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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"

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

China President Hu Jintao USA State Visit January 19 - 21 2011 http://www.b2bchinadirect.com/hujintaousavisit.htm

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

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

http://www.apec2011usa.org/ Inside APEC http://www.hkchcc.org/insideapechkchccpresentation080810.ppt  

AmCham Shanghai latest Viewpoint - U.S. Export Competitiveness in China - 2010 Washington, D.C. Door Knock  http://www.hkchcc.org/viewpointusexport.pdf 

成功之道 武进制造 Wujin - Changzhou - Jiangsu Province - China http://www.hkchcc.org/wujin.htm

Year of the Rabbit - February 3 2011

Hong Kong*:  February 1 2011

 China*:  February 1 2011

Hong Kong*:  January 31 2011

Chief Executive Donald Tsang Yam-kuen would not attend the private funeral for veteran pro-democracy campaigner Szeto Wah on Saturday afternoon, a spokesman for the chief executive’s office confirmed on Friday. The spokesman said Tsang and six government officials would only attend the public memorial. This would start at 1pm on Saturday at St Andrew’s Church in 138 Nathan Road in Tsim Sha Tsui. The private funeral for Szeto would be held at 3pm. The spokesman said the six officials include: Under Secretary for Constitutional and Mainland Affairs Raymond Tam Chi-yuen; Permanent Secretary for Home Affairs Raymond Young; Private Secretary to the Chief Executive Kenneth Mak Ching-yu; Under Secretary for Home Affairs Florence Hui Hiu-fai; Under Secretary for Food and Health Gabriel Matthew Leung; and Under Secretary for Constitutional and Mainland Affairs Adeline Wong Ching-man. The chief executive’s office had received 10 invitations for the funeral, the spokesman said. Meanwhile, the Secretary for Education Michael Suen Ming-yueng and some officials from the Education Bureau would attend a memorial for Szeto at the Tsim Sha Tsui Baptist Church on Friday night. On Wednesday, the government has banned exiled dissidents and former student leaders of the June 4 movement Wang Dan and Wuer Kaixi from entry into Hong Kong to pay their respects to Szeto. Tsang has declined to comment on why the government refused to let the pair enter. On Friday, the chief executive also did not reply to reporter’s questions on whether he would attend Szeto’s private funeral. Szeto Wah died of lung cancer at Prince of Wales Hospital at 12.56pm on January 2 at the age of 79. Three public memorial services will be held at Tsim Sha Tsui Baptist Church on 31 Cameron Road on Friday to allow Szeto’s family, relatives and colleagues from the education sector and fellow lawmakers to pay their final respects. Szeto’s funeral will be conducted by Reverend Chu Yiu-ming at St Andrew’s Church. The public will be able to pay their respects at the church from 9am to 1pm, before the funeral begins. From 1pm to 3pm on Saturday, the church will be open to representatives from local and overseas governments.

Centaline property agency - sole estate agent for The Icon luxury housing estate in Mid-Levels - on Friday told lawmakers 17 buyers had accepted the developer's latest buy-back offer. This is after buyers complained about the condition of some of the flats in the development on Conduit Road. One buyer, surnamed Chu, complained that her flat had been left like a “rubbish dump” a month after she completed purchase. It also emerged that the developer had changed the internal arrangement of the flats to avoid fire safety rules covering open kitchens. The 16-storey block is on a site with an unrestricted land lease, which makes it exempt from a Lands Department scheme that monitors flat sales. On Friday, Centaline Property Consultants Managing Director Sherman Lai told the Legislative Council Panel on Housing that 17 buyers of flat A or D units of The Icon had accepted the developer’s offer to buy back their flats. This is at a price 20 per cent higher than the owners paid for the properties. Civic Party lawmaker Ronny Tong Ka-wah criticised Centaline for misleading buyers by not telling them that the developer have might been violating fire safety rules by converting enclosed kitchens into open kitchens. He said, as the sole estate agent for The Icon, the agent had a responsibility to inform buyers about problems they might encounter. In response, Lai denied that buyers had been deceived. Lai said they were not sure whether changing an enclosed kitchen into an open kitchen violated fire safety rules. Lai said their sales agents, who are middle-men between developers the buyers, lacked any professional knowledge of these matters and could only trust plans provided by the developer. On Tuesday, Super Homes, a subsidiary of the property developer Winfoong, offered to buy back flats at The Icon at 120 per cent of their purchase price – according to a letter sent by a law firm to the owners. This compares with a previous offer of 110 per cent of the purchase price proposed by the developer last week, which was rejected as being too low. Four buyers who did accept the earlier compensation package have been excluded from later offer. Winfoong is run by Singaporean businessman, Patrick Cheong Pin-chuan. The Icon is the main asset of the company, which also leases out a number of properties in Singapore.

Run Run Shaw on a film set with actors during the broadcaster's heyday. TVB's extensive budgets outgunned potential rivals and its programmes attracted the best talent. For better or worse, TVB (SEHK: 0511) has been the preponderant influence in Hong Kong's popular culture. Since it made its first broadcast in 1967, virtually every major singer and movie star began their career at the TV station. Even today, few aspiring stars have much hope of making it if they do not have the good graces of the city's dominant free-to-air station. Early Canto-pop music - a mixture of western pop, rock and Mandarin songs from the 1940s and 1950s - might not have been invented at the station. But it would not have achieved the predominant music form it has become had such pioneering songwriters as Sam Hui Koon-kit, James Wong Jim and Joseph Koo Ka-fai not been heavily promoted by TVB. They, in turn, became legends in the local entertainment industry. And for at least three decades, TVB's Miss Hong Kong beauty pageant was one of the city's most important social events of the year, attended by the great, the good and the wealthiest of local society. "I started my broadcasting career in Hong Kong with TVB and witnessed its heyday," said Robert Chua Wah-peng, probably the city's most senior broadcaster and creator of TVB's legendary live variety show Enjoy Yourself Tonight (EYT). "I have therefore witnessed its cultural decline. Its stars used to be socially responsible, regardless of their private lives. Today, the programmes are hard to watch and the stars go in front of the camera and behave rudely and set a bad example for young people." TVB's decades-long market dominance, according to Chua, means it could afford to produce inferior or repetitive programmes without fear of losing viewers. It wasn't always like this. For those who lived through the 1970s and 1980s in Hong Kong, TVB was likely to be their primary source of entertainment when they left work or school. A second - and for a short time, a third - TV station such as RTV and later ATV, was never a serious challenge. As the controlling shareholder, Run Run Shaw made sure its finances outgunned any potential rival and that its programmes attracted the best talent. Just as that period of time is considered the golden age of Hong Kong when its economy took off, it was arguably the best time for quality programmes at TVB. Dragon, Tiger and Leopard was an innovative crime drama series; one episode was based on Samuel Beckett's Krapp's Last Tape, in which an unidentified man obsessively recorded his every thought on a tape recorder, except he turned out to be a serial killer. Another drama series, The Northern Stars, for a time, made being a social worker almost hip. Then came Gan Kwok-leung, arguably the best scriptwriter TVB ever had. He penned The Wrong Couples and No Biz Like Showbiz which restored the art of the dramatic dialogue that is hard to imagine for a TVB programme today. TVB's evening soap operas and their Canto-pop theme songs had most of the local Chinese population glued to the TV set. Its kung fu drama series, usually based on the martial arts novels of Louis Cha, made the writer a household name and his books a must-read for a generation of youngsters growing up in the city. Many Hongkongers, young and old, went to bed after watching the late-night EYT - the world's longest running live show of its kind, according to Guinness World Records. As a result, being chosen to play the lead characters in any one of those TVB drama series was a virtual guarantee of stardom. Even being consigned to hosting a children's show at the not-so-prime-time 4.30pm could be a ticket to instant fame. The long-defunct 430 Space Shuttle children's programme has since passed into local industry lore not for its especially educational or creative content, but because it was hosted at one time or another by such young then unknowns as Tony Leung Chiu-wai, Ekin Cheng Yee-kin and Stephen Chow Sing-chi. TVB's obliquitous influence extended far beyond the city's borders. When the mainland opened up after the Cultural Revolution, underground cinemas sprang up. Most showed bootlegged TVB soap operas, kung fu dramas and EYT. And virtually everywhere around the world where there was a Chinatown, TVB programmes were popular after VHS cassettes became widely available. They still are. So, does Shaw's sale of all his TVB stakes mark the end of an era? Chua thinks so, but he does not think it's a bad thing. "At least now, we have a chance of better programmes," he said.

The government issued an Amber Outbound Travel Alert for the Egypt – following unrest and mass demonstrations in the Middle Eastern country, a spokesman for the Security Bureau said on Friday. He reminded people planning to visit Egypt to follow developments closely. Hong Kong travellers already in the country should be vigilant, the spokesman added. The Security Bureau would continue to monitor the situation – along with staff from the mainland’s foreign affairs ministry. The spokesman said people who need assistance outside Hong Kong could call the Immigration Department’s 24-hour hotline on tel: 852-1868. Travel Industry Council (TIC) executive director Joseph Tung Yao-chung said there were more than 10 tour groups, incorporating some 300 Hong Kong people, currently in Egypt. He said the places they planned to visit were not experiencing demonstrations, so they could proceed safely. In addition, there were about nine further tours leaving Hong Kong for Egypt on Friday. The TIC believed it was not necessary to cancel these tours, Tung said. Egyptian demonstrators fought security forces into the early hours of Friday in the city of Suez, and the internet was blocked after it was used to co-ordinate the protests against President Hosni Mubarak’s 30-year rule. Emboldened by this month’s revolt that toppled the authoritarian leader of Tunisia, Egyptians have staged mass protests since Tuesday. The biggest yet are planned for Friday afternoon after weekly prayers. Nobel Peace Prize winner Mohamed ElBaradei, who returned to Egypt from Vienna on Thursday, has called for Mubarak to resign and said he would join the protests on Friday. Internet access was shut down completely across the country shortly after midnight. Mobile phone text messaging services also appeared to be partially disabled, working only sporadically.

There'll be no fast channel hopping at TVB under its new owners. Two members of the consortium buying the controlling stake in Television Broadcasts (0511) will be passive investors, while the station head will keep his job, new boss Charles Chan Kwok-keung told The Standard's sister publication Sing Tao Daily. "Sir Run Run Shaw and Miss Mona Fong will continue to lead the station until they want to step down," Chan said. "They know this industry the best." The local entrepreneur said he will adopt a hands-off approach to the station's operation. Chan, chairman of conglomerate ITC Corp (0372), said he personally initiated the talks concerning the sale of TVB's controlling stake with Shaw two months ago. "It is not the price of the deal he cares about," Chan said. "I'm thankful that he believes in me and agrees to sell his stake in Shaw Brothers." Despite his solid reputation as a deal maker, Chan said he is not going to restructure the TV operator or offload his stake in the short run. "TVB is the leader in local show business, yielding good returns," Chan said. "I can sit back, relax and enjoy the profits." A strong connection with tycoon Li Ka-shing did not play a role in the deal, Chan stressed. "Mr Li is someone I respect very much, and he called to congratulate me after learning about the deal," he said. "But no, Mr Li had no involvement in the deal." A spokeswoman for Cheung Kong (Holdings) (0001) had already denied rumors about Li's involvement on Wednesday, the day TVB announced its change in controlling shareholders. In fact, Li would have breached the cross-media ownership restrictions unless he sold his stake in any media directly under him, such as Metro Broadcast Corporation, Democratic Party lawmaker Lee Wing-tat said. "If Mr Li wanted to invest in TVB, he didn't even need to form a consortium," added Chan, noting that half of the capital for the deal is financed by banks. "This is my personal investment, where my listed companies, or other listed firms, are not involved." Following the deal, Cher Wang, chairwoman of Taiwan smartphone maker HTC, and Jonathan Nelson chief executive of Providence Equity Partners, will join the board as non- executive directors. The TV broadcaster will develop in the new media sector, said Chan, who believes the technology in HTC will provide a boost. Chan, who has 50 percent voting rights but less than half of the consortium holding in TVB, has not decided if he will take the role as an executive director. The consortium, along with Fong, will hold less than 30 percent stake, which can avoid triggering a general offer. "It will cost a lot more if a complete takeover is involved," Chan said. Although the deal price has not yet been disclosed, Chan said Shaw did not move much over the value of the assets, which could cost between HK$8 billion and HK$9 billion, representing a minimum 60 percent premium to the cap size as of yesterday's close. Chan confirmed that a plot of land is included in the deal. "That's the site of the old production house of Shaw Brothers," said Chan, who expects it to become a site for luxury homes. "We are waiting for approval to start construction at the site."

TVB will remain a Hong Kong television station despite its ownership change, general manager Stephen Chan Chi-wan assured. "TVB has always been, and will be the television station of Hongkongers," Chan said yesterday. The top executive, reinstated recently despite facing corruption charges, added it has always been the strategy of Television Broadcasts Ltd (0511) to explore overseas opportunities while being based in the SAR. Chan said the new investors will provide a new media platform for the company to expand its clout and reach a wider audience. On Wednesday, TVB issued a statement saying its biggest shareholder, Shaw Brothers, has sold its stake to a consortium comprising local venture capitalist Charles Chan Kwok-keung, Taiwan businesswoman Cher Wang, and US-based private investment firm Providence Equity Partners. The deal cuts the ties 103-year- old Run Run Shaw has had with the company since the early 1980s. Stephen Chan said although one of the major shareholders is from Taiwan, TVB's style will not change. But legislator Samson Tam Wai-ho said TVB "will no longer be a local TV station." Meanwhile, Hong Kong Journalists Association chairwoman Mak Yin-ting said: "We have heard this kind of guarantee before. But changes do take place afterwards." Analysts said the injection of capital from Taiwan will help internationalize TVB. "The change in ownership will help TVB set foot in Taiwan," said First Shanghai Securities chief strategist Linus Yip Sheung-chi. UBS expects the new owners to remain long-term investors, and TVB to become more aggressive in providing content to Chinese TV channels and generate new revenue streams in the mainland, which will convert to digital TV by 2015. ITC Corp (0372) executive deputy chairman Chau Mei-wah said it is a private investment by Charles Chan, without involving ITC. TVB shares dipped 2.9 percent to close yesterday at HK$44.55, while ITC jumped 15 percent to 42 HK cents.

Only 34 travel companies in Shenzhen have been authorized to organize group tours to Hong Kong under a new measure announced by authorities across the border. In a circular posted on its website yesterday, the Hong Kong Travel Industry Council reminded its members about Shenzhen's new rules on SAR tours, which took effect January 1. Executive director Joseph Tung Yiu- chung said the council welcomes the new policy to further regulate the tourism sector.

 China*:  January 31 2011

China's first property tax takes effect - Mainland property shares recouped slight losses suffered on Friday on views the first-ever property taxes introduced by the government in two main cities were less harsh than some had feared. China’s property sub-index was up 0.3 per cent as of 10.15am in a volatile session which saw it rise as much as 2 per cent after opening slightly weaker. The Shanghai Composite Index was down 0.5 per cent. “The tax measures are less harsh than expected while its negative impact has already been priced in,” said Tian Shixin, analyst at BOC (SEHK: 3988) International. “However, there’s limited room for upside, because tax and a slew of other property policies would dent developers’ sales and profitability this year.” China Vanke, the country’s biggest listed developer, was flat while Gemdale, another major property firm, was up 1 per cent. Shanghai and Chongqing, in western China, announced late on Thursday that they would start levying property taxes on Jan 28. In Shanghai, buyers will pay a tax of 0.6 per cent on their new second homes. If values of homes are less than double that of average market prices, buyers need only pay 0.4 per cent. In Chongqing, taxes are more staggered. Buyers of new second homes will pay a tax of 0.5 per cent if homes are valued at two to three times average market prices. Homes valued at three to four times average market prices will be taxed 1 per cent, with the highest tax not exceeding 1.2 per cent. All villas and town houses in Chongqing will be taxed as well. The tax measures came after Beijing earlier this week announced a series of measures to discourage property speculation and curb prices. “The property tax, as part of the government’s move to tighten control over the housing market, will have a big psychological effect on potential home buyers,” said Ge Haifeng, the research head at China Real Estate Index System in Beijing. “China’s housing market may get really quiet in coming months.” Speculation that China could introduce a property tax has helped drag down Chinese stocks 15 per cent in the past ten weeks. Yet the modest sizes of the tax rates drew scepticism from some analysts about whether they would be effective. Mark Williams, an economist at Capital Economics in London, said although the rates were in line with market expectations, they were not high enough to deter speculators, or implemented broadly enough to be of significance to municipal budgets. “The fundamental reason why a lot of people put their money in the property market is because they have very few alternative options,” he said. “Savings deposits don’t give you much of a return; there’s widespread scepticism about equity markets, and so the money goes into property. I don’t think this is going to fundamentally change that.” However, He Yifeng, an analyst with Hongyuan Securities in Beijing, said it was too early to judge the success of China’s new property tax regime. “Once the tax is launched, it is quite easy for the government to adjust the rate,” He said. “The tax’s effect may be weak at the beginning, but if housing prices remain high, the government can gradually increase the tax rate to depress the prices.” Talk has swirled in China for months that Beijing was ready to let various Chinese cities, including Shanghai and Chongqing, try a property tax before rolling it out to the rest of the country as part of its anti-inflation campaign. Analysts said Beijing appeared to be sticking to this plan. In a statement jointly issued by the Ministry of Finance, the tax bureau and the housing ministry on Thursday, the central government in Beijing said China would roll out the tax nation-wide when “conditions are ripe”. The statement said local governments would decide the size of the tax and the date of introduction. It said the tax would narrow China’s income gap and the money collected from it would accrue to the fiscal budgets of local governments. Thursday’s measures will end years of debate about whether property taxes should be introduced in the world’s second-biggest economy. Opponents had worried they could hobble the housing market. But with property prices jumping by over a fifth last year despite a steady stream of curbs since 2009, analysts said the government likely felt more needs to be done. China’s annual property inflation ran at 6.4 per cent in December, down a touch from November’s 7.7 per cent, although sequential momentum stayed strong, with prices rising 0.3 per cent on a month-on-month basis. Administrative policy steps are but one of Beijing’s many anti-inflation policy tools, including interest rates, reserve requirements and the yuan. But comments from central bank chief Zhou Xiaochuan on Thursday that it would keep the yuan at a stable level should dash the hopes of investors who had bet on China letting the currency rise at a faster clip to fight imported inflation.

Reluctant to raise interest rates, China is instead tightening its grip on property, a stop-gap that will curb inflation but fail to cure the problem of too much cash in the economy.

China will ramp up conventional fuel imports and production to power its economy this year despite accelerating efforts to develop clean, renewable and alternative energy. The National Energy Administration (NEA) estimated on Friday that energy demand in the world’s second largest economy will increase steadily but the growth could moderate from last year. It did not provide an estimate of overall energy demand this year or energy used last year. “China’s net coal imports hit 146 million tonnes last year. It could keep increasing this year,” Wang Siqiang, deputy head of general affairs department under the NEA, said in a quarterly press conference. “Australia, Indonesia, South Africa, Columbia and Russia will continue increasing their percentages of exports to China along with their rising coal output this year.” China will speed up construction of 14 domestic coal producing bases this year, new coal production capacity will come into use in major producing provinces including Shanxi and Inner Mongolia, and some railways will be upgraded and put into operation, Wang said. China is the world’s largest coal producer and consumer of coal. Coal makes up about 70 per cent of China’s primary energy consumption and around 80 per cent of its electricity output is generated by burning the carbon-intensive fuel. Power consumption growth will rise at a slower pace of about 9 per cent this year, easing off a 14.6 per cent expansion last year, according to the administration. Electricity consumption is expected to reach 4.5 trillion kilowatt hours (kw/h) this year, versus 4.19 trillion kw/h last year. The NEA said apparent oil demand increased 12.3 per cent from a year earlier to 449 million tonnes last year, or 8.98 million barrels per day. It did not provide a forecast for this year. China’s crude oil imports surged 17.5 per cent from a year earlier to a record 239.3 million tonnes or 4.79 million bpd last year while domestic crude production also gained an unusually fast pace of 6.9 per cent to a record high of 203 million tons, official data has showed. The agency forecast rapid growth in aviation fuels as China continues to build and expand airports, while demand for petrol may be curbed due to traffic control and fuel-efficiency measures. Diesel consumption will grow steadily on the back of demand from agriculture, industry, infrastructure, logistics and transportation, it said. The NEA said natural gas consumption would rise about 20 per cent to 130 billion cubic metres (bcm) this year, while natural gas output would increase 16 per cent to nearly 110 bcm, suggesting the country would have to import some 20 bcm of natural gas during the year. But the estimate could be an underestimate as China is aggressively promoting the lower-carbon fuel with a goal to triple its consumption in the next decade. China shipped in 4.4 bcm of pipelined gas from Central Asia last year and nearly 13 bcm of the fuel in the form of liquefied natural gas (LNG) from other countries. China National Petroleum Corp (CNPC (SEHK: 0135)) said it would receive 17 bcm of gas from central Asia this year. Two LNG terminals built by a subsidiary of the top Chinese oil and gas firm were expected to be operational before the summer, which would boost China’s capacity to receive the super-chilled gas by nearly 10 bcm per year.

China may move from a trade surplus to a trade deficit during this quarter as import growth exceeds that of exports, a central government research centre has said. Exports may grow 18 per cent in the first three months of this year, lagging behind an estimated 25 per cent rise in imports because of a stronger yuan, ballooning oil and commodity prices and escalating trade frictions, according to a State Information Center report published in the China Securities Journal yesterday. A trade deficit, however, may ease some tensions with the United States over the value of the yuan. Washington has accused Beijing of suppressing the currency to favor Chinese exporters. In March last year China recorded a trade deficit for the first time in six years, a situation that has not been repeated. "The world's economy will keep recovering in a moderate manner," said State Information Centre report lead writer Fan Jianping. "It will fuel demand and hence, drive the recovery of global trade." The State Information Center, an affiliate of the country's planning agency, the National Development and Reform Commission, said exports this quarter were being supported partly by greater consumer appetite in the US. Commerce minister Chen Deming said earlier this month that the ministry would further spur imports to narrow the trade gap. The surplus has added to inflation risks by pumping money into an economy awash with cash from record bank lending. The trade surplus totalled US$183 billion last year, narrowing for a second year after a record US$295 billion in 2008, according to China Customs. To boost imports, the central government yesterday halved the import tax for electronics products such as computers, video cameras and digital cameras to 10 per cent from 20 per cent previously. Despite a nationwide policy to encourage domestic consumption, the State Information Center report said retail sales might be curtailed by the existing inflation problem, a greater tightening in the property market and cancellation of the subsidies for cars and electrical appliances for rural homes. It anticipated that retail sales could grow 19.5 per cent in the first quarter of this year. "Higher food prices are unfavorable to middle-to-low income families' spending power," it said. "The recent drop in stock prices and stricter control in lending do not help spending as well."

Romantic film "What Women Want" makes debut in Shanghai - Actor Andy Lau, actress Gong Li promote their new film "What Women Want" during a press conference for premiere in Shanghai. The film will be staged on Feb. 3.

According to Ding Xiangyang, the vice mayor of Beijing, the Beijing municipal government is planning to invest more than 1 billion yuan into the Chinese capital's tourism sector per year, starting in 2011. Ding said that the Beijing Tourism Development Committee will be established to coordinate the development of the city's tourism sector, and the committee and Beijing Tourism Bureau will have separate remits. In addition, the municipal government will launch a special fund to offer stronger support for the city's tourism sector. So far, the city has raised funds for a total of 767 tourism projects, with an investment of 27.32 billion yuan. According to Ding, Beijing is aiming to generate more than $10 billion in inbound tourism revenue, and will receive 10 million inbound tourists and 200 million domestic tourists. In the meantime, the tourism sector's industrial added-value is expected to account for more than 10 percent of the city's GDP. In 2010, Beijing's total visitor arrivals rose 10.3 percent year on year to a record 184 million, and its tourism revenue rose 13.3 percent year on year to a record 27.68 billion yuan.

China's foreign exchange watchdog said Thursday that the surplus of Chinese banks' foreign exchange purchases to sales in client transactions increased 51 percent through 2010 to stand at 397.7 billion U.S. dollars at year-end.

Import tariffs halved on electronics - Computers for sale in Shanghai. Multinational companies, such as Hewlett-Packard Co (HP) and Dell Inc, stand to benefit as import tariffs are reduced on electronic products. China slashed its import tariff on some electronic products, such as laptops and digital cameras, by 50 percent, benefiting multinational companies, including Hewlett-Packard Co (HP) and Dell Inc, and stimulating their sales in the world's fastest-growing IT market. According to a statement posted on the Ministry of Finance's website on Thursday, the import tariff on computers, digital video recorders and cameras will fall from 20 percent to 10 percent starting Jan 27. "The Chinese government is fulfilling its promise to the WTO," said Wang Jiping, research manager at International Data Corporation (IDC) China, an IT research company. During his visit to the United States last week, President Hu Jintao worked for closer bilateral ties between China and the US to stimulate global economic recovery. The duty concessions may help overseas companies gain a better pricing advantage in the Chinese market. According to Bloomberg, the lower tariff may "narrow the lead held by domestic leaders such as Lenovo Group Ltd" because the US computer makers, including Hewlett-Packard and Dell, have struggled to boost their market share in China against Lenovo, the local industry leader. Wang, however, doesn't fully agree with that point. "Chinese consumers stand to benefit the most. The market will be stirred but the reduction won't change the market share significantly," Wang said. According to IDC, Lenovo led the Chinese PC market with a market share of 28.8 percent in the third quarter 2010, compared with Dell's 10 percent and HP's 9.2 percent. HP and Dell declined to comment on this issue. Chinese media recently highlighted that the import tariff on the iPad was set at 1,000 yuan ($152). A 16-gigabyte iPad with the import tariff was about $150 more expensive in China than the United States. Now, the duty on an iPad will be reduced from 1,000 yuan to 500 yuan. The change will permit distributors and dealers to make their prices similar to those overseas, removing an incentive for consumers to buy their digital devices elsewhere, Wang said. Before that, many consumers from the Chinese mainland went to Hong Kong and the US to purchase electronic products.

Hong Kong*:  January 30 2011

Secret negotiations pivotal to sale of Shaw's TVB stake - Shareholders of Television Broadcasts (SEHK: 0511) (TVB) face a swift and sober conclusion to the sale of Run Run Shaw's stake in the company he founded. They can thank the 103-year-old Shaw and his advisers, who had quietly kept under wraps for months the divestment negotiations of TVB's patriarch and largest shareholder before announcing on Wednesday evening that a deal had been done. Shaw Brothers (Hong Kong), which is owned by Shaw, agreed to sell its entire 26 per cent shareholding in the city's leading broadcaster for an undisclosed amount to an investor group composed of ITC Corp chairman Charles Chan Kwok-keung, Taiwanese entrepreneur Wang Cher and Providence Equity Partners, a United States-based private equity firm. The Shaw Foundation Hong Kong, which has a 6.23 per cent stake in TVB, will sell part of that shareholding to undisclosed third parties. After the disposal, which is expected to be completed on or before March 31, the foundation, the investor group and Shaw's wife, TVB deputy chairwoman Mona Fong Yat-wah, will hold in total less than 30 per cent in the broadcaster. "We believe the dust around the shareholding changes has now settled, and shareholders should now focus more on the business fundamentals and whether the new shareholder will implement any new strategy," Deutsche Bank analyst Rebecca Jiang said in a research note yesterday. Jiang has a "buy" recommendation on the stock and a target price of HK$45.90. Based on what a representative of Chan, the leader of the investor group, said yesterday, TVB's prospects post-Shaw appear to be rosy. Rosanna Chau Mei-wah, the deputy chairwoman and managing director at investment firm ITC, said: "The joining of new shareholders will positively push, not only the development of TVB, but of the whole media industry in Hong Kong." The broadcaster's existing development and production programmes would remain unchanged, and efforts to expand its international business would continue, Chau said. She pointed out that the interest in TVB of Chan, who controls or owns a dozen Hong Kong-listed companies and has a good relationship with Li Ka-shing, was a personal investment. She said the investor group's purchase did not include the land owned by Shaw. Speculation was rife that the sale price for the Shaw Brothers stake amounted to HK$8 billion, which is less than last year's rumoured offers of up to HK$10 billion. Shares of TVB slipped 2.94 per cent to close at HK$44.55 in trading yesterday. ITC, by comparison, saw its shares rise 16.44 per cent to HK$0.425 cents.

Concern over Taiwanese influence on TV station - Wang Cher will not be the first Taiwanese player to acquire a major stake in Hong Kong television. Taiwan snack billionaire Tsai Eng-meng is one of the biggest investors in ATV, the city's only other free-to-air TV broadcaster. Wang is acquiring Run Run Shaw's 26 per cent stake in TVB (SEHK: 0511), which Shaw co-founded in 1967, ending years of speculation about who would be the 103-year-old media mogul's successor. Wang, daughter of the late Taiwanese technology billionaire Wang Yung-ching, together with local businessman Charles Chan Kwok-keung and US-based media private equity specialist Providence Equity Partners will be the new controlling shareholder of Hong Kong's dominant free-to-air broadcaster. Mak Yin-ting, chairwoman of the Hong Kong Journalists Association said: "We are concerned with TVB's future. Its possible changes will take place gradually. "When ATV was acquired by Taiwan and with mainland capital, they also said there wouldn't be changes to the programmes, but the news programmes are clearly more and more pro-Beijing." In Taiwan, 52-year-old Wang is controversial for her close ties with Beijing. Mak said the Taiwanese interests really had their eyes on the mainland. "The deal is worth up to HK$10 billion," she said. "There is no way the investors can make that much money from the Hong Kong market." As the biggest Chinese content distributor in the world, TVB had a far-reaching influence. "TVBS, an arm of TVB in Taiwan, is running three pay-television channels, and TVB has landed in Guangdong province," Mak said. That meant the owner of TVB boasted an open door into the markets of Hong Kong, Taiwan and the mainland. But Professor Yu Guoming, deputy dean of Renmin University's School of Journalism and Communication, said the mainland's TV industry was still under tight control and would not open to outside players in the short term. The possibility of TVB landing beyond Guangdong was tiny. Wang keeps a low profile. In 2008, The New York Times described her as "one of the most powerful female executives in technology whom you have never heard of". She graduated from the University of California, Berkeley, with a master's degree in economics in 1981. She co-founded silicon chip developer VIA Technologies in 1987. Her husband Wen Chi Chen has been chief executive since 1992. In 1997 she established HTC and the company made notebook computers. A few years later Wang switched to handheld gadgets. Now she is the richest woman on the island, and she and her husband are ranked No488 on Forbes' 2010 global Rich List with assets of US$2 billion. Wang showed an interest in the entertainment industry recently when in December she said she would set up a fund of US$30 million to invest in movie making.


Where there's a will, there's a will to fight - When it comes to splitting the loot, more families are airing their dirty laundry in public. Fourth wife Angela Leong (left) and Deborah Ho (right), daughter of deceased first wife Clementina Leitao, leave Stanley Ho's residence at No 1 Repulse Bay Road amid a media scrum desperate for any sightings of the family yesterday. "Don't go to court when you're alive; don't go to hell when you're dead," says a famous Chinese proverb. It's an emphatic instruction rooted in Chinese culture to solve disagreements privately, and to turn to public mediation only as a method of absolutely last resort. Stanley Ho Hung-sun and his family may regret not following the proverb today. As the battle lines are drawn between Ho and a group of relatives, the ensuing court case has the potential to become an expensive, protracted feud. But it won't be the first time arguments over family assets have spilled over into the courts. In the last fortnight alone, the courts have heard arguments among the Kam family, which owns the famous Yung Kee restaurant; and Tony Chan Chun-chuen, an alleged heir to tycoon Nina Wang Kung Yu-sum's estate. Three days ago, Walter Kwok Ping-sheung released a statement hoping for a resolution in the dispute between himself, his two brothers and mother over his exclusion from a key trust of Sun Hung Kai Properties (SEHK: 0016). "It is undeniable that you seem to have more and more of these family issues over the distribution of assets," said Huen Wong, president of the Law Society. Traditionally in Hong Kong, filial piety ensured that the family business would be passed smoothly down from generation to generation. "It's all historical. All the wealth, everything, will stay in the family," Wong said. "It's to do with trust. `Money will not go next door' is the saying." Or so the theory went. Today's business leaders, said Wong, are more conscious of their legal rights and less prone to accept what orders their parents give them. Going to court to get some of the family wealth has become an option where previously there was none. "Everybody is going for their own share; everyone wants to be independent," said Herbert Tsoi Hak-kong, solicitor and former president of the Law Society. "They don't need a patriarch or the surname of the family, and they all want to run their own businesses." Whether or not relatives succeed in getting an inheritance they think is rightly theirs, one group is regularly getting more and more of the family's funds: lawyers. The costs of taking arguments from the dinner table to the High Court add up fast. Nina Wang's father in law, Wang Din-shin, was ordered to pay an estimated HK$700 million in legal fees last year after losing a dispute. In a separate case involving Nina Wang's estate, Tony Chan was told to pay HK$140 million of the Chinachem Charitable Foundation's bills last year. Chan's own legal fees cost an estimated HK$200 million - not including the costs of his most recent appeal, which concluded this month. The cost of every trial is different, as most lawyers charge according to the time it takes. Hong Kong's most expensive solicitors can charge HK$10,000 an hour and it is not uncommon to find barristers asking for HK$20,000 for a one-hour conference, according to Tsoi. Add to that a daily "refresher" fee for every day a barrister is estimated to be in court - if the trial finishes before its allotted number of days are up - plus the time billed for preparing the case, and fees can quickly stretch into the millions. The average cost for a family dispute? "I can't even say a ballpark figure," Tsoi said. "The sky's the limit." If there are multiple defendants with different interests in a case, they may choose separate lawyers, adding to the total cost - which the unsuccessful party pays most of. Twelve parties are involved in Ho's case, including two of his wives. But the cost of the finest legal minds in town is a drop in the bucket in most tycoon family disputes. Ho's net worth is put at US$3.1 billion by Forbes magazine. Last year Kwok turned down a HK$20 billion settlement from his family, claiming it was an unfair valuation of his cut of the family assets. When it comes to billionaire families, "legal costs in those cases would be minuscule", Tsoi said. "If you're playing for high money, you pay high stakes." Trials do not always last until a judgment. In 2008, Kwok dropped charges against brothers Thomas and Raymond after he was removed as chairman and chief executive of Sun Hung Kai Properties. But bringing the matter up in court does force the family to take the issue seriously. "You must create an issue before it can be settled. So what's a better way than taking court action so you create the issue?" Tsoi said. If the legal fees are not a worry, then taking an issue to court can either bring an award or force the contestants to settle out of court, he said. Part of the reason why more high-profile families are going to court is simply because they fail to take care of their wills early enough. "They think that once you start distributing the wealth you weaken the family because it's dispersed and divided up among too many people," Wong said. "They keep putting it off because as long as the old man lives, he wants to be the one who has the last say. "They always leave it to the very last moment - when the person is getting so senile that finally they accept they have to do something about it. Then your words don't carry that much weight anymore ... the children are less obedient." Billy Ma, a solicitor and member of the Law Society's probate committee, said there had been an upsurge in families big and small setting up trusts and writing wills earlier in their lifetimes to avoid future arguments. "Then again, even when the beneficiary knows what they are going to have at the end of the day, it will not prevent them from trying to get control now," Ma said. "A bird in the hand is better than two in the bush."

HKMA worries easy credit could create asset bubbles - With rates tied to low US levels, a loan boom is under way - Hong Kong banks are entering a period of enhanced risk as loan growth is surging on the back of low interest rates and abundant liquidity, says the Hong Kong Monetary Authority. "I'm concerned about credit growth," said Arthur Yuen, deputy chief executive of the HKMA, adding that banks should be prudent in lending. Hong Kong bank (SEHK: 0005) lending rose 28.6 per cent last year, the highest jump in the past decade, said Yuen. The amount of loans and advances to customers in Hong Kong stood at HK$4.09 trillion last year, an increase of 29 per cent from 2009, according to CEIC, a database provider. Banks have been lending money at record low rates as the net interest margin - the difference between the interest income generated by banks and the amount of interest paid out to their lenders - has been sliding for the past two years. "Interest rates are at record low levels now, people should not over borrow, because one day the rate will go up," said Yuen. The HKMA is worried that excessive credit growth will lead to an asset bubble. It introduced measures in August and November last year to curb mortgage lending, but property prices have exceeded highs last seen in 1997, the year of the city's last big housing bubble. The HKMA said it would devote more resources to supervision and mortgage data sharing this year. Karen Kemp, the executive director for banking policy at the HKMA, said 2010 was a busy year with a lot of lessons learned from the financial crisis. It was also a year when Hong Kong regulators dug into investigations of Lehman-related complaint cases. As of last Thursday, 99 per cent of the 21,744 Lehman-related complaints have been resolved. The HKMA said 2,680 cases were closed because of insufficient evidence of misconduct. Some 506 cases are still being reviewed, and 18,469 cases warrant further action. Last year the HKMA also proposed a thorough review of credit card practices, following credit card reforms in the US and Britain. Meena Datwani, the executive director for banking conduct at the HKMA, said the authority wishes to introduce some of these overseas reforms to Hong Kong to ensure customers are treated fairly. There are about 50 million credit cards issued in Hong Kong. Last year there were a number of cases where customers suffered losses when merchants went out of business after customers had prepaid for services using credit cards. The HKMA has since required that customers be given easily understandable forms when entering such agreements.

