group and Media Markt's two founding families, the Kellerhals and the Stiefels, holding 75 percent of the shares, and Foxconn Technology Group holding the remaining 25 percent stake. Jiang Peifeng, a consumer electronics industry researcher from Digital China (Beijing) Brand Communication Institute, said that the opening of the Shanghai store showed that the two giants' were testing the waters before making a massive foray into the mainland market. "Both of the companies are industry leaders, but the mainland electronics retail market is new to both of them," said Jiang. Seeing thinner profit margins from outsourcing manufacturing, Foxconn has been on the lookout recently for opportunities to develop its own brand and to open its own retail outlets. In March, Terry Gou, president of Taiwan-based Foxconn, announced an ambitious plan to open 1,000 electronics retail stores in three years, but, in the meantime, no concrete developments had taken place, Jiang said. Media-Saturn Chief Executive Officer Roland Weise said the joint venture will open 10 stores in Shanghai over the next two years. After that, the partnership will "ramp up its presence" on the mainland by opening more than 100 outlets throughout the country, he said. But Weise is aware of the fierce competition in a market currently dominated by local players Suning and Gome. "As a leading innovator in the market for consumer and home electronics and working with a strong partner like Foxconn, we are in the best possible position to pursue our growth strategy - which has already proved successful in Europe - in Asia to tap this huge growth potential," Weise said. China's retail electronics market, growing at an annual rate of 8 percent, is expected to have a total volume of 150 billion euros ($203 billion) in 2013, and the Shanghai market alone will exceed 5.5 billion euros, according to Media Market. Louis Woo, head of the channel business group of Foxconn, said that Media-Saturn's track record in Europe clearly demonstrates that it is capable of becoming a regional market leader within a short period of time. "As a Media Markt China shareholder, we will be working with Media-Saturn to successfully serve this market that we know so well. "This cooperation between the world's leading electronics manufacturer and one of the world's leading electrical goods retail companies offers countless other opportunities which we will be seeking to develop for the benefit of consumers in China and all of our shareholders," Woo said. The first Media Markt store on Huaihai Road of Shanghai has a sales area of 9,500 square meters and offers more than 45,000 products.

November 19, 2010

Hong Kong*: HK to benefit from US, EU clampdown - Hong Kong is set to reap the benefits from the financial regulatory clampdown in the United States and Europe, according to a leading financial services trade group. The Securities Industry and Financial Markets Association said the Volcker rule on proprietary trading and the wider crack down on derivative markets in the European Union and United States will drive more business out of these markets and into Hong Kong in particular. “If you have a system in Hong Kong that is more hospitable than a comparable entity in London or New York, people will move their business to this market place. And we keep telling regulators around the globe that that will happen and it will,” SIFMA chief executive Timothy Ryan told Reuters Insider television in an interview broadcast on Wednesday. The Volcker rule restricts US banks from trading with their own money, known as proprietary trading, and allows them to invest only up to 3 per cent of their Tier 1 capital in hedge funds and private equity funds. “Those rules do not apply to non-US financial institutions or institutions doing business outside the US and here (Hong Kong) would be the principal place where those activities would take place,” said Ryan. Asian financial markets and banks held up relatively well during the global financial crisis, meaning the impetus for the regulatory overhaul seen in the United States and Europe is not there. However, the Group of 20’s Asian members, along with Singapore and Hong Kong, are signed up to adopt the Financial Stability Board’s proposals on increasing transparency in derivatives markets and the Basel III rules on bank capital and liquidity. Ryan said that the biggest uncertainty now facing Asian markets is how these recommendations will be implemented. “The biggest issue is people say – ‘what’s the rule? What do we need to do?’ – and we can’t tell them exactly what it is right now because it’s in development,” he said.

Cathay Pacific Air cargo venture set to take off - Chief Executive Donald Tsang Yam-kuen receives a souvenir from Haeco chairman Christopher Pratt yesterday. An air-cargo venture expected to increase Cathay Pacific Airways (SEHK: 0293)' presence on the mainland could take off as early as next month, chairman Christopher Pratt said yesterday. The venture between Cathay and Air China (SEHK: 0753, announcements, news) finally won approval from the Beijing government after months of delay, Pratt confirmed yesterday while attending Haeco (SEHK: 0044)'s 60th anniversary celebration. Operations could start on January 1, if not next month. Pratt stopped short of predicting the deal's impact on the earnings of Hong Kong's largest carrier - expected to hit a record HK$12.5 billion this year - but said he was optimistic about both cargo and passenger growth in the first quarter of next year. Cathay Pacific sealed an agreement with its subsidiary Air China back in February to invest 1.7 billion yuan (HK$1.98 billion) in the latter's cargo unit. Cathay will control 49 per cent of Air China Cargo, including a stake to be held by an offshore trust. It will inject four Boeing 747-400 freighters and two spare engines into the unit to pay for the transaction. The airline said the joint venture would help it gain cargo traffic in the Yangtze River Delta, where cargo throughput has grown neck and neck with that in the Pearl River Delta. Kelvin Lau Wai-kin, transport analyst of Daiwa Capital Market, said the deal may be more beneficial to Air China than Cathay. "Obviously Cathay's major cargo business would still come from Hong Kong. It does not rely solely on the venture for its mainland cargo business as it has its own freighter routes there," Lau said. "Air China, on the other hand, could learn a lot from Cathay about the management and operation of the trade as few existing mainland airlines can handle the competition from experienced market players like UPS." Cargo business accounts for about a fifth of Cathay's total sales but the proportion may grow when the first batch of 10 freighters ordered by the airline are delivered in the second half of next year. Hong Kong International Airport, the busiest international air-cargo hub in the world, continues to make records with its cargo tonnage and aircraft movements. Last month it handled 373,000 tonnes of cargo, up 15.5 per cent over the previous year, while passenger traffic jumped 11.9 per cent to 4.4 million. Norman Lo Shung-man, the director-general of civil aviation, said daily aircraft movement was closing in on 1,000 trips. The capacity, he said, could be pushed to 1,200 to 1,300 trips per day through system and manpower enhancement.

For city's elite, it's the only club in town - As with most prestigious members-only clubs, admission to the Hong Kong Jockey Club is highly coveted. With exclusive clubhouse facilities throughout Hong Kong and in Beijing, the club is an obvious magnet for bankers, socialites, lawyers, doctors and the business elite, meaning long waiting lists are inevitable. The club's roughly 200 voting members, who tend to be major movers and shakers around town, technically control who gets in because all application forms are distributed through them. Every year, each voting member has only two full member and five racing member application forms available to give out. High demand, especially for full memberships that offer unrestricted access to all club facilities, means voting members are constantly inundated with requests for those application forms. But with only about 400 up for grabs each year, full-member application forms are almost never available on request and applicants usually have to queue for several years to get one. Racing member application forms are generally readily available but are less desirable, because they offer limited benefits. Racing members, for instance, are not allowed to use the Happy Valley clubhouse in Shan Kwong Road. There is also no secondary market for these club memberships because they cannot be transferred, meaning access to voting members is key to becoming a member. For racing member applications, two voting members are needed - one to propose and another to second the applicant. Another three ordinary members, such as existing racing or full members, must also vouch for the applicant. For full-member applications from racing members, only the proposing voting member need fill out the form. But outside applicants wishing to join the club as full members must simultaneously apply for racing membership. In 2007, the Racing Club was established as a way to help attract a new and younger generation of horse racing fans without compromising the existing application process. Billed as a stepping stone to racing and full membership, the Racing Club does not require applicants to seek the support of voting members. Louis Tam, general manager of Garway Membership Services, which acts as a middleman between various clubs and potential members, said improving incomes and a lack of new members-only clubs were keeping demand strong and prices high for memberships.

The Independent Commission Against Corruption (ICAC) on Wednesday said it had arrested 29 people as part of its probe into a bribery case related to applications to join the Hong Kong Jockey Club. The operation codenamed “Pilot”, which began about 6.30am on Tuesday morning, was still continuing, an ICAC spokeswoman said. Those arrested included three of the club’s voting members, some other club members, some applicants for membership and people suspected of acting as middlemen. “The ICAC investigation originated from a complaint, alleging corruption in applications for HKJC membership,” the spokeswoman said. “Inquiries revealed that through the assistance of middlemen, one of the arrested HKJC members, who was suspected of being the mastermind, had allegedly conspired with the voting members to accept bribes from applicants as rewards for supporting their applications for membership,” the spokeswoman said in a statement. The HKJC had offered its full assistance to the ICAC investigation, she added. In July last year, former Wheelock (SEHK: 0020) taipan and Jockey Club voting member John Terrence Hung was jailed for two years for accepting advantages to help with a membership application. According to the Jockey Club’s website, candidiacy for racing membership must be proposed by a resident honorary steward, honorary voting member or a voting member of the club. Proposers, seconders and supporting members must know their candidates well and be satisfied they are people of integrity before agreeing to sponsor them. Racing members have to pay an entrance fee of HK$68,000 and a monthly subscription of HK$420. Full members, who can enjoy additional privileges such as the right to use all facilities at the Happy Valley Clubhouse, the Sha Tin Clubhouse and the Beas River Country Club, have to pay a HK$250,000 admission fee and HK$1,000 a month.

USS Essex arrives in HK in sign of easing tension - US naval officers line up on the deck of the USS Essex, which began a four-day port call in Hong Kong yesterday. American warship the USS Essex began a four-day port call in Hong Kong yesterday with a high-profile invitation to the city's media to tour the vessel, a signal that suggests Sino-US military relations might be warming up after nearly a year of turmoil. Beijing has severed military contacts with the United States since February following Washington's decision to sell US$6.4 billion worth of arms to Taiwan. The relationship has been further strained as the US tries to boost its presence in Asia, commenting on disputed waters and holding joint military drills with South Korea off China's eastern shore. A meeting between US Defence Secretary Dr Robert Gates and Chinese counterpart general Liang Guanglie in Vietnam last month was the first step to putting ties back on track. Gates accepted an invitation to visit China early next year - he originally expected to visit this June. However, patching up will take time: even though the US navy extended an invitation to media to tour the vessel, US officers said there would be no contact with the People's Liberation Army garrison during the stay. "This is a purely regulation port visit for us ... We do have a reception tomorrow on board for the embassy on the behalf of the American ambassador and myself," USS Essex fighting group captain Mark Weber said. No PLA or Hong Kong officials had been invited. Hong Kong has for decades been a popular port for the US navy both for maintenance and recreation. Since the handover, applications for port calls have had to be made to the Ministry of Foreign Affairs. However, although such port calls remain routine, they have encountered problems on several occasions during times of tension. Just last month prior to the Gates-Liang meeting, US naval officers cancelled a visit by aircraft carrier the USS George Washington to Hong Kong for what they said were operational reasons. The USS Essex resembles a small aircraft carrier, and is the only permanently forward-deployed US amphibious assault ship, serving as the flagship of the Essex Amphibious Ready Group. It carries transport and attack helicopters, jets, trucks, Humvees, amphibious assault craft, and over 2,200 sailors and marines. Although the warship has visited Hong Kong before, yesterday was the first time it invited media aboard. The US navy arranged for two American-Chinese sailors to brief the press. Eric Tan, 26, a Guangzhou native and American sailor who moved to the US with his family when he was 12, said he was happy to come to Hong Kong: "I am very happy because it's my last time working for the USS Essex. I will miss my days on board and my visits to Hong Kong." Mainland scholars on Sino-US relations said the unusual arrangement could be interpreted as the US trying to send friendly signals amid warming military ties and a scheduled visit by President Hu Jintao to the United States in January. "Sino-US relations rarely affect the US navy making port calls in China," Professor Shi Yinhong of Renmin University said. "But under the circumstances both sides might want to be more proactive to create a good atmosphere."

The fugitive former managing partner of accountancy firm Grant Thornton Hong Kong, who vanished after allegedly fleecing tens of millions of dollars from people close to him, has been arrested in Spain. Gabriel Ricardo Dias-Azedo - a former president of Club Lusitano, one of the most respected private clubs in Hong Kong - disappeared in September last year along with more than HK$91 million he allegedly stole from friends and business partners. He was arrested in the city of Salamanca, 200 kilometres west of Madrid, people with knowledge of his detention have confirmed.

Lunar New Year fair stalls auction sees record-high HK$63,000 bid - The prices of winning bids for stalls are marked on a layout plan during the auction. A dry-goods stall for the Lunar New Year fair at Victoria Park next year fetched a record HK$63,000 at auction yesterday - more than six times the cheapest stall which went for HK$10,490. A total of 284 dry-goods stalls were up for grabs on the second day of the Lunar New Year fair auction yesterday at Queen Elizabeth Stadium. May Chung Mei-wai, who made the top bid, said she would sell traditional Cantonese desserts at the stall, such as rice puddings and white sugar cakes. "I do not know why the competition is so intense this time. The stall is unexpectedly expensive. Our budget was only HK$50,000." But she was confident the stall would not lose money, as people were more willing to spend money in recent months, she said. Shoppers at the fair will likely need to fork out more for a cake at Chung's stall, as the price of ingredients were up 20 per cent, she said. Meanwhile, veteran democrat politician Szeto Wah might not be able to write the "fai chun" - the traditional good luck posters for the new year - at this year's fair. Szeto, who is battling cancer, wanted to attend but it was uncertain whether he would be fit to write fai chun, said Lee Cheuk-yan of the Hong Kong Alliance in Support of Patriotic Democratic Movements in China. "It depends on the advice from the doctor," he said. Lee, who represented the alliance to secure two stalls for HK$42,000, expected revenue to fall if Szeto could not write the fai chun, but said their souvenirs for sale on Nobel Peace Prize winner Liu Xiaobo would make up for it. Most bidders were young people, with many students trying to gain real-world business experience. Polytechnic University finance student Owen Chow, who secured a stall with HK$22,500, said he would sell rabbit toys with a dozen friends. He said he hoped to make at least HK$30,000 from the venture. "I hope to get some business experience before I graduate," he said.

TVB board reinstates manager in ICAC probe - TVB's Stephen Chan (centre) faces the media yesterday. Television Broadcasts (SEHK: 0511) executive Stephen Chan Chi-wan resumed his duties as general manager yesterday, eight months after being suspended following his arrest by the ICAC. "I want to thank God," were Chan's first words to journalists who waited at TVB's headquarters in Tseung Kwan O after a Hong Kong Exchange announcement yesterday morning. His Christian comment contrasted with a Zen Buddhist remark Chan made in March after his arrest. Then he said: "What is false cannot be true. What is true cannot be false." Three bribery charges against Chan were dropped early this month but he and others still face a District Court case on other charges. Chan thanked the company for having him back. He said he would dedicate himself to work and strive to produce high-quality programs. "I'm most concerned about how my colleagues [and I] can do a better job," he said.

Experts see biggest HK surplus for three years - Buoyant stock and property markets are expected to benefit Hong Kong's public finances this year, delivering the biggest surplus since the government recorded a HK$123.6 billion windfall three years ago, according to estimates by leading accounting firms. Although official figures show a HK$18.4 billion deficit for the six months to September 30, tax revenue is usually collected in the second half. Income from land sales and stamp duties on stock and property transactions are expected to be strong. The government has already reaped a whopping HK$60 billion in land sales and premiums, higher than its full-year estimate of HK$34.1 billion. The financial year ends on March 31. Compared to the government's initial budget projection in February of a HK$25.2 billion deficit for 2010-11, a surplus of HK$73.3 billion now seems likely, according to estimates by accounting firm Deloitte Touche Tohmatsu. KPMG tax partner Jennifer Wong How-yee put the surplus at about HK$40 billion but said the final figure could top HK$80 billion. That would depend on what new measures, if any, the government introduces to cool the red-hot property market and whether land for luxury housing, including sites in Stubbs Road and Shouson Hill, are auctioned off. Stamp duty levied on stock and property deals may reach HK$50 billion, against the government's HK$30 billion forecast. In 2009-10, the government collected HK$42.38 billion in stamp duty. The relatively quick return to fiscal health, and improvement in the local economy despite worries about the pace of the global recovery - unemployment was 4.2 per cent last month, close to full employment - is bound to bolster public calls for handouts and relief measures. In his policy address, chief executive Donald Tsang Yam-kuen announced a HK$10 billion fund to help the poor. Yvonne Law Shing Mo-han, Deloitte's national chief knowledge officer and partner, said taxpayers should be allowed a deduction of up to HK$100,000 a year on their home loan principal for 10 years, not just for mortgage interest. But Wong said this would attract more funds to the property market. A decade ago, a similar measure was used in Shanghai. She said people had come to expect handouts but they did not boost the local economy.

Brave Hong Kong cyclist Wong Wan- yiu took a heavy tumble at speed yesterday but picked herself up to ride to silver at the Asian Games on a day that saw Hong Kong also claim gold in wushu, another silver in men's cycling and bronze in snooker. Geng Xiaoling won Hong Kong's first wushu gold medal of the Guangzhou Asian Games, overcoming injury to capture the Changquan title. The men cyclists, led by Cheung King-lok, took silver in the team pursuit behind South Korea. And capping a good day, Ng On- yee won bronze in the women's six-red snooker singles as the SAR improved its medal haul to 11, including three golds. But the big talking point of Games day four was the women's cycling points race, which saw two spectacular pile- ups. A first crash that saw all the riders back on their bikes was followed by a huge smash that left several dazed and strewn across the track - with some unable to continue - as coaches and medics rushed to their aid. Wong, 24, gingerly got back on her bike and completed the race to take silver in what coach Shen Jinkang called "a miracle." Fellow SAR rider Diao Xiaojuan, 26, was not so fortunate and had to be stretchered off the track at the Guangzhou Velodrome. "She dislocated her shoulder in the crash," Shen said. Wong had to be helped up to the podium to collect her medal and sobbed uncontrollably as she shakily stood for the national anthem, clutching her arm and her knees clearly badly bruised and grazed. Wong was taken from the velodrome in a wheelchair. China's Liu Xin won gold and Thailand's Chanpeng Nontasin bronze in the event. "I've had similar injuries before and believe I have fractured ribs this time. Yet, I never thought of giving up during the competition. This match is particularly important to me as the points race in the Olympics Games has been canceled. I believe this is my last participation in such a large sports competition," said a tearful Wong as she was being pushed away in a wheelchair.

Macau Chief Executive Dr Fernando Chui Sai-on yesterday delivered a policy address full of crowd-pleasing giveaways worth 500 million patacas. The bumper giveaways - a continuation of past practice by the administration - were announced after Premier Wen Jiabao's call on the government to take care of the people, especially the poor. But critics said Chui failed to address what Wen had said most needed to be done - speeding up public housing construction. There was no mention of political reform. Every Macau resident who is in the central provident fund will receive an injection of 6,000 patacas to their account. Chui said the one-off benefit was needed to help people fight inflation. In his previous policy address, he put 10,000 patacas into residents' provident accounts. In addition, Chui continues to hand out cash bonuses - first instituted by his predecessor, Edmund Ho Hau-wah, in 2008.

HSBC Holdings (SEHK: 0005) is raising the basic pay of many senior investment bankers by as much as double, a person familiar with the matter said on Tuesday. The bank follows several European rivals to significantly increase investment bankers' salaries this year as a clampdown on bonuses has put pressure on them to cut variable pay. HSBC, Europe’s biggest bank, will award the pay increases to staff across its global banking and markets (GBM) operations in leading financial centres including London, Hong Kong and New York, the source said. Some other senior staff would also be affected.

Hong Kong Pet owners find options are opening up in serviced flats - Flats at Chi Residences, Connaught Road West, are big enough for families with a large dog. Serviced apartments allow tenants to keep pets, whereas rented flats often bar them. Last year Jessie Yip Wai-lun found herself and her family in a bit of a bind. Yip and her husband sold their apartment in Pok Fu Lam to buy a village house in Tai Po that would give them the 2,100 square feet they needed for themselves and their two young children. But they wanted to renovate before moving into their new house, and while the work was under way the family and pets - a Jack Russell terrier and two turtles - needed somewhere to stay for two months. "Finding somewhere that was `pet friendly' was important, otherwise our dog would have had to go into kennels," recalled Jessie Yip. "That's torture because I don't think kennels treat the dogs very well. Also it would cost a fair amount." A serviced apartment was the obvious solution. So Yip found a list of operators and started calling around. Each call grew more and more dispiriting as she found out for herself that Hong Kong lived up to its reputation as one of the most pet-unfriendly major cities in the world. Only two landlords said they accepted pets. "Most said no," she remembers. "I even asked if they allow small pets. But they said they are very strict. Pets of any size are not allowed." A year on, and there are signs that this attitude is beginning to change, albeit slowly. Faced with a competitive environment, serviced apartment operators are searching for ways to set themselves apart, and a handful have explicitly outlined policies under which the furrier members of the family are welcome. Five now allow pets. Yip ended up staying in Kennedy Town at S-Residence, a block of 14 serviced apartments on Catchick Street. The operator allows small dogs as well as cats, birds, turtles and others. "We are happy to offer the service," manager Shing Dai-kung said. "I think there is a need in this market. Not everybody has a pet but those that do really do care for their pets." Several other chains of serviced apartments allow pets, normally at just one of their locations. The Ovolo at 111 High Street, the Shama in Wan Chai, and the Apartment O block run by Eton Properties in Causeway Bay all also accept animals. Some even champion the fact. The Chi Residences serviced apartment block at 120 Connaught Road West in Sheung Wan welcomes cats and dogs, and the operator recently put out a small guide for pet owners that acts as a primer on how to navigate the city with their charges. Chi charges HK$1,500 per pet per month. Still, it's a short list of five, perhaps because the companies that run serviced apartments are worried they will get complaints from other tenants. With occupancy rates above 90 per cent, there's not huge pressure on them to make concessions. "There are very few that allow pets," Anne-Marie Sage, the regional director for residential at Jones Lang LaSalle, conceded. "You can understand why when you have the turnover that you have in serviced apartments. The inconvenience that it causes to other people is a problem, and then there's the wear and tear." At Chi, the 12-page pamphlet is basic but gives listings for all the most important contacts families are likely to need as they settle in with pets - vets, grooming salons and pet-food shops. Chi Residences chief executive Pilar Morais says its generation stemmed from the legwork she herself has done both literally, in a family that has 13 pets, and figuratively while caring for what the Morais family call their "fur kids". There are handy tips on which restaurants welcome dogs, as well as which beaches you can get away with walking a dog - at Shek O back beach and the side of Stanley main beach (although of course it's still against the rules). Five to 10 per cent of the queries Chi fields are related to families looking to house themselves with their pets. "So there is definitely a niche market, particularly for people relocating from overseas, as well as those renovating their homes and in need of temporary accommodation for themselves and their pets," she says. Yip, who falls in the second camp, believes Hong Kong is very unfriendly towards pet owners. Public housing estates don't allow dogs, and they're chased off any of the beaches that have lifeguards. "Even the public parks don't allow dogs," Yip notes. "There are some dog parks in Hong Kong but the number is limited and you can never find a dog park near where you live." But more flexible attitudes are emerging. While Chi Residences charges tenants to house their pets on Connaught Road, there's no charge at S-Residence. But the operator only accepts smaller pets. "If we have to do extra cleaning or there is damage, we claim more from the deposit," Shing says. "In general our experience hasn't been bad. But we've also been a little bit picky." Some 10 to 20 per cent of the tenants keep pets. The apartments are reasonably small, at 550 sq ft, so bigger animals can't be accommodated. But Yip, who was also moving with her amah and so needed the two bedroom units at S-Residence, found they fit the bill.

 China*: Beijing will intervene to control consumer prices that are rising too quickly, the government said on Wednesday, a step that will do little by itself to tame inflation.

Japan said on Wednesday it will send an envoy to attend a Nobel Peace Prize ceremony honouring dissident Liu Xiaobo, a move that could increase tensions between Tokyo and Beijing.

Vice President Xi Jinping began a trip to mineral-rich South Africa on Tuesday aimed at securing resources for the Asian economic power, looking to extend its influence in the African continent. Vice President Xi Jinping is welcomed by South Africa's Deputy President Kgalema Motlanthe at the South African Parliament in Cape Town on Tuesday. Beijing sees global mining power and regional financial services leader South Africa as a vital source of commodities to fuel its rapidly expanding economy and industries and as a stepping stone to access other African states. Xi, pegged as China’s next president, is on a three-day official visit to Africa’s largest economy, which exports about US$5.5 billion a year in minerals to the state and has been increasingly a destination of Chinese foreign direct investment. “As the international landscape evolves and China-South Africa co-operation deepens, the need for our bilateral co-operation is growing, the areas of co-operation are expanding and a confluence of our interests is increasing,” Xi said on Tuesday. The Chinese delegation and South Africa are expected on Wednesday to sign a bilateral memorandum of understanding for co-operation in geology and mining, and a letter of intent related to South Africa’s energy sector, among others.

China's Guo Shuang made history at the Asian Games on Wednesday as she powered to the women's sprint title to become the first female track cyclist to win three Asiad golds. China's gold medal winner Guo Shuang (left) and silver medallist Lin Junhong ride with the Chinese flag to celebrate winning the women's sprint cycling event at the Asian Games on Wednesday. On the last day of track action, Asia’s finest female sprinter was simply too good for fellow Chinese Lin Junhong, adding to the sprint and 500m time trial golds she picked up in Qatar four years ago. It was China’s seventh consecutive gold medal in the event.

China's share of the world airliner fleet will grow from the current 8 per cent to 14 per cent over the next 20 years. This means the nation will need 4,912 planes by 2029, compared to last year's 1,465, according to the country's leading aircraft maker. In its first global market report, Commercial Aircraft Corporation of China (Comac) said that more than 30,000 new aircraft, costing US$3.4 trillion, would be needed worldwide to cope with increasing air travel and to replace planes over the next 20 years, when the world's commercial passenger fleet would double from more than 17,000 aircraft now. Comac released its forecast an hour after announcing that six companies had signed letters of intent to buy its C919 aircraft. The narrow-bodied C919, which will seat more than 150 passengers, is not expected to make its first flight until 2014.

China has sent a helicopter-equipped fisheries vessel to patrol the disputed East China Sea, state media reported yesterday, just as the two sides appeared to be cooling sharp tensions over the area. The fisheries patrol vessel is China's first to be equipped with helicopters, and left the southern city of Guangzhou for the East China Sea for a mission that could last 20 days, Xinhua said. China has sent vessels to the area on previous occasions, state media reported, amid a row with Japan over a shipping collision in September that severely tested what had been a marked thaw in relations between the regional rivals. The latest ship, the 2,580-tonne Yuzheng 310, is not China's largest fisheries patrol vessel but is "the fastest and has the most sophisticated technologies," Xinhua quoted an official as saying. Separately, Li Jianhua, director of the Ministry of Agriculture's fisheries bureau, was quoted calling the ship a milestone for China's marine law enforcement patrol work, as the vessel can combine air and sea surveillance. Li said China planned to build more such vessels, according to Xinhua. Video capturing scenes of a Chinese fishing boat apparently ramming Japanese patrol ships amid wailing sirens and orders from the patrol boats to stop, popped up on YouTube about 10 days ago. The Japanese government confirmed the footage as authentic though has not released any of its own to avoid further inflaming tensions. A Japanese coast guard officer said he leaked the video to YouTube because he wanted to show the world what happened. The 43-year-old officer released a statement yesterday saying he is still convinced he was right to leak footage of the collision that occurred near the disputed Diaoyu Islands in the East China Seat, though he says it may not have been acceptable as a public servant. "I just wanted as many people as possible to see the events that are occurring in Japanese seas so that each person can think about it, make a judgment and take action," he said in a statement released by his lawyer. Police have questioned the coast guard official, and investigators are deciding whether to press charges Investigators reportedly have decided not to arrest him as he is unlikely to try to destroy evidence or escape. The collision sparked a series of protests and snubs from Beijing and Japanese accusations that China was taking retaliatory economic action. On the sidelines of a regional summit in Japan at the weekend, the two sides appeared to take a step past the dispute when President Hu Jintao held a meeting with Japanese Prime Minister Naoto Kan. Hu promised that China was committed to being a good neighbor, as concerns rise over its assertive behavior in the Asia-Pacific.

Situated in China's Guangxi Region, Guilin is a scenic town and one of the best-known tourist destinations in China. There are many scenic places within short traveling distance of Guilin. These include Longsheng with its famous Longji rice terraces; The Li jiang river, a scene of which is printed on the back of ?20 bank notes; Yangshuo, a small city downstream form Guilin; and much more. This makes Guilin an excellent base for exploring the northern end of Guangxi region. Guilin is a beautiful city. The town center is surrounded by two rivers and four lakes and studded with shear sided karst mountains. Outside the city center, the buildings are less well kept. The main industry in the city is tourism. Guilin itself is like most other medium size Chinese cities, other than that it has a large number of western-style hotels, tourists and is relatively free of air pollution. Many Chinese domestic tourists also flock to this area. What makes it special is its proximity to many picturesque limestone mountains and formations. Guangxi and Guilin are home to 12 different ethnic minorities besides the Han Chinese. Guangxi is an autonomous region for the Zhuang ethnic group, rather than a province.

Green is the China's theme at high-tech fair - The opening ceremony of the China Hi-Tech Fair 2010 is held at the Shenzhen Convention & Exhibition Center on Nov 16. The event will go until Nov 21. This year's China Hi-Tech Fair (CHTF), which kicked off on Nov 16 and will go until Nov 21, is seeing companies focus more on exhibiting environment-friendly technologies as China steps up efforts to promote a "low-carbon" economy and encourage green innovations. This year's fair, held in Shenzhen, is China's largest platform for international technological and economic exchange, highlighting emerging industries of strategic importance, low-carbon economy and environment-friendly technologies, according to the event's organizing committee. Companies that specialize in new energy and green technologies, such as electric carmaker BYD and photovoltaic industry leader DuPont, attracted a great deal of attention, thanks to the prospect of business opportunities. One of the participating companies, the Shenzhen Institute of Building Research Co Ltd, said its business in green building consultation has grown by a large margin in recent years, according to Wei Xinqi, an architect at the institute. Wei told chinadaily.com.cn that the consultation business on green building, which includes technological tips, planning, standard drafting and other aspects in construction, accounts for 30 to 40 percent of their business, as more local governments and developers become aware of environment protection and energy conservation. The State-owned institute began its research and business on green building in 2000 and now is a leading enterprise of its kind in southern China, and its clients include major developers such as Vanke and China Merchants Property, said Wei. He added that this is the third year the institute has taken part in the event. Lenovo, China's leading PC maker, has attended the fair every year since its launch in 1999, and this year it put the emphasis on its energy saving products: an all-in-one desktop and cloud computing solutions, according to a staff member at Lenovo. The all-in-one desktop can save electricity by 30 percent, the staff member told www.chinadaily.com.cn at the fair, and the cloud computing solutions, a system for organizing customers, such as companies and educational institutions, to manage data and information, can save energy by as much as 90 percent. The solutions were launched about three months ago, the staff member added, and she believed the hi-tech fair is a very good platform to promote its latest products to both the public and enterprise customers. The host city Shenzhen is the site of China's leading technology companies such as instant message provider Tencent and telecommunications-equipment makers Huawei and ZTE. The city, which epitomizes China's economic miracle of the past three decades, is making major efforts to transform its economic pattern and upgrade its industries.

Aerospace reaches for the stars - Models of Long March rockets displayed at Airshow China in Zhuhai, Guangdong province. China's commercial aerospace sector took a further step toward major-player status in the global market on Tuesday. That came as China Great Wall Industry Corporation (CGWIC), the country's only satellite exporter and launcher for overseas customers, agreed to buy 20 carrier rockets and eight satellites in the next five years. CGWIC will buy 20 Long March 3A rockets and services from the China Academy of Launch Vehicle Technology. The company will also purchase eight telecommunications satellites, including the Dongfanghong-4 model, from the China Academy of Space Technology (CAST). The contracts have a combined value of 15 billion yuan ($2.26 billion). "It shows our confidence and our determination in competing in the global market," said Yin Liming, the president of CGWIC. The deal is expected to boost exports of Chinese-made satellites to as much as 10 percent of the international market, and might help the country secure 15 percent of the international commercial launching market within five years, according to Yin. Each year between 20 and 30 geostationary communications satellites are sent into orbit by commercial providers around the world, according to the company - making feasible the nation's goal of taking 10 percent of the global market by selling at least eight satellites over a five-year period. The president of CGWIC elaborated that the pre-order could also "bring forward research and development of rockets and satellites ahead of schedule, shorten the delivery period, and improve the company's sensitivity to the market trend". CGWIC is not the only enterprise to grasp the momentum of rising international demand for Chinese aerospace products. Hao Zhaoping, deputy director of the China Academy of Launch Vehicle Technology (CALT), whose rockets are used by tens of countries and regions, said global demand for Chinese rockets and services continues to grow. "We now produce 12 to 15 Long March 3A rockets each year; and that supply is almost equal to the market demand," he said. The contracts were signed at the Eighth China International Aviation and Aerospace Exhibition, also known as Airshow China, which began Tuesday in Zhuhai in Guangdong province. CGWIC, CALT and CAST are all subsidiaries of the China Aerospace Science and Technology Corporation.

November 18, 2010

Hong Kong*: Two of China's top power producers plan to raise US$2.5 billion by listing their wind-power units in Hong Kong, the latest among several green firms to list in the city.

Mainland police asked the Hong Kong government to confiscate more than HK$60 million from a woman whose boyfriend was convicted of manufacturing and trafficking dangerous drugs on the mainland. Acting on the request of mainland authorities, Secretary for Justice Wong Yan-lung yesterday applied in the Court of First Instance for an external confiscation order to seize the sum from Yam Chim-kwan, on the belief that the money was proceeds from drug-related offences for which Yam's boyfriend, Thao Phoumy Chan, was jailed for life on the mainland in 2008. Horace Wong Yuk-lun, SC, for the Department of Justice, said mainland authorities were seeking to confiscate the money under two mainland laws which empowered them to seize the sum as a punitive fine and also as proceeds from criminal activities. Judge Andrew Cheung Kui-nung, however, said he intended to put the application on hold until the conclusion of a 12-day trial scheduled for the District Court next month in which Yam is expected to face five charges of money laundering over the funds in question in the confiscation order, which she allegedly laundered using three bank accounts. Cheung said he wanted to avoid making any prejudgment on the confiscation order in case Yam is acquitted of the five charges. He adjourned the hearing until after the verdict in Yam's case. The hearing is expected to last for four days.

Mainland customs authorities defended a new rule that means they can tax people taking in iPads. Despite widespread criticism that the rule is a violation of Beijing's promise to the World Trade Organisation, officials said it was "helpful". Huang Yi , head of the General Administration of Customs' Department of Supervision, said that people have to pay extra tax on their iPads as they are now categorised as laptop computers. It is the first time customs have confirmed iPads are taxable, although stories of people being penalised for taking the devices to the mainland were reported before. The new rule has already had a big impact on shops in Hong Kong, which offer the cheapest price for iPads in the world and attract busloads of customers from the mainland every day. A shop owner at Wan Chai Computer Centre said business had fallen 30 per cent since mainland customs started to enforce the rule. The regulation took effect in August but did not attract public attention until last month, when an increasing number of travellers reported having to pay 1,000 yuan (HK$1,165), or a fifth of the retail value, to take their iPads home. Many users complained they had bought their iPads for less than 5,000 yuan - the threshold for a taxable electronic product in Hong Kong. Most iPads, except the top model, are sold below that price. But Huang said they fixed the valuation of the iPad at 5,000 yuan because "most laptops" cost that much and they had to take into consideration " travellers' convenience and officer's work efficiency", the Beijing Evening News reported yesterday. Huang made the remark after the Ministry of Commerce raised the question with customs last month. The ministry issued a letter to China customs, pointing out that one of the mainland's major promises to the WTO was to entitle all information technology products to zero-tariff treatment once the country joined the organisation. The report also quoted the ministry as saying both the iPod value set by customs and the 20 per cent tax rate were too high. Meanwhile, consumers complained about having to pay up. Zhu Lieyu , a senior lawyer with Guangdong Guoding Law Firm, said the regulations violated China's promise to eliminate duty on IT products covered by the WTO's Information Technology Agreement. They also seemed to ignore the basic fact that people always take portable electronic devices with them on cross-border trips. "It does cause a lot of trouble to ordinary travellers entering the mainland, so how can they call it convenient?" he asked. "The purpose of joining the WTO is to open the market to other countries and mutually benefit from the openness," he added. "A shutdown or monopoly hurts only our people, who have to put up with more expensive products."

Watchdog warns on baby bath products - Recalls made after Consumer Council finds excessive bacteria in high-end brands - Philip Leung (left) and chief executive Connie Lau Yin-hing talk about the hygiene dangers, at the council's office in North Point yesterday. Two high-end baby bath products have been recalled because they contain excessive bacteria, which can cause infection. The contamination of Balma-Baby Swiss Natural Baby Bath from Switzerland and NUK Hypoallergenic Mild Baby Shampoo with camomile and panthenol from Australia was found during tests by the Consumer Council. The watchdog said yesterday that the Swiss product had 7,300 colony-forming units per gram and the Australian one had 30,000, which were respectively about 14 and 59 times higher than the hygiene limit for children's cosmetics of 500 CFU/g. The limit was set by the mainland and is followed in Hong Kong. The two products were among 50 shower gels and shampoos for babies tested by the council. The hygiene problem might have stemmed from the raw materials or from the manufacturing, storage and transport process, Philip Leung Kwong-hon, a member of the council's publicity and community relations committee, said. Using the products on open wounds, near the eyes or genital areas could result in infection, especially for those suffering from eczema or other skin diseases. The more bacteria a product had, the more likely the baby would be infected, Leung said. The council reported the cases to the Customs and Excise Department, which ordered the recall. The Balma product costs HK$110 for 300 millilitres and the NUK product HK$69 for 110ml. Leung was also critical of a lack of labeling information on some samples. Among the samples, only six clearly carried expiry dates and stated how long they could be used after opening, and only three carried information on dates of manufacture and on shelf life. Twelve out of 50 used code indecipherable to the public. Leung urged manufacturers to show expiry dates and ingredients on products voluntarily, to safeguard the consumers' interests. The council called on parents to avoid letting children eat too much artificially coloured food, after a recent British study indicated six colorings could result in increased hyperactivity in some children. The six colorings are tartrazine, quinoline yellow, sunset yellow, carmoisine, ponceau 4R and allura red AC. The council sampled 84 locally available biscuits, sweets, jellies and beverages, and found that nearly half contained one or more of the potentially harmful colours. Some of them were popular products, including Garden Lemon Puff, Arnott's Strawberry Tartlets, EDO Pack Strawberry Vanilla Wafer, soft drink Fanta Orange, Schweppes Cream Soda, Gatorade Orange Flavor, and Robertsons Jelly Powder - Strawberry. The European Union had dictated that food items containing the colors must bear the additional information that they may cause harm, and Hong Kong would closely follow the development and take suitable regulatory action, Leung said. The council also called on the food industry to keep a close eye on the development in international food studies on food colours, and make an effort to meet consumers' expectations on food safety.

The Hong Kong Mortgage Corporation is becoming the guaranteed loan platform for small and medium-sized firms with a program to replace the expiring government financing scheme. Under the new plan, HKMC will guarantee 50 to 70 percent of bank loans for eligible companies - up to HK$12 million for an individual firm, for a maximum of five years. This is the same amount covered under the existing Special Loan Guarantee Scheme that expires on December 31, as the government exits from a loose monetary policy. The new platform will offer a firm up to HK$12 million as a revolving credit facility - double the HK$6 million cap under the old scheme. In return, SMEs will have to pay a guarantee fee - 0.5 to 2.5 percent of the bank loan. "SMEs usually face immediate hardship during a financial crisis as banks tighten loans," HKMC executive director Peter Pang Sing-tong said. "The loan can also be used to buy assets related to business," Pang added. "This is in addition to the required use of loans for general capital, or buying equipment." Eligible SMEs must be operational for a year and have a good repayment record. But if the interest rate for the original loan exceeds 10 percent, the corporation will reject the application. "If the rate stays between 8 and 10 percent, HKMC will take a deep look at the application," chief executive James Lau said. Financial Secretary John Tsang Chun-wah said the new program will help SMEs lift both productivity and competitiveness. "Although the loan scheme may not be necessary amid abundant capital and a recovering economy, it makes SMEs more confident," said Alan Ng Wai-lun, who owns a firm supplying office furniture. Lawmaker Tanya Chan Suk-chong cautioned that banks may offer too many loans, leading to a possible credit crunch.

Top TVB (SEHK: 0511) executive and showbiz personality Stephen Chan Chi-wan returned to work on Tuesday – several months after Chan and two other executives with the television station were charged in a bribery and fraud case. TVB said in a statement that Chan would not be involved in managing or casting any celebrities employed by the television station. This is because the charges brought against him by the Independent Commission Against Corruption are related to these activities. The television station said the decision was made after considering the allegations against Chan, as well as the interests of the company and its shareholders. On Tuesday afternoon, a smiling Chan appeared at the lobby of TVB City in Tseung Kwan O. He told local media he was having an enjoyable day at work and he was grateful to TVB. The 51-year-old was arrested by the ICAC for alleged corruption in March and his duties were immediately suspended after he was arrested. In September, Stephen Chan, Edthancy Tseng Pei-kun - Chan’s former assistant and a company director at Idea Empire Advertising and Production (IEAP) - and Wilson Chan Wing-suen - TVB’s head of business development - were formally charged by the ICAC. They were accused of eight charges of accepting or offering a bribe, and conspiring to defraud TVB and its celebrities. In early November, the prosecution said they had decided to withdraw three charges, relating to acceptances of advantages of about HK$10,000, after reviewing evidence against Chan and Tseng. Their cases have been transferred to the District Court. They will make a plea next Tuesday. The accused are on bail of HK$100,000 each.

 China*: Foreign direct investment in China rose 7.9 per cent year-on-year in October, indicating confidence in China's economy continued to improve after a slight lull.

China is confident that Myanmar will continue its peace process and ethnic reconciliation, Beijing said on Tuesday in the first official reaction to the release of Aung San Suu Kyi.

China's Ministry of Housing and Urban Rural Development announced Monday that purchases of housing by overseas organizations and individuals in the country would be capped or restricted, a move widely seen as combating speculative money from overseas that might flow into the property market.

China's aviation industry set to take off after lifting of airspace ban - Lin Zuoming, general manager of the Aviation Industry Corporation of China (AVIC), briefs to press about AVIC's exhibits in Zhuhai City, south China's Guangdong Province, Nov. 15, 2010. The 8th China International Aviation and Aerospace Exhibition will kick off on Tuesday. The news that China is to open its low-altitude airspace to private aircraft -- on the eve of the 2010 Airshow China -- is expected to set off a boom in the aviation market. Part of the low-altitude airspace will be opened to promote the country's general aviation sector, including the purchase and use of private planes, said a document jointly issued by the State Council and the Central Military Commission on Sunday. "The open airspace reform will definitely inject energy into the general aviation industry, and of course, some Chinese are hoping to realize their long-expected dreams of flying," said Lin Zuoming, general manager of Aviation Industry Corporation of China (AVIC), on Monday. The reform will be piloted in some areas next year and gradually extended to other parts of the country, according to the document. This news is set to be the hottest topic at the eighth China International Aviation and Aerospace Exhibition (Airshow China), which opens on Nov. 16 in Zhuhai, east China's Guangdong Province. About 600 exhibitors and 70 different models of aircraft from around the world will be on show. Stocks in aviation maintainance, management and pilot training industries were buoyed by the news Monday. Shares in China Ocean Helicopter Company (COHC), which has China's largest civil helicopter squadron, jumped by 6.87 percent, while shares in Sichuan Haite High-Tech Co.,Ltd, a maintenance and aviation equipment specialist, were up 3.69 percent. Both companies are listed on the Shenzhen Stock Exchange.

China announced a 100-plane order for its first commercial jetliner, a first step in its ambitions to challenge Airbus and Boeing for a slice of a global market worth US$1.7 trillion - State-owned COMAC, or Commercial Aircraft Corporation of China, unveiled the orders at the country’s largest air show on Tuesday, ending a dearth of orders in the two years since it launched designs for the 150-seat C919. As air travel expands with a billion Chinese predicted to be flying for business and leisure early next decade, China wants to reduce its reliance on foreign planes and foster a domestic industry worthy of a country capable of putting a man in space. COMAC said the orders came from four Chinese airlines, which was no surprise given government encouragement for the project, but also the leasing arm of General Electric, which will supply the C919 engines together with France’s Safran. It is the first time buyers have committed to the aircraft, which COMAC expects to start building next year, followed by a maiden flight in 2014 and first delivery in 2016. “The customer signing lays a market foundation for the C919, which has smoothly entered the engineering development phase,” COMAC Chairman Zhang Qingwei said in a statement. Officials did not give a value for the deal or break down the orders by airline.

A picture taken on Nov 16, 2010 shows the C919 aircraft launch customer signing ceremony in Zhuhai, South China's Guangdong province. COMAC struck deals on Tuesday to build 100 of its self-developed C919 jumbo jets for sale to Air China and five other domestic and overseas airline companies.

Maersk wants more market share on imports to China - A Maersk container ship passes another ship as it leaves Hong Kong. The shipping company expects to see a continuous rise in freight demand in Asia, Latin America and Africa for next year. Shipments are expected to pick up due to rising demand in Asia - Maersk Line, the world's largest container carrier, wants a larger share of shipments generated from imports to China as the country's economic growth pattern translates to stronger domestic demand. "We will put more sales and customer service staff in the import market," Tim Smith, chief executive officer for the Copenhagen-based shipping line's North Asia region, said in an exclusive interview in Beijing on Monday. "This is very much linked to the intra-Asia market because a lot of China's imports come from different parts of Asia. China imports raw materials or partly processed goods, assembles them and sends them for export. So we are trying to combine the intra-Asia imports with exports." Tim Smith,chief executive officer of Maersk Line North Asia - The transported volume related to China increased by more than 10 percent, 3 percentage points higher than the global gain, contributing 25 percent of the company's global volume and 35 percent of its total export volume. "We've seen a development in the import market in China that will help the overall demand. We are looking at that very closely," he said. In the first nine months this year, Maersk Line witnessed a dramatic upturn from its 2009 historic loss of $2.1 million to a profit of nearly $2.3 million, thanks to a 34 percent year-on-year increase in average freight rates, 7 percent increase in transported volume and substantial savings per unit. Smith, a 25-year veteran of the shipping industry, describes the business situation in 2010 as "strange" following unpredictable growth patterns quarter-on-quarter. The second quarter this year saw strong growth followed by unexpected average growth in the third quarter, and a slight decrease in the fourth quarter, which is unusual due to the annual expected year-end seasonal demand. "We've been surprised how quickly it has improved. The situation in 2010 is a little bit better than the normal level. 2011 is not necessarily as good as this year as demand may slow, and we have to carefully monitor the demand and supply situation," he said. Although the recovery of mature markets such as Europe and US is still not strong enough, robust economic growth in emerging markets will spur further grounds for optimism, said Smith, estimating a global demand growth of 8 percent next year compared to 2010. "It won't necessarily be a consistent growth month-by-month, but may go up and down a little bit," he said. Volume on transatlantic routes increased by 3 percent year-on-year in the first nine months this year, while volumes rose by 7 percent on transpacific routes and 16 percent on Latin America and Oceania routes.

Pu'er may help diabetics: Research - Research shows Pu'er tea may help prevent certain cancers and diseases of aging, thus helping to prolong life. It’s well known that dark, mellow Pu'er tea reduces blood fat, lowers cholesterol, aids in weight loss and assists digestion. Research shows that regularly drinking Pu'er, made from broad leaf tea in southwest China, has additional health benefits. Experts at the recent China Pu'er Tea Festival in Shanghai reported that to some extent, Pu'er can work as secondary therapy for certain disease conditions caused by diabetes. It also indicates that Pu'er may help prevent certain cancers and diseases of aging, thus helping to prolong life. To find out more about Pu'er's effectiveness, research was carried out in Pu'er city in Yunnan Province, where virtually all China's Pu'er tea is grown. Professor Sheng Jun, vice president of Yunnan Agriculture University, said at the festival in Shanghai that for one year 520 patients drank 1g "instant" Pu'er with 200ml water three times a day, half an hour before meals. Results showed drinking the tea helped relieve symptoms of more than 70 percent of patients with dyslipidemia, an abnormal amount of lipids (cholesterol and/or fat) in the blood, which usually leads to diabetes.

China, Singapore reaffirm cooperative relationship - Chinese Vice President Xi Jinping (L) shakes hands with Singaporean Prime Minister Lee Hsien Loong during their meeting in Singapore, on Nov. 15, 2010. Visiting Chinese Vice President Xi Jinping met here on Monday with Singapore Prime Minister Lee Hsien Loong. Both leaders reaffirmed the close and cooperative relationship shared by Singapore and China. Xi's visit caps a series of high level exchanges as the two countries celebrate the 20th anniversary of diplomatic ties. During the meeting, Xi said China and Singapore have increased mutual understanding and expanded cooperation since the establishment of diplomatic relations. China has drawn useful experience from Singapore's development as it undertakes reform, opening-up and the modernization drive. At the same time, China's increasing national power has provided broad market and huge potential for Singapore's continuous development. The good neighborly and mutually beneficial cooperation contributes to the interests of both people, and to the peace and prosperity of Asia as a whole, he said. Xi said China highly values the Sino-Singapore relationship and is willing to join hands with Singapore to bring the bilateral relations to a new level. He noted that the two countries should maintain high level exchanges, make full use of the existing bilateral cooperative mechanisms and projects, increase sharing of governing experiences and people-to-people and cultural exchanges, strengthen cooperation in regional and international affairs. Lee agreed with Xi on his suggestions to develop bilateral relations. He said the two countries have forged close cooperation in various areas, adding that Singapore is willing to further enhance cooperation with China in bilateral and multi-lateral areas. After the meeting, Lee and Xi witnessed the signing of the following three agreements: the Memorandum of Understanding (MOU) between the National Heritage Board of the Republic of Singapore and the State Administration of Cultural Heritage of the People's Republic of China on Museum Cooperation; the Agreement on the Details of Implementation between the National University of Singapore and Suzhou Municipal Government (Suzhou Industrial Park Administrative Committee) on the Joint Establishment of the National University of Singapore (Suzhou) Research Institute; and the MOU on the Establishment of a Cooperative College by the Nanyang Technological University (NTU) in Sino-Singapore Tianjin Eco-city. At the invitation of Singapore Prime Minister Lee Hsien Loong, Xi arrived in Singapore on Sunday for a three-day official visit.