Models show creations at the Italian fashion label Prada's fashion show in Beijing on Saturday. The board of Prada, one of the world's best-known fashion names, decides on Thursday on a long-awaited initial public offering in Hong Kong, which would make it a trailblazer for the European fashion industry. The owner of Miu Miu, Church’s and Car Shoe brands aims to use the Hong Kong listing to trim debt of around 1 billion euros (US$1.3 billion). The IPO would also fund growth in Asia, where Prada expects its sales to overtake those in Europe over the next three years. Analysts estimate Prada – known for its innovative fabrics and unconventional styles – could aim to raise 1.2 billion euros by selling a third of its shares at a multiple of 10 times its projected last year core earnings. Prada could be worth from 5 billion euros to 6 billion euros overall in favourable market conditions, analysts say. Prada has scrapped a share offering at least three times due to volatile markets and would be the first European fashion house to list on the Hong Kong bourse. No Italian company is traded in Hong Kong. The 98-year-old family-run company, whose trend-setter designer Miuccia Prada has gone from being a 1970s leftist to one of Europe’s most prominent businesswomen, could encourage other luxury goods companies to go public. The 60-billion-euro Italian sector is under-represented on the stock market. Fashion houses such as Ferragamo and Moncler have said they might float when markets recover. A listing could involve the issue of new shares, analysts said. Hong Kong bourse guidelines also require management changes, including two executive administrators based in Hong Kong and three independent administrators. Prada SpA is 95 per cent owned by the families of Chief Executive Patrizio Bertelli and his wife Miuccia. Italian bank Intesa Sanpaolo owns the rest. Among the banks mentioned as book-runners are UniCredit, Intesa Sanpaolo – both sitting on the company’s board – Goldman Sachs Group and brokerage firm CLSA, a Hong Kong division of Credit Agricole Securities, according to sources close to the issue. When Prada delayed its latest IPO attempt in 2008, some speculated it could not float at all. It has also turned down approaches from private equity firms.

Local meteorologists came a step closer to achieving their goal of a standardized Pearl River Delta weather warning system with the launch yesterday of a weather website for Hong Kong, Macau and nine neighboring cities in Guangdong province. The integrated website, www.prdweather.net, will offer the next best thing - a combined total of the 26 weather warnings currently in use in the three regions. Cross-border travellers will have access to warnings and forecasts, updated instantly, with only a few clicks on their computers or mobile phones. Some warnings are unique to particular places, such as smog and icy road warnings in Guangdong and storm surge alerts in Macau. All three regions issue typhoon warnings that use different criteria and forms of presentation. Meteorological agencies across the delta are now working to see if real-time weather information such as regional temperatures and rainfall can also be made available on the website. But there is no set timetable for this. The region's senior weather scientists have agreed on the ultimate goal of a unified weather warning system to provide residents in the region with more effective weather services. "One day, it will be best for people in the region to have common standards for weather warnings and forecasts," said Xu Yongke, deputy director of the Guangdong Provincial Meteorological Bureau. But he said local variations such as the way weather warnings were disseminated, public acceptability and the role of government should also be taken into consideration. Xu said that years ago, Guangdong wanted to adopt the typhoon warning system used by Hong Kong, which employs a unique scale of warnings based on wind speeds in Victoria Harbor, but settled for a modified system to reflect those differences. Fong Soi-kun, director of Macau's Meteorological and Geophysical Bureau, said the city's warning signals were already similar to Hong Kong. "It is good to narrow the differences among the three places while allowing local variations," he said. Lee Boon-ying, director of the Hong Kong Observatory, said the new weather website would offer convenience to hundreds of thousands of commuters and businessman who travelled in the delta. "It will offer better services to help prevent casualties and property losses in bad weather," he said. The launch of the website also marks the 25th anniversary of co-operation among the three weather bureaus. Apart from sharing data, the three sides have jointly developed an automatic weather station network on outlying islands and a lightening location system with six monitoring stations across the region.

Henderson Land Development (SEHK: 0012) is continuing to buy older buildings in Hong Kong for redevelopment, purchasing a site in Kowloon for HK$291 million at an auction yesterday. Henderson Land was the sole bidder of a property at 186-188 Tai Po Road, Kowloon, which houses a five-storey building, according to property consultant Savills, which conducted the auction. Henderson Land started buying units in the building in 2009 and held 92 per cent ownership since early last year. The Lands Tribunal recently approved the compulsory sales order for the building. Spanning an area of 8,325 square feet, the property is a commercial-residential development built in 1955. Last year, the Buildings Department approved Henderson's plan to redevelop it into a 37-storey building. A Henderson Land representative yesterday said the site would be redeveloped into a residential building, with shops on the lower floors. He said the project would provide 9,000 sqft of retail space on two floors. The building will comprise 80 flats with gross floor area ranging from 500 sqft to 600 sqft. Sales of the flats are expected to begin by the middle of next year. Henderson Land has stepped up its acquisition of old buildings for redevelopment as a way to increase the company's land bank. Chairman Lee Shau-kee last year said it was easier for the company to buy old buildings since the government in March lowered the threshold for compulsory sales to allow for redevelopment. The law allows developers to force the sale of remaining flats in a building older than 50 years once they have acquired 80 per cent of the property interests in it. This is down from the previous 90 per cent threshold. The lower threshold also applies to two other types of blocks: those with all units but one acquired; and industrial blocks outside industrial zones that are more than 30 years old. In the middle of last year, Henderson said it had snapped up most of the ownership of 40 sites, which could provide a total gross floor area of eight million sqft and 12,000 flats.

 China*:  January 30 2011

Now the US and China face the nitty-gritty - After pomp of Hu's American visit, leaders need to build trust on tough issues, experts say - The pleasantries have been exchanged, now the real challenges will begin. The Chinese and American leaders were on their best behavior during President Hu Jintao's state visit to the US last week. They put relations back on a cordial footing after a year of disputes in areas from trade and currency policy to military and regional security. But American analysts said that while China was pleased with the joint statement incorporating the term "co-operative partnership", the US was more reserved and would continue to judge China's sincerity through its actions. Jobs and the economy were Barack Obama's top concerns, but it was issues such as North Korea and human rights that would really test the relationship in the long run, they said. Arms sales to Taiwan will be China's key test for the US. On the North Korea issue, reports have emerged that Obama put pressure on Hu during their private dinner, saying the US might station more troops in South Korea if China did not work harder to rein in its fellow communists in Pyongyang. "The US keeps telling China over and over again that this time is not the same as before," said expert on Asian security Douglas Paal, from the Carnegie Endowment for International Peace. "North Korea now has missiles, and nuclear weapons that threaten us. No US president can fail to take action." Some progress has been seen on the Korean Peninsula since the summit. North Korea has proposed - and South Korea has agreed to - high-level exchanges that might result in a meeting of defence chiefs. In the joint statement issued after the Hu-Obama summit, China for the first time echoed US concerns about North Korea's uranium enrichment program, revealed in November during a visit to Pyongyang by a US scientist. Paal said the strategic interests of China and North Korea were not aligned. China wanted a quiet Korean Peninsula, he said, while North Korea was seeking attention from the US, South Korea and other powers by stirring up trouble. This made it difficult to tell how long Pyongyang would stick to any set course of action and meant China needed to push North Korea harder on ending its nuclear ambitions. "It has to take a risk on short-term stability," Paal said. "It will gain a more stable neighbor, with no nuclear power, in the long term." Arms sales to Taiwan, on the other hand, were described by Paal as a problem of "one choice and three compulsions". If China decided to increase military pressure on Taiwan, as it was doing now with a continued build-up of missiles, aircraft and other offensive capabilities opposite Taiwan, then Taiwan's leader would be compelled to seek arms from the US. The US would be compelled to sell them for political and legal reasons and China would be compelled to criticise such sales. "This is a vicious circle, and the place to fix it is at the choice," Paal said. Military expert Dr Michael Swaine, also of the Carnegie Endowment, said there was another potential problem, given China's continued development of its overall military capability. Despite improved political relations and closer economic ties between China and Taiwan, Swaine said "you don't have the development of serious confidence-building measures that could really result in the reduction of military deployments across the Taiwan Strait". He said: "The Chinese have made some reassuring comments on this, but haven't indicated they are prepared to unilaterally reduce military deployment as a goodwill gesture to start the ball rolling." "They tend to think [such a reduction] should be a response to some kind of political dialogue on reunification with Taiwan." In the absence of such reductions, US arms sales were likely to continue, further upsetting China. "The US should consider the possibility of developing a way of engaging more directly with the Chinese on some kind of mutual understanding about restraints," Swaine said. "The Chinese would restrain deployment or development of classes or types of weapons of relevance to Taiwan. "And the US would, as a result of that, restrain itself from or put a moratorium on arms sales. "This hasn't happened because the US has pledged ... not to speak directly to China about its arms sales ... but I'm not sure if the US' hands-off approach will be sufficient to maintain stability across the Taiwan Strait given the change in dynamics." Another challenge was China's growing naval reach in the western Pacific, with strategic fault lines opening up between China and the US in the East China and South China seas last year. "The US tends to believe that stability in the western Pacific rests to a certain extent on US maritime predominance ... and China does not entirely accept that argument," Swaine said. Frank talks on the operations, deployments and purposes of the two militaries were necessary, he said, and contacts could start with co-operation in less sensitive, non-traditional security areas like fighting terrorism and piracy, as agreed during US Defence Secretary Dr Robert Gates' trip to Beijing this month. "This is a subtle and complex problem, not one of China putting together a military and preparing to deploy force against somebody. It has a lot to do with strategic balance and perceptions of security, or insecurity, [in the region] and leverage over these issues," Swaine said. Professor David Lampton, of John Hopkins University, said Obama could be expected to take a firmer stance on human rights and Tibet , after repeatedly mentioning the need to respect universal human rights during his summit meeting with Hu. "During Obama's first year, there was a perception that the president was not staunch enough on some of the traditional positions of the United States," Lampton said. "I think what you are seeing now, particularly in light of a Republican House, is the president trying to re-establish his leading role in foreign policy. He talked about the one-China policy, but he also talked about human rights." Veteran China law professor Jerome Cohen said human rights would be the acid test for Sino-US relations as "the one area of contention where China's leaders have shown no willingness to yield to American pressure". "From today's vantage point, one can see little accomplishment in the human rights field despite the Obama administration's efforts to give the issue more prominence. The proof will emerge in the next few months as we witness whether there is any relaxation of repression in China, whether detained and disappeared human rights victims are released, and so on," he said. The US Congress pressed Hu hard on human rights issues when he was in Washington and such ideological differences will make deepening friendship difficult. In Obama's State of the Union Address on Wednesday he made a subtle comparison of the governance systems in China and the US, saying that while Americans argue about everything "some countries don't have this problem. If the central government wants a railroad, they build a railroad, no matter how many homes get bulldozed. If they don't want a bad story in the newspaper, it doesn't get written". Professor June Teufel Dreyer, of Miami University, said that going forward, a major problem for Sino-US relations would be domestic sentiments, which would make it difficult for the two countries to change their stance on issues such as North Korea and trade. "So the best we can hope for is what we've just had," she said. "There's a nice ceremony, and the two sides issued a joint statement which is mostly void of any concrete meaning ... Perhaps you could call this a soothing exercise by each side for its own domestic consumption." But many US experts lauded the joint statement's commitment to high-level exchanges. US Vice-President Joseph Biden will visit China this year and Vice-President Xi Jinping will make a trip to the US. "It is very important for US and Chinese leaders to trust each other," Lampton said. "The earlier that process begins the better."

Li Na yells during her semi-final match against Caroline Wozniacki at the Australian Open in Melbourne on Thursday. China's Li Na beat world number one Caroline Wozniacki 3-6, 7-5, 6-3 in the Australian Open semis on Thursday to become the first Asian woman to reach a Grand Slam final. Li courageously saved a match point before clawing her way back into the encounter, her second straight Australian Open semifinal, dashing Wozniacki’s hopes of winning a maiden major title. The 28-year-old from Wuhan now has a golden opportunity to bring home China’s first Grand Slam singles title, which would be expected to ignite the sport’s popularity in the country. Li, China’s number one, fought back from a poor start where she made error after error to give Wozniacki easy points, to gradually overhaul her younger opponent in hot conditions on Rod Laver Arena. When asked what had inspired her gritty fight back, the crowd favourite laughingly replied: “Prize money”, adding that her husband-coach Jiang Shan’s snoring had disturbed her sleep. “I didn’t have a good night’s sleep last night,” she joked. “My husband [snored]. I woke up every hour.” The 20-year-old Wozniacki had gone into the tournament having to fend off accusations that she wasn’t a deserving world number one because she is yet to win a Grand Slam. But for the first set-and-a-half, as she systematically picked apart Li’s game and broke down her fierce forehand, she looked every bit the world’s best player. However, just when Li looked down and out, she cut down her error rate and began to find her range with her ground strokes, before overwhelming a tiring Wozniacki to set up a final against either Kim Clijsters or Vera Zvonareva. “I’m happy that I am the first Chinese player to make the final,” said the smiling Li, as her husband Jiang beamed down from the stands. By reaching the semis Li was already assured of returning to the top 10, after becoming the first China player to crack the elite group following last year’s semifinal, when she was beaten by eventual champion Serena Williams. The trailblazing Li, China’s first WTA champion, also remains unbeaten this year after winning this month’s Sydney International, when she shocked three-time US Open winner Clijsters in the final. But victory had looked out of reach for the out-of-sorts Li during the first set, as the far steadier Wozniacki chased everything down and kept the pressure right on her opponent. Aided by Li’s 17 unforced errors, Wozniacki serve twice to close out the opening set in 39 minutes. Li, usually so solid on her ground strokes, sprayed the ball wide and long from both her forehand and backhand sides. She regrouped and played much better at the start of the second set, winning her opening service game to love and pushing Wozniacki. Li was broken but struck back at 4-3 to get the set back on serve, only to be broken again to leave Wozniacki serving for a place in her second Grand Slam final, after the 2009 US Open. But on Wozniacki’s match point, Li fired a blistering forehand down the line and then broke back, and broke again to level the match. Both women appeared fatigued by the hot conditions but it was Li who cracked first at 1-1 in the third as the errors came back into her game. Li was anguished to be broken early in the see-sawing deciding set, yelling in frustration at Jiang, but with both players struggling to hold serve the Li clinched it on her first match point as Wozniacki’s forehand went long.

Hu Xiufeng looked confident when she walked out of the Beijing Municipal Commission of Transport, where the capital's first lottery for new-car registrations was held. Among the hundreds of thousands of car buyers, she was lucky enough to be selected as one of the eight applicant representatives to attend the lottery yesterday. More importantly, her family needs just one car, but all three family members applied, which gave them a better chance. "I've been very lucky recently, and I think I will win the lottery," she said. "I'm going home now to check the winners." About one of every 11 applicants was awarded a number plate in Beijing's first lottery. A total of 17,600 applicants were awarded plates, a monthly cap for private cars so that Beijing can slash its growth in vehicle population by two-thirds compared with last year. Broadcast live on TV and the internet, the lottery was attended by representatives of applicants, deputies to the municipal People's Congress, political advisers, statistics experts and officials to show openness, fairness and equity - the three principles transport authorities promised. The results were published online 25 minutes after the lottery. Hu's good luck did not continue, and neither her husband nor daughter won either, which means they have to wait until next month's lottery. "The whole process seemed fair and transparent," she said, adding the only problem was whether it would be conducted the same way in the following months. Sun Wenjian , head of the transport commission's publicity department, refused to discuss whether representatives and media would be invited to future lotteries to be held on the 26th of each month. According to rules, lottery winners must complete new car registration within six months. The rules allow only 240,000 new cars to be registered this year, compared with the record 800,000 vehicles that were added to Beijing's clogged roads last year. Eighty-eight per cent of the number plates available each month go to individuals, 10 per cent to government vehicles and the rest to Beijing businesses and organisations.

The mainland’s most famous philanthropist on Thursday started handing out cash on the first day of a controversial trip to Taiwan that has sparked criticism and protests from anti-Beijing groups. Chen Guangbiao, who made his fortune recycling construction materials, handed three traditional ‘red envelopes’ containing a substantial amount of cash to a woman who had been waiting for him at his hotel in Taipei. “I’ve never counted so many banknotes. I don’t know what to do. I will use the money to take care of my 88-year-old mother,” the woman told reporters, her voice cracking with emotion. Chen, who is well-known in the mainland for his flamboyant style of charity, held up a wad of 2,000 new Taiwanese dollars spread out in a fan shape, surrounded by a crowd of photographers and cameramen. Chen, leading a group of businessmen from the mainland, arrived in an airport outside Taipei late on Wednesday where he was greeted by some anti-Beijing protesters holding a banner reading “Welcome to the group of hypocrites”. “I will deliver every penny that I’ve promised... and I hope to come every year,” the tycoon told reporters at the airport. Chen has said that he planned to give away more than US$15 million to the poor in Taiwan, in a high-profile gesture suggestive of a shift in relative wealth between China and Taiwan. He was scheduled to travel to the central county of Hsinchu later Thursday where he would give red envelopes each containing 10,000 new Taiwanese dollars to about 300 under-privileged families, officials said. The visit came at a time of easing tensions between Beijing and Taipei, although Beijing has sworn to retake the island ever since the two sides split in 1949 after a civil war. Taiwan is five times wealthier than the mainland in terms of gross domestic product per capita, even though the mainland’s economy is more than 10 times larger by scale.

Grand feast shows most dishes in multiple venues in central China - Community residents brought more than 8,000 self-cooked dishes to enjoy together on Thursday, to celebrate the upcoming traditional Spring Festival.

A child plays at a nianhua (New Year picture) workshop in Zhuxianzhen near Kaifeng city of Central China’s Henan province, Jan 26, 2010. Dozens of workshops in Zhuxianzhen are busy making woodblock New Year paintings as the Chinese lunar New Year draws near. As a national intangible cultural heritage, the Zhuxianzheng woodblock New Year paintings first appeared in Tang Dynasty (AD 618-907) and gained prosperity during the Ming Dynasty (1368-1644) and Qing Dynasty (1644-1911). According to traditional Chinese customs, the paintings are usually placed on doors and walls during the Spring Festival to prevent evil spirits and bring good luck to the family. 

Shoppers at a Carrefour SA outlet in Maanshan, Anhui province. An investigation by the National Development and Reform Commission found some of Carrefour's stores engaged in deceptive pricing. Carrefour released an apology afterward, indicating cooperation with authorities and special training for its employees. The retail giant Carrefour SA made an official apology on Wednesday after 11 of its stores in China were found to have overcharged consumers with false pricing. The French retail company also said it will establish an internal group to enhance pricing control. Chen Bo, spokesperson from Carrefour China, said in a statement that Carrefour "sincerely apologizes" for causing losses to the customers and promised to refund 5 times the difference. "We will establish a special control group to further conduct internal price quality inspections with wider coverage and higher frequency," said Chen, noting that the company will cooperate with local price inspection and supervisory bodies and involve them to provide special training on price quality control to related staff and managers. Carrefour's announcement came shortly after China's National Development and Reform Commission (NDRC) said Wednesday it found deceptive pricing practices during a national inspection at certain supermarket stores, including 11 stores of Carrefour SA and 3 stores of Wal-Mart Stores Inc. NDRC also ordered local authorities to fine the supermarket involved five times the overcharged amount or up to 500,000 yuan ($97,197) if the amount cannot be calculated, according to the statement. Chen Zhijiang, an official at NDRC, told China National Radio that in all the cities they investigated, Carrefour stores were suspected of price cheating. The investigation is part of the government's efforts to curb inflation as the Chinese Spring Festival nears. "We will urge Carrefour to check all the stores and protect consumers' interests," the report quoted Chen as saying. According to the report, the investigated cities are mainly provincial capitals including Tianjin, Shanghai, Wuhan, Shenyang. Regulators selected 30 to 40 items at random and compared their label prices with selling prices, and there were always three or four items that were not consistent. Zhang Xuejing, senior public relations manager at Wal-Mart China, said Wal-Mart attaches importance to price checking and insist on internal inspection and label management. "Every week, there are 700 price supervisors to check more than 1 million items," Zhang said, "We will seriously punish whoever is responsible for such acts." Zhang also said that the company offers discounts on more than 10,000 high-quality products to customers. The NDRC said on Wednesday that all supermarkets in China should avoid overcharging customers, adding that it will further strengthen price monitoring over the Lunar New Year period. According to the National Bureau of Statistics, China's GDP grew 9.8 percent in the fourth quarter from a year earlier, faster than the third quarter's 9.6 percent increase. The country's consumer price index hit 4.6 percent in December, down from November's 5.1 percent, which was a two-year high.

US will lose business if export controls remain in place By Ding Qingfen - The United States will probably allow huge business opportunities to go to European Union (EU) countries and Japan if it refuses to rescind controls on exports to China as soon as possible, according to Chinese government officials. The comments came at a monthly forum on China-US Economic Relations held by the China Center for International Economic Exchanges (CCIEE) - a high-level business thinktank - on Wednesday. Wei Jianguo, a former vice-minister of commerce, and now secretary-general of the CCIEE, urged the US to quickly reduce restrictions on high-tech exports to China in a bid to narrow the trade surplus, an issue that has become central to bilateral trade conflicts. "The sooner the US does it (loosens the restrictions), the more leverage it will gain in the future and the more commercial benefits it will gain otherwise, the business opportunities (in terms of high-volume Chinese imports of high-tech products) will naturally slip away to other nations, including those in the EU and Japan," said Wei. During the 3rd China-EU High-Level Economic and Trade Dialogue held in Beijing in December, the EU agreed to set up a working panel to examine boosting high-tech sales to China. A meeting on the issue is expected to be held early this year, after the two sides reached a consensus on increasing cooperation on high-tech trade. China has a large trade surplus with the US, which the US attributes to the yuan being undervalued. China denies this, and says that the best way to promote Chinese imports is for the US to abandon its restrictions on high-tech exports. The export of high-tech products to China, for both military and civilian use, has long been forbidden by the US despite repeated calls for change. During President Hu Jintao's four-day visit to Washington last week, China again made a proposal on the issue during the bilateral high-level meeting. Although China signed a series of agreements on purchasing US goods worth as much as $45 billion, no progress was made on the issues of export controls. "China and the US have been cooperating well, but US export controls are a big problem in bilateral economic relations," said Sun Zhenyu, the former Chinese ambassador to the World Trade Organization, at the forum. "US exports to China would easily increase if such a restriction did not exist." Some US companies have also agreed with that statment. "The US government has to look at reducing controls, because erecting barriers cannot be the answer to US need to create jobs and prosperous growth," said Mark Norbom, president of General Electric China. GE, the largest US industrial company by market value, announced a number of deals with Chinese groups last week that will create about 4,500 jobs in the US, including the formal signing of a joint venture agreement with the Aviation Industry Corporation of China to set up a 50-50 joint venture to provide avionics for the new Chinese C919 airliner.

On January 9-11, the 17th Central Commission for Discipline Inspection (CCDI) of the Communist Party of China (CPC) made an overall arrangement for the Party's anti-corruption work in 2011 at its sixth plenary session, stressing to address problems the public complains. Although China still has a long way to go in its fight against corruption, the situation will very likely continue improving, with constant progress in the country's anti-corruption legislation and institutions. 

China's Chongqing, Shanghai launch property tax to cool housing market - Photo taken on Jan. 21, 2011 shows a high-class residential area in southwest China's Chongqing Municipality. The State Council, China's cabinet, has approved on a trial basis the launch of property tax reforms in some cities. Shanghai and Chongqing are cities that will trial the tax first. Chongqing sets its property tax rate at 0.5 to 1.2 percent. Authorities of Chongqing and Shanghai municipalities announced Friday they would kick off the long-awaited trial property taxation, starting from Jan. 28, amid the latest measures to cool off the red-hot housing market. This came on the heels of another round of tightening measures China's cabinet unveiled Wednesday, including higher down payment, home purchasing restrictions in more cities, and annual price control targets for newly-built homes. China's real estate market remains overheated, even after a slew of tightening measures last year, including higher down payments, higher lending rates for second-home buyers and two hikes in the benchmark lending rates. Chongqing will tax all villas as well as new apartments priced at least two times the average price of all newly-built homes in the southwestern city, said Chongqing mayor Huang Qifan. The annual tax rates are 0.5 percent of the transaction prices for villas and apartments priced less than three times the average price, 1 percent for those priced three to four times the average and 1.2 percent for those priced more than four times the average, Huang said. For a family, the first 180 square meters for villas and first 100 square meters for high-end apartments are exempted from tax, he told a press briefing. For non-permanent residents who don't work and run companies in Chongqing, their second homes will be taxed at 0.5 percent regardless of the prices, he said. The city may use the home evaluation prices as the tax bases in three to five years, Huang said. The newly-bought second and second-plus homes of permanent residents in Shanghai will be taxed if the average floor area per family member of all homes, including the existing ones, is more than 60 square meters, the Shanghai Municipal government said in a statement. Each family member will have 60 square meters exempted from tax, it said. All new homes bought by non-permanent residents will be taxed, but the buyers can get all tax returned for their first new homes after they work in Shanghai for three years. The tax rates are 0.6 percent for housing priced more than two times the average prices and 0.4 percent for those priced less.

Hong Kong*:  January 29 2011

Making his first public appearance in the back-and-forth saga of his contested gambling empire, Stanley Ho Hung-sun said in a television interview yesterday that everything was back in order and that he would not sue his family members after all. Appearing on TVB (SEHK: 0511) at noon, the magnate appeared to be reading from a script on a large white board held up in front of him. "I thank [lawyer] Gordon [Oldham] for intervening. Now I do not need Gordon any more," Ho read from the board, breathing laboriously. But a few hours later, Oldham appeared in the High Court and contradicted what had been shown at noon. He said he had arrived directly from a meeting with Ho, who he was still representing. Oldham hinted that a big move was coming. "I think you will be surprised," he said. The saga unfolded after it was revealed this week that the tycoon's control of his sprawling empire was diluted almost to nothing. Last night, there was yet another twist when Angela Ho Chiu-yin, daughter of Ho's deceased first wife Clementina De Mello Leitao, issued a statement. She said in it she could not believe her father would leave nothing to her mother's family, as he had "always prided himself on being a fair, just and honest person". "Her [her mother's ]connections in Portugal and standing in Macau society was a big factor for my father winning the gambling monopoly in 1961. Daddy never forgot her importance in the creation of the empire he presides [over] today. My father speaks to me often and has stated publicly about how he intends to divide his estate evenly amongst his children and I therefore find statements and actions made and taken by his mistresses and their children, which do not conform to this wish, highly disconcerting and hurtful." She also said she had tried to contact Ina Chan Un Chan (Ho's third wife) Pansy and Daisy (daughters of his second wife) many times about these issues but they had ignored her. Oldham, senior partner at Oldham, Li and Nie, said in the afternoon that he had recorded video of Ho's Tuesday morning affirmation saying he was fighting to regain control of Lanceford, the key holding company in his corporate empire. An announcement by listed holding company SJM on Tuesday afternoon appeared to support this, saying the casino company's board of directors "has also been informed that the Lanceford [transfer of control] is disputed by Dr Ho and that Dr Ho is seeking a means by which such matters can be resolved." Shares of SJM immediately plunged 9 per cent when they resumed trading yesterday morning after a suspension on Tuesday to respond to a story in this newspaper. The shares later climbed back and closed down 4.93 per cent at HK$13.12. During the noon TV appearance, Ho was flanked by third wife Chan, on his left, and their daughter, Florinda Ho Chiu-wan, holding a microphone. On his right, daughters of his second wife, Lucina Laam King-ying - Pansy, Daisy and Maisy - stood about three metres away. It is unclear who wrote the words on the board he read from. The wheelchair-bound Ho left the living room immediately after delivering the statement. He did not take any questions. The tycoon made the statement in Chan's house at 5 Black's Link, which saw people coming in and out throughout the day, creating a frenzy for the throng of reporters waiting outside the gate. The family apparently had a meeting at about 3pm, when children of the four wives were seen entering the house. Ho left the house at 3.35pm in the company of his fourth wife, Angela Leong On-kei, and their daughter Sabrina. They went back to his home at 1 Repulse Bay Road. Oldham was seen entering the house at 4.30pm, and came out 15 minutes later with a cheque in his hand. He went to the High Court afterwards. Privately-held Lanceford, the holding company for the bulk of the billionaire's wealth, owns Ho's controlling 31.655 per cent stake in 50-year-old conglomerate Sociedade de Turismo e Diversoes de Macau (STDM). STDM in turn owns 55.7 per cent of SJM, which indirectly operates 20 of Macau's 33 casinos. The issue of new shares in Lanceford that shifted ultimate control of STDM took place on December 27. The issue reduced Stanley Ho's stake in Lanceford from 100 per cent to 0.02 per cent, and boosted the combined interest of Laam's five children and Chan to 99.98 per cent from zero. This was done "without Ho's consent and knowledge", according to a letter from Ho to Daisy dated January 5. In that letter, the tycoon said he had intended for his main assets to be distributed equally among each of his four families. That was contradicted by a subsequent reply from Daisy to her father on January 7. Moreover, another statement that was signed by Ho and was read out by Chan on Tuesday night said the whole matter was a misunderstanding that involved no cheating among family members, and that the matter did not require lawyers or the courts to settle. This prompted the following response from lawyer Oldham yesterday morning: "We don't pay too much attention to a press release issued at midnight by a third mistress who has a billion-dollar interest in the outcome of this." "It is business as usual. We have our instructions from Stanley Ho and are carrying on," he said. Leong, who is also director of SJM and managing director of its Macau operating unit, said yesterday after leaving Chan's house she would not comment on "gossip". Asked to comment on Chan's emergence as one of the biggest indirect shareholders of SJM, Leong said: "We have many shareholders. No matter big or small, they are all concerned with the development of the company. We will be accountable to them." She did not comment on whether Ho was conscious of his actions. Contacted yesterday, none of STDM's other major shareholders would comment on recent developments within the Ho family empire. The family of Cheng Yu-tung, the Henry Fok Ying Tung Foundation and Ho's estranged sister, Winnie Ho Yuen-ki, all declined to comment.

Two different letters dated two days apart, both signed by casino king Stanley Ho Hung-sun, paint a starkly different picture of how the octogenarian sees the future of his multibillion-dollar business empire. In a January 5 letter to his daughter Daisy Ho Chiu-fung, 89-year-old Ho said his wealth was to be divided equally among his four families. Forty-eight hours later, the patriarch's signature appeared on another letter stating otherwise. Changes of mind over matters of family and money - especially on such a grand scale - are the casino magnate's prerogative, but legal experts say they seriously complicate the making of a final decision on who gets what. Billy Ma, a solicitor specialising in probate and succession cases - and a member of the Hong Kong Law Society's Probate Committee, said: "Not every will or instruction requires a medical practitioner's presence or documentation. But if a client has been sick for a long time, steps must be taken in a bid to protect the client and the lawyer." Psychiatrist Dr Tsang Fan-kwong said a person was considered mentally fit to enter a contract or make a will if he or she knew what was at stake, how a fortune might be distributed, who would benefit and the implication of the contract. While it may make sense to take the last opinion or view of the person involved as the most accurate, this could depend on the time between the views and the changing circumstances during that period. Ma said there were many unclear issues in the Ho situation. "Which decision is the final one? Family members have to prove that the decision they believe is a genuine one was made when a client was without undue influence. "If the client is available, he should appear in court to reveal his decision in detail," Ma said. The flamboyant tycoon is known for his outspoken views and humour but has lived quietly since undergoing brain surgery in 2009 after hitting his head in a fall. Other than a TV interview he gave yesterday, he had only made two public appearances since his surgery. In December 2009, while still undergoing treatment in hospital, he took time out to attend the 10th anniversary of Macau's handover and enjoyed a brief chat with President Hu Jintao. When Hu praised him for his contribution to Macau and wished him good health, the tycoon surprisingly responded in English. Ho had undergone speech therapy, according to a person close to his family. It was unclear whether his therapist was an English speaker. On November 19 last year, Ho accepted the Grand Bauhinia Medal at Government House. A generous donor to Chief Executive Donald Tsang Yam-kuen's election campaign fund, Ho was given the top honour and praised for "his outstanding contribution to charity and community service". His last eloquent comment heard in public was in July 2009, when he was named founding president of Macau's casino chamber. At the launch of the chamber, which would lobby the government to cut casino taxes in the face of competition from Singapore, he said the six operators had agreed to limit the commissions paid to junkets to 1.25 per cent. "It's not easy for six minds to become one," he said. "We can make money together."

Stanley Ho Hung-sun is perhaps the best-known man in the region to openly declare he has four wives. The father of 17 children, Ho changed the four women's lives when he teamed up with them. Ho's first wife, Clementina Leitao, came from a prestigious family in Portugal and was known as the "greatest beauty in Macau". Leitao's grandfather was a lawyer and in the 1940s was Macau's only notary public. Ho fell in love at first sight with Leitao and they were married in 1942. The couple had four children — Robert, Jane, Angela and Deborah. Leitao's health deteriorated in the 1970s and she suffered partial memory loss after a car accident in 1973. She was dealt another blow when Robert and his wife died in a car accident in 1981. Leitao then required round-the-clock nursing care and was served by Ina Chan Un Chan, who became Ho's third wife. Leitao died in 2004. In the late 1950s, Ho developed a relationship with Lucina Laam King-ying, daughter of a Chinese soldier who fought in the war against Japan. They were legally married in 1962 in Hong Kong, which didn't ban polygamy until 1971. Laam's children went on to join the tycoon's businesses. Pansy, Daisy and Maisy hold senior positions with Sociedade de Turismo e Diversoes de Macau (STDM), Shun Tak Holdings (SEHK: 0242) and MGM Macau, and Lawrence is Melco International Development (SEHK: 0200, announcements, news) chairman. Josie is an actress. Ina Chan, wife No3, became a nurse after graduating from Macau's Sacred Heart Canossian College. She met the magnate when she was hired to take care of Leitao. Her status as the third wife was consolidated in 1985 when Ho bought her two apartments in Repulse Bay. She had three children - Florinda, Laurinda and Orlando. Chan is a vice-chairwoman of the Tung Wah Group of Hospitals. Angela Leong On-kei, who has been regarded as Ho's fourth wife since the late 1990s, was born in Guangzhou and was a dancer in a troupe. She met Ho in 1988 when they danced together at a private ball. She gave birth to five children — Sabrina, Arnaldo, Mario, Alice and Ho Yau-kai. Leong is the managing director of Sociedade de Jogos de Macau (SJM)'s Macau subsidiary and has been a director of Po Leung Kuk since 2005. Ho's family has been closely involved in mainland politics. The tycoon is a member of the standing committee of the national Chinese People's Political Consultative Conference (CPPCC), China's top political advisory body. Leong is a delegate to the Jiangxi provincial CPPCC and that of the Guangdong city of Zhuhai. Chan serves at the Guangdong provincial CPPCC. Pansy, Daisy and Lawrence Ho are delegates to various municipal CPPCCs. Leong is also a directly elected member of Macau's Legislative Council.

Ronnie Chan Chi-chung expects rental income to rise as new mainland commercial projects open. Hang Lung Properties (SEHK: 0101), which reported a 77 per cent plunge in underlying interim profit, expects rental income from the mainland will surpass Hong Kong next year. Excluding the gain on revaluation of investment properties, the developer's core earnings dropped to HK$1.27 billion for the six months to December, from HK$5.5 billion a year earlier. Hang Lung said the decline was mainly due to a lack of earnings from property sales. Operating profit from property sales dropped to HK$2 million, with contribution coming mainly from the sale of car parking spaces in Ho Man Tin. That compared with HK$5.33 billion in the same period in 2009. Rental income recorded 13 per cent growth to HK$2.07 billion. Turnover totalled HK$2.52 billion, down 74 per cent from the same period in 2009. Directors declared an interim dividend of 17 HK cents per share, the same as a year ago. "We are looking forward to a harvest following our 10-year effort on the mainland. The next several decades will be our golden era," chairman Ronnie Chan Chi-chung said. Rental income derived from the mainland - largely from Hang Lung's Plaza 66 and The Grand Gateway in Shanghai - rose 15 per cent to HK$929 million in the first half of the year. Palace 66 at Shenyang, which opened in June last year, was fully let. Its mainland investment portfolio accounted for 44.83 per cent of the HK$2.07 billion in total rental income, while the remainder was contributed from its Hong Kong. "Rental income in the mainland will be boosted as new commercial projects in the mainland started to open in coming years," he said. Managing director Philip Chen Nan-lok said that more than 80 per cent of the 171,000 square metre Parc 66 in Jinan, due to be opened in August, had been pre-leased. "More than half of the tenants are international brand names and will open their flagship stores in Jinan," he said. Chan said Hang Lung planned to spend HK$11 billion, raised through a share placement in November last year, to finance the construction of its commercial projects in the mainland this year and next. The developer planned to invest HK$40 billion to build six commercial developments in Jinan, Wuxi, Dalian, Tianjin and two in Shenyang. He said the developer might increase its investment in the mainland through expanding the existing projects or acquiring more development sites. In Hong Kong, Chan said the firm held 1,400 units, with an estimated value of HK$20 billion, at Harbourside at Kowloon Station and The Long Beach at Tai Kok Tsui. Without giving the timetable, he said the firm would consider selling them only during a market boom. Meanwhile, Hang Lung Group (SEHK: 0010) reported underlying interim profit fell 74 per cent to HK$790 million. It declared an interim dividend of 19 HK cents, same as a year ago. Shares in Hang Lung Properties rose 0.28 per cent to HK$34.9 yesterday while Hang Lung Group was up 0.99 per cent to HK$50.75.