At least 42 people died yesterday in a massive blaze in a downtown Shanghai apartment block that took off "like a firework". Firefighters battled from mid-afternoon until early evening at the 28-storey building while thousands of onlookers crowded the surrounding streets. The inferno engulfed the entire structure with intense flames billowing out of windows from ground to roof, sending a giant column of ink-black smoke into the sky. The wail of sirens echoed around Jingan district in the heart of the city as more than 100 fire engines, plus police cars and ambulances raced to and from the scene. Police cordoned off streets for several blocks in all directions, causing major traffic disruptions in the bustling district. The traffic chaos also appeared to hamper efforts to fight the blaze as an hour after the fire started, fire engines and ambulances were seen struggling to weave their way through narrow, winding streets, as gridlocked drivers largely ignored the sirens. Xinhua cited a witness saying the fire began when building materials had caught alight. The blaze spread to scaffolding and then to the apartment block itself, which houses a number of retired teachers. One sweet-potato hawker said he had been at the site shortly after the fire had started. "At first there weren't many flames, but I could see some smoke coming out," he said. "But then the scaffolding started burning, and when the wind caught it, the whole building went up like a firework. The scaffolding was all bamboo planking and plastic netting, so it caught fire immediately." Around 10 to 15 people, many of them construction workers, were seen in mid-afternoon huddling on the windward side of the building's roof in an effort to stay out of the smoke. Emergency services attempted to rescue them by helicopter but were forced to abandon the effort. The fire was largely put out after about four hours, the Shanghai government said. Firefighters could be seen taking bodies from the building. Earlier reports had put the toll at least eight dead and more than 90 injured. But by the evening the death toll had risen to 42, the Shanghai government said in a statement, which did not give an updated figure for the number of injured. One resident told Hong Kong broadcaster Phoenix TV that he and his wife were sleeping in their 23rd-floor apartment when they smelled smoke. He said they climbed down the scaffolding for four storeys before being rescued by firefighters.

Wholesale vegetable prices surge - A man arranges cabbages at a market in Beijing. Surges in the price of solanaceous vegetables, including tomatoes, eggplants, chilies and bell peppers, have been more conspicuous in the first 10 days of November than those in leaf vegetables.

November 17, 2010

Hong Kong*: Cathay Pacific Airways (SEHK: 0293) said on Monday that net profit for this year will be HK$12.5 billion (US$1.6 billion) or more, as business rebounds following the global downturn. Hong Kong's flagship carrier posted a profit of HK$6.84 billion for the first half of the year, meaning it expects a profit of HK$5.66 billion or more in the second half. “The favorable business trends being experienced in August have continued,” Cathay Pacific said in a statement to the Hong Kong stock exchange. “Demand for passenger and cargo services has remained very strong and consequently revenues have remained at high levels.” Apart from its own operations, it said the forecast also reflected strong performances at Air China (SEHK: 0753) , China’s flagship carrier in which Cathay holds a 19.3 per cent stake, and one-time profits from the company’s stake in two ventures.

A 10-year contract to transform the former Police Married Quarters Site on Hollywood Road has been awarded to the Musketeers Education & Culture Charitable Foundation, Secretary for Development Carrie Lam Cheng Yuet-ngor said on Monday. Lam said the project would retain the two quarter blocks and supporting construction, while there would be architectural improvements - such as a proposed multi-purposed hall and extended canopy. She said the project would provide about 2,000 square metres of outdoor space for public leisure purposes and other public facilities, including an exhibition hall, a heritage display hall and a restaurant. About HK$420 million has been earmarked for the project. The Architectural Services Department will be responsible for renovation of the quarters. Musketeers Foundation will bear the cost of remaining renovations and repair work. The work is expected to start in 2012, and the project is expected to be completed in 2014. Commissioned in 1951, the building was the first police quarters to provide accommodation for married junior police officers. It has been vacant since 2000.

Unsung charity to run hub for designers - Little-known group wins Hollywood Road site - An artist's impression of how the new designers' centre will look in Hollywood Road. Three businessmen running a little-known charity won the right to develop the former police married quarters in Hollywood Road into a designers' hub, offering a HK$110 million donation as a seed fund for the project. The Musketeers Education and Culture Charitable Foundation has no track record in the design field, but the founders say their networks and experience will provide support for their partners, the Design Centre, the Polytechnic University, the Design Institute and the Vocational Training Council. "There is no other business or real estate interest behind it. We just want to help local designers and small and medium-sized enterprises to build their own brands," founder Lawrence Fung Siu-por, who is also chairman of Hong Kong Economic Times Holdings, said yesterday. Fung said he, Stanley Chu Yu-lun, former chairman of the Exhibition and Convention Industry Association, and Leong Ka-chai, a former chairman of the Futures Exchange, together donated HK$100 million while HK$10 million came from an unnamed person. Formed in 2008, the foundation has had little publicity. It is not known to have organised any activities, nor does it have a website. It beat the Hong Kong Heritage Conservation Foundation, set up by Sino Land executive director Daryl Ng Win-kong, and an all-star group of artists and designers in the bidding. Under its proposal, the two 59-year-old blocks will yield 130 studios with several galleries, shops and restaurants. The studios, open to the public, will be rented to individual designers and SMEs at close to market rents, and some will be reserved for budding players at a discount. About six flats will be used for artists-in-residence accommodation. A bridge will link the two blocks and be wide enough to stage exhibitions. The underground foundation stones of the historic Central School will be preserved as a museum, where visitors will be able to walk along a corridor between the stones. The site will come with public open space of 2,000 square metres. The foundation estimates that each year, the hub will attract 5,000 local and overseas creative professionals to attend activities and 500,000 visits by members of the public. The Design Centre and the Polytechnic University, as joint applicants, will stage their flagship programmes, such as the Business of Design Week workshops, the annual show by graduates, and post-graduates classes at the site. The group has yet to announce details of tenant selection criteria and programs. Bernard Chan, head of the vetting committee, said the foundation was selected as its proposal was more all-round. "It's difficult to bring all these design bodies together and they did it. The donation shows their sincerity and willingness to take up a 10-year challenge," Chan said. The government, financing a HK$420 million construction cost, will lease the site to the operator at a nominal rent for 10 years, renewable for another five years. The hub will open in 2014. Chan said the group's income projections were prudently conservative, assuming an 80-per-cent occupancy rate that would lead to a surplus in the fifth year. The government, sharing half the surplus, would garner HK$30 million during the 15-year lease. Secretary for Development Carrie Lam Cheng Yuet-ngor said the operator would be bound by an agreement to run the cluster as a social enterprise that sought not to maximise profits but to generate benefits to society. "This is a multi-purpose project intended for the community. There won't be luxury shops or restaurants," Lam said, responding to concerns that the site could become like other revitalised heritage sites that are occupied by posh shops. Democratic Party lawmaker and Central and Western District councillor Kam Nai-wai said he had not heard of the foundation. "It has never consulted the district," Kam said. "I am not sure if the situation is like laymen leading the designers. Officials need to explain in detail why the team was chosen, and to what extent its partners and advisers are devoted to the project." Katty Law Ngar-ning, of the Central and Western Concern Group, said the community should be able to monitor the operation. The Hollywood Road site was removed from the land sale list in 2007 after archaeological excavations uncovered foundations of the Central School. The old police quarters were given a grade three historic rating earlier this year.

The foundation stones of the historic Central School will be preserved as a museum.

A bridge will link the designers' hub in Hollywood Road.

People power is leading the war on land rogues - Trail walker Law Kwong-keung never expected the scene he witnessed when he approached picturesque Sai Wan beach with his friends one April morning - a barge carrying two diggers landing on the sand. "We heard a lot of noise as we headed down to the beach. "But when we got there, there were at least 20 villagers staring at the landing operation," he said. Law, also a district councillor, did not take it seriously at the time and thought it might be government work. So he and his team just carried on with their walk. But a few months later, he was shocked to discover the barge and the diggers were sent to the beach for a private development by a businessman. And now, as he moves around the countryside, he keeps his eyes open for any such abuses. Law said: "I always stay alert to what is happening around me when we are hiking, looking out for any places where vegetation cover is being removed or areas that developers might be looking at." Law is part of a hikers' network in Hong Kong. The walkers exchange information about suspect activities in the countryside and report them to the authorities when necessary.

The most expensive food stall for the upcoming Victoria Park Lunar New Year fair sold at an auction on Monday for HK$380,000, 20 per cent less than last year. The auction of the fair’s stalls is traditionally seen as an economic indicator. Bidder Lam Wai-tat, who won the right to the stall, which will sell fishballs and other snacks during the seven-day event, said the price was lower than he had expected. “Maybe it’s because it rained during last year’s Lunar New Year [and] some bidders couldn’t bear the risk,” Lam told local media. The second and third most expensive fast-food stalls were won by a bidder surnamed Tam for HK$350,000 and HK$280,000. He said the prices were reasonable. Today and tomorrow more than 400 dry and wet goods stalls for the fair will be auctioned at Queen Elizabeth Stadium in Wan Chai. The Lunar New Year fair will last from January 28 to February 3, 2011.

Asia now competes with America for top business students - Asian MBA programs have emerged as challengers to their more established United States peers in global academic rankings, but their pulling power may still be limited to students willing to put down roots in this region. Top students have traditionally completed their Master of Business Administration degrees in the US or Europe, where opportunities for high-level jobs are most abundant. But global growth has since shifted to Asia and business schools in the region have capitalized on the trend, drawing candidates from both home and abroad. The rising profile of Asian MBA programs is expected to come at the expense of overseas universities by taking a bite out of their application intakes. But so far the face-off between East and West has been kept in check by a lack of overlap between the two markets, said Richard Lyons, dean of the Haas School of Business at the University of California, Berkeley. "There is still such a strong segmentation that we don't see ourselves going head-to-head against those schools very often," Lyons said. "People either decide they want to do [the MBA] here or they want to do it over there." He said only a "tiny" number of Haas's roughly 240 full-time MBA students in last year's class had also been admitted to the Hong Kong University of Science and Technology (HKUST) Business School. The head-to-head numbers between Haas and Hong Kong-based business schools have generally been five or less, Lyons added. That comes as no surprise to Hong Kong's leading business schools, which have positioned themselves as distinct alternatives to the traditional western MBA programs. "There is no single school that we are battling it out with because we are unique," said Steven DeKrey, a senior associate dean at HKUST. "If people want a top school and want Asia, is there a better choice?" The Chinese University of Hong Kong (CUHK) has also made efforts to differentiate its MBA program from other overseas ones. The curriculum covers themes unique to this region, including family business ownership, supply chain management in the Pearl River Delta and corporate governance in the mainland. "Asian business schools should start to have confidence in ourselves and not copy from the US," said T.J. Wong, dean at the faculty of business administration of CUHK. Attending an Asian business school has become a more viable option in the past few years after several MBA programs around the region have charted a rise up global academic rankings. HKUST was ranked ninth in the Financial Times Global MBA Rankings 2010, tied with University of Chicago Booth School of Business. And CUHK was tied with Haas at 28th overall. In total, six schools from the region cracked the top 30, including France's Insead, which has a full-time campus in Singapore. That is up from just two in the 2007 rankings. Academic rankings are usually taken with a grain of salt because of all the variables involved in calculating them. But they can still serve as a useful starting point for prospective students when they are deciding where to apply, DeKrey said. "[And then] the more sophisticated reader will analyse the criteria and match it against what they care about," he said. Many students seem to be zeroing in on the better job placement data from Asian business schools. The FT survey showed that nine out of 10 students from both HKUST and CUHK had secured work within three months after graduation, for example, compared with just three in four students from University of Pennsylvania's Wharton School of Business. Data from the Graduate Management Admission Council, which offers the GMAT exam required by most MBA programs, reflected this trend, reporting the percentage of test scores sent to US-based business schools decreased from 83.9 per cent of the world total to 78.4 per cent between 2005 and 2009. The combined percentage of scores sent to India, Singapore, and Hong Kong more than doubled to 5.3 per cent in that time. That signals competition for students could increase over time between East and West, even though top-tier US business schools have been relatively insulated so far. "There will be some shake-up among US business schools," Lyons said. "[In] that middle-tier of US business schools there is going to be a lot of competition and increasingly the top 10 schools are [even] feeling it."

Fast trains, integrated hubs point to future of transport in HK and mainland China - Three days after the Shanghai-Hangzhou high-speed train service started service on October 26, I took the train from Shanghai to Hangzhou and back again. The terminus in Shanghai is at the Hongqiao transport hub on the outskirts of the city. This is a multimodal transport centre that seamlessly links the new high-speed service with the Hongqiao airport and metro service. The hub opened in April, in time for the Shanghai World Expo, which started in May. Passengers can get off a plane, then take a short walk to access the high-speed rail network. The train station at Hongqiao felt more like the airport terminal to which it is linked, being cleaner and with better facilities than a standard mainland station. Though it was not as crowded as many mainland train stations, there was still a significant number of passengers waiting to board the trains. Judging by their dress, the passengers at the train station looked like the middle class mainlanders typically seen at Chinese airports, economically a cut above the migrant workers that normally pack ordinary mainland railway stations. The service offered frequent departures, with about four high-speed train journeys leaving Shanghai for Hangzhou every hour. I bought an economy ticket for the 3.40pm train for Hangzhou at one of the many automatic ticketing machines. Although some were out of order, the vending machines made buying tickets easier. Along the journey, most of the landscape was urban with many buildings or factories. In the sparse rural areas, pockets of construction activity were visible. This suggests that in coming years, the corridor between Shanghai and Hangzhou will become a common urban zone merging both cities into one huge megacity in the Yangtze River Delta. The 200 kilometre trip took about 50 minutes and cost 82 yuan (HK$95.60). In comparison a standard train journey would take 80 minutes and cost 54 yuan in economy class. But despite the higher ticket price, the train was nearly full. At Hangzhou railway station, where I looked for a taxi, traffic was congested, indicating how heavily used the station is. The construction of a new metro train station in the area was a sign of the intensive infrastructure building under way in the city - activity that is to be found throughout China as the nation undergoes a massive infrastructure investment program. I took a taxi to Hangzhou's famous West Lake, celebrated in ancient Chinese poems like Su Dongpo and patronised by tourists today. I reached the lake around 6pm, just in time to see the sunset. I then took a taxi back to Hangzhou train station, where I caught the high-speed train back to Shanghai. Some of the earlier trains from Hangzhou to Shanghai were fully booked, which shows how popular the services have become on the mainland. My train was almost full, although a passenger sitting next to me complained: "At 82 yuan per ticket, this is highway robbery." When the train reached the countryside, its speed rose to 350km/h per hour, one of the fastest operational train speeds in the world. The journey took one hour. On reaching Shanghai's Hongqiao hub, I took the metro train to Jingan Temple station in downtown Shanghai. From Jingan Temple metro station, I walked to the Portman Ritz-Carlton Hotel for my next appointment, arriving around 8pm. Between 3pm and 8pm, I had, therefore, left Shanghai to enjoy the sunset on the West Lake in Hangzhou and returned again to my hotel in Shanghai. This indicates the speed and convenience of high-speed train travel, as well as the seamless interconnection between different transport modes in the Hongqiao hub. Based on my experience and observations, several trends seemed clear to me. First, contrary to concerns about cost and scheduling, high-speed train travel has become widely accepted by ordinary mainlanders. Second, the shortening of travel time will speed up integration between mainland cities, causing adjacent cities to combine into one megacity. Thus, high speed railway will accelerate urbanisation. And third, the flow of business and tourists between mainland cities will expand. It also seemed to me that what was on view in Shanghai was a foretaste of what we might expect when Hong Kong's high-speed railway begins operating in 2016. A high-speed train journey from Hong Kong to Guangzhou will then be similar to an MTR train ride from Hong Kong Island to Kowloon. This will increase the integration between Hong Kong and the Pearl River Delta. However, Shanghai has a six-year headstart over Hong Kong in this integration process.

Race is on for David Chiu to be San Francisco's first Chinese mayor - San Francisco could soon have its first Chinese mayor. David Chiu, a Harvard-educated son of Taiwanese immigrants, and state senator Leland Yee, originally from Guangdong, are both likely to be in the running for the post. Current mayor Gavin Newsom is quitting early after being elected to serve as California's next lieutenant governor. His victory cut short his second term and opened a vacancy for an interim mayor and an opportunity for someone to seek a full term in November next year. Board of Supervisors president Chiu, who represents Chinatown, will automatically become interim mayor if Newsom resigns before January 8 and the board does not pick a successor. He would therefore, by default, become the city's first Chinese and Asian-American mayor. Yee, who won re-election to Sacramento's position on the board with nearly 80 per cent of the vote, announced last week his intention to campaign for the full-term mayoral job next November. But he declined to say if he would accept the interim appointment. San Francisco, with an ethnic Chinese population of about 20 per cent, has by far the highest proportion of Chinese residents among the major American cities. Yet Chinese Americans aren't the only minority group hoping to claim Newsom's job. Openly gay politicians Tom Ammiano and Mark Leno are also among the top contenders to be the first gay mayor of a city regarded as America's homosexual capital. The next mayor will have to deal with a massive budget deficit and the effects of the recession while leading the city's bid to host the lucrative America's Cup sailing contest. The new mayor will also serve as the face of a city in the habit of grabbing the nation's attention. Newsom touched off the gay marriage debate in California when he defied state law and opened City Hall to same-sex marriages two days before Valentine's Day in February 2004. He now finds himself in the middle of a stormy debate over whether toys in McDonald's Happy Meals should be banned in the city in an effort to promote better nutrition for children. The Board of Supervisors, a diverse group of 11 politicians elected from their respective neighbourhoods, has the task of appointing an interim mayor to serve until the November 2011 election. If Newsom resigns after January 8, a newly-constituted board with four newly-elected supervisors will end up picking the interim mayor. But so far, the only thing the current board seems to agree on is that no willing candidate has emerged who can garner the necessary six votes on the 11-member body. The day after his election victory, Newsom floated his own proposal at a celebration before thousands of Giants fans at a World Series victory celebration in front of City Hall. Newsom joked about appointing Giants pitcher Brian Wilson to the vacancy. Wilson's beard, personality and post-season performance have made him extremely popular in San Francisco. "This town is going to need another mayor soon," Newsom said. "I have just three words: fear the beard'." Wilson's response later to the cheering crowd - "I don't think I'm up for that job" - drew a gasp of mock disappointment.

 China*: China's leading automaker SAIC Motor Corporation has agreed in principle to buy a minority stake in General Motors at the US car giant's initial public offering, state media reported on Monday. SAIC, which has two vehicle production joint ventures with GM in China, may buy about one per cent of GM for around US$500 million , the China Securities Journal reported, citing unnamed sources. SAIC president Chen Hong left for the United states last week to finalise details of the deal, the report said. Officials with Shanghai-based SAIC were not immediately available for comment when contacted by reporters. The US auto giant said earlier this month it had become the first international carmaker to sell two million vehicles in a year in China, now the world’s largest auto market. GM hopes the listing will allow it to break from government ownership, after it was forced into a state-backed bankruptcy reorganisation in June last year. GM has said it wants to raise US$13 billion from the IPO, one of the largest in US history. The offering will consist of 365 million shares of common stock, with an estimated price range of US$26 to US$29 per share. GM will also issue 60 million preferred shares at US$50 per share. Last week, GM posted a US$2 billion third quarter profit after years of painful cuts, a major revamp of its product portfolio and a slow-but-steady recovery by the car industry from the worst downturn in decades.

Nestle added Nescafe Yunnan (China) Arabica coffee to its beverage portfolio - Choosing Nescafe, produced by Nestle, at a grocery store in Zurich. Swiss-based Nestle SA, the world's largest food company by sales, recently added Nescafe Yunnan Arabica coffee to its beverage portfolio, pinning much hope on its success. Yunnan, traditionally home to tea producers, becomes a hot bed of competition for rival drink. When Chinese people saw their first Nescafe commercial in the early 1980s with its slogan "The Taste is Good" on their old black-and-white television sets, it was thought unlikely they would take to the foreign drink made so far away from their own country with its deep-seated tradition of drinking tea. However, it seems to have won people over and has led to the world's leading coffee makers growing the beans in Yunnan, the province regarded as the cradle of Pu'er tea. China's southwestern Yunnan province is about the same latitude as some of the world's top coffee-producing regions and now accounts for 99 percent of China's total production of the energizing drink. The region is now a key front in the war between international coffee giants. Recently, Swiss-based Nestle SA, the world's largest food company by sales, added Nescafe Yunnan Arabica coffee to its beverage portfolio, pinning much hope on its success. The world's largest coffeehouse chain, Starbucks Corp, launched Yunnan-originated coffee products in January 2009. The exotically named South of the Clouds Blend is a mixture of whole beans grown in Yunnan and other Asia-Pacific regions. During the first three quarters of 2010, coffee exports in Yunnan were worth about $85.9 million, an increase of $26.6 million compared with the same period in 2009, according to figures from Yunnan provincial government. In addition, the plantation area was increased to more than 30,000 hectares in 2009 from 18,000 hectares in 2005. Huang Jiaxiong, a researcher from Yunnan Academy of Agricultural Sciences, said: "The viable coffee-growing area in Yunnan is about 80,000 hectares. Only 30 percent of them have been exploited." Coffee has become second only to oil as the world's second largest traded commodity. "There is still much room for development as the coffee industry in Yunnan is expected to become a new pillar industry creating more than 10 billion yuan of output value," Huang added. Huang said the advantage of Yunnan coffee lay in its unique flavor and aroma of fruit, herbal spiciness and strong but not very bitter coffee taste. Adrian Ho, head of the coffee and beverages business unit at Nestle (China) Ltd, told China Daily that currently Nestle controls close to 80 percent of China's coffee market after coming to the market more than 20 years ago and gradually developing the business. The company pioneered the making of Yunnan into a viable coffee-growing region in the late 1980s. Wouter De Smet, manager of Nestle Coffee Agriculture Service (NAS), said the company in 1994 started a coffee development program based in Pu'er, in Yunnan, that focused on training and technical assistance. So far, Nestle has invested about 50 million yuan into training local people free of charge, helping jump-start the Arabica coffee bean development in Yunnan and supporting farmers in improving the quality and yield of their plantations. "We teach local farmers to check the price of coffee on the international market on the Internet so they can sell their coffee beans at an appropriate time at a fair price," said De Smet. The company established a Nestle experimental and demonstration farm in 1997 covering an area of 60 hectares and started direct large-scale procurement of Arabica coffee from local farmers from 2002. "Now, Nestle annually purchases around 3,000 to 5,000 tons of coffee in Yunnan," said Ho. "And, Nestle promises to make constant investments in the coffee sector in Yunnan." In urban areas of the Chinese mainland, average annual per capita consumption is around 0.76 kilograms (kg) against Taiwan's annual per capita consumption of 0.95 kg, according to statistics by the International Coffee Organization (ICO). Finland ranked first in terms of annual per capita coffee consumption with 11.98 kg, followed by Norway with 9 kg, Denmark 7.90 kg and Switzerland at 7.68 kg, according to the ICO. "China has still much potential and we welcome more companies who have a long-term interest and commitment in developing the Chinese coffee market," said Ho. "I'm not concerned about maintaining market leadership - because Nestle does not only sell coffee products in China - but in developing Chinese coffee culture and also encouraging the habit of drinking coffee among Chinese consumers." Many Chinese people have known of the Nestle brand since their childhoods and recall it nostalgically, Ho added. According to Euromonitor International, coffee sales in China could reach $3.6 billon by 2011 from $ 2.4 billion in 2006.

China-made regional jet undergoes high-intensity tests - Regional aircraft ARJ21-700 made in China arrives in Zhuhai, south China's Guangdong Province, Nov. 9, 2010. ARJ21-700, designed and manufactured in China, will take part in the 8th China International Aviation and Aerospace Exhibition, slated to open on Nov. 16. China's independently-developed regional ARJ21-700 jet has begun high-intensity test flights in order to get its airworthiness certificates, according to its producer, the Commercial Aircraft Corporation of China (COMAC). Tian Min, chief accountant of the COMAC, said Monday at the China International Aviation and Aerospace Forum in Zhuhai that the China-made jet was preparing for a series of difficult and high-risk trials, including tests of the engine and the avionics system. Four aircraft were undergoing test flights while another two were being tested on the ground in order to earn airworthiness certificates from the Federal Aviation Administration (FAA) of the United States and the Civil Aviation Administration of China (CAAC). Since the first trial flights in November 2008, ARJ21-700 jets have completed more than 900 hours of tests in more than 400 trial flights, including high-temperature and high-humidity tests, Tian said. Tian said the COMAC planned to deliver the first ARJ21-700 plane to buyers in 2011. The company had received 240 orders from home and abroad.

A look inside China's C919 passenger jet - A model of the China-made C919 passenger airliner is seen at the 8th China International Aviation and Aerospace Exhibition in Zhuhai, South China's Guangdong province, Nov 15, 2010. The model, which comprises the cockpit and the front part of the passenger cabin, is the same size as an actual C919 plane -- 17 meters long, 5.6 meters high and 3.96 meters wide.

A woman shows a square-shaped watermelon newly developed by a Chinese company at the recent China-ASEAN Expo in Nanning, Guangxi Zhuang autonomous region. A lot of Chinese companies are considering overseas investment in ASEAN economies with their latest technology.

November 16, 2010

Hong Kong*: China Modern Dairy, a raw milk supplier to China Mengniu Dairy (2319), starts retail book building today to raise up to HK$4.43 billion in an initial public offering. Sales of raw milk to Mengniu generated 97.6 percent of Modern Dairy's total sales in the last financial year ended June 30. Despite the tainted-milk scandal of September 2008, the average selling price per kilogram of milk has climbed steadily, reaching 3.73 yuan (HK$4.36) this year, chairman Deng Jiuqiang noted. Deng holds a 0.16 percent stake in Mengniu. China Modern Dairy's institutional portion was four times oversubscribed yesterday, a banking source said. Five cornerstone investors, including Mengniu, Government of Singapore Investment Corp, COFCO-controlled Ceroilfood Finance, Keywise Capital Management and Dong Yin Development subscribed a combined US$129.4 million (HK$1.01 billion). One-third of the offering comprises secondary shares to be sold by existing shareholders. Advanced Dairy, a controlling shareholder that is owned by US private equity fund KKR will sell 228 million shares which may raise up to HK$841.38 million. China Modern Dairy is selling 1.2 billion shares at HK$2.89-HK$3.69 apiece. The minimum spending for a board lot of 1,000 shares is HK$3,727.2. The company is set to go public on November 26 in the local bourse. Da Ming International, a stainless steel processor and distributor, begins its roadshow today to raise up to HK$1.56 billion. Lee Kee Holdings (0637) agreed to subscribe HK$30 million as a cornerstone investor, market sources said. China Gold International Resources saw its institutional portion eight times oversubscribed, sources said. Meanwhile, Wuhan-based China ZhangTong Auto Services seeks to raise up to HK$3.1 billion and will start its roadshow by the end of this month. The distributor of BMW and Porsche cars targets a December listing.

Listings boom spurs demand for lawyers - Hong Kong is in the middle of a recruitment drive for more lawyers, as new stock market listings and tougher compliance and regulatory requirements boost demand for legal professionals. The number of overseas lawyers admitted this year has risen more than 40 per cent. Caroline Lim, executive vice-president in Asia of the legal and compliance division at headhunting firm DHR International, said the significant number of initial public offerings, mergers and acquisitions and stiffer regulatory requirements had led to big demand for legal professionals. "More of our clients - both law firms and corporations, particularly in the health care, manufacturing and renewable energy industries, are hiring lawyers," Lim said. Growth on the mainland was a key factor in the need for lawyers, with overseas investors requiring legal advisers on mainland deals and Chinese companies wanting legal advice when they invested overseas. Last year, 420 new solicitors were admitted to practise in Hong Kong. Among them, 105 were overseas qualified lawyers allowed to practise locally. In addition, there were 261 new applications to register as foreign lawyers in Hong Kong. This year, initial figures from the Hong Kong Law Society estimate that 148 overseas qualified lawyers were admitted to practice in the first 10 months of the year, a 41 per cent increase from last year. Overseas qualified lawyers admitted in Hong Kong are allowed to advise on Hong Kong laws if they have at least two years' experience in a common law jurisdiction and have passed a local examination, but foreign registered lawyers are only allowed to advise on laws of their own jurisdiction. Lim said companies needed lawyers with international networks and experience to provide legal advice on cross-border transactions and disputes.

Chief Executive Donald Tsang Yam-kuen yesterday launched a fresh appeal for justice over the Manila hostage deaths in his first meeting with Philippine President Benigno Aquino since the August tragedy. Officials on both sides said the conversation on the sidelines of the Apec summit in Yokohama, Japan, was cordial but frank. Tsang pushed for results and Aquino tried to find ways of turning the page in his fledgling relations with both Beijing and Hong Kong leaders. "We are anxious to see justice done in the investigation work undertaken by the Philippine authorities and the actions taken against the people involved," Tsang said in a statement after the pair spoke for about 10 minutes. "We hope the Philippine government will fulfil its pledge to be accountable to victims." On August 23, eight Hong Kong tourists were killed and seven others injured aboard a tourist bus hijacked by sacked police officer Rolando Mendoza amid repeatedly bungled rescue attempts - all played out live on international television. Tsang's statement noted Hong Kong's earlier disappointment at Aquino's review of an investigation report and warned that Hong Kong would be watching closely for the results of a further review into emergency procedures for handling any similar incidents. Officials said, however, that Tsang did not repeat specific concerns over Aquino's decision to take only administrative sanctions - not criminal action - against four police officers and two senior administrators whose incompetence and neglect allowed the 11-hour hostage stand-off to spiral out of control. "The time was brief but the conversation was frank ... all key points were made," one Hong Kong official said. Aquino's decision came despite an independent panel demanding criminal investigation or prosecution against 10 government and police officials, two journalists and three broadcasters. Philippine officials said any change to that decision was unlikely. "At least we know action will be taken if it is done administratively ... the problem with criminal action is that what happens if they are found not guilty? No one wants to see that," one official close to Aquino said. While Aquino said after yesterday's meeting that "both sides want to put this behind us", his officials acknowledged that considerable work was still needed. While Aquino and Tsang were speaking, President Hu Jintao approached them and, according to a Filipino official, appeared happy that Tsang and Aquino were mending fences. Aquino "believes it was a big step towards settling lingering issues between the Philippines and Hong Kong", the official said. Aquino sought a formal bilateral session with Hu this weekend. But by yesterday no meeting had been fixed. "It is our intention to fully account for everything that has been done since, from the investigations to the improvements to our tourist police and special forces procedures," the Aquino official said.

Premier Wen Jiabao yesterday told Hong Kong and Macau to be prepared for fallout from America's latest round of financial engineering. What is known as quantitative easing threatens an oversupply of money in the world, Wen said. So the two SARs, he warned, could be confronted by currency volatility - Macau's pataca is on a fixed exchange rate to the Hong Kong dollar and so is also effectively pegged to the US dollar - as well as inflation and the risk of property bubbles. But while taking Washington to task for increasing money supply and affecting the world economy, Wen also said before he left Macau yesterday that the SARs have the means to meet the challenges. Testing times have been forecast after the US Federal Reserve announced last week it would buy US$600 billion (HK$4.66 trillion) in long-term Treasuries over the next eight months to try to revitalize the United States. A major concern around the world is the likelihood of increased liquidity flooding emerging markets, including the mainland. Wen, making his first visit to Macau as premier, admitted it was already difficult to control property prices in the mainland and said the central government was concerned about the high cost of living overall. The central government had rolled out stringent measures to cool the property boom, he noted, but the result has so far been unsatisfactory. "This matter is indeed difficult ... [mainland] property prices have just not been pushed down," he said after a Macau youngster asked him to control property prices in the SAR to help make it easier to buy a home. In a speech to Macau's leaders, including Chief Executive Fernando Chui Sai-on, Wen pledged the central government would assist the SAR in stabilizing prices of property and agricultural and consumer products in the face of fears about inflation. He also said that the strength of the financial systems in Hong Kong and the mainland can help Macau - which has a limited financial capacity - to maintain stability. In a speech that was also heard as taking local leaders to task, Wen then laid out four wishes for gambling- dependent Macau: scientific governance, economic diversification, improving people's livelihoods and developing a harmonious society. Macau needed a diverse set of industries to sustain growth, Wen said. The government in Macau had benefited from an economic boom, he went on, but wealth had to trickle down to ordinary citizens. He also said that Macau officials should be clean and responsive to people's needs while putting more resources into raising living standards. For example, more public housing units could be built. Wen was in Macau for an economic forum of Portuguese-speaking nations. He held meetings with Portugal's premier, Jose Socrates, and officials from Angola, Brazil, Cape Verde, Guinea-Bissau, Mozambique, and East Timor. Wen left Macau last night.

Local snooker fans were celebrating last night after the women's six-red team potted their way to gold against the China team. Hong Kong won their second gold medal of the Asian Games 2010 with the team winning 3-1 in the final in Guangzhou. And there was more good news for sports fans after cyclist Cheung King- lok and wushu's Zheng Tianhui also grabbed silver. Women swimmers also took bronze in the 4x100-meter freestyle relay, bringing Hong Kong's medal tally to six and putting them fourth in the medals table. The victorious snooker team, who reached the final after defeating Taiwan 3-0 in the last four, comprised Jaique Ip Wan-in, So Man-yan and Ng On-yee. For the event, there are only six reds on the table compared with 15 in regular snooker. The other rules are unchanged. Meanwhile, one day after fellow cyclist Lee Wai-sze won the SAR's first gold with victory in the women's 500-meter time trial event, Cheung battled hard before losing to South Korea's Jang Sun Jae in the men's individual pursuit. Jang clocked four minutes 30.298 seconds against Cheung's 4:37.543, with Cheung, 19, saying Lee's record win had inspired him. "She got a gold medal yesterday and I heard the result when I was preparing for the individual pursuit qualification - that encouraged me a lot," he said. Zheng scored 9.72 points in the women's jianshu/qiangshu all-round behind Chinese winner Kan Wencong, who tallied 9.8. Swimmers Sze Hang-yu, Yu Wai- ting, Stephanie Au and Hannah Wilson clocked 3:43.17 to finish third in the 4x100m freestyle relay behind China and Japan. It was the second medal for both Sze and Wilson, who led another team to bronze in the 4x100m medley relay on Saturday.

Gold-medal joy for HK cycling star - Lee Wai-sze defeats defending champion on her way to a new Asian record - Track cyclist Lee Wai-sze gave Hong Kong a perfect start to the 16th Asian Games, breaking the Asian record and beating defending champion Guo Shuang of China to win the women's 500-metres time trial at the Guangzhou velodrome yesterday. The 23-year-old completed the two-lap race in 33.945 seconds, bettering an eight-year-old Asian record of 34 seconds set by mainlander Jiang Yonghua. "I could not believe I had achieved such a time when I came down from the bike," said Lee, who has been training full-time for six years in track sprinting events. "It was an excellent time, as I thought I managed only 34 to 35 seconds. But still, I thought I might lose the race as Guo was the last one to start behind me. "In the end, she managed a time that fell short of mine, and everything felt like a dream come true." Hong Kong coach Shen Jinkang and other backroom staff surrounded Lee, showering her with congratulations for her brilliant performance after it became clear she had beaten Guo. "The training leading to the Asian Games was very tough, and I once even considered quitting," said Lee, who suffered a broken wrist during training in 2006 that stopped her from competing for almost a year. "But all my hard work and effort paid off today."

Wine frenzy grips Hong Kong - Vintage bottles 'better than stocks' as city leads the world in auction sales - He Weiqi, a businessman from Zhejiang province , says he routinely pays more than 30,000 yuan (HK$35,000) for a bottle of wine to entertain guests. "A price tag of more than a million yuan a bottle does more than show off your wealth. It shows you have good taste," He, 38, said at the Hong Kong International Wine and Spirits Fair, which drew 700 companies from 29 countries and regions. "We don't care how outrageously expensive the wines are." Wine sales in the city by auction houses Sotheby's and Christie's International will raise more than in New York and London combined this year, with vintage Chateau Lafite selling at more than US$200,000 a bottle. Sales at Hong Kong's auctions have more than quadrupled since the city cut duties to zero two years ago. David Elswood, the London-based head of wine for Christie's, said: "What we've seen emerging in the last year are people paying virtually any price for wine. "That's not investment. That is just uncontrolled spending." Mainland buyers may double auction sales in Hong Kong next year, he said. Meanwhile, merchant Alex Yu, touting a HK$80,000, five-litre bottle of Chateau Mouton Rothschild, said: "Red wine is better than stocks. Chinese wine lovers are pushing up prices." Three bottles of Chateau Lafite's 1869 vintage sold for a record US$230,000 each last month, 28 times Sotheby's top estimate. And collectors in Hong Kong, China and Taiwan now hold about a quarter of the world's fine or rare vintage wine, according to Crown Wine Cellars, which stores about HK$1 billion of wine in a network of converted ammunition bunkers in Hong Kong. Total consumption has doubled in China in the past five years, with red wine accounting for 75 per cent of demand, according to a report by Citigroup Inc. And wine isn't the only product buyers are mopping up. The fastest growth of any major economy and an appreciating currency have seen them picking up properties in London and artwork in New York. In Hong Kong, demand from the mainland drove luxury property prices past the 1997 peak, spurring the government to warn of an asset bubble. Robert Beynat, chief executive of wine exhibition organiser Vinexpo Asia-Pacific, said Asia's wine market will expand four times faster than in the rest of the world. Much of the growth will come from the mainland, which is the final destination of a "large part" of the wine imported into Hong Kong. Liu Xuebiao, a merchant from Shenzhen, said wine he buys in Hong Kong for about US$3 a bottle can be sold on the mainland for 300 yuan, more than 15 times what he paid. "They are willing to pay just about any price," said Liu. Imports by Hong Kong merchants jumped to US$600 million in the first nine months, more than the whole of last year. And the value of auctions reached US$120 million this year, almost double the US$64 million of 2009, according to the government. Sotheby's had to issue tickets for the first time for its wine auction at the Mandarin Oriental Hotel last month, when it offered almost 2,000 bottles of Lafite shipped directly from the Bordeaux chateau's cellars. The sale beat the auction record for a single bottle set in 1985 in London, when the late US publisher Malcolm Forbes paid £105,000 (HK$1.3 million) for a 1787 vintage. "New York and London aren't going to catch up," said Robert Sleigh, who moved to Hong Kong from New York in August to run Sotheby's Asia wine business. "People like the fact that the wine is here in Hong Kong. You just go and pick it up." Sotheby's next wine auctions in Hong Kong will be in January, where it will put on sale the Bordeaux Winebank Collection. The highlights include bottles of Chateau Petrus 2000 and Chateau Lafite Rothschild 2000. Sotheby's has sold US$52 million of wine in eight auctions this year in Hong Kong compared with a combined US$24 million so far in New York and London, previously the world's biggest markets. And 11 consecutive wine auctions it has held in Hong Kong have been sold out. Gregory De'eb, general manager of Crown Wine Cellars, said the Hong Kong sales are an indication of how far mainland Chinese buyers have come since the 1990s, when they would drink Coca-Cola with wine and merchants hawked unwanted vintages to them. "Through their own aggressive tasting, they have built a better knowledge of what suits their palates," De'eb said. While the Chinese are the ninth-largest consumers of wine globally, it accounts for only 2 per cent of the alcohol drunk in the country, according to Citigroup analysts. That's changing as wine starts to win favour compared with baijiu and Maotai liquor. In 2008, Domaines Barons de Rothschild (Lafite) agreed to develop more than 25 hectares of vines in Shandong province with Citic Group, China's biggest state-owned investment company. Elswood, of Christie's, said the burgeoning wealth is "inflating a bubble" in wine. "When you're paying four, five times or even more than the reference price, then you have to seriously question the market knowledge of that buyer." At Sotheby's April auction in Hong Kong, a 12-bottle lot of Chateau Latour 1982 fetched HK$338,800 or US$43,707. About two weeks later, New York-based Tribeca Wine Merchants ran a newspaper advertisement offering the same wine for US$2,250 a bottle. He, strolling around the Hong Kong fair with a glass of wine, said: "Westerners drink wine slowly as a way of enjoying life. Just look around you. Mainland Chinese tilt the glass and pour it straight down the throat."

The government yesterday announced it would exempt all taxis queuing at taxi stands from a proposed ban on idling engines. The exemption will also apply to 16-seater school minibuses, not just bigger school buses as proposed earlier. However, the full exemption will not be extended to public light buses. The new concessions, which the Legislative Council must approve, come on top of several others already granted - most of them in response to pressure from drivers' groups, who said they wanted to run air-conditioning while stationary. The death in July of an 81-year-old minibus driver from heatstroke after he turned off his engine to avoid idling, and the hospital treatment a bus driver required for suspected heatstroke the same month, added to the pressure on the government to respond to demands for concessions. Friends of the Earth said it was disappointed by the latest move and said the exemptions meant the ban on idling engines had lost all meaning. When the ban was first proposed three years ago as part of measures to reduce street-level air pollution, the administration said any driver who left a vehicle parked with an idling engine for what a law enforcer deemed an unnecessary length of time would face a fixed penalty of HK$320. The first concession came when the government agreed to exempt the first two taxis queuing at a stand. Then it said the exemption would apply to the first five. Then the drivers of the first two public light buses waiting in a line for passengers were allowed to idle their engines. The government also said all vehicles would be exempt on any day when one of the three rainstorm signals, or the very hot weather warning, were put up. Last month the government said the exemption would also apply to school and tour buses with 17 or more seats. With the latest exemptions, drivers of all taxis queueing at any of the city's 278 taxi stands will be allowed to idle their engines, as will drivers of school minibuses with 16 seats or fewer - providing they have passengers on board. The government had indicated an exemption for all taxis on stands was being considered two months ago.

FOX television network plans to launch a Hong Kong-based Asian version of its long-running and popular crime-fighting reality show, America's Most Wanted. The program in the United States has helped capture 1,130 fugitives and recover 61 abducted children over the past 22 years. Show host and executive producer John Walsh, whose son was murdered in 1981, told The Standard he plans to assist local and mainland law enforcement bodies by producing Asia's Most Wanted. "Child trafficking has become a global concern. When filming our latest series, I went undercover in Cambodia and saw how terribly easy it is to exploit a child there by paying just a few hundred US dollars," Walsh said. "We have helped capture dangerous fugitives in Britain, Germany and Japan. The next plan is to make the show truly global." Walsh said he has been negotiating with Star- TV, the Asian TV service owned by media tycoon Rupert Murdoch, to produce and distribute the show. No timetable has been set. He said Hong Kong, with its cosmopolitan character and easy access to the mainland, where child smuggling is a serious problem, is the "perfect place" from which to launch the project. The Asian version will follow a format similar to the US show that attracts six million viewers weekly. "Every week, we discuss with the police to pick up five to six cases, including violence, abduction and murder cases, and film a re-enactment," Walsh said. "When it is on air every Saturday night, I appeal to the audience to provide tips through a toll- free line or our website. "TV is a powerful tool to give people ways to do the right things." The show does not involve any investigation, he said, adding the police or Interpol will "go after the bad guys." Walsh recalled Hong Kong played a part in the show's 2007 international manhunt for American sex offender and child pornographer Kenneth John Freeman. After the story was aired, clues flew in hinting that Freeman had fled to Shanghai after being released on bond in 2005. Since America has no extradition treaty with the mainland, US police worked with the airline to direct the flight of his girlfriend - who intended to meet him in the mainland - to Hong Kong. "When Freeman arrived here by bus to pick up his girlfriend, he was caught by local police." Walsh, 64, was honored by four US presidents for his dedication to child protection after his son Adam was abducted and murdered 29 years ago. In 2006, on the 25th anniversary of Adam's murder, legislation entitled the Adam Walsh Child Protection and Safety Act was signed into law by then- president George W Bush.

Bosses cough up $167m in MPF dues - The Mandatory Provident Fund Schemes Authority has, in the last financial year, realized HK$167 million in outstanding contributions from employers who failed to pay to MPF accounts on time.

A young couple who died when their motorcycle crashed on Ting Kau Bridge two weeks ago was seen jumping lanes while overtaking vehicles shortly before the accident, according to a video clip circulating on the internet.

 China*: President Rafael Correa says Ecuador could become Beijing's "gateway to Latin America" after meeting with the mainland's top army general and reviewing a series of cooperation agreements between the two Pacific Rim countries.
"We offer very important things to China," Correa said, referring specifically to Ecuador's port facility in southeastern Manta, and its sprawling air base. He called the port "the best in the South Pacific," and said its airbase can operate around the clock due to the coast's "superb weather conditions." He added: "We're getting a lot of cooperation, a lot of funding from China, including for our armed forces." Correa, who met Army Chief of Staff Chen Bingde, cited the mainland radars being installed on the border with Colombia and "two medium-size cargo planes" for the air force's aging fleet. Mainland investment in Ecuador is on the rise, including a US$1 billion (HK$7.8 billion) loan for the country's 2010 investment plan and US$1.7 billion for the construction of a power plant.

Asian Pacific Region looks to China for profit, and to get a free ride from USA on security - Apec leaders in Yokohama welcomed the continued military presence of the United States in the region even as they looked to China for trade. Two summits in East Asia reveal how countries in the region are increasingly torn between their reliance on China's surging economy and their desire for an assurance of their security from the United States. The contradictions between the conflicting priorities of security and economics across the region are all too clear after four furious days of international summits in Seoul and Yokohama, Japan. On one hand, China's growing economic clout was boldly on show as the US struggled to set the agenda when the leaders of the G20 nations met in South Korea. US President Barack Obama, wounded from domestic political defeats, is limping home after a rare regional tour in which he was unable to seal specific agreements on trade surpluses and currency manipulation. Even a once-vaunted trade deal with South Korea could not be completed. And even though President Hu Jintao acknowledged the need to drive Chinese domestic consumption to ease imbalances, he spoke for many when he voiced concern over the Federal Reserve's decision to effectively print an extra US$600 billion in cash, accusing Washington of its own currency manipulation. Still, at the Asia-Pacific Economic Co-operation gathering of leaders in Japan and on his visits to Indonesia and India, Obama entrenched Washington's push to court Asian nations eager to snuggle more closely under the traditional US security umbrella. That trend was highlighted in Yokohama as Japanese Prime Minister Naoto Kan spoke of the increasing importance of the US role after 50 years of Washington's security alliance with Tokyo. And he did it with a warmth hard to conceive of just two years ago - hardly music to the ears of a Beijing fearful of being contained. "I expressed my appreciation for the consistent support of the US amid Japan's various problems with China and Russia," Kan said after a lengthy meeting with Obama. "I also said that I myself and many Japanese people as well as neighbouring countries recognised the further importance of the US military presence for the peace and security of the region." As Kan spoke, former US president Bill Clinton arrived in Vietnam to hail the rapidly emerging economic and security relationship with a former bitter foe of the US - an emerging strategic relationship that reflects regional concerns over the harder edges of China's rise. Of course, few are pretending the challenge of China's rise is "zero sum" - diplomatic code for a fight in which there can be only one winner. Even, for example, as Washington weighs tougher action over a yuan believed to be as much as 20 per cent undervalued, its officials happily note soaring US exports to China. Obama attempted to address the contradictions in an interview at the weekend with the Yomiuri, Japan's largest newspaper. He spoke of the need for the region to "shape" China's rise as well as its economic and global leadership potential. He spoke of the US welcoming a strong and prosperous China that assumed responsibility for tackling global and regional problems. But Obama added: "We will work with our allies and partners to shape the context in which China's rise is occurring ... We want to ensure that China's rise is a source of security and prosperity (SEHK: 0803, announcements, news) for all. The United States and our regional allies and partners share a fundamental interest in ensuring security, stability and prosperity in Asia." He went on to talk about the need to peacefully resolve outstanding differences and respect international "norms". Even for a politician who has defined himself by nuance, it is a complex equation, riddled with both opportunity and suspicion. And Obama leaves the region with a clearer view of the importance of getting the balance right. As the US president wallowed in adulation in Jakarta on his first visit to his boyhood home, his Indonesian counterpart warned of the regional dangers if Sino-US relations worsen. "If something happens between those two states, it will have a severe impact on not only countries in the region ... but also the world," President Susilo Bambang Yudhoyono said he had told Obama. Beijing is already anxiously eyeing Obama's security posture. "There are serious concerns in China that the US is pursuing a containment policy towards China," Zhang Yebai, a retired analyst of Sino-US relations at the Chinese Academy of Social Sciences, told the McClatchy-Tribune news agency. "China hopes to further develop its economic relationship with the United States, but it keeps alert about US security issues." Washington analysts, meanwhile, are pondering the sustainability of a region that looks to China for wealth and to the US for security. "One thing you can be pretty confident about in the future of Asia is that China's economic role is going to be pretty large throughout the region," said Kenneth Lieberthal, director of the John L. Thornton China Centre at the Brookings Institution. "Everyone is coming to us and saying, `Please increase your presence and be more robust' - everyone except China," Lieberthal told McClatchy-Tribune. "But, frankly, if China ends up being the one to really capture the economic upside of the region and we capture the security needs of the region, then China captures the region as a profit centre, and we capture the region as a cost centre. "And that's not where we ought to want to be."