The Hong Kong Monetary Authority will soon start investing in mainland stocks and bonds to improve the performance of the Exchange Fund. While Hong Kong's retail investors bet on further yuan appreciation, HKMA chief executive Norman Chan Tak-lam said the plan to invest in yuan products was aimed at diversifying risk and improving returns. The Exchange Fund, which exists to support the Hong Kong dollar's peg to the US dollar, is managed by the HKMA to invest in bonds, Hong Kong and overseas stocks, and foreign currencies. The fund made a profit of HK$79 billion last year, 25 per cent below the HK$106 billion it made in 2009, but better than the HK$75 billion loss in 2008 amid the financial crisis. The fund grew 3.6 per cent last year, below the 5.9 per cent in 2009 and below the 5.9 per cent average from 1994 to 2010. In comparison, the Hang Seng Index advanced 5.3 per cent last year. Chan said he was satisfied with the Exchange Fund's performance, which he said was "better than expected" in view of the European debt crisis. The fund made HK$42.1 billion from bonds, HK11.6 billion from Hong Kong equities and HK$27 billion from other equities but lost HK$3.1 billion in foreign exchange. But he admitted the need to seek better investment opportunities. "HKMA has started to diversify its investments by way of overseas properties and private equities to improve returns," Chan said. "We will also start to invest in mainland stock and bond markets soon." The HKMA has got the nod from the mainland regulators to become a qualified foreign institutional investor (QFII) and is working with the State Administration of Foreign Exchange on how much it will be allowed to invest in mainland stocks and bonds. Since the mainland is yet to open its capital markets to overseas investors, overseas central banks and investment companies need to obtain QFII certification before they can invest on the mainland. Chan said the HKMA has also got the green light to invest up to 15 billion yuan (HK$17.7 billion) in the mainland's interbank bond market. The value of the Exchange Fund grew to HK$2.35 trillion as of the end of last year from HK$2.15 trillion a year earlier. The fund's performance affects the government's income. Despite the fund's poor performance last year, the government will still receive HK$33.8 billion in fees from the fund - more than the HK$33.5 billion in 2009. The fee is based on the fund's six-year average return up to the year in question. Looking ahead, Chan said: "The markets will continue to be uncertain and volatile." While the high unemployment rate and municipal debt would continue to trouble the US, the emerging markets that were facing mounting inflation would adopt tightening policies, Chan said. "All these will bring significant instability and uncertainty to the macro financial environment and investment markets this year. Against this backdrop, I will take a cautious stance on the outlook of the financial markets this year," he said.

For marine conservationists, the whereabouts of thousands of tonnes of shark's fin imported annually into Hong Kong is a mystery yet to be solved. While restaurant owners and traders have reported a fall in sales, government trade figures suggest otherwise. As the world's biggest importer of shark's fin - a Chinese delicacy blamed for pushing rare shark species into extinction - Hong Kong has seen steady imports of 9,500 to 10,500 tonnes a year in the past 10 years. However, government statistics showed a steady drop in the re-export of the fins, including the mainland - the No1 destination. That suggests more and more stock must be staying in Hong Kong - either being consumed or saved up as reserve. However, restaurant owners, wholesalers and retailers all tell a tale of falling sales. So where did all the fins go? A closer look at the figures suggests the drop in re-export to the mainland market was the main reason behind the falling number of outgoing fins. However, local traders say exactly the opposite is the case - the fall off is only on paper as mainland traders find ways to get around custom inspections. According to the Census and Statistics Department, re-exports of shark's fin to the mainland dropped from 8,626 tonnes in 2003 to 3,028 tons in 2009. Last year Hong Kong Customs and Excise reported only 939.4 tonnes were shipped across the border during the first 11 months. A major local shark's fin trader says mainland shoppers continued to be his biggest clientele, only the trading method has changed. "We do not ship them the stock any more. Mainland shoppers now come directly to our shops with huge luggage bags, load them up with fins and carry them home," says Kwong Hung-kwan, who has a trading company and shop in Western specialising in shark's fin. The shoppers also come with vans and trucks, but Kwong says he has no idea how they take the goods home. "A snake will have a snake's way," he says. The situation can be traced back to 2003 when Hong Kong ceased to be a processing centre for unfinished shark's fin products. Without value-adding processing, the fins became a taxable trading item for mainland authorities when they were re-exported from Hong Kong. These hefty duties - which can be up to 40 per cent of the total stock price - provided mainland traders with an incentive to find a way around the rules. Following the change almost half of the city's 100-odd traders were squeezed out of the industry. The Shark's Fin and Marine Products Association, a group comprising most of the city's remaining traders, says the figures are misleading. "In the old days, China made up only about one third of the total re-export market, nowadays the share is around three-quarters," says group council member Lam Chan-shun. "Mainlanders, especially those from the Pearl River Delta, are definitely looking for more shark's fin, not less." China also imports shark's fin directly from other countries but as Hong Kong does not impose any tax on imported fins, it has became a haven for fin smugglers from the mainland. If most of the imports are really sold elsewhere, as claimed in the statistics, there may be grounds to believe that consumption of the delicacy is on the decline, or at least not increasing. The Hong Kong Federation of Restaurants and Related Trades estimates orders from the 2,000 local restaurants that serve shark's fin dishes have shrunk 5 per cent in the past decade despite a boom in the banquet business. "There are more banquets alright, but in the last three years about 10 per cent of the hosts have replaced shark's fin with other ingredients. Meanwhile, price-sensitive restaurants serve smaller portions," federation president Simon Wong Ka-wo says. A federation survey showed that the number of banquet tables jumped 40 per cent from 1.8 million in 2000 to 2.5 million in 2009. But Thomas Woo Chu, managing director of Hsing Kuang Restaurants Holdings, which owns 25 branches of five different eateries, says the portion of shark's fin served per table was halved as prices jumped 30 per cent in the past three years. As mainlanders have grown in prosperity (SEHK: 0803, announcements, news) , demand for shark's fin has surged and merchandisers are fighting for a limited supply from Africa and the Middle East. That has pushed prices up 30 per cent for expensive species like tiger sharks, which now cost up to US$170 per catty, up from about US$120 three years ago. "In the old days, restaurants may have served up to 400 grams of shark's fin for each table, now you get maybe 150 grams," Woo says. The Shark's Fin Trade Merchants Association, which represents 90 per cent of all wholesalers in Hong Kong, says sales have definitely dropped over the years. "Both restaurants and retailers are making smaller orders. Housewife orders have almost gone completely," association chairman Chiu Ching-cheung says. While it should be good news for green activists, Silvy Pun Yuen-yiu, project co-ordinator of global conservation body WWF, which has run a long-standing campaign to protect precious marine life including sharks, says she will not indulge in the unproven optimism. "Figures provided by local authorities are usually credible, and the industry has reasons to play down the consumption pattern to avoid criticism, so we will not step down our efforts in the campaign," she says. According to the International Union for Conservation of Nature, the number of endangered sharks, rays and chimeras has increased from 15 in 1996 to 126 in 2008.

Clockwise from top left: scenes from All's Well Ends Well 2011; I Love HK; and Mr and Mrs Incredible & Raymond Wong - Next week the war for box-office supremacy between two of Hong Kong's most bankable comedians starts again. At least that's how one of them, Raymond Wong Pak-ming, sees it. The veteran producer, director and actor hopes his latest festive comedy, All's Well Ends Well 2011, will avenge his defeat last year. "That's one battle which I'm still quite unhappy about," Wong says. His previous Lunar New Year offering, All's Well Ends Well 2010, earned just HK$15.5 million in ticket sales compared to HK$34.5 million recorded for 72 Tenants of Prosperity (SEHK: 0803), the bombastic production from Eric Tsang Chi-wai, who is back this year with the even more populist I Love HK. Evidently still smarting, Wong describes his rout last year as a "technical knock-out"; he complains that 72 Tenants received "blanket coverage" from TVB (SEHK: 0511) - the broadcaster which co-produced the film and provided most of its stellar cast - while All's Well was shunned. The tradition of hor sui pin ("celebratory New Year films") began in the early 1980s with either action films (mostly involving Jackie Chan) or family comedies (with films such as Michael Hui Koon-man's Teppanyaki, and Wong's The Eighth Happiness in 1988) being released for the festive period. It remains to be seen who will prevail this year but Wong and Tsang's ongoing rivalry reflects how the Lunar New Year period remains one of the most profitable in the calendar for Hong Kong filmmakers. Wong says he is "determined to win" this time and has adjusted his promotional strategies to circumvent the unremitting exposure TVB lavishes on I Love HK. Taking a leaf out of his rival's book, he lined up sponsorship deals with local retailers, so his film posters have become part of their window dressing and ticket coupons are being given to customers who spend over a certain amount in the shops. Content-wise, Wong has also aped 72 Tenants' formula by casting as many big name actors as he can. Even the most insignificant characters are played by industry personalities, with established directors such Wilson Yip Wai-shun and Fruit Chan Kuo in walk-on roles (as a priest and a bookseller respectively).

It's the newest attraction at Ocean Park - sit watching fish and then point out to the waiter what you'd like for your seafood dinner. Don't worry, says chief executive Tom Mehrmann, green groups helped design the menu of Neptune's Restaurant - where marine life circles the diners behind a 13-metre-wide viewing panel - and the food comes from sustainable species (not the aquarium). Park chairman Allan Zeman is proud of the restaurant, part of its new Aqua City zone. "It's the first one in the world that I see. You can watch the fish while dining. You don't have to go deep sea diving." The Grand Aquarium, one of the highlights of the new Aqua City zone that was officially launched yesterday, features milk fish manta rays and endangered species such as scalloped hammerhead sharks and bluefin tuna. They are among the 5,000 fish of more than 400 species in the aquarium containing 5.2 million litres of water. The park admits 10 of the 80 endangered bluefin tuna died en route from Japan. The Hong Kong Dolphin Conservation Society accuses the park of lacking in transparency in revealing information about the deaths of some animals. Society chairman Dr Samuel Hung Ka-yiu, who said he was quoting a park employee, said more than 10 of 40 hammerhead sharks had died too due to overcrowding in a quarantine pool. But Una Lau, the park's public affairs director, said only just over 10 hammerhead sharks were imported. Zeman, who denied that hammerhead sharks had died, said the deaths of the bluefin tuna were natural. "It's quite normal ... people die and babies are born every day," he said. "Fish die and are born. "The aquarium in Japan told us the tuna we got, which were caught by a reputable fisherman, were meant to be sushi. We actually saved them as they would have wound up being sushi in a restaurant." Hung said importing such fish created demand and led to unnecessary catching of the gravely endangered species. "Why couldn't they import other species of tuna which are not endangered. The public can't differentiate between the species. The park is no longer the Ocean Park we knew from childhood. "Driven by a business mentality, they aim for the rarest species for gimmicky effect. Bluefin tuna swim very fast and long distances. They can only make circles inside the aquarium. Their policy on animal acquisition, which states that acquisition of animals from the wild is pursued only if the wild population is sustainable, is a joke." Zeman said green groups always protested at the opening of aquariums. "It's a good time to protest. It's good that green groups keep us on our toes, but we can't always do what they want. Some animal conservationists say we should not have animals in captivity ... [Ocean] pollution is serious [in Hong Kong]. People need to know about conservation. Criticising us is always easy ... if we are just about rides, we will just be Disney." The aquarium is double the size of the old one named Atoll Reef, which was closed last month for renovation and will house sharks in future. At the entrance to the aquarium is a man-made blowhole, where ocean waves are simulated, and a touch pool containing starfish. An artificial lagoon in front of the aquarium is another highlight, where a show featuring pyrotechnics, water jets and laser lights will be put on every night. Zeman points out another benefit of the new aquarium. "People can get married in the tank if they have diving licence." It's not just the acquisition of hammerheads and bluefin tuna for Aqua City that greens are criticising. They don't like the park bringing in beluga whales for Polar Adventure, an attraction to open next year. Hung said: "Due to the big demand for the whales from the mainland, there are fewer numbers of the species in Russian waters. Russia doesn't know much about conservation. You can buy a permit for acquisition easily. The park is soon to be open, but they have yet to make public the research findings." The theme park earlier confirmed it had been funding Russian research on beluga whales in the Okhotsk Sea since 2007. Sun Ho-yan, senior project officer with Green Sense, accused the park of causing more global warming by building a simulated polar area that will consume a lot of power to maintain the freezing conditions required. Zeman said he expected a 15 per cent increase in visitor numbers once the new attraction opened. "The Rainforest will open in May. This is a big year for Ocean Park."

The ICAC this week raided the headquarters of the League of Social Democrats as part of an investigation of how it spent campaign funds in Legislative Council by-elections last year. League chairman Andrew To Kwan-hang confirmed that the officers took documents from the league's office on Tuesday. "The officers came to collect receipts and claims," he said. "But the league is not the subject of the investigation." A spokeswoman for ICAC said it would not comment on individual cases. Lawmaker Albert Chan Wai-yip, who quit the league together with Wong Yuk-man on Sunday, said he welcomed the investigation, which follows accusations over their expense claims during the election. "An independent and objective investigation by the ICAC will find out who is innocent," Chan said. Wong, Chan and "Long Hair" Leung Kwok-hung resigned from the Legislative Council last year with two Civic Party lawmakers and were re-elected in by-elections they hoped would be serve as a de facto referendum on the pace and scope of democratisation.

The Consumer Council is demanding the government draft legislation to regulate the sale of new flats following an outcry over "rubbish-dump" flats in a new Mid-levels estate. Several buyers of the Icon in Mid-Levels were shocked by the condition of their flats, which included exposed flooring and walls and unfinished kitchens. Their cases reflected how vulnerable flat buyers could be if their properties fell outside existing regulations, the council warned. Although the government has set up a committee to consider legislation, the council said officials should speed up the process and make sure flats in redevelopment projects - such as the Icon - were covered by it. "It is necessary to have a law governing sales of all kinds of residential properties. There is an urgent need for that," said Ambrose Ho Pui-him, convenor of the council's working group on consumer issues relating to residential property. The council has received three complaints about the Icon sales. Ho said two loopholes had been exposed by the controversy and they should be plugged. Flats in redevelopment projects do not come under the Lands Department Consent Scheme, which approves developers' applications for presales but only for those in new-lease agreements. Inaccuracies may arise in redevelopment sales brochures as developers are not obliged to hand them to authorities for approval. It is also not necessary for developers who are not members of the Real Estate Developers' Association - such as Winfoong of the Icon - to follow voluntary guidelines that the government set for the association concerning the sales of unfinished flats. Nine rules to enhance market transparency and avoid manipulation and a further 12 proposed requirements for show flats came into effect in June. They only apply to association members, making it difficult for consumers to know the difference. Ho said the new law should cover all types of flats, including finished and unfinished ones, those that fall under the consent scheme and those that don't, to ensure all buyers had the same protection. The steering committee on the Regulation of the Sale of First-hand Residential Properties by Legislation, set up in October, is expected to complete its work in a year. It will deliberate on the definition of new flats, sales practices, price lists, show flats, saleable area, the enforcement mechanism and penalties. Ho said while no laws were available in the meantime, the Estate Agents' Authority should make sure agencies follow its guidelines requiring them to provide accurate property information. The council also called on the Law Society to add warnings on contracts for transactions of non-consent scheme flats so that buyers would be more cautious when considering the deal. The Estate Agents' Authority started its investigation into The Icon case on Tuesday. It called on representatives of Centaline Property Agency to meet its officers at the authority office and passed them a list of questions to be answered within seven days. The probe is to find out whether Centaline agents provided inaccurate information to flat buyers. Earlier this week, Winfoong offered two options for buyers of problematic flats at The Icon. They can either receive HK$600,000 compensation and allow the developer two more months to finish the flats or accept a buyback offer valued at 120 per cent of their purchase price.

Shaw sells TVB stake in estimated HK$5.2b deal - Shaw Brothers (Hong Kong), owned by 102-year-old media mogul Sir Run Run Shaw, has agreed to sell its entire shareholding in Television Broadcasts (SEHK: 0511) (TVB) to an investor group led by local dealmaker Charles Chan Kwok-keung and Taiwanese entrepreneur Wang Cher. The operator of Hong Kong's biggest free-to-air TV network said the deal was signed yesterday and would be completed on or before March 31. In a filing with the Hong Kong stock exchange last night, TVB said Shaw Brothers would sell its entire 26 per cent in the company. This represents 113,888,628 shares. Terms of the transaction were not disclosed and it was not clear last night exactly how much Chan, Wang and Providence Equity Partners - the other member of the investor group - offered for the Shaw Brothers shares. However, TVB's shares closed at HK$45.90 last night and that means the deal could be worth about HK$5.2 billion. The deal is not a surprise as it was widely speculated that Shaw wanted to sell his TV empire. "It is easy to understand the reason for Sir Shaw to sell his media empire. He is old and it's not very pragmatic for him to continue taking care of business. The day of handing over was always going to come sooner or later," said Wang Ran, chief executive of boutique investment bank China eCapital Corp. "For him, he can keep this legendary media giant to himself, or he can cash it in and use the money to do things in which he is interested, charity and so on. When there is a proper pricing, he sells it." TVB last night said Chan, Wang and Providence chief executive Jonathan Nelson would be nominated to join the TVB board on completion of the deal. Chan, the chairman of ITC Corp, is a well-known dealmaker who has dabbled in the media industry before. In 2000, he was behind a takeover of Sing Pao, one of Hong Kong's oldest news publications. Chan sold his shares in that company within two years. He is also known for his good relationship with Li Ka-shing. Wang is the daughter of Taiwanese tycoon Wang Yung-ching, one of the island's richest tycoons with an estimated net worth of US$5.5 billion. She founded smartphone maker HTC Corp and chipmaker VIA Technologies. Providence Equity Partners is a United States-based private equity firm with more than US$22 billion of capital under management. The Shaw Foundation Hong Kong, which currently has 27,286,200 shares or a 6.23 per cent in the issued share capital of TVB, will dispose of a portion of its shareholding to certain independent third parties on or before the completion of Shaw Brothers' divestment in March. Mona Fong Yat-wah, deputy chairwoman and the wife of Shaw, currently holds 1,146,000 shares, or a 0.26 per cent stake, in TVB. The announcement ends months of speculation over who would seize control of TVB, which Shaw founded in 1967. Shaw gave up his executive duties in 2009 to become the non-executive chairman. He is the biggest shareholder in TVB with a 32.5 per cent stake, comprising shares held personally and the 26 per cent holding owned by Shaw Brothers (Hong Kong). Last year, the reported front runners to buying the Shaw family's TVB stake included Henderson Land Development (SEHK: 0012) vice-chairman Peter Lee Ka-kit and Shanghai Media Group, the mainland's second-largest media company. Besides dominating the Hong Kong market, TVB is a major Chinese television programming distributor worldwide. Its programmes mainly cover Southeast Asia, including Malaysia, Singapore and Indonesia. It also owns a pay-television channel in Taiwan, TVBS.

The Housing Society's Wong Kit-loong with Cheerful Court residents Yuen Ka-lok, 82, and Chu Ming, 73. Fine dining on the menu at Hong Kong luxury housing project for the elderly - A luxury housing project for the elderly now under construction in North Point will include a wine cellar and fine dining restaurants - and for tenants who continue to work, a business centre. But for those contemplating retirement and wishing to escape the urban environment and office life, a proposed resort-style project in Tin Shui Wai may be a better choice. The projects are being developed by the non-profit Hong Kong Housing Society and are aimed at providing quality retirement accommodation on life-lease contracts for people aged 60 or over. Excluding land, the projects will cost in the region of HK$5 billion and will provide 1,780 units for lease. "One in every four Hong Kong residents will be aged 60 and above within 11 to 12 years from now. Demand for elderly housing will become enormous," said the society's chief executive and executive director, Wong Kit-loong. The contrasting lifestyle concepts for the developments - one catering for retirees keen to continue a cosmopolitan and urbanised lifestyle, and the other targeting those who wished to settle into a quiet and tranquil living environment - were chosen after the society visited elderly housing projects in Denmark, Holland, Japan, Australia and the mainland, said Wong. "We will offer two choices for retirees. The Tanner Hill project will be suited to those who want to remain in an urban area to continue with their businesses, and our project in Tin Shui Wai next to the Wetland will be run like a country club," he said. In addition to its 1,200 tenanted units, the Tin Shui Wai project will feature a 200-room hotel or guesthouse. This could be used by relatives or friends of the units' occupants, he said. Phase one will be completed in 2014 and phase two in 2017. The Tanner Hill development, comprising 580 units ranging in size from 700 sq ft to 1,400 sq ft, is due to be completed in 2013. Wong said more than 600 potential tenants had indicated an interest in leasing units in the two projects when the society conducted a survey with 1,000 interviewees aged over 60 and with assets valued at over HK$10 million. Rentals have not yet been fixed, but Wong said they would be referenced against prevailing rental transactions in the nearby district. Taking into account the planning restriction on the two sites which must be used for accommodation for the elderly, Wong said he believed the land premium charged by the government should be relatively lower than what it charges for ordinary residential sites. The society has two existing subsidised projects catering for the elderly - the 243-unit Jolly Place in Tseung Kwan O, and the 333-flat Cheerful Court in Jordan Valley. The projects offer accommodation for middle-income retirees aged over 60 as well as a rehabilitation and health care centre, gymnasium, and activity rooms. Tenants have to pay a lump sum ranging from HK$300,000 to HK$600,000, for the use of the flats for the rest of their lives. Asset qualifications for single applicants in the two existing projects are set at between HK$1 million and HK$3.3 million, and between HK$1.5 million and HK$4.95 million for couples. Yuen Ka-lok, 82, moved into Cheerful Court six years ago after he had a heart attack. He was on holiday in Hong Kong at the time and unfit to take a long-haul flight back to London where he was living. "I had no choice but to stay in Hong Kong with my wife," said Yuen, who initially rented a unit in Telford Garden for HK$7,000 per month. After learning from his son about the society's two Senior Citizen Residences, Yuen decided to move into Cheerful Court. He paid a lump sum of HK$490,000 for a 552 sq ft unit and on top of that he also pays a HK$1,200 monthly management fee and a HK$300 monthly caring fee that includes a regular health check. "The elderly housing project's caring services are extremely helpful. In the first year, I was in and out of hospital eight times," said Yuen. "The incidents usually happen late at night but each unit has an emergency bell beside the bed that connects to a 24-hour nursing centre. So the centre is able to send staff to check on us around the clock." Now that his health has improved he has established a busy social life and meets regularly with other retirees in the estate. "We have dim sum breakfasts together or visit each other's homes regularly for parties," he said. Chu Ming, 73, sold her 30-year-old 200 sq ft apartment in Kwun Tong and moved into a 560 sq ft unit at Cheerful Court in 2005. She and her husband paid about HK$550,000 to rent the unit for life. Chu said her children encouraged the move because they became concerned for the safety of their parents as the run-down apartment in Kwun Tong in which they were living had once caught fire. "All my kids have married and they have their own families, and we wanted to maintain our independent life," she added, so she cashed out of her flat and with the assistance of a contribution from her children, was able to lease a unit at Cheerful Court. "Now my four children and five grandsons visit us every weekend," she said. Chu said some elderly people could not easily be convinced that it was a good idea to make a one-off payment of half a million dollars to secure a flat for life on a rental basis. "But it is value for money as I have lived here for more than six years since making my payment. Also, I enjoy living here very much," she said. About 70 per cent of tenants at Cheerful Court are aged between 73 and 75 and the turnover rate of units in the estate was just three per cent. The Housing Society's Wong said applicants for units should not view their one-off payment for elderly housing as a kind of investment. "The money you spend is to ensure that you enjoy your retirement life," he said.

 China*:  January 29 2011

The mainland may be one of the most difficult markets for foreign home improvement retailers, which have suffered a series of setbacks to expansion plans there. Home Depot, the world's largest home improvement retailer, said it had shut its 13,000-square-metre shop in Beijing's West Fourth Ring Road last Friday following the closure of its other store in the city eight months ago. It's the fifth store Home Depot has closed in the mainland in the past two years. The company said the decision was made based on "a financial and commercial evaluation" of the store's business performance. Market observers said the United States-based company had failed to find a proper approach to the market and lacked sufficient advertising to raise its brand awareness. Home Depot, which operates more than 2,200 outlets around the world, embarked on an ambitious expansion plan in the mainland in 2006, acquiring all 12 stores of local home upgrader Home Way. Trying to adapt to the mainland market, the company changed its business model from a "do-it-yourself" retailer, which it widely employed in the US and elsewhere, to a "do-it-for-me" model, offering one-stop home renovation services. However, the effort appears to have failed. With five store closures since May 2009 due to low sales revenue, it has only four shops in Tianjin, two in Xian in Shaanxi province and one in Zhengzhou, Henan province. Nevertheless, the company said it would not retreat from the country and confirmed its long-term commitment to the market. Home Depot is not the only foreign home improvement chain with a frustrating experience in the mainland. Europe's biggest home improvements retailer, Kingfisher, announced two years ago it would shut down a third of its 60-plus B&Q shops in the mainland after recording a loss of more than €50 million (HK$531.32 million) there for the 12 months to January 31, 2009. Yet the British retailer said it was still optimistic and expected to break even or start making a profit this year. Liu Yi, vice-president of the China National Interior Decoration Association, said the home renovation market in China is largely a wholesale-oriented market and it was hard for big foreign retailers to be successful simply by copying their business model from abroad. "The operating cost for these companies to run such big shops in Beijing is usually huge, yet their sales revenue is often lower than other local stores. How could that last long?" he said. Zhang Haiquan, a designer with Beijing Jinzhao Home Decoration, said advertising and discounts are still the most efficient tools to attract consumers in Beijing. Yet Home Depot is a relatively unknown brand in the city and seldom offered large-scale discounts.

China has raised the minimum down payment for buying a second home to 60 per cent from 50 per cent in a move to further limit the risk of an asset bubble. The State Council yesterday unveiled eight measures to curb property prices, including requiring local governments to set price controls, but made no mention of a widely expected property tax. "China will continue to effectively curb investment and speculative purchases of houses to consolidate and expand on previous measures," said a statement on the State Council's website. The country's leaders, acutely aware of public anger over unaffordable housing prices, have said they will not tolerate property inflation and speculation. Annual property inflation fell to 6.4 per cent last month from November's 7.7 per cent, although sequential momentum has remained strong, with prices rising 0.3 per cent on a monthly basis. Municipal governments have a vested interest in the booming property sector, which provides much of their tax revenue. According to the statement, city governments must set property price control targets in line with local income levels for this year and need to make the targets public by March 31. "Local governments must shoulder responsibility for the stable and healthy development of the property market," it said. The State Council reaffirmed a pledge to build more affordable homes to meet demand from low and middle-income groups. While the statement did not mention the long-discussed property tax, the government will step up tax collection in the property sector. An individual who sells his property within five years after purchase will have the revenue taxed under the new policy. Previously, only the price difference is taxed in most cases. Lenders will continue to charge "differentiated" interest rates on mortgages. For second-home buyers, the rates should be at least 110 per cent of the benchmark rates. Local residents are barred from buying if they own more than two houses. Analysts said the measures might achieve their intended goal. "These are the unprecedentedly harsh policies, and will definitely weigh down [property] prices," said Hua Zhongwei, an analyst with Huachuang Securities in Beijing. "The new measures are very strict. If property sales plunge, some developers will definitely run out of cash," said Shen Aiqing, an analyst with GF Securities in Guangzhou. Despite the measures rolled out to control the property sector, prices have stayed stubbornly high. Soho China (SEHK: 0410)'s chief executive Zhang Xin said in Davos, Switzerland, the harsh measures were having a limited impact on prices and developers were still enjoying stellar sales. "You would expect the market to completely collapse, but just look at all the listed developers. Nearly everybody reported a record year."

Taiwanese President Ma Ying-jeou is urging Washington to approve a new round of arms sales to the island. Ma told Raymond Burghardt, the de facto United States ambassador to Taipei, during a meeting on Tuesday that he hoped the US would sell to Taiwan its advanced F-16C/D fighter jets and diesel-electric submarines to help reduce the growing military imbalance across the Taiwan Strait. It was Ma's first public call for the US to sell advanced-level arms to Taiwan since he was elected president in 2008. Last January, US President Barack Obama decided to sell Taiwan a US$6.4 billion arms package, but it did not include the two weapons systems long sought by the island. Burghardt, who is chairman of the American Institute in Taiwan, was visiting Taipei to brief Ma on the meeting between Obama and President Hu Jintao in Washington last week. He told Taiwanese media that the US was waiting for the "right time" before making any further decisions on arms sales to Taiwan, and that Beijing's "habit" of breaking off military ties with Washington following such arms deals was not a factor in the omission of the F-16C/D jets from the January deal. "All good things come in their own time," Burghardt said. "The military relationship with Taiwan is so much more than arms sales." Ma said he was happy to see the US had stuck to the Taiwan Relations Act when deciding on arms sales to the island last January and in August. The 1979 act commits the US to selling arms to Taiwan, and Washington said it had not consulted Beijing about those deals. The request for advanced weapons came after Taiwan conducted a major missile drill ahead of Hu's high-profile state visit to the US. The drill, involving a dozen Taiwanese army, navy and air force units, upset Ma because almost a third of the 19 missiles fired missed their targets - raising concerns that the island needed to strengthen its defence capabilities further. The Taiwanese government denied the tests had anything to do with Hu's trip. Beijing's successful first test flight of its J-20 stealth fighter earlier this month, its aircraft-carrier project and its rapidly expanding naval and air forces have threatened to diminish Taiwan's defence capabilities. Military experts and the public have urged the Ma administration to upgrade the island's defences. During a visit to Taiwan's Defence Ministry on Tuesday, Ma said he did not want to see any struggles between Taiwanese and mainlanders, and hoped that both sides of the strait could implement concrete measures to resolve disputes "under the guidance of the wisdom of Chinese culture". Fan Liqing , a spokeswoman for the mainland's Taiwan Affairs Office, said yesterday that Beijing welcomed such sentiments.

Co-operation between the Sha Tin university's medical schools and the mainland is growing. The Chinese University of Hong Kong's medical school is extending its reach to the mainland. University officials are laying plans to help train doctors at Shenzhen University's three-year-old medical school. From next year, the university will admit 10 medical students annually from Shantou University to study for a year at its medical faculty. It is an ongoing integration. Already, about half the postgraduate medical students at the university are from the mainland. That integration will increase in the next five years. At this year's Guangdong provincial People's Congress meeting, officials announced a series of co-operative ventures in higher education involving Hong Kong and coastal cities. The ventures are listed in Guangdong's 12th five-year plan as initiatives to strengthen co-operation with Hong Kong. The deputy director of the provincial Educational Department, Wei Zhonglin , said discussions were progressing smoothly on plans for at least four Hong Kong universities to establish branches in Guangdong. Professor Joseph Sung Jao-yiu, vice-chancellor of the Chinese University of Hong Kong, confirmed that Shenzhen University's medical school had invited the medical faculty to co-operate in various ways. "It's at the very preliminary stage," Sung said. "We have to study it further." The university would set up a task force to discuss avenues of co-operation, Professor Fok Tai-fai, its dean of medicine, said. Opened in 2007, the Shenzhen medical school is still small. "We are happy to share our experience with them, such as curriculum design and teaching methods," Fok said. "We may also send our teaching staff there for exchanges." The university's moves come as the University of Hong Kong prepares to begin operating a public hospital in Shenzhen in August. Supported by the Ministry of Health, the groundbreaking project is touted as a showcase for health-care reform on the mainland. Binhai Hospital will open its first 600 beds in August and will become fully operational, with 2,000 beds, in 2013. It will be the University of Hong Kong's second teaching hospital after Queen Mary Hospital in Pok Fu Lam. Fok said Chinese University's medical school had no plans to follow HKU's example. "We have not thought about running a hospital on the mainland," Fok said. "We focus on our work in Hong Kong." Hong Kong medical institutions had the advantage and expertise in English teaching, which was not yet common on the mainland, said Professor Chan Wai-yee, director of Chinese University's school of biomedical sciences. Chan said cross-border co-operation in medical education was an irreversible trend that benefited both sides. Two years ago, the school and Jinan University set up a laboratory for joint research on the latter's Guangzhou campus with the support of the Ministry of Education. The biomedical science school's four teaching academics each supervise two postgraduate students at Jinan. Chan said that the joint arrangement allowed Chinese University researchers to apply for mainland research funds, an added source of finance for Hong Kong scientists. "It is a win-win situation," he said. "Our academics can use the laboratory resources at Jinan, and the students there help their research. In return, our staff help teach their students." The medical school also collaborates with the Zhejiang University in selecting students to study in doctorate programmes in Hong Kong. Chan said it was to Hong Kong's benefit that mainland students were now filling about half the medical research student slots. "Most Hong Kong medical graduates will take up a job after their studies and very few want to continue research," Chan said. "Mainland students become our important source of research students." Yao Yao, a Guangzhou resident who began studying for a three-year doctorate in biomedical sciences at Chinese University in August, said she found the experience of studying in Hong Kong very rewarding. The stem-cell researcher got her master's degree at Jinan University before coming to Hong Kong. "The discussion in medical studies in Hong Kong is very free and active, and I can mix with academics and students from different backgrounds," said Yao.

Solargiga to double wafer production - Solargiga Energy Holdings, a major producer of solar panels and components, has budgeted over 600 million yuan (HK$709.28 million) to more than double its wafer production capacity this year amid falling product prices and higher raw material costs. The firm, which produces mainly in the northeastern province of Liaoning, aims to be able to churn out 1,400 megawatts of solar wafers by the end of the year, up from 600 MW at the end of last year. This includes 300 MW of mono-crystalline wafers and 500 MW of multi-crystalline ones. The latter are less expensive to produce than mono-crystalline ones but are less efficient in transforming solar energy to electricity. About half of the budgeted 600 million yuan has already been spent by Solargiga, with the remaining 350 million yuan to be invested this year. The solar industry has a long industry chain, which turns silicon crystals into polysilicon rods before they are cut into ingots, sliced into wafers, processed into cells and assembled into modules or panels. Speaking after a shareholders' meeting approved Solargiga's HK$835 million acquisition of a solar cells factory, chief executive Hsu You-yuan said he expected product prices to continue to fall. "Since the solar energy industry is highly dependent on state subsidies to grow, panel prices must fall in the long term, although for brief periods you would see price increases due to short-term demand-supply dynamics," he said. Polysilicon prices rose 16 per cent and wafer and cell prices were largely stable last year, while module prices fell about 10 per cent, according to a CLSA research report. The brokerage expects prices of all the components to fall this year as new capacities come on stream. Hsu noted the industry is cutting costs through technology advances and expansion of scales of production, which means overall profits could still rise despite lower profit margins.

Huawei Technologies, the mainland's largest telecommunications equipment manufacturer, won a court order in the United States that prevented Motorola from disclosing any of its confidential information to rival Nokia Siemens Networks (NSN). The Shenzhen-based Huawei has co-operated with Motorola in the radio access network and core network businesses since 2000. It filed a lawsuit on Monday for a preliminary injunction to bar the transfer of trade secrets to NSN, which wants to complete a deal made in July to buy Motorola's wireless network business for US$1.2 billion. The US District Court in Illinois granted Huawei a temporary restraining order against Motorola, independent public companies Motorola Mobility and Motorola Solutions, and NSN, according to court filings obtained yesterday. The presiding judge, Sharon Coleman, also ordered the defendants to notify the court and the plaintiff within 24 hours of any action taken by China's Ministry of Commerce on the pending purchase. Regulators in the US and European Union have approved the NSN acquisition, which was expected to close in the first quarter of the year. Huawei, Motorola and NSN have declined to comment on the case. Motorola bought Huawei's GSM, 3G and other wireless infrastructure products and sold these to customers under its own brand. The US company also received confidential information on Huawei's product specifications, designs, software and hardware implementations, pricing and other commercial data. Huawei says it has tried to ensure NSN will not get that data, but Motorola "has not responded with assurances that it will prevent disclosure of that information to NSN". It said the illegal transfer of its proprietary commercial property would result in "irreparable commercial damage".

Hong Kong*:  January 28 2011

It is the tale of two letters, both with vastly different implications for the future ownership of billionaire Stanley Ho Hung-sun's sprawling empire. But they share one thing in common: both letters bear the signature of Stanley Ho. Complicating matters further, a statement issued late last night by Ho's third wife, Ina Chan Un Chan, called for an end to the familial discord, battles for control of Ho's corporate interests and a dismissal of the legal team appointed last week by Ho. That statement, too, was signed by Stanley Ho. On January 5 this year, the 89-year-old casino magnate sent a letter to his daughter, Daisy Ho Chiu-fung. It was not a fatherly new year's greeting. Ho had just learned that Daisy and four of her siblings - Pansy, Maisy, Josie and Lawrence - together with third wife Chan had taken control of the business empire he had spent the past five decades building.

The government on Wednesday refused to grant June 4 activist Wang Dan a visa to enter Hong Kong to attend the funeral of pro-democracy campaigner Szeto Wah.

Last Monday in the Convention Centre in Wan Chai, a bevy of leggy models from Eastern Europe took to the mile-long catwalk wearing clothes by Barney Cheng, a renowned designer whose clientele includes celebrities and some of the wealthiest women in the region. Cheng's edgy designs wouldn't look out of place on an international catwalk, but the event overall failed to deliver the same buzz you would expect from a similar show in Milan or Paris. Truth be known, half of the seats remained empty despite the stellar line-up. Hong Kong Fashion Week, which ended last Thursday and celebrated its 42nd anniversary this year, is one of the most commercially successful fashion fairs in the Asia-Pacific region. According to the Trade Development Council (TDC), it's the second-largest garment fair in the world (after the Magic Show in Las Vegas) and attracted some 1,731 exhibitors from more than 23 countries and regions this year. In contrast, the concurrently held World Boutique, which is solely dedicated to showcasing fashion brands and designers, is a much more modest affair. Now in its ninth year, it's billed as the "the first independent show in Asia dedicated to promoting brands ... from around the world", although it welcomed only 270 exhibitors from 14 countries - a fraction compared with the main fair. Despite this, World Boutique always boasts a packed schedule, including group designer shows, seminars and the high-wattage Young Designer's Contest, which has welcomed high profile judges over the years such as Ennio Capasa, founder and designer of Costume National, and French designer Martine Sitbon of Rue du Mail. This year the event was even bigger. "We've added more trend elements in addition to the series of seminars and catwalk shows," says deputy executive director of the TDC, Benjamin Chau Kai-leung. "We increased the number of stages from one to three. They are smaller stages for brands with smaller collections, allowing us to showcase more talent," he says. While this sounds on par with any other international fashion week, World Boutique still struggles to attract the right mix of designers, buyers and retailers. As a result it's not high on the list of must-attend events for fashion media or buyers - a growing problem for young brands coming here for exposure. "I don't think people outside of Hong Kong would look at it as a fashion week - it's really a trade show," says fashion entrepreneur Jimmy Chan, and one of the judges at the Young Designer Contest. "I would probably consider it a second-tier fashion week, in the top five definitely. But most of the designers on show are not up to par with cities like Paris." Cheng, who participated this year after an absence of more than 10 years, agrees: "When the top tier international buyers come then it will be able to measure up, but right now we are making a lot of effort that is wasted as the important opinion makers are not available to be wowed by us." Another perpetual problem is the lack of quality brands and design talent - a spectre that haunts World Boutique year after year. Indonesian designer Ali Charisma has been showing at World Boutique since 2005, but has yet to see an improvement in the calibre of designers on show.