Remember the poor, Wen tells Macau's elite - Premier Wen Jiabao shows off his tai chi skills as he practises with local residents at Mount Fortress in Macau yesterday morning. He later delivered a stern lecture to Macau's ruling elite on their responsibility to the public, especially the poor.

Data from the SCDRC indicates that China's urbanization rate hit 46 percent by the end of 2009, and will reach 63.6 percent by 2030, with the urban population standing at 930 million.

APEC meeting concludes with joint declarations - In the declaration called "The Yokohama Vision -- Bogor and Beyond," the leaders pledged to build an APEC community in which " trade and investment are freer and more open." APEC leaders also vowed to "take concrete steps" toward realization of a Free Trade Area of the Asia-Pacific (FTAAP), which "should be pursued as a comprehensive free trade agreement by developing and building on ongoing regional undertakings, such as ASEAN+3, ASEAN+6, and the Trans-Pacific Partnership, among others." APEC champions a collective growth strategy that emphasizes high-quality development at a time the region is recovering from the financial crisis but facing uncertainty. APEC member economies "will implement the Growth Strategy out to 2015, focusing on the five desired attributes of balanced, inclusive, sustainable, innovative and secure growth." Separate statements were adopted at the end of the meeting in the Japanese port city of Yokohama on the growth strategy, FTAAP and the Bogor Goals of free and open trade and investment.

Jia Rui, from Macao, China celebrates his gold medal in the men's Daoshu and Gunshu at the Guangzhou Asian Games in Guangzhou, South China's Guangdong province, November 14, 2010. Jia won the first gold medal for Macao in the history of Asiad.

Cast members of the film "If You Are the One II" attend a news conference in Beijing, capital of China, Nov. 14, 2010. Some interesting moments of the film were released during the news conference on Sunday.

Zhao Jing of China celebrates after women's 200m backstroke swimming final at the 16th Asian Games in Guangzhou, south China's Guangdong Province, Nov. 14, 2010. Zhao Jing set a new Asian record and claimed the title with 2 minutes and 6.46 seconds.

Beijing, as it develops, is gradually defined by lots of tall buildings, large mansions and shopping streets. The modern Chang'an Avenue, Qianmen pedestrian malls and Wangfujing Street present to the world a prosperous and bustling capital. However, none of them can speak for the historical culture of Beijing. The old streets in Beijing, such as Yandaixie Jie (Skewed Tobacco Pouch Street), Guozijian Street and Nanluoguxiang Street, can best interpret the history, culture and architectural heritage of Beijing. Yandaixie Jie means "Skewed Tobacco Pouch Street" in English. It starts from Di'anmen Street in the East and ends at Qianhai in the West. Measuring almost 300 meters long, the street resembles a huge tobacco pouch. Also as it runs from the northeast to southwest, hence the name "Skewed Tobacco Pouch Street". Another reason for its name's origin is reflected to the people who lived there in the Qing Dynasty (1644-1911), and that they adored smoking pipes. Due to the large demand for pipes, many tobacco pouch stores were opened, thus giving the street the name "Tobacco Pouch". Today, the old street has become a popular destination for visitors. Wandering along the street, visitors will find many stores selling pipes, tobacco pouches, antiques and all kinds of souvenirs. The trendy bars, old-style shops and featured inns are all attractive to the eyes. In November, 2010, Yandaixie Jie was named "Chinese historical and cultural street", after Guozijian Street in 2009.

November 15, 2010

Hong Kong*: Appeal seals 50:50 divorce split - Women are entitled to half a couple's assets when they divorce in Hong Kong, the city's top court decreed in a landmark ruling yesterday. The Court of Final Appeal decision, which upholds a ruling in a lower court, brings Hong Kong into line with other common-law jurisdictions and makes the city one of the most generous places in the world for financially weaker spouses. In a separate ruling, the court also found that a period of cohabitation before marriage should be disregarded in divorce proceedings. "As a result of this landmark case, the principle of equality of division will continue to have a major impact on so-called `big money' cases in Hong Kong where the financial assets are substantial," said international family law expert Marcus Dearle, managing director at the Hong Kong office of global law firm Withers. "As a consequence, pre- and post-nuptial agreements will continue to be extremely important for those in Hong Kong who wish to protect their family wealth." Peter Barnes, the legal representative for the wife awarded half of the joint total assets, amounting to HK$2.68 million, in yesterday's landmark case, said: "My client is very happy because a lengthy period of litigation has come to an end and she can get on with her life." In the past, Hong Kong courts assessed the "reasonable requirements" of the spouses and divided the assets accordingly; leftover assets have then been awarded to the breadwinner, usually the husband. In 2008, the Court of Appeal ruled a husband and wife were each entitled to an equal share. Yesterday, the Court of Final Appeal upheld that decision in the case of a woman seeking half of their combined assets. The couple married in 1996 and divorced in 2002. The 48-year-old husband runs a small business and the wife stopped working after they wed before resuming work between 1998 and 2003. The couple have no children and total assets of HK$5.36 million. At an earlier hearing, a deputy district judge ruled the husband had to pay one-third of the total assets to his wife. But the Court of Appeal invoked a principle laid down in a House of Lords decision in England and awarded the wife half the assets. Yesterday's ruling by the top court referred to an earlier English court ruling, which stated that "there should be no bias in favour of the money-earner and against the homemaker and the child carer". In the other case, involving a couple who met in 1985, married in 1997 and divorced in 2004, the top court ordered that the husband pay the wife HK$11.9 million, not the HK$37.5 million ordered by the Court of Appeal, because 12 years was spent in pre-marital cohabitation.

Deng Xiaoping should have been first Chinese to get Nobel Peace Prize: Exco chief - Leung Chun-ying delivers a lecture on the theme "Establish vision, narrow differences, seek consensus - the responsibility of political leaders" at Chinese University. Deng Xiaoping was the "most recognized peacemaker" and should have been the first Chinese to win the Nobel Peace Prize instead of dissident Liu Xiaobo, Executive Council convenor Leung Chun-ying says. The remark by Leung - widely tipped as a hopeful to be the next chief executive - stirred immediate controversy because of Deng's role in the 1989 Tiananmen Square military crackdown and bloodshed. He made it after delivering a speech themed "Establish vision, narrow differences, seek consensus - the responsibility of political leaders" to 1,400 students at Chinese University yesterday. Asked by a social work student for his view of Liu being awarded the Nobel Peace Prize, Leung said: "I know more about Mr Deng Xiaoping than Liu Xiaobo. I also know a bit more about President [Barack] Obama than Liu Xiaobo. When Obama won the prize last year, many people in and outside his country thought the award should not go to him." He continued: "There is one thing I don't understand. If a Chinese was to take the Nobel Peace Prize, why was the first one not Mr Deng Xiaoping?" He stopped short of commenting on whether Liu - who was jailed for two years for supporting the 1989 Tiananmen Square protests and is currently serving an 11-year sentence for subversion after drafting the Charter 08 democracy manifesto - deserved the award. During his 40-minute speech, Leung mentioned the name of the late paramount leader eight times. He also extensively cited Deng's speeches and his design of the "one country, two systems" principle to illustrate the qualities of a political leader. Expounding on his ideas of leadership, he also stressed that political leaders were "not ballot boxes", "not vote-counting officers", "not just executors" and should stand firm on their beliefs even when these were contrary to the voters' will. "Political leaders cannot just drift with the tide. They must have their own ideas, thinking and clear values on issues." He explained after the event why he thought Deng should have been awarded the peace prize. "Mr Deng Xiaoping was a great man. He lifted hundreds of millions of Chinese people out of poverty. He contributed directly and indirectly to the peace and prosperity (SEHK: 0803, announcements, news) of the people of China and also people living in neighboring countries, and by extension to the world as a whole. He's the most recognized peacemaker and also contributor to the development of the country in a prosperous and stable manner." Deng, chairman of the Central Military Commission at the time of the 1989 bloodshed, was a key figure in the crackdown, according to various accounts. While hailing him as a great peacemaker, Leung said he would leave history to decide Deng's role in the military suppression. "June 4 [1989] was certainly a tragedy for Chinese people. The truth of June 4 has not yet been completely made clear. We can still discuss the issue." When taking a separate question on the imprisonment of Zhao Lianhai , a mainland father who organised a support group for parents with children affected by melamine-tainted milk, Leung said he thought the sentence should be reviewed. "I sympathise with any parent with young children whose health had been affected by tainted milk," he said. "Under such circumstances, any parent might act too emotionally." The moderator of the session, Ivan Choy Chi-keung, a senior instructor in politics at the university, said he was surprised to hear Leung link Deng with the peace prize. "I believe most Hongkongers would not agree with him. Deng was the man in control of the military forces who ordered a crackdown which resulted in such massive bloodshed. "I can't see how Leung could convince people Deng deserved the Nobel Peace Prize."

The latest Medical Council election has become a fight between public and private doctors, as the biggest public doctors' union tries to get its first seat on the watchdog. The 2,500-strong Public Doctors' Association (PDA) has nominated its immediate past president, Dr Ho Pak-leung, and serving president, Dr Loletta So Kit-ying, to run for two seats in an effort to counter what they say is "superpower" dominance by private doctors. They will compete with the president and vice-president of the Hong Kong Medical Association, Dr Choi Kin and Dr Alvin Chan Yee-shing, for the two seats. Seats on the council, which has the power to punish errant doctors and decide on important policies and matters such as licence approval, are regarded as key positions in the profession. A war of words has already broken out, with the Medical Association accusing the union of misleading voters by calling it a superpower. Ho said the Medical Council had long been dominated by the Medical Association, which has seven seats on the 28-member watchdog. "The HKMA mainly speaks for private doctors," he said. "For years, there has been zero representation of frontline public doctors." The council earlier endorsed a new policy so its preliminary investigation committee can investigate doctors' misconduct even without receiving complaints. Ho said in his election material that the new policy was a serious threat to doctors. "It is dangerous for the council to actively investigate a doctor without any sound evidence or complaints," Ho said. "We worry that the council will turn into a tool of political persecution. The council is becoming a superpower and so is the HKMA because it supports this new policy." In response to Ho's accusation, the Medical Association sent a message to its 8,000 members earlier this week saying it had never suppressed the voices of public doctors. It said it had nominated at least four doctors - including two serving public doctors and two former presidents of the PDA - to the council or its committee in recent years. "It comes as a surprise to us that these doctors, former presidents and council members [current and past] of the HKPDA are considered by the said professor as being unable to represent or to understand the predicaments of our colleagues in the public sector. We do not see our frontline doctors as weak and repressed," the letter said. "HKMA nominates colleagues who are hard-working and willing to spend day after day on an inquiry. Our representatives have a track record for doing so." The association also said its representatives had actively taken part in movements in pushing for better working conditions for public doctors, such as a protest held in 2008 to call for better remuneration packages for young doctors. Choi said the duty of the medical councillors was to safeguard the interests of patients and the public, not those of doctors. All registered doctors in Hong Kong can vote in the election, which will end on Thursday. The two new members will start their three-year term in January. Of the council's 28 members, 14 are appointed by the government - the four lay members and 10 representatives of various parties, including the two medical schools, Hospital Authority, Department of Health and Academy of Medicine. The other 14 are seven doctors nominated by the Medical Association and seven elected by the profession.

Hong Kong's economy remained robust in the third quarter, with gross domestic product growth stronger than expected at 6.8 per cent, but economists are warning of a rising risk of inflation and an asset-market bubble. The encouraging recovery has prompted the government to revise its full-year GDP growth forecast to 6.5 per cent from between 5 per cent and 6 per cent predicted earlier. On a quarterly basis, GDP rose 0.7 per cent, the sixth consecutive quarter of growth. This was fuelled by a strong rise in exports, which increased 20.8 per cent over a year ago, and a 5.7 per cent rise in private consumption due to improving incomes and job prospects. Thanks to rosy Asian economies, total exports of goods increased by more than one-fifth. "Overall, the GDP figures are encouraging," government economist Helen Chan said yesterday. "But risks are still with us.

 China*: The central government plans to set limits on foreigners buying mainland property to curb speculation and stem an inflow of hot money, the Securities Times newspaper reported. The Ministry of Housing and Urban-Rural Development is reportedly working with the State Administration of Foreign Exchange on the measures, which will apply nationally. Previously, only Beijing, Shanghai and Shenzhen had such limits. Under the measures, foreigners and Chinese from Hong Kong, Macau, Taiwan and overseas will only be allowed to buy one new flat for their own use. Foreigners also need to provide documents to prove they have worked on the mainland for more than one year. Chinese from Hong Kong, Macau, Taiwan and overseas have to prove they work, study or live on the mainland. They also need to declare that they have no other property there. Foreign institutions are also only allowed to buy non-residential property for their own use. The Securities Times reported that the government planned the measures in reaction to massive inflows of capital. "Many mainland cities have issued restrictions on buying homes for local people since the end of September. So the new rules on foreigners buying property were to be expected," said Dickson Wong Hung, the chief executive for property agency Centaline Property on the mainland. But property agents believe the policies will have a limited impact on the market. "Only 5 per cent of buyers in the Shanghai property market come from overseas," said Vincent Luk Fung-siu, the general manager for eastern China at property consultant DTZ. Wong said the measures would have a greater impact on the Pearl River Delta and on Shanghai than on other cities. "Most of the overseas buyers on the mainland come from Hong Kong. They prefer to buy flats in those cities, particularly Shenzhen, as they are close to Hong Kong," he said. But Wong said the number of overseas buyers had begun to fall off in recent months after banks tightened up on property loans. "It is not easy for them to get mortgages for home purchases. They have to pay in full," he said. Central and local governments began implementing new measures to cool the property market at the end of September. All the big cities have imposed restrictions on the buying of new homes. Wong said developers had begun to cut the asking prices of new homes in suburban Beijing at the end of last month. He expects property prices in the capital to fall 10 per cent by February.

Appoint managers from poorer countries, Hu tells world bodies - Hu Jintao and Barack Obama urged each other's countries to adopt wise policies. More jobs in the upper ranks of international financial institutions should go to people from emerging economies, President Hu Jintao said yesterday. In a speech to the G20 summit, Hu welcomed a recent shift in voting power at the International Monetary Fund to give developing countries more say in the running of the Washington-based lender. "The reform of international financial institutions is a long and dynamic process. Quota and voting power reforms are just a starting point, and much remains to be done," Hu said. "We should continue to push for fair and merit-based selection of the management of international financial institutions, enable more people from the developing countries to take up mid-level and senior management positions and redress the under-representation of developing countries at the management level in the institutional framework of international financial institutions." There are few Chinese in senior positions at international financial institutions. Zhu Min, a former deputy governor of the People's Bank of China, is a special adviser to IMF managing director Dominique Strauss-Kahn. Justin Lin is chief economist at the World Bank. Hu said China backed the IMF in its efforts to prevent the "destructive" impact of large capital movements on individual economies. He called for "an international reserve currency system with stable value, rule-based issuance and manageable supply". Central bank governor Zhou Xiaochuan proposed in March last year that a strengthened version of the Special Drawing Right, the IMF's in-house unit of account, could eventually dethrone the US dollar as the world's premier reserve currency. In a thinly veiled criticism of the United States, Hu urged countries that issue reserve currencies to adopt responsible policies and maintain relatively stable exchange rates. Chinese officials have pointedly voiced dissatisfaction with the Federal Reserve's easy-money policy in the run-up to the Seoul summit, fearing it will trigger destabilising flows of footloose capital into emerging markets in search of yield. In response, the US has consistently urged China to expand domestic demand so that its economy relies less on exports. Hu said China would do just that and switch to a growth model driven by consumption.

Starbucks to grow its own coffee in Puer China - Howard Schultz in Kunming announces details of Starbucks' first global coffee farm. After serving coffee around the world for 39 years, Starbucks plans to start growing its own. And the location for its first global farm will be in Puer city in Yunnan province, which is better known for its tea. The Seattle-based coffee giant signed a memorandum of understanding with the Yunnan Academy of Agricultural Science and the local government of Puer yesterday, saying it would invest in and operate its first ever base farm there. It would also establish a coffee development centre, a coffee farmer support centre and coffee processing facilities. The initiatives would complete Starbucks entire value-chain - from seed to cup - in China. The local coffee growing industry expected the involvement by the coffee giant would make the relatively unknown Yunnan coffee a worldwide brand. "Our customers will have a taste of Yunnan-made coffee in our shops from Paris to Tokyo, from Brazil to US. We will share our coffee knowledge to help Yunnan develop into a top quality coffee-growing region in the world," said Howard Schultz, chairman and chief executive of Starbucks. Yunnan is one of the best places in China for coffee, especially the high-quality Arabica beans, thanks to its warm, mild and wet weather. China produces around 40,000 to 50,000 tonnes of coffee beans a year, with more than 90 per cent of it coming from Yunnan. Under the agreement, Starbucks will operate the base farm and the farmer support centre, its first in Asia and third globally following Costa Rica and Rwanda. The company will assign agronomists and quality experts to work directly with local farmers to improve quality and improve yields. Research will be conducted on areas like varietals for local adaptation, disease resistance and flavour improvements. The beans produced in Yunnan will be processed in Starbucks' US roasting plant but the company also plans to build a roasting plant in Asia. Yang Yalin, deputy mayor of Puer, said both parties were open to co-operation, including joint ventures and wholly-owned foreign enterprises. "With Starbucks' power in coffee-growing, marketing and branding, we will build Puer into the capital of coffee in China," he said. The Yunnan government also plans to increase green bean volume from the current 38,000 tonnes to 200,000 tonnes by 2020 and enlarge the coffee acreage from 26,700 hectares to 100,000 hectares. Neither party was willing to disclose how much was being invested. All details of the project will be finalised by January. Starbucks is the latest in a series of major foreign corporates to invest in the province: Nestle arrived in Yunnan more than a decade ago, offering training to farmers and purchasing around 3,000 to 5,000 tonnes of coffee beans annually, and brands like Maxwell and Kraft Food also buy Yunnan coffee. Starbucks only started buying beans from the province in 2007, using them to make the "South of the Clouds Blend" sold in outlets in China, Singapore and Malaysia. Li Sijun, director of the Yunnan Coffee Factory, the biggest producer of coffee beans in the province, expected Starbucks' arrival to drive up local prices and increase competition in the domestic market. "But the opportunity is much greater than the challenge. No one has a deeper understanding than Starbucks about coffee sourcing, processing and retailing. It will certainly bring totally new concepts to Yunnan coffee industry," he said.

Dalian Port has slashed the maximum size of its A-share issue from 2.4 billion A shares to 1.5 billion A shares for its Shanghai initial public offering.

Chinese president meets Japanese PM on sidelines of APEC meeting - Chinese President Hu Jintao (R) meets with Japanese Prime Minister Naoto Kan in Yokohama, Japan, Nov. 13, 2010. Chinese President Hu Jintao held talks with Japanese Prime Minister Naoto Kan on the sidelines of the 18th Economic Leaders' Meeting of the Asia-Pacific Economic Cooperation (APEC) forum here on Saturday. Hu stressed that it is a right choice in the interests of both peoples for China and Japan to follow a road of peace, friendship and cooperation. The two sides should proceed from a strategic and long-term perspective, abide by the principles defined in the four political documents between the two countries and firmly maintain the right direction of developing bilateral relations in order to advance China-Japan strategic and mutually beneficial relations on a healthy and stable track, Hu said. The Chinese president pointed out that China and Japan should make joint efforts to consistently conduct cultural exchanges to boost mutual understanding and friendly feelings between the two nations. China and Japan, being each other's main trading partner, should continue to deepen their bilateral mutual beneficial cooperation and enhance dialogue and coordination on international affairs in a bid to jointly contribute to Asia's revitalization and address global challenges, Hu said. Kan said he was in full agreement with Hu's opinions on developing China-Japan relations. He said he hoped that the two sides would strengthen communications and cooperation in various fields and further improve and develop bilateral relations. The Japanese prime minister also congratulated China for its success in hosting the 2010 Shanghai World Expo. The two-day 18th Economic Leaders' Meeting of the APEC forum opened here Saturday afternoon, with the theme of "Change and Action."

Chinese Premier Wen Jiabao (R) greets Portugal's Prime Minister Jose Socrates during the third Ministerial Conference of the Forum for Economic and Trade Cooperation between China and Portuguese-speaking Countries in Macao, Nov 13, 2010.

Airport chaos is blamed on rise in 'black flights' - Private pilots taking off illegally are causing UFO scares on mainland. Chaos at mainland airports caused by unidentified flying objects is being blamed on an increase in so-called black flights. Unauthorised flights by private aircraft have become a common annoyance as the country's growing number of billionaires buy planes and helicopters to flaunt their wealth. But the problem is becoming a potential danger to airlines and passengers, with airports being forced to shut down and commercial flights having to be diverted. Baotou airport in Inner Mongolia was shut down for more than an hour on September 11 after air traffic controllers reported a UFO buzzing round the airport. It was the ninth report of a UFO in the skies over Hunan , Sichuan , Shandong , Shanxi , Yunnan and Zhejiang provinces and the Xinjiang Uygur Autonomous Region since June. In July, another UFO report forced Xiaoshan airport in Hangzhou , Zhejiang's capital, to suspend operations for an hour. The authorities claimed the aircraft was part of a military test at a nearby air force base. But people in the neighbourhood said it could have been a private plane whose owners took to the sky without appropriate licences. In late April, flights to Shanghai's Pudong and Hongqiao airports were delayed or forced to be diverted after an illegal flight by a helicopter. Private access to the sky is strictly limited by the government. But the fine for those guilty of flying illegally is between 10,000 yuan (HK$11,660) and 100,000 yuan (HK$116,600), a trivial amount for the rich. Tycoon Liu Boquan , of Dongguan , Guangdong province, took off in his own helicopter in an attempt to trace thieves in July, apparently without the approval of air controllers. But he received an award for bravery from the city government. Chen Yan , 40, a cafe owner in Zhuhai and the mainland's first female to obtain a private licence, told the South China Morning Post (SEHK: 0583) that black flights were an open secret among pilots. She said: "In the United States, flyboys can take to the sky after simply filing a flight plan, but the scenario is totally different in China. "The mainland's air space is still highly restricted to military and commercial aircraft, and potential fliers need to apply to air traffic controllers seven working days ahead for a single journey. "It is too difficult to fly on your own in China. I have the opportunity to fly and get a private licence largely because my father-in-law served in China's air force and my husband received his own private licence in 2000." Chen said she knew many private jet owners in her hometown in Zhejiang who fly illegally. "Lots of people do that ... a friend of mine crashed a helicopter to the ground, and his spine was badly hurt during a black flight. Thanks to the surgeons, he finally recovered after sitting in a wheelchair for more than three months," she said. Guan Xiwen , general manager of the Guangzhou Suilian Helicopter General Aviation Co, attributed the rising number of black flights to the mainland's administration, which had not recognised the new demands of the rich. "China neither has laws and regulations to manage air traffic of private planes, nor issues licences to assemble helicopters for leisure and sport purposes, which are very popular in the United States and have grabbed a considerable market share in China, too. It means owners have to fly illegally," said Guan. "Black flights at a very low attitude to avoid being detected by authorities' radars are common. [I guess] the number of private helicopters or jets registered with the General Administration of Civil Aviation of China is fewer than 200, far below the real number." Scott Jiang Li, a Beijing-based regional director of US private jet manufacturer Cirrus Aircraft, said the mainland's tedious procedures for importing private aircraft and a lack of necessary infrastructure were other factors that make some rich people fly illegally. He said: "The regulations on buying private jets abroad are too strict. "Only certain types of jets are allowed to be imported to China. "In terms of infrastructure, nobody will build his or her own apron and hire a crew just to fly privately, but that's what Chinese aviation authorities require." He added: "In China, individuals aren't allowed to buy their own planes before they appoint professional operators that can provide an apron, pilots, a maintenance crew and a hangar, and help them apply for tedious flight permits ahead of each journey." Jiang said very few operators provided those services on the mainland and there are few aprons available, even in Beijing and Shanghai. To boost aircraft sales, Jiang's company built its first apron in Zhuhai and provides a maintenance and storage service for private jets. He said the company was discussing with more regional governments the possibility of building more aprons in an attempt to encourage billionaires to buy their planes and fly legally. Zhu Songbin , 52, a tycoon in Wenzhou , Zhejiang, who was fined for a black flight in March, complained at least two of his sport planes couldn't receive licences from aviation authorities. "The two helicopters, priced under 2 million yuan (HK$2.3 million) each, aren't recognised by mainland authorities," he was quoted by Shanghai's Xinmin Weekly as saying. "Also, I couldn't find an apron nearby or build my own, which is a prerequisite for each authorised journey. I'm doomed to fly illegally."

November 14, 2010

Hong Kong*: Sateri International Group, a maker of cellulose used in products from sunglasses to ice cream, will launch a US$1 billion IPO by year-end, a source with direct knowledge said on Thursday. The company has received a green light from the Hong Kong stock exchange, said the source, who was not authorised to talk to the media and so declined to be named. Sateri, controlled by Indonesian tycoon Sukanto Tanoto and his family, has annual production capacity of 465,000 tonnes of dissolving wood pulp and was the largest wood pulp supplier of China last year, said the source. Forbes lists Sukanto as one of Indonesia’s richest people, worth US$1.9 billion. Incorporated in the Cayman Islands, Sateri grows eucalyptus trees and produces cellulose in Brazil, and operates cellulosic fibre mills in Brazil and in Jiangxi province to provide materials for customers in the textile and non-woven sector. Bank of China International, Credit Suisse and Morgan Stanley are involved in the IPO.

No apology, but church regrets Li Ka-shing 'devil' jibe - The Catholic Church yesterday expressed "regret for the displeasure caused to Mr Li Ka-shing" by a priest who likened the tycoon to the devil, but it stopped short of apologizing.

US cash flood could trigger a repeat of the region’s 1997-98 crisis: Donald Tsang - Hong Kong Chief Executive Donald Tsang Kam-yuen speaks during the APEC CEO Summit in Yokohama, Japan, on Friday. Chief Executive Donald Tsang Kam-yuen warned on Friday that a move to inject billions of dollars into the ailing US economy could inflate Asian asset bubbles and trigger a repeat of the region’s 1997-98 crisis. Tsang said there was a risk of “unprecedented market turbulence” in currencies, bonds and stocks and warned that Hong Kong is ready to take new anti-speculative steps to cool its over-heated property market. “I am very much concerned about the impact of the US second round of quantitative easing on Asian economies,” Tsang said, referring to the Federal Reserve’s controversial US$600-billion attempt to reflate the US economy. Critics worry the cash surge will not only further dilute the value of the dollar but add to the flood of money that is chasing higher returns in Asia and dangerously inflating stock, bond and property markets. “This has increased the risk of asset bubbles, which will impact on our financial stability as well as regional and global economic growth,” Tsang said at a business forum in Yokohama, Japan. The popping of “emerging bubbles in different pockets” of Asia’s securities and property markets would be “highly infectious”, he said. “And the end result is you can see a second wave... similar to the one we had in 1997 and 1998, when there was an over-exuberance in our markets. This is exactly the case now. “All you need is one major conglomerate or one large bank... suffering a shock... and suddenly you can see a tsunami style” effect, Tsang said at the event, held on the eve of an Asia Pacific Economic Co-operation (APEC) summit. There has been widespread foreign condemnation of the US policy of printing billions of new dollars as a stimulus measure, including at the G20 summit which US President Barack Obama was attending in Seoul Friday. Tsang said the “exceptionally abnormal” environment called for vigilance from policymakers, who should be “fully prepared and take all forms of action to avoid systemic risks that might disrupt our recovery”. Hong Kong last month laid out measures to cool the world’s hottest property market, including a halt to granting automatic residency rights to rich buyers and a rise in stamp duty on luxury sales. “But we will not stop here. We will not hesitate to introduce further anti-speculative measures when there is need to do so,” Tsang said, adding that to maximise the impact “there will be no prior notice” before they are imposed.

'Made in China' - but cheaper to buy in Hong Kong - Amid high inflation and surging prices, mainlanders head across the border to shop - The "made in China" tag that seems to appear on almost everything these days does not necessarily mean those products are cheaper on the mainland. Mainlanders load up with goods that are cheaper to buy in Sheung Shui to take back across the border. Shenzhen housewives are upset that many mainland-made groceries and items cost less to buy in Hong Kong. Many Shenzhen housewives are upset that a lot of mainland-manufactured groceries and items cost less to buy in Hong Kong. Such is the effect of inflation across the border. Han Mei , 57, a retiree from Henan who has lived in Shenzhen for more than a decade, was forced to give up eating Fuji apples from Shandong every day after the price of her favourite fruit rose from 6 yuan (HK$7) a kilogram last year to 16 yuan now. "I used to have a Fuji apple every day but can't afford it any more now that they cost around 5 yuan each," she said. "I haven't eaten an apple for a week." Han's family travels every month to Hong Kong to shop for groceries and daily necessities. Han said she was really taken aback when she first found that food and other basic items on the other side of the border were cheaper. "The grocery prices [in Shenzhen] are flying high this year ... my daughter has to visit Hong Kong every month for grocery items because things are selling much cheaper there and the quality is more reliable," Han said. Beijing on Thursday said inflation last month rose to 4.4 per cent - the highest in 25 months and well above the government's target of 3 per cent. Meanwhile, the value of the yuan against the Hong Kong dollar has been slowly but steadily rising over the past few years. Take Fuji apples, for example. They cost about HK$10 for four in supermarkets in Hong Kong, or 2.15 yuan each, half the price at wholesale markets on the mainland. The price of imported fresh food is also rocketing. At a Jusco supermarket in Shenzhen, Red Delicious apples from Washington state in America sell for 34.40 yuan a kilo, or about 8 yuan each. In Hong Kong, they cost only HK$3.50 each. Kiwi fruit from New Zealand cost 3.90 yuan each in Shenzhen, but in Hong Kong, HK$10 buys five of them. What really puzzles Han and other mainland housewives is that even goods made on the mainland are cheaper in Hong Kong. Shenzhen housewife Yuan Jing , who visits Hong Kong every two weeks, found almost all mainland-made products such as shampoo, toilet paper and dog food were more expensive in Shenzhen. "I'm very angry every time I talk about this," she said. "Can you explain to me why Dove beauty moisture wash - made in Hefei [Anhui's capital] - is priced at 48 yuan a litre, but only costs HK$33 in Hong Kong? "I'm also very angry about dog food. Pedigree dog biscuits, which are made in Beijing, cost 10 yuan a 250 gram pack, but only HK$7.90 in Hong Kong. I don't think the [central] government has done a proper job in controlling the price because Hong Kong has a much higher living standard, salaries and housing prices. Hong Kong's prices should be higher than Shenzhen's." Yuan said she saved 300 to 400 yuan on shopping even after she deducted 37 yuan in fares for a round trip from Lo Wu to Sheung Shui. The National Development and Reform Commission says 80 per cent of 31 key fresh food and grocery products it monitors rose in price in 36 cities last month. Shenzhen's food prices rose 8.3 per cent year on year in September and the overall consumer price index 3.8 per cent. The mainland's overall CPI rose 3.6 per cent and Hong Kong's 2.6 per cent. Rising food prices account for three-quarters of national inflation, and water, power and gas prices contribute another 15 per cent. The mainland's Engel's Coefficient - which refers to the proportion of a family's spending on food to total consumption - is about 40 per cent. Because Beijing does not include rent and mortgage payments in its calculation, the real CPI is likely to be higher, considering the speculation in the property market. The average cost of housing in 70 mainland cities was up 9.1 per cent year on year in September and 8.6 per cent last month. Lin Jiang , an economics professor at the Centre for Hong Kong, Macau and Pearl River Delta Studies at Sun Yat-sen University, said inflation expectations, monopolies and widespread collusion between big businesses made mainland-made products more expensive in Shenzhen than in Hong Kong. "We call this kind of phenomenon `overshooting' in economics," Lin said. "Retailers tend to raise the price a little over the real cost, amid expectation of long-term inflation in production, labour, logistics and operational costs. The lack of a market pricing mechanism and government intervention also make the mainland's price rises unpredictable. The prices are often decided by retailers themselves rather than the market. When individual retailers raise the price, it has a `demonstration effect' on other retailers, resulting in widespread inflation." Lin said the government also contributed to inflation by raising the price of water and power in recent months. Lin Jizong , a restaurant owner in Shenzhen, said he was forced to raise prices to match inflation. "Everything is going up. The landlord just raised our rent by 10 per cent this month. If we don't raise our prices, we will suffer a loss," he said. Other economists blame the inflation on the central government's loose monetary policy. The economy is saddled with excess liquidity amounting to 43 trillion yuan, according to the People's Bank of China. Last year, mainland banks extended 9.59 trillion yuan worth of new credit, a 95 per cent increase over 2008. "Inflation on groceries including green beans, ginger, garlic and chillis is the result of an oversupply of money," economist Xie Guozhong was quoted by the China Economic Weekly as saying. "Excess money accumulated in recent years has brought huge inflation risks to China's economy." Thousands of Hong Kong retirees who tried to contain their living costs by moving to the mainland have run into trouble as prices continue to rise. According to the Hong Kong Federation of Trade Unions, some 90 retirees turned to the Hong Kong government for help in 2008 after they used up all their savings. The number rose to 110 last year and 65 in the first five months of this year. The stop sign is also up for younger Hongkongers. Clerk Fong Wai-yee, who lives in Tseung Kwan O, used to take her family to Shenzhen for the weekend for cheaper meals, entertainment and products. But now HK$100 is only worth 85 yuan. "Even a glass of iced lemon tea is more expensive in Shenzhen than in Hong Kong now," she said. "It costs 15 yuan at Tai Hing restaurant in Shenzhen, but only HK$16 at its Hong Kong branch. There's no way we spend weekends in Shenzhen now."

Hong Kong's Baptist University to open center for research in Jiangsu China - Baptist University is set to expand to the Yangtze River Delta. It will establish a research institute in Changshu , Jiangsu province, and offer joint doctoral programs with elite mainland universities, its president says. The institute will carry out research in fields including Chinese medicine, biotechnology and communications. The Changshu city government will provide land for the 60,000 sq ft facility at 5 per cent of the market price and subsidize it to the tune of 10 million yuan (HK$11.7 million) for the first five years, the university, based in Kowloon Tong, says. The centre will offer programs including media training and a master's in business administration aimed at government officials and heads of corporations. The university's president, Professor Albert Chan Sun-chi, said expanding beyond the Pearl River Delta could allow it to tap the vast state funding available for research. "State funding cannot be used across the border. But if our people are on the mainland, we can make use of the vast resources," he said. "The move will also lessen the pressure on our laboratories and on our Hong Kong campus." Plans to develop joint doctoral programs with prestigious universities in northern areas of the mainland are also in the offing. "Developing joint PhD programmes will be the first step. Spending time both in Hong Kong and across the border, the research students from the joint PhDs will be co-supervised by us and mainland professors." The next step would be to develop joint undergraduate programs, Chan said. "Students would spend two years here and the remaining two years on the mainland. But I don't want to push too hard at this stage, as we don't have enough hostels and classrooms. We must give them a place to live when mainland students come." The university's expansion into the mainland began when it set up United International College in Zhuhai with Beijing Normal University in 2005. The institution is the first to offer Hong Kong-style degree programmes on the mainland. Chan, who took the reins at the university in July, said joint projects between local and mainland universities were the way forward for the development of the higher education sector. "Many professors on the mainland have a good academic stature, with many of them coming from overseas. If talent and resources from Hong Kong and the mainland could be merged, the teamwork and joint expertise could allow us to compete with the rest of the world," he said.

Hong Kong Central office costs rise 34pc in year; fastest pace in world - Occupancy costs average HK$123 per sq ft; Kowloon also up - Office occupancy costs in Central have risen the most in the world in the past year, up 34.2 per cent, according to property consultancy CB Richard Ellis. Annual office occupancy costs, which includes rent, taxes and service charge, grew to US$184.21 per sq ft in the 12 months to September, or HK$123 per sq ft a month. As a result, Central continues to rank as the world's second-most expensive office market, after London's West End. The West End retains its top position among 175 cities worldwide, with an occupancy cost of US$193.69 per sq ft a year. Tokyo's Inner Central district is third, with an occupancy cost of US$158.08 per sq ft. Hong Kong's non-core business areas also saw a boom in the office market. Areas such as East Kowloon recorded the third-sharpest spike in the world, gaining 23.9 per cent year on year. CB Richard Ellis said this reflected higher demand for office space in non-core areas because of lower rents and higher availability of quality offices compared with Central. "There has been a strong demand throughout this year for buildings such as International Finance Centre and Exchange Square in Central business district," said Rhodri James, executive director of office services at CB Richard Ellis in Hong Kong. He expects this trend to continue into 2011. James said that because the amount of office space in development was insufficient to meet demand, rents had risen strongly not only in Central but across the majority of Hong Kong Island and Kowloon's office districts. The Asia-Pacific region saw a solid increase in office occupancy costs in the last six months. The consultancy said increased economic activity had boosted demand while a strengthening yuan means costs have risen relative to other markets. The Hong Kong office sales market overall has seen a strong growth. Data from agency Knight Frank shows grade A office prices have rebounded 84 per cent from their trough in February last year. The market saw a number of record-breaking deals recently. The 79th floor of The Center in Central changed hands for HK$338 million - a record HK$25,581 per sq ft. "Office prices at Lippo Centre in Admiralty were about HK$13,000 per sq ft early this year. But now prices have risen 25 per cent to more than HK$16,000 per sq ft," said Desmond Poon, associate director at agency Chartersince Realty. He said the average price is close to the market peak of HK$19,000 per sq ft in 1997. "I believe prices of grade A office will rise 25 per cent in the coming year. It will definitely surpass the previous peak set in 1997. Transactions have increased sharply over the last few days after the US Federal Reserve unveiled its second round of quantitative easing policies last week." Investors are increasingly interested in office space as prices in this sector are still lagging behind other properties, said Harry Chow Wing Hang, associate sales director at commercial agency Midland IC&I. Knight Frank research shows grade A office prices are still 5 per cent below where they were in February 2008. Retail properties are up 30.3 per cent and luxury residential properties up 7.1 per cent from their previous peak in 2008. While prices of luxury residential and prime retail properties hit record levels a few years ago, grade A office prices are still below their 1997 peak. "Office prices are still cheap, compared with other types of properties. It is very attractive to investors who are looking for a higher capital value growth. Also, investors expect office prices to rise further due to a strong growth in office rents," Chow said.

Be prepared to dig deeper into your pockets and purses because raging inflation in the mainland is going to bite deep in Hong Kong. A double-digit surge in food prices drove mainland inflation to a 25-month high of 4.4 percent in October, raising expectations of another rate hike and a knock-on effect here. The inflationary blast, due mostly to a 10.1 percent increase for food, was far above the official consumer price index target. That was 3 percent. It was also up sharply on September - the inflation rate then was 3.6 percent. "Pressures on prices and macroeconomic controls are increasing," National Bureau of Statistics spokesman Sheng Laiyun said yesterday as the grim data was revealed. China's battle to slow price rises comes amid worries that the US Federal Reserve's move to inject US$600 billion (HK$4.68 trillion) into the American economy could increase speculative "hot" money flows into the mainland and add more fuel to the flames of inflation. About 80 percent of mainland food products registered price hikes in 36 major cities in a month, recent figures from the National Development and Reform Commission show. And it can only get worse, as seen for example in price-label changes in Shanghai's Carrefour supermarkets. Prices of garlic have surged nearly threefold and sugar 80 percent since the start of the year. In Hong Kong, too, the prices of the spices of life are harbingers of problems. A housewife named Tse complained yesterday: "Prices of garlic and ginger are terribly high. Ginger costs HK$20 a catty, up 150 percent from six months ago." Giddying hikes are affecting many other foodstuffs: in six months the price of an egg has risen from 50 HK cents to 90, the price of beef is up by HK$5 a catty, while cooking oil costs HK$8 more a kilogram. "I'm spending on average HK$40 more to buy food for my family of four for every meal," complained a woman named Leung. Chong Tai-leung, an economics associate professor of the Chinese University of Hong Kong, sees a double whammy. "Food prices are expected to be up at least 10 percent within three months, and may lead to a significant rise of inflation," he said. This would be coupled with pressure from the appreciation of the yuan. The SAR government will announce today a decision on whether to adjust the expected annual inflation rate, which now stands at 2.3 percent. The latest overall consumer prices show a 2.6 percent rise in September on the same month last year. Inflation in the mainland is so far limited to food, but that will change as money from a flood of lending that was part of a stimulus effort courses through the economy, said William Hess, managing director of Beijing-based researcher firm China Analytics. "Inflation is especially sensitive in a society where poor families spend up to half their incomes on food," Hess added. "Beijing might decide it needs to impose price controls if the cost of basic items such as grain continues to rise."

Hong Kong may need to build at least five incinerators to deal with solid waste, Chief Executive Donald Tsang Yam- kuen believes. Speaking in Tokyo yesterday, Tsang said he saw how Japan is able to integrate incinerators into the community. "The one I have just visited is in the middle of a high-class residential area, next to a river and a major transit point where there is an annual throughput of two million people," he said. "But when you go into the facility, you don't see any smoke. No odor, no noise, and it's part of the community." Japanese experts told him the SAR would need at least one plant on Hong Kong Island, two in Kowloon and two in the New Territories. Tsang was speaking after visiting the Tamagawa Incineration Plant, which can handle 300 tonnes of waste a day. Efforts were made to design the buildings and the chimney at the plant to harmonize with the environment. The bunker can store about 1,200 tons of refuse. Using modern technology, the plant is able to reduce the volume of waste it receives by 90 percent. "We should study and learn lots from Japan's experience on solid waste, which will inspire Hong Kong on how garbage can be dealt with in a more effective, cleaner and more sustainable way," Tsang said. Hong Kong generates about 18,000 tonnes of waste a day, half of which will be recycled and another half disposed of in landfills. "We must deal with the problem of overflowing landfills with full consideration." Tsang has said incineration might be preferable to landfill, after vowing not to press ahead with a plan to expand a landfill at the expense of a country park in the New Territories. He made the pledge last month after lawmakers overwhelmingly passed a controversial motion repealing his executive order to expand the Tseung Kwan O landfill into the Clear Water Bay Country Park by five hectares.

 China*: 'Like Singapore' - residents wake up to a new city - It was anything but an ordinary working Friday for Guangzhou residents yesterday as the build-up to the Asian Games opening ceremony turned their hometown into a different city. It is the first time since the founding of the People's Republic that Guangzhou has hosted such a big international event. And preparations for the Games have changed the city and its people's lives over the past six years. "This is the first time in my life that I've felt I was in a foreign city, not Guangzhou," said Wang Jiequn , who lives several blocks away from the site of last night's opening ceremony. Wang said she did not usually like walking in Guangzhou because it was always too crowded and dirty, with occasionally appalling air quality. But as she strode the streets around her home for about 40 minutes yesterday morning to check out the traffic restrictions and security precautions, she found she was in a different world. "Compared with other days, there were far fewer people and cars and more flowers. It felt like Singapore," said Wang. "What we want most is that Guangzhou can look this way in the future, even after the games." To guarantee smoother traffic flow and less pollution, about half of Guangzhou's vehicles have been removed from its roads each day since early this month. Yesterday was also declared a public holiday for residents. And some of Wang's neighbours decided to make the most of it by heading off on weekend breaks, helping to make the city's streets look half empty. The strictest security precautions were put in place around Wang's Pearl River New City residential community. The whole area, of more than six square kilometres, was sealed off from the afternoon until midnight, with only those with special passes proving they were residents allowed to enter. All 24-hour convenience stores, coffee shops, restaurants, banks, spas and real estate agencies were shut. A Mexican business consultant who lives in the area said the security measures had gone too far. "It is a little too much," he said, carrying food from shops further afield. Many residents said they felt proud of the city. But not all residents were so impressed. A taxi driver said officials were interested in such projects only because the bigger they were, the more money the government would pour in and the more opportunities there would be for them to rake off some of it off for themselves. "The road construction and traffic restrictions have given me a lot of trouble in the past few years," he said.

G20 refuses to back US push for action on yuan - Alarm at American economic stimulus undermines bid to pressure China - Global disquiet about the impact of fresh US economic stimulus thwarted American efforts to pressure China over the yuan's value at the G20 summit in Seoul yesterday. Underlining the global concerns, Chief Executive Donald Tsang Yam-kuen said in Japan that the American credit injection could inflate Asian asset bubbles and trigger a repeat of the 1997-98 financial crisis. The G20 leaders brokered a communique aimed at appeasing all parties but which may not achieve anything concrete. The two-day G20 summit, which closed yesterday, was overshadowed by surging capital flows into emerging economies as the US Federal Reserve added US$600 billion in an attempt to reflate the American economy. Tsang, addressing a business forum, said Hong Kong must guard against a risk of "unprecedented market turbulence". "I am very much concerned about the impact of the US second round of quantitative easing on Asian economies. This has increased the risk of asset bubbles, which will impact on our financial stability as well as regional and global economic growth." The sentiment was widely echoed among leaders in Seoul. In the statement issued after their meeting, they said emerging markets could adopt regulatory steps to cope with excessive liquidity. Brazil, Indonesia and South Korea have already imposed restrictions on investment inflows to defuse the danger of hot money. In the run-up to the summit, the US and China bickered over trade and currency policy. US Treasury Secretary Timothy Geithner vowed to rally other G20 powers to push China for currency reform at the summit. But America's unrestrained printing of money has, in turn, alarmed many nations, prompting criticism even from its traditional allies in Europe. Facing the prospect of currency wars, G20 leaders patched over their differences and agreed to a vague framework that promises to bring global imbalances under control. A joint statement issued by leaders including President Hu Jintao and US President Barack Obama tried to create a sense of unity. But deep divisions among the countries mean the communique was a watered-down agreement. It was deemed by some as "a step forward" from the June summit in Toronto, as it touched on hot issues such as exchange rates trade imbalances. The communique made a commitment to "moving toward a more market-determined exchange rate system, enhancing exchange rate flexibility and refraining from competitive devaluation of currencies". But it steered clear of the term "competitive undervaluation" - which the US wanted and was used to target China more specifically. On the other hand, it did not address the excess of credit some blamed on the United States. The communique only carried a line in principle saying that "advanced economies, including those with reserve currencies, will be vigilant against excess volatility and disorderly movements in exchange rates". More critical analysts worried that the communique lacked detail and substance. Citi Investment Research economist Shen Minggao said: "The deal didn't reach concrete measures to erase the possibility of a currency war." Hu was gloomy in his final remarks before the communique was issued, calling for global resistance to trade barriers while painting a bleak picture of the global economy - an apparent dig at recent US policy. "The international financial markets are volatile, the fluctuation in the major currencies is large, prices of commodities are high, and there is a clear rise in protectionism." Without naming the US, Hu called on major reserve-currency economies to adopt "responsible policies and maintain relatively stable exchange rates". Obama reiterated after the agreement that China's currency policy was an "irritant" for the US and other trading partners. "China spends enormous amounts of money intervening in the market to keep it undervalued," he said. "We understand that this is not solved overnight. But it needs to be dealt with, and I am confident it can be." The leaders, nonetheless, agreed to setting guidelines to assess "persistently large imbalances" under an existing IMF mechanism where member countries carry out periodical review of each other. The Seoul summit showed the growing clout of emerging countries such as China and India. French President Nicolas Sarkozy, host of the next G20 summit, said China had already offered to host the first working group seminar for the finance minister meetings next year. G20 has emerged as the premier forum for dealing with economic issues since the financial crisis, but it shows signs of weakening momentum since the world moves from crisis management to building a financial system to ensure sustainable growth. Professor Gregory Chin, of the Centre for International Governance Innovation in Canada, said the meeting showed a general theme of moving away from the "Washington consensus". He said the new G20 approach has incorporated elements of development lessons from China and other major emerging nations.

Guangzhou opens Asian Games with a bang - Dazzling flotilla of boats transports thousands of athletes at record-breaking event - Guangzhou yesterday kicked off the 16th Asian Games with world-record-setting fireworks and a dazzling waterfront spectacle in the middle of its landmark Pearl River - and tens of thousands of eager onlookers broke into condoned-off areas to catch a glimpse of the show. Two years after China wowed the world with the Olympic Games opening ceremony in Beijing, Guangzhou highlighted Guangdong's heritage as a coastal province at its ceremony on Haixinsha Island.