Ho Tung Gardens, a grade-one historic site, was built in 1927 for the wife of Ho Tung, one of the city's most prominent business leaders in the early 20th century. Sir Robert Ho Tung (third right) welcomes US vice-president John Nance Garner (second right) to Ho Tung Gardens in 1935. The government has declared the 83-year-old Ho Tung Gardens villa on The Peak "a proposed historic monument" to freeze a HK$3 billion redevelopment plan by a granddaughter of late tycoon Sir Robert Ho Tung. Secretary for Development Carrie Lam Cheng Yuet-ngor said yesterday the decision had been made after the owner secured a plan to demolish all the structures at the grade-one historic site and ended talks with her officials. "We have talked to the owner's representatives many times and met the owner herself twice, offering incentives to preserve the heritage and assist maintenance work," Lam said. "But since July we have lost contact with the owner." Ho Tung Gardens was built in 1927 as residence for the wife of Ho Tung, one of the city's most prominent business and community leaders in the early 20th century. The site is the only remaining residence related to the person locals called "the grand old man of Hong Kong". According to the building plan submitted, the owner wants to build 11 blocks of four-storey houses on the site. The Buildings Department, which is confined to looking only at the plan's structural safety issues, issued approval in December and alerted heritage officials. The would-be developer, Ho Min-kwan, could not be reached for comment. Her elder brother, Robert Ho Hung-ngai, said he respected the government's decision but was not involved in the case as his sister had owned the site since 2003. It could yield 60,000 square feet of residential floor area. Charles Chan Chiu-kwok, managing director of Savills Valuation and Professional Services, said the redevelopment could be worth HK$3 billion if sold at the current market price of about HK$50,000 per square foot. The freeze, which will take effect on Friday, will last for 12 months, during which time Lam will restart talks with the owner. "We hope to reach an agreement with the owner, but I don't underestimate the challenge," she said. "If there is no consensus, we are empowered by law to declare the site a formal monument and the owner has a right to claim a financial loss. The matter might have to be resolved in the law court, which I don't wish to see happening." Several options would be considered, including a land exchange with the owner; a transfer of plot ratio, whereby the owner could transfer the unrealised development potential to another site she owned; or a relaxation of building restrictions, by which the owner could, for example, break the height limit or maximum building footprint set for the site. Buying out The Peak site with cash would be the "last resort", because it would be very costly and a controversial way to spend taxpayers' money, Lam said. She added that the idea should be open to public discussions. A grade-one rating does not afford the site's statutory protection under the Antiquities and Monuments Ordinance, but the law empowers the government to declare a historic site as a proposed monument if it is under threat. This is the fourth time such power has been invoked. The previous case was the King Yin Lei mansion in Stubbs Road, which was defaced by the owner days before the declaration in 2007. Antiquities Advisory Board chairman Bernard Chan said board members unanimously supported the government's decision, noting that the site was a landmark commemorating Ho Tung's contributions. Board member Ng Cho-nam, while supporting the move, said there was still no comprehensive heritage policy for private heritage sites. "If there were other supporting measures such as town zoning for conservation, things would be easier ..." he said. Peter Lee Siu-man, campaign manager of the Conservancy Association, said the current approach was passive. "There is no trust fund for conserving private heritage," he said. "Such a declaration is more like a rescue than a conservation measure."

French climber Alain Robert, also known as the "French Spiderman," poses for photographers before he climbs the Hang Seng Bank headquarters on Wednesday. 

The huge Harbour City shopping mall belonging to The Wharf (Holdings) (SEHK: 0004) generated record sales revenues of HK$20.3 billion last year, because of the economic recovery locally and overseas. Sales at the Tsim Sha Tsui mall climbed 30 per cent from HK$15.5 billion in 2009. "This is because both the local and global economies were very good last year, while many brands sought global development," said Canis Lee Lai-yi, general manager of leasing at Harbour City Estates. Rents for retail space in the mall ranged between HK$200 and about HK$600 per square foot per month, Lee said. She did not disclose how much rents would go up this year, but said rents went up by about 20 per cent last year. She said about 30 per cent of its visitors were from the mainland and that the mall attracted about 240,000 visitors a day during holidays. The company increased its budget for Lunar New Year promotions by 10 per cent, she said. According to the latest report from property consultant Colliers International Hong Kong, the average ground-floor retail rental in the four traditional shopping districts - Central, Causeway Bay, Mong Kok and Tsim Sha Tsui - increased 5.3 per cent in the fourth quarter of last year compared with the third. The higher rents were supported by double-digit growth in retail sales and sustained leasing demand from global brand names, Colliers said. "Central and Tsim Sha Tsui were the two most popular sub-markets among most newcomers," said Simon Lo Wing-fai, the firm's director of research and advisory services. "While overseas fashion retailers remained aggressive, local retailers were faced with greater competition in securing retail space on the back of rising inflation, landlords' aggressive asking rents and reduced supply in the core shopping areas," he said. "As such, local retailers started to seek spaces in second-tier streets in the key shopping districts." Rentals of ground-floor units in the traditional shopping districts were likely to rise another 20 per cent in the next 12 months, Colliers said.

Airport New concourse to meet soaring demand - Hong Kong International Airport has unveiled a HK$7 billion expansion plan that includes the first phase of a midfield concourse that will boost handling capacity by 10 million passengers a year when completed in 2015. The midfield concourse will be a separate building west of the main Terminal 1, on the other side of the air traffic control towers. It will be linked by an extension of the existing underground "people mover" beneath the main terminal. The building site is the last piece of airport land available for large-scale development. The project will also include a new cross-field aircraft taxiway. Construction of the midfield concourse is seen as buying time before the airport reaches its maximum capacity and construction of a third runway is completed. The north and south runways will reach their maximum capacity of 68 aircraft movements per hour by 2015, up from 60 per hour at present. "The midfield development project, together with our long-term development blueprint, Master Plan 2030, will become the most important corporate projects of the Airport Authority," the authority's chairman Marvin Cheung Kin-tung said. The new concourse project follows HK$4.5 billion of improvements that began in 2006, which included reconfiguring the immigration halls and doubling the size of the baggage handling system. Eleven of the 20 aircraft parking stands at the midfield concourse will be served with air bridges to the planes. Three of these will be wide enough to serve double-decker Airbus A380s. The remaining nine stands will be mixed operational stands for passenger aircraft and freighters. The total number of air bridges at the airport will rise from 59 to 70, decreasing the likelihood that passengers will have board or disembark via steps at remotely parked aircraft. The 27 existing remote parking stands for passenger aircraft will remain in service after the completion of the midfield concourse. The midfield concourse will boast a number of green features such as low-energy lighting and north-facing skylights to maximise natural lighting in the centre of the building. High-performance glazing will reflect more than 40 per cent of solar heat, reducing the use of air conditioning, and interior air will be cooled by chillers using recycled water. Hong Kong International Airport handled a record 51 million passengers last year, up 10.3 per cent from a year earlier. By 2020, the city's airport is projected to receive about 57 million visitors a year, according to the Master Plan 2025 drawn up by the Airport Authority in 2006. A feasibility study on building a third runway on reclaimed land north of the airport island is underway, and public consultation on the 2030 master plan will begin in the first half of this year.

Hong Kong retailers are rolling out their red carpets, along with free bus rides, wine, theme park tickets - and even "pudding tours" - to lure mainland shoppers into their malls before and during the Lunar New Year. "They [mainlanders] like those promotional offers and are attracted by them," director of Times Square, Leng Yen-thean, said, adding that the growing number of mainlanders visiting the mall had boosted its full-year sales revenue to a record high of HK$7.4 billion last year. Shoppers who spent at least HK$5,000 at the Causeway Bay complex, owned by Wharf (Holdings) (SEHK: 0004), between next Wednesday and Sunday, would be given two tickets to Ocean Park, a destination that is popular with mainland visitors, and Leng expected retail sales and traffic volume at the mall to be up 15 per cent and 10 per cent respectively compared to the same period last year. Hollywood Plaza, located away from the tourist destinations of Tsim Sha Tsui and Causeway Bay, would spend some HK$900,000 on promotions targeting mainland consumers during the Lunar New Year festival. The promotions planned for the mall, in Diamond Hill, included an offer of free coach transport and lunch for about 450 mainlanders travelling from Guangzhou. "We will offer them a free trip and lunch at the mall, where they will also get some welcome gifts including discount coupons and cash vouchers from our tenants," said the mall's promotions and advertising manager, Candy Lo Hang-yee. Mainland shoppers would also be given additional gifts based on their actual spending at the arcade, and Lo said shoppers who spent HK$500 would get a bottle of red wine, while those who spent HK$2,000 could choose either a digital camera or mobile phone as a reward. Lo said such promotions had proved effective in the past and mainlanders contributed about HK$170 million, or 7 per cent, of the mall's total sales revenue last year. She expected the contribution to increase to around HK$300 million this year because of the high inflation rate on the mainland and the appreciation of the yuan. Sun Hung Kai Properties (SEHK: 0016), a pioneer of free group tours to bring mainland visitors to its malls, has launched several "theme tours" to attract visitors this year. "For example, we have the pudding tour which will bring visitors here to learn how to make Lunar New Year puddings in Hong Kong," said Maureen Fung Sau-yim, general manager of Sun Hung Kai's leasing department. "We will also organise some luxury new year goods tours for shoppers who are keen to buy dried seafood, abalone, bird's nest and health products." To boost sales, the developer even gives the tour group participants a pre-order form with items offered by its tenants before their trip, so that they can make orders in case they do not have sufficient time to visit all shops in the arcade. Since all malls in Hong Kong would be engaged in a competitive battle to attract mainland visitors, such promotions were important because many mainlanders had been to Hong Kong before and would be looking for a novel experience, Fung said. Of the HK$13.5 million investment by Sun Hung Kai on Lunar New Year promotions at its 11 malls, up to 40 per cent targeted the mainland market, she said. That included organising 40 group tours bringing up to 2,000 people to its malls which was expected to boost its sales by HK$15 million. However, some shopping mall operators believe having the right mix of tenants is more important in wooing shoppers from the north. "They will come to your mall if you have the right strategies and tenant model which fits their preference and lifestyle. This is more important," said MTR Corporation (SEHK: 0066)'s general manager of investment property, Betty Leong Sin-ling, who manages Elements at West Kowloon. "They now come all year round, including the periods when luxury brands offer private sales," she said. "They are looking for some special and unique items too." Therefore, apart from investing more than HK$20 million on Lunar New Year decorations and treats such as free cash coupons, beauty products and hampers for tourist who spend from HK$2,000 to more than HK$33,888, the mall is bringing in luxury brands to build a watch and jewellery display area to appeal to affluent mainland visitors. On average, mainland shoppers spend between HK$15,000 and HK$20,000 per person at the mall, she said, and more than half of that amount was spent on watches and jewellery. Leong expected that traffic and sales revenues at the mall would achieve record double-digit growth during the Lunar New Year, compared to the same period last year.

City University has set an hourly minimum wage of HK$31 for its outsourced workers and a trade union will urge other universities to follow suit. "Currently our policy is to pay them about 10 percent more than the average wage published regularly by the Census and Statistics Department," a university spokeswoman said. "With the minimum wage now set at HK$28 per hour by the government, the university has decided to revise our minimum pay to about 10 percent more, which will be HK$31 per hour," she said. The policy will take effect on May1, the same day the statutory minimum wage comes into force. The spokeswoman added that the new pay level will also apply should any outsourcing contracts be renewed before that day. Suzanne Wu Sui-shan, organizing secretary of the Catering and Hotel Industries Employees' General Union, said the move will increase the salaries of outsourced workers by between 14 and 23 percent. Wu said the average hourly wage for outsourced workers at the university is now around HK$25 and they work for 10 hours a day according to their current contracts. "Their monthly salary is HK$6,500 to HK$7,000. With the new rate their salaries will rise to HK$8,000 or more. We urge all universities to introduce a similar wage system to protect outsourced workers," she said. The University of Hong Kong said it already has conditions and terms in outsourcing contracts requiring contractors to show corporate social responsibility and to treat workers well. "Contractors are prescribed not to change workers' employment conditions unilaterally. They also need to agree that we can directly contact workers and check their salary records if necessary," a HKU spokeswoman said. The Chinese University of Hong Kong said it has reminded its restaurant contractors that once the statutory minimum wage comes into force, workers' salaries should not fall below the minimum. "In order to protect outsourced workers' welfare, the CUHK will require contractors to follow the minimum wage level when it signs or renews contracts with restaurant contractors in the future," a CUHK spokeswoman said. The trade union also called on universities to provide workers with more information about their rights.

The new head of HSBC Holdings (0005) will keep his office in Hong Kong, said a spokesperson of the lender, denying a Financial Times report saying chief executive officer Stuart Gulliver has chosen to stay in London. But the spokesperson did not refute part of the article that said Gulliver was spending more time in London than in Hong Kong. "Gulliver will be travelling frequently," said the spokesperson, adding that the chief executive will live in a property under HSBC, instead of the house prepared for its top official. Gulliver is scheduled to spend an average of two weeks a month in Britain, a week in Hong Kong and a week travelling to other parts of HSBC's global operations, a close associate of his told the Financial Times. Gulliver had warned the British government that HSBC could move overseas if lenders are forced to break up as part of a plan to revamp Britain's banking sector following the global financial crisis. But he has now ruled out any move for the bank. He will also keep an office in the London headquarters. Two years ago, Gulliver's predecessor, Michael Geoghegan, moved his office to Hong Kong, where HSBC was founded in 1865. The lender was based here before moving to London in 1993. Gulliver has spent much time in Asia recently meeting China's vice-premier Wang Qishan, while maintaining a home in Hong Kong. Analysts said Gulliver's decision will have no impact on the bank. "Once the business strategy is set for such a big multinational firm, it doesn't matter where Gulliver's office is," said Castor Pang Wai-sun, of Cinda International. But Gulliver needs someone with better connections in the mainland to oversee Greater China businesses, said Eddy Wong Chin-wai, research manager at iFAST Financial (Hong Kong). Gulliver believes it is more efficient to run a global business within the London time zone, the FT reported. Back in September when Gulliver was appointed, HSBC said the principal office of the group chief executive would remain in Hong Kong. HSBC is now trying to get the green light to list in Shanghai.

Launch of Hong Kong Ocean Park "Aqua City" - Hong Kong Ocean Park launched a new flagship marine-themed zone - "Aqua City" Wednesday, in the hope that these fresh attractions will bring 15 percent more tourists. Chairman of Hong Kong Ocean Park Allan Zeman said at a ceremony to mark the event that the opening of the "Aqua City" represents the birth of the New Ocean Park as it "gives us a new flagship aquarium and a new iconic entrance." He expected the Aqua City will lure more tourists from not only the Chinese mainland, but also from Philippines, India and South Korea, regions which have provided the largest share of attendance to the park in 2010. The newly-unveiled "Aqua City" includes three major attractions. Among them, Grand Aquarium features the world's largest aquarium viewing dome, where guests can encounter around 5,000 marine animals of over 400 species. Ocean Park opened in 1977 and is now among the world's top 15 most visited theme parks. 

 China*:  January 28 2011

Premier Wen Jiabao talks with petitioners at the lobby of the State Bureau for Letters and Calls in Beijing on Tuesday. Premier Wen Jiabao paid a rare visit to the country's top complaints body in a surprise bid to woo petitioners and ease escalating social tension fuelled by corruption, injustice and a widening wealth gap. Xinhua and state television said Wen's visit on Monday was the first time since the founding of the People's Republic in 1949 that a premier had talked to petitioners in Beijing. Despite its economic success, the mainland has seen soaring dissatisfaction and unrest in the past few years, with large numbers of petitioners flocking to the capital. Although Beijing has tried to stop petitioners from visiting the State Bureau for Letters and Calls, those who feel their grievances are not properly dealt with by their local authorities still travel to the capital to take their complaints to higher officials or vent their anger in increasingly violent ways. Petitioners are increasingly viewed by local officials as constant threats to stability. They are usually rounded up in Beijing and sent home or held in illicit "black jails". Analysts said Wen's visit showed the extent of a looming social crisis on the mainland, marked by widespread discontent across society and the lack of an effective channel to voice dissatisfaction. China Central Television broadcast footage of Wen meeting petitioners from Tianjin, Jilin, Shandong, Inner Mongolia, Hubei, Hebei, Shanxi and Jiangsu. He listened to their grievances and problems. "I came here to seek your opinions on the government's work. Please don't hold anything back, and give me the facts," Xinhua quoted Wen as saying.  Most of the petitioners Wen met voiced grievances about forced evictions and land seizure disputes, according to the report. "As some cases of land expropriation and house demolition happen in rural areas, the State Council is conducting research to work out relevant laws and regulations [to protect peoples' rights]," he said. "Land is the lifeline of farmers. The government must examine and approve projects using arable land strictly and in accordance with the law ... and give reasonable compensation." He urged local authorities, especially officials in charge of complaints to be patient with petitioners and address their problems. "Our government is a government of the people, and our power is granted by the people," he was quoted as saying. Professor Zhu Lijia , from the Chinese Academy of Governance, said Wen's visit highlighted the seriousness of domestic problems, especially in the past year. He noted that protests had risen steadily in the past three months. "Corruption, the rising number of mass incidents and soaring discontent about the government have posed a serious challenge to social stability and the Communist Party's rule," he said. "Apparently, Wen wants to show that Beijing attaches importance to grievances voiced by petitioners, but it also underlines that how to deal to petitioners remains the most difficult and complicated task for the government." Beijing-based political analyst Hu Xingdou said Wen's move to woo petitioners was encouraging. Mainland scholars have called for years for major changes to the petition system, under which local authorities routinely ignore grievances and take revenge on those who file complaints in Beijing. "The move may be conducive to repairing Beijing's image and easing tensions between the people and local cadres," Hu said. "But as long as problems with the petition system exist, largely due to the absence of the rule of law, we will not see any changes in the fate of petitioners." Wu Wei , a petitioner from Beijing's Haidian district, was sceptical about Wen's meeting with the petitioners. "Those people Wen met don't look like real petitioners and I simply don't think it is possible for Wen to meet people like us," he said. "What he did is just for show, which will not do any help to alleviate our sufferings." Wu has been petitioning over his forced eviction since 2007.

China's finance minister says Beijing plans to impose a nationwide tax on production of oil, coal and water to raise money for poor areas. Finance Minister Xie Xuren told the state newspaper China Daily the change will be part of reforms aimed at expanding the tax base of local governments. Beijing began a trial of the tax last June in China’s oil-producing northwestern region of Xinjiang. It is aimed at raising more money for poor minority areas, where ethnic groups complain they get little of the wealth extracted by government oil and mining companies. In 2009, ethnic tensions in Xinjiang exploded into rioting that killed nearly 200 people.

Farmers in drought-hit Shandong province scoop up water from a ditch yesterday to keep their tea plants from dying. Prolonged droughts in the north of the country and freezing conditions in the south have begun to threaten grain supplies and put further pressure on soaring food prices. Unusually dry weather since October has affected more than four million hectares of crops, mainly wheat, across northern and eastern provinces including Henan, Shandong, Jiangsu and Anhui, Xinhua reported. Premier Wen Jiabao paid a weekend visit to central Henan, an important grain production base where no rain has fallen for more than 100 days. Wen urged more investment to fight the drought, particularly to build water projects, saying it was of great significance to combat the current drought and ensure agricultural production. While the north remained thirsty, southern areas have suffered heavy snow and serious frosts, hampering the transport of vegetables to the north. "Several times in recent weeks, we've been delayed for hours by congestion on the expressways in Jiangxi and Anhui as a result of freezing weather," said Tian Yali, a vegetable trader who buys pumpkins from the southern island of Hainan and sells them in Shandong. He said that after dropping a little last month, vegetable prices were back up again, partly because of the weather and partly due to the festive season, with the Lunar New Year's Eve just a week away. Tian said: "It's a season of visiting family and friends. Workers and farmers spend what they earn in the past year in these two months. Plus it's hard to find labourers these days as most migrant workers are back home for the festival. So labour costs have risen." Wheat prices could hit a record high since three-fourths of the country's wheat acreage is being affected by drought, Ma Wenfeng , an analyst at Beijing Orient Agribusiness Consultant, said. "If the drought continues to April, wheat production in these areas will drop by 10 to 15 per cent, and therefore greatly affect supply," he said, adding that wheat accounts for more than one-fifth of the mainland's national grain output. "We should pay special attention to this issue because there's so much idle money [looking for investment] in the market today." He warned that if speculators begin to focus on the sector, a wide range of other economic areas could be influenced. "Wheat is a crop that has the longest industry chain. Speculation could spread to businesses such as noodles and biscuits," he said. Inflationary pressures have increased since early last year, when a rise in the prices of agricultural products triggered an overall price hike. Despite consecutive record-high grain outputs in the past seven years, food security challenges still loom as the area of arable land shrinks and extreme weather becomes more common. "The exceptional weather conditions have made it hard to achieve another record grain harvest in 2011," said Li Guoxiang , a researcher at the Chinese Academy of Social Sciences' Rural Development Institute. He expected China to strictly control the amount of wheat exported, contributing to higher global wheat prices. The United Nations Food and Agriculture Organisation recently announced that food prices had now broken the record set in 2008, when they nearly doubled within 18 months. Li said against this backdrop - and recent floods in Australia, a main wheat exporter, and Brazil, a major exporter of sugar - world food prices could rise even higher.

The first known one-fingered dinosaur has been found on the mainland, according to a study that says the distant cousin of the Tyrannosaurus rex confounds expectations about the evolution of the creatures. Fossil hunters led by Xu Xing of the Chinese Academy of Sciences in Beijing found the partial skeleton in rock formations on the border with Mongolia, they wrote in the January 24 edition of the Proceedings of the National Academy of Sciences journal. The researchers called the species Linhenykus monodactylus after the city of Linhe, near where the skeleton was found. The new species belongs to the theropod class of dinosaurs, which includes the T-rex, Xu said. The dinosaur was probably about 20 centimeters tall, weighed no more than 500 grams and may have fed on termites or ants, he said. The dinosaur's finger is smaller than that found on related species with three digits. This defies expectations that the middle finger, used for digging, would have become bigger over time while the outer two would get smaller and disappear, Xu said. This discovery shows evolution can be a combination of adaptive and random processes, he said. "The middle finger is not as large as [in] other species that still have two small lateral fingers," Xu said yesterday. "We don't see this very often in dinosaur evolution." The fossil, discovered in 2008, may be 84 million years old, the researcher said. It was dug up near the border with Mongolia in rocks of the Upper Cretaceous Wulansuhai Formation, which dates to between 75 and 84 million years ago. The researchers found a partial skeleton at the site.

Beijing has set out tough standards on capacity expansion in the oversupplied, energy-intensive and pollution-prone polysilicon industry. Polysilicon is a key raw material for making solar power panels. In a joint policy circular, the National Development and Reform Commission, the Ministry of Industry and Information Technology and the Ministry of Environmental Protection yesterday unveiled requirements on production scale, technology, pollution control and safety. They effectively erected entry barriers for would-be industry participants, which would also force any incumbents who failed to meet the standards to upgrade facilities or face the prospect of being shut down or forced to sell out. Key prerequisites for greenfield projects and expansion of existing plants included a minimum annual production scale of 3,000 tonnes and economical power consumption, moving from 80 kilowatt-hours per kg to 60 kWh per kg by the end of this year. It also required plants to recycle at least 98.5 per cent of waste hydrogen and fluorosilicone chemicals. "New polysilicon plants will not be approved in principle before the government releases an updated catalogue on allowed investments," the circular said. "But projects (which are) using advanced technology and are environmentally friendly and energy efficient will still be vetted and permitted." Existing projects that fell short of the requirements would be compelled to overhaul their facilities. Failing this, they would have to close. Banks are banned from providing credit to projects that cannot meet the new requirements. CLSA solar sector analyst Charles Yonts said the industry was given an outline of the requirements last year. "Only a handful of companies have a shot at meeting them," he said. Nomura Securities analyst Nitin Kumar estimated that 75 to 80 per cent of the mainland's installed polysilicon output capacity failed to meet new requirements. He said industry leaders Jiangsu-based GCL-Poly Energy and Jiangxi-based LDK Solar were expected to grab more market share. "The majority of [the outdated capacity] is largely unprofitable at current spot market prices," Nitin said. "The policy is directed towards weeding out the unprofitable and weak players and not necessarily an end to polysilicon capacity additions." Still, it was premature to assume that the standards would lead to a string of acquisitions as the industry's technology-heavy nature meant leaders preferred to build new facilities, ICBC International head of research Alex Fan said. A GCL spokesman said its silicon deposition power consumption stood at 60 to 65 kWh per kg, and its waste chemicals recycling ratio topped 99 per cent. Its share price rose 6.1 per cent to close at HK$3.63 yesterday.

Shanghai's economy expanded slower than its domestic rivals last year amid an ailing property sector and weak stock market, prompting calls to drastically liberalise the finance industry to stem a further slowdown. The gross domestic product of the mainland's economic locomotive grew 9.9 per cent, 0.4 percentage points lower than the national figure. It was the second consecutive year that the Shanghai economy lagged behind the national total. Shanghai's growth was also the slowest among the 20 or so provincial-level regions that have published full-year economic data for 2010. "The numbers sounded the alarm," said Lu Ming, a professor of economics at Fudan University. "Shanghai is now in bad need of liberalisations to reinforce its efforts to shift focus from manufacturing to service." The city's service industry that accounted for nearly 60 per cent of its economic output grew only 5 per cent last year, despite a huge boost from the six-month World Expo. In 2009, the industry grew 12.6 per cent year on year. The property sector generated added-value of 104 billion yuan (HK$123 billion), down 22.8 per cent from a year earlier. The finance sector's output was valued at 193.2 billion yuan, up 4.9 per cent. But the growth was 20 percentage points less than in 2008. The municipality that aimed to transform itself into a global financial centre has yet to work out a complete plan for the ambition. It was expected to launch the international board at the Shanghai Stock Exchange in the second half of last year, attracting foreign corporate giants to float yuan-denominated shares. But the board is on hold due to the slumbering A-share market. The Shanghai Composite Index lost 14.3 per cent last year, the world's third-worst performing indicator. Real estate industry fell victim to the government's austerity measures as Beijing intensified its crackdown on the red-hot sector. In the fourth quarter of last year, the city's GDP grew 5.9 per cent, down from 9.2 per cent in the previous quarter when would-be homebuyers took a wait-and-see attitude toward potential policy changes. Cai Xuchu, chief economist with Shanghai Statistics Bureau, attributed the slowdown to a high-base effect, since the economy expanded rapidly in the same period last year. "Shanghai managed to curb the real estate market under the directives of the central government," Cai said. "We believe the year of 2011 will see a healthy and stable growth of the industry." But economists said policy restrictions would be the major stumbling block for Shanghai's future development. The city is now subject to approvals by Beijing to implement any major policy changes. Shanghai is barred from reducing personal income tax to woo overseas financial talent and the stock and futures exchanges aren't allowed to launch any new derivatives unless permitted by financial regulators.

Andy Lau, Gong Li promote new film in Beijing - Actor Andy Lau and actress Gong Li pose as they promote their new film "What Women Want" during a press conference for premiere in Beijing.

Li Na close to China's first Grand Slam singles final - Tennis player Li Na of China poses with performers in lion dance costumers during her visit to Chinatown in Melbourne January 25, 2011. China's Li Na on Tuesday breezed past German Andrea Petkovic 6-2, 6-4 in the Australian Open women's singles quarterfinals, and continues her battle to be the first Chinese player to make it to a Grand Slam final. For Li, the secret of success and the best preparation for the semifinals match is to take it easy, and relax. "I have just went through today's game less than an hour ago, isn't it too tough for me if i already start worrying about the next match," Li Na told reporters in Melbourne on Tuesday. "Right now just totally rest." Last year, she reached the Australian Open semifinals and moved into the top 10 for 16 weeks. She has carried that form into the new year of 2011, beating third seed Belgian Kim Clijsters to become the champion of Sydney International, a tune-up event for the Australian Open. The 28-year-old Li has become a crowd favorite in Australian Open with highly talented and professional manner on the court to crash out her opponents. However, quickly after the game she turns to a nice, smart lady with quick wit and sharp sense of humor. It is very difficult to tell from her manner that Li is carrying a heavy burden. Sporting success is considered a matter of national pride in China, where table tennis and badminton remain far more widespread than Li's sport. The expectation is that a Grand Slam win would inspire a rush of new tennis players in the nation. Li earlier joked about her coach and husband Jiang Shan, who promised to let her loose with their credit card if she won the tournament. She beat Petkovic on Tuesday to reach the Melbourne semis for the second straight year, and was asked if it was enough to win a shopping spree, or whether she needed to go all the way to the championship. "No, end of the tournament," she said with a smile, pointing toward her support box, where Jiang and her team had been a minute earlier but the seats were now empty. "You can see now - the credit card, he just left, you can't find him anymore." Li said she played each of her match fairly well throughout the tournament, and enjoys very much of the freedom she has at the moment. She added that it is crucial to have her career and personal life separated. "Life for me is very casual. If no game tomorrow, and if i think i have to do some training, I went to practice. However, if someone told me that i have to practice, i will not do it, because I do not like someone to force me," she said. "This freedom is very conducive to build up a relaxed environment for myself. I like it this way, I know what I want, so that there is more room for myself to play." Li gave up tennis for two years to do media studies at a university after becoming disillusioned with her lack of rankings success. She then re-entered the game in 2004. During the two years retirement, Li admitted she sometimes casted doubts on whether she should continue her sports, because it is not popular in China, and many of her classmates and friends reckon tennis is not so interesting. After her comeback, she gathered up her confidence, and decided to do something for the sports. "After two years, I was feeling like, OK, I'm grown up, I should stand up to try my best," she said. "(If I win the tournament) It will be amazing for me, amazing for my team, and may be amazing for China tennis also." Now, she is playing better and is far happier on the court than she used to be. And with every game she wins, the prospect of a Chinese major winner grows closer.

Hong Kong*:  January 27 2011

Ho accuses family of stealing empire - Stanley Ho on Tuesday accused his family of stealing shares in his empire and leaving him with "almost nothing" after a share restructuring he said was done without his consent.

The developer of The Icon, Winfoong International, has offered a better buy-back deal and more generous compensation to buyers outraged by the quality of some of the flats in the block, Civic Party lawmaker Tanya Chan Suk-chong said on Tuesday. Chan, who is assisting affected buyers of the 16-storey block at No 38 Conduit Road, said the company had increased its buy-back offer to buyers. “The developer issued a notice to buyers on Monday, saying they would offer to buy back all flat A and D units at a price 20 per cent higher than the owners bought them for. “The company is also willing to give owners HK$600,000 to renovate enclosed kitchens,” Chan told local media. Angry owners of the flats in Mid-Levels rejected an earlier buy-back offer from the developer – saying the price was too low. Buyers of apartments had said they would not accept the developer’s offer unless the price was raised, the deal was in writing and its details were the same for everyone. Chan said the buyers were still considering which option would be in their best interests, and had not made a final decision on Tuesday. “After long negotiations, some [buyers] just want to accept the buy back offers, while others really want to own the flat,” she said. The Icon recently sparked controversy after a buyer, surnamed Chu, complained that her flat had been left like a “rubbish dump” a month after she completed the purchase. It also emerged that the developer had tried to avoid fire safety rules over open kitchens. The 16-storey block is on a site with an unrestricted land lease and escapes regulation under a Lands Department scheme that monitors flat sales. Winfoong is run by Singaporean businessman, Patrick Cheong Pin-chuan. The Icon is the main asset of the company, which also leases out a number of properties in Singapore.

HSBC’s new chief executive has dropped plans to relocate to Hong Kong, the Financial Times reported on Tuesday, in a surprise turnabout from his predecessor who had moved to the territory with much fanfare. The newspaper also quoted sources close to CEO Stuart Gulliver as saying he is scheduled to spend an average of two weeks a month in Britain, a week in Hong Kong and a week travelling to other parts of HSBC’s global operations. “Asia and other emerging markets remain extremely important to HSBC, and I don’t expect things to change much for the bank,” said Andy Lam, a strategist with Harris Fraser in Hong Kong. An HSBC spokesman in Hong Kong declined to comment. Gulliver’s predecessor, Michael Geoghegan, moved to Hong Kong in January last year, entering the Norman Foster-designed HSBC building in the territory’s Central district. He was greeted by dozens of applauding employees on his first day of work there. Geoghegan’s decision to live in Hong Kong had been regarded as a highly symbolic move to show that Europe’s biggest bank was returning to its roots in the fast-growing Asian market, where it was originally known as the Hongkong and Shanghai Banking (SEHK: 0005) Corporation. Gulliver was previously head of the bank’s investment banking and European divisions, and had been pushed to the chief executive’s seat after ex-chairman Stephen Green resigned to become Britain’s trade and investment minister. “I am looking forward to moving back to Hong Kong,” Gulliver had said in September. “My appointment to group CEO does not change the mix of businesses within the HSBC group,” he said then. Oxford-educated Gulliver also has right of abode in Hong Kong, he said in September, having previously lived in Hong Kong after joining HSBC in 1980.

Szeto Wah's funeral is to be held on Saturday, with memorial services taking place on Friday, funeral committee convener Reverend Chu Yiu-ming said on Tuesday.

The value of Hong Kong's total goods exports rose 12.5 percent year-on-year in December 2010, while goods imports increased 14.8 percent, said the Census and Statistics Department of Hong Kong on Tuesday. According to the department, Hong Kong's value of total good exports in last December rose 12.5 percent over a year earlier to 253 billion HK dollars, after a year-on-year increase of 16.6 percent in November. Within this total, the value of re-exports rose 12.3 percent to 246.6 billion HK dollars, and the value of domestic exports increased 24.2 percent to 6.4 billion HK dollars. Also in last December, the value of goods imports in Hong Kong rose 14.8 percent over a year earlier to 296.5 billion HK dollars; A visible trade deficit of 43.5 billion HK dollars - 14.7 percent of the value of good imports was recorded. For 2010 as a whole, the value of Hong Kong's total good exports rose 22.8 percent over the same period in 2009. Within this total, the value of re-exports increased 22.8 percent, while the value of domestic exports increased 20.4 percent. Comparing Hong Kong 2010's fourth quarter with the preceding quarter on a seasonally adjusted basis, the value of total goods exports fell 3 percent, whereas the value of domestic exports rose 6.3 percent and the value of goods imports rose 0.7 percent.

 China*:  January 27 2011

China's Ministry of Finance may announce the start of property tax reforms during the first quarter, the official Shanghai Securities News reported on Tuesday, citing unidentified sources. Two mainland cities, Shanghai and western Chongqing, will be included in a pilot scheme, the newspaper said. Beijing has been cracking down on real estate speculation and discouraging property investment to rein in surging prices and maintain social stability. The newspaper also cited finance ministry head Xie Xuren as saying that China would start a nationwide levy of a resources tax in five years.

A China J-20 stealth plane photographed after finishing a runway test in Chengdu, Sichuan on January 5. State media are reporting the stealth technology used in its planes is home grown, not the result of espionage in the US and the Balkans. An official newspaper in the mainland on Tuesday dismissed a report that the country used technology taken from a US airplane shot down in the Balkans in its own stealth fighter program. China officials this month staged the first-known test flight of the J-20 prototype stealth fighter that could one day challenge American air superiority. The flight came during a rare visit to China by US Defence Secretary Robert Gates and caught many defence analysts by surprise, seeming to indicate that China was acquiring cutting-edge technology more rapidly than previously thought. China says the plane is based entirely on indigenous designs, and the Global Times on Tuesday quoted an unidentified Defence Ministry official as dismissing reports citing Balkan military officials and other experts saying that China likely gleaned some of its technological know-how from an American F-117 Nighthawk shot down over Serbia in 1999. “It’s not the first time foreign media has smeared newly unveiled Chinese military technologies. It’s meaningless to respond to such speculations,” the official was quoted as saying by the newspaper, which is published by the ruling Communist Party’s flagship People’s Daily. Calls to the Defence Ministry’s spokesman’s office rang unanswered on Tuesday. The Defence Ministry has commented little on the test flight other than to assert that China continues to arm for defensive purposes only. The US fields the only stealth fighter in active service, the F-22 Raptor, the successor to the Nighthawk. The US is also employing stealth technology on the F-35 Joint Strike Fighter, while Russia’s Sukhoi T-50’s stealth fighter made its maiden flight last year and is set to enter service in about four years’ time. No direct evidence or specific allegation has been offered on how China would have exploited the downed plane, although Balkan military officials say agents from China hunted for pieces of the F-117 wreckage and may have shared intelligence with their Serbian allies. Western diplomats have said China maintained an intelligence post in its Belgrade embassy during the Kosovo war. The building was mistakenly struck by US bombers in May 1999, killing three people inside, and cementing firm opposition in the mainland towards the Nato air campaign. Serbia shot down the F-117 in March of that year, marking the first time one of the much-touted “invisible” fighters had ever been hit. The Pentagon believed a combination of clever tactics and sheer luck allowed a Soviet-built SA-3 missile to bring down the jet. “At the time, our intelligence reports told of Chinese agents crisscrossing the region where the F-117 disintegrated, buying up parts of the plane from local farmers,” Admiral Davor Domazet-Loso, Croatia’s military chief of staff during the Kosovo war, told the reporters. “We believe the Chinese used those materials to gain an insight into secret stealth technologies ... and to reverse-engineer them,” Domazet-Loso said in a telephone interview. Parts of the downed F-117 wreckage – such as the left wing with US Air Force insignia, the cockpit canopy, ejection seat, pilot’s helmet and radio – are exhibited at Belgrade’s aviation museum. While not completely invisible to radar, the F-117’S shape and radar-absorbent coating made detection extremely difficult. The radar cross-section was further reduced because the wings’ leading and trailing edges were composed of nonmetallic honeycomb structures that do not reflect radar rays. Experts say insight into this critical technology, and particularly the plane’s secret radiation-absorbent exterior coating, would have significantly enhanced China’s stealth know-how. The newspaper report refuting the allegations that China used the F-117 technology comes one day after a US federal judge sentenced an engineer of an earlier generation of stealth aircraft, the B-2 bomber, to 32 years in prison for selling military secrets to China. Noshir Gowadia, 66, who was born in India, was convicted in August on 14 counts, including communicating national defence information to aid a foreign nation and violating the arms export control act. Prosecutors said Gowadia helped China design a stealth cruise missile to get money to pay the US$15,000-a-month mortgage on his luxurious multimillion dollar home overlooking the ocean on the Hawaiian island of Maui. They say he pocketed at least US$110,000 by selling military secrets. The defence argued Gowadia provided only unclassified information to China.

Li Na of China plays a stroke during her women's singles quarter-final match against Andrea Petkovic of Germany on the ninth day of the Australian Open tennis tournament in Melbourne on Tuesday. Li Na has reached back-to-back semifinals at the Australian Open to set new benchmarks for tennis in China. She is more confident of going one better this time. Li beat Andrea Petkovic 6-2, 6-4 in the quarterfinals on Tuesday, breaking her German rival’s serve three times in the first set and twice in the second. Li, who lost the last year semifinal in two tiebreak sets to eventual champion Serena Williams, came to Melbourne after winning the title at a tuneup event in Sydney and is on a 10-match winning streak. “It’s good for me. I mean, the second time in the Grand Slam semifinal, always in the Australia Open, and also before I played well in Sydney,” she said. “Hopefully I can do better this year, and everyone will see me again.” The 28-year-old Li was the only quarter-finalist from the last Australian Open to reach the last eight this year. She already has been a trailblazer for tennis in her country, being the first Chinese woman to win a WTA tour event, and the first to enter the top 10. Her run to the Wimbledon quarterfinals in 2006 was the furthest a Chinese player had gone in a major before. Now her return to the semis is a first. No Chinese woman has won a major, but Petkovic thinks that can change here. “I think she played really well. I think she’s going to win the tournament,” Petkovic said, identifying Li’s strength as her concealed aggression. “She moves very well, she has a great footwork. She takes the ball very early. She plays flat and deep. She has this sneaky aggressive play, I would call it.” Li thanked Petkovic for the vote of confidence, but said she still had two difficult steps to make. A win would certainly be career defining. “Wow, amazing for me, amazing for my team,” she said when asked how she’d react to winning a Grand Slam title. “Maybe amazing for China tennis also.” The first difficult stage: her next match is against the winner of the later quarterfinal between No. 1 Caroline Wozniacki and French Open champion Francesca Schiavone. On Monday night, Rafael Nadal reached the the quarterfinals with a 6-2, 6-4, 6-3 win over Marin Cilic, extending his winning streak to 25 in Grand Slam matches. Nadal already holds the French, Wimbledon and US Open crowns and is three wins from an Australian title. Nobody has held all four men’s majors at once since Rod Laver in a calendar year in 1969. He next plays fellow Spaniard David Ferrer, who fended off big-serving 20-year-old Canadian qualifier Milos Raonic 4-6, 6-2, 6-3, 6-4. In the previous round, Nadal had complained that a virus he picked up two weeks ago in Qatar left him weak and caused him to sweat more than usual. “The two other days I was sweating like crazy and I felt very tired when I played the match,” he said. “Today was the first day that I felt perfect physically. So that is the most important thing.” Andy Murray, the last man to beat Nadal at a major — in their quarterfinal here last year — made only 10 unforced errors in a 6-3, 6-1, 6-1 win over No. 11 Jurgen Melzer. In the quarterfinals, he’ll meet Alexandr Dolgopolov, who ousted French Open finalist Robin Soderling 1-6, 6-3, 6-1, 4-6, 6-2. On the women’s side, No. 3 Kim Clijsters wasted plenty of chances to break Ekaterina Makarova before winning 7-6 (3), 6-2, while No. 2 Vera Zvonareva kept rolling toward a possible third consecutive Grand Slam final with a 6-4, 6-1 win over Iveta Benesova. Zvonareva, who lost the Wimbledon final to Serena Williams and the US Open final to Clijsters last year, moved into a quarterfinal against No. 25 Petra Kvitova, who rallied past No. 22 Flavia Pennetta 3-6, 6-3, 6-3. No. 12 Agnieszka Radwanska beat China’s Peng Shuai 7-5, 3-6, 7-5 and in the quarters will meet Clijsters, the growing favourite for the women’s title. Defending champion Roger Federer takes on No. 19 Stanislas Wawrinka in the first all-Swiss quarterfinal at a Grand Slam on Tuesday, while 2008 champion Novak Djokovic takes on Wimbledon finalist Tomas Berdych.

France’s President Nicolas Sarkozy rallied China, Russia and other allies on Monday as he launched his G20 plans for world finance reform which he said aimed to defend poor and emerging economies. Sarkozy said he would meet his Chinese counterpart Hu Jintao in China in March and invited Britain, Germany and Russia to aid his efforts to police financial transactions and stabilise currency and raw commodities markets. He also said France wants to reform the International Monetary Fund, a support for emerging economies, to broaden its world finance role. “We propose to the G20 to develop a code of conduct for managing capital flows,” Sarkozy said in a televised address. “The role of the IMF should be broadened, possibly by modifying its statutes.” He said the IMF should “carry out surveillance” of international capital transactions — part of his strategy for ending what he sees as dangerous imbalances in the world financial system. Setting out his plans for his stewardship of the G20 and the G8 group of biggest economies, he said he would be aided by British Prime Minister David Cameron, German Chancellor Angela Merkel and Russian President Dmitry Medvedev. Merkel will co-chair a working group on the world monetary system with Mexico’s President Felipe Calderon, who will take on the G20 presidency next year, and hold a seminar in China at the end of March, Sarkozy said. Medvedev meanwhile will oversee a working group looking at reforms to the agricultural market, seeking ways to control what Sarkozy sees as instability in global food prices. “If we do nothing, we risk food riots in the poorest countries,” such as the violent protests that broke out in numerous countries in 2008, he warned. He proposed a common database to monitor food production and stocks and a system of “universal social protection” under International Labour Organisation workers’ rights conventions. Cameron, Sarkozy added, has been asked to re-examine the nuts and bolts of global government: studying plans for a permanent G20 secretariat, a world environmental body and a reform of agricultural organisations. Kicking off Sarkozy’s personal calendar for the year are the talks with Hu, when he will tackle the sensitive issue of China’s currency policy. The United States and other western powers accuse Beijing of holding the value of its currency at an artificially low level, thereby favouring Chinese exports while holding down domestic demand for foreign products. Sarkozy said it “hadn’t been easy” to convince China to host the March meeting, but added: “Far be it from me to tell China what to do” about its own exchange rate policy. He also insisted he was not seeking to end the dollar’s preeminent role in the world monetary system, stressing it “should remain a strong currency”, amid growing calls for other currencies to take on a greater role. But “the emergence of new international powers will lead unavoidably to the emergence of new international currencies,” however, he added. Sarkozy reiterated his desire for a tax on international financial transactions, which he hopes to hammer out during his year at the G20 helm. “France considers that this tax is moral, given the financial crisis that we have just been through, useful for dissuading speculation and effective for finding new resources for development” of poor countries, he said. He said he had asked Germany and Mexico to jointly lead a working group on financial reform. Sarkozy has suffered record-low approval ratings of less than a third over recent months and is hoping that his turn on the world stage will also give him a political boost at home. A G8 summit is scheduled in Deauville, western France in late May and a G20 summit in November in the southern resort of Cannes. “We will get results,” Sarkozy vowed.

China's ICBC opens branch in Madrid - ICBC President Jiang Jianqing, Spanish Minister of Industry, Tourism and Commerce Miguel Sebastian and Chinese Ambassador to Spain Zhu Bangzao attended an inaugural gala dinner.

China's Huawei sues Motorola for IPR breach - THuawei Technologies, on Monday asked a U.S. District Court to prevent Motorola from illegally transferring Huawei's intellectual property (IP) to Nokia Siemens Networks ("NSN"), officials of Huawei told Xinhua in Sydney, Australia on Tuesday.

A Buick production line at Shanghai General Motors' factory. GM plans to add more hybrids, plug-ins and electric vehicles in China in the next five years. General Motors Co sold more vehicles in China than it did in the United States last year, marking the first time a foreign market has outpaced the automaker 's domestic sales in its 102-year history. GM's sales in China increased 28.8 percent to 2,351,610 vehicles in 2010, while US sales rose just 6.3 percent to 2,215, 227, The Los Angeles Times said on its website Monday. GM recently announced that it expected to export about 900 million in vehicles and components to China over the next two years. Brazil was the next-largest foreign market for the automaker with sales of 657,825, a 10.4-percent increase. Overall, GM's global sales rose 12.2 percent to 8,389,769 vehicles last year, according to the report. GM is one of the best-positioned automakers in emerging markets, even better than Toyota, said George Magliano, an economist at IHS Automotive. "This is the wave of the future," Magliano said in remarks published by the paper. "The Chinese market is going to grow faster than the US, and it will continue to be this way." Despite its bankruptcy reorganization in 2009 and efforts to turn around the American market, GM remains one of the best- positioned automakers in emerging markets, Magliano said. "GM took the big risk moving into China with Buick some years ago, but now its global footprint is actually better than even Toyota's," he said. "Ford has made some good moves, but they are still trying to catch up in emerging markets." Nonetheless, the auto market is growing almost too fast for Chinese cities to control traffic. Car registration in Beijing has increased to 4.8 million from 2.8 million since 2005, with 700,000 new cars registered in the last year alone. The boom has created massive traffic problems in China's capital, the report said. In 2009, China surpassed the United States as the largest automobile market in the world. Across the nation, sales of passenger cars rose 33 percent in 2010 over the previous year, the report quoted the China Association of Automobile Manufacturers as saying.

The new Volvo S60 car is unveiled by Volvo Car Corp President & CEO Stephen Odell on the exhibition stand of Volvo during the first media day of the 80th Geneva Car Show at the Palexpo in Geneva March 2, 2010. Volvo Car Corporation inaugurated its China headquarters in Shanghai on Jan 25, 2011 to increase its presence in the Chinese market. It is reported that the China headquarters is similar in function to the headquarters in Sweden, and the China headquarters will directly report to Volvo Chief Executive Stefan Jacoby. With the China headquarters open in Shanghai, Volvo will officially launch its China market strategy. Volvo China spokesman Ning Shuyong said: "The Volvo China headquarters is a branch of the headquarters in Sweden, but as China is the location of the Volvo parent company, the future Volvo China headquarters will be very different from other branches of the company. It will have more business and form a complete functional system." Previously, Volvo's business in China mainly focused on sales, marketing and customer service. However, the new headquarters will foster a renewed focus on product design, manufacturing, quality control, procurement and investment. "To set up a China headquarters means paying more attention to the Chinese market in the future," said Zeng Zhiling, an auto industry analyst with Shanghai-based Global Insight. According to Ning, in February this year, Volvo will announce the establishment of a China Development Center as the next move of Volvo's in-depth localization strategy in China. The center is designed to increase support for localization. The local development center will be different from its Swedish counterpart. While the research and development center in China will support the Swedish side, it will focus on designing products that are based on market demand in China and Chinese consumer preferences. It is also learned that Volvo will release more specific strategic planning in the Chinese market. Its initial plan is for Volvo car sales in China to reach 200,000 by 2015 and its market share to rise to 20 percent. After a series of personnel changes and recruiting, Volvo basically had its management team assembled by Aug 2, and has laid the basis for carrying out the Volvo China market strategy. However, Ning could not comment at this time about location of the future Volvo plant in China. Last year, Volvo reported 36.2 percent year-on-year sales growth, selling more than 30,000 vehicles in the Chinese market. But it still lags far behind its competitors — both in terms of growth and total sales. Audi sold 226,000 units in China in 2010, up 43.5 percent year on year. Mercedes-Benz reported sales volume of 147,670 units last year, up 115 percent and BMW sold 169,000 units, up 87 percent in China. Signs are showing that Volvo is preparing a frontal assault on the Chinese market, and its plan to set up a research center in the country indicates further domestication of the Volvo brand in China. The general image of Volvo as a low-profile luxury car can gain ground in China, said Zhang Yu, an independent auto industry analyst, because "the image of Volvo is in accordance with the taste of the rising middle class in China." Sun Wei, Volvo China's marketing director, said this feature of Volvo cars would remain for the future. However, Zeng pointed out that luxury car buyers in China prefer larger cars, which are a far cry from Volvo's small, energy saving and environmentally-friendly cars. Therefore, Volvo needs to make adjustments to its products if they want to compete with other luxury cars in China, Zeng said. Not long after Geely acquired Volvo, the Hangzhou-based carmaker proposed setting up three plants in China and increasing Volvo sales to 1 million units in five years.

Hong Kong*:  January 26 2011

The operator of the Kai Tak Cruise Terminal will have to share its gross income with the government each year. With construction costs for the terminal at HK$8.2 billion, "taxpayers expect to get the biggest return," said Secretary for Commerce and Economic Development Rita Lau Ng Wai- lan. "Such a mechanism will allow the authorities to capture the upside of the business and avoid unreasonable business risks to the operator," Lau told the Legislative Council's economic development panel. Sharing the gross receipt, instead of net revenue, also has the advantage of encouraging the successful tenderer to control operating costs in a prudent manner, Lau said. But wholesale and retail sector lawmaker Vincent Fang Kang thinks the terms are too harsh. "The lease terms should allow the operator to generate a handsome profit as the Kai Tak terminal is being positioned as a world-class cruise terminal. Otherwise, it may not attract bidders from around the world," he said.

Homes in Hong Kong cost more than 11 times average salaries, making them the least affordable among major global cities. That makes buying a home here "severely unaffordable," said the 7th Annual International Housing Affordability Survey by US-based Demographia. Meanwhile, prices are set to soar more than 30 percent in the next two years, UBS warned. The Demographia survey tracked home prices and household income in 325 urban markets in Australia, Canada, Hong Kong, Ireland, New Zealand, Britain and the United States. The median home price in Hong Kong was HK$2.58 million in the third quarter of 2010 - 11.4 times the median household annual income of HK$225,400. Sydney followed with a multiple of 9.6 and Vancouver with 9.5. But local experts dispute the findings. "The survey ignores the fact that there is affordable housing in Hong Kong, like public housing and the Home Ownership Scheme," said Eddie Hui Chi-man, a professor at the Hong Kong Polytechnic University. Hui said it would be more fair to compare affordability by analyzing exactly what proportion of household income is spent on housing. A resident of Vancouver said the survey does not take taxation levels into consideration. "The disposable income is limited by heavy tax in Canada, making houses less affordable than in Hong Kong," said Brian Wong, who moved back to Vancouver from Hong Kong last year. "The price for my apartment almost doubled to C$560,000 (HK$4.38 million) in the past two years, but salaries have not kept pace," added Wong, who makes C$52,000 a year before tax. Home prices in Hong Kong soared 20 percent last year, backed by prolonged low interest rates, improving economy and more mainland buyers. Local home prices, meanwhile, are expected to surge 33 percent in two years while inflation may peak at 7 percent this year, predicts Eric Wong Chun-ya at UBS. Rents will also increase 15 percent over the same period. One of the major drivers for local home prices, Wong said, is surging inflation due to depreciation of the Hong Kong dollar. Inflation this year may go up to 7 percent, leading to a real interest rate of below minus 6 percent, which will drive demand in the property market and push up prices.

Macau casino tycoon Stanley Ho Hung-sun has transferred nearly all of his shareholdings in the parent of casino operator SJM Holdings (0880) to his family members, the latest move in the handover of his casino empire. Ho offloaded a 31.7 percent stake in Sociedade de Turismo e Diversoes de Macau, which owns 56 percent of SJM, to Lanceford Co. The stake is worth about HK$13.3 billion, based on SJM's closing share price yesterday. The 89-year-old billionaire kept only 100 shares of the parent. Action Winner Holdings Ltd - controlled by Ho's third wife Ina Chan Un-chan - will hold a 50.55 percent stake in Lanceford, while Ranillo Investment Ltd will have 49.45 percent. Ranillo is owned by Pansy Ho Chiu-king, Daisy Ho Chiu-fung, Maisy Ho Chiu-ha, Josie Ho Chiu-yi, and Lawrence Ho Yau-lung, who are children of Stanley Ho's second wife, Lucina Nam King-ying. The arrangement will allow Chan to hold 8.9 percent of SJM, or 488 million shares, worth HK$6.73 billion. Pansy Ho and her siblings will hold 8.7 percent of SJM, 477 million shares, worth HK$6.58 billion. Last month, Stanley Ho transferred his 7.7 percent direct stake in SJM to his fourth wife, Angela Leong On-kei, who was appointed managing director of SJM's subsidiary, Sociedade de Jogos de Macau, SA. Leong's SJM stake of 417 million shares is now worth HK$5.75 billion. "He's been the real strength," said Andrew Sullivan, director of institutional sales at OSK Securities Hong Kong. "Now instead of dealing with Stanley, you may deal with a lot more people. It introduces a huge element of uncertainty in what is already a cut-throat business." However, Philip Tulk, an analyst at RBS in Hong Kong, said it is good because Ho is trying to ensure there will not be a big fight after he is gone. Ho was hospitalized in 2009 and confined for seven months after an accident. He also underwent two surgeries, but has since made more regular public appearances. Pansy Ho, who jointly owns the MGM Grand Macau casino with MGM, is also managing director of Shun Tak Holdings (0242). Lawrence Ho is chairman of Melco International Development (0200), which operates casinos and hotels in Macau. In December, Stanley Ho cut his direct ownership in Shun Tak in favor of two holding firms in which his children have stakes. SJM shares, which were suspended yesterday, fell 8.9 percent after trading resumed in the afternoon session, before recovering to end 4 percent lower at HK$13.80.

Cheung Kong (Holdings) (0001) hopes to gross around HK$30 billion this year by launching up to 11 residential projects in Hong Kong, Singapore and three mainland cities. "We may raise HK$20 billion by selling seven projects in Hong Kong with about 3,500 flats, if we can obtain pre- sales consent this year," said executive director Justin Chiu Kwok-hung, adding sales revenue will be similar to last year. The first two projects to go on the market are Phase 2C of Lohas Park in Tseung Kwan O - with 1,100 flats - and the Hung Shui Kiu project in Yuen Long, which is mainly targeted at mainland buyers. "Around 10-15 percent of our buyers will be from the mainland, compared with 5-6 percent last year," said director William Kwok Tsz-wai. The Li Ka- shing-controlled developer also expects to make HK$10 billion from more than 1,000 homes that will be sold in Beijing, Shanghai, Guangzhou and Singapore. Looking ahead, Cheung Kong is interested in bidding for land along and above the Long Ping railway station in Yuen Long, said Chiu. Meanwhile, rival Sun Hung Kai Properties (0016) plans to sell its residential project Imperial Cullinan in the coming months. Situated in southwest Kowloon, the five-block project offers 650 residential homes. The apartments range from 800 to 2,000 square feet. "For the price, you may take reference from nearby The Cullinan," said Allen Woo, Sun Hung Kai Real Estate Agency senior sales and marketing manager, hinting they will cost more than HK$20,000 per square foot. The local property market is expected to see robust growth after speculators were bounced out by government curbing measures in November. With interest rates remaining low and inflation between 4 and 5 percent, home prices are expected to see double-digit growth this year, said Chiu. "Developers don't want house prices to shoot up too fast," Chiu said. On the other hand, mainland property prices will stabilize due to further credit tightening policies, Chiu noted. Cheung Kong said it will continue to replenish its land reserves in China and is targeting large sites for big projects. Cheung Kong shares rose 0.3 percent to HK$133 yesterday, while Sun Hung Kai Property (0016) dipped 0.7 percent to HK$134.20.

Walter Kwok Ping-sheung, eldest son of the family that runs Sun Hung Kai Properties (SEHK: 0016), said a dispute over the family's assets may be settled sooner rather than later, amid a high-profile battle over one of the world's most valuable property empires. "I hope the issue can be satisfactorily resolved in a few months," said a spokesman for Kwok. The statement is a step towards resolving the family dispute that intensified in October last year when Kwok was removed as a beneficiary from a key trust controlling the business group. At the time, Kwok said he had been offered HK$20 billion to settle a dispute over ownership of the family's assets, which include a 42.4 per cent stake in the HK$344.9 billion SHKP empire. Kwok turned the offer down at the time, saying it was not fair. He also said he might agree to leave SHKP if he were offered a reasonable price. Kwok yesterday declined to reveal the settlement amount being discussed but said the atmosphere of recent family talks was not bad, and that he hoped the dispute would be resolved soon. He also emphasised that his mother had been strongly supportive of him. The talks are expected to cover the interests of his children in the property empire. SHKP issued a public statement on behalf of chairman Kwong Siu-hing, the family matriarch, on October 4 indicating that Walter Kwok had been removed as a beneficiary from a key trust holding a controlling stake in the company following its reorganisation. A third of the shareholding of the trust was now held for the benefit of "Walter Kwok's family" - not Walter Kwok. His two brothers, Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen, would each be beneficiaries of a third of the trust along with their families. Walter Kwok then questioned if his children were beneficiaries of the trust. In a letter sent by HSBC (SEHK: 0005, announcements, news) Trustees in October, his children's names did not appear as beneficiaries. Kwok at the time also insisted he had not been cut out of the trust, saying he had been told by his mother he was not excluded in the re-organisation of the family trusts. The feud began in February 2008 when SHKP said Walter Kwok would take a temporary leave of absence. In May that year he was demoted - after 18 years in the top job - to non-executive director. Kwong replaced him as chairman after he lost a legal fight.

Trainee construction workers will be guaranteed pay rises of up to 50 per cent after a government review found a tepid response to a training scheme to boost the workforce. Secretary for Development Carrie Lam Cheng Yuet-ngor, who admitted it was unusual to review a scheme after four months, said the pay commitment did not involve taxpayers' money and it would help eradicate the need to import foreign labour. But the pay rises are expected to further increase the cost of works. The so-called 5-8-1 training programme - announced in February last year and implemented four months ago - was part of a HK$100 million government initiative to attract young people into the construction industry, especially in light of the huge labour demand expected from future major infrastructure projects. When the scheme began, the government subsidised new entrants HK$5,000 a month during their training and when they graduated the 94 contractors associated with the programme guaranteed a starting salary of HK$8,000, rising to HK$10,000 after six months. The Hong Kong Construction Association suggested that the wages be increased to HK$10,000 and HK$15,000 respectively. "The government continues to pay HK$5,000 at the training phase so the new proposal will not involve extra public funds. Rather, it is the industry who will commit more," Lam said. The proposal came after the admission response to the six select skills - including bar bending and metal forming - fell short of expectations in the first recruitment drive, which began in September. Only 100 of 165 places were filled by last month. But course organiser Charles Wong Dun-wee, of the Construction Industry Council, said enrolments were increasing as word of the scheme started to spread. The council expected to recruit 450 students in the next phase, starting in April, and a total of 3,000 in the next three years. Lam said the government would not consider importing foreign labour at this point but said last year that the society should keep an open mind when the need arose for such discussions. Association president Conrad Wong Tin-cheung said more than 20 major contractors in the city agreed to the new pay scale, and the rise would inevitably affect the cost of projects. "Wages form just part of the costs. What's more important is to ensure a stable labour supply, as a shortage of workers will push up wages anyway - and in an uncontrollable manner." A sharp jump in costs for several major infrastructure projects sparked public outcry in the past year. Meanwhile, the development bureau rationalised a policy to shorten the payment period for public works projects. For small projects of below HK$4 million, the government will settle half of the payment when the project is 50 per cent complete. This would enhance cash flow for subcontractors and minimise wage disputes that have plagued the industry in recent years.

From left: C'estbon's Felix Chen, CRE's Frank Lai, and Kirin's Yoshinori Isozaki and Shiro Atsumi toast the companies' new non-alcoholic beverage joint venture. Hong Kong-listed brewer China Resources Enterprise (SEHK: 0291) and Japanese beverage giant Kirin Holdings will establish a joint venture to produce and distribute soft drinks in Greater China. CRE chief financial officer Frank Lai said the aim was to build the soft drink alliance into a leader in the mainland's non-alcoholic beverage market with an annual turnover of 6 billion yuan (HK$7.1 billion) in five years. "We believe this mutually beneficial co-operation, which brings together the distribution capabilities of CRE and product portfolio of Kirin, is truly an alliance where the whole is larger than the sum of its parts," CRE chairman Qiao Shibo said. Kirin will invest US$400 million to take a 40 per cent stake in the venture, with CRE holding the rest. The two parties will split the profit according to this ratio. Lai said CRE contributed assets - mainly C'estbon, CRE's non-alcoholic beverage business - and intellectual property but not cash. C'estbon is the largest packaged water provider by market share in Guangdong, with annual turnover of 1.8 billion yuan. CRE has a nationwide distribution network but few non-alcoholic products beyond purified water. Kirin has tea, coffee, "functional" beverages and fruit and vegetable drinks but its expansion on the mainland has been frustrated by limited sales channels. The alliance comes as Japanese beverage producers seek overseas expansion, especially in the growing mainland market, to offset a shrinking domestic demand. Figures from consulting company Canadean indicate that non-alcoholic beverage consumption has outpaced the mainland's GDP growth and is expected to continue. Consumption grew by 14.7 per cent in 2009 and last year's growth is expected to be 15.7 per cent. Lai said the joint venture's product line would include purified water, tea drinks, coffee, carbonated beverages as well as fruit and vegetable juice. He said the first product would hit the market in half a year. CRE, brewer of Snow, the largest single beer brand by sales volume on the mainland since 2005, said the joint venture with Kirin would focus on non-alcoholic drinks and wouldn't expand into the beer market.

Ocean Park trumps Disneyland - Ocean Park has claimed victory over rival Hong Kong Disneyland in terms of attendance figures and earnings. The Aberdeen-based theme park welcomed a record 5.4 million visitors last year, beating Disneyland's 5.2 million, its chairman Allan Zeman said. Zeman also said it was hopeful that net surplus for this financial year could hit the HK$100 million mark, from HK$82 million in the 2009-10 financial year. This contrasted sharply with Disneyland's report of a net loss of HK$720 million for its last fiscal year, ended October 2. A new aquarium is set to open on Thursday, among a series of attractions Ocean Park will offer under a HK$5.5 billion facelift announced in 2005 to boost competitiveness, as the city's Disneyland opened its doors that year. Both theme parks are keen to take advantage of the rise in mainland arrivals as wealth generated in the world's fastest-growing major economy spurs outbound tourism. This month, Ocean Park unveiled a plan to sell milk powder, a favourite commodity among mainland tourists because of the low quality of baby formula sold back home. The idea was dropped upon criticism that it would go against the park's education and conservation role. Zeman yesterday said the impact might have been overstated because the plan was only to sell milk powder at one store, and it would be only one of many products on display. Ocean Park chief executive Tom Mehrmann said its real competitor was not HK Disneyland, but in Zhuhai , referring to reports that a 20 billion yuan (HK$23.7 billion) mega theme park cum resort was coming up on the island of Hengqin . That theme park was estimated to draw 20 million visitors a year. Visitor numbers at Hong Kong Disneyland have fallen short of the government's estimates, made in 1999. Managing director Andrew Kam Min-ho told a Legislative Council panel the Lantau-based theme park was hopeful of turning a profit after its expansion project was completed in about three years.

 China*:  January 26 2011

China's yuan advances to 6.5883 per USD Monday - The central parity rate of yuan, the Chinese currency, Monday gained 3 points to 6.5883 against the U.S. dollar, according to the China Foreign Exchange Trading System.

China's Haier sees profit up 78% - Haier Group, one of the world's leading white goods and household appliance manufacturers, announced Sunday that its profit jumped 78 percent year on year in 2010.

China, Russia start construction of iron ore dressing plant = Russian and Chinese companies started construction of an iron ore dressing plant Friday in the Evreyskaya Autonomous Oblast to provide high-grade iron ore to the Asia Pacific region, including China.

Trees decorated in red to greet Chinese New Year - Decorative red lanterns are hung on a tree ahead of the Chinese Lunar New Year celebrations at Ditan Park in Beijing Jan 24, 2011.The Lunar New Year begins on Feb 3 and marks the start of the Year of the Rabbit, according to the Chinese zodiac.

Stamping personality on one's home - A shopper inspects a kitchen unit at an IKEA store in Beijing. An increasing number of Chinese people, especially newly-married couples, are seeking modern Western-style kitchen units made with environmentally friendly and safe materials to decorate their apartments. Having a walk-in closet at home like Hollywood celebrities such as Paris Hilton - who even owns a separate shoes closet - is no longer a dream for Chinese women. Demand for fittings and furniture with a personal style is booming in China. As China's middle class grows bigger and richer, its members are looking for more ways to spend their cash. Zhao Liang, 25, a clerk in Beijing, owns a 90-square-meter apartment in Beijing and started decorating his home in October last year. He said the big difference between his approach and how his parents' generation went about it is that he hired a home designer.

Beijing is considering diverting water from the Yellow River in an attempt to relieve its chronic water shortage, which is rapidly approaching a crisis level with the capital's overpopulation and worsening droughts. An official at the Beijing Water Authority yesterday confirmed a report by the Beijing Times that a new diversion project channelling water from the river through a 500-kilometre canal had emerged as the new hope for the grave water woes. The municipality also planned to pump more water from arid Hebei and Shanxi provinces, increase groundwater extraction this year and step up research on desalination, the report said. Environmentalists warn that water diversions and the overuse of groundwater may carry dire long-term consequences. They also lambast the capital as having set a terrible example of urban management, marked by runaway expansion at the expense of neighbouring areas. The drinking water sources for the municipality of nearly 20 million people - the Miyun and Guanting reservoirs - can barely supply half of the household water consumption, which stands at 2.5 billion cubic metres a year. A 12-year drought has made the shortage worse. Beijing has not seen any precipitation since October 25 - which was 92 days ago. Years of pumping more and more water from sources, including strategic reserves deep in the ground, had lowered the level of underground water by 1.2 metres a year since 1999, the authority's director Cheng Jing was quoted as saying. Delays in building the central route of the South-North Water Diversion Project - aimed at channelling as much as 1 billion cubic metres of water from the Han River, a major tributary of the Yangtze - have also dashed the capital's hopes of seeing any early relief. Beijing would face grave challenges in ensuring water supply before the Yangtze diversion project began to deliver in 2014, Mayor Guo Jinlong admitted last week at the municipal people's congress. Despite its efforts on water conservation and efficiency in the past five years, it faces a gap of 515 million cubic metres a year; its total demand stands at 3.6 billion cubic metres a year. A new reservoir in Hebei would be added this year to the list of six - four in Hebei and two in Shanxi - that were involved in Beijing's water diversion scheme, the newspaper said. The capital has long pinned its hopes on its neighbours to solve its water woes. Hebei and Shanxi began delivering water in 2003, especially in the lead-up to the 2008 Olympics, water expert Wang Jian said. Official figures showed up to 400 million cubic metres was pumped to Beijing to ensure a successful Games. Its new plan was tipped to aggravate hard feelings harboured by residents in neighbouring provinces, which are suffering from severe drought and shortages of their own. Citing senior local water officials, the newspaper - operating under the People's Daily, the Communist Party mouthpiece - yesterday said about 300 million cubic metres of water would be transferred from the Yellow River to the capital. Officials conceded that even with water diverted from the Yangtze and Yellow rivers, Beijing would still have to cope with a lack of 190 million cubic metres a year. Wang said: "The current mode of development ... is by no means sustainable, and we won't be able to avoid a crisis without curbing population growth and stopping the city's expansion."

Hong Kong*:  January 25 2011

Billionaire Stanley Ho, chairman of Macau's biggest casino operator SJM Holdings, has offloaded more of his shares to relatives, the latest move to cement succession plans for his vast empire. The share restructuring, detailed in a filing with the Hong Kong stock exchange on Monday, said the 89-year-old chairman will no longer have any attributable interest in Sociedade de Turismo e Diversoes de Macau, SA. (SDTM), which controls SJM’s parent, STDM Investments. Under the restructuring, the 26.8 per cent stake in STDM held by Ho’s Lanceford was transferred to family-run firms Action Winner Holdings and Ranillo Investments Ltd, which together now own a 31.66 stake in SDTM. The new shareholders include Ho’s daughters Pansy Ho, Daisy Ho and Maisy Ho. “It sounds fairly consistent with what he has been doing in terms of getting his affairs in order. It’s probably good if you are an SJM shareholder, because he is trying to ensure there isn’t going to be a big fight after he has gone,” said Philip Tulk, an analyst at RBS in Hong Kong. Angela Leong, Ho’s fourth wife, was appointed managing director of SJM’s operating subsidiary, Sociedade de Jogos de Macau, SA, in December, the most recent shift of power from Ho, whose frail health has triggered speculation about his succession. Ho, who has amassed an empire worth an estimated US$3 billion, was hospitalised in 2009 and confined for seven months after an accident. He also underwent two surgeries but has since made more regular public appearances. Shares of SJM, which controls more than 30 per cent of Macau’s gambling market, fell as much as 9 per cent after the restructuring announcement but partially recovered to trade down 4.5 per cent by 3.30pm. Shares had been suspended earlier on Monday, pending the announcement. Shares in SJM have been trading at record highs since the start of the year, hitting an all time peak of HK$15.04 on Jan 20. Casino revenue in Macau soared 58 per cent last year, with surging demand from the high roller VIP segment that has grown along with China’s strong domestic economy, helping to sustain double-digit growth in the world’s largest gambling market. Most analysts are bullish on the outlook for Macau – the only Chinese city where gambling is legal – citing solid fundamentals including low penetration of the mainland market, and a strengthening of the renminbi as offsetting nagging concerns over domestic credit tightening. SJM had a monopoly on gambling in Macau until 2002 when the territory granted new casino concessions to more operators including Wynn Resorts Ltd and Las Vegas Sands Corporation.

Chief Justice of the Court of Final Appeal Geoffrey Ma Tao-li would leave for Beijing on Monday for a four-day visit at the invitation of the Supreme People’s Court, a government spokesman said. Accompanied by Permanent Judge of the Court of Final Appeal Justice Patrick Chan, and judiciary administrator Emma Lau, Ma will meet officials from the Supreme People’s Court, the Hong Kong and Macao Affairs Office and the Ministry of Justice. He would also call on the Legislative Affairs Commission and the Basic Law Committee of the National People’s Congress Standing Committee, a spokesman said. Ma will return to Hong Kong on Thursday.

Travellers making trips abroad during the Lunar New Year can breathe a sigh of relief. Cathay Pacific Airways (SEHK: 0293)' Flight Attendants Union announced yesterday that its members would not stage industrial action during the holiday following a dispute over pay rises. It has shelved a planned work-to-rule protest during the Lunar New Year to push for higher wages. The airline's management welcomed the decision but ruled out any further talks on wage adjustment. Secretary for Labour and Welfare Matthew Cheung Kin-chung also welcomed the union's decision. "We are not backing down," said Dora Lai Yuk-sim, the chairwoman of the union. "It is only a responsible decision that we are not taking any industrial action during the holiday. Postponing the action does not mean we are giving up." Lai hoped the company would take note of the union's concessions and would resume talks before Easter.

A block of 19th-century Hong Kong postage stamps featuring Queen Victoria’s head sold for a record US$820,000 (HK$6.3 million) at a weekend auction in the territory, organisers said on Monday. The olive-coloured set of four stamps was described as “extremely rare” with organisers chalking up its unusual colour to a printing error, although the pre-sale estimate had been as high as US$1.5 million. It is the highest price ever paid in the city for a single lot of Hong Kong stamps, which went to an anonymous buyer. The face value of each of the stamps was 96 Hong Kong cents. The stamp and banknote sale by auction house Spink on Sunday capped off a busy weekend of auctions in Hong Kong, with British composer Andrew Lloyd Webber’s wine collection fetching a higher-than-expected US$5.6 million at Sotheby’s. Another wine auction raised about US$10.8 million, well above the US$9 million organisers had predicted. “We are excited to see strong participation by Hong Kong, mainland and Asian clients, along with numerous bidders back in America participating as well,” said John Kapon, chief executive of auctioneer Acker Merrall & Condit, which organised that sale. Hong Kong has emerged as the world’s third-largest auction centre after New York and London, thanks in large part to China’s rapidly growing number of millionaires. Mainlanders are regular buyers of the top lots at sales of art, jewellery and wine.

Mainland computer maker Tsinghua Tongfang said on Monday that it planned to list its subsidiary Technovator in Hong Kong in the second half of this year to fund its international expansion. The move is part of Tsinghua Tongfang’s strategy to realise gains in some of its investments made years ago through initial public offerings, with some analysts expecting the company to float as many as five units in the next two years. The planned listing would enable Technovator, which makes building automation systems, to further consolidate global resources through direct financing or mergers and acquisitions, using Hong Kong as a platform for capital raising, Tsinghua Tongfang said in a statement to the Shanghai Stock Exchange. The move would also boost Technovator’s sales and net profit, thus benefiting Tsinghua Tongfang and other shareholders, the statement said. To make listing easier, Technovator, which is 47.4 per cent controlled by Tsinghua Tongfang, will expand its share base by splitting every share into 40, and plans to sell at least 25 per cent of the company. Technovator, which is registered in Singapore, has no plans to sell stakes to strategic investors before its planned Hong Kong listing, and will use the IPO proceeds to expand its international sales networks. Technovator’s planned listing came after Tsinghua Tongfang’s two other units, BesTV New Media and Tongfang Microelectronics Co went public in the mainland stock market.