G20 agrees tougher financial regulations - Barack Obama shakes hands with Hu Jintao at the G20 summit in Seoul on Friday. G20 leaders on Friday endorsed tighter financial regulations, including tougher bank capital and liquidity standards, to guard against the "irresponsible risk-taking" which triggered the economic crisis. The leaders of advanced and emerging economies, in a declaration after their Seoul summit, backed measures to better regulate “systemically important financial institutions” – those deemed too big to fail. “This new framework... will ensure a more resilient financial system by reining in the past excesses of the financial sector and better serving the needs of our economies,” their statement said. G20 leaders have been digesting the lessons of the global financial crisis, including the need to limit the risk of major financial institutions failing and sending shock waves through the economy. The lesson was learnt the hard way after the collapse of Lehman Brothers in 2008, which triggered the worldwide economic downturn. “The global financial system came to a sudden halt in 2008 as a result of reckless and irresponsible risk-taking by banks and other financial institutions, combined with major failures of regulation and supervision,” the leaders said. “Today, we have delivered core elements of the new financial regulatory framework to transform the global financial system.” Leaders endorsed new rules set by the Basel Committee on Banking Supervision and known as Basel III, which order banks to keep more capital for a rainy day. These are scheduled to be phased in from 2013 with banks asked to hold higher reserves by January 1, 2015. The key element known as core Tier 1 capital will be raised to 4.5 per cent from two per cent. In addition, by January 1, 2019, banks will be required to set aside an extra buffer of 2.5 per cent to “withstand future periods of stress”, bringing the total reserves required to 7.0 per cent. The G20 leaders reaffirmed that “no firm should be too big or too complicated to fail and that taxpayers should not bear the costs of resolution”. They supported a policy package proposed by the Financial Stability Board to reduce the moral hazard risks posed by systemically important financial institutions and address the too-big-to-fail problem. Banking executives, including Standard Chartered CEO Peter Sands, have voiced concern that Basel III could deter enterprising companies. “We have to be careful... that we don’t have unintended consequences in terms of the impacts on the real economy,” Sands said in Seoul Thursday. The possibility of extra capital requirements on top of Basel III is even more unpopular with major banks. US Treasury Secretary Timothy Geithner shrugged off the criticism in an interview with TV news channel CNBC. “The most important thing... is to make sure these large institutions, large in our markets and they can be globally, run with less leverage and less risk and hold more capital against that risk,” Geithner said. “That is overwhelmingly important and I wouldn’t listen too carefully to those people running those institutions who told us for years and years and years that they knew better than anybody else how to manage their risk.”

Chinese vase sells for record US$69m - An antique Chinese vase decorated with a 'humorous fish' motif sold for 43 million pounds at a London auction on Thursday. An 18th-century Chinese vase discovered in a house clearance fetched a staggering 43 million pounds (US$69.2 million) at a London auction on Thursday. The 40-centimetre Qianlong porcelain vase, which was sold by Bainbridges auctioneers, is understood to have been bought by a private Chinese buyer. On top of the initial price, the purchaser will also have to pay 20 per cent fees, bringing the grand total to an eye-watering 51.6 million pounds. It is thought to be the highest ever price paid for a Chinese art work at auction, and has made the brother and sister who inherited the vase following its discovery in a north London suburban home instant multi-millionaires. Helen Porter of Bainbridges said: “They had no idea what they had. They were hopeful but they didn’t dare believe until the hammer went down. “When it did, the sister had to go out of the room and have a breath of fresh air.” The vase – decorated with a “humorous fish” motif – was expected to fetch between 800,000 pounds and 1.2 million pounds but far exceeded the valuations as a new breed of Chinese investors look to snap up artefacts from their imperial past. The auctioneers described the “exquisite” piece as “one of the most important Chinese vases to be offered for sale this century.” The clearance of the one-storey house – where the vase has been residing for decades – was undertaken by the brother and sister following the death of their parents. It is unknown how the vase made it to Britain, but it is thought almost certain that the antique – which dates from around 1740 – was fired in the imperial kilns and kept in the Chinese Royal Palace.

Guangzhou adds finishing touches to Asian Games - Women rehearse the medal presentation ceremony at the main stadium of the Asian Games in Guangzhou on Thursday. After investing billions of dollars in venues and orchestrating civil obedience campaigns designed to ensure Guangzhou plays the perfect host, China saved a warning for its athletes until the hours leading up to Friday's opening ceremony. In an address to athletes and officials on the eve of the opener, Chinese Olympic Committee president Liu Peng ordered the country’s representatives to “behave,” urging them to heed lessons from the “Wang Dalei incident.” Wang, a brash Chinese goalkeeper, was suspended indefinitely earlier this week for posting a stream of rants on his micro-blogging site attacking his critics – calling them “a bunch of dogs” and “morons” – after his football team lost its opening match to Japan. He was benched for China’s second match on Wednesday, then suspended and ordered to “meditate on his actions.” It was the first blight on the games, for which preparations have been meticulous. China’s official news agency, Xinhua, quoted Liu as saying Wang’s “ill-natured” actions had a “negative effect on society” and breached the team’s code of conduct. “It is understandable to lose a soccer game,” Liu was quoted saying. “It is unforgivable to have disgraceful acts such as swearing at soccer fans. The Chinese delegation never tolerates such actions.” Chinese officials have talked openly this week about overhauling the state-run sports systems and enhancing the programs to include more emphasis on overall development rather than purely on results. “We should put more efforts in education about moral conduct, raise the moral standard of the Chinese athletes, make the Chinese athletes stronger and more civilized,” Liu said. Of the 977 athletes on China’s Asian Games team, 655 will be competing at a major international multi-sports event for the first time. In scale, the Asian Games – featuring more than 10,000 athletes in 42 sports – is second only to the Summer Olympics, last hosted in the Chinese capital two years ago. Athletes from all 45 countries will be ferried down the Pearl River later on Friday into what organisers are promising will be a spectacular opening ceremony and a first of its kind. The event is being staged on an island in the downtown area, well away from the main stadium. People living within a one-kilometre radius of the island have been ordered to vacate their homes during the ceremony, for security reasons, but asked to leave the lights on. Many central underground railway stations were closed on Friday for security sweeps and streets in the vicinity of the opening ceremony were unusually quiet for a bustling city of more than 10 million. There will be 28 gold medals to be awarded Saturday on the first day of full competition, with finals in shooting, swimming, triathlon, judo, weightlifting, gymnastics and in dance sports, which is making its debut at the Asian Games. India has a good chance in the shooting, with Olympic champion Abhinav Bindra and Gagan Narang in action on Saturday. Japan is the leading contenders in the women’s triathlon and judo, but China is again expected to lead the way from the start in the overall medal count. The first medal of this year’s Asian Games is likely to be in wushu, the indigenous Chinese martial arts. Defending champion Yan Ziaochao is the leading contender in the men’s changquan discipline, which opens the competition.

A request for residents of Guangzhou to turn on their lights during Friday's opening ceremony of the Asian Games could instead trigger a symbolic blackout protest. With authorities striving to depict the Games – the largest sports event in the country since the 2008 Olympics – as a symbol of harmony and its global stature, any sign of dissent has been stifled amid a tight security squeeze. But in recent weeks, a smattering of dissenting voices have dismissed a campaign by authorities in Guangzhou urging residents to keep their lights blazing to enhance the city skyline as absurd, while on at least one social networking site, appeals have been made for a retaliatory “lights off” campaign. While the blaze of fireworks, lasers and illuminations planned for the show will not be much dimmed by a handful of critics blacking out their homes, some said it was a chance to prove a rare point against Guangzhou’s policy-making. “Normally, when they decide on something they don’t give us any say. So this is what we can do in protest,” said one online critic who asked not to be named when contacted by reporters. On the social networking site Weibo, dubbed China’s Twitter, netizens also blasted the “lights-on” movement as a waste of energy and contrary to the multi-sport event’s supposed green credentials. Some local residents have shown barely disguised scorn for the Games, griping about the inconvenience and disruptions caused by massive construction, traffic restrictions and demolitions, while others have expressed support for it. “It’s not every day you have the Asian Games so I don’t mind supporting this [lights on policy],” said a Guangzhou artist surnamed Leung, speaking in the local Cantonese vernacular. Guangzhou, considered one of China’s three largest cities has pumped billions into the Games and urban gentrification projects in a bid to showcase itself as a cosmopolitan city of international stature. The opening ceremony on a tiny island on the Pearl River promises to be a spectacular one with 6,000 performers, a flotilla of boats for athletes and performances drawing on the region’s Lingnan culture with water-based themes. The Asian Games run from November 12-27 with around 10,000 athletes from 45 countries taking part in 42 sports.

GM will pay US$51 million to boosts China's stake prior to US IPO - GM China president Kevin Wale plans to steer the company into the massive lower-tier segment, one of the largest markets in the world. General Motors will pay US$51 million to boost its stake in its mainland commercial vehicle joint venture ahead of next week's planned US$10.6 billion stock market listing in New York, eyeing a larger piece of the growing vehicle demand in second and third tier cities and towns across the mainland. GM China agreed to raise its stake in three-way partnership SAIC-GM-Wuling (SGMW) to 44 per cent by acquiring an additional 10 per cent interest from Guangxi-based Wuling Group in exchange for US$51 million in cash and an agreement to provide technical services to the Wuling Group until 2013, GM said. Wuling will keep a 6 per cent stake in the venture and SAIC 50 per cent. The deal gives GM exposure to a bigger slice of soaring demand for affordable, but reliable, minivans and passenger cars in the mainland's interior provinces, cities and towns. SGMW produces the Wuling Sunshine, a minivan-style light commercial vehicle priced from 30,000 yuan and ranked as the mainland's single best-selling automobile this year. At the same time, SAIC-GM-Wuling is making a new foray into the mainland's lower-tier passenger car segment via its newly launched Baojun or "treasured horse" brand. The first Baojun model was scheduled to roll off the production line later this month, said GM China president and managing director Kevin Wale. "If you look at the lower end of each vehicle segment, it is massive," Wale said yesterday. He estimated lower-tier mainland auto sales at about five to six million units per year. "By itself this segment is larger than just about any other car market in the world. If you choose not to play in it, you effectively give it up to the Cherys, the Geelys and the BYDs," he said, referring to several homegrown companies that have tended to capture the dragon's share of mainland demand for affordable passenger cars. SAIC-GM-Wuling's sales of mini-commercial vehicles rose 5.1 per cent last month to 93,935 units, accounting for just under half of all sales reported by GM China's various mainland joint ventures. GM's main passenger car business on the mainland, Shanghai GM, saw wholesale shipments rise 55 per cent in the first nine months of the year to 742,162 units under the Buick, Chevrolet and Cadillac brands. Shanghai GM, 51 per cent controlled by SAIC and 49 per cent by GM, saw net income more than double in the period to US$1.92 billion, up 129 per cent from US$838 million in the first nine months of last year. Revenue rose 60 per cent to US$13.88 billion in the first nine months, with sales by GM's joint ventures on the mainland now on track to surpass its US sales this year. GM is hoping booming business in China will attract investors to next week's share sale, which will reduce the US government's controlling stake in the bailed out carmaker to well below 50 per cent. GM China expected to sell around 2.3 million vehicles this year and maintain market share of around 13.5 per cent, Wale said. He expected total mainland vehicle sales would rise to a record of up to 17.5 million units, nearly 30 per cent up on last year.

Shanghai stocks plunged 5.2 per cent suffered their biggest fall in 14 months as investors scrambled to bank profits before any new monetary tightening measures were introduced.

General Motors, the largest overseas carmaker in China, has failed to replicate that success in India. To crack the market, the Detroit-based manufacturer is enlisting its partner in China, SAIC Motor Corp. The alliance produces the best-selling vehicle in the world's biggest car market, where it has a 13 per cent market share. GM has struggled in India since entering in 1994, with its Chevrolet models accounting for only about 5 per cent of car sales in Asia's second-fastest growing major economy. GM and Shanghai-based SAIC will start selling models in India next year that are similar to those now sold in China, Kevin Wale, GM's China president, said in an interview. The alliance will challenge Maruti Suzuki India, the nation's largest carmaker with a 41 per cent market share, and Tata Motors, maker of the world's cheapest car, the Nano. "The Indian market is very similar to the Chinese market," Wale said last month. "They also have a need for a lot of products that have already or are being developed for the Chinese market." The partners may introduce as many as three light commercial vehicles and two passenger cars in India by 2012. The alliance also is targeting other developing markets. Last month, it started exporting Chevrolet Sail compacts made in Shandong to Chile and Peru. The carmakers may ship elsewhere in Latin America, Egypt and the Middle East, Wale said. GM and SAIC said in December they would spend US$650 million forming a new venture to build and sell passenger cars and small trucks in India. The carmakers have not identified the first vehicles to go on sale next year. The two companies plan to use their expertise in China to gain a competitive advantage in India, said Judy Zhu, a Shanghai-based spokeswoman for SAIC. Domestic car sales in India rose 29 per cent from a year earlier to 215,632 units in September, the Society of Indian Automobile Manufacturers said in New Delhi. Deliveries in China rose 19 per cent to about 1.21 million units in the same period. India's passenger-car sales were 1.95 million in the year ended March 31. The government estimates sales may pass 3 million by 2015. During the past five years, India's economy grew by an average 8.5 per cent annually, and per capita incomes gained 70 per cent. "Our focus is on India," Wale said. "The ability to take the product portfolios and the understanding of the growth-market business model gives us the opportunity to grow much faster than if we did it by ourselves." GM-SAIC will make cars and trucks weighing less than one tonne at GM's Halol and Talegaon plants, which have a combined annual capacity of 225,000 units, said Hua Foley, GM's spokeswoman in Shanghai. GM and its partners have 13 per cent market share in China this year, chief financial officer Chris Liddell said last week. This is up from 3 per cent in 2000, he said. Winning market share from Maruti and Tata will not be easy, according to Deepesh Rathore, India managing director at consulting company IHS Automotive in Gurgaon. "These companies have very good brand names and widespread service networks," Rathore said. "I don't think the Chevrolet network is wide enough." The joint venture also needs to change consumer perceptions that Chinese products are of inferior quality, said Bill Russo, a Beijing-based senior adviser at Booz & Co. M.S. Thapa, 72, owns a security guard service in suburban New Delhi that uses three Maruti minivans to transport workers. He said he would choose an Indian vehicle over a Chinese one in the same price bracket. "General Motors is fine, but public opinion of Chinese companies is very poor," Thapa said. "People will think twice to buy a product with a Chinese stamp." Manoj Sharma, 37, a senior executive with a New Delhi-based consultant, said he would not consider a GM-SAIC model when buying a six- or seven-seat passenger vehicle. He said GM cheapened its image by offering sales incentives such as a free 100,000-kilometre warranty. "Indians are an intelligent target audience that not only looks at price, but also the quality and the technology," Sharma said. The closer ties between GM and SAIC come as GM aims to raise as much as US$10.6 billion in an initial public offering, two people familiar with the plan said this month. SAIC chairman Hu Maoyuan said his company may participate in the offering.

China Banks give out 587.7b yuan in new loans in October - Banks on the mainland extended 587.7 billion yuan (HK$685.57 billion) in new loans denominated in yuan last month, which was an unwelcome surprise to an economy grappling with rising inflation. Outstanding loans at the end of October stood at 49.7 trillion yuan, climbing 19.1 per cent year on year, according to the People's Bank of China (PBOC). Yuan-denominated incremental loans last month were 334.7 billion yuan more than a year ago and higher than the 500 billion yuan forecast by many economists. "The October loan and inflation data explained why the central bank increased the required reserve ratio, " Shen Jianguang, an economist with Mizuho Securities, said. The PBOC yesterday asked banks to set aside an additional 0.5 per cent of deposits as reserves, mopping up about 360 billion yuan of liquidity after the first interest rate hike since the financial crisis and a temporary lift in the reserve ratio last month. "More aggressive interest rate hikes are likely in the weeks ahead. Tighter monetary policy and looser fiscal policy will be the policy theme for next year," Shen said. The new loans made in the first 10 months totalled 6.88 trillion yuan, leaving 621 billion yuan lendable for the next two months under the country's target of 7.5 trillion yuan for the full year. "Taking into account of seasonality, 300 billion yuan per month is enough for the rest of the year, so we don't need to worry about a lending freeze," Lu Ting, an economist with Bank of America Merrill Lynch, said. Many economists have forecast China would lower the loan target to 7 trillion yuan for next year to cool inflation, which hit a 25-month high of 4.4 per cent last month. The growth of M2, a money supply measure which includes cash and all deposits, quickened slightly to 19.3 per cent year on year in October from the 19 per cent in September. Outstanding deposits rose 19.6 per cent year on year to 70.8 trillion yuan. The increase was 8.3 percentage points lower than a year ago. For October, household deposits decreased by 700.3 billion yuan. Li Huiyong, an analyst with Shenyin and Wanguo Securities, said: "High commodity prices and a negative interest rate environment caused incremental [yuan] deposits to fall last month. The money is expected to flow into the stock market and the housing market." Trading was brisk in the stock market and the number of newly opened stock transaction accounts increased substantially. Nearly 450,000 A-share accounts were opened last week, the highest since November last year. Property sales still topped expectations in October despite a month-on-month drop. Sales across the nation totaled 507.6 billion yuan, down 7.7 per cent from September but still up 27 per cent from a year ago.

Premier Wen attends opening ceremony of Asian Games - Chinese Premier Wen Jiabao attends the opening ceremony of the 16th Asian Games in Guangzhou, south China's Guangdong Province, Nov. 12, 2010.

Chinese national flag hoisted during Asiad opening ceremony - Guards of Honor of the PLA hoist the national flag of the People's Republic of China during the opening ceremony of the 16th Asian Games in Guangzhou Nov. 12, 2010.

Float parade during opening ceremony of Asian Games - The float representing China makes parade along the Zhujiang(Pearl) River during the opening ceremony of the 16th Asian Games in Guangzhou Nov. 12, 2010.

Delegations enter site during Asiad opening ceremony - Delegations enter the site during the opening ceremony of the 16th Asian Games at the Haixinsha Island in Guangzhou, China, Nov. 12, 2010.

Delegations enter site during Asiad opening ceremony - Delegations enter the site during the opening ceremony of the 16th Asian Games at the Haixinsha Island in Guangzhou, China, Nov. 12, 2010.

Art performance during Asiad opening ceremony - Actors dance during the art performance of opening ceremony at the 16th Asian Games at the Haixinsha Island in Guangzhou, China, Nov. 12, 2010.

Fireworks displayed during opening ceremony of Asian Games - Fireworks are displayed over the Guangzhou Tower during the opening ceremony of the 16th Asian Games at the Haixinsha Island in Guangzhou, China, Nov. 12, 2010.

November 13, 2010

Hong Kong*: Three contractors were fined around HK$1.4 million in Kwun Tong Court on Thursday for safety violations linked to the collapse of a work platform last year that killed six workers.

More bus terminals will be smoke-free zones from December 1 - Smoking will be banned in more bus terminals after an extension to regulations comes into force on December 1. No-smoking zones will be increased to cover 129 open-air and two covered public transport facilities, according to the Tobacco Control Office. Smoking was banned in 48 covered public transport areas from September last year. Workers will soon install no-smoking signs and floor plans at the sites involved. A city-wide publicity campaign will warn smokers not to light up in the areas. Dr Raymond Ho Lei-ming, who heads the Tobacco Control Office, said white lines would border the areas to avoid confusion. Smoke-free ambassadors would be stationed at the new zones for a month to tell people in neighbourhoods about the new policy. Ho said up to HK$7 million was spent on the extension to no-smoking areas. The list of no-smoking places and maps are available on the office's website. People can also read copies at the office's resource centre and at the Land Registry. Some 140 people were fined HK$1,500 each for smoking in 48 covered transport facilities in September. A total of 5,800 fixed-penalty tickets were handed out in the first nine months of the year to people smoking in no-smoking areas. They paid HK$8.7 million in fines. Of these penalties, 1,630 were handed out in game centres, 980 in shops and shopping malls, 520 in restaurants, 440 in markets, 320 in parks, and 1,900 in other places such as stairways, car parks and public toilets. There are more than 700,000 smokers in Hong Kong - fewer than half the number 20 years ago. One in five men and one in 28 women smoke. The Tobacco Control Office is looking at ways to encourage people to give up the habit, including having more no-smoking zones, making shop owners responsible, and raising tobacco duty. Ho said increasing the tobacco duty was the most effective method. "We would like to see the cigarette duty raised next year."

 China*: China's inflation sped to a 25-month high in October and bank lending blew past expectations, highlighting the challenge faced by Beijing in keeping a lid on in prices.

Appliances giant Gome on Thursday said it has a signed a new agreement with a firm controlled by its jailed founder, a move that could end the bitter feud in the company.

US, China 'making progress' at G20 - US President Barack Obama meets with President Hu Jintao on the sidelines of the G20 summit in Seoul on Thursday. President Barack Obama said on Thursday the United States and China were "making progress" in discussions on economic issues, but made only a guarded reference to the divisive topic of Beijing's currency. “As two of the world’s leading economies we have a special obligation to deal with ensuring strong balance and sustained growth,” Obama said at the start of a meeting with China’s President Hu Jintao on the sidelines of a G20 summit in Seoul. The United States says Beijing holds its yuan currency artificially low against the US dollar and argues it should be allowed to rise to aid US exports and jobs. Obama is pushing for specific commitments from other G20 leaders at this summit to tackle global imbalances – shorthand for the massive US trade deficit and equally large trade surpluses built up by countries such as China and Germany. It was Obama’s seventh meeting with Hu, the most with any foreign leader since the start of his presidency in January last year – a record the White House says shows how highly Obama values their relationship. “The US-China relationship, I think, has become stronger over the last several years, as we’ve been discussing a whole range of not only bilateral issues but world issues,” he said. Hu struck the same tone of co-operation in his remarks. “The Chinese side stands ready to work with the US side to increase dialogue, exchanges and cooperation so that we can move forward the China-US relationship on a positive, co-operative and comprehensive track,” Hu said. he said the G20 would yield a “positive outcome”.

Japan's military may form a new unit to monitor Chinese naval operations, a move to counter what many Japanese strategists see as an increasingly aggressive stance by Beijing in the East China Sea. The unit would consist of about 200 troops based on remote Yonaguni Island, which is on Japan’s western fringe near Taiwan, and would primarily be tasked with radar monitoring of Chinese naval operations in the area, according to a report in the Yomiuri newspaper. The report quoted unnamed defence ministry officials as saying a budget for the unit would be formally submitted soon. Ministry officials contacted by The Associated Press on Thursday said they could not comment on specifics because the plan was still under discussion. The ministry has confirmed, however, that it is considering bolstering military monitoring capabilities in the country’s southwestern islands. Tokyo is deeply concerned over the growth of the Chinese navy and its posture in the East China Sea, where the two countries have conflicting territorial claims. Relations between Beijing and Tokyo have soured recently because of an incident in which a Chinese trawler collided with two Japanese coast guard patrol ships in waters near disputed islands called the Diaoyu or Diaoyu in Chinese and Senkaku in Japanese. The islands are controlled by Japan but also claimed by China. Located 190 kilometres east of Taiwan, the islands are surrounded by rich fishing grounds and are regularly occupied by nationalists from both sides. After the September 7 collision, China demanded an apology and compensation, but Tokyo countered by demanding that Beijing pay for damage to the patrol boats. Beijing cut off ministerial-level contacts with Japan, repeatedly called in Tokyo’s ambassador to complain, and postponed talks on the joint development of undersea natural gas fields. China also quietly halted exports to Japan of rare earth elements, which are essential for making high-tech products. Japan’s Prime Minister Naoto Kan said on Monday he will discuss the dispute if he meets with President Hu Jintao at the Asia-Pacific Economic Co-operation summit, which Japan is hosting this weekend. Hu is to attend the summit, but Beijing and Tokyo have yet to confirm that Kan and Hu will hold talks. China has already rejected an offer by US Secretary of State Hillary Rodham Clinton to broker three-way talks with Japan over the islands. Clinton said Washington has no position on which country holds ultimate sovereignty over the islands.

A group of 17 Chinese sailors returned home safely after being held hostage more than four months by Somali pirates who gave them only one meal of boiled potatoes per day.

The Chinese government has warned that feverish urban expansion is threatening farmland and forcing farmers off their land as local governments raze villages to create new towns and cities. The warning from the State Council, or government cabinet, late on Wednesday showed the difficult balance China faces in pushing urbanisation while saving farmland for food security. It came after a meeting chaired by Premier Wen Jiabao that found “problems demanding urgent correction” as local governments seek to expand towns and small cities, according to the central government website. “Halt mass demolitions and construction that violates farmers’ wishes, as well as the reckless construction of high buildings,” said the official summary of the meeting. China is seeking to speed up urbanisation while preserving arable land above a “red line” of 120 million hectares. The Ministry of Land and Resources has said China is already brushing that limit, with 121.7 million hectares available for farming at the end of last year. Between now and 2040, China’s urban population will expand by up to 400 million, according to Han Jun, a rural policy expert who advises the government. That would mean towns and cities absorbing around 15 million new residents every year. Forced farmland requisition, often for what farmers say is inadequate compensation, is the main source of protest and unrest in the countryside, home to over 700 million people. In many areas, including eastern Jiangsu and Shandong provinces, officials have tried to claim more land for urban growth and industry by encouraging or forcing villagers to move into more concentrated settlements. The cabinet said local governments were abusing pilot schemes intended to promote better co-ordinated urban-rural development and using them to grab land from villagers. “A small number of areas are obsessively pursuing expanded urban building land-use targets,” the official summary said. “Some areas go against the wishes of farmers in carrying out forced demolitions and construction, violating their rights and interests.” The meeting warned local officials to “adhere to the strictest arable land protection and preservation system”.

Chinese, Russian presidents meet in Seoul on cooperation - Chinese President Hu and his Russian counterpart Medvedev met Thursday to discuss the development of the China-Russia strategic partnership of coordination.

Torch relay for Asian Games continues in Guangzhou - Torchbearers run with the torch during the torch relay for the 16th Asian Games in Guangzhou, south China's Guangdong Province, Nov. 11, 2010.

A different kind of family - Wu Youjian, the first mother to openly support her gay son on Chinese television, in 2005 - Wu Youjian, the first mother to openly support her gay son on Chinese television, in 2005, and founder of Parents and Friends of Lesbians and Gays in China, talks to participants during the recent gay festival, Shanghai Pride. Shanghai Pride shines the light on friends and families of gays and lesbians. Shi Yingying reports. Sixty-four-year-old Xu Dexiu and 49-year-old Mei (surname only) were special guests at the country's second gay festival, Shanghai Pride. They came on stage to express support for their gay sons. "I accept it, because I love him," said Mei proudly in front of the lesbian, gay, bisexual, transgender (LGBT) community, on the concluding day of this three-week event on Nov 6. The Sichuan native came to Shanghai three years ago, to live with her 25-year-old son Wang Chen and his boyfriend Jerry Chen. Wang, who came out five years ago, says: "Mom regards both of us as her sons. She calls us 'my boys'." The two mothers were joined by 13 other family members, friends and colleagues of gays and lesbians for a special program of Shanghai Pride, called Family Day. "I wish more people could have come here, not only because we want public attention, but also because we gays take traditional family values more seriously than most people assume," says Tang Zhicheng, organizer of Family Day. "Though we only had 15 people on stage this time, I believe next year we will have more," he says. His cousin Jacky Tang still remembers how surprised he was when he came to know about Tang Zhicheng's sexual orientation, in 1989. "My first reaction was to convince him that he could turn straight, but after I saw the pain he was going through and the fact that he had talked it through with his psychiatrist, I was on his side," he says. He not only showed his support by appearing at Shanghai Pride with his wife, but also helped talk to Tang's parents. "Different generations have different thoughts about this sensitive issue. For the older generation, it is more like being forced into acceptance, but those like my 29-year-old wife, have no problem with it." Talking about his impressions of Shanghai Pride as a straight man, Jacky says he did not expect the gathering to be so grand. The 2010 edition, that ran for three times longer than 2009's inaugural one, included parties, panel discussions, art exhibitions and a gay film festival. "I thought it would be a private party among the LGBT community. If had known (how grand it would be), I would have come earlier." All of Family Day's participants say they came to know about it from the online group Out in Shanghai, founded recently by Tang. Out in Shanghai, he says, discusses topics such as "how to tell my parents I'm gay or lesbian" and "how to maintain a long-lasting relationship". "I want to emphasize that being gay means more than looking for liberation," he says. "China is the most family-oriented nation in the world, and we're part of it." Kenneth Tan, one of Shanghai Pride's organizers, says, "There is a huge desire for something more in the gay community. The event is about getting the community to come out as a whole." The gay film festival was a highlight of the second annual festival. "It was unfortunate that our film festival was canceled last year, but I'm happy that eight of the 10 films shown this year were made by Chinese and talk about gay and lesbian lives," says curator Fan Popo, also head of Beijing LGBT Center. His own documentary Chinese Closet focuses on 10 gays and lesbians who came out and explored their family ties. "It was never easy for us," Fan says. "Most often in China, when we come out, it means our parents have to go into the closet - to hide the identities of their sons and daughters from friends and family."

November 12, 2010

Hong Kong*: Born in HK but torn between two systems - Children of mainland parents face struggle - They give birth in Hong Kong to escape the mainland's one-child policy and to secure a Hong Kong passport for their children. The problems begin when they return home. The law on coming to Hong Kong to give birth is a grey area. Under mainland regulations, their babies are considered Hongkongers and are excluded from all social welfare and education benefits. With nowhere to turn, many parents search the internet for answers. Slowly, they start to form online communities, sharing their stories and experiences as well as handing out tips to those who are interested in following the same path. No one can put a finger on when it started, but the phrase gangsheng yidai - which translates as "the Hong Kong-born generation" - is spreading like wildfire on mainland social networking sites and chat groups. Online communities formed primarily by mainland parents who have, or plan to have, babies in Hong Kong have grown rapidly over the past two years. The new word gangsheng is now all the rage among rich young mainland couples who want to give something special to their children. The phenomenon can be traced to 2001 when Hong Kong's High Court and Court of Final Appeal handed down landmark rulings giving local residency to children born in Hong Kong to mainland parents. As a result, the number of mainland couples coming to the city to give birth exploded. From 2003 to 2009 the numbers increased 15-fold. Nearly half the babies born here have mainland parents. "Going to Hong Kong to give birth now is something fashionable and proof of your status," said a Chongqing woman. William Zhou, a founder of a cyberforum whose members are all mainland parents who have or plan to have children in Hong Kong, said: "Our online community has only been set up for about half a year but now we have nearly 3,000 members. "By word of mouth alone, we now have more than 20 new members joining our forum each day. It is like a big and warm family. Many mothers-to-be come to us asking for tips. "Those who have just come back from Hong Kong will share their experiences with members, such as how to book hospital appointments, which doctors are good and which serviced apartments have the best facilities," he said. "Members whose kids are older will discuss among themselves where to take their children for education and how to plan their future." Unlike a decade or two ago, when most mainland mothers coming to Hong Kong were illegal immigrants looking for a better life and social benefits, the majority of those today are from the affluent middle class attracted by the city's top-class medical facilities and the prospect of a Hong Kong passport for their child. The market has created a new business; many travel agencies provide tailor-made services for mainland mothers to come to Hong Kong. "It only costs around HK$50,000 [to sign up for a package], which includes the operation fees as well as a three-day stay in hospital," Zhou said. In 2007 a charge of HK$39,000 was imposed on pregnant mainlanders booking to give birth in public hospitals. Those who go to an emergency room without pre-booking are charged HK$48,000. Zhou said it was a misconception among some Hong Kong people that their children would one day become a burden to the city and live off on social welfare. "Just look at the members in our group. The vast majority of us are from well-educated and well-off families. We simply want to give our children more," he said. In fact, some members playfully call themselves the "20K Club" - people who make more than 20,000 yuan (HK$23,350) a month. The 3,000 members who joined Zhou's forum are between 30 and 50 years old. Most of them already had a child before coming to Hong Kong to have a second. Zhou said escaping the mainland's one-child policy was the biggest single reason for them coming to Hong Kong. Getting the child a Hong Kong passport - and thereby enjoying visa-free access to more than 140 countries - was the second most popular reason. The city's world-class medical services was the third. In the past, mainland mothers were mostly from Guangdong. Today they are from a much more diverse background, mainly affluent professionals or business owners from big mainland cities. They prefer to fly to Hong Kong, skipping the train, and stay in serviced apartments or hotels. Many said they were prepared to pay for top-level medical care. And increasingly the parents like to do it by themselves instead of asking travel agents. "On average, it costs each of us about 100,000 yuan to deliver a baby in Hong Kong. Many combine it with their holiday. They also do a lot of shopping in Hong Kong apart from giving birth," Zhou said.

Minimum wage law to help 310,000, but job losses forecast - "Sister Kwai", who washes dishes at a restaurant in Causeway Bay, may be affected by the start of a minimum wage level next year. Hong Kong is set for the first time to have a legal wage floor of HK$28 an hour. The new law is expected to benefit more than 310,000 low-income workers. But this came as a prominent economist and former government adviser warned that up to 100,000 workers could lose their jobs when the law was implemented. The government said yesterday the Executive Council had adopted the minimum wage recommendation made by the Provisional Minimum Wage Commission. The commission has acknowledged small and medium-sized enterprises - particularly those whose margins depend on low wages - will come under greater financial pressure. But officials insisted the law would only have a "relatively mild" effect on labour supply and inflation. Describing the law as a milestone, Chief Executive Donald Tsang Yam-kuen said it would offer better protection for low-income workers. But he admitted it would have an impact on the labour market and business environment. "The statutory minimum wage is new to Hong Kong," Tsang said. "I hope that various sectors will join hands in making the necessary preparation for the implementation of the new legislation in the interest of Hong Kong and for the better protection of low-income workers," Tsang said. The minimum wage will come into effect on May 1.

Honored Yam's lonely toil in HK's science 'battlefield' - Professor Vivian Yam Wing-wah, who has been named as one of the five winners in the L'Oreal-Unesco Women in Science awards - A University of Hong Kong professor, named one of five winners in the annual L'Oreal-Unesco Women in Science awards, says doing research in Hong Kong is a lonely business. Chemistry professor Vivian Yam Wing-wah was honoured for her work on light-emitting materials and innovative ways of capturing solar energy. But for all the glamour coming with the recognition of her efforts, she said working in science was a lonely pursuit in Hong Kong. "It's like going to the battlefield on your own," she said. "Ordinary people in Hong Kong, a financial hub, think you are weird doing scientific research." "I hope the award can let the general public understand more about scientific research and that a more supportive atmosphere could be nurtured." She is the second local woman scientist to be awarded the honour. Yam said the prize validated the achievements of women in scientific research. "There's not much difference between men and women doing scientific work. "We don't do scientific research to win prizes, but I was happy that my work got recognised." The annual awards are for scientific achievement by woman researchers from five continents. Yam was picked as the recipient for the Asia-Pacific region. Each laureate receives US$100,000 in prize money. Born and educated in Hong Kong, Yam became a professor at the University of Hong Kong in 1997 and was promoted to chair professor in 1999. She was the head of the university's chemistry department from 2000 to 2005. Aged 38 in 2001, she became the youngest person to be appointed an academician of the Chinese Academy of Sciences. She said it may take 10 years before the fruits of her research could be widely applied in public. But she hoped her work could help make a "quantum leap" in the field of sustainable energy development. "The solar dyes I am exploring might absorb the same amount of solar power [as current materials], but they can convert power into electricity in a more effective way." Her work on organic light-emitting diodes (OLEDs), currently widely used in TV screens, also has the potential to drastically reduce energy consumption. If OLEDs could be made to emit white light, they could deliver the same brightness as a normal bulb using much less energy, Yam said. "An eight-watt white OLED can emit the same intensity of light as a 60-watt tungsten incandescent light." She appealed to the government to follow the examples of Japan and Korea in providing long-term funding to researchers who are well recognised in their fields. This would spare them the hassle of writing detailed proposals to compete for funding for every project they do. She said: "Writing reports and proposals can be time-consuming. "If a researcher's work is already well recognised, there should be exceptional treatment for them so they don't have to spend too much time on administrative work." The Women in Science awards presentation ceremony will be held in Paris in March. The first local woman scientist to win the award in 2004 was biochemistry professor Nancy Ip Yuk-yu, co-director of the Molecular Neuro- science Centre of the Hong Kong University of Science and Technology.

The European Commission has fined Cathay Pacific Airways (SEHK: 0293) €57.12 million (HK$618 million) for colluding in price fixing on cargo surcharges to and from Europe. The airline is one of 11 fined a total of €799 million yesterday by the European Union regulator. "We will make full provision for the amount as per the accounting standards within this year, but without accepting them," a spokesman for Cathay said. The provision would imply a 4.8 per cent drop in Cathay's net profit this year, a Goldman Sachs report said yesterday. The carrier did not make similar provisions on previous occasions when it was involved in antitrust probes in various jurisdictions, including Australia, New Zealand and Europe. Cathay was still reviewing the commission ruling and evaluating its options with its legal advisers, it said yesterday. "I would like to stress that we have always endeavoured to comply fully with the legal requirements in every jurisdiction in which we operate and that we are firm in our support of full and fair competition among all air carriers," Tony Tyler, chief executive of Cathay, said yesterday. As validation of Cathay's commitment to fair competition, he cited the competition compliance office that Cathay had set up. The office provided training and support necessary for the airline to comply with competition laws around the world. Lufthansa, which was the first carrier to turn itself in to the regulator, and its subsidiary Swiss International Airlines had not been fined, the EU said on its website. "Lufthansa received full immunity under the Commission Leniency Programme as it brought the cartel to the Commission's attention and provided valuable information." Ten airlines managed to get the fines reduced. Cathay Pacific, Air France-KLM, Lan Chile and SAS were granted a 20 per cent discount on their fines because of their co-operation with the commission. Singapore Airlines, the only airline to get no discount on its €74.8 million fine, said it was disappointed with the decision and "strongly contests" the allegation it was involved in fixing prices. The carrier said it was likely to appeal against the decision. The fine, if realised, would shave 9.5 per cent off Singapore Airlines' net profit this year, the Goldman Sachs report said. Air France and its subsidiary KLM, which were fined €310 million in total said they would appeal, too, as will Lan Chile and SAS. Five carriers applied for a discount, claiming inability to pay the fine, the regulator said without disclosing the names. But none of the applications met the conditions for a reduction. Qantas, which was fined €8.88 million, said it acknowledged improper conduct by its freight unit. The commission's ruling comes on the heels of jail sentences for some airline executives following a global antitrust crackdown. Keith Packer, a former cargo manager with British Airways, was sentenced to a jail term of eight months after pleading guilty to US charges of collusion with rivals to inflate fuel surcharges in 2008. The same year the US government fined 18 airlines at least US$1.6 billion and filed criminal charges against 14 executives for price fixing. Cathay Pacific was fined US$60 million by the US government. The commission ruling stated the carriers concerned had infringed its competition laws by collectively setting cargo surcharges from December 1999 to February 2006 in Europe. It said that, among themselves, the airlines reached a consensus on fuel surcharges and decided to rope in other airfreight operators to ensure uniform surcharges on all shipments to and from Europe. The price fixing was extended to security surcharges later on. To ensure that all "cartel members" would introduce the surcharges in full, the carriers found guilty by the commission allegedly agreed to refuse to pay a commission on surcharges to their clients, freight forwarders and the middlemen between exporters and airlines. "By refusing to pay a commission, the airlines ensured surcharges did not become subject to competition by way of discounts to customers," the regulator said. Cathay shares dropped 0.45 per cent to HK$22 yesterday.

Treat for birdwatchers as four rare visitors touch down at Mai Po - Two species of Bean Goose make a rare appearance in Hong Kong at the Mai Po Nature Reserve. It is hoped they may stay for the winter. A cold spell from the north has brought new visitors to Mai Po Nature Reserve - a small flock of migratory wild bean geese from Siberia. It is the first time so many bean geese have flown into the city. Two of them are taiga bean geese, a species new to Hong Kong. The other two are tundra bean geese, a species which has rarely been seen in wetland reserve in the northwest New Territories. The discovery was described by the WWF Hong Kong, which manages the reserve, as causing a buzz in the local birding community. The geese are now believed to be feeding and roosting daily at a newly refurbished freshwater pond inside the reserve, after they were first spotted flying over the reserve on October 30. "The pond contains flooded grassland, a new habitat type for Mai Po, which the geese find very attractive. There is a good chance that they may stay here for the winter," said Bena Smith, the reserve's manager. Smith believes that the cooler weather at the end of last month brought the rare visitors to Hong Kong. In the past five years there have only been three bean goose sightings in Deep Bay. "The recent trend of new water bird species being recorded in the Deep Bay wetlands and increasing waterbird numbers is great news for local birdwatchers and conservationists," Smith said. "However, to ensure Hong Kong's future generations have the opportunity to experience and enjoy the wetlands and the waterbirds like we do today, it is important to protect the health and integrity of the Deep Bay ecosystem."

Shenzhen's Qianhai - partner or rival for Hong Kong? On a dusty 15-square-kilometre construction site in Shekou , Shenzhen, the foundations have been laid for what has been billed to become "the Central of Shenzhen" or "the Manhattan of the Pearl River Delta". Shenzhen authorities have loftier ambitions than building high-rises and metro lines in the district. Numerous co-operative ventures with Hong Kong are in the pipeline that could see it become a rival financial centre in the Pearl River Delta. Chief Secretary Henry Tang Ying-yen in July last year was among the first to say Qianhai had potential to be the "Central of Shenzhen". A month later, Chief Executive Donald Tsang Yam-kuen sought to ease concerns that development of Qianhai - with financial services to be one of the pillar industries - would pose a threat to Hong Kong by saying: "Even the Qianhai reclamation work has not been completed yet." A year on, the reclamation and site formation are done. Workers are busy on projects such as the Qianhai metro station with a property development above it. The extension of Shenzhen's first metro line, with a stop in Qianhai, is expected to start operation next month. According to its blueprint, the municipal government will invest 40 billion yuan (HK$46.5 billion) in the next three years to develop service industries such as finance, logistics, professional services, communications and the media as well as hi-tech industry. Its confidence in the development of Qianhai, one of the last plots of undeveloped land in the special economic zone, is built on the status granted to the area by the central government. Shenzhen Mayor Xu Qin has said the gross domestic product of Qianhai will reach 150 billion yuan in 2020, more than a third of the present figure for the entire city. The National Development and Reform Commission issued a circular two weeks ago saying Qianhai would have the same power to manage its economy as cities "specially designated in the state plan", meaning it will have the economic autonomy of a province. Currently there are five such mainland cities - Dalian , Qingdao , Shenzhen, Ningbo and Xiamen. Dr Fang Zhou, assistant chief research officer at the One Country Two Systems Research Institute in Hong Kong, said Qianhai's special status would put Shenzhen in a better position to seek preferential treatment for it in areas such as approval for foreign investment and fiscal policies. "Shenzhen authorities' strategy is to team up with Hong Kong to fight for favours for Qianhai," he said. The State Council has also designated Qianhai as a "Hong Kong-Shenzhen modern service industries co-operation zone". The governments of Hong Kong and Shenzhen are discussing how to capitalise on Hong Kong's strength in financial services, trade and logistics to pave the way for development of service industries in the zone. Beneath the hype lies the fact that Qianhai will be used as a testing ground for initiatives that have not been tried in other mainland cities. Options being considered by Shenzhen officials and academics for Qianhai include allowing Hong Kong's offshore financial institutions and arbitration institutions to set up branches in Qianhai, a pilot scheme for free convertibility of the yuan, and introduction of salaries and profits taxes much lower than elsewhere on the mainland. Fang, who has exchanged views with Shenzhen officials on development of Qianhai, said Shenzhen authorities were seeking consent from central government departments to cut profits tax for companies investing in Qianhai to about 20 cent, compared to 25 per cent for firms elsewhere on the mainland. Hong Kong's profits tax is 16.5 per cent. "The Shenzhen government also hopes to cut the rate of salaries tax to about 20 per cent to raise its appeal to talent from Hong Kong and overseas," he said. The standard rate of salary tax in Hong Kong is 15 per cent. Fang said Shenzhen's expectation of the development of Qianhai went beyond providing support services, such as data centres for financial institutions, for Hong Kong's service industries. "Instead, Shenzhen wants to woo top talent in service industries from Hong Kong to develop high-end service industries in Qianhai. In this sense, Qianhai will compete with Hong Kong in the development of service industries," he said. The planned 50-kilometre, 20-minute rail link between Hong Kong and Shenzhen airports will have a stop in Qianhai. The Hong Kong International Arbitration Centre said it would be interested in expanding services to the mainland. An official with Shenzhen's Urban Planning, Land and Resources Commission, which oversees development of Qianhai, said it was pressing ahead with preparatory work. Guo Wanda, vice-president of the Shenzhen-based China Development Institute, said there was "plenty of room for imagination" for the development of Qianhai. "I believe Qianhai will enjoy greater flexibility in areas such as the tax system and flow of currency," he said. The Qianhai Management Authority, established in April, was modelled on statutory bodies in Hong Kong that enjoyed great flexibility and autonomy, Guo said. "It would be a good idea to invite Hong Kong officials or professionals to serve as members," he said. Tsang said in his policy address his government would work with Shenzhen to encourage the local trades to seize opportunities arising from Qianhai's development. A spokesman for the Constitutional and Mainland Affairs Bureau said the Shenzhen authorities were responsible for the development and management of Qianhai, while Hong Kong would serve as an adviser. National People's Congress Hong Kong deputy Priscilla Lau Pui-king said Qianhai had a long way to go to become a mature financial centre. Fang agreed: "Given Hong Kong's advantage in the rule of law and free flow of capital, it is difficult for Qianhai to emulate Hong Kong in the development of service industries."

Racing in the territory could soon become isolated from the rest of the world if the government does not come to its aid, Hong Kong Jockey Club chief executive Winfried Engelbrecht-Bresges warns. Writing in his bi-weekly blog, Engelbrecht-Bresges said although local racing has reached world-class levels, the club now finds itself in a growing globalized and competitive market and cannot sit back on past achievements. He said a few external factors are preventing Hong Kong from keeping pace with the rest of the world, including the aging trend of its core customer base, the lack of room for expanding facilities and the commingling of bets. Another challenge is to make racing more sports-driven than just money-driven in the local mindset. To this end, the simulcast programs have been successful. However, simulcasting and world recognition are a two-way street, he said. "We cannot expect the world to come to Hong Kong's door without reciprocal arrangements. To make that possible, we need the government's understanding and support."

 China*: China posted a bigger-than-expected October trade surplus of US$27.1 billion yesterday, a day before the Group of 20 leaders meet in Seoul to discuss global trade imbalances and currency friction. Mainland exports climbed 22.9 per cent last month from a year earlier to US$135.98 billion, while imports rose 25.3 per cent to US$108.83 billion, according to the customs bureau. The surplus was far above the US$16.9 billion surplus in September and past the US$25 billion estimated by many economists for October. "The elevated trade surplus could add some pressure on China in the G20 meeting," said Lu Ting, an economist with Bank of America Merrill Lynch. The surplus is expected to provide new ammunition for US politicians to attack Beijing's foreign exchange policy and accuse the mainland of undervaluing the yuan. The central bank told the biggest mainland banks to set aside an additional 0.5 per cent of deposits as reserves yesterday, in a bid to lock down money flowing into the world's second-largest economy in the form of trade surpluses or as hot money, bank executives and analysts said. The rise in the reserve requirement ratio should absorb about 180 billion yuan (HK$209.59 billion) of liquidity from banks. After the increase, the rate is 18 per cent for the big four banks: Industrial and Commercial Bank of China (SEHK: 1398), hina Construction Bank (SEHK: 0939, announcements, news), Agricultural Bank of China and Bank of China. For some of the smaller banks, the ratio stands at 15.5 per cent. The reserve ratio rise, soon after Beijing last month raised interest rates for the first time since the financial crisis, is "on the back of the US's quantitative easing and the yuan's appreciation", said Lu. "The People's Bank of China governor Zhou Xiaochuan said last Friday that China should build a pool to contain money inflows. Unsurprisingly, the pool is just central bank bills and required reserves," he said. Gao Shanwen, an economist with Essence Securities in Beijing, expects mainland import growth to trend up while export growth will slow in the next two months. The trade surplus for the full year is likely to reach around US$180 billion, smaller than last year's US$196 billion, vice-commerce minister Zhong Shan said last week.

Games city's security forces on high alert - One look at the busiest subway stations in Guangzhou will tell the story: the Asian Games are here. Intense-looking armed police, standing motionless on 20cm-tall platforms, guard every exit of Gongyuanqian station which leads to Beijing Road, the city's busiest shopping area. In Xiaobei station, populated mostly by African traders, six male and two female unarmed police cadets patrol tirelessly. With the 16th Asian Games starting tomorrow, Guangzhou's security forces are on high alert to ensure a safe and smooth opening. As organisers of the world's largest non-Olympic multiple-sports event in terms of the number of participating countries, Guangzhou faced a management and logistical challenge, while the rest of the world watched. This year, there will be 11,643 athletes from 45 countries participating in 42 sports and a total of 590,000 volunteers for the Asian Games and Para Asian Games. About 10,000 journalists from around the world will cover the sporting spectacle. Fifty-three venues are dotted across the Pearl River Delta. Although most are located in Guangzhou city's downtown area - Panyu, Huangpu and Huadu districts, there are others in Foshan , Dongguan and Shanwei , and even county-level cities such as Zengcheng and Conghua. A superintendent of the Guangzhou Public Security Bureau's Baiyun branch said police officers had been working hard under heavy pressure to maintain social stability in the run-up to the Games. "We are too busy to die," he said, declining to be identified. "It hurts so much even just to take a breath after working all those extra shifts and running around town." He said as well as patrolling streets more often and running more vehicle checks, senior police officers were also called in for emergency meetings every other day, on a range of topics, from formulating strategy to preventing protests and riots. Confidential communiques from the provincial Public Security Department and the Ministry of Public Security in Beijing, which normally arrived once a week, were now coming in every day, providing information about possible demonstrations, social unrest and dissidents' latest moves. He said officers would receive warnings or face dismissal should they allow any severe crimes, riots, protests or fire incidents to occur in their jurisdictions. "We must monitor every move of highly targeted people to nip any potential unrest in the bud," he said.

Authorities are working round the clock to ensure tight security. At a checkpoint on a highway leading to downtown Guangzhou, a dog sniffs around a vehicle.