Manulife's Michael Huddart in his Kwun Tong office, where the insurer moved from Central to get more office space for lower rent. Continuing the exodus of businesses from expensive office spaces in Central, Manulife (International) has moved from Causeway Bay to Kwun Tong to cut costs and find more space for its staff of more than 3,000 employees and agents. Its Causeway Bay office at Lee Gardens is now occupied by Sun Hung Kai Financial, which is in the process of moving staff from Admiralty, intending to reduce its rent and consolidate its three offices into one. Manulife, the second-largest insurance company in the city, sells life insurance, pensions and fund products. A number of investment banks including Morgan Stanley, Credit Suisse and Deutsche Bank have moved in the past two years from Central across the harbour to the International Commerce Centre on top of the Kowloon MTR station. While the companies have not disclosed the rent they pay, property agents said the ICC charged about HK$30 to HK$70 per square foot per month, substantially lower than the rent at the International Finance Centre or other prime office spaces in Central, which can run to HK$120 or even HK$170 per square foot per month. Some companies are simply moving across the street. Allianz Global Investors and its fund company, RCM, are planning to move from Cheung Kong (SEHK: 0001) Center in Central across Garden Road to Citibank Tower and ICBC Tower, around Easter, for the cheaper rent. Michael Huddart, Manulife's executive vice-president and chief executive for Hong Kong, said the office had moved to a former factory area in East Kowloon, about 45 minutes by car from Central. Huddart did not disclose the rent but said the current payment was about 50 per cent cheaper than its Causeway Bay and North Point offices. The new office comes with a nine-year lease. "My role is to manage costs well," he said. "I made the decision in 2009 amid the financial crisis, since the downturn would make it easier for us to bargain for a better lease ... and provide a better working environment to staff and agents." Huddart said that at the time, he expected the crisis would be over soon and rents in Causeway Bay would be raised substantially when the economy picked up. That proved to be true. Many offices in Central and Causeway Bay area increased by 20 to 30 per cent last year. "We want a good location, but that does not need to be a prime location," Huddart said. "Many staff of insurance companies stay in the office, while the agents can go out to meet clients. This is why, in many overseas markets, insurance companies are not located in the city centre. This is why we left Causeway Bay and moved to Kwun Tong." Another reason was to consolidate the 800 staff and 2,500 sales agents into a single office. Manulife occupies 444,000 sq ft on 13 floors in a tower newly built by Henderson Land Development (SEHK: 0012), which has been named the Manulife Financial Centre. The firm still keeps a small regional office in Causeway Bay and an agent centre in Jordan. "We believe that once a big company like Manulife, which has several thousand staffers, moves into an area, it will help develop the area because the staff and agents need to make appointments with customers and it will bring business to restaurants nearby," Huddart said. The new office has room for expansion, he said. The firm has 4,500 agents, which he wants to increase to 5,000 by the end of the year and to 7,000 in four years. After Manulife left Lee Gardens in August, Sun Hung Kai Financial began moving in its 1,000 employees. Sun Hung Kai Financial executive director Joseph Tong Tang said the rent in Causeway Bay was 10 to 15 per cent cheaper than at its old Admiralty office. "It is cheaper for the longer term," he said. "But more importantly, it was because we could not find enough space for our 1,000 staffers, who are now spread in three different offices in Admiralty." As a financial firm, Tong said it would be hard for them to move to an area too far away, such as Kwun Tong. "Many of our brokers and fund managers need to meet and entertain clients. Causeway Bay is a good location and a prime area for that purpose."

From cap guns, to dolls, to matchbox cars - old Hong Kong-made toys are set to be dusted down and put on display in an exhibition that will rekindle fond childhood memories for many and pave the way for the creation of a toy museum in the city. A group of veteran toy manufacturers, a toy collector and the government-funded Hong Kong Vocational Training Council are in talks to organise a three-month toy exhibition at the council's recently built 7,000 square foot Hong Kong Design Institute Gallery in Tseung Kwan O at the end of the year. The planned exhibition may mark a significant step forward for the creation of the museum, which the Hong Kong Toy Council and the Toys Manufacturers' Association of Hong Kong have lobbied for in the past year as a way to celebrate an industry that took off from scratch in the 1940s and became world-renowned. Proponents said a toy museum would also serve as a destination for tourists and families, while critics said it was a disgrace that Hong Kong had yet to have a museum dedicated to toys despite its reputation as the world's toy capital. "Before 1978, all toys were made in Hong Kong," said Yeung Chi-kong, a Hong Kong Toy Council committee member and a toy maker for about 48 years. "The toys combined successful design, creativity, imagination and culture, and I hope the planned museum will convey this message." Starting from nothing 60 years ago, Hong Kong's toy industry dislodged Japan in 1971 to become the world's No1 producer as a post-war influx of migrants across the border into the city created a large pool of low-cost labour. Today Hong Kong-owned toymakers supply nine out of 10 toys sold in the United States. This is despite the fact that rising costs in the city forced toymakers to migrate to the Pearl River Delta starting from 1978 for lower wages and abundant labour supply. Toys, which brought joy to children in the west, prompted a number of "toycoons". One of the most prominent examples is Cheung Kong (Holdings) (SEHK: 0001)' chairman Li Ka-shing, who made his first fortune out of plastic flowers. Others are the Ting clan of Kader Holdings, and Qualidux Industrial, which manufactured the Cabbage Patch Kids dolls; Shanghainese David Yeh Chung-woo, who led the takeover of British-based die-cast car maker Matchbox in 1982 and listed the company on the New York stock exchange; and the Chan family of Playmates Toys, which designed and produced another global best-seller - Teenage Mutant Ninja Turtles. Qualidux Industrial chairman Bernie Ting Wai-cheung, the second-generation representative of a family business established by his father Dennis Ting Hok-shou in 1964, said many of the company's products were lost throughout the years. Among those to migrate its toy manufacturing activities from the city across the border in the 1980s, Qualidux has churned out toys varying from the Cabbage Patch Kids to the Mighty Morphin Power Rangers and Star Wars figurines, but kept few of the products of its early days. Ting was pleasantly surprised, however, to learn that some of the company's prototypes and early toys were included in the collection of toy collector Joel Chung Yin-chai. Chung, a teacher at the Hong Kong Polytechnic University's Swire School of Design and the largest collector of art work left by late graffiti artist Tsang Tsou-choi - known as the `King of Kowloon' - has amassed about 30,000 toys, industry journals, receipts, advertisements, catalogues and other items related to the history of the toy industry in the city. He is enthusiastic about showcasing part of the collection at the planned toy exhibition at the Hong Kong Design Institute Gallery. "The main purpose of the exhibition of course is not just displaying toys in a showcase," Chung said. "It should aim at passing the message of preservation onto the next generation and inspiring their creativity and innovation." A keen supporter of the proposed toy museum, Chung says he was inspired by Japanese collector Teruhisa Kitahara's passion for toys that led to the establishment of 19 toy museums in Japan. He believes that the establishment of a toy museum in Hong Kong is long overdue and will serve both educational and cultural conservation purposes. Chung recalled a meeting with the Japanese collector, who pointed out that every item in his own collection was made in Japan. Hong Kong Design Institute principal Victor Tsang said workshops, design competitions and conferences could follow the planned toy exhibition, which would engaged students, toy manufacturers and designers and other stakeholders. The Toy Council's Yeung hoped the toy exhibition would arouse the interest of the Hong Kong government as the project would require a grant of land by the government, funding support, and operational and management skills. He believed a standalone toy museum could be located in the West Kowloon Cultural District. A Home Affairs Bureau spokesman said an existing exhibition of toys at the Hong Kong Heritage Museum was playing its role "in preserving and promoting the cultural heritage of toys in Hong Kong". The spokesman would not be drawn into saying whether or not the government would support the idea of a dedicated toy museum, but said the Heritage Museum displayed some 1,600 toys and the history of the industry on a permanent basis.

The painful credit crunch, widespread lay-offs and payouts, stalled billion-dollar projects, and near bankruptcies that plagued Macau casino operators in 2008-09 all seem like distant memories. Today, investors are partying like it was 2007 all over again. Shares in four of the five Hong Kong-listed Macau casino operators hit lifetime highs in the past two weeks. The five stocks advanced 158 per cent on average over the past year, compared with a 14.4 per cent gain in the Hang Seng Index. That saw them add HK$215 billion in combined market value in the past 12 months, which was more than the record 188.3 billion patacas Macau did in total casino revenue last year. And Macau's winning streak continues: the shares are up 22 per cent on average in the first three weeks of this year against a 3.6 per cent rise in the blue-chip index. Shares in Sands China, Wynn Macau, SJM Holdings, and Galaxy Entertainment (SEHK: 0027) now trade at rich multiples of 20-30 times this year's forecast earnings. Melco International Development (SEHK: 0200, announcements, news) is trading at 165 times forecast earnings - implying it will finally swing back to profitability after three years of booking losses. By comparison, the benchmark market index trades at a humble 11.2 times forecast earnings. Did somebody say "bubble"? Nope. "Despite the recent share price run-up ... we argue that Macau gaming names are still attractive," JP Morgan analysts led by Kenneth Fong wrote last week in a research note. Fong expects casino revenue in Macau to surge 29 per cent this year to about US$30 billion. He points out that while Macau shares are trading at 20 times this year's forecast earnings on average, that is still cheaper than the 25 times earnings' multiple at which shares in Chinese consumer stocks are currently changing hands. Investors have been here before, in the autumn of 2007, when shares in Macau gaming companies were at their peak. That massive run-up saw Las Vegas Sands controlling shareholder Sheldon Adelson rank briefly as the third-richest man in America behind Bill Gates and Warren Buffett. But it all came crashing down in the wake of the financial crisis. This time around is different, analysts say. Despite the recent run-up, when comparing share prices to underlying earnings, Macau stocks have yet to approach the sky-high valuations they enjoyed in 2007. Chastened by several near-defaults on mountains of debt, the companies today maintain stronger and more conservative balance sheets. Macau's relentless growth of casino revenue in recent years means ongoing corporate sales and profit levels are several times what they were a few years back. And the fundamentals of the market have shifted, too. Unlike the building boom of previous years, this year will see only one major casino resort opening - Galaxy Entertainment's HK$14.9 billion, 2,200-room Cotai complex. Bolstered by abundant liquidity on the mainland, Macau's high-stakes gamblers meanwhile continue to enjoy cheap and free-flowing credit, skewing the entire market more heavily towards the VIP segment. VIP revenue accounts for 73.4 per cent of all casino revenue in the fourth quarter and 72 per cent for the full year last year, compared with 64-67 per cent of the market between 2006 and 2009. At the same time, the gradual appreciation of the yuan against the US dollar (and thus against the Hong Kong dollar and the pataca) means gambling in Macau has become increasingly "affordable" in relative terms. "Any appreciation in yuan against the [Hong Kong dollar] creates buying power for Chinese visiting Macau ... Players essentially will have more capital and will be able to absorb losses more easily," says Bill Lerner, a Las Vegas-based analyst at boutique consultancy Union Gaming Group. He calculates that currency appreciation has resulted in around US$3 billion in additional gaming revenue in Macau in the past five years. Still, there are a number of potential risks that could threaten to bring an end to Macau's winning streak in the coming months. The credit-driven nature of the VIP segment and the city's heavy reliance on mainland gamblers make Macau particularly sensitive to shifts in Beijing's economic policy. The mainland in recent months has taken steps to rein in liquidity, including twice raising interest rates, raising the amount of cash banks must keep on reserve, and setting conservative informal lending quotas. In addition, the local government in Macau continues to roll out new measures designed to curb the pace of expansion in the casino sector and allow for broader economic diversification. These include strict limits on imported construction workers, tight caps on introducing new gaming tables, and blocking developer's plans for new resorts on Cotai. But judging by recent trading in casino stocks, investors are not too worried about these risks. "We think the concerns are overdone," wrote JP Morgan's Fong. He cited the sector-specific nature of Beijing's tightening measures so far, and said as long as liquidity on the mainland remains ample it will usually find its way into Macau's VIP segment. "The potential impact from credit tightening in China is unlikely to have a significant effect on the Macau growth outlook," he wrote.

 China*:  January 25 2011

Thousands of students and other Chinese gathered at various points along President Hu Jintao's way in the United States, often in biting wind and sub-zero temperatures, to cheer and support him. They gathered outside his hotel in both Washington and Chicago, not only demonstrating a marked fervor in their cheers, especially when it came to drowning out small groups of protesters, but also great mobility. And there was online talk of mysterious subsidies paid to some. On Hu's first day in Washington, 800 people were bused in from Philadelphia - about a three-hour drive away - to stand outside his hotel and welcome him, according to organisers of various groups. Most people arrived on rented buses provided by their various organisations, and they all stood in orderly groups, waving flags. In Chicago, several thousand students braved the bitter wind a block away from Hu's hotel. As they did in Washington, their presence took on a strategic value - countering the shouts from protesters just across the road. But who was the mastermind behind such neatly executed cheerleading? All the various Chinese students' associations and expatriate Chinese groups were no doubt the primary organisers, but many also pointed to help offered by Chinese embassy staffers - such as bus arrangements. If you asked embassy staffers though, they would say they were only there to maintain order - and to distribute fluffy rabbit mobile phone souvenir toys. There were media reports and Twitter tweets claiming that some supporters were paid by their student associations to show up - fees ranging from US$50 to US$70 per event. Finance student Wang Bo, 24, said he heard there would be a US$20 food subsidy for students to be handed out by the embassy. "To be honest, I'd still come with or without a subsidy."

Shandong is facing its worst drought in a century, with nearly a quarter of a million residents facing drinking water shortages, while more snow is expected in the south.

China Southern Power Grid Corporation, one of China's two leading power distributors, has planned 400 billion yuan (US$61 billion) of grid investment in the next five years, 32 per cent more than in the past five years. The firm, operating most grid networks in southern provinces of Guangdong, Guangxi, Guizhou, Yunnan and Hainan, said in a report on its website (www.csg.cn) that it planned more than 500 billion yuan of capital expenditure in the five years from this year to 2015. The whole region will need 60 gigawatts (GW) of new generating capacity in the coming five years and the transmission capacity from Guizhou, Yunnan and Guangxi to Guangdong will increase by 17.3 GW during the same period, the grid firm said. It also expected power generating capacity from non-fossil fuels in the whole region it covers will increase to 48.4 per cent of its total, and output to rise to 43.3 per cent by the end of 2015. The output will account for 21.9 per cent of primary energy consumption in the region by 2015, 5 percentage points higher than at the end of last year, it said. The grid had forecast 6 GW of power shortages in the region this year due to insufficient generating capacity and other reasons. But the province of Guangdong alone has also forecast 6 GW of power deficits in the second and third quarters due to growing demand, the official Xinhua News Agency reported on the weekend. Guangdong had forecast 4 GW of power shortages in the first quarter.

China has extended its tightening measures to second- and third-tier cities in a bid to rein in a rebound in home prices that started last month. The move underlined Beijing's resolve to curb speculation and stabilize prices. It comes amid private-sector forecasts that growth in home prices will ease this year to 13 percent from 2010. The Ministry of Housing and Urban- Rural Development has told some cities - where prices rose rapidly at the end of 2010 - to limit house purchase, the Economic Observer News learned from sources. Unlike the first batch of 14 cities to limit home purchases last year, the new list comprises second-and third-tier cities, including Kunming, Zhengzhou, Qingdao and Jinan. Kunming was ranked No8 among cities where home prices have surged the most, and Zhengzhou came in 13th, China Index Academy statistics showed. Total property sales in December alone represented over one-fifth of the total for the whole of last year, according to a report from the National Bureau of Statistics. Meanwhile, both sales and floor area sold last year in the central and western regions rose much faster than those in the east, according to the bureau's data. Floor area and sales jumped 19.9 percent and 39.7 percent, respectively, in central China; and 13.5 percent and 32.2 percent in the west, compared with only 4.1 percent and 10.1 percent in the east. "One of the most severe tightening measures this year may be to continue limiting home purchases, which could help restrict demand," said Dong Jichang of the Chinese Academy of Sciences' Center for Forecasting Science. Higher interest rates and a property tax can also help curb speculation by increasing costs for developers and investors, he added. The rise of home prices nationwide may start to ease this year. But the average selling price of residential flats is still seen rising 12.77 percent year on year due to demand and growing urbanization, Dong added. Shenzhen, meanwhile, will follow Shanghai and Chongqing and launch a trial property tax. The city government has already submitted the pilot proposal to Beijing, a report said.

Artists of Jinan Acrobatics Troupe perform in Hong Hong - Artists of Jinan Acrobatics Troupe in east China's Shandong Province will present highly difficult acrobatics in Hong Kong from Jan. 24 to Feb. 2.

Li Ning makes jump into the US market - Chinese sportswear company tries a little humour as it takes on global leaders. Chinese athletic shoemaker Li Ning (SEHK: 2331) knew it could not "out-Nike" Nike, especially in the sporting giant's own backyard. So the company is going low-budget edgy in its expansion to the US, using an irreverent YouTube video to play up its heritage while taking a lighthearted dig at the company name shared with its high-profile founder. Li Ning is among the first Chinese consumer product brands trying to build a following in the US, seeking to grab a slice of its saturated but highly coveted market. As China's economic might increases - it last year overtook Japan as the second-biggest economy after the US - its companies are increasingly confident about expansion overseas. But corporate China has yet to produce a brand with the global name recognition of the likes of Apple, Sony or Google. "It's a process of finding out - while staying true to our heritage, our brand - what side of our DNA is going to resonate with the American consumer," said Jay Li, general manager for Li Ning International. "We're still searching, to be perfectly honest with you. And we're not in a hurry." Americans might remember Li Ning as the final torchbearer during the opening ceremony of the 2008 Beijing Olympics - the former gymnastics gold medalist who "ran" along the opening in the stadium roof while suspended by wires. His namesake company is a top domestic brand in China's lucrative athletic shoe and apparel industry, with more than 7,900 stores across the country. Though it has forecast slumping sales and a one-percentage-point decline in gross profit margin in 2011, chief executive Zhang Zhiyong recently told The Wall Street Journal that Li Ning plans to invest US$10 million in US operations this year. "Our founder Li Ning has always said his vision was never about building China's Nike, it's about building the world's Li Ning," Li said. "You can't be global without having a legitimate claim of market share in the most mature sporting goods market." There are significant hurdles to overcome: Americans are still smarting from the recession and spending less. Chinese goods are widely regarded as shoddily made, knockoffs or even dangerous. Li Ning's logo recently underwent a redesign, but many consumers may still see a strong resemblance with the Nike "swoosh". "The way to fight the perception is to continue rolling out your own world-class products and that perception will go away," Li said. He would not provide sales figures for the US, where Li Ning products are sold online and through a few select retailers, but said international operations made up only 2 per cent of the company's total revenue. Expansion into the US is "important for them because if they show they have retail presence in the US it helps them not only sell there but it helps them sell in their home market in China and wherever else they go," said Ben Cavender, associate principal at China Market Research Group in Shanghai. "They can say, `Look, we really are an international brand'." The US expansion began in earnest in 2007 with the opening of a R&D centre and design studio in the Portland, Oregon, area, heart of the US athletic shoe industry where Nike is headquartered and Adidas has a regional office. Li Ning's US staff includes about 30 people. In comparison, more than 6,000 work at Nike's headquarters just outside town. Products sold in the US include equipment and apparel for Asian-dominated sports like table tennis and badminton, niche areas where Li Ning is an established leader. Its running shoes have debuted in specialty shops, with the aim of attracting avid runners who are concerned more about performance than brand name. But it is with street culture-influenced basketball shoes that Li Ning may be able to score its breakthrough. Endorsement deals with NBA players like Shaquille O'Neal, Baron Davis and Evan Turner have so far been key to building awareness among image-conscious consumers. Li Ning has a quality product but "we need to bring in the cool factor, the street legitimacy, the street cred. Bring all these elements together and fuse them into the product. It's a systemic project and we are working on it," Li said. That is the thinking behind the YouTube video, featuring a Chinese Li Ning import agent who has to convince two suspicious US customs officials that the new F2 sneaker is a real shoe. It is a humorous take on real events involving a shipment of F2s that got stuck in US customs because of questions over how to declare the components of a shoe made almost entirely of rubber-like foam material. The YouTube import agent protests, "They're shoes! Li Ning!" prompting one officer to snarl, "I'm Li Ning towards kicking your ass!" Created by LA ad agency Zambezi, the video has received about 40,000 views since December and is a way of getting some attention with limited resources. There probably will not be a sequel - the Portland customs office called to complain about being in the video and Li's office pledged not to revisit the topic again. For now, Li Ning's baby steps are showing encouraging results. Cavender pointed out that one industry insider has found some Li Ning products to be better quality than Adidas products. And the colourful, sometimes cartoon-like designs are turning heads, even if they have not yet translated into massive sales. "People are asking about it every time they walk in and see it," said Frank Pacifio, manager of a Champs Sports shoe store in Wayne, New Jersey, which sells two to 10 pairs of Li-Nings a week. In that time the store sells 10 to 25 pairs of its most popular shoe, the Nike Air Max 2010. "A lot of people try the [Li Ning] shoe on to see how it feels but people are just accustomed to the Nikes, the Jordans," Pacifio said. "People are so used to what they've had, you never want to take the leap to the other side." Li remains confident, pointing to the mainstream acceptance of other Asian companies in the US. "A few brands are attempting it, but no one has come out as a dominant Chinese brand in any industry yet," he said. "I always optimistically look back on the Japanese brands in the '50s and '60s and the Korean brands in the '80s and '90s. It's our turn. We'll get there."

Hong Kong*:  January 24 2011

Lloyd Webber uncorks sell-out in Hong Kong - Hong Kong's wine auctioneers started the year with a bang yesterday - 746 bangs, to be precise - as eager buyers snapped up part of composer Andrew Lloyd Webber's collection. French-wine lover Lloyd Webber, who often composed the music to the hit shows Evita, Cats and The Phantom of the Opera with a glass of wine by his side, opted to sell part of his vast collection because he no longer had space to store it. With Hong Kong having overtaken New York as the world's largest wine auction centre, all 746 lots on offer at a Sotheby's auction at the Mandarin Oriental Hotel, Central, were sold in the course of six hours. In Sotheby's first sale this year, more than 100 bidders - locals and telephone and online bidders - paid HK$43.3 million, topping the pre-sale estimate of HK$32 million. "I hope the new owners enjoy my wines as much as I have and look forward to reacquainting myself with them in restaurants all over China when Cats starts its national tour in Mandarin [Putonghua]," the British composer said. He gained an interest in wine aged nine, thanks to an aunt who collected Italian wine; he started collecting wine himself when he was 15. "He [Lloyd Webber] is known for buying excellent wine and storing them in excellent condition," Robert Sleigh, head of Sotheby's wine department, said. The highest price paid by more than 100 bidders was for a 12-bottle lot of Chateau Petrus 1982, which was sold for HK$605,000 - far exceeding the pre-sale estimate of HK$480,000. A 12-bottle lot of Chateau Lafite 1982 was sold for HK$459,800 and an 11-bottle lot of Chateau Petrus 1982 for the same price. Three bottles of Romanee-Conti 2002 were sold for HK$314,600 - nearly double the auctioneers' upper estimate. Sleigh said Hong Kong was likely to remain the leading location for wine sales in the world, thanks to the abolition of wine duty in 2008. "The Asian economy is generally stronger than the rest of the world and there is a genuine wine bloom in Asia. But the reduction of wine duty to zero started the whole thing." High demand would keep wine sales in Asia strong this year, he said. Of the auction house's record sales of more than HK$688 million of wine worldwide last year, nearly 60 per cent was sold in Hong Kong; last year's sales in the city were more than three times that of the year before. Sotheby's holds a second wine auction today, featuring the Bordeaux Winebank 2000 collection. Meanwhile, auctioneer Acker Merrall & Condit also predicted a good year ahead. Its two-day wine auction at the Island Shangri-La and Grand Hyatt hotels generated revenue of HK$85 million - one-fifth more than its estimate. The 1,200-plus lots were all sold. "As strong as 2010 was, it seems that 2011 has already exceeded the benchmark set last year," chief executive John Kapon said. Eight bottles of 1985 Henri Jayer Richebourg, one of the star lots, were sold for HK$780,800, exceeding the upper estimate of HK$680,000. Bordeaux continued to outperform its counterparts, with wine from Chateau Petrus and Lafite taking the lead, Kapon said.

Honduras plans Hong Kong-like statelets - They say imitation is the sincerest form of flattery and if Hong Kong is looking to feel good about itself, it need look no further than the Central American state of Honduras. The country - listed by the World Bank as the third-poorest in the western hemisphere - is looking for a way out of economic penury by modelling itself on the SAR. The Honduran Congress has given initial approval to a constitutional reform package - sound familiar? - that authorises the creation of special autonomous regions roughly the same size as Hong Kong. The statelets would have their own laws and offer decades-long concessions to foreign investors. Honduran President Porfirio Lobo last week touted the creation of the special areas as a way to promote rapid development in his country, which is plagued by corruption and rife with economic inequality. He said that unless the bill was passed, "we cannot have the success that has occurred in China, Singapore and other parts of the world where `model cities' have been established, enabling accelerated economic development". But some aren't buying the Hong Kong solution, deriding it as utopian and expressing fears that it could mean the creation of mini-states within the country and a loss of national sovereignty. Former deputy Ramon Villeda said: "They talk about Hong Kong, but the rise of Hong Kong was due to it being under British administration." Mo Pak-hung, an economics professor at Hong Kong Baptist University, said special economic zones (SEZs) were very effective ways to boost growth, but Singapore was a better model than Hong Kong. "This is basically what China did when it created special economic zones several decades ago. This is a very good decision," he said. "But it will also depend on how the zones are managed, as a bureaucratic environment will not help businesses." The SEZs must run like a company to maximise profit, he said. Hong Kong was not the best model because some of its legislative seats were directly elected, a process not geared to profit maximisation. Under the Honduran bill, the special regions would accelerate the adoption of technologies to produce and deliver services with high added value, in a stable environment.

ICBC, the world's biggest bank by market value, has signed a deal that will allow it to enter the US retail banking market. The Industrial and Commercial Bank of China (SEHK: 1398) would buy a stake in the US subsidiary of Hong Kong-based Bank of East Asia (SEHK: 0023), a person with direct knowledge of the deal said. The purchase will make it the first Chinese state-controlled bank to acquire retail bank branches in the United States. The deal, which still requires the approval of US regulators, was signed on Friday in Chicago on the last day of President Hu Jintao's visit to the US. The price was not revealed but The Wall Street Journal said it was about US$100 million. ICBC has been the most aggressive of China's "big four" banks in expanding overseas, as the country's lenders restart plans that were put on hold by the global financial crisis and seize new opportunities left in its wake. Bank of East Asia has 13 branches in the US, in New York and California. ICBC in January last year bought a 70 per cent stake in the bank's Canadian subsidiary. The deal will allow ICBC's US customers to buy and sell the yuan. Trading in the currency is already available to clients of the Bank of China, currently the only mainland bank with a US retail licence. China is seeking to promote the use of the yuan as an international currency for trade and investment. Chip MacDonald, a partner at law firm Jones Day in Atlanta, said the deal may give financial firms in both countries greater access to each others' markets. "This will break new ground in that it will allow Chinese banks to enter the US," MacDonald said. "There's a greater likelihood that US banks will now get equal treatment." ICBC's deal with Bank of East Asia requires approval by US banking regulators and the Committee on Foreign Investment in the US, the Journal said. It would be a "long process", it said, citing a person familiar with the matter.

 China*:  January 24 2011

Hu Jintao garners good reviews for stopover in Chicago - President Hu Jintao was in Chicago for less than 24 hours but his choice of the Midwestern city as a second stop appeared to have hit the right note with Americans. In the national news cycle, Hu's visit to Chicago has receded from front page to opinion pages, even in local papers. But the reports have mostly portrayed it in a positive light, and saw it as recognition of a rising Chicago - a traditional industrial rust-belt city turned sleek financial and cultural centre. The two main purposes of the Chicago leg were to make contact with many key US enterprises that are based there and tout Chinese enterprises doing business in the US that have created jobs for Americans. "There are many Chinese businesses that have chosen to locate in the Chicago region, and we appreciate their decision to do so," Mayor Richard Daley said at an exhibition set up by China General Chamber of Commerce-USA featuring nine Chinese companies doing business in the city, from car parts maker Wanxiang America Corporation to Huawei Technologies and China Telecom (SEHK: 0728) (Americas). "Our long-range goal is to make Chicago the most China-friendly city in the United States," he said. While business ties were highlighted, Hu's visit to Walter Payton Preparatory High School could easily have been the highlight of the trip for both him and the audience. At the school he was treated to performances by pupils including a choir and a Chinese handkerchief dance. The school is also home to the largest Confucius Institute - a Chinese-government-backed organisation aimed at promoting Chinese language and culture. Yesterday was a day of examinations at the school, but pupils said they were excited about the visit. "I think it's fantastic to see the president of China, which is like a huge world power, to see him in our school auditorium," Grade 12 pupil Helenka Mietka said. "I've heard negative things about China like human rights and pollution; I don't think I'm well informed enough to judge. But I think it's a good thing that co-operation is going on." Grade 10 pupil Chantae Howell said she was learning Chinese because she thought it would be good for business. She thought the visit was "cool" even though she did not agree with some of the Chinese president's policies such as that on Tibet ; she is planning to sign up for a trip to China in the next school year. Eric Cheung, an immigrant from Hong Kong in Grade 10, said he thought the visit showed that Hu "cared about how schools in other countries are doing, and that he can make schools in China better". He said he was learning Putonghua because he wanted to go back to China to work one day. David Lampton of Johns Hopkins University in Baltimore said in an earlier interview that Hu's visit to Chicago or any Midwestern city "is in some sense as important as a visit to Washington". "One of the big needs for the Chinese is to put a human face on China for the American people. And in Chicago he's [exposed] to more civilian aspects of the American society."

Chinese delegation members wave as President Hu Jintao departs for China from Chicago's O'Hare International Airport. The Chinese signed up to buy US$45 billion worth of US goods and were received "with the respect they so deeply crave", an analyst said. Hu's US visit hailed as 'new page' in bilateral ties - As President Hu Jintao's plane touched down at Beijing airport (SEHK: 0694) yesterday afternoon, Chinese officials may well have sighed with relief. The largely incident-free trip was hailed by Xinhua yesterday as "turning a new page in the history of China-US ties", while Foreign Minister Yang Jiechi highlighted the pomp-filled reception staged for Hu at the beginning of his 68 hours in US as a major achievement. "The United States paid great attention to the visit of President Hu Jintao and treated [him] with the highest level of protocol. President [Barack] Obama departed from usual practice and hosted a private dinner for President Hu Jintao in the White House. Vice-President [Joe] Biden also attended the welcoming ceremony at the airport in person," Yang said in a statement issued by Xinhua. The Hu-Obama summit on Wednesday was billed by both sides as one of the most important diplomatic events for years. Yang also said the exchanges by leaders of both sides, including reciprocal visits by Vice-President Xi Jinping and Biden, as stipulated in the joint statement, were crucial to enhancing mutual trust in strategic areas. On the US side, the White House cited accomplishments related to security, trade and human rights. China acknowledged concerns about North Korea's uranium enrichment programme, White House spokesman Robert Gibbs said. China also pledged to protect intellectual property, while signing up to a long list of export deals. US officials said Obama's warning that US troops would be redeployed near North Korea if Beijing did not put pressure on Pyongyang had persuaded China to take a harder line with the North Koreans, and opened the door to a resumption of inter-Korean talks, possibly next month. North Korea accepted the South's conditions for talks on Thursday, marking a major breakthrough in the crisis on the peninsula. On the economic front, China's agreement to sign US$45 billion worth of contracts to buy American goods that would support 235,000 US jobs, including a US$19 billion deal to buy 200 airliners from Chicago-based Boeing, was the biggest concession Obama got from his visiting Chinese guests. Commerce Minister Chen Deming assured his US audiences on Friday that China hoped US exports to China would more than double to US$200 billion by 2015 as part of US$500 billion in overall trade. "Our two countries need to sit down and work it out so there won't be such a huge trade deficit and trade surplus," Chen told a business conference in Chicago. "We still have work to do to get to that US$200 billion." Obama said in his weekly radio and internet address yesterday that gaining access to foreign markets was the reason he met Hu at the White House last week. David Shambaugh, director of the China policy programme at George Washington University, said: "I think the Hu visit succeeded in its most important goal: to stabilise the relationship after a year of steady deterioration and to provide some new momentum, in the short term at least, for renewed co-operation between the two governments on a range of issues. "The Chinese side definitely got what they came for: the symbolism of President Hu being received with highest protocol and honours, which provides him personally and China as a nation the respect in world affairs they so deeply crave." But how the visit will shape bilateral relationship in coming years remains unknown. Jin Canrong , associate dean at Renmin University's school of international relations, said: "The summit did not solve emerging new problems as well as long existing ones. "I am not optimistic about future Sino-US relations despite the positive tone of the summit."

Piano diplomacy or politics, no strings attached as Lang Lang's ode to motherland wins American applause. With all the sensitivities surrounding Sino-US relations, even pianist Lang Lang's performance at the White House came under scrutiny - not for his undisputed virtuosity but for one tune he played - My Motherland, the theme song from the 1956 film Shangganling, or The Battle of Triangle Hill. The film depicts Chinese troops fighting the US-led United Nations forces during the 1950-53 Korean war. China watchers mused light-heartedly about whether the tune's inclusion was an oversight or if it was picked to send a subtle hint about the state of the two countries' relationship. My Motherland is popular with nationalistic performers in karaoke lounges on the mainland, having been made famous again in recent years by pop stars and PLA singers including Peng Liyuan , the wife of Vice-President Xi Jinping. While its lyrics make no mention of America, telling only of "wolves" encroaching on the motherland, some speculated that if the song had been played during a Sino-US summit in China, it might have provoked a diplomatic incident. Lang (pictured), writing on his personal blog on Sina.com, said the tune was "the most beautiful song in the hearts of the Chinese. I feel deeply honoured and proud to be able to play this song, which praises China before so many foreign guests, especially leaders from different places." To be fair to the 28-year-old, he may not be aware of the song's background. The other tune Lang played was free of controversy - Laideronnette, a chinoiserie-themed piece from French composer Maurice Ravel's suite Mother Goose, for which Lang was joined by American jazz musician Herbie Hancock. James Fallows, former speechwriter for US president Jimmy Carter, described the piece as a good choice that portrayed the summit's win-win theme. Lang's choice of My Motherland was not picked up on by US commentators. Liu Kang, professor of Asian and Middle Eastern studies at Duke University in the US, said: "For the Chinese, the melody remains a solemn but sweet tribute to the beauty of China's land and people, and the American audience would applaud such an emotion with no strings attached - the Korean war reference went unnoticed."

Chinese President Hu Jintao (C) talks to students at the Walter Payton College Preparatory High School in Chicago during the final day of his US visit, January 21, 2011.

Cosmetics firm wants new foundation in China - Sales assistants help a customer at the Shiseido Co cosmetics counter at a department store in Beijing. Shiseido aims to boost overseas sales to 50 percent of its total by 2017, from an expected 42 percent this fiscal year. Shiseido Co, Japan's biggest cosmetics maker by market capitalization, is seeking to increase sales in China by 15 percent or more every year as rising incomes in the world's fastest-growing major economy spur demand for consumer products. "Interest among women in skincare, makeup and haircare is increasing, boosting cosmetics use," incoming Shiseido Co's President Hisayuki Suekawa said in an interview on Thursday. He will be the youngest president from outside the Tokyo-based company's founding family when he assumes the post in April. Shiseido aims to boost overseas sales to 50 percent of its total by 2017, from an expected 42 percent this fiscal year. That's as demand in Japan drops amid sluggish wage growth and an aging population. The 138-year-old cosmetics maker, which competes with L'Oreal SA and Procter & Gamble Co, introduced the DQ skincare brand for drugstores and hair-care products for salons last year in China, whose economy grew 10.3 percent in 2010. "China's expansion promises growth for Shiseido," said Toshiro Takahashi, an analyst at TIW Inc in Tokyo, who has a "positive" rating on the stock. "The company's strength is having drugstores as a sales channel, which will allow it to draw customers in China." China accounted for about 10 percent of Shiseido's 644 billion yen ($7.76 billion) revenue in the fiscal year ended March 2010, said spokeswoman Megumi Kinukawa. The cosmetics company acquired San Francisco-based Bare Escentuals Inc last year for $1.8 billion, according to data compiled by Bloomberg. Shiseido entered nine markets this fiscal year. "We are interested in acquisitions if there is an opportunity," Suekawa said, without elaborating. Shiseido fell 3.3 percent to 1,676 yen at the 3 pm trading close on the Tokyo Stock Exchange on Friday. The stock declined 0.4 percent last year, compared with a 3 percent drop in Japan's benchmark Nikkei 225 Stock Average. Net income may decline 26 percent to 25 billion yen for the year ending March on a valuation loss in the value of its securities holdings, Shiseido forecast in October. Sales may rise 6.8 percent to 688 billion yen. The takeover of Bare Escentuals, Shiseido's largest acquisition, gave it a cosmetics company with products sold through 800 US retail outlets and 1,500 salons in its smallest regional market. The maker of bareMinerals powder foundation gets about 88 percent of its sales from the United States and had an operating-profit margin of 31.5 percent in 2008. Suekawa, now a corporate executive officer, evaluated the purchase price for Bare Escentuals, said the outgoing President, Shinzo Maeda, on Jan 12. Maeda will become chairman in April. "Bare Escentuals agreed with the line Suekawa proposed after doing a difficult calculation to decide the purchase price by judging the future value," Maeda said at the time. "The US was the place where we were weak."