Hu decries blame game ahead of Seoul summit - President Hu Jintao called on other countries to "face their own problems" and not cast blame as he prepares for a contentious Group of 20 summit in Seoul, state media said yesterday. Hu (pictured) also defended China's controversial controls on its currency, the yuan, and warned of a grim world economic situation. "Countries should shoulder the responsibility and the courage to face their own problems, adhere to international co-operation and properly handle differences," Hu said. "China will try to run its own affairs and not blame its problems on others." Preparatory negotiations for the two-day G20 summit in Seoul grew heated yesterday as deputy finance ministers battled over how to redress growth imbalances arising from China's dramatic expansion and America's deficit woes. Among the key criticisms of China are accusations it keeps the yuan's value artificially low to make its exports cheaper on world markets, amassing huge trade surpluses at the expense of other nations. "China, in the face of considerable pressure, kept its [yuan] exchange rate basically stable," Hu said, noting "gradual steady progress" in the reform of its exchange rate systems. Beijing pledged in June to allow the yuan to trade more flexibly but it has increased only slightly in value. Hu, speaking in a Xinhua interview, said "the world economic situation is still complicated and grim" - language of the sort that Chinese leaders often use to justify resisting pressure for any drastic policy changes. Officials were meeting in Seoul yesterday to thrash out a summit communique to be adopted by leaders including Hu and US President Barack Obama tomorrow. Washington has attracted stinging criticism for pumping an extra US$600 billion into the fragile American economy. Critics, including top Chinese officials, say this amounts to an effective dollar devaluation.

London eyes a slice of offshore yuan trade - London is set to become an offshore yuan trading centre, according to the United Kingdom's Chancellor of the Exchequer. In a speech in Hong Kong yesterday, Chancellor George Osborne said London "as a partner of Hong Kong, is developing new businesses, including the internationalization of the renminbi". He did not give further details, but added: "This is something I definitely want London to be part of." Traders questioned Osborne's comments, particularly because the mainland currency is tightly controlled by the government in Beijing, which does not allow it to flow freely around the world. David Buick, a London-based partner with international brokerage BGC Partners, called Osborne's comments "wonderful political rhetoric" designed to draw attention to London's long-standing status as a leading global foreign exchange centre. "The practicalities don't make it possible," Buick said. "I am not critical of the concept. It's a good idea. But we need the yuan to become a reserve currency - in other words, one that is freely exchangeable." Beijing has allowed Hong Kong to build up a very small renminbi deposit base, currently standing at 150 billion yuan, so banks here can experiment with yuan trading and yuan-denominated investment products. The People's Bank of China supplies Hong Kong-based banks with yuan, using the Bank of China's local branch as a conduit. But London has no yuan deposit base. Banks in the UK capital would have to source the Chinese currency from their Hong Kong offices. And the limited amount of yuan the mainland has released outside its borders would make trading in yuan unappealing to big institutions, said a yuan expert who asked not to be named because he did not want to seen as criticising the UK government. London traders buy and sell an average of US$1.9 trillion of foreign currency every day, according to the Bank for International Settlements' tri-annual survey of the market, which was published in September and only cited data for April 2010. At the same Hong Kong event, Osborne, who was visiting the territory for the first time, ducked questions about the currency war between the United States and China. Washington has accused Beijing of keeping the yuan artificially low to prop up mainland exporters, making it difficult for US manufacturers to compete in world trade. "I have avoided commenting on the level of currencies," Osborne said. Instead, he insisted, the debate should be broader, focusing on the "real issue, which is economic imbalances" between countries running trade surpluses and those, like Britain and the US, that are in deficit. British Prime Minister David Cameron has spent the past few days in Beijing, ahead of the G20 meeting in Seoul. As well as calling for deeper trade links between Britain and China, the UK premier has urged Beijing to improve human rights, the rule of law and press freedom. Osborne yesterday said the British government could criticise China and call for strengthened economic ties at the same time. "There is the political debate, and there is the financial debate," he said. He said Britain wanted to double its exports to China over five years, to £100 billion (HK$1.24 trillion).

China's Guangzhou ready for 16th Asian Games - Picture taken on Nov. 10, 2010 shows the aerial view of Guangzhou, south China's Guangdong Province. The 16th Asian Games would run in Guangzhou from Nov. 12.

November 11, 2010

Hong Kong*: Confusion reigned yesterday over an insurance requirement imposed by the Philippine government when new domestic workers are hired. Local employment agencies and families were frantically trying to find out whether employers had to pay the comprehensive US$144 insurance on top of the policy already required under Hong Kong law. Though the Philippines' Overseas Employment Administration told employment agencies on October 21 of the changes, local authorities and many job agents were still caught off guard. The change will only cover those hired for the first time through authorized agencies; current contracts will not be affected. The chairman of the Hong Kong Employers of Overseas Domestic Helpers Association, Joseph Law, said it would be unfair if bosses had to pay twice. Technic Employment Service Centre managing director Teresa Liu Tsui-lan was unsure if the Hong Kong government would approve insurance packages bought in the Philippines. "We have stopped letting new workers come to Hong Kong. The halt will continue until we know the specifics of the new policy," she said. The existing employee compensation policy, including medical coverage, costs HK$1,350 over two years. Liu said the Philippine policy was US$144 (HK$1,120) for two years, but this did not cover hospital admission. The three authorised Philippine providers for the insurance are Paramount Life & General Insurance, Philippine Charter Insurance and United Coconut Planters' Life Assurance. "This is not a levy but a new law that gives added protection for Filipino overseas workers," a spokesman for the Philippine Department of Labor and Employment, Nicon Fameronag, said yesterday. Fameronag said the guidelines were published in Hong Kong's newspapers on September 17 but probably not noticed because the focus then was on inquiries into the Manila bus hostage-taking in which eight Hongkongers died. "The recruitment agencies lobbied Congress to have this insurance incorporated into the law," he said, and Congress found it reasonable. The policy is optional for the current employers of 140,000 Filipino domestic workers in the city whose contracts may be renewed, he said. It is not clear whether the insurance will be mandatory for helpers switching jobs. "This is very wrong," a caller to a radio phone-in program said. "There's no notification and they charge the sum when they want it. Those who need a worker urgently are totally unprotected." A spokeswoman for the Labor Department said it was getting in touch with the Philippine consulate to discuss the policy. Chan Kin-por, the lawmaker for the insurance sector, said employers should not drop the existing employee compensation policy in favour of the Philippine one or they could break the law. With local policies, insurance companies, not employers, compensate workers injured at work, he said. In contrast, the Philippine policy contains no clause that spares employers from liability. Filipino workers will not necessarily benefit: Chan said the coverage limit for permanent total disability is US$7,500 in the United Coconut Planters' package, much lower than the maximum compensation of HK$100 million local employee compensation policies offer.

The government has slashed its proposed budget for the bid to host the 2023 Asian Games by more than half to less than HK$6 billion. The move, which could scupper Hong Kong's chances of staging the Games, has failed to satisfy critics on both sides. Supporters of the original bid question how such a huge cut was possible and say the new budget is sure to have an effect on Hong Kong's chances of being awarded the event. Others believe that the heavily pared-back bid is still too high. Yesterday, the venue subcommittee of the Asian Games Provisional Bid Committee offered to cut the direct cost of hosting the Games from the original estimate of HK$13.7 billion to HK$14.5 billion, to less than HK$6 billion. That would mean reducing expenditure by about HK$8.5 billion - money meant for expanding and upgrading planned indoor sports centres in Tai Po, Yuen Long and Sha Tin. "The government is keenly aware of the community's concern at the potential costs involved in hosting the Asian Games. We therefore welcome the option ... that would reduce by more than half the direct cost of hosting the games," Secretary for Home Affairs Tsang Tak-sing said. The minister said the option put forward by the sub-committee had given the public "an opportunity to consider from a fresh perspective". The HK$6 billion estimate does not include more than HK$30.17 billion set aside for building sporting facilities that the government said would go ahead whether or not Hong Kong hosts the Games, plus an unknown sum for an athletes' village.

More than 30,000 people yesterday flocked to view hi-tech wizardry giving a snapshot of what it was like 900 years ago in a bustling northern Song dynasty capital, on the first day of an exhibition at AsiaWorld-Expo. A packed AsiaWorld-Expo on day one of the exhibition of an animation of the painting Riverside Scene at Qingming Festival. One in seven Hongkongers are expected to see the show recreating life in the northern Song dynasty 900 years ago.

If you think Christmas appears to be starting earlier every year, you are not alone. Some shopping malls in Tsim Sha Tsui will light up their Christmas decorations today - two weeks earlier than last year and six weeks before December 25 - in a bid to cash in on what they believe will be a bumper festive season as the economy continues to recover. The buoyant mood is also reflected in the amount of money shops and malls are prepared to spend on decorations and promotions. The MTR Corporation (SEHK: 0066) is investing HK$25 million on luring Christmas shoppers to its upscale shopping arcade Elements - the highest-ever budget for a December promotion and up by 25 per cent from HK$20 million a year ago. The company budgeted another HK$25 million for festive promotions at its 11 other malls, up 15 per cent compared with last winter, and expects visitor arrivals to grow by one-tenth. "This is because the economy is doing well and therefore we want to lure more people to spend," the company's chief retail marketing manager, Cindy Woo Lai-man, said. Part of the budget would be used to promote new tenants, which comprise about 40 per cent of the tenants at Telford Plaza in Kowloon Bay, and to lure consumers to start shopping for Christmas this month. "Faced with keen competition from other malls, we want to create a pre-Christmas shopping period by dishing out gift rewards and special offers this month," Woo said. Rival Sun Hung Kai Properties (SEHK: 0016) is also going into record-breaking territory. The developer forecasts spending of HK$17 million on seasonal promotions at its apm mall, up about 10 per cent year-on-year. This excludes the cost of organising up to 80 tours which will bring 4,000 mainlanders from Guangzhou to the mall from early next month. "Competition between shopping malls in Hong Kong is stiff," said Maureen Fung Sau-yim, general manager of Sun Hung Kai's leasing department. "Apart from wooing local young people, we want to expand the Christmas shopping habit to mainlanders," Fung said. "For example in Shanghai, people usually shop on December 24 and 25 only. Those from southern China have been influenced by the shopping tradition in Hong Kong and start their Christmas spree earlier." She forecast per capita spending of mainland visitors would range from HK$3,800 to HK$4,500 per person. Total sales in the mall next month are expected to surge at least 15 per cent to over HK$500 million. Fung expected some Hongkongers might stay and spend in the city for the holiday as the appreciation of foreign currencies meant it was more expensive to travel overseas this year. The developer will also increase its Christmas investment by 20 per cent at another 11 malls to a record high of HK$19 million. Other malls, including Times Square and Langham Place, are also upbeat about shoppers in the coming month. Vivian Leung Wai-mun, general manager of Eagle Property Management, said the company was confident that its Langham Place would fetch a double-digit growth in sales during Christmas, thanks to the robust economy in Hong Kong and on the mainland.

  Hong Kong ICAC warns schools of the pitfalls of graft could face 7 years prison and HK$500,000 fines - The ICAC issued new guidelines to principals and teachers, warning them to steer clear of accepting frequent or lavish entertainment from people who do business with their schools. The Corruption Prevention Department of the Independent Commission Against Commission yesterday issued a Best Practice Checklist on Governance and Control in Schools to 1,000 primary and secondary schools in the city. It urges schools to strengthen their administrative procedures and increase transparency in nine areas, especially in procurement and student admissions. In recent years there have been instances of chaotic management and suspected corruption. In one case the principal of a primary school in Choi Hung engaged a decorator to work in his flat for free in exchange for renovation contracts at the school. In another, a school in Yau Tong was investigated by the ICAC for outsourcing services to a company chaired by its supervisor. Raymond Ng Kwok-ming, assistant director of the anti-graft body's corruption prevention department, said the guidelines were in response to "mounting public concerns about school administration". Corruption complaints in the education sector have steadily increased, from 67 cases in 2008, to 95 in 2009, and the 83 cases in the first nine months this year. "Good management can help eliminate the chance of corruption happening in schools," Ng said. The new guidelines recommend best practices for school in governance, procurement, staff administration such as promotion arrangement, student admission and accepting donation and sponsorship. Hong Kong parents will go to great lengths to get their children into a sought-after kindergarten or elite school. Recently, a Kowloon Tong kindergarten provided fee-paying religious conversion courses to enhance children's chances of entering Catholic-affiliated elite primary schools, a scheme that was scrapped after strong criticism. The new ICAC guidelines included recommendations on student admission, to ensure that the admission process is fair and transparent to avoid favouritism or abuse. Dr Anissa Chan Wong Lai-kuen, a member of the corruption prevention advisory committee and principal of St Paul Co-educational College, said some schools had started to set up an admission committee involving more staff, about 20 school management and teachers for selecting new students. Schools are also urged to make their finances transparent, along with any donations received. Lo Sai-kwong, president of Eastern District School Liaison Committee, said the Education Bureau also provides guidelines on school management. "Regular inspections can also help to eliminate corruption in schools," Lo said. School principals or teachers who breach bribery laws can face a fine of up to HK$500,000 and seven years in prison.

The Executive Council yesterday approved a minimum wage of HK$28 an hour, but an official announcement is not expected for a day or two. The wage level, proposed by the Provisional Minimum Wage Commission, was subjected to in- depth discussions and its impact on the economy was fully scrutinized at the meeting, sources said. Chief Executive Donald Tsang Yam-kuen took into consideration the concerns of unions, the need for better protection of workers as well as calls from the business sector to set a benchmark that was more moderate, before making a final decision. The government is set to unveil the rate this week. The legislative process will be carried out in the coming months before the statutory level is put into effect in the first half of next year. Tsang yesterday refused to say whether a final call on the contentious figure has been made. "We have worked hard on the legislation of a minimum wage to better protect our lower-income working class." The delay in announcing the minimum wage rate has puzzled many in political circles and unionists. "I am very eager to know what has been decided," legislator Wong Kwok-hing of the Hong Kong Federation of Trade Unions said. "I don't think there is a problem with the wage level. They are just not announcing it," said another legislator, Lee Cheuk-yan of the Hong Kong Confederation of Trade Unions. A person close to the chief executive told The Standard: "If there is nothing today. Wait until tomorrow." A source said Tsang was holding back on the official announcement, partly because the administration wanted to make sure all things are in place to ensure the smooth implementation of the landmark policy. In addition, Tsang is keen to know who leaked the proposed wage level during the lobbying process - especially since it is lower than many developed countries with a GDP similar to Hong Kong. He also said "insults and abuse" have been posted on his new Facebook page and admitted they may be signs of the frustration that the government causes on a daily basis. He pledged to make adjustments whenever possible.

Liver donor Simon Hui Sai-man has called on the public to stop calling him a hero, saying he's just a regular guy. The 40-year-old made the plea as he left Queen Mary Hospital less than a week after donating part of his liver to save a dying colleague, Yuen Wai-cheung. That came during 13 hours of surgical procedures on Thursday. "I'm just a normal citizen in this issue," Hui said as he headed home. "I don't want to be portrayed as a hero." However the airport customs inspector does want a role in raising awareness of the importance of organ donation. "I'll return to the hospital for a checkup and will recover quickly," Hui said as he left the hospital with family members. "I'll soon be serving members of the public again after I have recovered." But he will take advice from his doctor and the Customs and Excise Department on just when to return to work. On that, his doctor, Lo Chung-mau, said Hui is making good progress. Meanwhile, transplant recipient Yuen remained in intensive care with a slight fever. Yuen, 39, was injured during an anti-smuggling operation in Tseung Kwan O on October 28, and his liver was close to failing completely. Lo said Yuen may have been infected by the tubes used in dialysis, and so the procedure was suspended. He had been undergoing dialysis to restore his kidneys. Lo said Yuen may need to have more antibiotics. However he seemed calmer yesterday. Lo revealed on Monday that the life-and-death experience had left Yuen fearful that he was in the underworld. "He can now tell he's in Queen Mary Hospital and knows he is injured," Lo said. "He seems to believe he's alive now."

Hong Kong Professor Vivian Wing-Wah YAM was announced among five laureates of 2011 L'Oral-UNESCO Women Scientist Awards, for her work on light-emitting materials and innovative ways of capturing solar energy, the Paris-based UNESCO said on Tuesday. Born in Hong Kong, Vivian obtained her PhD at the University of Hong Kong and became professor there in 1997. She is an academician of the Chinese Academy of Sciences and a fellow of the Academy of Sciences for the Developing World. Each year, the L'Oral Foundation and UNESCO select five outstanding women scientists -- one per continent -- to honor their contribution in research and encourage their commitments and effort in pushing forward the social development. "With the Marie Curie Nobel Centenary being celebrated in 2011, this year the For Women in Science Programme has a particularly strong resonance, placing women and chemistry at the heart of science today," the UNESCO said in a statement. Out of 1,000 high-level scientists around the world, five winners on behalf of Africa and Arab States, Asia and Pacific, Europe, Latin America and North Africa will be awarded with 100, 000 U.S. dollars on March 3, 2011 in a ceremony at UNESCO headquarters. Besides Vivian, the other winners are Kuwaiti Professor Faiza al-Kharafi working with Kuwait University on corrosion related to water treatment, Professor Anne l'Huillier specializing in Atomic Physics with Lund University in Sweden, Professor Silvia Torres- Peimbert with Institute of Astronomy in Mexico City University and Professor Jillian Banfield working on Earth and Planetary Science in University of California of the United States. Initiated 13 years ago, the L'Oreal-UNESCO Awards have recognized 67 laureates, two of whom received the Nobel Prize in 2009, and 864 fellowships have been granted to young women scientists from 93 countries.

 China*: Beijing tightened its grip over foreign currency flows yesterday by introducing a series of policies including a daily floor for banks' foreign currency holdings, highlighting worries over hot money. A circular issued by the State Administration of Foreign Exchange said stricter scrutiny would apply to a variety of sources of speculative capital that can threaten financial security. The government has become more alert to speculative capital following a record US$100 billion jump in the mainland's foreign-exchange reserves in September and the US Federal Reserve's decision to pump another US$600 billion into its economy last week. The latest move by the authorities was aimed at cracking down on "all kinds of illegal capital inflows" and preventing financial risks that accompany hot money inflows, the currency regulator said. Under the new policies, which came into effect from yesterday, a bank's daily net dollar position - in expired forward contracts and spot greenback holdings - should not be less than the levels on Monday. "This makes a big difference as the regulator used to cap lenders' holding of foreign currencies," said Lu Zhengwei, an economist with the Industrial Bank. Banks' foreign-debt quotas and exporters' request to exchange payments into the local currency will be subject to stricter scrutiny. Authenticity of foreign direct investment, inflows of funds raised from overseas listing, equity investments by foreign companies on the mainland and Chinese special-purpose vehicles overseas will also be put under the microscope. "The measures are all-around and the punishment is unprecedentedly serious, underscoring concerns about hot money," Lu said. The circular says banks' senior management will be held responsible if irregularities are found. Only employees directly responsible were punished in the past. Last month the regulator named and shamed nine banks, including the four biggest state lenders, for irregularities found in a hot-money clampdown campaign started in February. The 197 verified cases involve a total of US$7.34 billion. There is no official estimate of the amount of hot money in the mainland. Economists note the inflow has been accelerating on the back of expectations the yuan will appreciate following the scrapping in June of its de facto peg to the US dollar. Foreign reserves rose by US$194 billion in the third quarter to US$2.65 trillion. The trade surplus was US$65.6 billion in the quarter and foreign direct investment US$22 billion; the depreciation of the US dollar could add US$70 billion. Put together, they explain US$158 billion, leaving about US$36 billion in "unexplained inflow", according to Lu Ting, an economist with Bank of America Merrill Lynch. The liquidity creation by the United States is expected to exacerbate China's inflation and asset bubble and encourage more funds to flow across the border to bet on higher returns, according to economists. Robert Subbaraman, an economist with Nomura, said the second round of quantitative easing in the US was expected to result in more capital flow to China and increase pressure on the yuan to strengthen. The call on Friday by Zhou Xiaochuan, the central bank governor, for a "pool" to contain hot money triggered speculation that Beijing may want to channel the money to the A-share market, which started a rally at the end of September after slumping from its peak in 2007. Industrial Bank's Lu said Beijing may approve more initial public offerings if the stock market attracts a flood of money.

Timberland plans Asia-Pacific HQ and e-commerce on mainland - Jeffrey Swartz, Timberland's president and chief executive, shows off some of his products. The Timberland Company, a leading global designer and vendor of outdoor shoes and clothing, will soon establish an e-commerce presence on the mainland amid efforts to double the number of its domestic retail outlets.

Cameron seals over US$1b in trade deals - Rolls-Royce to supply jet engines for 16 planes - British Prime Minister David Cameron (second right) and cabinet ministers share a toast with Premier Wen Jiabao during a signing ceremony at the Great Hall of the People. Visiting British Prime Minister David Cameron and Premier Wen Jiabao yesterday oversaw trade deals worth more than US$1 billion. Cameron - travelling with Britain's largest ever delegation of bosses and ministers - wanted to focus on doubling trade with the world's second largest economy and taking their trade relations "to a new level". By far the biggest deal announced was worth US$1.2 billion between Rolls-Royce and China Eastern Airlines (SEHK: 0670) under which the British group will provide jet engines to power 16 Airbus A330 aircraft. Facing pressure to challenge mainland leaders on rights, Cameron said he was not in favour of "lecturing and hectoring" Beijing. Cameron and Wen had a "general discussion" on human rights, British officials said. They emphasised that Wen had welcomed the two countries' discussions on rights. China defended its human rights record, with Foreign Ministry spokesman Hong Lei saying at a regular briefing that its citizens today "are enjoying more extensive rights and freedoms. "This is a fact that is there for everyone to see." Cameron is the first Western leader to visit China since jailed dissident Liu Xiaobo was awarded the Nobel Peace Prize on October 8 - an honor hailed in the West but condemned by Beijing as tantamount to "encouraging crime". Countries including Britain have said they will not heed a Chinese call for Western diplomats to steer clear of the Nobel ceremony next month. Cameron is travelling with 43 bosses from major British companies and four government ministers on his first official visit after taking power in May. He said in an article for The Wall Street Journal that he expected to see "new contracts worth billions of dollars" signed during his two days in Beijing, which come ahead of the Group of 20 summit in Seoul starting tomorrow. His longer-term target is to double the level of trade in goods and services between Britain and China by 2015, from last year's US$51.8 billion, though it is thought there has been no specific discussion on targets with China. Cameron's government is searching for new sources of economic growth after unveiling the deepest public sector spending cuts in decades last month. His ministers are battling to tackle a record deficit of £154.7 billion (HK$1.94 trillion). Earlier deals signed include a £45 million, five-year agreement for British companies to export breeding pigs to China and the construction of 50 new English-language schools in China by British company Pearson. In a bid to highlight the opportunities for British companies, Cameron's first visit of the two-day trip was to a supermarket run by Tesco, the world's third-largest retailer, in south Beijing. The British leader will meet President Hu Jintao and attend a business summit today before heading to South Korea. He is also due to deliver a speech insisting Britain retains considerable global influence despite its economic woes, and constitutes an important trading partner for China. Wen visited several European countries in September and October, conveying pledges to strengthen trade and purchase Greek bonds. Cameron's visit comes on the heels of Hu's trip to France and Portugal last week that resulted in US$20 billion worth of contracts for French and European firms, but no similar pledge to buy Portuguese debt. Cameron's visit is also the first by a British leader since China executed a 53-year-old British man, Akmal Shaikh, for drug smuggling last December, despite an official appeal on his behalf from London. The execution drew condemnation from many British politicians and rights groups who argued that Shaikh was delusional and had unwittingly been exploited by criminals.

British PM can trace his roots to Shanghai - David Cameron meets social entrepreneurs in Beijing. When British Prime Minister David Cameron stepped off the plane in Beijing yesterday, he was taking a step closer to his family history. Cameron's great-grandfather Ewen Allan Cameron was born in Shanghai in 1879, and his family has close links to the early development of the region's international financial industry. His great-great-grandfather - also called Ewen - was manager of the Hong Kong and Shanghai Bank's branch in the city at the time, a post he filled until 1890, when he became director of the bank's London office. He was knighted in 1901. Ewen Cameron (1841-1908) had risen from humble origins as the son of a farmer near Inverness, in the north of Scotland. He moved to Hong Kong with the Bank of Hindustan in 1866, moving to HSBC (SEHK: 0005) (itself established just the previous year) when his employers went into liquidation shortly afterwards. Another of the British prime minister's great-great-grandfathers, Emile Levita (1828-1909) - a German Jew and naturalised British citizen - served as director of the Chartered Bank of India, Australia and China, which would eventually become Standard Chartered. Cameron has frequently come under fire at home for his privileged background, his family connections to the aristocracy and rumours about the size of his personal wealth. Cameron is fifth cousin, twice removed, to Queen Elizabeth, as his great-great-great-great-grandmother Elizabeth FitzClarence (1801-1856) was one of 10 illegitimate children born to William IV by his mistress, Irish actress Dorothea Jordan. The prime minister and his cabinet have been sniped at by opponents as hailing from "the playing fields of Eton", due to the number who attended elite boarding schools. Ahead of his election in May, Cameron repeatedly needed to deny rumours his personal estate was worth £30 million (HK$373.5 million) - prompting questions over how well he could understand ordinary families' concerns in the face of dramatic public spending cuts.

Royal Bank of Scotland chief regrets sale of 4.3pc stake in Bank of China - Philip Hampton, chairman of the Royal Bank of Scotland, says the purchase of a stake in BOC was meant to be a long-term deal. The chairman of bailed-out British bank Royal Bank of Scotland expressed regret at the lender's decision to sell its 4.3 per cent stake in Bank of China, and said Beijing was "right to be disappointed" at the move. The British high street lender's chairman, Philip Hampton, said of the BOC (SEHK: 3988) stake sale: "I think they [the Beijing government] were disappointed. And they were right to be disappointed. It was supposed to be a long-term deal." RBS bought its Bank of China stake in 2005, in a deal that its previous chief executive, Fred Goodwin, predicted would allow the lender to sell its own banking products to mainland consumers through its partner's vast branch network. It sold the stake for £1.7 billion (HK$22.52 billion) last February, after receiving the biggest bailout in banking history from the British government. At the time, analysts widely predicted RBS had offended Beijing and would be prevented from making more inroads into the mainland's lucrative banking market. That fear was partly scotched yesterday when Hampton said that RBS won central government approval to launch a securities joint venture with a relatively small, provincial Chinese stockbroker. RBS has partnered with Guolian Securities, which is based in Wuxi, a city northeast of Shanghai in Jiangsu province. The deal will allow RBS to advise mainland companies on Shanghai initial public offerings, and to help them issue bonds. Other foreign banks, including Goldman Sachs, UBS, Deutsche Bank and Credit Suisse, have struck similar deals with Beijing-based partners. But Lawrence Lam, RBS' head of Greater China, claimed it was not a problem that the British lender's partner was based in Wuxi. "There are still only a handful of foreign banks who have these securities joint ventures in China," Lam said. Guolian ranks 38th on the Securities Association of China's list of members. Ian Gordon, an analyst who follows RBS at Exane BNP Paribas in London, said RBS' joint venture with Guolian was: "In the context of the RBS group as a whole, not significant to the investment case, though it could provide an incremental positive [for earnings] much further down the road." Gordon said it was probably regrettable, in hindsight, that RBS sold out of Bank of China. But, he added: "I imagine they were under an awful lot of pressure to do this." RBS has been suffering financially since it led a consortium to acquire Dutch lender ABN Amro for €72 billion (HK$777.33 billion) in August 2007, just before the credit crunch bit, in what proved to be an incredibly overpriced deal. The bank is now 83 per cent owned by the British government. It reported a £1.15 billion net loss for the three months to September. RBS was not the only Western bank to offload shares in Chinese lenders as the credit crunch bit. In December 2008, UBS also sold a 1.5 per cent stake in Bank of China, while Bank of America sold part of its holding in China Construction Bank (SEHK: 0939).

November 10, 2010

Hong Kong*: Fully relaxing restrictions on who can get the Old Age Allowance will involve a radical change in policies, the welfare chief says. It would also result in a big increase in the number of recipients because everyone who has emigrated from Hong Kong and reached the eligible age would be able to get the money, Matthew Cheung Kin-chung told legislators. He was responding to calls from lawmakers to scrap restrictions that require recipients to stay in Hong Kong for at least 60 days a year - recently reduced from 90 - and to live in the city for at least a year before applying. Critics say this deters the elderly from moving to the mainland, where costs are lower, and increases Hong Kong's welfare burden. The HK$1,000-a-month "fruit money" is paid to people over 70 and those over 65 who meet a means test. Cheung told the Legislative Council's welfare services panel yesterday that since 1987, 660,000 Hong Kong residents had migrated to the mainland or other countries. He said the recent changes would benefit 2,000 recipients who had been staying in Hong Kong for less than 90 days a year. "The changes will make it more flexible and more convenient for the elderly," he said, adding that the residency requirement was designed to ensure that recipients maintained a link with Hong Kong. But lawmakers said the change did not address the problem of elderly people needing a place to stay in Hong Kong. "Why are elderly people who don't have a home in Hong Kong prevented from getting the allowance? Are they not Hong Kong citizens?" asked lawmaker Wong Kwok-kin. Lee Cheuk-yan said allowing recipients to move to the mainland without having to come back each year would benefit the government, "because they won't be getting Comprehensive Social Security Assistance like those in Hong Kong". It is estimated that 40,000 recipients of the allowance live on the mainland. "The government will consider giving a grant to the elderly in moving to the mainland. This is not to encourage them to do so but to respect their choice," Cheung said. The government would also consider giving supporting services such as medical care. But he said it would wait until a judicial review of the issue, now before the courts, was settled before starting any serious discussion on fully relaxing the restrictions. At the meeting, annual adjustments of the CSSA scheme and the Social Security Allowance Scheme payment rates were also discussed. Lawmakers urged the government to evaluate the grant on rents under the CSSA, saying the present grant was not keeping pace with increasing rents. The Social Security Assistance Index, which the CSSA rate is based on, saw an average cumulative increase of 3 per cent from October last year to September, government figures show. Lawmakers said as rent and food prices had been increasing in recent years, raising the CSSA rate by just 3 per cent was insufficient to cover expenses.

Foreign currency reserve assets swell to US$267b - Hong Kong's official foreign currency reserve assets rose to US$267 billion in October, up by US$900 million on September, the Monetary Authority says. There were no unsettled forward contracts at the end of October and end of September. Hong Kong is the world's ninth-largest holder of foreign currency reserves based on the latest published figures, after the Mainland, Japan, Russia, Taiwan, India and Korea. The total foreign currency reserve assets of US$267 billion represent over nine times the currency in circulation or 53% of Hong Kong dollar M3.

Gold futures on the COMEX Division of the New York Mercantile Exchange Monday extended rally and managed to stand above psychological mark 1,400 U.S. dollars, settling at all-time high 1403.2 dollars amid bullish sentiment.

Jingdu Tianhua takes over as Grant Thornton's HK member - Appointment heralds fresh start for united business operation - Grant Thornton International has appointed a new Hong Kong member firm after its existing operation in the city became embroiled in lawsuits related to its former missing boss Gabriel Ricardo Dias-Azedo. The new firm, Jingdu Tianhua Hong Kong, has been set up by Grant Thornton's mainland firm and is headed by Daniel Lin Ching-yee. It has five partners and 60 staff in Hong Kong and will work with the larger Grant Thornton operation in the mainland where it has 65 partners and 1,500 staff. The firm has applied to the Hong Kong Institute of Certified Public Accountants, the city's accountancy regulator, to adopt the Grant Thornton name some time next year. Grant Thornton is one of the world's leading networks of independently owned and managed accounting and consulting firms - The existing Grant Thornton's Hong Kong member firm will cease operation at the end of this year after an exodus of more than 600 accountants to rival BDO. Grant Thornton International global leadership board member Alex MacBeath denied its decision to cut links with the existing Hong Kong member firm was related to the lawsuits involving Azedo, but said it was a result of disagreement with the existing firm's partners on how to expand in the mainland. MacBeath said Grant Thornton International took the mainland market very seriously and wanted the Hong Kong member firm to work with Grant Thornton in China as a single unit. The Hong Kong partners had disagreed with that strategy. As a result, as at the end of September, Grant Thornton International notified the Hong Kong member firm to leave the global organisation by the end of March next year. That triggered the existing Grant Thornton Hong Kong chief executive Patrick Rozario to jump ship with 600 accountants, including 70 partners, to BDO, doubling Hong Kong BDO to 1,100 staff. Rozario also denied the closure of the Hong Kong office was related to the Azedo lawsuits.

Sino Land eyes up to US$534m placement - Builder cashing in on bullish stock market - Sino Land chairman Robert Ng Chee Siong is taking advantage of the market. Sino Land, the city's seventh-largest developer by market value, is planning to raise as much as US$534 million hot on the heels of a share placement by rival Hang Lung Properties (SEHK: 0101) last week. The developer plans to raise between US$518 million and US$534 million in a share sale at a 6.5 to 9.2 per cent discount to yesterday's closing price of HK$18.28, according to a term sheet. It is offering 242 million shares at HK$16.60 to HK$17.10 each. Goldman Sachs is the sole bookrunner of the sale. The amount is far below Hang Lung Properties' HK$10.9 billion share placement but, according to one analyst, could be followed by a later share sale. "They [the management of Sino Land] don't want to miss the chance of financing in a bull market," the analyst said. "So they will make a smaller placement first and then may follow up with another." He believes the proceeds will be used for land acquisitions to take advantage of the government's plan to release more sites for sale in the coming year. Sino Land acquired two development sites and a serviced apartment project so far this year. The sites could provide a total gross floor area of more than 1.6 million square feet. Sino Land has a land bank of 42 million sq ft. The developer said in its annual report that it would continue to selectively replenish its land bank in Hong Kong and the mainland. Last Thursday, Hang Lung Group (SEHK: 0010) unveiled its plans to raise up to HK$10.9 billion for its property arm Hang Lung Properties through a share placement. It said it would sell about 293.9 million shares in the developer and subscribe to an equal number of new ones. The placement represents 7.05 per cent of its existing issued share capital. The shares priced at a 6.8 to 8 per cent discount to the day's closing price. It was offering 269.4 million shares at HK$37.08 to HK$37.56 each. The proceeds will be earmarked for expansion on the mainland. The developer has six new commercial projects, which require more than HK$30 billion in investment. The analyst expects other developers such as Henderson Land Development (SEHK: 0012) and New World Development to seek capital through equity placements. "More developers will consider raising funds by share placement if the market is booming and share prices reached their target," the analyst said. Sino Land shares dropped 1.72 per cent to close at HK$18.28 yesterday.

Arts Festival stock keeps rising under steady hand - Charles Lee's business touch sees the show grow - Arts Festival chairman Charles Lee says he wants to give young artists the chance that he did not have. He asked for tickets, they gave him the show. Seven years ago, Executive Council member Charles Lee Yeh-kwong asked his friends if they had spare tickets to the Hong Kong Arts Festival. His friends, who happened to be festival executive committee members, said they did not but suggested a way that would in future save him the trouble of looking for tickets. "They said, 'Why don't you join us? That way you'll know of the programmes in advance and book the tickets in time'," Lee recalls. That was a fine idea, Lee thought, and subsequently became the Hong Kong Arts Festival Society chairman. The society, founded in 1973 and partly funded by the government, has been arranging the biggest cultural event in the city for the past four decades. It brings together local and international artists in more than 200 performances ranging from ballets, opera and drama to jazz and orchestra. Lee admits his own inclination to arts is limited, coming as he does from the cut-and-dried world of business.

Tears of happiness for chance to be donor - Hong Kong Customs inspector tells of 'indescribable' joy - Simon Hui appears before the media at Queen Mary Hospital yesterday to speak of his decision to donate part of his liver to save a fellow customs officer. Customs inspector Simon Hui Sai-man has spoken of his "indescribable happiness" after donating part of his liver to save the life of a critically injured colleague. Hui wept yesterday as he spoke publicly for the first time since the operation four days ago in which part of his organ was implanted in fellow officer Yuen Wai-cheung, who had been injured in the line of duty. "It is an amazing feeling when you see a person's life continue because of you," he said. "The happiness is indescribable." Hui, whose swift recovery after such a serious operation has astonished doctors, said he had been to see Yuen - whom he had not met before the surgery - and had agreed to meet later for a game of chess. "We had a simple conversation; Yuen thanked me and I cried as it was a touching moment," he said. Meanwhile, doctors said Yuen, who was in a coma before the operation, was still disorientated and had trouble believing he was alive. "Sometimes he thinks he is already dead and in hell and calls me or other medical staff Emperor of the Underworld," Professor Lo Chung-mau, head of the University of Hong Kong's liver transplant team, said. This was normal in people who had suffered such trauma and could last for days to two weeks. "We keep talking with him and repeatedly reminding him that he is alive in a hospital in Hong Kong," Lo said. Commissioner of Customs Richard Yuen Ming-fai, who met Yuen and Hui yesterday, said Yuen could remember a lot of things, such as the fact he was a customs officer and had been invited to participate in the customs chess competition in January. "I wished him to get well soon and to practise his chess skills during his recovery," the commissioner said. Hui said Yuen, whose liver was damaged when he fell against a fence while chasing a suspected cigarette smuggler, told him he wanted to recover as soon as possible. "I told him to be patient," Hui said. "We made a deal for a coming chess game." Commissioner Yuen said doctors had been astonished by the speed of Hui's recovery. "He opened his eyes the first day after the operation, got out of bed by himself on the second day, walked around on the third day, and asked to be discharged on the fourth day," the commissioner said. Hui attributed his recovery to his healthy lifestyle. He is a vegetarian who exercises regularly and does not drink nor smoke. Lo has said he could be discharged as early as today. "I really hope the public will understand the importance of their health and spend more time with their loved ones," Hui said. Hui, who made a split-second decision to make the donation after hearing an appeal, called for more people to donate organs after their death. "I hope my experience can deliver a positive message that we can help many people around us."

Secretary for Labor and Welfare Matthew Cheung Kin-chung on Monday denied putting pressure on restaurant chain Cafe de Coral to resolve a recent dispute over the minimum wage.

Scientists have turned the conventional idea of producing a vaccine on its head in their fight against Aids, a foremost researcher in the field said yesterday in Hong Kong. Instead of using a vaccine to induce the immune system to produce antibodies, Chinese-American Aids researcher David Ho Ta-yi said his team and other scientists are now trying to produce antibodies in the laboratory then inject them back into people. He said the treatment is still years away, but is more promising than trying to develop a vaccine. No effective vaccine against Aids has been found after 20 years of research, said Ho, who was speaking on the sidelines of a conference on public health and preventive medicine yesterday. The director of the Aaron Diamond AIDS Research Centre in the US called the new method a "substitute for vaccine". "What we are now talking about is a passive approach," he said "Instead of asking the body to make antibodies, we make the antibodies outside the body and give them to people, so hopefully the antibodies would stay around to protect them." Ho hopes the vaccine-substitute will be ready for human testing in the next few years. However, he said the method's effectiveness may be uncertain because the level of the ready-made antibodies could lower over time. As a result, people may need new injections from time to time. "The vaccine is far away too. Despite some 20 years of research, we don't have one and I see the problem as too enormous to have any kind soon, that is why I talk about a substitute for the vaccine instead of using a vaccine to actively induce the body to make antibodies." Dennis Lo Yuk-ming, chemical pathology professor of Chinese University, said he believed the vaccine-substitute idea was not new. Lo said the idea was similar to "passive immunisation'', where pre-made antibodies are injected into people to provide instant protection against diseases. An example is feeding breast milk to infants, which he described as a natural passive immunization when the mother's antibodies are passed on to their babies through the milk. Meanwhile, Ho said drug incompliance was another problem in the treatment of HIV patients and the spread of the virus. Non-compliance can increase drug resistance but many patients stop medication because they dislike taking so many drugs each day. Ho's team is working to produce more patient-friendly therapies, such as drugs that only need to be taken once a month. "We don't want to blame the patients. But we know that failure of the treatment is largely due to lack of complete adherence, but that is human nature," Ho said. Ho said Aids and HIV treatment had shown great improvement but more needed to be done. "We have been successful in treating patients to make them live longer or have a more normal life, we are winning there," he said. "But we are losing in terms of the spread of the virus. Now we don't have anything to slow down the spread except for education and changing people's behavior." Speaking at the same conference yesterday, Dr Leong Che-hung, chairman of Hong Kong Aids Foundation, said he also shared Ho's concern about a drastic rise in HIV infections among gays on the mainland. They believed the rise was caused by the internet bringing more gays together.

Hundreds of teachers, parents and students took to the streets of Central yesterday to protest against a government policy forcing schools to close because of falling rolls.

The 40-year-old customs officer, Simon Hui Sai-man, who donated part of his liver to his fellow colleague Yuen Wai-cheung last Thursday, was recovering well, a surgeon said on Monday. Head of the University of Hong Kong’s liver transplant team at Queen Mary Hospital Dr Lo Chung-mau said Hui could be discharged soon. “He can return to the Customs Department to do office work in about six to eight weeks. “Now, we are discussing whether it would be better for him to stay in hospital or return home to recover,” said Lo. Hui’s elder brother said his family supported his selflessness. “After he is discharged from hospital, he will stay with me. My wife will help take care of him,” he told local media. Hui, an inspector with the department’s airport command, donated part of his liver to 39-year-old customs officer Yuen Wai-cheung after he heard Yuen was in a critical condition after damaging his liver at work. The successful operation lasted 14 hours. Speaking to reporters, a smiling Hui, said he had recovered quickly because of his lifestyle. “I eat regularly and do not drink alcohol or smoke,” he told local media. Hui thanked Dr Lo, hospital staff and his family for their support. Asked why he donated part of his liver, Hui said he had always wanted to help others. “I hope this can send a positive message to Hongkongers about organ donation,” he added. Meanwhile, Lo said Yuen Wai-cheung’s condition was stable, but he was having trouble accepting what happened to him. Lo said the hospital would arrange a psychologist to counsel him.

SJM Holdings Ltd, Macau's largest casino operator said on Monday its third-quarter net profit rose six-fold, lifted by its strong position in Asia's biggest gambling centre.

How Hong Kong celebrity gravy train is gathering pace - Stars' wealth and careers flourish as luxury brands expand business across China - The next time you see the likes of Maggie Cheung Man-yuk or Carina Lau Kar-ling dressed to the nines and sitting in the front row at a fashion show for a European luxury brand in Shanghai or attending a glamorous party unveiling a watch or a car in Beijing, do not think that they are merely party animals craving publicity. They are in fact at work. The traditional game of celebrity endorsement has taken a new turn. These photogenic faces do not necessarily need to be so closely tied to a product or a brand that they have to be their official spokesman or spokeswoman. All they need to do nowadays is show up for events thrown by the brands and have fun - or, at least, act as if they are. The arrangement has been something of the norm in Hong Kong for a long time, but as international luxury brands become more eager to do business in the rest of China, more stars are being paid to party and they are earning more than just cash. While it may cost as much as HK$1million to attract an A-list star, celebrities may also receive gifts such as a range of the brand's products. Some events may have dozens of celebrities, from A-list to C-list. Brand consultants say celebrities are like shopping tour guides for mainland consumers, who are affluent but still new to the international world of luxury. To the stars, the brands offer an opportunity to boost their careers.

Miramar spending millions to tempt mainland taste buds - Hotel group planning to open 20 gourmet restaurants - Romain Chan plans to open 10 Cuisine Cuisine and 10 Tsui Hang Village restaurants on the mainland. He says the spending power of mainlanders cannot be underestimated. Miramar Group, the hotel flagship of Lee Shau-kee's Henderson Land Development (SEHK: 0012), plans to "export" its Cantonese gourmet restaurant brand across the border as a key part of an HK$940 million expansion plan over the next seven years. Cuisine Cuisine, the company's upmarket Cantonese restaurant at International Finance Centre in Central - dubbed "the canteen for senior government officials and corporate bigwigs" - will have its first outlet in Beijing by the middle of next year. That will be followed by a further nine openings at a total cost of HK$300 million on the mainland by 2017, general manager Romain Chan Wai-shing said in an interview. The company's other Cantonese restaurant icon, Tsui Hang Village, will also open in 10 cities over seven years, at a cost of HK$100 million, he said. Hong Kong-listed Miramar Hotel and Investment is a member of the Henderson Land Group, with a diversified business portfolio covering hotels and serviced apartments, property investment, food and beverage and travel services in Hong Kong, the mainland, and the United States. "Cuisine Cuisine and Tsui Hang Village are no strangers to solo travellers," Chan said. "Very often, we see a few solo travellers walk in Cuisine Cuisine with their shopping bags and walk out with a HK$100,000 bill for a dinner." A classic example of a lunch party, he said was a table of 10 mainland travellers dining at Cuisine Cuisine who washed down a menu of abalone and shark's fin soup with half a dozen bottles of Chateau Lafite Rothschild. "The red wine alone costs about HK$60,000," Chan said. "Their spending power can't be underestimated." Miramar's expansion plan cannot have come at a better time, with the central government's mission to drum up domestic consumption and develop the service sector as stipulated in the country's 12th five-year plan from 2011 to 2015. According to a research report from China Investment Consulting, sales of food and beverage on the mainland are forecast to jump 16.8 per cent to 1.8 trillion yuan in the next five years. From an industry perspective, said Chan, food and beverage operations generated a faster return and a stronger cash-flow than running hotels. The gross operating profit margin of hotels in Hong Kong typically averaged about 40 per cent, he said, compared to about 20 per cent in key cities across the border. The Cuisine Cuisine restaurant now planned for Beijing is expected to recover its HK$30 million investment cost in two years assuming 1,200 yuan spending per head and its positioning as a top-flight Cantonese restaurant in the capital. Asked if Beijing and Shanghai's property prices will erode the profitability of the group's planned restaurants, Chan said: "Many upmarket shopping malls knock on our door and offer favourable rentals. They are keen to have top Hong Kong brands." Profit at Miramar's seven restaurants in Hong Kong was expected to grow 20 per cent to HK$15 million this year, a marked improvement from last year when the market was still enveloped in the fallout from the global financial crisis. "In five to seven years, the profit contribution from food and beverage business is likely to be larger than that of our hotel business," he said. Chan said the proposed investments would be spread over the next seven years and would be funded by cash flow from operations and cash resources on hand. Some analysts said Miramar's decision to avoid head-on competition with other hoteliers and investment in food and beverage made business sense. Cities such as Shanghai and Beijing had been plagued by a glut of hotel rooms after foreign hoteliers poured into the market in the past few years, they said. In Hong Kong, Miramar plans to spend HK$20 million on a facelift for its two Tsui Hang Village restaurants in Central and Tsim Sha Tsui, in the second quarter of next year, Chan said. The company also plans to diversify into Italian food by opening a mid-market Italian restaurant in the Hong Kong Arts Centre in Wan Chai at a cost of HK$10 million next year. It will also join forces with Green House Foods of Japan to bring a chain of Saboten Tonkatsu fast-food restaurants to Hong Kong. Miramar plans to have 100 restaurants around Hong Kong in seven years at an investment cost of HK$300 million. Miramar will also set up a Japanese ramen-noodle restaurant chain in the city under a franchise with 100 outlets costing HK$200 million, Chan said.

BOC Aviation looking at HK yuan bonds for funds - Securitising an aircraft has been an efficient way to raise financing for it in the US, but it doesn't work in quite the same way elsewhere. Singapore-based aircraft leasing company BOC (SEHK: 3988) Aviation is looking at issuing offshore yuan bonds in Hong Kong, as well as bonds denominated in Hong Kong dollars and yen, according to chief executive Robert Martin. The bond issue would be part of a programme to fund a US$10 billion expansion plan for the next 10 years. The company plans to increase the proportion of bond issues in its financing mix to 30 per cent of total funding sources in the near future, compared with 10 per cent at present, said Martin. The balance of the funding will be supplied by its parent, Bank of China, and through syndicated loans from 43 banks. It has so far borrowed US$200 million from its parent this year, following on loans of US$100 million last year. "We really believe this decade will mark the period that the aviation bond market opens up," Martin said. A newly affluent class emerging throughout Asia over the past 10 years has created a large capital pool available for aircraft funding, he added, and BOC Aviation issued US$45 million worth of medium-term notes in Singapore this month which were well received and widely-distributed among private banks. The issue followed a successful financing exercise by Singapore Airlines, which issued S$50 million (HK$301.6 million) in bonds in September. There were the first corporate bonds to target retail investors in the city state, indicating that Asian investors were developing a taste for aviation bonds. Whether BOC Aviation can issue yuan bonds for the first time will depend critically on the depth and maturity of the currency swap market between yuan and US dollars, said Martin. Finding financing for aircraft can be difficult. In the United States, the stand-alone credit rating of many carriers is single B or below the investment grading threshold of BB. This forces them to issue bonds by securitising the aircraft they operate. Enhanced equipment trust certificates, a structured product involving securitisation, have been popular among US carriers for decades. Section 11-10 of the US bankruptcy code, the so-called Chapter 11, specifies the right of the investors to get hold of an airplane in 60 days once the airline is in default and unable to repay its debts. Airlines can get a higher credit rating by securitising their aircraft to raise cash and obtain a lower cost of funding. However, not many countries have such a solid bankruptcy code, making the certificates much less popular among carriers elsewhere. The Cape Town Treaty, named after the city in South Africa where it was agreed, came into existence to fill the void. The treaty creates an international registry of aircraft with their owners or lenders of securitised bonds, which works in the same manner as Chapter 11. At present, more than 30 countries, including the US, Ireland, China and the Philippines, have signed on to the treaty and agreed to adopt the protocol into their laws.

 China*: A turf war between two rival software giants has sparked privacy fears among the mainland's 420 million internet users, with each side accusing the other of stealing information from computers. Users face being forced to choose between the mainland's most popular free instant-messaging service or its most popular anti-virus software. On one side of the fight is Shenzhen-based Tencent, which runs the Tencent QQ instant-messaging service, with 600 million accounts. On the other is Beijing-based Qihoo, which makes 360 Safeguard antivirus software, with 300 million users. "It's an abduction of the social relationships of millions of users," said Wang Fengchang , founder of website Laweach, which champions internet users' rights. He said the reputations of both companies had been damaged. Hong Kong QQ users have also expressed concern, with one local expert saying the row has exposed a lack of awareness of privacy and consumers' rights among mainland program developers.

Cameron's trade team arrives in Beijing - British Prime Minister David Cameron arrives at Beijing Capital International Airport on Tuesday. British Prime Minister David Cameron arrived in China on Tuesday on a bid to win trade deals to boost his country's fragile economy – but differences over human rights issues could overshadow the trip. Cameron, accompanied by 43 bosses from some of Britain’s biggest companies plus four ministers, says he wants to take his country’s relationship with the world’s second-largest economy “to a new level” on the visit. In a comment piece published in the Wall Street Journal, Cameron said he expected to see “new contracts worth billions of dollars” signed during his two days in Beijing, which come ahead of the Group of 20 summit in Seoul. But his efforts to build lucrative ties with Beijing on his first official visit face being eclipsed by increasing calls for him to issue a stern rebuke to Premier Wen Jiabao and President Hu Jintao on their human rights record.

China, Russia and the European Union stepped up criticism on Federal Reserve's policy of printing dollars - US President Barack Obama defended the Federal Reserve's policy of printing dollars yesterday after China, Russia and the European Union stepped up criticism ahead of the Group of 20 meeting this week. The G20 summit to be held on Thursday and Friday has been pitched as a chance for leaders of the countries that account for 85 percent of world output to prevent a currency row escalating into a rush to protectionism that could imperil the global recovery. But there is little sign of consensus. The summit has been overshadowed by disagreements over the US Federal Reserve's quantitative easing policy under which it will print money to buy US$600 billion (HK$4.68 trillion) of government bonds. "I will say that the Fed's mandate, my mandate, is to grow our economy. And that's not just good for the United States, that's good for the world as a whole," Obama said on a trip to India. Resentment abroad stems from worry that Fed pump-priming will hasten the US dollar's slide and cause their currencies to shoot up in value, setting the stage for asset bubbles and making a future burst of inflation more likely. The head of the group of eurozone finance ministers, Jean-Claude Juncker, said the dollar was undervalued and that the US Fed's stimulus package presented "risks" for the world at large. Speaking to a European parliament committee, Juncker said "the dollar in relation to the euro is not at the level it should be." China feels the US did not recognize its responsibility to stabilize global markets and did not think about the impact of excessive liquidity on emerging markets, Vice Finance Minister Zhu Guangyao said. Russia said actions such as QE2 should be taken after consulting other nations. Meanwhile World Bank president Robert Zoellick yesterday urged leading economies to consider adopting a modified global gold standard to guide currency rates as the precious metal hit a new record high of US$1,398.35 (HK$10,907.13) an ounce. Writing in the Financial Times, Zoellick called for a "Bretton Woods II" system of floating currencies as a successor to the Bretton Woods fixed-exchange rate regime of the 1970s.

Chinese fans take loss to Japan sitting down - Flanked by police, disappointed Chinese fans watch their side go down to bitter rivals Japan in Guangzhou. The game passed off without any crowd trouble. Security was tight inside and outside Guangzhou's Tianhe Sports Center Monday night as bitter rivals China and Japan met in an Asian Games soccer match. However, the game passed peacefully, despite the hosts losing 3-0.

J-10 jet fighters of Bayi Aerobatic Team arrive in S China - Seven new J-10 jet fighters of Bayi Aerobatic Team arrived in Zhuhai, and they would make their debut in the 8th China International Aviation & Aerospace Exhibition.

Guangzhou shines for Asian Games - Light shoots out from the Liede Bridge into the night sky, illuminating Guangzhou, the host city of 16th Asian Games on Nov 7, 2010. Dazzling light displays for the upcoming Asian Games have been installed in some public places and high-rise buildings in Guangzhou to make the city more charming for the games.

China ratcheted up pressure on Washington over the US Fed's latest moves to lift its economy by printing more money, with a vice finance minister saying resulting hot money in-flows were a shock to global markets. In the run-up to this week’s G20 and APEC meetings, a number of leading economies have warned against the Federal Reserve’s decision last week to inject an extra US$600 billion into the US banking system. “As a major reserve currency issuer, for the United States to launch a second round of quantitative easing at this time, we feel that it did not recognise its responsibility to stabilise global markets and did not think about the impact of excessive liquidity on emerging markets,” Chinese Vice Finance Minister Zhu Guangyao said at a briefing on Monday. Zhu said that China plans “frank discussions” with the United States over its money printing plans. China and the United States had turned down the heat in the acrimonious dispute over currencies and trade imbalances at a meeting of finance ministers from the 21-member Asia-Pacific Economic Co-operation (APEC) forum over the weekend. But Zhu said on Monday that the Fed’s quantitative easing was a poor decision. He said the United States must recognise its role and responsibility in the global economy. A leading Chinese newspaper warned on Monday that Washington’s actions were a form of indirect currency manipulation that could lead to a new round of currency wars and even global economic collapse. For his part, Federal Reserve Chairman Ben Bernanke in recent days has been defending the bond-buying, saying the measures to help restore a strong US economy were critical for global financial stability. Despite the heated rhetoric aimed at US economic policymakers, Zhu predicted on Monday that the G20 meeting would send a positive signal to global markets. “We, including the Federal Reserve, will strengthen coordination of and communication about macroeconomic policies and monetary policies.” He said the current global situation was different from that at the height of the global financial crisis. “Financial markets do not lack capital, but the capital lacks confidence in the real economy,” he said.

Hu wraps up Portugal trip with offer to help fight crisis - President Hu Jintao exchanges toasts with Portuguese President Cavaco Silva during dinner at the Ajuda Palace in Lisbon. President Hu Jintao prepared to wrap up a visit to Portugal yesterday with pledges to support its battered economy, but he did not commit to buying Portuguese debt as was widely anticipated. Hu and Portuguese Prime Minister Jose Socrates signed a series of trade deals after holding talks, but there was no announcement of Beijing's willingness to buy Portuguese debt, as it did last month for Greece. "We are ready to support through concrete measures Portugal's efforts to reduce the impact of the international crisis," Hu said at a joint news conference. He also repeated a pledge made on Saturday to see a doubling of bilateral trade by 2015. Portuguese lenders Millennium BCP and BPI signed deals with Bank of China to identify investment opportunities in the world's second-largest economy, the Portuguese government said. Energy firm EDP signed a deal with China Power International (SEHK: 2380) (CPI) with a focus on renewable energy and co-operation in Europe, Africa and Brazil, the government said. The deal also paved the way for CPI to take a stake in EDP. The Portuguese government is keen to reduce its 25 per cent holding as it seeks to reduce national debt. The two countries announced the signing of further agreements in tourism, telecommunications and education, but no specific investment figures were released. "These agreements represent a bet on the economic relations of the two countries," Socrates said. Portuguese debt has been buffeted on international markets despite the parliament approving swingeing budget cuts of €5 billion (HK$54.67 billion) last week. The yield on benchmark 10-year bonds rose to a record 6.439 per cent on Thursday. Portugal ranks 77th on the list of China's suppliers, with goods worth €222 million exported last year, and imports worth €1.1 billion. Earlier, Hu said China wanted to strengthen co-operation with Portugal on international issues such as reform of the United Nations. "Thus we will be able to consolidate our consultations on global themes and common international interest, such as the resumption of world economic growth, the reform of the United Nations and climate change," he said. He was speaking at a joint press conference with President Anibal Cavaco Silva, who said the election of Portugal to one of the non-permanent seats on the Security Council opened "new possibilities of deepened dialogue between the two countries". Hu arrived in Lisbon on Saturday with his wife Liu Yongqing, members of the Chinese government and about 50 business leaders. He flew from France, where Chinese officials had signed more than US$20 billion in contracts. The authorities denied a request from Amnesty International to hold a protest outside Lisbon's presidential palace during Hu's visit. The city government said the demonstration would clash with one by Portuguese and Chinese businessmen that had already been approved, according to state news agency Lusa. But about 20 people gathered near the venue, holding up photographs of what they said were the victims of human rights abuses in China.

The Shanghai government has granted trading licenses to shipbrokers Braemar Shipping, Clarkson, and at least three other foreign firms, allowing them to trade in the local currency for the first time, Braemar's chief executive said on Monday. Shanghai, which surpassed Singapore as the world’s busiest port, invited the global trading firms to form Chinese subsidiaries in an effort to drive out fraudulent shipbrokers and bolster the city’s reputation internationally. With the United States and Europe still in a fragile economic state, China is expected to be the main driver for seaborne trade next year, importing vast amounts of oil, iron ore, coal and grains. “The Shanghai government has approached a limited number of brokers – some international, some local – to grant them a license to create a fully-Chinese company,” Alan Marsh, the head of one of the world’s top 5 shipbrokers, told reporters ahead of an industry conference. “As we understand it, there was a concern in China that there were a lot of bogus brokers.” International shipbrokers Simpson Spence & Young (SSY) and Barry Rogliano Salles (BRS) were also believed to have received licenses, along with three Chinese companies. Foreign shipbrokers have operated in China for years, but only as representatives of domestic companies and could not trade in yuan. Shanghai has provided few details on how the new firms would operate or be regulated. “The initiative has come from the Shanghai government, not from the broking side. We do not know exactly what the implications are,” said the 61-year-old, adding he expected to get a fuller picture in three or four months. China represents more than 10 per cent of Braemar’s worldwide business and was expected to grow by 60 per cent annually. Marsh believed next year profits at the British firm would remain near this year’s level despite a distressed global tanker and dry bulk market that have been plagued by an oversupply of vessels. The British firm last month reported first-half pretax profit of 7.2 million pounds (US$11.3 million) compared with 7 million pounds a year ago. “We expect our income will be the same if not better, but we are going to have to fix more ships to establish that,” he said. Braemar was also “investigating” a dual listing in Singapore, Hong Kong or Shanghai, reflecting its growing business in the region, but a final decision was still far off, Marsh said.

The lessons that China can learn from Japan - Chinese global brands 10 years off: ex-Sony chief - When asked to comment on China overtaking Japan to become the world's second largest economy, Nobuyuki Idei, Sony's former chairman and now head of his own Tokyo-based consultancy, was cool: "No one should be surprised." Already on his sixth trip to China this year, Idei knows the country very well. "Up to now, Japan can be seen as a mirror of whatever happens here. The Chinese will go through what the Japanese went through 20 to 30 years before them, in our learning of industry and globalisation," he said. "China's catch-up, especially in size and in quantity, is what Japanese businesspeople have anticipated for some time," Idei said. Nor should it be interpreted as an unhappy turn of events. Japan does not compete with China on size or on quantity, he said. China's course of progress would inevitably generate more opportunities for the two economies to work together. Economists say that this year, China's GDP will probably be around US$5.3 trillion, compared with a US figure of US$14 trillion and Japan's US$5.1 trillion. Last year China recorded a GDP of US$4.9 trillion, according to IMF figures. But with its immense economic power, isn't it time for some Chinese companies to grow into powerful brand names? Some Western management consultants have been asking this for a couple of years. For instance, where is the Chinese Sony? "Not yet," Idei said, in a matter-of-fact way, adding that in the future, there should be some Chinese companies like Sony and Samsung - built on an international structure and owning international brands. However, the reality was because China had such a large domestic market, which was still a long way from mature or fully exploited, most Chinese companies did not feel the pressure for overseas expansion. At the same time, Idei pointed out: "Unprepared overseas ventures might even cost a company its domestic market share." So the priority for most Chinese companies was still to focus on the domestic market, before they could leverage their home-base success globally. This being the case, people would still have to wait for another 10 years or so before they could see some Chinese global brands. In car manufacturing, for instance, China was still going through growth stages similar to those in the US in the 1930s and Japan in the 1970s and 80s. "The same is true for Baidu.com," Idei said, referring to the Chinese search engine company in which he is a member of the board of directors. Baidu's organisation is fairly complex - registered in Hong Kong, listed on Nasdaq and recently beginning its operations in Japan - and stands a good chance of becoming more internationalised. But the domestic market that Baidu is facing is all the same; immensely large and still immature in some ways. Idei is regarded by younger business people in Japan and in Asia as a kind of visionary guru, who has been busy helping them with new ideas and new connections since he retired from Sony and founded his own management consultancy, Quantum Leaps. Part of what his company does is to gather business leaders and intellectuals from Asian countries to discuss their future economic relations. Although there is no mistake in saying that China is following Japan's footsteps in industrialisation, the country also has some special features that outsiders do not easily fully appreciate. Being large is one, and having a tremendous amount of poverty is the other. And "you see it once you drive just a little farther away from Beijing and Shanghai". Idei said poverty in China was also reflective of the dichotomy throughout Asia, which remained the homeland of the largest group of poor people in the world despite recent impressive developments. China's further industrialisation and urbanisation would yield almost a natural demand for improvement in health care systems, in efficient energy use, in financial services and in applications in agricultural and bio-science. These could be new areas of business collaboration between the two countries, he said. But can China, which has been going through many similar developmental experiences as Japan, avoid making the mistakes that Japan made in the 1930s and 1940s - especially when it is fairly strong in size and quantity, and at times seen by the outside world as being assertive? Idei was quick to use a triangle metaphor to explain his approach: Back in the 1930s, the balance of the "Japanese triangle," joined by the government, bureaucrats and the military, was broken when the military became predominant and out of control. Similarly, there is also a "Chinese triangle", made up by the Communist Party, bureaucrats and the military. Viewing the country this way, "you can see for yourself how the component factors change in their weight and proportion," he said. Besides, Idei stressed, one important thing to remember was that "time is different". Imperialism was no longer the game in the world. People knew better nowadays what the real challenge for the future was and quibbling about trade disputes, border issues, and political trivialities yielded no real help. "Think about the many poor people in Asia, how can their problems be solved without nations across the region forging stronger collaboration?" he asked. Thanks to China's participation, Asian economies were already working together more closely in recent years. Yet this was only the beginning, and much more could be done in developing the regional market and business network. "So I have great hope in Asia's future," Idei said.

Defiant supporters turn up for activist's feast of river crabs - The crab feast was supposed to have been cancelled but the diners came anyway, and they were not denied the chance to crack some claws. Artist and activist Ai Weiwei may have been placed under house arrest, but the feast he threw to mock the authorities' censorship rules went ahead regardless. About 600 of his online followers flocked to his soon-to-be-demolished studio in Shanghai. Ai said from his Beijing home he was overwhelmed by the response, which he described as a "strong signal" that ordinary people were willing to stand up for their rights. "We never expected that many," he said. "After we announced it was cancelled, I thought maybe just 50 people would still come. But some people said it is not our building any more, it's a building for the `grass mud horses'. "Young people showed the world that they are not going to be intimidated. They showed they can still enjoy the sunshine and listen to music without being afraid." The term "grass mud horse" is used to refer to rights activists. It is a homophone in Putonghua for a strong swear word invented to counterbalance the "river crab" - itself a homophone for "harmony", one of the government's favourite terms used to discourage dissent. Those crabs were served yesterday in a symbolic defiance of government controls. "Harmonious society, eat river crabs," the diners chanted as the crabs were dished out - one of the few moments when the carnival atmosphere took on a more political feel. Organisers, who were worried about the prospect of police breaking up their "illegal gathering", said they had earlier cancelled their plans, yet the 600 came. "We are sure we have enough crabs for everyone," one kitchen hand said as he loaded crabs on his wok. Ai's huge studio home, built of red brick and concrete in the traditional courtyard style, was overrun by supporters from across the country. "As soon as I heard about this event I knew I had to come," said one youth who flew in from Shenzhen. "I think this gathering is the most meaningful thing we can do. "We don't need slogans or labels. The fact so many people came will make others ask what inspired us. People in this country don't ask enough questions, but I think this is a start." Ai announced on Twitter he planned to treat "mud grass horses" to a dinner of 10,000 river crabs to mark the demolition of the studio. He said he was told by officials to demolish the US$1.1 million building because it was an illegal structure, even though it was built at the district government's invitation. "They offered me compensation if I kept quiet, but I told them this is not about money," he said. Ai had planned to attend the function, but police placed him under house arrest in his Beijing home on Friday. He was expecting the restrictions to be lifted at midnight yesterday.

November 9, 2010

Hong Kong*: Fast-food chain Cafe de Coral (SEHK: 0341) ditched a plan to deprive staff of paid meal times, heading off a major boycott of its restaurants. Trade unions hailed yesterday's turnaround as a victory after weeks of protests and pledged to continue monitoring other enterprises. The fast-food giant had originally offered to raise hourly pay for its 3,000 frontline staff in line with the implementation of the minimum wage law, but it cancelled paid lunch breaks, resulting in lower pay in some cases. Despite later promising that no wages would be reduced as a result, it came under intense pressure from unions and internet users over the week, bashing what opponents of the move said was the exploitation of "legal loopholes". The company said it took the decision to drop the plan to "alleviate public doubt" and "for the purpose of social harmony". "Although acceptance of such an offer has been duly signed off by most of the employees, the group acknowledges that certain organizations and members of the public have viewed the matter to the contrary," a spokesman said. "To alleviate public doubt and for the purpose of social harmony, the group decided the above-mentioned arrangement of excluding the meal time from the normal working hours is to be withdrawn with immediate effect." Last month Cafe de Coral offered its staff a rise of between HK$2 and HK$3.50 in their hourly rates of HK$22 to HK$25, on condition that they forfeited their right to up to 45 minutes of paid meal break a day. The pay rise would remain intact. Under the new plan a staff member would make about HK$500 more a month, instead of losing HK$16. Labor minister Matthew Cheung Kin-chung welcomed the move. "It's good for enterprises to be more mindful of employees' well-being which will help foster harmonious labour relations," he said. Suzanne Wu Sui-shan of the Catering and Hotels Industries Employees' General Union, said a planned boycott of Cafe De Coral restaurants would be cancelled. "It's the first victory won by trade unions since the minimum wage law was passed. It's only a start. We'll continue to monitor other enterprises and defend workers' rights." Tommy Cheung Yu-yan, lawmaker for the catering sector, urged the public to understand the impact of the minimum wage. He said if the minimum wage was set at HK$28, at least 30 per cent of employees in the industry - 62,400 people - would have a pay rise, which would place a heavy burden on bosses.

Cleaner harbor raises hopes for Hong Kong cross Harbor swim - Jumping into the harbour was not considered a hazardous activity in 1976, as these cross-harbor swimmers demonstrate. But two years later the event was cancelled because the water was so foul. Now momentum is gathering for the race to resume as efforts to clean the harbor start to take effect. In his teens, Ronnie Wong Man-chiu took part in the annual cross-harbor swimming race and won it for three consecutive years. But then the water got so dirty that the famous race was stopped in 1978. Now Wong, secretary of the Hong Kong Amateur Swimming Association, is bidding to revive the event and has targeted next year as the date to dive back into the harbor as it coincides with the 60th anniversary of the Sports Federation and Olympic Committee of Hong Kong. "We are very hopeful we will get the approval from all the government departments concerned to restart this great event which will be popular not only with the locals but also with swimmers from overseas," Wong said. The Environmental Protection Department (EPD), which has started the process of cleaning the harbor, had originally told the swimming association that the water would be clean by 2013. But Wong is hopeful that recent studies which have shown the water in the east of the harbor was clean would clear the way for permission to stage the race next October. "We have been talking to the EPD and trying to apply for a permit to swim across the harbor for the past five or six years and they have always said the water was not good," Wong said. "But now they say it is getting better, especially in the east of the harbor, and have asked us to present them with a plan which will have to involve a route, a date for the race as well as getting an independent study from the medical sector as to what impact swallowing water will have on a swimmer." The EPD confirmed that many parties had expressed an interest in holding the cross-harbor swimming event. They warned that based on the water quality monitoring results obtained last year, the E coli levels in the harbor near Central and Wan Chai remain relatively high. However, this did not necessarily mean that the event could not take place. "All parties interested in holding the cross-harbor swimming event will need to consider factors such as the nature of the competition or event, the health and fitness of the participants, the location and alignment of the swim course, the time required to complete the event, the seasonal and spatial variations of water quality in Victoria Harbor, and other related marine traffic and safety issues," an EPD spokesman said. According to Wong, other key departments have backed the move to bring the race forward from 2013 when the treatment and cleaning of the harbor is expected to finish. "The Marine Department, the police and the LCSD [Leisure and Cultural Services Department] all support us. I think it is very feasible. I'm pretty confident we will get the green light after having also spoken to the EPD and reading the latest figures for the water quality in the harbor," Wong said. With the eastern side of the harbor already cleaner, the swimming association has targeted a start at Hung Hom and finish at North Point - a far cry from the 1960s when the race began near the old Kowloon station on the pier used by the post office (where the clock tower is presently) and ended at Queen's Pier. "It was a distance of 1,650 yards or 1.5 kilometers. I won the race in 1968, 1969 and 1970," Wong recalled. "But if we revive the race, it will be over a longer distance, at least three kilometers. "It will be a huge draw, and will be a big tourist attraction. This will also encourage more people to take up swimming."

New York mayor Michael Bloomberg (center left) is escorted by security guards through Wan Chai after a climate-change workshop at the Convention and Exhibition Centre.

PLA to join Oxfam race despite Beijing attack on charity - The PLA team at the Oxfam Trailwalker finish line in Yuen Long last year. Nine months after Beijing looked to have locally-based charity Oxfam blacklisted by saying it had "ulterior motives", the People's Liberation Army has decided to support its work by taking part in its fund-raising Trailwalker event in two weeks time. But in joining the gruelling cross-mountain race for the second time, the Hong Kong garrison, which swept the first two places in last year's race in controversial fashion, will have to consider the organiser's advice to keep its support team small. The PLA team's victory last year was tainted by accusations of questionable tactics after they used a support crew of more than 50 people, drawing complaints from some competing teams. Two teams of four soldiers will be among the record-breaking 1,150 participating teams, comprising 4,600 walkers, tackling the 100km-MacLehose Trail from Sai Kung to Yuen Long. The annual event, which raises money for Oxfam's poverty-alleviation and emergency-relief projects in Asia and Africa, was first held in 1986. The charity, which has been active in launching projects on the mainland, suffered a blow earlier this year when it had to suspend a training programme for university-student volunteers after a row. A notice, attributed to the Communist Party office of the Ministry of Education and appearing on the websites of several mainland universities in February, labelled the group "a non-governmental organisation that has been trying hard to infiltrate China" and said "its head is a key member of the opposition camp". It was later removed from the websites. Dr Lo Chi-kin, chairman of Oxfam Hong Kong and a Democratic Party member, said Oxfam sought clarification about the notice but had not obtained any official response. But he believed the incident had not affected the relationship between the organisation and official mainland bodies such as the PLA. "Three days after the SCMP reported on the notice, the PLA still attended the Trailwalker award presentation ceremony," he said, welcoming the PLA's continued participation in the event this year. Oxfam event manager Brenda Wong Yuk-han said it extended an invitation to the garrison in May or June, but received a reply only about a month ago, after the open registration period had passed. After last year's race, runners and support runners for the teams which came fourth and sixth complained that the PLA teams used an excessive number of support runners to join the route at intervals, and give out food and water at checkpoints. This was compared to the Gurkhas - the dominant participants in the past, who used only two or three support runners. They did not join the event last year and are not competing this year. The Salomon Gatorade Racing team looks to be the PLA's biggest rival for the title and is made up of two members who complained about the PLA's antics last year: Michael Maddess and Jeremy Ritcey. "It wouldn't surprise me if the PLA has been training harder to put aside any negative news from last year," Maddess said. "There are some great support runners who are very good at getting out of the way, but tensions do rise when you're on a one-metre-wide technical trail. Support runners can put you off your stride when trying to get around people not even in the race. "It's a grey area that many of the top teams take advantage of now to be competitive." Maddess said that "Oxfam is in a difficult situation, as they're trying to keep all happy and focus on fund-raising", but that the Super Trailwalker teams were getting more competitive every year. The PLA said their eight participants would use their spare time this week to improve their endurance training and study the rules in the run-up to the race. "The force will continue to follow rules laid down by the organiser strictly," the PLA said. "Participation in the event and friendship are more important than winning the challenge." Oxfam said it had called on participants to keep the size of their support crews down. "We found that support teams had not caused real obstruction to participating teams. But in view of the opinions raised last year, we have still asked participating teams, especially the strong ones, to arrange support teams of appropriate sizes," Wong said. But she said the organizer would not cap the number of support runners for each team. "It is difficult to impose such a restriction. The MacLehose Trail is a public space and everyone can go there."

The Hong Kong Tourism Board's sacking of 17 people and outsourcing of their work to save HK$2 million has raised questions about future quality control of the outsourced work. The board's Quality Tourism Services, an accreditation scheme that awards shops, restaurants and hotels marks of quality if they pass an assessment, has been outsourced to two other bodies. One of the sacked employees, who refused to disclose his identity, said he wanted to sue the board even though it had given all the employees compensation in accordance with the labour laws. "We all devoted ourselves wholeheartedly to the board, but it just fired us suddenly. It is really cruel," he said. A tourism board spokeswoman said the decision was made as a result of "a regular review of our organisational structure and to maximise resources". By outsourcing the department, the board can save HK$2 million a year for extra marketing work for the city, she added. She said the assessment work was outsourced to the Productivity Council while the work to engage merchants to offer discounts for tourists was outsourced to a company called AQ Communications. Lawmaker Lee Cheuk-yan said it was strange for the board, a government-subvented body founded in 2001, to outsource the assessment work to the Productivity Council, which is also a public sector organisation. "The board's staff members are all experienced in accreditation, but now it is outsourcing the work to somewhere else. I really question about the quality of the assessment now," he said. "It just cannot sacrifice quality for money." But the spokeswoman said there were still five staff members left in the department to monitor the quality of the outsourced work.

Fed's 600 billion QE2, a dangerous and unnecessary step: Leo Melamed, the founder of financial futures - Leo Melamed, the founder of financial futures, has labeled the U.S. Federal Reserves' second round of quantitative easing not only dangerous but unnecessary. The Federal Reserve announced Wednesday it would buy another 600 billion dollars worth of U.S. Treasury securities to revive the sputtering U.S. economy. "The U.S. Federal Reserve is taking a very dangerous and unnecessary step by undertaking a second round of quantitative easing policy," Melamed told Xinhua reporter in an exclusive interview here Friday. "We have certain opinions as market participants. I think the Fed is taking a very dangerous step, because it's not clear that the QE2 is necessary, and it's also not clear whether it can achieve the purpose Fed intends," said Melamed, currently chairman emeritus of CME Group and CEO of global consulting enterprise Melamed & Associates, Inc. "We already had a good deal of quantitative easing in the U.S, and so far it hasn't done any restructuring of the market. In terms of strength of the economy, our economy has not rebounded, so why would it be necessary to do it again, when the first round isn't helping. We should give it more time before we do anything else," he said. Melamed warned it was a very dangerous move the Fed was undertaking. The danger was that it might not work to rejuvenate the economy but would create a falling dollar, which was not helpful for the economy and eventually would create an inflationary environment in the United States.

 China*: China promoted to third in IMF's big league - The International Monetary Fund board has agreed to boost the voting power of big emerging economies and make China the third leading voice in the global lender. IMF managing director Dominique Strauss-Kahn said: "This historic agreement is the most fundamental governance overhaul in the fund's 65-year history and the biggest ever shift of influence in favor of emerging markets and developing countries to recognise their growing role in the global economy." Under the deal, first clinched by finance ministers of the Group of 20 leading economies in South Korea last month, 6 per cent of IMF voting shares will be transferred to "dynamic" emerging market countries from industrial economies. The move would vault China over Germany, France and Britain into third spot behind the United States and Japan. It would also lift other large emerging powers India, Brazil and Russia into the top 10 of the 187-member institution. Strauss-Kahn said having a bigger say in the IMF came with greater responsibility in the global economy and China recognised that. "I think [IMF reforms] may have an influence on the behaviour of the Chinese authorities. They were willing to have this position, they were willing to be better represented in the IMF, which shows they do care about multilateral institutions," he said. "I expect they will behave, or have in mind the importance of their role." Yi Xianrong , an economist from China Academy of Social Sciences, believes China should participate in more international issues, co-operate with the United States and take part in the negotiations and drafts of decisions. Emerging economies have gained more clout in the IMF over the past five years, but Friday's shift is by far the most significant, amounting to an overhaul of the global economic order established when the IMF was set up after the second world war. Independent economist Ye Tan said although the rudimentary format remains untouched, "there will be more balance between China and the European countries". The move doubles IMF member quotas, or subscriptions, boosting the lender's resources by about US$755.7 billion at current rates. The IMF board's approval came before next week's G20 summit in South Korea. IMF member countries will vote on the reforms in the coming weeks, with 85 per cent of support needed for the changes to pass.

Banks running out of cash as economy soars - The mainland's biggest banks will have a massive need to raise funds in the next couple of years, says a top official with Central Huijin Investment, the major shareholder of state banks. As the economy grew and money deposits expanded, banks would have to lend out the money, which would generate a need to replenish capital, Li Jiange , vice-chairman of Central Huijin, told an economic forum yesterday. The company is a subsidiary of the national sovereign wealth fund, China Investment Corp. The five largest mainland banks have announced plans to raise about US$63 billion this year after a lending binge last year weakened their finance sheets and prompted regulators to raise capital adequacy requirement to cushion default risk. The massive fund-raising plans have dampened market sentiment since the start of this year. Many analysts have issued reports saying the banks were undervalued based on the handsome profits they made this year. However, the stocks still lagged behind in the A-share market. "The current size of the fund-raising has not met the level required by the real economy, because of a lending budget control in place," Li said. Mainland banks extended an unprecedented 9.6 trillion yuan (HK$11.2 trillion) in new loans last year to finance the nation's stimulus projects. In an attempt to curb inflation, the central authorities set a lower target of 7.5 trillion yuan this year. "If banks are allowed to extend as many loans as there is demand, banks can expand their assets and thus generate more demand for capital," he said. The combined profits of 16 listed banks totalled 524.8 billion yuan on widened net interest margins in the first three quarters, one-third higher than a year ago. Mainland banks rely on a homogeneous model - making profits mainly from the spread between stipulated deposit and lending rates under the domestic-administered interest rate regime. Hu Huaibang , chairman of the Bank of Communications (SEHK: 3328), said at the forum that mainland banks should focus on the domestic market before expanding overseas. "China's market is so big; if you just focus on the overseas market, foreign banks will come to China, so there needs to be a balance," Hu said. However, it was a good chance for mainland banks to venture overseas to "set up offices, co-operate with strategic investors or make mergers and acquisitions" while their foreign counterparts were de-leveraging after the financial crisis, he said.

Sanya awarded as one of "2010 China's Best Leisure Cities" - Sanya, a famous international tourist destination in south China's Hainan Province, was awarded as one of the "2010 China's Best Leisure Cities" on Saturday.

Replenishment training for China's naval escort flotilla - Chinese naval depot ship "Qiandaohu" pipes fuel to "Xuzhou" missile frigate during a replenishment training for China's seventh naval escort flotilla.

China, Portugal to boost bilateral ties - China's President Hu Jintao walks with his Portuguese counterpart Anibal Cavaco Silva as they review the honor guard at Belem presidential palace in Lisbon November 6, 2010. Visiting Chinese President Hu Jintao and his Portuguese counterpart, Anibal Cavaco Silva, agreed on Saturday to further deepen the comprehensive strategic partnership between their countries. Both China and Portugal boast ancient civilizations and have made great contributions to human progress, Hu said during a meeting here with Silva, noting that the smooth settlement of the Macao issue has set an example for other nations to tackle outstanding historical disputes. The two countries suffer no conflict of fundamental interests, their peoples cherish friendly feelings toward each other, and their relations have been growing steadily, he added. Development of bilateral ties since Beijing and Lisbon established diplomatic relations 31 years ago has demonstrated that the two sides should treat their relationship from a strategic and long-term perspective and stick firmly to the right direction for its further advancement, Hu said. Both countries should also understand and support each other's major concerns and enhance mutual political trust, while further expanding practical cooperation in various fields on the basis of mutual benefit and win-win progress to consolidate the foundation of their relations, he added. The Chinese side, Hu stressed, appreciates Portugal's adherence to the one China policy and its efforts to promote relations between China and the European Union (EU). Silva, for his part, welcomed Hu's visit, and hailed the time-honored ties between Portugal and China, which he said were based on mutual respect. The successful settlement of the Macao issue has created favorable environment for Macao's social and economic development, he said. Macao has since served as a bridge between China and Portugal as well as other Portuguese-speaking countries, and the forthcoming third ministerial conference of the Forum for Economic and Commercial Cooperation between China and the Portuguese-speaking Countries in Macao is a proof of that, said Silva. Looking at the future, Hu said that against the backdrop of a complex and volatile international situation, China and Portugal need to make concerted efforts to further boost their five-year-old comprehensive strategic partnership to better benefit their peoples. In a four-point proposal, Hu expects the two sides to strengthen mutual political trust and strategic cooperation by bolstering high-level exchanges and broadening communication between governments, legislatures and political parties of the two countries. Meanwhile, China is confident that Portugal will continue to play an active and important role in securing a healthy and steady development of China-EU relations, he said. he called upon the two sides to shore up economic cooperation and try to double bilateral trade by 2015. He said China is ready to explore with Lisbon ways to upgrade China's economic and trade cooperation with other Portuguese-speaking nations. Next on Hu's priorities list is that the two sides should step up people-to-people exchanges and further deepen the friendship between the Chinese and Portuguese peoples. The two sides should make full use of their rich cultural resources to carry out diverse cultural exchange programs so as to bring China-Portugal friendship closer to the publics of the two countries, he said. The Chinese president also proposed that Beijing and Lisbon beef up cooperation on international affairs and jointly contribute to the construction of a harmonious world. China values Portugal's important influence on regional and global issues, and is ready to conduct better communication and coordination with Portugal on economic recovery, UN reform, climate change and other matters in order to jointly promote world peace and development, Hu said. Silva agreed with Hu's proposals, calling the establishment of the comprehensive strategic partnership between the two countries in 2005 a milestone in Portugal-China relations. Currently, the strategic mutual trust between the two countries has been deepening, and their trade and economic cooperation are developing smoothly, Silva said, adding that he wishes both sides to further achieve the potential to enhance trade and investment with each other, and expand pragmatic cooperation in various fields. Portugal is willing to conduct mutually beneficial cooperation with China as well as with any third party, Silva said. Silva hailed China's vigorous economic development and its successful holding of the 2010 Shanghai Expo. He also spoke highly of China's crucial role in boosting world peace and development, and its contribution in fighting the global financial crisis and promoting the recovery of the world economy. Portugal expects to see China play a more important role in such issues as the reform of the international monetary system and climate change, he said. Portugal, taking advantage of its recent election as a non-permanent member of the United Nations Security Council, is willing to strengthen cooperation and coordination with China in coping with global challenges, said Silva, who also pledged his country's efforts to boost relations between Europe and China. Portugal won a seat of the UN Security Council last month, and will join Colombia, Germany, India and South Africa to serve two-year terms on the most powerful UN body starting January 1. The Portuguese leader said that President Hu's ongoing visit is of great importance, and will surely push ahead cooperation between the two countries in a variety of fields and turn a new page of bilateral ties. Hu arrived here Saturday after a three-day state visit to France. He is also expected to hold talks with Portuguese Prime Minister Jose Socrates and other senior officials. Hu is scheduled to head back for China on Sunday.

November 8, 2010

Hong Kong*: HSBC says credit quality is on the rise - Bad loan charges at lowest level since 2007 - HSBC (SEHK: 0005) said at a third-quarter business briefing yesterday that credit quality has recovered to pre-financial crisis levels, as loan impairment charges for the quarter reached their lowest level since 2007. But it warned that the world was not out of the woods yet. "Our latest data from emerging markets points to a slowdown in the rate of recovery and the likelihood of some bumps in the road ahead," said HSBC chief executive Michael Geoghegan, who is stepping down at the end of the year. His replacement, Stuart Gulliver, HSBC's head of investment banking operations, told the briefing, however, that bad loan charges were already significantly lower. "Unless the US enters a serious contraction we should not be seeing the level of the impairment charge in 2008 and 2009," said Gulliver. Although HSBC, the largest lender in Europe and Hong Kong, is among the few international lenders who did not need a government bailout, it was still hit by the global financial crisis. The bank in 2003 spent US$16 billion to acquire US subprime lender Household International. Since the US housing bubble burst, HSBC has been forced to set aside US$32 billion against losses on its US portfolio, and in April last year went cap in hand to shareholders to raise US$17.7 billion of new capital in a rights issue. The announcements yesterday marked the last quarterly update from Geoghegan and Gulliver will deliver the next briefing. In line with UK regulations, HSBC did not release detailed earnings figures for the third quarter report. Despite the expected fall in bad debt charges, HSBC still faces challenges in the form of reduced lending demand from the US and Europe. In North America, the bank said that it cut gross lending by US$7.5 billion to US$61.3 billion. Even though HSBC's pre-tax profit for the first nine months was well ahead of the whole of 2009, the bank said revenue growth has slowed. Looking ahead, Geoghegan said that even though Asia accounted for the largest share of pre-tax profits in the quarter, HSBC still had to be careful about the region growing too fast and watch out for excess liquidity. The bank brushed aside earlier speculation that it might need to raise additional capital, saying HSBC had no immediate plans to hold a rights issue to meet capital requirements under the Basel III rules. Under the Basel III agreement announced in September, all banks must hold top-quality capital totalling 7 per cent of their risk-bearing assets by 2019, up from the current requirement of about 2 per cent. "We're very pleased with our capital organic growth and confident with the way we are," said Douglas Flint, chief financial officer. The fact that HSBC did not raise a rights issue will ease concern and attract more investment, said Louis Wong Wai-kit, director of Phillip Capital Management. HSBC closed up HK$2.65, or 3.10 per cent, at HK$88.15 ahead of the briefing. The benchmark Hang Seng Index closed 1.39 per cent higher.

Opposition lining up to thwart new law - Competition legislation faces race against time - A drawn-out battle is shaping up over the proposed business competition law, with legislators already expressing fears it may go on so long that it will not be possible to pass the bill before the end of their term in 2012. Business representatives are complaining that the bill - aimed at creating a level playing field for companies in Hong Kong - is too vague, while expressing concern about possible huge penalties. They also continue to question the need for such a law in the first place. The Legislative Council committee scrutinising the bill has scheduled 37 meetings and public hearings with an expected completion date in April 2012. But if lawmakers fail to pass the bill before July 2012, the legislative process will have to be restarted from scratch in the new four-year term that starts in October that year. Key among the concerns of businesses is a lack of details of how the law will be enforced. Also worrying them is the possibility that companies that breach the law may be fined up to 10 per cent of their total turnover for however long the breach has taken place, according to Hong Kong General Chamber of Commerce insiders. Committee chairman Andrew Leung Kwan-yuen, the legislator representing the manufacturing sector, said many small and medium enterprises were concerned the bill would affect their businesses. "The definitions on market share or monopoly are unclear," he said. Federation of Hong Kong Industries chairman Cliff Sun Kai-lit said the need to legislate should be the main reason for having a competition law. He said it should not be enacted just because Hong Kong felt it had to mirror other jurisdictions such as Singapore. Miriam Lau Kin-yee, leader of the business-oriented Liberal Party, said there was a need for thorough discussions in the coming year or so to address grey areas. The Civic Party's Ronny Tong Ka-wah, deputy chairman of the bills committee, said it would be difficult to satisfy concerns raised by both business and pan-democrat political parties and a compromise had to be made at some stage. He said: "Many concerns raised by businesses are actually unnecessary worries. "What I am most concerned about is whether anyone will drag on the scrutinising process, which could result in the bill lapsing when this legislative term ends in 2012." Tong said his party was prepared to back the bill even if a clause allowing companies to initiate lawsuits over alleged monopolistic abuses was dropped to ease business concerns. Both the Democratic Party and the Democratic Alliance for the Betterment and Progress of Hong Kong say the bill must be passed in principle and that details can be worked out in the legislative process. Gerry O'Brien, a senior associate with law firm Mayer Brown JSM, said it was clear from the draft bill that the maximum penalty of 10 per cent of turnover related to a company's worldwide turnover.

Moving scroll brings Song dynasty to life - The press get an advanced briefing on the exhibit, an animated version of a 900-year-old painting, at Asia World-Expo in Tung Chung yesterday. Coolies stack up bags of goods in a pile. People ride on donkeys and sedan chairs. Boats slip along a river, propelled by men. These are all moving characters in the animated version of Riverside Scene at Qingming Festival, whose creator is making final preparations before it makes its debut in Hong Kong next week. About one out of every 10 Hongkongers has secured a ticket to see the duplicate of the star exhibit from the China pavilion at the Shanghai World Expo, which will be displayed at Asia World-Expo from Tuesday until November 29. The exhibit is a digital version of the painting Riverside Scene at Qingming Festival, which shows daily life unfolding in Kaifeng - formerly known as Bianjing - during the Northern Song Dynasty 900 years ago. Adjustments to make sure images projected by 12 projectors were synchronised were one-third finished, exhibition director Yu Zheng said yesterday. The progress was faster than scheduled, he said. While each ticket holder is allowed an hour's visit, Yu advised people to spend 10 minutes getting an overall impression of the scroll before spending another 20 minutes looking at the details. Many might spend the rest of their time looking at exhibits on the dynasty and the animation technology, he said. Science Museum curator Karen Sit Man described some of the 12 must-see attractions on the scroll. "The Rainbow Bridge, the drum tower, the camel fleet, boats and various shops selling paper offerings, medicine and fragrances, for example," she said. People should arrive at the venue 15 minutes before their time slot, she said. The keenest fans can enter the waiting area an hour before their scheduled time to watch a video and look at exhibits about Hong Kong's participation at the World Expo. On event days, a return trip on the Airport Express will cost HK$48 instead of HK$100. Trains will depart every 10 minutes instead of the usual 12 minutes. The show's 768,000 tickets have sold out, but some were still available on auction websites for 10 times more than their original HK$10. Millions visited the China pavilion, but they might not have known that the animated artwork offers clues to a series of Song dynasty innovations, Professor Victor Sit Fung-shuen, director of the Advanced Institute for Contemporary China Studies at Baptist University, said. Bianjing, the ancient Chinese capital, was far more urbanised than Western cities 900 years ago, Sit said, adding: "Bianjing was similar to the London of the 18th century." While the original Riverside painting shows Bianjing during the day, the digital scroll adds a transition into night-time: animated figures are gathered at restaurants, having fun drinking. It sounds perfectly normal to enjoy a night out at a bar by modern standards. But it was not until the Song dynasty that Chinese residents could leave their homes at night, Sit explained. Entertainment for the public, such as Chinese opera and story reading, also started around the same time. The river that dominates the lower part of the digital scroll was a vital transportation route in Bianjing. "Ninety per cent of rice and salt demanded by residents in the capital was shipped in," Sit said. Secretary for the Environment Edward Yau Tang-wah may be interested to know that an environment bureau was in place 900 years ago. "The trees along the river were not wild. They were planted by the government," Sit said.

Copyright row stops the music at annual awards - Eason Chan fans won't be seeing their hero - An annual joint Canto-pop awards ceremony has been cancelled for the first time in 15 years because of TVB (SEHK: 0511)'s long-running copyright dispute. Yesterday, organisers TVB, RTHK, Commercial Radio and Metro Radio announced they would call off the Four Electronic Media Syndicated Awards. The move followed complaints from music buffs that the exclusion from TVB's rankings of big-name artists from Universal Music, Sony Music, Warner Music and EMI made it less likely for them to win awards. Singers from the four labels have not appeared on TVB since the copyright dispute began in December. They include superstars Eason Chan Yik-shun, Kay Tse On-kay, Hacken Lee and Jacky Cheung Hok-yau. Normally awards are given to singers who have the best overall results in the four prize ceremonies held separately by the four organisers before the joint event. RTHK Radio 2 deputy head Fung Wai-tong said the broadcaster had received huge numbers of inquiries from fans about the assessment standards for the ceremony. The inquiries led RTHK, this year's convenor, to call a meeting on Wednesday at which representatives voted to cancel the event. Fung stressed it did not mean the ceremony would be gone forever. TVB is refusing to pay the music companies' demands for doubled copyright fees.

China putting a froth on profits for Starbucks - Starbucks boss Howard Schultz has a cup of coffee during a visit to the HKU branch yesterday. Even with all the tea in China, a strong cafe culture has enticed more mainland consumers and helped boost Starbucks Corp's international sales in its fiscal quarter to October. United States-based Starbucks, operator of the world's largest coffeehouse chain, credited its 11-year-old China business - along with operations in Britain and Canada for contributing the most growth to the company's record international revenue of US$619.3 million, up 21 per cent from US$512 million a year earlier. "We are seeing fantastic comparable (store) sales growth and increased profitability in China,"chairman and chief executive Howard Schultz said yesterday in a conference call with analysts after reporting the firm's latest quarterly results. No details were provided. Starbucks, which posted total revenue of US$2.8 billion in its fiscal quarter to October, has more than 700 shops in. About 380 of these are on the mainland. Schultz said Starbucks will continue to open new shops on the mainland amid plans to introduce 400 stores internationally in the next 12 months. "In September, we opened in Changsha and Fuzhou to enormous crowds and exciting brand buzz," Schultz said. "Average daily sales for these new stores are far exceeding even our most optimistic projections." He said "relevant local offerings such as Green Tea Frappuccino, Coffee Jelly Frappuccino, Mocha Valencia, Iced Tea, juice beverages and moon cakes... continue to resonate well and attract new and repeat customers " at all of Starbucks' mainland stores. According to a report from the International Trade Centre in Geneva, Switzerland, China's growing urban population of 600 million people accounts for an estimated 90 per cent of coffee consumption in the country. The report said freshly brewed coffee is primarily consumed by Chinese drinkers outside their home, such as in cafes and restaurants, "because many coffee drinkers do not know how to brew "We've said for years that China will be the biggest market for Starbucks outside of the US," Schultz said. That is why, he said, the firm is keen to "have more ownership [of stores in the country] than less". Competition is expected to heat up for Starbucks, as Hong Kong- listed China Resources Enterprise (SEHK: 0291) announced in August a plan to open hundreds of Pacific Coffee outlets across the mainland.

APEC finance ministers urge policy measures for stronger growth - APEC finance ministers called on member economies to take policy measures to achieve "stronger, more sustainable and more balanced growth" in the region.

 China*: Guangzhou officials hope this month's Asian Games, the biggest international event ever hosted by the city, will add impetus to their drive to see it become a fully fledged international metropolis by 2020. Scholars and officials have mountains of data to measure the city's international credentials, including per capita gross domestic product, the number of multinational enterprises setting up headquarters in the city, urban infrastructure comparisons and the international influence - the soft power - of the city. But for locals and foreigners living in Guangzhou, internationalisation can be as simple as being able to find more foreign food and drink options along with a convenient living environment and an open culture. Sitting in a Starbucks cafe, 56-year-old Wang Jiequn said that reading a novel and enjoying a slice of blueberry cheese cake and a mug of latte made it feel as though Guangzhou was already well on the way to internationalisation. A Guangzhou native, Wang said her friends, in their 50s or 60s, still preferred Cantonese dim sum to Western-style coffee and desserts. "But we are changing, especially the youth." she said, while adding that compared with Beijing and Shanghai, Guangzhou still had a long way to go. Guangzhou, however, has long been a part of China more open to international influences, even at times when the rest of the country was sealed off. From the mid-1700s to the first opium war in 1840, Guangzhou was the only Chinese city opened to foreign traders. When Beijing stopped most business connections with the West during the Cultural Revolution in the 1960s and 1970s, the Canton Fair trade show continued, on the direct orders of then premier Zhou Enlai. Guangzhou's biggest advantage used to be its coastal location, less than 200 kilometres from Hong Kong, which allowed people to travel overseas easily, bringing back all kinds of new habits, ideas and sometimes their foreign business partners.

France, China sign more trade deals on state visit - France and China signed a fresh batch of trade deals yesterday during a state visit by President Hu Jintao that has already seen Paris win export contracts worth US$20 billion. President Nicolas Sarkozy has brushed aside worries about China's human rights record to throw on a warm and lavish welcome for Hu, wooing investment and Chinese support for his agenda as the incoming president of the G20. France and China signed 20 billion dollars in industrial contracts on Thursday at the start of Hu's three-day visit, with police trying to keep rights protestors away from the Chinese leader. A new round of 15 contracts was signed yesterday in arenas ranging from power to wine, including a €1.1 billion (HK$12.1 billion) deal between telecommunications-group Alcatel-Lucent and China Mobile (SEHK: 0941), China Telecom (SEHK: 0728) and China Unicom (SEHK: 0762). They were signed at the business association Medef on Paris' chic Left Bank in the shadow of the Eiffel Tower, at a ceremony attended by Chinese Minister of Commerce Chen Deming and French trade minister Christine Lagarde. In remarks calculated to reassure China about its export-driven economy, Lagarde branded protectionism "the most hideous monster" and called for "a sustained economic relationship founded on friendship and demand". But she added that France would like to sell more to Chinese consumers. "We're not necessarily very proud when we see that our trade deficit with China is the largest, at €22 billion," she said. After striking a deal to supply 102 airliners to Chinese firms worth US$14 billion, Louis Gallois, the boss of Airbus-parent-company European Aeronautic Defence and Space, said China's human rights "problem" could not be resolved by businesses. "I don't think that we should resolve the problems that you mention, notably human rights, through business," Gallois said when asked by BFM radio about the lack of any public comment by Sarkozy on human rights in China. "I don't see what commercial instrument one can use to resolve this kind of problem. "I think that China is developing, evolving, as it opens up." Alongside the trade contracts, Hu has thrown China's weight behind Sarkozy's goal of using France's upcoming presidency of the Group of 20 (G20) of the world's largest economies to reform the global financial system. After next week's summit in South Korea, France will take on the year-long rotating G20 presidency, during which Sarkozy wants to push big international reforms, and China has given cautious backing. French nuclear-giant Areva has also signed a contract to supply US$3.5 billion worth of uranium to Chinese power-firm China Guangdong Nuclear Power Group.