Shanghai's lowest-paid workers can look forward to a pay rise of "at least 10 per cent" in April as the city moves to maintain competition with Guangdong, the municipality's mayor said yesterday. "We certainly must increase the minimum wage again this year," Han Zheng said. "The level [of the increase] has not been decided yet, but I can say that it will be at least 10 per cent." The mayor was speaking after the annual meetings of the city's people's congress and political consultative conference, and responding to the news this week that Guangdong province planned to increase its minimum wage by an average of 18.6 per cent. Han admitted that the current minimum monthly wage of 1,120 yuan (HK$1,321) was not enough to live on. The mayor added that, if companies felt it would make wages too expensive, perhaps their "business model is not in line with the industrial growth and economic development of Shanghai". "We need to implement a mechanism for businesses and workers to ensure reasonable wage increases above the minimum wage," Han added.

Rates heat rises on Beijing over growth - China's inflation eased to 4.6 percent last month from 5.1 percent in November. However, economic growth accelerated 9.8 percent in the fourth quarter as industrial production and retail sales picked up, adding pressure on policymakers to keep raising interest rates.

Chinese Li marches into quarterfinals at Australian Open - Li Na of China hits a return during the fourth round match of women's singles against Victoria Azarenka of Belarus at the Australian Open tennis tournament in Melbourne Jan.23, 2011. Li Na won 2-0 (6-3, 6-3). 

China's Haier sees profit up 78% - Haier Group, one of the world's leading white goods and household appliance manufacturers, announced Sunday that its profit jumped 78 percent year on year in 2010.

Beijing plans to build China's first design exchange - Beijing is planning to build China's first design exchange to offer a platform for design trading and boost the country's burgeoning creativity industry.

China, Russia start construction of iron ore dressing plant - Russian and Chinese companies started construction of an iron ore dressing plant Friday in the Evreyskaya Autonomous Oblast to provide high-grade iron ore to the Asia Pacific region, including China.

Chinese diving queen Guo Jingjing decides to retire - Chinese diving queen Guo Jingjing has decided to retire to end the speculation over the past two and a half years on her future at the national team. National diving team leader Zhou Jihong confirmed on Sunday that the Olympic and world champion diver had submitted her application for retirement. "She already made it clear that she would not train and compete, so she will not appear in the London Games," Zhou was quoted by Chinese portal Sina.com. "She is out of the national team. We respect her decision," Zhou said. This is the first time that the national team confirmed Guo's retirement. After the Beijing Olympic Games, Guo has become the center of speculation as what she will do next. Her last major event was the 2009 National Games where she eased to her fifth title and then she disappeared from the competition venues but often returned to the public sight as an ad star or Youth Olympic model. "I think I have fulfilled my task, so the London Games is not what I have in mind now. The chances should be left to other talents in the team," the 30-year-old told The Bund, a magazine based in Shanghai, a couple of days ago. Guo's retirement marked the end of an era during which she set an almost unbeatable record of four Olympic gold medals, five consecutive victories in both the individual and synchronized 3m springboard at the world championships and 17 World Cup titles. She is not just a phenomenon on the springboard, but also an eye-catching figure off the venue with her good looks and seven-year romance with Kenneth Fok, son of Hong Kong Olympic Committee president and tycoon Timothy Tsun-Ting Fok. It has been reported that Guo will get married this year.

Hong Kong*:  January 23 2011

The dark age has arrived for homeowners in a Sheung Wan building - literally. A three-storey building next to it is turning into a 34-floor hotel that will completely block some of their windows. There will be so little room between the two buildings that some flat owners in the 14-storey Wing Shun Building on Bonham Strand West have been told to remove air-conditioners and water pipes to make room for the rising hotel. "We received a letter two months ago, [from the builder] telling us that our windows will be blocked. And they asked us to move our air-conditioners and pipes to the other side," said a tenant living on the 12th floor. "There won't be any light and air coming into the living room," she said. The hotel construction was approved by the Buildings Department - but so was the placement of air-conditioners and pipes on the older building, questionably close to the lot boundary. It appears that when Wing Shun was built 40 years ago, its developers were so eager to make use of the investment, the building literally used every inch of the site's space. Bernard Lim Wan-fung, professor of architecture at Chinese University, said the air conditioners and pipes were probably illegal constructions in the first place. "No windows and facilities can be built on the side of a building which is close to the lot boundary," he said. "If they are built, the building should not be constructed close to the lot boundary. There must be space between these facilities and the adjacent building." Once the hotel is complete, three of the five windows of flat B units in Wing Shun Building will disappear, leaving those flats with only two windows facing the main street. The hotel, developed by Bright Century Limited, is now seven floors high. Its completion date is unknown. "It's now very noisy and dusty in the apartment," the woman tenant said. "Lights are on until 8pm or 9pm. That's very annoying." Flats on the lower floors are not affected, however. Their windows do not face the hotel project. Lawmaker Kam Nai-wai, who is also a Central and Western district councillor, said four owners had complained to him so far. Vincent Ho Kui-yip, chairman of the Institute of Surveyors' building surveying division, said buildings close to each other were common in Hong Kong. Developers were allowed to build buildings within their own lot boundaries, Ho said. He said the hotel developers had a right to ask that the older building's facilities be removed. "In the first place, the old building should not have windows, air conditioners and pipes out of its lot boundary," he said. Bright Century project director Joe Liu said his company had first tried to approach property owners affected by the development a year ago. "In fact, we have settled cases with three units already, to help them remove air conditioners and other facilities," he said. He said the hotel development had been approved by the Buildings Department, which assisted in talks with affected property owners. "When our hotel is built, there will still be a 10cm gap between our building and the adjacent building." The owner of Flat B on the 9th floor said he felt humiliated when trying to negotiate with contractor Paul Y Builders. He said the contractor had only offered to pay half the expenses involved in modifications. "They sent us letters and informed us what they were going to do. We are in a very weak position."

Andy Tsang Wai-hung, the new police commissioner, urged the public not to vent their anger on officers, after five were injured during the arrest of two people in separate incidents on Tuesday night. Last week, Tsang hit back at critics, including lawmakers, who described him as having a hawkish policing policy, amid fears he would get tough on demonstrators. Speaking at a Sha Tin District Council meeting yesterday, his first since assuming his post, Tsang said he hoped police and public would show respect towards each other. "We welcome citizens monitoring the police's work, but I absolutely do not hope they will vent personal anger on frontline officers," he said. In the first incident, a 41-year-old man who has a mental illness lost his temper and slapped an officer when police tried to stop him for questioning at the junction of Argyle Street and Portland Street. Officers received a complaint that the man had been following a woman in Mong Kok. He was taken to a police station where he punched another officer in the face and kicked chairs and desks. A station sergeant who tried to subdue him was injured on the hand. In the second incident, a 47-year-old woman pushed an officer and kicked his leg when police arrived to mediate in a dispute between her, her husband and a taxi driver outside Pacific Place in Admiralty. She also slapped a sergeant on the face. The couple were drunk. The man and woman in both cases were arrested for assaulting officers and were granted bail. All five officers were treated at hospitals. Tsang stressed that officers should be protected by law while discharging duties. He also welcomed any public criticism, saying their work could not always be perfect. "We will listen [to criticism] modestly and accept accountability because we would like to improve our services," he said. Residents could offer more encouragement if they found officers doing jobs well. Gary Wong Ching, chairman of the Junior Police Officers' Association, said it was a coincidence that the two incidents occurred on the same day, but he feared some people might follow the example of Amina Mariam Bokhary. Bokhary, niece of judge Mr Justice Kemal Bokhary, has a history of scuffling with police and is serving a six-week jail term for breaching her probation order. She slapped an officer after crashing her car in Happy Valley last year. "We hope the force's management can propose a heavier punishment [for assaulting officers]," he said.

China Shouguang Agricultural Product Logistic Park and EuroSib plan to apply to the Stock Exchange of Hong Kong in mid-February for a share listing.

Two critical in HK hospital with swine flu - Two people were in critical condition in hospital suffering from swine flu, health officials said on Friday, one and a half years after an outbreak that killed 80 people in the city.

Action comedy Let the Bullets Fly leads the pack at this year's Asian Film Awards in a big year for Hong Kong-mainland collaborations. It has six nominations, two of them for performances by Hong Kong actors. Chow Yun-fat is up for the best actor award for his turn as gangster Huang. And his co-star Carina Lau Kar-ling will compete with women in Japanese, Indonesian and South Korean films for the best supporting actress honor. Awards organiser the Hong Kong International Film Festival Society announced the nominees in 14 categories yesterday. Other big budget mainland-Hong Kong co-productions nominated include Sammo Hung Kam-Po for best supporting actor in Ip Man 2 and Michelle Yeoh for best actress in Reign of Assassins, in which Taiwan collaborated. Japanese filmmaker Tetsuya Nakashima's Confessions received five nominations, including best film and best director. The film has also made the shortlist for a best foreign language film nomination at the 83rd Academy Awards. Special effects producer Phil Jones competes against himself for best visual effects, having worked on both Aftershock, one of this year's mainland blockbuster hits, and Detective Dee and the Mystery of the Phantom Flame, which has two other nominations in production and costume design. Independent Hong Kong films were given several nods. Director Pang Ho-cheung and co-writer Heiward Mak are nominated for best screenplay for Love in a Puff, the low-budget love story starring Miriam Yeung and Shawn Yue. Aarif Lee Chi-ting is nominated for best newcomer for his role as Desmond Law in 1960s drama Echoes of the Rainbow. Police action-thriller The Stool Pigeon is in the running for best cinematography. This year, the jury will be chaired by Yonfan, director of the 2009 film Prince of Tears. Wilfred Wong Ying-wai, chairman of the international film society, said: "The mainland boom is undeniable. Japan is enjoying a recent revival, South Korea continues to go strong. And Hong Kong is finally climbing out of the abyss." The Asian Film Awards will be held on March 21 at the Hong Kong Convention and Exhibition Centre. The 35th Hong Kong International Film Festival will run from March 20 to April 5.

The tables have turned - shoppers from the mainland are hitting local shopping malls in organized groups to buy Lunar New Year items. In Diamond Hill's Hollywood Plaza, Shenzhen resident Irene Lai Yen-fen, 28, arrived with a busload of 40 shoppers yesterday, the third Lunar New Year shopping group to visit the mall. In less than 30 minutes, her shopping bag was full with dried seafood bought for more than HK$1,000. Lai said the same seafood would cost 10 to 20 percent more in Shenzhen. Lai said it was her third trip with the shopping group, which offers a free shuttle bus from Shenzhen to Hong Kong's shopping malls. "It's convenient and I can travel to Hong Kong malls directly for quality products. I'm budgeting about HK$4,000 for Chinese New Year items," she said. Hollywood Plaza said it will soon team up with one of the largest group shopping websites on the mainland - tuan.qq.com - offering a 10-yuan (HK$11.81) coach fare from Shenzhen Great Theater to the plaza. The mall's promotions and advertising manager Candy Lo Hang-yee said mainland netizens can start to register online from January 24 and she expects all the 2,011 coach tickets will be sold out in two to three hours. "We expect about 3,000 mainland visitors to spend between HK$5,000 and HK$8,000 each in our mall, bringing us HK$20 million in sales," Lo said. Lo said those unable to get the 10 yuan ticket would have to pay about 100 yuan for the round trip. The QQ shopping website is one of the largest for online shoppers with more than 100 million mainland users and more than 100,000 from Hong Kong. But the spending spree is raising eyebrows of Hong Kong housewives, who fear it will drive up prices. One housewife, surnamed Lau, 55, said shops selling dried seafood had already raised their prices. "It costs me HK$850 per catty of sea cucumber, HK$50 more that it was two months ago," she said. "I'll probably have to spend more than my original budget of HK$5,000." The tours have also caused concern at the Travel Industry Council. Executive director Joseph Tung Yao-chung called on the government to check if they should be subject to the new tour regulations. "The problem is not how cheap is the coach fare or whether the malls are reputable, but whether they involve tourism activities. Only registered parties can provide such services," he said.

Cathay Pacific Airways (0293) has chosen Ivan Chu Kwok-leung as chief operating officer, a post that has been a stepping stone to the top job for the last three incumbents. Chu, who will also become a board director, will assume the new role on March 31, the airline said in a statement to Hong Kong's stock exchange. He replaces John Slosar, 54, who takes over as chief executive the same day. Chu, director of the department that oversees the airline's service quality, takes on the No2 post as the world's third- biggest carrier by market value works on a fleet-wide refit of its business-class cabins. He handled last year's disruption in Europe caused by volcanic ash that stranded thousands of passengers. "Ivan Chu has extensive and well-rounded experience in the airline industry," said Kelvin Lau, an aviation analyst at Daiwa Capital Market Hong Kong. Slosar will replace Tony Tyler, who leaves to head the International Air Transport Association trade group. 

 China*:  January 23 2011

Chicago mayor Richard Daley introduces his wife Maggie to President Hu Jintao before a meeting of business leaders in Chicago on Thursday. Chicago's Mayor Richard Daley's long effort to build ties with the world's second-largest economy seemed to pay off on Thursday as President Hu Jintao arrived for his first visit to Chicago, his only stop outside Washington during this trip. Hu was expected to focus on economic ties between China and Chicago during his whirlwind overnight visit to the city. Experts said the attention from China has been the envy of other US cities and could mark a gigantic – and profitable – step forward for both parties, despite the sometimes rocky US-China relationship. “Our long range goal is to make Chicago the most China-friendly city in the US,” Daley said during a Thursday night dinner attended by Hu, as well as Illinois Governor Pat Quinn, top city officials and business leaders. Many have credited Daley’s efforts so far. The mayor has travelled to China four times since 2004, touting Chicago as a global transportation hub with large manufacturing and industrial sectors friendly to Chinese business. “Chicago deserves some kudos. It’s clear that he’s [Daley] cultivated the China relationship and he’s learned how to do that very well,” said Kenneth Lieberthal, director of the John L. Thornton China Center at the Brookings Institution. “Mayors and governors around the country, regardless of their politics, see China as a source of potential capital, markets and jobs. So you better be ones looking to have the president of China come here.” Hu, speaking to the Thursday dinner through a translator, also praised the city’s efforts to build relationships through language and business. “Despite the great distance between Chicago and China, our hearts are linked together by friendship,” he said. He earlier congratulated Daley on his 22 years in office, calling him “the most senior mayor in America.” The retiring mayor has largely stayed away from politics in developing a relationship with China. He went to Shanghai last year to headline “Chicago Days” at the last year World Expo. In 2008, he went to the Beijing Olympics to look for lessons for Chicago’s 2016 Summer Olympics bid. He has avoided criticising China for human rights issues and stayed away from US manufacturers’ claims that China undervalues its currency to make its exports cheaper than US products, contributing to high unemployment here. In 2006, Daley pushed for the development of the Confucius Institute in Chicago, a language and cultural centre that started as a small parent-driven Chinese language programme. It’s now one of the largest institutes of its kind in North America; about 12,000 Chicago public school students take Chinese and the institute offers community classes and international exchanges for teachers. While the institute doesn’t have direct ties to business, leaders in Chicago’s Chinatown say it helps forge a connection. “It creates a whole generation of younger students and future leaders to understand Chinese culture and language. It will help the business transaction,” said Tony Shu, president of the Chinatown Chamber of Commerce. “If you know the language, you’ll find it so much easier.” Hu was expected to visit the institute on Friday, as well as a Chinese business expo in the suburbs. City leaders say Chicago’s sister cities program also has helped. Shanghai and Shenyang have been Chicago sister cities since 1985, and Daley has met mayors of both cities. He met Hu at a White House state dinner in 2006, a Daley spokeswoman said. Tom Bartkoski, a director at World Business Chicago, also said Daley deserves much of the credit for the growing economic ties between China and Chicago. Chicago-area businesses such as Boeing, Motorola, Abbott and Wrigley have expanded operations in China. On Wednesday, Obama announced new business deals with China worth US$45 million, including a highly sought US$19 billion deal for 200 Boeing airplanes. At least 40 Chinese businesses now have operations in the Chicago area, and the number is growing. For example, Wanxiang America Corporation, which makes solar panels, has opened plants and a headquarters around Chicago in the last two years. While Daley deserves much credit for Hu’s visit, some experts say it also was a natural progression. Hu visited much of the West Coast in 2006, with stops in Los Angeles and Seattle. There’s also been some precedent for Chinese presidents to see the US president’s hometown. In 2002, former President Jiang Zemin went to former President George W. Bush’s Crawford, Texas, ranch. Others see the Chicago visit as a bit of a surprise since the Chicago area hardly has the largest Chinese population in the US. Roughly 1 per cent of the metro area’s approximately 9.6 million people are of Chinese descent, according to the US census. Six other metro areas – New York, Los Angeles, San Francisco, San Jose, Calif., Honolulu and Boston – have larger Chinese populations. Aside from business, Hu’s visit was expected to help increase awareness of Chicago and tourism. “It gives us much greater visibility in China. They remember cultural icons,” said Dali Yang, a political scientist and faculty director at the University of Chicago Center in Beijing. “We are at a critical turning point. This is to establish the image of Chicago as that destination in their consciousness.” An election to choose Daley’s replacement is Feb. 22. Candidates include former White House chief of staff Rahm Emanuel, who attended the Thursday dinner for Hu, and former US Sen. Carol Moseley Braun.

China's Li Na continued her winning ways when she downed Barbora Zahlavova Strycova of the Czech Republic 6-2, 6-1 in the third round of the Australian Open on Friday. The ninth seeded Li was never troubled against Zahlavova Strycova, who seemed to run out of ideas as the match wore on. It is the second year in a row Li has made the fourth round in Melbourne, and the third overall. Li made history last year when she reached the semi-finals of the Australian Open, a result that ensured she became the first Chinese player ever to reach the world top 10. In last year she beat Caroline Wozniacki in the fourth round and Venus Williams in the quarter-finals before losing to eventual champion Serena Williams in the semis in two tiebreak sets. Li has started this year in top form, beating Kim Clijsters to win last week’s Sydney International, when she came from 0-5 down in the first set to win 7-6 (7/3), 6-3. She will now play the winner of the match between eighth seed Victoria Azarenka of Belarus and South Africa’s Chanelle Scheepers.

President Hu Jintao urged the United States on Thursday to ease restrictions on high-tech exports to China after Beijing and Washington signed US$45 billion in trade deals during his US visit. “China wishes to work with the United States to fully tap our co-operation potential in fiscal, financial, energy, environmental, infrastructure development and other fields,” Hu said in a speech to political and business leaders in Chicago. “We hope the United States will work in the same spirit and relax its control on high-tech exports to China as soon as possible in order to boost its exports to China.” Hu flew to Chicago after meeting with President Barack Obama and political and business leaders in Washington and attending a lavish state dinner on Wednesday. Obama – facing domestic suspicions that China has ridden roughshod over trade rules and US manufacturers – stressed the US$45 billion in trade deals would support 235,000 US jobs. But he also insisted on Wednesday on a “level playing field” for US companies, referring to disputes that have often bubbled to the surface as China’s economic clout has grown. Hu echoed those words in his speech at a Chicago reception on Thursday. “We hope the US side will provide a level playing field for Chinese companies pushing to invest in the United States so that they will have more opportunities to contribute to the development of the US economy,” he said through an interpreter. Hu also urged greater co-operation on trade. “We believe that when trade issues arise between China and the United States the two sides should seek a proper solution through candid consultations on an equal footing and in a spirit of mutual respect,” he said. “Both China and the United States are major trading nations and benefit from free trade. Our two countries should play an exemplary role in building and improving the global trading regime, advancing the Doha round negotiations and rejecting protectionism.” Top US lawmakers said earlier on Thursday they had pressed Hu on rampant intellectual property theft during a meeting on Capitol Hill. House Republican Majority Leader Eric Cantor said Hu “admitted that they weren’t as far along as they would they would like to be, and maybe came to the game late, but indicated that they were hard at work in trying to meet the expectations of the global economy.” US lawmakers also charge that Beijing keeps its currency – and thereby its exports – artificially cheap, hurting their US competitors at a time of deep US worries about historically high unemployment. Hu told the Chicago reception that both countries are working to recover from the economic downturn and financial crisis, and that there is great opportunity for US businesses in China. “China is focusing on building long term mechanisms to boost domestic demand and ensure its economic growth is driven by consumption, investment and export together,” Hu said. He also pledged to “further increase imports.”

Publication of three major government-run newspapers was delayed by eight hours yesterday to ensure that coverage of two highlights of President Hu Jintao's visit to the United States could be included. The People's Daily, the China Economic Daily and the PLA Daily were delayed to include reports of Hu's joint press conference with US President Barack Obama, as well as a joint Sino-US statement, a People's Daily employee confirmed yesterday. The statement was issued in the early hours of yesterday morning Beijing time. Although occasionally the printing presses of the major official mouthpieces are held to wait for reports of important events, such as overseas visits by Hu, or even the annual plenum of National People's Congress, such a long delay was unheard of in recent years, according to media experts and journalists. All reports about important overseas visits by state leaders are carefully vetted by the party's propaganda authorities. Song Shinan , a media analyst based in Sichuan , said he believed the papers may have been ordered to wait for the reports from the US because Hu's trip might well be his last to the US as president. Analysts said Hu was eager to cement his legacy in China's diplomatic history with the US visit, while a joint press conference and the joint statement were regarded as tangible achievements. Hu is expected to hand over the presidency to Vice-President Xi Jinping in 2013. Three big pictures of Hu - one reviewing the troops, one shaking hands with Obama in the Oval Office and one hugging an American boy during a welcoming ceremony at the airport - were printed on the front page of the People's Daily yesterday - with a prominent headline "Hu Jintao held talks with US President Obama". The full text of Hu's speech on the South Lawn and the full text of the Sino-US statement were published on page two. Despite prominent coverage, the state media was careful to avoid sensitive topics. None of the mainland television channels broadcast clips of Hu's remarks on human rights during the joint press conference, in which Hu publicly admitted that "a lot still needs to be done in China in terms of human rights". Mainland audiences, except those who know how to scale the mainland's internet firewall, were unable to see Hu face repeated questions by American reporters on China's human rights, which Hu said he had not answered at first because of a technical glitch in translation. Most mainland newspapers carried only Xinhua reports about Hu's visit - a long-standing practice for coverage of sensitive events, including important overseas trips by state leaders. The reports played up the fact that Hu was given the highest level of reception in the US and praise for the visit from the foreign media. They also detailed business deals with the US worth US$45 billion. The Xinhua Daily Telegraph published a full-page story headlined "the whole world is looking forward to another handshake between China and the US". Despite the carefully managed publicity, intended to emphasise the rise of China to the domestic audience, a joke widely circulated on the internet illustrated a sentiment widespread on the mainland. It suggested Hu paid the bill for the state banquet when Obama excused himself to visit the toilet. Jiao Guobiao , a former journalism professor at Peking University, said such a long delay in publication was extremely rare and described the decision as a joke. "No matter how important the event is, the newspaper shouldn't be a servant to power," he said.

A meat vendor waits for customers at a market in Shanghai on Thursday. Pressure on China's CPI eased a little in December to 4.6 percent, down from 5.1 percent in November - China's consumer price index (CPI) slowed to a year-on-year rise of 4.6 percent in December from a 28-month high of 5.1 percent in November, according to the National Bureau of Statistics on Thursday. The main gauge of inflation gained 3.3 percent during 2010, the bureau announced at a media briefing held in Beijing. "The higher CPI basis of last year and stabilized food prices contributed to the temporary drop in the December number," said Lu Zhiming, an economist with the Bank of Communications. Despite the slowdown, China still faces a great challenge from inflation in 2011, but the government will be able to keep consumer inflation in check through various measures, said analysts and officials. Lu said CPI might break 6 percent sometime in the first half before showing a decline from July onwards, spurred by price rises in agricultural products, the increasing cost of labor and materials, excessive domestic liquidity and surging prices of international commodities driven by the depreciation of the US dollar.

Shanghai Construction starts restructuring - Shanghai Construction Group Co Ltd on Thursday suspended trading of its A shares in Shanghai to avoid large fluctuations in its share price, as its parent company Shanghai Construction General Co has begun talks with the local government on asset reorganization within the company. In a statement released to the Shanghai Stock Exchange, the Shanghai government-controlled company said its board will discuss asset reorganization and the suspension could be extended to Feb 21 if a plan were not made in 30 days. Progress on the reorganization will be disclosed on a weekly basis to the Shanghai Stock Exchange, said an official with the company's securities department, who refused to be named. The announcement comes just a day after the company won a 635 million yuan ($96 million) contract from Shanghai Shendi Group, which was created specifically by the Shanghai government for the development of a planned Disneyland theme park in the city. Construction of the theme park started in November and local media say the total investment could top 100 billion yuan. Shanghai Construction Group is contracted to do surface cleaning and site formation work on an area of 1.68 square kilometers in Chuansha, Pudong New Area, where the Disney project is located. The securities department official said there was no connection between the contract and the share-trading suspension. "The suspension is solely due to asset reorganization, which falls into the background of Shanghai's State-owned assets restructuring, and has nothing to do with the contract," the official said. The restructuring of State-owned enterprises (SOE) in Shanghai has been gaining traction after the municipal government issued guidelines in 2008 to improve efficiency and eliminate overlaps in redundant business units among SOEs in the city. The Shanghai Construction Group's planned asset reorganization follows a private placement in May 2010, when the company issued 323 million shares to its parent company to buy shares in 12 companies and nine properties. Shanghai Jahwa United Co, another listed SOE in Shanghai, is also a under trading suspension after the company said it was undergoing a restructuring plan. It is estimated that more than a quarter of the 72 companies owned or indirectly controlled by the Shanghai municipality completed restructuring in 2009. Yang Guoxing, director of the Shanghai Municipal State-owned Assets Supervision and Administration Commission, said in a Jan 13 meeting that the city plans to raise the securitization rate of local SOEs to 35 percent in 2011 from 30.5 percent at the end of 2010. In a separate statement to the Shanghai Stock Exchange on Thursday, Shanghai Construction Group said its net profit in 2010 likely doubled from a year earlier, getting a boost from the private placement deal in 2010. The company's net profit in 2009 was 359 million yuan.

In the recent Hollywood movie Wall Street, Chinese investors fund the world's leading green technology. Likewise in reality, China is on track to play a leading role in the green sector, as more Chinese companies in the sector are investing in the United States and creating jobs. Goldwind Science & Technology Co, one of the country's largest wind turbine manufacturers based in the Xinjiang Uygur autonomous region,made a significant mark in the US last month by winning a bid to supply China-made turbines to an Illinois-based large wind farm project. The Shady Oaks project is Goldwind's second wind turbine project in the US. Goldwind said it would buy more than 60 percent of its materials locally. In a previous project in the US in January 2010, it used about 63 percent US-made content. The Chinese manufacturer set up Goldwind USA in May 2010. As funding has been an issue for many local developers, Goldwind USA offers debt and equity financing to customers and strategic partners throughout the US, aside from providing a variety of wind power solutions including sales, service and manufacturing platforms. In the near term, Goldwind USA expects to expand within the US by adding manufacturing facilities as part of its international growth. Sinovel Wind Group Co Ltd, China's largest wind turbine maker, was also in discussions with the Ohio state government on the possibility of opening a factory there. "The local government welcomes such investment because it will create jobs," said Tao Gang, vice-president of Sinovel. But unpredictable long-term policies may be an obstacle for Chinese investors to expand in the US market, said industry experts. Like the wind power industry, the solar-energy market is also developing a more and more globalized industry chain. The US is importing and exporting solar products from every continent. In the meantime, Chinese solar manufacturers not only export products to the US but also contribute to local employment. Since October 2010, China's Suntech Power Holdings Co has been making panels in a 36,500-square-meter plant in the Arizona desert. Suntech's Arizona factory brings the company closer to its American customers and is in compliance with the "Buy American" requirements in some government contracts. It also means more job creation to the local government: more than 1,000 people turned up at a recent Suntech job fair. "This is truly an international marketplace, especially when you're talking about solar. It always has been. It makes a very positive statement - here's a Chinese solar company that's literally exporting jobs from China to the US," Roger Efird, managing director of Suntech, said earlier. More than 8,000 applicants were vying for 150 jobs at Suntech's Arizona plant, its first in the US. The plant is part of its long-term strategy for the US, which the company expects to be its biggest market in three years. Suntech hopes its first manufacturing plant in the US can help ease worries that China is taking green jobs from the US, especially when the employment situation stateside remains bleak. The US is importing and exporting solar products from every continent. In the meantime, Chinese solar manufacturers not only export products to the US but also contribute to local employment.

UN World Tourism Organization (UNWTO) Secretary General Taleb Rifai said Thursday he expected China to become the world's largest tourism destination within five to seven years. Rifai was speaking to Spanish state television network RTVE a day after the opening of the FITUR tourism exhibition here. After China, which is well represented at FITUR with 22 different exhibitors, received 53 million foreign visitors in 2010, Rifai expects that number to increase. "We can expect to see China become the number one country in terms of both receiving and sending tourists in the next five to seven years. It is simply natural development," he said. "China occupied the place of Italy as the fourth most important destination two or three years ago and now it is in third place." "China is the country with the biggest population in the world and it is also an extensive and diverse country. That means it is very attractive for tourists and visitors," he added. "China is full of attractions, it has a huge variety, which goes from sea to mountain and cultural destinations and it is a culture that is not just immaterial, but tangible, from its food down to its ancient legacy," Rifai said. The UNWTO chief also highlighted the warm welcome visitors could expect in China. "Tourists travel to places where they feel welcome and comfortable and that is the case with China. The country knows how to welcome tourists and that is more important than any political questions," he said. "In the future, China will win second place and then first place. China is doing things very well," Rifai said.

Journalists were hungry for answers at Wednesday's joint press conference by the two presidents but translation problems just left the two leaders hungry, with President Hu Jintao's lunch at the State Department delayed until after 2.30pm. However, US President Barack Obama and Hu still managed to project an aura of mutual understanding at the "lost in translation" press conference, where an apparent breakdown in the simultaneous interpretation system stretched answers to four questions into a one-hour marathon. The glitches kicked in with the first question by a US journalist on China's human rights. Obama gave his answer, which according to some Chinese journalists was simultaneously translated, but Obama was told that the answer had not been translated, and his translator stepped in to translate it again through the stage microphone. "I apologise, I thought we had simultaneous translation there, or I would have broken up the answer into smaller bites," Obama said after he realised what had happened. Hu stood beside him looking blank as the translator continued with a long monologue on human rights. While the question was also aimed at Hu, he didn't answer, shocking some of the American journalists present. When a second American journalist asked Hu the same question, he said he hadn't heard it the first time. "First, I would like to clarify, because of the technical translation and interpretation problem, I did not hear the question about the human rights," Hu said. "What I know was that he was asking a question directed at President Obama. "As you raise this question, and I heard the question properly, certainly I'm in a position to answer that question." All questions and answers ended up being consecutively translated, doubling the length of the press conference, with a Chinese journalist asking the consecutive translators to translate his questions correctly given the "on-and-off translation from the simultaneous booths". That wasn't the only technical glitch. For a few seconds in the morning it appeared that a US guard was unable to open Hu's limousine door as he arrived at the White House South Lawn. It did open. Still those were minor compared to five years ago, when the US announced China's national anthem as being that of the "Republic of China" , Taiwan's official name. That South Lawn welcoming ceremony was also marred by a Falun Gong protest.

Consumer price rises slowed on the mainland in December, increasing 4.6 per cent compared with 5.1 per cent in November. China's economy accelerated unexpectedly in the fourth quarter despite a series of tightening measures by Beijing, fuelling fears of overheating and further tightening ahead. The country's gross domestic product grew 9.8 per cent in the fourth quarter from a year earlier, faster than the third quarter's 9.6 per cent increase, according to data released by the National Bureau of Statistics yesterday. For the full year, the world's fastest-growing major economy expanded by 10.3 per cent - up from 2009's 9.2 per cent - officially making it the world's second-largest economy. Economists said the data further strengthened their expectations of a continued tightening of policy, including higher interest rates in the foreseeable future, even though inflation declined in December because of moderating food prices. "The strong economic growth will give those in the government in favour of further monetary tightening greater reason to act," said Alastair Chan, an economist with Moody's Analytics. "With a new tightening cycle starting from mid-October last year, three to four more hikes in interest rates and four more rises in RRR [reserve requirement ratio] are expected for this year," said Liao Qun, senior vice president and chief economist for Citic Bank International. Liao also warned the economy was still on the verge of overheating. A greater-than-expected surge in growth has renewed fears of further tightening measures and triggered sell-offs in stock markets around the region yesterday. The benchmark Shanghai Composite Index ended down 2.9 per cent, or 80.45 points, at 2,677.65, its lowest close since September 30. The Shenzhen Composite Index fell 3.4 per cent or 41.17, points to 1,170.47. Hong Kong shares, as well as almost all other regional markets, ended broadly lower yesterday, tracking weakness in China after the release of official data. The country's consumer price index rose 4.6 per cent in December, down from November's 28-month high of a 5.1 per cent rise. Moderating food prices, as well as a high base in the year-earlier period, contributed to the slowdown in inflation, economists said. The CPI rose 3.3 per cent in 2010, compared with a 0.7 per cent fall in 2009, which was above the government's target of keeping inflation below 3 per cent for the year. Many economists warned inflation risks remain and that cold weather and strong demand during the Lunar New Year holiday in February could push food prices back up in the first quarter. Jianguang Shen, an economist with Mizuho Securities, said the moderate inflation was mostly attributable to the government's price stabilisation measures. "The effect of these measures is likely temporary, however, and we expect inflation to rebound strongly in January," Shen said. Chan said: "The decline in inflation in December was due to price controls for a number of staple goods, which will not be effective long term, and if the economy continues growing above trend then inflation is likely to tick up again." Food prices rose 9.6 per cent from a year earlier in December, down from the 11.7 per cent increase in November. Non-food prices also picked up, rising 2.1 per cent in December, compared with November's 1.9 per cent rise. Ma Jiantang, director of the National Bureau of Statistics, said yesterday that the government should not let its guard down on inflation. Implementing a "prudent" monetary policy could help curb inflation, said Ma, who added he was confident the government could contain consumer price inflation within its target for this year. The National Development and Reform Commission, the country's top economic planning agency, earlier set an inflation target of around 4 per cent for 2011. This suggested the government had become more tolerant over inflation since this year's target is one percentage point higher than the government's usual 3 per cent goal. The producer price index, a forward indicator of inflation, rose 5.9 per cent in December, down from November's 6.1 per cent. The PPI rose 5.5 per cent in 2010. With its double-digit growth for the full year, China has apparently overtaken Japan as the world's second-largest economy. The growth effectively displaces its Asian neighbour from the global ranking it has held since 1968. The value of the mainland's gross domestic product for last year totalled 39.80 trillion yuan on a nominal basis, or about US$6 trillion, the National Bureau of Statistics said. Japan's nominal GDP in 2010 is likely to have totalled about 480.7 trillion yen, or US$5.5 trillion. The Japanese Cabinet Office is scheduled to announce the country's preliminary GDP data for 2010 on February 14. Other main data released yesterday also painted a picture of solid expansion. The country's retail sales rose 18.4 per cent year on year, but a gain of 14.8 per cent in real terms after accounting for increased prices. Fixed-asset investment in the country increased 23.8 per cent in 2010, but slowed by 6.2 percentage points from the previous year. The total investment in real estate development surged 33.2 per cent in the reporting year. Value-added industrial output in December rose 13.5 per cent from a year earlier, higher than November's 13.3 per cent expansion. Factory output rose 13.3 per cent in the quarter, up from 13.5 per cent in the third quarter.

About half the small and medium-sized enterprises in Hong Kong may opt to use the yuan to settle cross-border trade in the next 12 months, according to an HSBC (SEHK: 0005, announcements, news) survey. The bank yesterday released findings of the survey of more than 6,300 SMEs in 21 markets across the world. Of the 300 surveyed in Hong Kong, 37 per cent were already using yuan in cross-border settlements. Albert Chan, the head of commercial banking at HSBC, said traders were getting used to yuan trade. The volume of cross-border yuan settlements by HSBC has risen to 45 billion yuan (HK$53.16 billion). It reached 14.3 billion yuan last month and 11 billion yuan in November. According to the Hong Kong Monetary Authority, total cross-border trade settlement in yuan climbed to 93.7 billion yuan in November from 68.6 billion yuan in October. Yuan deposits in Hong Kong reached 279.6 billion yuan by the end of November. Twenty-one per cent of the SMEs surveyed had yuan deposits, of which 48 per cent were between 100,000 and 500,000 yuan. About 54 per cent of respondents said they intended to hold yuan deposits because of concerns over the volatility of foreign currencies - 38 per cent rated dealing in foreign currencies as their top concern in conducting international business, up from 28 per cent in the last survey. "If a mainland trade settlement is made in foreign currency, the mainland seller may factor in the risk of foreign currency fluctuations and include it in the price," Chan said. "But if the deal is settled in yuan, the buyer may get a better deal." Lam Kwok-hung, the president of the Hong Kong Small and Medium Enterprise Development Association, said more and more SME owners were holding yuan deposits and choosing yuan as the currency of choice for mainland trade settlements. "The yuan is becoming expensive. It is a good hedge to increase your yuan deposits when the cash flow allows it," Lam said. "And buyers can get a better deal when prices are quoted in yuan. Prices quoted in a foreign currency can add 3 to 5 per cent for the sellers to mitigate the risk of currency fluctuations." Chan expects the trend of using yuan in mainland trade settlement to spread globally. About 29 per cent of the SMEs worldwide said they were involved in international trade, but that might reach 40 per cent by 2013. About 40 per cent of Hong Kong's SMEs are into international trade, well above the 29 per cent global average, and the figure is expected to rise to 45 per cent in two years. The HSBC survey, conducted every six months, also reported on the confidence level of SMEs in the 21 markets. The business confidence index in Asia among SMEs has almost recovered to pre-crisis levels, reaching 125 in the fourth quarter of last year compared with 127 in the same period in 2007. Hong Kong's confidence level index stands at 107, up from 105 in the second quarter of last year, but well below the overall Asia index. Vietnam tops the chart in Asia at 156, followed by Singapore, at 149. The figure is 121 on the mainland, down from 123 in the second quarter. The survey found that 30 per cent of Hong Kong SMEs will increase their capital expenditure in the next six months while 49 per cent will maintain the current level. Chan said the confidence level in Hong Kong and on the mainland had been hurt by the increase in business costs because of inflation, despite the general positive and stable outlook on the local economy.