Forbes magazine has named President Hu Jintao as the world's most powerful person - It is a move that analysts say shows global acknowledgement of China's contribution to the world's economic recovery. China's President Hu Jintao (L) is greeted by France's Prime Minister Francois Fillon before a meeting at the Hotel Matignon in Paris November 5, 2010. United States President Barack Obama slipped to second place on the annual list. Obama had previously been considered the world's most powerful person but his party's defeat in the midterm elections may have had some influence on the latest rankings. China's peaceful rise on the world stage is also likely to have been a decisive factor. Analysts said China's burgeoning economy might have tipped the scales in Hu's favor. They noted that China's remarkable contribution to the world's economy helped it gain a strong international reputation. Yuan Peng, a researcher with China Institutes of Contemporary International Relations, said other nations have been struggling with the economic recession while China has impressed the world with its economic development. "It has not only achieved rapid economic growth in the shadow of the financial crisis but it has also helped other nations by providing capital and markets that are badly needed," Yuan said. Fan Jishe, an analyst with the Chinese Academy of Social Sciences, said another significant factor in Hu's ranking was China's stable social development and its ability to overcome natural disasters in recent years. "The effective measures taken by the government also earned credits for Hu," Fan said. Fu Mengzi, another researcher with China Institutes of Contemporary International Relations, said the Shanghai Expo also served as a good opportunity to promote China and raise Hu's profile. Forbes magazine said it used four criteria to define power - whether the person has influence over a lot of people; whether the person controls significant wealth compared to their peers; whether the person is powerful in more than one sphere and whether they actively wield that power. Third place went to King Abdullah of Saudi Arabia, a country with one-fifth of the world's oil reserves. The value of crude oil owned by his country is estimated at $22 trillion. The magazine claimed Abdullah consolidated his power by pursuing conservative Islamic values while maintaining close ties with the US.

PBOC warns of US policy's global impact - Bank to strictly control hot money flows in wake of Fed's cash injection - The Federal Reserve's move to inject money into the US economy may suit the United States, but it will have side effects for the global economy, China's central bank governor warned yesterday. Zhou Xiaochuan, head of the People's Bank of China, told a financial conference that Beijing would "strictly control" inflows of hot money in the wake of the new round of the quantitative easing (QE), under which the US will buy US$600 billion in bonds to help the domestic economic recover. Zhou's remarks came as China demanded an explanation from Washington of the second round of QE, after frequently being pressured by the US to appreciate the yuan faster to restore trade balance. Deputy Foreign Minister Cui Tiankai said yesterday: "Many countries are worried about the impact of the policy on their economies. It would be appropriate for someone to step forward and give us an explanation, otherwise international confidence in the recovery and growth of the global economy might be hurt." Economists are concerned the low US interest rates and ballooning liquidity will result in money flooding into emerging markets seeking higher returns, pushing up exchange rates and exacerbating inflation. "If the domestic policy is an optimal policy for the US alone, but not so for the world, it may have a lot of negative impact on the world," Zhou said. For short-term speculative money, China would put in place a "pool" and prevent it from entering the real economy. So when these funds exited the country, impact on the economy would be minimised, Zhou said. Li Youhuan, a researcher with the Guangdong Academy of Social Sciences, said the plan to restrict hot money to a "pool" was "wishful theoretical talk". "An unprecedented scale of hot money has been flowing into China in recent months, pushing up prices from stocks to cotton, sugar and Chinese herbs," said Li, who researches hot money from monitoring activities in more than 100 illegal banks. Robert Subbaraman, chief economist of Asia excluding Japan at Nomura, said effective means to counter hot money do not actually exist. Asian countries were likely to adopt a mix of policies including: allowing local currency to "strengthen appropriately"; market intervention; macroeconomic controls like China's cooling measures to curb property market speculations; broadening channels to allow capital outflows; and imposing strict capital account control. A large amount of foreign capital is expected to flow into emerging markets in coming years to benefit from their better economic fundamentals compared with developed countries. As capital markets on the mainland, South Korea, Hong Kong and Singapore are not big enough to absorb this gush of capital, to some extent Asia is becoming "a victim of its success", Subbaraman said. "Asset bubble, economic overheating and inflation were the aftermath of the capital inflows into Asia in 1995 and 1996. But this time, we think Asian governments will produce more creative policies," the Nomura economist said. China needed to increase interest rates to curb capital inflows driven by US monetary easing, the official China Securities Journal said in an editorial yesterday.

Collision video turns up the heat again - Leak of boat incident footage threatens to further derail relations with Japan - Images taken from a video anonymously posted on YouTube show what appears to be a Chinese fishing vessel identified as Minjinyu 5179 (blue vessel) and what appears to be a Japanese coastguard patrol boat seemingly colliding. The authenticity of the video has not been confirmed. Japan said it is investigating the leak of a video showing a collision between a Japanese coastguard vessel and a Chinese fishing boat off the disputed Diaoyu Islands in September that inflamed bilateral tensions. The Foreign Ministry in Beijing expressed concern over the video, and diplomatic and military experts said the footage proved that Japanese patrol ships had been to blame for the incident as they had sought to contain the Chinese trawler. Forty-four minutes of video footage, posted on YouTube yesterday morning, was widely picked up by Japanese television networks, prompting Beijing to express concern and sending Japanese officials scrambling to contain the damage, a week before Japan hosts an Asia-Pacific summit. The clip appears to show the blue Chinese boat, the Minjinyu 5179, which was later detained by Japan, colliding with a grey-hulled patrol ship as a plume of black smoke billows from the Japanese vessel. Antony Wong Dong, president of the Macau International Military Association, said the video had been shot in such a way as to show the Chinese trawler intentionally crashing into the Japanese ship. "The video obviously was recorded by a cameraman on the Japanese coastguard boat, who used a good angle to shoot the whole process," Wong said. "We don't know whether the Chinese trawler was provoked before the collision, but it crashed rapidly into the Japanese ship after being circled by the Japanese vessel, which raises doubts about whether the Chinese side was provoked or had no other choice but to ram it." Video footage taken by the Japanese coastguard had previously only been shown to Japanese Prime Minister Naoto Kan, security officials and some lawmakers, but not released to the public for fear it would worsen the spat. "I have a strong sense of crisis because our information management is not in shape," Kan said. "It is important for both countries to respond calmly even if such a problem arises." Japanese foreign minister Seiji Maehara told a parliamentary committee that the Japanese government would investigate the leak. He said the Chinese embassy in Tokyo had called Japan's foreign ministry to check into the leak, and that China later had "expressed concern and conveyed worry in Tokyo and Beijing through diplomatic channels". Foreign Ministry spokesman Hong Lei said yesterday that the collision had occurred because the Japanese coastguard was undertaking "illegal operations" within Chinese territorial waters in the East China Sea. "The so-called video cannot either change such a fact or cover up Japan's illegality," Hong said in a statement on the ministry's website. Beijing-based Sino-Japanese experts said the collision video would not harm China's international image, but would cause more domestic problems for Japan. "The video showed clearly that our small trawler was contained by at least three big Japanese coastguard patrol ships, which is like a poor child being bullied by three bruisers," Gao Haikuan , a specialist in northeast Asian security with the Chinese Association for International Friendly Contact, said. "I believe our fishing boat was forced to clash with the Japanese ship as it was under great pressure." Kan is hoping to talk with President Hu Jintao when they attend next week's Asia-Pacific forum in Yokohama, and both Gao and Wong said the footage might have been leaked by Japanese right-wingers seeking to derail the talks. Jiang Lifeng , former director of the Chinese Academy of Social Sciences' Institute of Japanese Studies, said the video had also pushed Kan into an embarrassing position. "Actually, both Kan and Maehara decided not to make the video public as they wanted to improve ties with China," Jiang said. "However, the video dragged them back into the crisis, ruining their plan."

Washington plan 'like a planned economy' - China pushed back strongly against US policies yesterday ahead of the G20 summit, saying Washington's plan to impose current account targets resembled a "planned economy". The remarks by Cui Tiankai , a deputy foreign minister (pictured), was the first high-level official stance from Beijing on the issues. "We believe a discussion about a current account target misses the whole point," he said. The United States proposed at the G20 finance ministers' meeting last month that countries should cap current account surpluses or deficits at 4 per cent of gross domestic product as part of efforts to rebalance the global economy. "Of course, we hope to see more balanced current accounts," Cui said. "But we believe it would not be a good approach to single out this issue and focus all attention on it. "The artificial setting of a numerical target cannot but remind us of the days of planned economies." Economist Andy Xie said it was impossible for the G20 to settle the dispute over trade surpluses. "[The] current international currency mechanism will certainly lead to such results," he said. In a briefing on China's outlook for the G20 summit in Seoul next week, Cui said China would closely monitor the impact of the Federal Reserve's plan announced this week to buy US$600 billion of US government bonds to stimulate the economy. "They owe us some explanation," he said. "I've seen much concern about the impact of this policy on financial stability in other countries. "As the main issuer of a reserve currency, we would hope that it [the US] adopts a responsible position." Xie said the hot money would flow into Hong Kong's stock market and added: "That explains why the Hang Seng index has remained robust lately." Economist Dr Yi Xianrong , from the Chinese Academy of Social Sciences, said the American bonds might drive up commodity prices. "Excessive currency issuing will increase China's import costs and impose more inflation pressure," he said. Yi said the impact on China should be limited and controllable. He added: "US$600 billion is about 3 per cent of the US GDP. For a reserve currency, it's not a huge amount of money." In the briefing Cui also rejected attempts by other countries to set targets for yuan appreciation. "That would indeed be asking us to manipulate the renminbi's exchange rate, and it is something that we will, of course, not do," he said. China has resisted calls from other nations to let market forces set the value of the yuan. The US in particular has said China keeps its currency artificially cheap, giving its exporters an unfair advantage. Cui said Beijing would keep the door open to discussions with Washington, adding he was confident the relationship of the world's two largest economies will remain healthy.

Retired high-ranking generals from China and the United States held informal talks last month as part of efforts to build greater trust and communication following recent tensions. The discussions touched on stabilising Afghanistan, Pakistan and the Korean Peninsula, security in the South China Sea and nuclear issues relating to North Korea and Iran, according to a statement issued late Thursday by the American side. "Regardless of each side's point of view, both agree there have been misperceptions between the two countries and both governments should take concrete actions to eliminate misunderstandings through confidence-building measures and dialogue to encourage trust," the statement said. The week-long talks, the third round of an ongoing dialogue termed the Sanya Initiative, come amid a push to revive military-to-military contacts that were suspended by China in January over Washington's sale of US$6.5 billion worth of helicopters, PAC-3 air defence missiles and other defence items to Taiwan. Relations further soured over a US declaration it considered as a national interest the peaceful resolution of territorial disputes in the South China Sea. China considered this unwelcome interference in its affairs and was also angered by a US offer to mediate between Beijing and Tokyo over disputed islands in the East China Sea. Participants in the talks, including Admiral William Owens, vice chairman of the US Joint Chiefs of Staff from 1992-96 and former Chinese air force chief General Yu Zhenwu, recognised that "the official military-to-military relationship should not be jeopardised due to political tensions in the relations," the US statement said. They also called for leaders on both sides to define areas of mutually beneficial co-operation between their militaries, the statement said.

November 7, 2010

Hong Kong*: Hang Seng posts biggest weekly gain since May - Hong Kong shares posted their biggest weekly gain since May 2009, driven by financials and commercial property developers, on optimism over earnings growth.

Can you prevent your dollar from shrinking in a coming flood of money? Yes, say experts. Put your money in yuan fixed deposits to offset effects of the second round of quantitative easing - or QE2, a move by the US Federal Reserve to pump US$600 billion (HK$4.68 trillion) into the economy. That's because the Chinese government will safeguard the yuan. This move should be a priority for those who like to be conservative with their investments, argues Mo Pak-hung, an associate economics professor at Hong Kong Baptist University. "The yuan is most likely to be allowed to appreciate sufficiently against the US dollar by the Chinese government in the near term," Mo said. "The relatively low risk and attractive interest rate makes yuan fixed deposits a good option for investors to maintain their purchasing power." For those who can tolerate risks, Grand Finance Group analyst Ken Lo Chi-ming suggests buying property for personal use. QE2 presents a powerful backdrop for assets price inflation as it is widely expected to boost inflows to the region, Lo said. "The SAR government's measures in curbing property price rises will be effective in two years. [In the meantime] Hong Kong will continue to see an uptrend in property prices." During QE1 in 2009, Hong Kong was flooded with capital which, in the fourth quarter, exceeded 40 percent of GDP. CCB International managing director Peter So Kwok-kin says people must avoid holding too many long-term assets as they may become losers due to unforeseen market changes. Stocks like Tracker Fund, H shares or Hong Kong-listed firms with mainland equity would also be a wise choice, says Lingnan University economics professor Ho Lok-sang. "The shares of large listed enterprises with stable dividend records and an accountable management will guarantee better returns," Ho said. Hang Seng Investment Services chief analyst Mark Wan Chuck-pui said the Fed launched a slightly larger QE than what the market expected as it wanted to give a clear signal of its desire to see the greenback slide only gradually as this will help moderate inflation. Wan also said that foreign currencies will appreciate, and "I like the euro most as it is the largest currency besides the dollar. With a falling dollar, the euro may trend towards 1.46 to 1.48." With one euro currently worth about US$1.42, Wan said there is an upside. For those chasing high interest returns, the Australian dollar is also appealing.

Hong Kong customs officer injured in an anti-smuggling operation received organ donation from fellow officer to save life - A customs officer injured in an anti-smuggling operation was yesterday snatched from the jaws of death when a colleague donated part of his liver. Yuen Wai-cheung's liver was working at only 20 percent capacity, making his condition life- threatening, before receiving the organ donation from fellow officer Simon Hui Sai-man. Yuen, 39, was moved to the intensive care unit of Queen Mary Hospital at 4pm yesterday following a 13-hour operation. Hui, 40, is listed in a stable condition while Yuen is under observation. "I felt like I was riding a roller coaster," Yuen's wife said. "I would not have made it through without the support of so many people." Yuen was transported to the operation room at 11pm on Wednesday after tests showed Hui's liver was a match. Relatives of both Hui and Yuen then spent the next 13 hours anxiously waiting for news of the operation. They were joined by colleagues from the Customs and Excise Department. At noon yesterday, applause broke out at news that the operation had gone well. Lo Chung-mau, head of the liver transplant team at the University of Hong Kong and Queen Mary Hospital, said Hui lost a little blood but was eager to know Yuen's condition as soon as he had awakened from the anesthetic. Chief Executive Donald Tsang Yam-kuen sent letters to both Yuen and Hui. He hailed Yuen as a role model for all civil servants. "You were fearless in face of danger. You are a role model for civil servants. I hope you will rest and get well soon so that you can continue to serve members of the public," he wrote. In the letter to Hui, Tsang said he deeply appreciated his donation and added everyone in Hong Kong will be proud of him. Hui, a bachelor, was one of 70 officers and citizens who offered to save Yuen's life after his liver was badly damaged during an anti-contraband cigarette operation in Tseung Kwan O last Thursday. However, only a few turned up for the suitability test as many were deterred by their family members, Lo said. Sources said Hui, who was on vacation, had rushed to the hospital after learning the news. "Everyone is behind Hui. We are happy he made this decision," a relative of Hui said. The lack of a donor until the last hours underlines the problem with organ donations. Some 1,600 people are estimated to be waiting for transplants each year, but only a few dozen are donated.

New hospitals chief outlines three priorities - Dr Leung Pak-yin, chief executive of the Hospital Authority - Manpower shortages, staff morale and long working hours will be the top three topics to be tackled by new Hospital Authority chief executive Dr Leung Pak-yin. Leung, 51, who has been the authority's director for quality and safety since 2007, will assume his new post next Monday on a three-year contract. "This is a top honour. I will give my best in these three years," said Leung, who met the press yesterday afternoon with the authority chairman Anthony Wu Ting-yuk, who was also the chairman of the chief executive selection committee. Leung will succeed Shane Solomon, who quit suddenly in July for family reasons. Leung specialises in public health and was the founding controller of the Department of Health's Centre for Health Protection, which was set up after the Sars pandemic. Before that, his posts included deputy director of health and deputy director of Food and Environmental Hygiene. He was loaned to the authority in 2007 and has worked at his current post since then. He resigned from the civil service in order to assume his new role. Leung said manpower shortages in some specialities was the most urgent issue to be dealt with, but that there were issues that could only be solved in the long term, such as doctors' long working hours and staff morale. "I hope I can tackle these problems by communicating more with frontline staff," he said. Unions welcomed Leung's appointment, but doubted if there could be any major changes. Public Doctors' Association president Dr Loletta So Kit-ying said she was confident in Leung's ability to lead. "He has worked in the Department of Health for a long time, and he also has a few years of work experience in the authority," she said. "He has a clear understanding of our operations." She said Leung had already contacted her, and that he would meet the association's representatives on November 15. Frontline Doctors' Union vice-chairman Seamus Siu Yuk-leung said he hoped some improvements could be achieved on the issue of manpower shortages, but he did not have high hopes. "Changing the structure of manpower distribution will certainly generate a lot of opposition. It is not something that can be solved in three years," he said. Patients' Rights Association spokesman Tim Pang Hung-cheong said he hoped Leung would be able to learn from previous medical blunders and improve service quality and efficiency. Secretary for Food and Health Dr York Chow Yat-ngok also welcomed the appointment, and said he would work closely with the authority on health care reform. Leung was chosen from a shortlist of four candidates following an international headhunting exercise. His salary will be HK$4.3 million a year.

Hang Lung Properties (SEHK: 0101) said on Friday it planned to raise a net HK$10.9 billion (US$1.4 billion) in a share sale to finance its expansion in China. In a filing with the Hong Kong bourse, the property firm said it would sell 293.86 million shares to its controlling shareholder, Hang Lung Group (SEHK: 0010), at HK$37.48 each, or a 7 per cent discount to the previous close. Hang Lung Group will subscribe to the new shares on completion of a sale of the same amount of existing shares of Hang Lung Properties at the same price to third party investors, the statement said. Hang Lung Group’s shareholding in Hang Lung Properties will be reduced to 48.96 per cent after the deal, from 52.41 per cent. Hang Lung Properties was raising as much as US$1.3 billion in a share sale by offering 269.4 million shares at a 6.8 per cent to 8 per cent discount to Thursday’s closing price, according to a term sheet seen by reporters.

Bloomberg applauds Chinese mayors at HK meeting - New York City Mayor Michael Bloomberg on Friday praised Chinese cities for taking part in a climate change coalition that he is set to lead, saying he is heartened that they are no longer blinded by the pursuit of economic growth. Bloomberg is scheduled to take over as chairman of the C40 group of cities from Toronto Mayor David Miller at the end of a two-day meeting in Hong Kong on Saturday. On Friday, he and Miller took part in a panel discussion with the mayors or deputy mayors of the Chinese cities Changsha, Shenzhen and Kunming, as well as the leader of Johannesburg. Asked after the session what impressed him the most about the discussion, Bloomberg told reporters: “I think the most impressive thing this morning was that they were there. Ten years ago, they would not have been there.” Noting poverty is still widespread in the country, the billionaire founder of the financial information company that bears his name said “job creation, economic development has always been modern-day China’s No. 1 priority”. “For the first time, there is an understanding in China that the environment is something that they cannot walk away from, they can’t treat as a second-class citizen any more. When you’re starting to get your rivers polluted and your air unfit to breathe, you’ve got to do something about it,” Bloomberg said. “It may be the beginning but if you want to get a hand of cards to play you’ve got to come to the table, and they are certainly doing that,” he added. Changsha Mayor Zhang Jianfei said the central city is scaling back the number of high-polluting factories, building two subway lines and a light rail line and promoting electric buses. It has also banned hotels from giving out disposable toiletries. Vice-Mayor Tang Jie said Shenzhen was making sure that new buildings use energy-efficient electrical equipment and developing its electric car industry. The southern city is home to electric car maker BYD Autos, which counts US billionaire Warren Buffett among its investors. In southern Kunming, Vice-Mayor Wang Daoxing said officials are promoting the use of solar power in a city that enjoys extended daylight and cleaning up neighbouring Dianchi lake. However, on a national level, Beijing says in negotiations for a global treaty to curb greenhouse gas emissions that the US and other wealthy countries should make bigger cuts because they have produced more pollution historically. Later Friday, Bloomberg was scheduled to visit an industrial park and drug company in Shenzhen and meet with railway officials working on a high-speed line between the city and neighbours Hong Kong and Guangzhou. Environmental activists also applauded the Chinese efforts. Kunming’s push for solar power will inspire other Chinese cities to follow, while Shenzhen’s green building campaign is significant because of the large scale of construction there, said Greenpeace Hong Kong campaigner Prentice Koo.

Shirble pitches IPO for HK$1.6b - Shirble Department Store Holdings (China), a Shenzhen-based retail operator, planned to raise up to HK$1.6 billion from an initial public offering in Hong Kong, the company said.

 China*: Workers in central China have fished 3,800 tonnes of rubbish out of the Three Gorges Dam in just six days, state media said yesterday, after the trash threatened to jam up the massive structure. The clean-up began on October 26 when the water level hit maximum capacity. Around 100 workers worked to scoop out the trash, which consisted mainly of tree trunks, branches and straw, the China Daily quoted Wang Yafei, head of the operation, as saying. Household garbage is also a problem, as more than 150 million people live upstream from the dam, and trash is sometimes dumped directly into the Yangtze river because nearby municipalities are unequipped for waste disposal. China considers the US$22 billion (HK$171.6 billion) dam a modern wonder. Since its completion in 2008, it has pumped out much-needed hydroelectricity, increased shipping on the Yangtze and helped reduce flooding. The garbage was threatening the operation of the dam's 26 power generators.

A boat flow on the river where Walt Disney Co's theme park will be built in Shanghai, Nov 5, 2010. The Walt Disney Company has signed an agreement with a Shanghai company for the establishment of a Disneyland theme park in the city, bringing its long-planned park in the mainland closer to fruition. The deal was reached with Shanghai Shendi Group, which was specifically created for the development of the Disneyland project, the official Xinhua news agency said on Friday. Disney confirmed the Xinhua statement and said it was still awaiting final approval from China’s central government regarding the incorporation of the related joint venture companies and the completion of regulatory procedures. “For quite some time, we have been involved in discussions with the Shanghai government about building a Disney theme park. We can confirm the statement from the Shanghai government that we have taken another step forward in the approval process,” a Disney spokeswoman said in an emailed statement to Reuters. Shanghai’s Disneyland is expected to cover around 4 sq km and cost about 25 billion yuan (US$3.75 billion), Xinhua said. Disney itself gave no further details. It was not clear what the ownership structure of the park would be like, but state media reported last year that an investment company controlled by the Shanghai municipal government would own a majority stake in the park. Disney received approval to build a Disney theme park in Shanghai a year ago, but discussions about the specifics have been ongoing and few details have been released publicly. Disney has long sought to build in Shanghai, a wealthy city of about 20 million people that is ringed by the prosperous Yangtze River Delta, home to tens of millions more potential visitors. It was less enthusiastic about building near Beijing, which has fewer large population centres in the immediate vicinity. Disney’s foray into the China market has been mixed so far, with its Hong Kong Disneyland park reporting a loss last year.

Hu backs Sarkozy's G20 reform plan - Nicolas Sarkozy and Carla Bruni Sarkozy greet Hu Jintao and his wife Liu Yongqing at the Elysée Palace in Paris on Thursday. President Hu Jintao and France's Nicolas Sarkozy voiced joint support on Thursday for reform of the global monetary system and pledged close co-operation as Paris prepares to take over the G20 presidency. As Hu kicked off a two-nation European visit with a slew of French aircraft and nuclear fuel contracts, the two leaders agreed on a need to adopt coordinated macroeconomic policies, to fight volatility in commodities markets and to look at reforming institutions such as the International Monetary Fund. “China supports France in its efforts to host a successful G20 summit next year and aims to keep close communication and coordination with France to prepare its success,” Hu said in a speech before a formal dinner for the leaders and their wives. Hu and Sarkozy said in a joint statement the Group of 20 economic leadership forum should recast economic growth and the international financial system on solid foundations. In a toast before a banquet table adorned with red and gold decorations, Sarkozy said he wanted to “tightly associate” China with France’s work as G20 president from mid-November. “I will be able to count on China’s backing to help push progress on three essential fields for the good of the world: reform of the international monetary system, the question of the volatility of commodity prices and the reform of global governance,” he said. Hu’s three-day visit to France, after which he travels to Portugal, comes at a time when EU leaders have closed ranks with Washington in urging China to allow its yuan currency to appreciate more quickly, unsettling relations between Beijing and Brussels. China hopes the trip will ease those strains ahead of a G20 leaders summit in South Korea next week which will focus on global economic imbalances. Sarkozy’s government, which takes up the G20 baton after the Seoul summit, wants to build common ground for its ambitious agenda of reforming the global monetary system, while avoiding alienating China by harping on about the yuan. Paris has said its G20 agenda of diversifying global currency reserves away from the dollar and stabilising commodity markets hinges on the support of the world’s No. 2 economy. Sarkozy and his wife, former model Carla Bruni, received Hu with military honours at Paris’s Orly airport. Hu’s cavalcade, escorted by a formation of motorcycle escorts and the Republican guard on horseback, then swept down the historic Champs Elysees en route to the exclusive George V hotel. “China should not be seen as a risk but an opportunity,” Sarkozy said ahead of Hu’s arrival. “It’s not by reproaching people for things that you make progress.” Hu oversaw the signing of US20 billion worth of corporate investment contracts and pledged to double China’s annual trade with France to US$80 billion over the next five years, Chinese Deputy Foreign Minister Fu Ying told reporters. Chinese officials signed four contracts with EADS unit Airbus and deals with Total for a petrochemical plant and with Areva for a nuclear-fuel treatment factory and 10 years of uranium. The Airbus deals were signed with China Southern Airlines, China Eastern (SEHK: 0670), Air China (SEHK: 0753, announcements, news) and state agency CASC. French officials billed it as the biggest contract signing ceremony by China with a European leader, even though 36 of the Airbus planes were repeats of old orders. The trip caps a rehabilitation of Sino-French ties since Sarkozy outraged Beijing in 2008 by meeting the exiled Dalai Lama, prompting some Chinese citizens to boycott French goods. France, one of the first Western nations to open ties with Communist China in 1964, has carefully avoided antagonising Beijing ahead of the visit, scarcely reacting to last month’s award of the Nobel Peace Prize to dissident Liu Xiaobo. “We have the feeling the objective of this visit is to sell Airbus planes and nuclear reactors to China, which is good, but it is a detriment to human rights,” said Jean-Francois Julliard, secretary-general of Reporters Without Borders, one of several groups that protested in Paris against Hu’s arrival. French telecom gear maker Alcatel-Lucent announced 1.2 billion euros in deals with Chinese phone companies and insurer Axa also sealed deals. Sarkozy gave Hu six bottles of the finest Bordeaux grand cru as a gift, and gave the Chinese first lady a baccarat crystal containing perfume. On Friday, Hu will travel to the Mediterranean resort of Nice, where afternoon talks are expected to centre on foreign affairs, including Iran’s nuclear ambitious, the situation in Afghanistan and Pakistan, and the development of Africa, where resource-hungry Chinese companies are investing heavily. On Saturday, Hu flies to Portugal where President Anibal Cavaco Silva, struggling to rein in his country’s debt, will hope for a repeat of a Chinese performance in Greece that boosted that economy with promises of investment and debt purchases.

Stronger yuan bites into trade fair receipts - Christmas shopping started early at the China Import and Export Fair in Guangzhou, with attendance slightly lower this session, but sales on the upswing. A strengthening yuan and skyrocketing raw material prices kept buyers away from the mainland's largest and oldest trade fair, according to a senior official. The autumn session of the China Import and Export Fair, or the Canton Fair - as it has been known since its inception in Guangzhou in 1957 - ended yesterday. It registered 199,266 visitors, 2.3 per cent fewer than its spring session in April, Liu Jianjun, a Canton Fair spokesman and deputy director-general of the China Foreign Trade Centre, said. The biannual show is a key barometer for the mainland's exports. The yuan's appreciation, an increase in raw material prices and labour costs, worker shortages and the slower than expected economic recovery in the United States and Europe had bogged down exports of late, Liu said. He said sales at the trade show showed an improvement, but had yet to return to the levels before the global financial crisis. Fewer Hong Kong manufacturers took part as exhibitors because a new rule excluded participation by service providers. A Chinese Manufacturers' Association spokeswoman said the trade body did not attend the fair this year because of this. Two purchasing managers' indices (PMI) point to unexpectedly rapid growth in manufacturing activities last month, driven largely by ballooning input prices. Prices of raw materials such as sugar, cotton and corn surged, with sugar rising 25 per cent in the past month and cotton prices jumping worldwide. The PMI, released by the China Federation of Logistics and the National Bureau of Statistics, leapt from 53.8 in September to 54.7 in October. A second PMI, from HSBC Holdings (SEHK: 0005, announcements, news) and Markit Economics, jumped from 52.9 to 54.8. A Hang Seng Bank (SEHK: 0011, announcements, news) research report yesterday said it expected a fresh round of interest rate rises if property and consumer prices went higher. It said property prices had been hovering around peak levels since April. However, the People's Bank of China is in a dilemma as higher interest rates would fuel capital inflows and risks of consumer price inflation. Hang Seng Bank forecast the yuan would strengthen to 6.60 to the dollar at the end of this year and 6.30 by the end of next year from 6.83 at the end of last year and 6.67 yesterday.

Top mainland carmaker SAIC Motors in October sold 28.8 per cent more vehicles than a year earlier, extending a rebound from August bolstered by the peak car sales season.

The surging Australian dollar is pushing more and more Hong Kong and mainland students to look elsewhere for their tertiary education. And the number is set to grow even more, Australia's education minister, Chris Evans, admitted. The students are now opting for countries such as Britain and the United States, which were once deemed too expensive. China is by far the largest market for Australia's tertiary education revenue, valued at A$18.6 billion (HK$146.16 billion). "Some of the lead indicators are that we are going to get a serious drop in Chinese numbers, but how many at this stage we do not know, and for how long is yet to be determined," Evans said. He said Australia, because of its appreciating currency, is being forced into a "very competitive" market against a "very aggressive" marketing campaign from the United States. Hong Kong education consultant Cheng Wing- chung said more parents have consulted them about alternative destinations although Australia remains a popular option. "Many students with not-so-good results are attracted by the foundation programs in Australia as it is relatively easy for them to progress directly to universities if their results are acceptable," Cheng said. Cheng estimates there are 8,000 to 9,000 Hong Kong students who are pursuing tertiary education in Australia. International Studies Service Centre general manager Steve Lo Kwok-cheong also said fewer Hong Kong students are choosing Australia. "The appreciation of the Australian dollar has led to a rise in fees. It is now as high as or higher than Britain," he said. He said tuition fees in prestigious Australian universities now cost A$30,000, while it is only 10,000 (about HK$126,000) in British universities. He said Australia's tougher new immigration rules is another reason for the decline because it is now harder for students to get a permanent resident visa after graduation. Lo said Canada is catching up as it allows graduates to stay in the country for their internship, giving them a better chance of becoming permanent residents. Monash University in Melbourne and Macquarie University in Sydney said enrollment numbers of overseas students could fall by 10 percent or more next year. Eliza Yiu Ka-ki from Hong Kong, who is taking an International Business Masters course at Monash after finishing an undergraduate program in Brisbane, said she feels discouraged because of the tougher immigration rule.

PLA's 7 J-10 jet fighters with new coating to make debut - Seven new J-10 jet fighters of Bayi Aerobatic Team with new coating, were to make their debut in the 8th China International Aviation & Aerospace Exhibition in Zhuhai China.

November 6, 2010

Hong Kong*: The days of guaranteed bonuses appear to be coming to an end, as the number of companies offering employees such a payout have practically halved in a decade and is expected to continue dwindling. Pay trend data compiled by the Hong Kong Institute of Human Resource Management show 46.4 per cent of companies offered a guaranteed bonus plan this year versus 89.7 per cent in 2001. Similarly, while 73.1 per cent of employees were eligible for a guaranteed bonus in 2001, only 36.9 per cent enjoyed this benefit this year. But, on average, companies have budgeted a 3.3 per cent pay rise for staff next year. Along with rent, the staff payroll is one of the biggest overheads for a company, and many have abandoned the practice of guaranteeing employees a bonus. But knowing that a bonus is guaranteed each year is usually a key incentive for many workers, who may be counting on the extra payout, such as to pay off credit card debts or go on a family holiday. "To me, whether the salary adjustment is 3 per cent, 5 per cent or 8 per cent, it's not really a big deal. But I do expect a bonus, because I need that to pay my tax bill," Eva Lui, who works in the hotel industry, said. According to the institute's survey, a brighter outlook for many companies means employees can look forward to slightly fatter pay packages next year with salary rises averaging 3.3 per cent. This is up from 1.9 per cent this year, when construction, banking and insurance firms recorded the highest pay increases. The property development, hotel and telecom sectors fared the worst this year, with average salary adjustments of about 1 per cent. Lai Kam-tong, co-chairman of the institute's remuneration committee, said the actual pay rise next year may be higher than 3.3 per cent as a clearer picture of the business environment emerges. Many companies have not finalised an overall, budgeted pay increase for next year and are waiting for more information on the economic recovery, he said. "This wait-and-see approach does not mean that they are thinking the situation will become worse and that they might have a lower percentage. They are seeing that we are having a better situation and they think they will probably be able to give us more than 3.3 per cent," Lai said. Economists generally expect moderate growth, especially in the US, next year with hopes of increased imports from major trading partners like Hong Kong and the mainland. Yesterday's announcement by the US Federal Reserve of an additional US$600 billion in Treasury bond purchases to next June is intended to keep US interest rates low and spur corporate and consumer spending. The institute surveyed 97 companies from 17 sectors, with a total of about 139,000 full-time staff. This year's pay adjustment figure was based on data collected in the first nine months of this year. Next year's projected pay rise is based on estimates sought last month.

Hot money heads to Hong Kong as US Fed frees up billions - HKMA on standby to tackle bubbles - Norman Chan , Chief Executive of the Hong Kong Monetary Authority - Get ready for a new flood of hot money. Hong Kong's de facto central bank has warned that the US Federal Reserve's latest US$600 billion attempt to boost the world's biggest economy will probably add to the asset and housing bubble here, but says it stands ready to act. The Hong Kong Monetary Authority said it would re-enter the city's red-hot housing market as required after the Fed announced its latest round of quantitative easing, or QE2, early yesterday in Washington. "We will take measures that are specific to the housing market if necessary," said Norman Chan Tak-lam, HKMA chief executive, just hours after the Fed announcement. Under the plan, the Fed will buy US government debt, or Treasury bonds from banks, effectively giving them cash to lend in the market. Buying so many bonds effectively lowers interest rates and is intended to encourage people to take out a mortgage or other form of loan to revive the US economy - at the risk of creating problems further afield in markets like Hong Kong. "The risk of an asset bubble in Hong Kong's property market is rising," Chan said. "Everybody should stay alert. Banks should manage their risks and be fully prepared, and homebuyers should not buy property just because interest rates are low." Financial Secretary John Tsang Chun-wah echoed Chan's concerns about asset bubbles, and three commercial banks in Hong Kong have raised mortgage rates this week. The Fed has already spent about US$1.7 trillion from 2008 to earlier this year to take bonds off the hands of banks and stabilise them, and restore confidence to the market, but failed to boost the economy or create jobs. "At the same time, excessive liquidity has flowed into emerging markets where the economic outlook is more favourable, creating pressure on exchange rates, consumer price inflation and asset prices," Chan said. As hot money continues to flow in, Hong Kong's interest rates would stay close to zero, increasing the risk of an asset bubble, Chan said. Some countries - including Australia, India and China - have lifted interest rates to head off inflation and asset bubbles. But Hong Kong's currency peg means its rates have to track the Fed. "The Fed is printing money for other people - not just for the US," said Louis Wong Wai- kit, director of Phillip Capital Management. "Like Japan, which has had numerous rounds of quantitative easing over the past decade, but still can't revive its economy because people just take the cheap money and invest in emerging markets where the returns are higher. QE2 will probably create a bubble in Asia and Hong Kong rather than boosting the US economy." The Hang Seng Index yesterday rose 390.96 points, or 1.62 per cent, to close at 24,535.63. The HKMA introduced measures in October 2009 and August this year to curb luxury residential mortgage lending, but prices have still topped the highs they reached in 1997, when the city last had a housing bubble. Chan rejected the option of removing the Hong Kong dollar's 27-year-old peg to the greenback, saying it had been "the pillar for monetary and financial stability in Hong Kong. We have no plan to change it". Another banker said QE2 would be good news for short-term investors. "Stock and property markets are likely to continue to do well for the moment."

The government on Thursday said the cost of the MTR Sha Tin to Central Link project would be over HK$60 billion, approximately 57 per cent higher than that estimated in 2007. Speaking to a Legislative Council Panel on Transport, Under-Secretary for Transport and Housing Yau Shing-mu said the rail project had been estimated to cost only HK$38.1 billion in 2007. However, because of the rising costs of construction materials, the addition of a station at Hin Keng just north of the Lion Rock Tunnel, and a revised alignment, the cost would rise. Work on the project will start in 2012. The 17-kilometre Sha Tin to Central Link will have 10 stations. They are Tai Wai, Hin Keng, Diamond Hill, Kai Tak, To Kwa Wan, Ma Tau Wai, Homantin, Hung Hom, Exhibition and Admiralty. The link will provide interchanges with other railway lines. The government has said the link between Tai Wai to Hung Hom could start operating by 2018.

Tsang hits out at care-fund critics - Don't be deterred by political posturing when contributing to the HK$10 billion Community Care Fund. That was the message from Chief Executive Donald Tsang Yam-kuen to business leaders yesterday. Tsang described as "illogical" criticism that the fund is being set up to help those who are not covered by the social security net. In a speech that touched on several issues in his recent policy address, he told those at the Joint Business Community Luncheon to be ready to tackle standard working hours themselves. Changes to regulate property sales are also not meant to punish developers but to make sales more transparent, he added. In response, Jeffrey Lam Kin- fung, who represents the commercial functional constituency, told the government to first study the effects of the minimum wage on business for at least two years before tackling the issue of standardized working hours. Speaking of the care fund, Tsang urged critics to "take off their political lens and focus on the people's needs." The fund has been described as a tool to help Chief Secretary for Administration Henry Tang Ying-yen, who is in charge of the project, become leader after Tsang steps down in 2012. Others said the fund is an example of government-business collusion. "I honestly fail to see the logic. Is it really something so objectionable when the government and the business community work together to help people in need?" The government has promised to match every dollar donated by the business sector to create the HK$10 billion fund. Sources say pledges so far exceed HK$3 billion. "When it comes to helping people, the question is not whether to do it or not, but how to do it right and do it quickly," Tsang said. On standard working hours, he said companies should take the opportunity to help their employees enjoy a proper work-life balance. "This is another sacred cow we have to tackle in Hong Kong." Tsang joked that he has too little time to read and can only catch up with the latest news on his iPad.

New Hong Kong Hospital Authority chief Leung Pak-yin with annul salary of US$550,000 will start Monday - Hospital Authority director of quality and safety Leung Pak-yin would succeed Shane Solomon as chief executive from next Monday, HA chairman Anthony Wu Ting-yuk said on Thursday. Australian-born Solomon resigned as HA chief executive in mid-July after deciding to rejoin his family in Australia. Leung, 51, will serve in the post for three years with an annual salary about HK$4.3million - equivalent to that paid to Solomon. Leung completed his medical education and training at the University of New South Wales in Australia. He then returned to Hong Kong where he has worked in public health and administrative medicine for more than 20 years. He took up his current position as a Hospital Authority director in March 2007. Before that, Leung was a senior official with the Food and Environmental Hygiene Department. Speaking to local media on Thursday, Leung said he was greatly honoured to become HA chief executive and he would work to improve the standard of public medical services. “The most important thing is we have a strong team that will work with me in solving problems,” he said.

The United States Federal Reserve launched a fresh effort to support a struggling US economy on Wednesday, committing to buy US$600 billion in government bonds.

The former chairman of Sun Hung Kai Properties (SEHK: 0016), Walter Kwok Ping-sheung, who was recently removed from a key trust controlling the property empire, has teamed up with Cheung Kong (Holdings) (SEHK: 0001) to develop a residential project in Ho Man Tin. The move caught the market by surprise as Li Ka-shing's Cheung Kong is seen as the only serious competitor to SHKP in Hong Kong's real estate market. The two companies now account for seven out of 10 new homes sold in the city. The development comes a week after Kwok announced that he could agree to leave the company if his two brothers paid him a "reasonable" price - something more than HK$20 billion, as he indicated. Kwok said he was offered HK$20 billion to settle the dispute over the family's assets, which include a 42.4 per cent stake in the HK$371.37 billion SHKP empire. The joint-venture project is to be built on a site in Argyle Street, Ho Man Tin, which is the former Civil Aid Service Training Centre. The site was bought by Cheung Kong at a government land auction in August for HK$4.1 billion, or HK$10,399 per square foot - the second costliest land in Kowloon in terms of price per square foot. According to Next Magazine, Cheung Kong bought the site through a company called Bradford Investments, which was formed in 2007. Directors of the company include Cheung Kong deputy chairman Victor Li Tzar-kuoi and the group's directors, Grace Woo Chia-ching and Justin Chiu Kwok-hung. Kwok joined as a director on August 17, the same day Cheung Kong won the site at the land auction. Kwok, through his spokesman, confirmed his investment in the venture. Cheung Kong declined to comment, as did Sun Hung Kai Properties. The spokesman said the investment had the blessing of Kwok's mother Kwong Siu-hing, who is also the chairman of SHKP. "Kwok is a long-time friend of Victor [Li]," the spokesman added, citing the co-operation between SHKP and Cheung Kong on the West Kowloon development (SEHK: 0034). The two companies formed a joint venture - one of the three consortiums to bid for the much-criticised West Kowloon cultural project - in early 2000. There was strong resistance to the government's idea of a single developer getting the whole project. The public also objected to the high development density that the developers had proposed. The Executive Council eventually scrapped the "single-developer model" for the controversial project in 2005.

Chief Executive Donald Tsang Yam-kuen told businessmen yesterday to move with the times on corporate social responsibility or risk having changes forced on them. While saying his administration would be careful over studying the introduction of standard working hours, Tsang stressed that rising public expectations of social justice meant workers expected a fair deal. Addressing business chambers at a lunch to discuss the policy address he delivered last month, Tsang repeatedly highlighted the changing nature of Hong Kong society with people wanting more from the business community. "Times are changing. In recent years, business success has sometimes been equated with business excess," he said. "Social tension is increasing because the fruits of business prosperity (SEHK: 0803, announcements, news) have not been trickling down to the grass-roots level. Some people feel they are being ripped off. "It is better to instigate change than to have change foisted upon you." Amid intensifying public sentiment against the rich and powerful, Tsang cited several measures in his policy blueprint, including the imminent introduction of a minimum wage and plans to study the introduction of standard working hours. Despite having a capitalist economy, social change warrants arbitrary action by the government "to make sure profits have to be shared properly at some stage", Tsang said when responding to questions on the impact of policies on the business sector. The "overly long working hours" of the workforce was hurting not only workers but also business productivity, Tsang said, who joked that his 18-hour working day left him no time to learn how to use his iPad. He urged discussion by the business community, but warned that he would "not bury my head in the sand". On the tightening of regulations for property sales, Tsang said it was not designed to punish property developers but to stop buyers being misled. Tsang also dismissed criticism of the HK$10 billion Community Care Fund - designed to help the poor - as being collusion between officials and business leaders. The matching fund, which is headed by Chief Secretary Henry Tang Ying-yen, is seen by some as a political vehicle to help Tang's possible bid to fill Tsang's shoes in a 2012 election. Ivan Choy Chi-keung, a political scientist at Chinese University, said Tsang's hardline speech was in line with a strategy adopted by the government in recent weeks to boost its popularity. "Donald Tsang has realised that by hitting hard at property developers and businessmen, he can be in tune with public sentiment, thus raising his popularity," Choy said. "He has no option but to identify with the people to avoid becoming a lame duck in the remaining two years in office."

Hong Kong New green jail offers a more humane look - An award-winning design shows that prisons do not have to be dark, dank and airless - Prison images (clockwise from left): a cell block; a“green”roof (also bottom, left); staff quarters; visitor registration centre; bird's-eye view of complex; rooftop solar panels; an indoor recreation hall.

Admiralty MTR due for facelift - Office workers in Admiralty will lose one of their favorite lunchtime hangouts for the next few years, when Harcourt Garden closes to make way for construction of the Admiralty MTR station extension. The garden, which is located on top of the future extension, would be closed from early next year until 2015, the MTR Corporation (SEHK: 0066) said yesterday. But an elevated garden would be restored after construction is completed and its usable area increased by 70 per cent, said Peter Leung Man-fat, design manager of the MTR's South Island Line. The new Admiralty station will be a major interchange with two additional lines - the South Island Line and the Sha Tin-Central Link. After construction is completed in 2015, the total area will be more than doubled, from 9,000 square metres to 20,000 square metres. The platforms serving the new lines will be linked to the existing platforms by a series of escalators, and Leung said it would be a three-minute walk between the old and the new platforms. The extension will have six floors, and on the bottom will be the platforms of the South Island Line. On top will be the platforms for the Sha Tin-Central link. The extension will be covered by a large glass pane that will allow daylight to enter, and will include more than 30 escalators. "The new lines will be able to attract some passengers who are now using the Tsuen Wan line. Admiralty station will not be more crowded," he said. Construction would be designed to minimise disruption. Despite the MTR's reassurance that Harcourt Garden would be restored and there were no plans to add commercial elements to it, some office workers still lamented the loss. Wong Sze-mei, who regularly has lunch in the garden, said she would now be forced to dine indoors. "As an office worker I already spend too much time indoors. It would be a loss if I cannot have lunch or simply stroll in the park, just to breathe some fresh air," she said.

Schools to get funds for voluntary drug tests - Secondary schools will get funds next year to conduct voluntary drug testing of students after a trial in Tai Po was deemed to have fostered an anti-drug culture even though no users were found.

New rule puts damper on Kowloon land sale - New rules on floor area resulted in a lacklustre land auction yesterday as a luxury residential site in Kowloon Tong sold for HK$2.17 billion - at the bottom of the forecast range.

 China*: Franco-American telecoms giant Alcatel-Lucent scooped the first deal of what was expected to be a lucrative Chinese state visit to France on Thursday, announcing US$1 billion in contracts. President Hu Jintao was due to arrive in France later in the day at the start of a visit that French officials hope will lead to tens of billions of euros in contracts for France’s high-technology sector.

Chinese president arrives in Paris for state visit - Chinese President Hu Jintao (L, front) and French President Nicolas Sarkozy inspect the guard of honor during a welcoming ceremony at the airport in Paris, France, Nov. 4, 2010. Hu arrived in Paris Thursday for a state visit to France. Chinese President Hu Jintao arrived in Paris Thursday for a state visit to France, aimed at promoting long-term and stable development of comprehensive strategic partnership between China and France. Later in the day, President Hu is expected to hold talks with his French counterpart Nicolas Sarkozy on bilateral ties and major world and regional issues of common concern, Chinese officials said. "In the face of complicated and profound changes in the international situation, Hu and his French counterpart, Nicolas Sarkozy, would discuss how to work together to highlight the strategic nature and the overall importance of the partnership between the two countries," said Kong Quan, Chinese Ambassador to France, in an interview with Chinese reporters last Monday. "The two sides will also explore and decide ways of bilateral cooperation which lays stress on the spirit of times and creativity," he added. The ambassador said that the two countries will sign a number of cooperation deals during Hu's visit. Since China and France set up diplomatic ties 46 years ago, bilateral relationship has played a leading role in relations between Western countries and China because of its pioneering nature and strategic significance. France is China's important trading partner in the European Union. The two-way trade was registered at 38 billion U.S. dollars in 2008. Although bilateral trade fell to 34.4 billion dollars in 2009 due to the international financial crisis, it has increased significantly since the beginning of this year. In the first nine months, the trade volume was recorded at 33 billion dollars. Hu paid his first state visit to the European nation in January 2004, during which Hu and French leaders agreed on lifting bilateral ties to the the level of comprehensive strategic partnership. Hu met Sarkozy in Beijing in April this year when the French leader was on his second state visit to China. The two leaders had "candid, friendly and productive" talks on deepening the China-French comprehensive strategic partnership, and reached "many important agreements." "China is satisfied with the overall development of bilateral relations, but we believe that our ties should reflect the change of the times," said Chinese Vice Foreign Minister Fu Ying last week at a press briefing. She said China hopes that through dialogue between Hu and Sarkozy, the two countries would increase mutual understanding and trust and promote a partnership of equality and mutual respect between the two big powers. China and France have conducted fruitful cooperation in civilian nuclear energy and aviation, and the two sides are discussing how to broaden cooperation in these fields, said the vice minister. As France will take over the chair of the Group of Twenty (G20) in mid-November, Fu said, the two leaders will exchange views on the upcoming Seoul summit and the future development of the G20 mechanism. Hu will also pay a state visit to Portugal following his France trip.

President Hu Jintao arrives in France on Thursday for a state visit expected to yield billions of euros' worth of trade deals. Hu is due to touch down with his wife Liu Yongqing at 7.30pm HK time at Paris’s Orly airport where he will meet French President Nicolas Sarkozy and receive military honours before being driven to his Paris hotel. Sarkozy and Hu hold their first round of bilateral talks at the Elysee Palace at midnight HK time and will then sign “lots of contracts, large and small” before a full state dinner, a presidential official said on Wednesday. The deals are expected to include a purchase by China of Airbus aircraft, nuclear energy deals for French company Areva and a contract between French insurance firm Axa and the Industrial and Commercial Bank of China (SEHK: 1398). The value of the deals “will be far greater than during any previous visit by European leaders to Beijing or by Chinese leaders abroad,” the presidential official said, declining to give a precise figure. During Sarkozy’s first state visit to China in November 2007, French companies signed contracts worth 20 billion euros (US$28 billion). Activists complain France is keeping human rights off the menu for the visit, a delicate encounter given the economic stakes and Sarkozy’s preparation for his upcoming presidency of the G20 group of economic powers. The leaders will toast each other at the state dinner on Thursday evening – the only official public statements scheduled by the two. They have not scheduled a joint news conference during the visit – an exceptional departure from state visit procedures, criticised by campaigners who want Hu to be pressed on the issue of human rights. Campaigners criticised Sarkozy for not speaking out in favour of jailed mainland dissident Liu Xiaobo, whose Nobel Peace Prize enraged Beijing when it was announced last month. It is the Chinese leader’s first official foreign trip since the Norwegian Nobel Committee awarded Liu the prize. On Friday, Hu is due to meet business leaders for more contracts, visit a war memorial at Paris’ Arc de Triomphe and meet with French Prime Minister Francois Fillon before flying south to the Riviera city of Nice. There he and Sarkozy are due to hold further bilateral talks and dine at a restaurant on Friday evening. Hu will visit a nearby Schneider Electric factory on Saturday before flying on to Portugal, the Elysee official said. France and China have had tense diplomatic relations in recent years, notably over French meetings with the exiled Tibetan leader the Dalai Lama, but they maintain important economic ties and relations have warmed since last year. On his second state visit to Beijing in April, Sarkozy hailed China as a “strategic partner” and Hu has made warm comments about France in the run-up to this week’s visit.

Lamborghini gets jump start in China high-end sector - A Lamborghini Murcielago LP 670-4 Superveloce automobile on display prior to the 79th Geneva International Motor Show. With customers as young as 18 years old in China, the automaker is stepping up its sales force throughout the country.

Seafood sector rides on growing Chinese market - Officials present the 10 millionth salmon from Norway since 1985 in Shanghai. China is forecast to become the world's largest market for seafood products this year, overtaking the United States. More overseas seafood producers and supplies are eyeing the Chinese market, following its growth in the past few years. "This year, China's international seafood trade will be worth more than $17 billion. It will likely overtake the United States and become the world's largest seafood-trading country," Peter Redmayne, president of US-based Sea Fare Expositions Inc, said on Tuesday at an industry event in Dalian, Liaoning province. The Chinese market is getting stronger because the country is becoming more prosperous and more people can afford both domestic and imported seafood, Redmayne said. "Chinese people are importing more and more seafood even though the prices of some products, such as salmon and king crab, are rising," he said. Norway alone exported 19,300 tons of salmon, valued at 895 million yuan ($133.97 million), to the Chinese mainland and Hong Kong in the first eight months, figures released by the Norwegian Seafood Export Council (NSEC) showed. The imports increased 35 percent in volume and 53 percent in value year-on-year. "Some 130,000 tons of Norwegian seafood were imported to China in 2009, valued at 1.9 billion yuan," Ashild Nakken, director of NSEC China, told China Daily. "2010 could become another record-breaking year as the value already reached 1.9 billion yuan in September." Nakken said China will soon surpass Japan and become the most important market in Asia for Norwegian salmon. "We are very happy that the Chinese people like Norwegian salmon. They buy more and pay more," she said. Compared with the rising imports, China's seafood exports have been falling slightly since 2007, Redmayne said. "It's partly because of the rising labor cost. Also, some imported products for reprocessing are not exported but stay in China for domestic consumption," Redmayne said. Liaoning Province Dalian Ocean Fishery Group Corp (Liaoyu Group), previously an export-oriented pelagic fishery corporation, is now paying more attention to the domestic market. "Exports are becoming less competitive with the potential appreciation of the yuan and rising labor costs. We are now rebalancing the two markets. We not only sell our own products in the domestic market, but also act as agents for overseas seafood products," said Lu Daqiang, vice-general manager of Liaoyu Group. The 15th China Fisheries and Seafood Expo, held from Nov 2 to 4, is organized by the agriculture council of the China Council for the Promotion of International Trade. Sea Fare Expositions Inc is the overseas co-organizer of the expo. A record number of overseas exhibitors are attending this year's expo, organizers said. It features 700 companies from more than 30 countries and regions, including the US, Australia, Russia, Vietnam and Japan.

China Southern, the country's largest airline, announced on Thursday that it had agreed to purchase 36 Airbus planes for $3.78 billion from Airbus SNC, based in French city Toulouse. In a statement filed to the Hong Kong stock exchange, China Southern said it would buy six Airbus A330 aircraft for $1.205 billion and 30 Airbus A320 series aircraft for $2.575 billion. The aggregate consideration will be partly payable by cash and partly by financing arrangements with banking institutions, according to the statement. The six Airbus A330 planes will be delivered in stages to China Southern between 2013 and 2014. While the 30 Airbus A320 series aircraft will be delivered in stages from 2012 to 2015, said the airline. The airline, based in South China's Guangzhou City, said the purchasing was consistent with its development strategy and the aircraft fleet structure plan. The acquisition will facilitate the optimization of the structures of its aircraft fleet and traffic capacity, thus enhancing China Southern's competitiveness and core competence, it said. Delivery of the 36 planes will increase the airline's carrying capacity by nearly 14 percent when compared to the capacity by December 31 last year, according to the statement. China Southern operates domestic, regional and international services. It is a member of the SkyTeam airline alliance. It operates a total fleet of 400 Airbus and Boeing jet aircraft, the company said on its website. In 2009, China Southern carried 66.28 million passengers and was the 3rd largest airline in the world and the largest one in Asia, it said. China Southern has been ranked as the largest airline in China for 31 consecutive years.

Clear skies guaranteed for Asian Games Guangzhou China - Authorities in Guangzhou are preparing to use planes and rockets to disperse rain clouds and ensure clear skies for the Asian Games which start next week in Guangzhou. Xinhua news agency reports that the city is prepared to do whatever it takes to ensure the November 12-27 games are rain-free. Weather in the city is usually mild and sunny at this time of year, but authorities appear to be taking no chances China claims it employed weather modification techniques to prevent rains from dampening the 2008 Olympic Games in the capital Beijing. A common method is to seed storm clouds with dry ice or silver oxide released from aircraft or shot from the ground to make it rain before it can disrupt proceedings.

China Vanke said on Thursday that preliminary data showed property sales for October jumped 137.3 per cent from a year earlier to 15.51 billion yuan (US$2.32 billion).

Polo Club looks set to score big in China - New Tianjin club in the hunt for members - Rowland Wong, president of the Tianjin Goldin Metropolitan Polo Club, expects the sport to become popular in northern China. Mahjong losing its thrill? Backgammon becoming a bit of a bore? Try polo, the horseback sport known as the Game of Kings. It's expected to be the next big thing in China for the well heeled - and well mounted. The Tianjin Goldin Metropolitan Polo Club, which is part of a large-scale property project developed by Hong Kong-listed Goldin Properties Holdings, is being launched today in the Binhai Hi-tech Park in southeastern Tianjin. It will be the biggest of the very few polo clubs across a country where people are more used to swinging a golf club than a polo mallet. "Polo is the latest trend in China. We are confident it will be very well received by more people in northern China, who are known for their love of horses," said Rowland Wong Kwok-ho, president of the private club. He said the property developer was looking for sites to build more polo clubs in two other major mainland cities. The Tianjin club site covers 890,000 square metres. It includes a polo clubhouse, two international-sized polo fields with stabling and training for up to 150 horses, an outdoor dining area, a hotel, a theme park and auxiliary polo sports facilities. Compared to golf, Wong said, polo is more environmentally friendly, more fun - and also more expensive. Memberships for the patron owners of polo teams are priced as high as 10 million yuan (HK$11.6 million) at the club. Joining the polo teams costs 2 million yuan and ordinary social members need to pay at least 200,000 yuan to enjoy the facilities and equestrian services. The club has invited individuals and corporates to join, but Wong declined to say how many had accepted the offer. "We will set up a panel to assess members' applications. The only criterion we have for our members is that he should be an honourable person," he added. The club was targeting senior executives, businessmen and people from multinational corporations and local government bureaus as potential clients. The club will host its first match, the Metropolitan Polo Club Trophy, today and more international polo tournaments, horse riding performances, outdoor carnivals and fashion shows are expected to be staged in future. Asked why the developer chose a polo club rather than a golf club, Wong said a polo club was more suited to the high-end concept of the whole project and the size of the block of land available. There are around 400 golf courses across the country. The government has tightened approvals for golf course construction in recent years as many of the courses have been built on farmland illegally. Polo originated in Persia in the 5th century BC. Players on horseback score by driving a small, white ball into the opposing team's goal with a long-handled mallet.

November 5, 2010

Hong Kong*: Hong Kong must maintain its peg to the dollar to avoid currency volatility and cannot contemplate a shift to a yuan peg until the Chinese currency is convertible, its former central banker said on Wednesday. Joseph Yam Chi-kwong, ex-chief executive of the Hong Kong Monetary Authority, said that although anchoring to the dollar might lead to asset bubble and inflation risks, the territory would be able to cope through stronger supervision and regulation. “I genuinely believe that a fixed exchange rate is better than a floating exchange rate system for Hong Kong,” Yam told a Bank of America-Merrill Lynch forum. The Hong Kong dollar fell near the bottom of its band on Wednesday and speculation has increased that the monetary authority will have to adjust the peg to deal with a wave of speculative inflows as the United States loosens its policy. When asked about the possibility of pegging to the yuan, he said: “If I were still head of the HKMA, and you asked me to move the peg from the US dollar, I’d say, ‘Sorry, I cannot do it, because the renminbi is not convertible.’” However, he also questioned whether convertibility was a must for internationalising the yuan, also called the renminbi, saying that Beijing’s gradual approach made sense. “Many have pointed out the prerequisite that the renminbi should first become freely convertible,” he said. “But at the same time, they have also sounded warnings on the associated risks of capital account liberalisation given that the potency of international finance has time and again proved to be quite difficult to harness,” he said. China has loosened the reins on the use of its currency for trade and investment in Hong Kong, making the territory a key testing ground and stepping stone for internationalisation of the yuan. The value of trade settled in yuan reached 126.5 billion yuan (US$19.0 billion) in the third quarter, up from 48.7 billion yuan in the second quarter, the Chinese central bank said this week.

Standard Chartered plans major Chinese expansion - Standard Chartered Plc, the London-based financial services group, will accelerate the expansion of its Chinese banking business, with the aim of launching 40 more branches in the country by the end of 2011, said John Peace, chairman of the board, in an exclusive interview with China Daily. Speaking before the company's first-ever board meeting on Chinese soil, Peace said that Standard Chartered had opened more than 60 branches in the world's fastest-growing economy by the end of October. In this year, the bank is planning to increase staff numbers by 20 percent, open 30 percent more branches and expand business in China's financial market by 40 percent. "China is a key market for our bank. Over the last two years, we have discussed ways of growing the business in many different areas," said Peace, who added that the company will continue its significant investment in what it regards as an important market. "Standard Chartered is in a great position to support trades between the Chinese mainland, Hong Kong and Taiwan," he said. In July 2009, Standard Chartered HK became the first foreign bank to complete a two-way trade settlement between Hong Kong and the Chinese mainland. Meanwhile, in August of the same year, its Chinese division was the first foreign bank to be appointed as the agent and settlement bank for yuan cross-border settlements. It now offers yuan trade settlement services in a number of locations including Hong Kong, Singapore, Japan, the United States, and the United Kingdom. More countries and regions are due to come online soon. According to the People's Bank of China, as of the end of September the accumulative settlement volume conducted by Standard Chartered ranked first among foreign banks in the country. The bank will focus on financial products and services that support small and medium-sized enterprises (SMEs) in China. "It is a market that we know very well," Peace said. He also said the cooperation with the Agricultural Bank of China (ABC), one of the country's top four commercial banks, is an important part of its future strategy. The collaboration brings with it the advantages offered by ABC's large domestic distribution network of 23,000 branches and outlets which serve about 2.6 million corporate customers and 320 million retail customers. On June 30, Standard Chartered announced it will invest $500 million in ABC's H shares IPO in Hong Kong. The collaboration includes international trade corridors, SMEs and the consumer finance sectors. The core development strategy of the bank is organic growth, but it also keeps a close eye on merger and acquisition opportunities when they make sense financially and strategically, Peace said. So far, the bank has no intention of entering any other financial sector, he said. Standard Chartered recently raised a one-for-eight rights issue of about $5 billion to strengthen its balance sheet. Peace said this will enable the group to meet the Basel III countercyclical buffer (the financial mechanism establishing a set of minimal capital requirements for banks).

The government does not intend to make its voluntary drug-testing scheme for secondary students compulsory because of opposition from parents and students.

Chinachem wins bidding for Kowloon plot - Chinachem sales executive Ng Shung-mo bids during an auction in Wan Chai on Wednesday for a plot of land at Inverness Road in Kowloon City. The real estate developer eventually bought 75,000-square-foot site for HK$2.17 billion. The government on Wednesday auctioned a piece of land in Kowloon for HK$2.17 billion - below expectations. Unlisted Chinachem won the bidding. The 75,845 sq ft, or 7,046 sq m site is average in size compared with the previous eight auctions this year. The site, offering a gross floor area of 227,529 sq ft, was expected to sell for HK$2.78 billion, according to a poll of nine analysts. Chinachem sales director Ng Shun-mo said they planned to develop four residential towers on the site - which would provide about 160 units. The auction is the first after Hong Kong Chief Executive Donald Tsang Yam-kuen unveiled new measures in October to cool the red-hot property market, including raising housing supply and restricting immigration based on real estate investments. The weak response from developers was in stark contrast to previous auctions this year, when tranches of land were sold at higher-than-expected prices after furious rounds of bidding. “It’s the location because there is one side facing a cemetery and the other side facing a secondary school, which means that it will be too noisy for the residents,” said Yu Kam-hung, senior managing director for valuation in greater China at CB Richard Ellis. “One more uncertainty is that because there is a new policy about building plans,” Yu said. The government also announced earlier this year that as of April next year, developers would have to submit building plans in which the gross floor area concession would have to be reduced to 10 per cent from 20 per cent, yielding a bigger net floor area. Developers in Hong Kong usually quote apartment prices in gross floor area, which includes actual space of the apartment and other common areas, such as corridors and club houses. “The new rules have some impact [on the auction result],” Ng Shun-mo, Chinachem’s sales director told reporters after the land auction. Chinachem is an unlisted Hong Kong-based developer. Chinachem said the project will involve an investment of HK$3 billion, with four 10-storey blocks set to be built on the site supplying 160 units. The government sold the site in Kowloon Tong with an area 75,845 sq ft, or 7,046 sq m, and offering a gross floor area of 227,529 sq ft, at HK$2.17 billion (US$278 million), below a poll forecast of HK$2.78 billion. The auction came during trading hours. The Hong Kong property sub-index briefly gave up some gains right after the auction, but powered ahead to end up 3.43 per cent, outperforming the Hang Seng index’s 2.0 per cent. Hong Kong’s housing market is overheating, prompting the government to unveil a series of measures to curb fast-rising prices, including raising the stamp duty of luxury apartments to 4.25 per cent from 3.75 per cent. Housing prices have risen 50 per cent since the start of last year and are fast reaching 1997 highs on brisk demand from mainland Chinese investors and low mortgage rates as Hong Kong tracks US monetary policy because of the dollar peg. “It [the Hong Kong market] will go up and it will come down once the US starts tightening and interest rates go up, the market will turn,” said David Faulkner, executive director of Colliers International. The longer it goes on, I think the more chance of prices going up higher.”

Jeremy Fok sentenced to community service - Jeremy Fok Kai-yan, accompanied by his mother Loletta Chu Ling-ling, enters Eastern Court on Wednesday for sentencng. Fok had previously pleaded guilty to dangerous driving and drink driving. Jeremy Fok Kai-yan - the youngest son of legislator Timothy Fok Tsun-ting - on Wednesday was ordered to perform 160 hours of community services and had his driving licence suspended after being convicted of dangerous driving and drink driving. Accompanied by his mother, former Miss Hong Kong Loletta Chu Ling-ling, Fok, 22, appeared in the Eastern Court on Wednesday. He had previously pleaded guilty to the two charges. Passing sentence, Acting Principal Magistrate Amanda Jane Woodock said the case was serious as Fok should have taken a taxi after he had been drinking. But she noted that Fok had a good academic background and was truly remorseful, so she sentenced him to serve 160 hours of community service and suspended his driving licence for a year. Fok was also ordered to take a driving improvement course in the next three months. The 22-year-old was arrested on July 17 about 6am, after his HK$500,000 BMW convertible with the number plate, “HK 21”, lost control. It crashed into a railing on Bonham Road in Mid-Levels. No one was injured. Fok said he was trying to park the car, but accidentally put his foot on the accelerator. His lawyer told the court Fok had been drinking with friends in Lan Kwai Fong. Fok's blood-alcohol level at tbe time of the accident was found to have been exceeded twice the legal limit. Speaking outside the court, his mother said she was pleased the case was over. Fok is also the grandson of the late tycoon and philanthropist Henry Fok Ying Tung.

Green coalition fights to save wetland - Groups want Henderson Land barred from building luxury homes on Yuen Long site - About 20 green groups have combined to hold what they say is the last line of defence to stop a developer building luxury houses on a Yuen Long wetland. They say that if the Henderson Land (SEHK: 0012) project goes ahead at Nam Sang Wai, it will open the way for development of other wetlands where developers have bought up sites. The coalition issued a joint statement yesterday in an attempt to stop the government from giving the developer permission to build luxury homes on 54 hectares before a deadline next month. The Town Planning Appeal Board gave conditional approval to the plan, against the opposition of green groups, in 1994. But it required the developer to submit plans to preserve the ecologically valuable wetlands. The green groups say that if the government approves the latest plans before December 18, the developer will be subject to the board's less stringent environmental standards in force at the time of its conditional approval, not the present rules. "The old restrictions are insufficient to satisfy the community's aspirations for environmental protection and conservation," said Chan Kin-ching, a member of the Northeast New Territories Development Concern Group. "No public consultation was required under the old standards. "Nam Sang Wai is a bottom line which cannot be passed," Chan said. "This is because once the government approves this project, other wetlands such as San Tin - where many developers acquired a lot of land in the area - and Hoo Hok Wai will also be in jeopardy." Designing Hong Kong's Paul Zimmerman said the government should review its approval and consider a transfer of development rights to sites with lower ecological value. Other organisations - such as WWF, Friends of the Earth, the Conservancy Association, Green Sense, the Hong Kong Bird Watching Society and The Professional Commons - also signed the joint statement. They demanded the developer submit a plan on which the public can comment and which the board can consider in light of community expectations and conservation principles. The "no-net-loss" principle - meaning any development should not be allowed to result in a loss of wetlands and ponds - should be strictly upheld, the groups said. A spokeswoman for Henderson Land said it had heard many different opinions about the project but it had its own historical background that should be respected.

Troubled accounting firm's staff jump ship - Grant Thornton to close as BDO gains full team - Accounting firm Grant Thornton, which is embroiled in lawsuits involving its missing former boss, will close down its Hong Kong operation by year-end after its entire 600-plus partners and staff agreed to jump ship to its rival, BDO. It is the biggest such raid in the city's accounting sector and will make BDO Hong Kong's largest second-tier accounting firm, with 1,100 staff and more than 70 partners serving 200 listed companies. BDO will still be dwarfed by the Big Four - PricewaterhouseCoopers, Ernst & Young, Deloitte Touche Tohmatsu and KPMG. But it will extend its lead over smaller accounting firms with 300 people or fewer. Albert Au Siu-cheung, chairman and chief executive of BDO, described the mass recruitment of Grant Thornton partners and staff as a "golden opportunity". "The opportunity to have a massive admission of so much established accounting talent is rare. This will strengthen BDO's competitiveness in the local accounting industry," Au said. "This will also create a bigger mid-tier firm allowing listed companies a choice for auditing and professional services in future." Au said the recruitment would be completed by the end of this year, and all staff and partners would become part of BDO, while Grant Thornton would cease operation in Hong Kong. Grant Thornton's clients - including 130 listed companies audited by  the firm - had been notified of the change and most agreed to make the switch to BDO, Au said. Au said lawsuits involving Grant Thornton's missing boss, former managing partner Gabriel Ricardo Dias-Azedo, were not a factor in the move. Grant Thornton chief executive Patrick Rozario, who led the move to BDO, said the team decided to shift because of Grant Thornton International's directive for the mainland member firm to lead Grant Thornton's Hong Kong office. "We consider BDO, which is run independently in Hong Kong and China, respectively, is a model that suits us better," Rozario said. The lawsuits involving Azedo will continue after Grant Thornton closes its Hong Kong operation. Rozario emphasised that the company had done nothing wrong. Grant Thornton's former managing partner Azedo vanished last autumn after allegedly fleecing those close to him out of tens of millions of dollars. A Hong Kong court last week declared Azedo bankrupt. The Court of First Instance accepted an application to have him declared bankrupt by his distant cousin, Angela Gardner, a toy company trader. Gardner had entrusted US$9 million to Azedo to invest. Mr Justice Thomas Au Hing-cheung said evidence indicated Azedo had probably absconded. "There is every indication that he has fled Hong Kong and can no longer be located," the judge said. Also claiming funds are Archie and Betty da Silva, prominent members of the Portuguese community, who placed US$2 million in Azedo's care to set up a trust fund. Numerous lawsuits have been filed since Azedo disappeared, not only against him, but also against Grant Thornton. In November last year, the da Silvas obtained a ruling that - if undisputed and approved by the court - could have entitled them to get back some of their money through Grant Thornton on the basis that the company owed Azedo HK$5.5 million on his partnership account. But a judge ruled against them, saying Grant Thornton did not owe Azedo anything.

HL Technology aims for HK$500m in stock offering - Mainland wire and cable maker to float 180 million shares - Celebrating the company's stock offering yesterday are, from left, HL Technology's chief financial officer Li Jianming, chairman Chi Shaolin and chief executive Jiang Taike. HL Technology, a mainland maker of transmission wires and cables for laptops and television sets, plans to raise more than HK$500 million through an initial public offering in Hong Kong. It will offer 180 million shares at between HK$2.70 and HK$3.70 each to raise net proceeds of about HK$528 million. Chi Shaolin, the chairman and chief executive of HL Technology, said 40 per cent of the proceeds would be used to expand the production capacity of existing products, and 44 per cent would be used to develop and manufacture new products. The company planned to make new products such as solar connectors, halogen-free insulating materials and automotive wiring harness, said Chi, adding that it would be able to make new products for the automotive and alternative energy sectors. HL Technology's turnover rose 73.4 per cent to 636 million yuan (HK$735.79 million) in the first half of 2010 compared with the same period last year. Over the same period, its net profit rose 127.9 per cent to 70 million yuan. Chi said the company's size underpinned its growth, along with a solid customer base. Frost & Sullivan, a market research and consulting group, forecasts compound annual growth in China's consumer electronics industry of 13.2 per cent between 2009 and 2013, compared with a global average of 11.7 per cent, making the mainland one of the most important markets in the world. Another mainland company planned to raise between US$220 million and US$280 million through a Hong Kong stock market listing, Reuters said, citing a term sheet it had obtained. China Gold International Resources, listed in Toronto, is the overseas flagship company of China Gold National, the largest gold producer in China by output. The company made a net loss of US$8.37 million for the year to December last year, according to the pre-listing document. But it recovered in the first six months of this year, making a net profit of US$784,737. Citigroup is acting as the book-runner for the planned IPO of China Gold International in Hong Kong, according to the term sheet cited by Reuters. The company plans to offer 53.66 million shares, while the offer price has not been fixed. The mining firm focuses on gold production and acquisitions in China and is 41.2 per cent owned by gold producer China Gold National. China Gold International is expected to produce 116,000 ounces of gold this year and 146,570 ounces of gold in 2011. It has acquired another mine that contains copper-polymetallic deposits, which the company said would be able to process 12,000 tonnes per day at the beginning of 2012.

 China*: The World Bank on Wednesday boosted its growth forecast for China to 10 per cent for this year, but warned that global tensions over trade imbalances could cast a shadow over the rosy economic outlook. The bank based its new prediction on the “still surprisingly strong” 9.6 per cent growth in gross domestic product seen in the third quarter, and said the prospects for the world’s second-largest economy “remain sound”. The bank forecast next year growth of a scaled-back but still robust 8.7 per cent. It suggested in its latest quarterly update on China that a more flexible exchange rate mechanism would allow for more policy options such as further interest rate hikes, which would help Beijing contain mounting inflation. “The combination of large current account surpluses in some countries, including China, and large current account deficits in other countries, notably the US, poses financial and economic risks, including from possible tension and contentious policy responses to them,” the bank said. It said those risks were “probably the key ones for China”, adding: “In this connection, a lack of success in rebalancing China’s growth pattern would be among the more serious medium-term risks, for China and the world economy.” Global trade woes and the prospect of a looming “currency war” are expected to dominate discussions at next week’s Group of 20 summit in Seoul. G20 finance ministers vowed to move towards more market-determined exchange rate systems and “refrain from competitive devaluation of currencies” when they met last month in the South Korean city of Gyeongju. The United States and Europe accuse China of deliberately holding down the value of the yuan to benefit exporters. The currency has appreciated about two per cent against the dollar since Beijing pledged in June to loosen its grip. China says that irresponsibly loose US monetary policy is causing a wave of speculative cash to flood emerging markets in search of higher non-dollar returns. The World Bank said those capital inflows would “add to the upward pressure on the renminbi”, or yuan, but should be “more manageable” in China, adding they “should not be a reason not to raise interest rates”. China’s central bank last month raised one-year lending and deposit rates for the first time in nearly three years as Beijing ramped up efforts to contain rising inflation and cool the red-hot real estate market. The World Bank, which provides financial and technical aid to developing nations, upped its this year growth forecast from 9.5 per cent, much higher than the government’s own target of eight per cent. China posted first-quarter economic growth of 11.9 per cent and 10.3 per cent expansion in the second quarter. It emphasised the need for China to wean itself off its dependence on exports and continue to boost domestic demand, saying: “China’s economy, its role in the world economy and its external surplus are now substantially larger than five years ago.”

China Exporting factories to climb value ladder - Branded goods and value-added products are selling better than their cheaper counterparts at the Canton Fair, a strong indication that China's battered exporters have to climb the value ladder to survive. Liu Jianjun, a Canton Fair spokesman, said enterprises with independent intellectual property rights and their own brands, were better represented this year than in previous years, with their products priced 20-30 percent higher than their traditional rivals. Liu Wenge, a professor at the Central University of Finance and Economics in Beijing, said China's manufacturers are making the transformation from low-value producers to makers with independent research and development capabilities. Recent research in Guangdong province in South China, one of the country's manufacturing hubs, showed that upgraded enterprises making their own brands have profit margins 15 percent higher than those that did not. Zhao Zhongxiu, from the University of International Business and Economics in Beijing, said the structure of China's manufacturing industry is changing, "although it still largely depends on the global market". "In the past, most of China's small and medium-sized companies did not have capability to invest in research and development," said Zhao, who is head of the university's International Trade and Economics School. "The thin profit in export industry caused by exchange rate and labor cost will eliminate some speculative companies with no technical value. "But with the government's help, more and more enterprises are able to start to innovate and design their own brands." The fair, which opened in Guangzhou in mid-October, is held over three five-day phases, with phase one exhibiting high-tech machinery and products as well as heavy machinery and building materials. Phase two covers non-durable consumer goods, gifts and home decoration. Phase three mainly shows off textiles, clothes, baggage, medicine and healthcare products. The biannual fair, officially called China Import and Export Fair, is a crucial barometer of the foreign trade in China. Over the past five years, the fair attracted more than 350,000 buyers from around the world a year and before the financial crisis, annual turnover reached $73.8 billion. Among the companies at this year's fair was Aiminer Leather Products Co, from Southwest China's Sichuan province, which has benefited from carrying out independent design and research. The company has entered the US and European markets with its own brand and has enjoyed a more than 30 percent increase in exports over the past few years. Other manufacturers at the fair have also received increases in orders. Dong Cuiqing, trade manager of socks and hosiery makers MengNa, from Zhejiang province, said: "The textile industry business this year has been good, but profit has dropped as the material and labor cost increase, together with an increasing exchange rate." A report released by the Ministry of Commerce on Monday, said the proportion of China's high-tech and new electromechanical exports has grown, and amount to $348.24 billion and $667.72 billion in first nine months of this year. In addition, more enterprises are being encouraged to create own design and brands. Last year, more than 10,000 products received intellectual property rights in Dongguan, in Guangdong province, a 59 percent increase over the previous year. "Eighty-nine R&D centers with foreign investment were established in the city at the end of 2008, about 10 times of that in 2007," Liu Wenge said.

Shanghai reaps spoils of success as expo pays off - Visitors crowd a passageway to the top of the Nepal Pavilion with the Oriental Pearl TV Tower seen in the distance. Shanghai officials are popping champagne corks as they relish the economic success of the World Expo, with its attendance of more than 73 million. The organisers have published a slew of record-shattering numbers - from cultural performances to the number of reporters who covered the world's most extravagant fair - after the six-month-long event closed on Sunday. The question uppermost in residents' minds is whether the multibillion-dollar investment for the dazzling show paid off. But whether the money is reflected on the balance sheet of the expo itself or was made and spent on the perimeter, it's clear that hundreds of billions of yuan were involved. All signs point to a net profit. Two officials with the Shanghai Expo Bureau told the South China Morning Post (SEHK: 0583, announcements, news) the event was successful in business terms, though they were unable to tell exactly if the bottom line would show a profit or a loss. "I would say it would be a small profit," an Expo Bureau official dealing with media accreditation said. "The cost control proved efficient, and the bigger-than-expected crowds certainly helped the organisers operate at a profit." Municipal Communist Party boss Yu Zhengsheng said before the opening of the expo that the government aimed to break even, as box-office sales, rent from retailers and restaurants, income from the sale of toys and expo-related products as well as proceeds from the sponsors were projected as adequate to offset the multibillion-yuan construction and operational costs. So on May 1, Shanghai opened the gates after spending 18 billion yuan (HK$20.9 billion) on the construction of the 5.28 sq km site and earmarking 10.6 billion yuan for the expo's operation until October 31. The organisers have yet to unveil the balance sheet for the expo, but some figures are available. According to the media accreditation official, organisers were under strict budget control, to the extent of not being allowed to spend a single extra coin. Call it the famous "thriftiness" or "stinginess" of the Shanghainese - depending on your viewpoint - but one example of the tight cost control was when the organisers messed up the production of hundreds of journalist passes before the official opening due to rigid bureaucracy and chaotic management. Even so, they refused to spend extra money to produce the plastic cards again. Ticket sales alone amounted to an estimated 12 billion yuan, based on 160 yuan a ticket during ordinary days and 200 yuan for special days. The Economic Observer reported that the sales of premium products topped 30 billion yuan as of the end of last month, and that figure will increase as sales of products continue. The income from rent collected from retailers inside the expo has not been revealed, and the proceeds from the sponsors are confidential. Professor Chen Xinkang , head of an institute focusing on studying the World Expo at the Shanghai University of Finance and Economics, was quoted by the Jiefang Daily as saying that total revenue could be about 80 billion yuan if attendance exceeded 70 million. Chen added that, beyond expo-related revenues and expenses, 13 sectors - including hotels, traffic and telecommunications - would also get a much-needed boost. Certainly, tourism did. The National Tourism Administration said the expo generated an additional 80 billion yuan of income, with hotels, aviation companies and retailers the top beneficiaries. The municipal government also benefited by raking in billions of yuan in tax revenue, and 627,000 jobs were created. There seems little doubt, then, that the expo will boost Shanghai's gross domestic product (growth last year was 8.2 per cent). And yet, the true story of the expo economy can't always be told with statistics. For example, the box office was largely bolstered by extra spending by the state-owned companies. Employees of state-owned enterprises reported that nearly every worker was granted at least three free tickets, part of the strategy to boost the gate numbers. One employee of China Mobile (SEHK: 0941, announcements, news) received 20 free tickets from the company last month. Several government officials from other parts of the country told the South China Morning Post that they were encouraged to travel to Shanghai and visit the expo. Those costs won't show up in statistics, either. Also, off-balance-sheet costs amount to a big sum that won't be reflected on the expo balance sheet. The thousands of security guards hired to police the crowds standing in queues to visit pavilions were paid by the district government, not the Expo Bureau. What's more, many officials at the co-ordination bureau were on loan to the organisers, most of whom were on their state-owned employers' payrolls. And the host city will have its own balance sheet. When municipal officials talked about mega projects such as the breakneck expansion of Shanghai's subway system to 420 kilometres, economists raised questions about whether the big-ticket spending on infrastructure outside the expo area would be worth it. Yu, the party boss, admitted that Shanghai had shelled out at least 300 billion yuan to build infrastructure for the expo, which would exceed the US$40 billion investment for the 2008 Beijing Olympics. Jones Lang LaSalle's estimate of the investment for the expo projects was even higher - US$95 billion. But whatever the figure is, Shanghai expects to get it all back - and then some - when it auctions off the land on the expo site. And based on the current price in the city's prime areas, analysts expect the city to rake in about one trillion yuan. One executive with a Shanghai-based developer credited the city's expo strategy as being better, monetarily speaking, than the one Beijing officials had for the Olympics. "The stadiums for the Olympics turned into white elephants because of the limited use of the sport venues and facilities [afterwards]," he said. "The redevelopment of the expo site will generate tonnes more money for Shanghai."

French President Nicolas Sarkozy will woo his visiting Chinese counterpart this week with his bold agenda for global financial reform, although Hu Jintao may be wary of commitments. President Hu’s visit to France and then Portugal will nonetheless be another opportunity for China to wield its growing economic clout to counter trade tensions with Europe and ensure Hu has Sarkozy’s ear as he takes up the G20 presidency. “China hopes the talks between China and France will advance policy coordination and help stabilise its relationship with the European Union,” Chen Qi, a professor of international relations at Tsinghua University in Beijing, said in an email. “Advancing political relations with France will buffer against co-ordinated pressure from the US, the EU, Japan, South Korea, and other countries at the G20 summit.” Seoul hosts the next G20 summit on Nov. 11-12, after which France assumes the presidency of the group.

SMIC, China's largest chipmaker, reported its first operating profit in four years, banking on global demand and more efficient measures under a new management team.

Industrial and Commercial Bank of China said on Wednesday it was looking for acquisitions in countries in Southeast Asia where now it has no presence.

Hong Kong Sun Hung Kai Properties to give The landmark Beijing APM mall in the city's Wangfujing Street a second facelift - Sun Hung Kai Properties (SEHK: 0016) is to give its Beijing APM shopping mall a second major facelift in as many years to reposition the centre to appeal to local middle-income shoppers rather than tourists. SHKP, the largest property developer by market value in the world, says it will spend another 300 million yuan (HK$347 million) on renovations to the mall, which is a major landmark in Beijing's shopping mecca of Wangfujing Street. A 320 million yuan refurbishment in 2008 was aimed at increasing the appeal of the mall to young customers, but shopping traffic in the area had since undergone a significant change, said Ian Choy Chi-keung, SHKP's chief representative in Beijing. "The retail market in Beijing is changing. The purchasing power of local middle-income and white-collar shoppers has grown substantially in recent years. The local customer market has matured," Choy said. An in-house survey revealed that average spending by local customers at Beijing APM doubled to between 400 and 600 yuan this year from 200 to 300 yuan last year, which lifted it above the average 300 to 500 yuan spent by tourists at the mall, said Raymond Ip, leasing director at the firm. The profile and buying patterns of local shoppers has also changed. "They used to be government officials or businessmen and they bought products to give to others as gifts. That's why sales of luxury brands expanded aggressively. But in the past two to three years, salaries of white-collar workers have risen rapidly," said Ada Nip, head of retail at property consultancy DTZ's North China division. "The monthly salary of a university graduate may be only 3,000 to 4,000 yuan in the first year, but will grow by many multiples in the next few years." Nip said there were now about 10 shopping malls in Beijing that were geared to appeal to wealthy and big-spending customers. The market was saturated and as a result international luxury brands were not expanding aggressively this year. "But the middle-class market still has potential. Raffles City Beijing, and Joy City in Xidan and Chaoyang are among the few shopping malls targeting the white-collar market," she said. That change in shopping patterns prompted SHKP to reposition Beijing APM as a fashion shopping centre rather than continue as a tourism concept mall, Choy said. Under the renovation scheme, the Chinese-style external walls of the mall will make way for large-scale light emitting diodes (LED) lighting external walls. As the landlord, SHKP will also change the tenant mix and introduce more international brands targeting younger local shoppers. One of the brands that has recently signed up for space in the mall is US-based fashion retailer Gap, which will open its 12,540-square-foot duplex store at Beijing APM this month. The retailer will invest more than 100 million yuan in the store. It will be the only store on the mainland with all of Gap's brands. Gap has expanded aggressively in China. It will open two stores in Beijing and two in Shanghai this year, and one in Hong Kong next year. A US computer products company has also leased a three-storey space in the mall of more than 20,000 sqft. It will be the company's largest mainland store and is scheduled to open at the end of next year. Another North American fashion retailer targeting younger shoppers has rented a four-storey space of more than 20,000 sqft and will open in the third quarter of next year, Choy said. "Half of our tenants will be fashion stores. We hope local customers will exceed tourist visitors after the facelift, which will be completed by the end of next year. Currently, half of our customers are local people." The fashion items would not come cheap - clothes sold under the Zara or other international labels might cost up to 600 yuan per item. But the spending power of the city's younger shoppers is rising. "They have benefited from growing asset values as property prices have risen significantly in the past few years. Also, since they have no family burden, they are more willing and able to spend," Nip said. Beijing's retail market is responding. While five years ago there were only five shopping malls in the city, there are now about 30. "To compete in the market, we hold regular events such as a New Year countdown, and offer loyalty benefits to VIP customers to attract shoppers. Our experience in managing shopping malls and our familiarity with mainland rules and governments are our strengths," Choy said. With the strong retail market sentiment, Ip said rents at the mall had increased 30 per cent over the past 12 months. The mall was also enjoying annual growth of 40 per cent in traffic flow since the facelift in 2008 and annual turnover growth of 45 per cent. Nip said rents of the established shopping malls in key locations had risen 15 to 20 per cent so far this year and she expected them to grow a further 10 per cent in the coming year.

Mascots for 3rd Asian Beach Games unveiled - Mascots for 3rd Asian Beach Games unveiled. A cartoon dragon and phoenix have been selected as the mascots for the 3rd Asian Beach Games to be held in 2012 in Haiyang.

China's air fleet to triple by 2030 - A Boeing Next Generation 737 jet for Shanghai Airlines sits on an assembly line at Boeing's manufacturing facility in Renton, Washington. China will need 4,330 new commercial airplanes valued at $480 billion over the next 20 years, with demand being driven by the country's burgeoning economy and soaring personal wealth, US aircraft manufacturer Boeing forecast. Over that period the Chinese airplane fleet will triple in size, making it the largest market outside the United States, according to the company, which released its 2010 China market outlook on Tuesday in Beijing. "Driven by the urbanization of China, the growth of its economy and ever-increasing personal wealth, China is one of the world's fastest growing and dynamic aviation markets," said Randy Tinseth, vice-president of marketing at Boeing Commercial Airplanes. He expects the country's domestic passenger traffic to grow on average at an annual rate of 7.9 percent. The majority of the new aircraft bought by Chinese carriers will be newer, more fuel-efficient single-aisle planes, or regional airliners, with total deliveries reaching 3,090, the company said. Boeing's single-aisle aircraft models include the 737 and the Next Generation 737-900. Passengers nowadays want more convenient, frequent flights and only single-aisle aircraft can accommodate that demand, Tinseth said. The single-aisle and intermediate twin-aisle market will account for 92 percent of China's total delivery in value. About 60 twin-aisled wide-bodied 787 Dreamliners will be delivered to Chinese airlines next year, following a long delay caused by work to rectify various production problems. Around 890 Boeing 777s will also be delivered. A forecast by Airbus, the European aircraft manufacturer in February also painted a rosy picture of the Asia-Pacific market, which will acquire some 8,000 new passenger and cargo aircraft over the next 20 years. However, the company said demand is for larger aircraft. The region is expected to take delivery of some 880 large aircraft, around 2,600 twin-aisle wide-body and 4,500 single-aisle aircraft, Airbus said. The high proportion of larger aircraft reflects the concentration of populations around main urban centers, which generate high-density traffic on key intra-regional routes, in addition to capacity-constrained international destinations in Europe and North America, the company said. Meanwhile, demand for single-aisle aircraft in the region is expected to continue rising in the coming years, driven by the growth of low-cost carriers and the opening of new routes between secondary destinations, especially in China, India and Southeast Asia. With China's cargo markets leading the global industry, Boeing predicts that the country's air carriers will add about 330 freight airplanes by 2029, with the total freight fleet more than tripling in size. Airbus predicts that around 340 new production freighters will be delivered to the region over 20 years. These will mainly be wide-body aircraft and will represent 40 percent of the expected global demand for new production freighters.

November 4, 2010

Hong Kong*: To help ease congestion at the Cross- Harbour Tunnel, a government-commissioned consultant is proposing a rise in tolls for the heavily used arterial road and a cut for levies at the Eastern Harbour crossing, a source said. The report on the 12-month consultancy study does not recommend buying either the Eastern and Western harbor tunnels or both, the source added. It is expected to be submitted to the Legislative Council's transport panel today for discussions on Tuesday. The source cited the report as saying that the toll for private cars in the government-owned Cross-Harbour Tunnel should be increased by HK$5 to HK$25 while that for the Eastern crossing should be correspondingly trimmed to HK$20. The consultants have also included an analysis of how traffic flows in the three crossings - including the Western Harbour Tunnel - would be affected when tolls are set at different levels. Despite calls for the government to buy back the Eastern and Western tunnels, Ying Fun-fong, speaking as the acting assistant commissioner for transport last week, said the Western crossing would not be able to cope should excessive traffic be diverted from the Cross-Harbour Tunnel as the road network surrounding it is largely saturated. The construction of the Central- Wan Chai Bypass, which aims to alleviate traffic congestion along Gloucester Road, Harcourt Road and Connaught Road Central, will not be completed until 2017. The Society for Protection of the Harbour and the Action Group on Protection of Victoria Harbour insisted the government should press ahead with the purchase of both the Western and Eastern crossings. Society adviser Winston Chu Ka- sun said traffic congestion will remain serious if the traffic flows through the tunnels are not rationalized. He also warned that if the Central and Wan Chai areas are further developed, the building of the bypass will be a waste of money as further development will merely generate more traffic. Action group convener Kwok Ka- ki said the redevelopment of the SAR government headquarters' west wing will also add more traffic to the area. Meanwhile, the Transport Department said last year's traffic flow assessment estimated that even with the new government headquarters in Tamar, Gloucester Road, Harcourt Road, Connaught Road Central and the Central-Wan Chai bypass will not exceed their capacities in 2017 or even by 2021.

On hold - Lee's bid to buy Shaw's TVB stake - Henderson Land (0012) vice chairman Peter Lee Ka-kit's personal bid to buy into Television Broadcasts (0511) may fall through if Shaw Brothers stick to their asking price. Lee and partners are finding the HK$9 billion price tag for a 30 percent stake in the terrestrial operator too steep. Shaw Brothers have no need to cash in their shares, a source told Sing Tao Daily, sister publication of The Standard. Based on the asking price, TVB is worth a total of about HK$30 billion. But the broadcaster's market capitalization is just HK$18.5 billion after its shares slipped 0.8 percent to close at HK$42.05 yesterday. So HK$9 billion for a 30 percent stake would mean a payment of more than a 60 percent premium. Lee and his consortium could be the new owners of TVB if both parties can resume discussion and negotiate over the final price, the source said. The broadcaster's delay in applying for a change in its shareholding structure has led to rumors that the deal is off. A Broadcasting Authority spokeswoman said: "As of yesterday, there wasn't any application concerning a change in TVB's shareholding structure." As the market leader, TVB makes a profit and pays dividends each year. So there is no pressing need for additional capital, analysts said. A source close to TVB said chairman Run Run Shaw will allocate all the proceeds from the stake sale to charity. He is also unlikely to sell any stake "for a song." There were rumors that PCCW (0008) chairman Richard Li Tzar-kai was invited to join the consortium. But a source close to PCCW said: "There's absolutely no truth in such a thing. Nor is Richard Li interested in TVB." Li's current ownership of Now TV and the Hong Kong Economic Journal make any acquisition by him subject to complicated cross-media laws.

Sun Hung Kai Properties (0016) expects rental income from its eight main shopping malls to rise 20 percent this year and 15 percent next, backed by a robust retail market. Rental income is expected to reach HK$1.13 billion this year- an all-time high and 20 percent more than in 2009, said Fiona Chung Sau-lin, leasing general manager at Sun Hung Kai Real Estate Agency. SHKP malls include East Point City, WTC More and Landmark North. But Chung warned that rental income growth will likely slow next year, owing to the higher base. "We expect the rental income in 2011 to increase 15 percent on this year's level to around HK$1.3 billion," she said. Basic rents increased by 10 to 20 percent when tenants renewed their leases for next year. The developer expects both turnover and visitor numbers at its malls to grow 38 percent in the fourth quarter to HK$2.07 billion and 86 million respectively. Sales at its eight malls rose 37 percent to HK$2.05 billion in the third quarter and total sales for the year are expected to hit HK$7.42 billion, up 32 percent from 2009. SHKP plans to invest HK$18.8 million in promotions during the Christmas and New Year holidays, up 18 percent year-on-year. "We expect sales at the malls to surge 27 percent year-on-year between December 18 and 27, with the arrival of more mainland shoppers."

China's securities regulator has approved an application from Hong Kong’s central bank for a licence that will allow it to invest in the Shanghai and Shenzhen stock markets, it said in a statement on its website. The China Securities Regulatory Commission gave no other details in the statement. This approval makes the Hong Kong Monetary Authority the third central bank to receive a Qualified Foreign Institutional Investor (QFII) licence after Norway’s Norges Bank and Malaysia’s Bank Negara. The next step for the HKMA is to apply for an investment quota from the State Administration of Foreign Exchange, which regulates how much the HKMA will be allowed to invest in the stock markets. Foreign investors with QFII licences, including Goldman Sachs Group, JP Morgan and smaller players such as Singapore’s DBS Group Holdings, have pumped about US$17.7 billion into China’s stock market under the eight-year-old QFII scheme.

Real Estates Massive shocks loom - Homeowners, get ready for massive shocks. That's the message from Hong Kong Monetary Authority chief Norman Chan Tak-lam's three-hour presentation to Legco yesterday. "The global economy is extremely abnormal and this can never last for a prolonged period," Chan said. "There must be adjustments, potentially causing massive shocks." The impending monetary stimulus from the US Federal Reserve - widely expected to be outlined on Wednesday - is likely to inflate the local property bubble, he warned. Risk aversion caused by unforeseen crises could also hike rates, raising the mortgage burden of homebuyers. Despite successive quantitative easing by the Fed, the European Central Bank and the Bank of England, Chan noted the recovery of Western economies has been weakening. Excess capital has flooded emerging markets including Hong Kong, giving undue strength to the local property market, he said. Most analysts expect the Fed to announce a US$500 billion (HK$3.9 trillion) asset purchase plan on Wednesday, but Goldman Sachs' figure is as high as US$2 trillion. This will likely set the tone for the ECB, Bank of England and Bank of Japan to follow suit later in the week. A smaller-than-expected quantitative easing may cause capital outflow as asset prices have already fully factored in its effects, analysts said. Chan warned homebuyers must never be assured that a weak US economy will always deter rate hikes. A sovereign debt crisis, which afflicted several European nations earlier this year, for example, could spark rate rises. "Rates will also surge due to risk aversion in fluctuating markets," Chan said. He admitted capital flows determine local interest rates, and the peg to the greenback means Hong Kong has fewer combative measures at its disposal than other economies. But he stressed the authority has no "need" or "intention" to de-peg the local currency, as suggested by lawmaker James To Kun-sun. Chan said asset prices in nearby countries with free- floating currencies have all seen similar asset bubbles. So merely abolishing the peg would not curb the situation. More capital would rush into Hong Kong as investors sought profit from a free- floating exchange regime if the peg was discarded. Chan also ruled out a proposal by legislator Regina Ip Lau Suk-yee on restricting foreign capital, noting the Basic Law guarantees free fund flows. And thanks to that freedom, Chan admitted the authority does not have comprehensive information on the size of local property investments involving mainland funds. Several lawmakers urged the authority to tighten mortgage loans,