Hu urges U.S. Congress to further facilitate bilateral ties - Chinese President Hu on Thursday called upon the U.S. Congress to continue helping the two countries boost their relations.

Hong Kong*:  January 22 2011

Training hard to become a domestic helper is something few women in the newly affluent Pearl River Delta aspire to - unless it means a ticket to Hong Kong, says the operator of a Shenzhen homemaking school. The year-old Zhongjia Occupational Training School, which specialises in training domestic helpers, is attracting applicants in droves. The school's major selling point is that it trains domestic helpers up to Hong Kong standards. With an ever-booming market for high-quality maids in the delta, students who complete the program stand a good chance of working for either Hong Kong families living in the delta or wealthy mainland households. The ultimate prize is to go to Hong Kong one day, when the city lifts its ban on mainland domestic helpers. "Most new graduates would rather go jobless than take up work as a waiter or waitress. But if you tell them that they can serve in a Paris restaurant one day, it's suddenly different," Zhu Fenglian, who runs the school, said. The school has attracted many migrant workers who want a career outside the usual factories. They have to pay 2,200 yuan (HK$2,600) for the month-long training course; the average monthly salary for migrant workers in Shenzhen is 1,677 yuan, but Zhu said the school had no problem filling up the classroom. The training includes etiquette, Chinese and Western cooking, basic medical care for children and the elderly, and communicating with difficult employers. "We even teach them how to call an ambulance or report a fire in Hong Kong," Zhu said. The students are graded at the end of the course. On average, they can make between 1,600 yuan and 6,800 yuan a month after they finish and go out to work. "Our students are mostly hired by Hong Kong families or foreigners living in Shenzhen. More and more mainland families are also interested," Zhu said. Shenzhen official data suggests that about 400,000 Hongkongers live in Guangdong. This creates a huge demand for professional and well-trained domestic helpers. "Many Hong Kong families living in Shenzhen have to hire mainland domestic helpers. Unfortunately, most of the domestic helpers here are poorly trained and unprofessional," said Wendy Luo, a Hongkonger who lives in the Nanshan district of Shenzhen. "I paid my helper 2,500 yuan per month plus free accommodation," Luo said. "I'm still not happy with her performance. Many maids will suddenly go missing without notice. Some will even steal your money. It'll be much better if we can have maids professionally trained, like those from the Philippines and Indonesia." Some mainland families said they were prepared to pay more to hire better-trained domestic helpers. "I definitely would like to use a maid that has received Hong Kong-style training," said Shen Yu, a housewife whose husband runs an IT company.

Assistant principal immigration officer Chan Ping-fai says people handed over passports to strangers thinking that bargain-price travel was being arranged. Nearly 70 Hong Kong SAR passports have been reported lost in recent months after people unwittingly handed them to suspected "snakeheads", or human smugglers, according to an Immigration Department investigation. The passports were handed over by people who had been persuaded that bargain travel packages or overseas business trips would be arranged for them. Seven people reported the loss of their passports early this month, prompting the investigation, which found that 60 more passports were reported lost in similar situations recently. "We believe that these reported losses of SAR passports are related to human-smuggling and illegal forgery activities," Chan Ping-fai, assistant principal immigration officer with the investigation subdivision, said yesterday. People were asked by friends to provide a passport to strangers who said they could help arrange bargain travel packages and overseas business trips to negotiate lucrative trade deals. The victims assumed the passports would be returned after the trips were arranged, but the strangers disappeared. "Some even gave their Hong Kong identity cards to the strangers, and later the stranger could not be contacted," Chan said. Investigations revealed that passport holders were approached on the internet, an unusual avenue for syndicates to use because they usually placed newspaper advertisements seeking potential victims. Immigration officers are investigating whether any of the passport holders intended to relinquish their passport for monetary gain. The seven residents who lost their passports this month are all men, aged between 44 and 55. Three of them lost a new electronic passport. "As the new HKSAR electronic passport is difficult to forge, we suspect syndicate members would like to collect a batch of them so they have more of a chance at getting one whose picture is similar to that of their clients," Chan said. The advance security features in the electronic passports, introduced in February 2007, make it difficult for human smuggling syndicates to change the picture or information on the data page. A resident's personal particulars and photo are etched into the data page with laser engraving technology. The data page is also made of polycarbonate, a material which cannot be tampered with, and once the engraving of information is done it is irreversible. The department had not ruled out the possibility that the syndicate collected older versions of the HKSAR passport as well, to make forgeries. The department yesterday appealed to people to keep their travel documents in a safe place and not to hand them over to anyone. It said it was co-operating with overseas law enforcement agencies on the case, including providing the passport numbers and expiry dates of the 67 missing passports. People often pay human smugglers about 300,000 in yuan or Hong Kong dollars for a passport on the black market. The department said the lost passports were not linked to an October case in which a young mainlander used a mask to disguise himself as an elderly Caucasian male and boarded a flight to Canada. "Information and statistics does not show the situation [related to human smuggling] becoming very serious at this stage," Chan said. There had been an 8 per cent increase in the number of forged travel documents being detected, from 1,207 in 2009 to 1,299 last year. Of the 747 people arrested using forged passports in Hong Kong, 58 per cent were mainlanders.

The Mongolian government is pressing ahead with an initial public offering of shares in the Tavan Tolgoi coal deposit, an immense reserve in the Gobi Desert that has an estimated five billion to six billion tonnes of coal, mostly coking and thermal. Bankers said the deal is most likely to take place in Hong Kong, a natural market for Mongolian mining assets given the landlocked country's proximity to mainland China. Investment banks have been asked to pitch for roles advising on the offering by January 31, said people with knowledge of the situation. The site could be the world's second-largest coal deposit, after the Shengli field in China, according to data provider Raw Materials Group. Asian investment bank Eurasia Capital estimates the Tavan Tolgoi deposit holds 5.1 billion tonnes of coal that could be mined continuously for 200 years. One investment banker based in Mongolia said Tavan Tolgoi would be a much bigger listing than that of Mongolia Mining, which raised nearly HK$5 billion on the Hong Kong stock exchange last October. Mongolian Mining, which mines coking coal from a deposit in the South Gobi Desert, now has a market capitalisation of almost HK$40 billion. An official in the Mongolian State Property Committee said in a telephone interview that the government was pushing for the float to happen before May or June in Hong Kong, London or Mongolia. "The IPO for the Tavan Tolgoi deposit is in preparation," he said. Because the Mongolian exchange is too small to accommodate such a large listing, Hong Kong or London makes more sense. The Hong Kong stock exchange, which wants to turn itself into a mining hub by attracting listings from mining entities outside China, is facing intense competition from the London Stock Exchange. LSE officials recently flew into the country to discuss the deal. The official said current plans call for the government to own half the reserves. He said some of the coal will likely be distributed to the Mongolian public for free. "How that would be carried out is still under preparation and it requires a lot of work," he said. One investment banker said the Mongolian government is most likely to list Erdenes Tavantolgoi, or Erdenes TT, a company directly overseeing the business of the Tavan Tolgoi coal deposit. This is the latest plan for Tavan Tolgoi. Mongolia has changed its strategy to develop the deposit several times. It first decided to sell 49 per cent of the deposit, but cancelled an auction in February this year after Mongolian politicians worried this would cede too much of the nation's wealth to foreign miners. The government then said it would retain 100 per cent of Tavan Tolgoi and employ a contractor to develop the mine, before realising it could not afford that option. Early last month tender documents went out to international miners, which are now vying for contracts to operate the mine.

 China*:  January 22 2011

In a rare concession on a highly sensitive issue, President Hu Jintao used his White House visit on Wednesday to acknowledge "a lot still needs to be done" to improve human rights in his nation accused of repressing its people. President Barack Obama pushed China to adopt fundamental freedoms but assured Hu the US considers the communist nation a friend and vital economic partner. Hu’s comments met with immediate scepticism from human rights advocates, who dismissed them as words backed by no real history of action. Hu contended his country has “made enormous progress” but provided no specifics. Still, his remarks seemed to hearten and surprise US officials, coming during an elaborate visit that centred on boosting trade and trust between the world’s two largest economies. More broadly, Hu and Obama sought to show off a more mature and respectful relationship, not the one often defined by disputes over currency, sovereignty and freedoms. Hu said he wanted even closer contact with Obama; Obama sought again to embrace China’s rise, and the two men shared some unexpected laughs. The Chinese president was treated lavishly, granted the honour of the third state dinner of Obama’s presidency. He was welcomed in the morning to the sounds of military bands and the smiles of children on the South Lawn; he was capping the evening at a black-tie White House gala of jazz musicians and all-American food. Eager to show progress, particularly with the unemployment weighing down his country, Obama said the nations sealed business deals that would mean US$45 billion in US exports and create roughly 235,000 jobs in the United States. The package included moves by China to expand US investment and curtail theft of intellectual property. China’s human rights record is poor and worsening, with abuses ranging from censorship to illegal detention of dissidents to executions without due process, according to the US government. In a packed news conference, which was designed to underscore the freedom of speech on Obama’s home turf, Hu was pressed to defend his country’s treatment of its people. He initially did not answer, saying he never heard the question translated, although the White House said that it was. When prodded a second time, Hu defended his country’s promotion of human rights. But then he added that China is enduring challenges as it develops and “a lot still needs to be done in China in terms of human rights.” He said China stood to gain from other countries’ input, saying: “We’re also willing to learn.” For his part, Obama had to find a balance, standing up for freedoms while not overstepping Hu during the uncommon honour of a state visit. Obama said his nation’s relationship with China is bettering the world’s economy and security, and that it cannot stop over “tension” about human rights fairness. Pressing for a more cautious long view, Obama said: “I want to suggest that there has been an evolution in China over the last 30 years since the first normalisation over relations between the United States and China. And my expectation is that, 30 years from now, we will have seen further evolution.” Laced in their comments, however, were reminders that no amount of cooperation would trump each country’s core interests. Charles Freeman, a China expert at the Centre for Strategic and International Studies, said that Hu’s comments on human rights were a minor concession to US concerns. “They have learned over the years that throwing a bone to the Americans is a pretty good way to shut them up,” Freeman said. Sophie Richardson, Asia advocacy director for Human Rights Watch, said China had issued similar rhetoric before but that it added up to little more than a public relations exercise. Earlier, as Hu’s visit was just beginning, Obama was blunt about human rights. “History shows that societies are more harmonious, nations are more successful, and the world is more just when the rights and responsibilities of all nations and all people are upheld,” he said. White House officials said Hu, privately to Obama, expressed the same sentiment about China’s need to do more on human rights. They expressed surprise that Hu made the statement publicly and while overseas. Chinese leaders have typically argued that how the country handles human rights is an internal matter. In private, Obama specifically inquired about the case of Nobel Peace Prize laureate Liu Xiaobo, a jailed dissident who was prevented from attending the December 10 prize ceremony in the Norwegian capital. Obama, who himself won the prize last year, did not mention Liu in his public comments on Wednesday. On another contentious issue, Obama said that the United States continues to believe that China’s currency is undervalued, making Chinese imports cheaper in the United States and US goods more expensive in China. He said Hu has been moving toward a market-based system, “but it’s not as fast as we want.” “President Hu’s concerned, understandably, about how rapid this transition takes and the disruptions that may occur,” Obama said as his Chinese counterpart stood beside him in an elegant East Room crammed with media and dignitaries. “But I’m confident that it’s the right thing to do.” The US president said it was time to stop viewing every issue of the China-US relationship through the lens of rivalry. He made the case that as China grows and expands the living standard of its people, that benefit is not just humanitarian, but economic. And by that he meant good for US companies. “We want to sell you all kinds of stuff,” Obama said to his Chinese guests, prompting laughter. “We want to sell you planes. We want to sell you cars. We want to sell you software.” He also made clear: “I absolutely believe that China’s peaceful rise is good for the world, and it’s good for America.” Mindful of protocol gaffes five years ago, when Hu visited President George W. Bush, the White House seemed to host the state visit without a hitch; that is, except for translation problems that made the news conference long and at times confusing. Hu walked with Obama around the South Lawn grounds during the arrival ceremony and spent time shaking the hands of smiling children, even sharing a moment with the US president’s youngest daughter, 9-year-old Sasha.

President Hu Jintao and US President Barack Obama take part in a pomp-filled welcoming ceremony staged on the South Lawn of the White House - President Hu Jintao and US President Barack Obama said yesterday that the two nations had opened a new chapter of co-operation in a fast-changing and interconnected world. Speaking at a formal welcoming ceremony on the South Lawn of the White House, Hu said China and the United States shared many common interests and both sides would "work together to open a new chapter of co-operation as partners". Obama, in his speech, said the 30 years before the normalisation of ties were a "time of estrangement for our two countries", while "the 30 years since have been a time of growing engagement". "With this visit we can lay the foundation for the next 30 years," he said. Hu, representing a more confident China, repeatedly used the phrase "co-operation as partners", and said bilateral relations should be based on mutual respect, a win-win approach, facing challenges together by enhancing co-operation on international affairs and improving civilian exchanges. Both countries "share broad common interests and important common responsibilities", and should adopt a long-term perspective and seek common ground while reserving differences, Hu told Obama. Hu, dressed in a black coat and grey scarf, was given a pomp-filled welcoming ceremony. A colour guard stood to attention as VIPs, officials and journalists looked on. Former Hong Kong chief executive Tung Chee-hwa also attended the ceremony, standing behind US ambassador to China Jon Huntsman. Obama said the visit was a chance to demonstrate that "we have an enormous stake in each other's success". "The United States welcomes China's rise as a strong, prosperous and successful member of the community of nations," he said. "Indeed, China's success has brought with it economic benefits for our people as well as yours, and our co-operation on a range of issues has helped advance stability in the Asia-Pacific and in the world." Obama added: "Even as our nations compete in some areas, we can co-operate in others." Obama, who is under immense domestic pressure to raise human rights concerns with Hu, gently touched on the thorny topic. "History shows that societies are more harmonious, nations are successful and the world is more just when the rights and responsibilities of all nations and all people are upheld, including the universal rights of every human being," he said. After shaking hands with excited audience members, Chinese and American, the two presidents proceeded to the Oval Office where they held talks on wide-ranging issues. Tao Wenzhao , a senior research fellow with the Chinese Academy of Social Sciences' Institute of American Studies, said Hu wanted to set the tone of his US visit with the repeated notion of "co-operation as partners". Jin Canrong , associate dean of Renmin University's school of international relations, said: "It [the summit] is symbolic. But that symbolism might highlight the uneasy embrace between the world's most powerful economy and the fastest-growing and largest developing one." Since Hu last visited the White House in 2006, his country's influence has surged and its relationship with the US is widely recognised as the world's most important bilateral match-up. Yesterday's ceremony and summit came a day ahead of expected official confirmation that China has overtaken Japan to become the world's second largest economy. The summit, the eighth between Obama and Hu in the past two years, is widely seen as a test of how well the two powers can accommodate each other and work together to tackle a series of global issues. A US official yesterday said both sides were expected to reach agreement on export deals worth US$45 billion, including a US$19 billion deal with Boeing in which China will buy 200 Boeing aircraft. Hu, whose trip has been beset by US complaints about Beijing's currency policies, will face an uphill task in showing Americans that China's rise can benefit the US.

Action star Jackie Chan and pop diva Barbra Streisand topped a guest list including three presidents and media elites at a US state dinner for President Hu Jintao on Wednesday. At the request of the Chinese side, the menu for the dinner honouring Hu, after a day of frank talks at the White House, was quintessentially American fare, such as poached Maine lobster and dry-aged rib eye with creamed spinach. And nothing could be more American than the old fashioned apple pie offered as dessert in a final flourish for a meal washed down with a selection of wines from California and Washington state. Hu, wearing a business suit, posed with President Barack Obama, in black tie, and First Lady Michelle Obama, who was wearing a flowing red and black off-the-shoulder dress, after arriving at the North Portico of the White House. On the list of 225 guests for Obama’s third state dinner were his two predecessors as Democratic presidents, Bill Clinton and Jimmy Carter. Previous events honoured the Indian and Mexican leaders. Henry Kissinger, the Nixon-era national security adviser and secretary of state who played key role in forging relations with communist China, was also invited. Guests from the art world and the media included cellist Yo Yo Ma, whose parents were ethnic Chinese, and Anna Wintour, the editor-in-chief of Vogue magazine. Wendi Deng, the wife of media mogul Rupert Murdoch, showed up without her husband, who she said was travelling. After-dinner entertainment was to be provided by Herbie Hancock and Chinese classical pianist Lang Lang. Several important Washington power players who would have normally been expected at a state dinner turned down invitations amid anger on Capitol Hill over China’s human rights record and economic policies. Senate Democratic Majority leader Harry Reid, Republican Senate Minority Leader Mitch McConnell and Republican House Speaker John Boehner -- now the third-ranking US elected official – all chose not to attend. But former speaker Nancy Pelosi, who now leads the Democratic House minority, was on the guest list, despite her history of fierce denunciations of China’s human rights record.

President Hu Jintao on Thursday will try to persuade often hostile US lawmakers that China is a threat-free engine of growth, after a White House summit sought to narrow rifts between the world’s top two economies. Fresh from dinner banquet toasts with President Barack Obama on Wednesday night, Hu begins day three of his four-day state visit with a trip to Congress, a hotbed of criticism of Beijing’s policy of holding down the value of its yuan currency and of its human rights record. In China, state media lapped up the pomp and ceremony of Hu’s visit but largely avoided mention of the rare joint news conference in Washington, where Hu answered questions on the yuan and human rights. Newspapers splashed photos of Hu with Obama across their front pages, with headlines touting a “new chapter in relations” and “leaders hail symbiotic ties”. Online, China’s popular chat rooms and blogs brimmed with pride after China agreed to buy US$45 billion worth of US goods, deals that seemed aimed at quelling anti-Chinese sentiment in the United States. “You capitalist-minded Obama, you’re not that great!” said a blogger on Sina Microblog, the Chinese version of Twitter. “It’s our socialist-minded Boss Hu who is wealthy! As a Chinese, I feel immense pride!” “Hu’s visit injects new blood into the tug-of-war between China and the US,” wrote one poster on the tianya.cn portal. “China is showing its strength to the whole world.” Beijing residents said BBC and CNN television broadcasts (SEHK: 0511) of the summit went blank when the topic switched to human rights and anti-Chinese protesters, though access to foreign news channels is restricted to upscale hotels and apartment complexes. US lawmakers have since 2005 threatened legislation that would punish Chinese goods with duties to offset currency policies that critics say keep China’s exports artificially cheap. But they have yet to pass a law. In the past week, China’s central bank has repeatedly set the daily mid-point for the yuan at record highs, showing that the currency has room to rise. Offshore forwards , which imply yuan appreciation against the dollar in one year, were little changed, though, underscoring investor scepticism that the central bank would allow the yuan to continue rising after Hu’s visit. So far China has resisted demands for faster appreciation of the yuan, a move that could help lower China’s trade surplus with the United States, which Washington puts at US$270 billion. Asked about the Hu-Obama talks on the yuan, Chinese Vice Foreign Minister Cui Tiankai told a press conference in Washington that China had repeated its position on the yuan exchange policy many times and “this stance has not substantially changed”. Chinese Commerce Minister Chen Deming said China was willing to resolve the trade imbalance through discussions, adding that the value of the yuan was not to blame, Xinhua news agency reported. Chen called on the Obama administration to drop US restrictions on high-tech exports to China. Analysts said the business deals looked impressive, but some agreements may take years to materialise and others were closer to non-binding memorandums of understanding that still require further negotiations. “Business deals make nice photo opportunities, but six months from now, how many of those deals will have come to fruition?” asked China analyst Dean Cheng of the Heritage Foundation. Hu, who heard frank talk from Obama on currency during their summit but kept silent on the issue during the news conference, will continue his courtship of the US business community with a keynote speech at a Washington hotel. Stiff and often unsmiling in public, Hu may not be a natural salesman for winning over Americans struggling with a sluggish economy and unemployment that remains above 9 per cent. Tao Wenzhao, a Sino-US relations expert at Tsinghua University, wrote in a front-page commentary in the overseas edition of Chinese Communist Party mouthpiece the People’s Daily that the common interests between China and the United States should supersede their differences. “The region’s peace, stability and prosperity (SEHK: 0803, announcements, news) are beneficial to both countries. The countries in the region can also share the benefits,” Tao wrote. “If military conflict, turmoil or economic recession develop in the region, it will benefit no one.” Overall, US analysts gave a qualified thumbs up to a summit that produced the business deals and agreements to expand contact between their nations’ militaries and to tackle the nuclear proliferation threats posed by North Korea and Iran. “There’s a lot that is aspirational here, and the devil will be in the details,” said Drew Thompson of the Nixon Center in Washington. “But in principle, this has been a good summit, with the right symbolism and therefore it is a good signal that the relationship is on track,” he said.

Chinese banks must bring all of their off-balance-sheet trust loans back onto their books this year, the bank regulator said on Thursday, a tougher benchmark than it had previously set for them. The intensification of the banking sector clean-up reflects Beijing’s determination to get lenders to fall into line with the official policy of slowing credit growth this year as a way of reining in stubbornly high inflation. The China Banking Regulatory Commission had said in August that all loans sold to trusts, which banks have used as a vehicle to get around official credit restrictions, should be recognised within two years. “This move entirely blocks the way for banks to get around lending controls and issue loans more quickly. This is important to ensure the result of macroeconomic policies, especially with too much cash sloshing around the economy,” said Wan Li, a banking analyst at Bank of Communications (SEHK: 3328) International in Beijing. In a statement on its website, the CBRC said that banks would have to bring at least 25 per cent of their outstanding trust loans onto their balance sheets each quarter this year. Early last year, mainland banks ramped up their sale of loans to trust firms, which in turn repackaged them as wealth management products. By doing so, the lenders were able to free up more space on their balance sheets to issue new loans, skirting around lending caps imposed by the government. In its announcement on Thursday, the CBRC said the pace of trust lending had already been curbed. The total volume of trust-held loans was 1.66 trillion yuan (US$252 billion) at the end of the year, down from 2.08 trillion yuan at the end of July, it said. Wan, the Bocom International analyst, said that market reaction to the latest CBRC order was likely to be muted. “The regulator had ordered banks to do this as early as the middle of last year, so I don’t think it will have a big impact on banks,” she said.

Guangdong China to raise minimum wage by 19% - Guangdong province will raise its minimum wage by an average 18.6 per cent from March, local media said on Thursday, in a sign that labour costs in the mainland may rise strongly again this year. The wage rise will lift minimum salaries in Guangdong, China’s export hub, by between 140 yuan (US$21.27) and 200 yuan, China Business News said on Thursday. The pay rise will also give Guangdong’s capital city Guangzhou the highest minimum salary in China, of 1,300 yuan (US$200) a month, the newspaper said. After a decade of steady rises in minimum salaries across cities and provinces, wage increases accelerated last year as China’s economic boom spread into the hinterland and fuelled competition for labour. The city of Beijing, for instance, lifted the floor for wages by 200 yuan to 1,160 yuan (US$175) a month from January 1, following a 20 per cent increase just six months earlier. The government in Beijing has repeatedly pledged to increase workers’ share of national income as part of efforts to boost consumption. Rising wages put pressure on China’s inflation, already running at its highest in over two years, but that is compensated by even faster gains in productivity.

Beijing will take a big stride in expanding wireless internet service this year with its Wi-fi network expected to cover the entire urban area by the end of the year. Wi-fi signals will cover more than 600 square kilometres within the capital's fifth ring road and major town centres in suburban areas, according to He Ning, general manager of Beijing Mobile, a China Mobile (SEHK: 0941, announcements, news) subsidiary operating in the capital. The Beijing government news portal Qianlong.com quoted He as saying the number of hotspots, which enable wireless connections to the internet by users of laptops, phones and other portable communication devices, would be doubled or even tripled this year. His remarks were made at a group discussion on the sidelines of the week-long annual meeting of the municipal people's congress, which opened on Sunday and is focusing on the capital's development blueprint for the next five years. Analysts said the pledge, if realised, would be significant for Beijing's development, as it could give the capital a competitive edge both at home and abroad. Beijing has vowed to become a liveable world-class metropolis in the coming decade with its Communist Party boss, Liu Qi , saying this month that he wanted it to become the country's best "Wi-fi city". To achieve that ambitious goal, another 5,000 to 10,000 hotspots would be set up this year in addition to the existing 5,000-plus spots across the city in hotels, cafes and airports, Wu Chunyong, a Beijing-based internet analyst, said. Beijing began providing free trial Wi-fi service in busy commercial areas within the third ring road as part of a major facelift for the Olympics in 2008. The free trial coverage was cancelled soon after the Games and Wi-fi users were asked to pay for the service, even though many complained about its weak and unstable signal. It had not been decided how much to charge for the upgraded network, but He said it would be cheap. Dozens of other large and medium-sized cities are also working on extensive Wi-fi coverage, including Shanghai, Tianjin , Wuhan , Hangzhou , Guangzhou and Shenzhen.

Calls for curbs as China's GDP hits 10.3pc - China finished last year with a bang, its growth soaring past forecasts and inflation slowing less than expected, numbers that could prod the government to intensify tightening.

China oil demand up 19pc in December - China's implied oil demand surged 19 per cent to a record 9.6 million barrels per day in December, ending the year with record refining volumes and strong diesel imports.

Changan to export China-made Ford cars - Ford Motor is in talks with its mainland partner, Chongqing Changan Automobile, to export China-made Ford vehicles to emerging markets.

Peng Shuai returns against Jelena Jankovic of Serbia on the fourth day of the Australian Openin Melbourne on Thursday. China's Peng Shuai knocked seventh seed Jelena Jankovic out of the Australian Open on Thursday, her 7-6, 6-3 second round win providing the first genuine upset of the week at Melbourne Park. Serbian Jankovic, a semi-finalist here in 2008, blew a lead of two service breaks in the first set before claiming a third to force a tiebreak, which she lost 7-3. Peng, ranked 54th in the world after struggling with injury last year, broke for a 4-2 lead in the second and served out for victory three games later, dancing around the Hisense Arena court with a huge smile on her face. Jankovic was once again left ruing her inconsistency after serving up 39 unforced errors against her deceptively hard-hitting opponent. Peng’s triumph continues China’s good showing in the women’s draw at the Australian Open, now officially titled the “Grand Slam of the Asia/Pacific”. Li Na and Zheng Jie both reached the semi-finals last year. Ninth seed Li reached the third round on Wednesday with a comfortable 6-3 6-2 victory over Evgeniya Rodina of Russia, while Zheng missed the tournament through injury.

Hong Kong*:  January 21 2011

Shanghai plans to avoid a 'Mickey Mouse' operation - Political consultants to the Shanghai municipal government urged the city to get more deeply involved in its joint venture with Walt Disney Co before signing the final agreements on Shanghai Disneyland. Tu Haiming, president and general manager of Shanghai Hodoor Real Estate Development Company and a member of Shanghai People's Political Consultative Conference, said the city should avoid a similar scenario to that which occurred at Hong Kong Disneyland, which took five years to turn a profit. "We need to try to lower the risk of building a money-losing park and the solution lies in participating in more of Walt Disney's most profitable businesses such as the Disney Channel, the Disneyland Hotel and Disney's English teaching program in China," said Tu in a proposal to the city's political consultative body. In the same proposal, Tu noted that Shanghai's upcoming Disneyland is 57 percent owned by Shanghai Shendi Group, a State-owned company specifically established for the project in August, and 43 percent owned by Walt Disney Co. "The distribution ratio between US and Chinese investors (in the project) is exactly the same as it was with Hong Kong Disneyland," said Tu. Hong Kong Disneyland, which opened in 2005, reported its first pre-tax profit on Tuesday, after more than five years of operation. Its pre-tax profit for the 2010 fiscal year, which ended on Oct 2, was HK$221 million ($28.4 million), compared with a loss of HK$70 million in the previous fiscal year, the company said in a statement. "The concept of cost-control should be built into the Shanghai project right from the initial stage," said Tu. "Shanghai Disneyland should be a good compromise between the needs of its Chinese customers and being pure American. Chang Qing, another member of Shanghai People's Political Consultative Conference, said: "We don't need to import an American theme park to Shanghai - if Disney wants to stay here, it needs to be creative in terms of including Chinese culture". Compared with Hong Kong's Disneyland, the Tokyo Disneyland model has instead proven to be a winner. Oriental Land Company, Walt Disney Co's Japanese partner, has entered into a licensing agreement with the US-based company at a cost of $51 million a year. Disney licensed its names and characters and acted as a consultant in the park's construction and operation. It is also involved in the associated hotels. Qi Xiaozhai, director of Shanghai Commercial Economic Research Center, said Tu's proposal provides valuable insights. Facilities for meetings, conferences and exhibitions in the nearby area will be promoted in Shanghai's southeast corner as the upcoming theme park finds its home in Pudong, said Qi. Shanghai Disneyland, which will be finished in 2014, will be the US entertainment giant's third theme park in Asia after Tokyo and Hong Kong.

The weaker Hong Kong dollar encouraged more visitors from the mainland and other Asian markets last year, Tourism Board chairman James Tien Pei- chun said yesterday. According to the board, the number of visitors increased by 22 percent to 36 million with each tourist spending an average of HK$6,705, an increase of 16.2 percent on 2009. Expenditure related to inbound tourism contributed HK$212.6 billion to the economy, a rise of 30.5 percent. Tien said Hong Kong will continue to be a desired tourist destination and that the number of visitors in 2011 could increase to 39 million. The mainland remains Hong Kong's largest source of tourists, according to a report to be presented to the Legislative Council's economic development panel next week. The board says mainland visitors constitute 60 percent of all travelers to Hong Kong. Arrivals from the mainland in 2010 increased by 26.3 percent compared with the previous year. The report also shows that visitors from other Asian markets such as Taiwan, Japan and South Korea increased by 7.7 percent, 9.3 percent and 40 percent, respectively. Tien said the strengthening of the yuan and other Asian currencies against the US dollar played a major role in making Hong Kong a top destination. For the Taiwan market, the report said more promotions were conducted last year to fill empty seats on Hong Kong-Taiwan flights following the increased number of cross-strait direct flights between Taipei and the mainland. Tien declined to reveal the subsidy amount to be allocated to the tourism body for this year, saying it has yet to be approved by the government. However, a spokeswoman said later the budget for 2011-2012 is expected to be slightly higher than the HK$501 million the board received for 2010-2011. During yesterday's press conference, Tien said one of the board's priorities will be to invest funds to explore potential new markets such as Vietnam and the Netherlands. Tien also said in view of the construction of the Kai Tak cruise terminal, the board will endeavor to generate demand for cruises by partnering with cruise operators and travel agencies. More effort will also be made to include Hong Kong in television shows overseas as part of the board's publicity program. Last year, Hong Kong was featured in a number of reality shows in South Korea and the United States. The board also plans an overhaul for its discoverhongkong.com website. Tien added that another way to attract more tourists is to promote Hong Kong festivals. A lantern festival will be held in September for the Mid- Autumn Festival while events will also be held in conjunction with other Chinese festivals.

Expert action at last to tackle concert hall sound barriers - Cultural Centre acoustics studied but a fix is still years away. A major study of the sound quality in the Cultural Centre concert hall will start tomorrow after two decades of controversy and debate among critics and musicians. But don't hold your breath waiting to hear any improvement in the sound. Any changes will have to wait until the West Kowloon Cultural District and its concert hall are up and running, which will be years away. A team of international acousticians will collect data for nine days in the 2,019-seat oval-shaped hall, as well as opinions from musicians and critics. A report, including short-term and mid-term recommendations, is expected to be ready 14 weeks later. But it will take a while to implement the measures. "The Cultural Centre is heavily booked in the next 12 months and beyond and it's impossible for us to close it for renovation. That will have to wait until the opening of the West Kowloon concert hall," said Linus Fung Wai-fan, chief manager of urban cultural services at the Leisure and Cultural Services Department. Fung said at least three experts from Ove Arup & Partners Hong Kong would set up devices to collect data during concerts by the Hong Kong Philharmonic and the Hong Kong Chinese Orchestra. "We are aware of the acoustics issue and have sought expert consultation on a regular basis," Fung said. The department decided early last year to look into the matter seriously, and worked with the Architectural Services Department to tender the project. "We chose Arup for its international standing and recognition in concert hall acoustics, and their fee is within our budget," she said. The Arup team comprises Rob Harris, Andrew Nicol and Simon Tsoi, whose projects include the Sydney Opera House, London's Royal Opera House, Singapore's Victoria Hall, Greek National Opera and the Seoul Performing Arts Centre. Aside from technical data, the team will meet members of the Philharmonic and Hong Kong Chinese orchestras, as well as music industry representatives and critics. The concert hall's acoustics have haunted performers. "We were rehearsing the Bach concerto for four pianos to open the hall in 1989. Every time I played a note, it would be repeated. That was awful," said pianist Nancy Loo, of the Philharmonic. Savio Lau Chi-kong, managing editor of Hi Fi Review magazine who has been invited to meet the experts, was also critical. "Consistency of sound is probably the biggest failure of the hall," Lau said. "You get different sounds from different seats, and the ironic thing is, the most expensive seats in the stalls get very poor sound. Those under the balcony in the rear are the worst. "The City Hall Concert Hall, by contrast, has more consistent and predictable sound. One can be fairly sure what to expect from the stage." Clive Greensmith, cellist with the world-acclaimed Tokyo String Quartet, agreed. "I could hardly hear myself or my colleagues during our performance at the Cultural Centre. But it all became clearly audible at the City Hall," he said. Klaus Heymann, head of the Naxos classical music label, has recorded at most halls in Hong Kong, but never at the Cultural Centre concert hall. "The acoustics are terrible and it is impossible for recording," he said. John Harding, concertmaster of the Philharmonic, agrees. "It is a very difficult stage to hear what's going on just across [other orchestra sections]." But he said the actual sound quality on stage was not bad and gave the hall a rating of 5.5 out of 10, whereas the acoustics at the Sydney Opera House, where he performed as the leader of the Sydney Symphony Orchestra, got only 3. Yip Wing-sie, music director of the Hong Kong Sinfonietta, said there was a difference between what she heard on stage and what was heard in the audience. "When I conduct the orchestra on the podium, the sound is in fact quite good. But when I hear it in the audience, the sound always seems like it's coming from a far distance," she said. "There is also the problem of reverberation, which is especially prominent with the percussion section, such as the snare drums, which often sound with more than one echo." Yim Hok-man, principal percussionist with the Hong Kong Chinese Orchestra, said the problem was even more serious with traditional Chinese instruments. "I can't hear the huqin strings at the front at all, which sound remote from the percussion. The oval-shape stage opens up too widely and the sound gets scattered," he said. Aik Yew-goh, chief recording engineer of Hugo Productions, who has also been invited to meet the experts, said the hall produced an uneven reproduction of sound and clarity, which was linked to the balcony. "The balcony blocks the sound from the stage. Except for devising some reflective soundboards around the stage, there is very little you can do about it structurally unless you demolish the balcony." But Aik said that to be fair, the hall would sound very good under world-class orchestras, which were capable of producing a sumptuous sound that could overcome the shortcomings of the hall's acoustics.

The Hong Kong government said on Wednesday it was "striving" to pass legislation to comply with UN sanctions against Iran, after 20 shipping firms in the city were accused of being linked to Tehran’s weapons build-up. Last week, the US Treasury Department slapped sanctions on 24 shipping companies, including four in Britain’s Isle of Man, accused of being fronts for Iranian businesses involved in Iran’s missile programs. The firms are allegedly affiliated with the Islamic Republic of Iran Shipping Lines (IRISL), which has been slapped with international sanctions. Hong Kong is awaiting Beijing’s final approval to usher in the changes, but Beijing has said it would support the sanctions passed by the UN Security Council in June last year. At present, Hong Kong cannot seize assets belonging to the IRISL-linked shipping companies without first obtaining a court order. “We are preparing the necessary subsidiary legislation to... give effect to new sanctions against Iran,” the government said in a statement on Wednesday, adding it was “striving to complete the work as soon as possible.” The government did not immediately provide details about when it had last sought a court-issued warrant to seize assets. James To Kun-sun, head of Legislative Council security panel, said the new laws would be passed in the “very near future”. “The process should be very quick”, he told reporters. “I can see no problem with it all, given that China is a member of the UN Security Council”. The US has stepped up its efforts to isolate Iran-linked commercial entities tied to its military development programmes since the Security Council imposed a fourth set of sanctions against Iran in June last year. Observers have said firms dodging sanctions or engaging in other illicit activity often look to Hong Kong for cover given the ease of registering a business in the city, which is also a major shipping hub. In November, Hong Kong authorities detained a cargo ship linked to IRISL over an alleged loan default with a group of European banks.

HK still popular with overseas companies - Hong Kong continues to be an attractive destination for overseas companies seeking to invest, Simon Galpin director general of InvestHK said on Wednesday. He said that in 2010 InvestHK – a department of the Commerce and Economic Development Bureau of the Hong Kong SAR government concerned with foreign direct investment – assisted 284 overseas and mainland companies in setting up or expanding their businesses in the city. These companies created 3,056 jobs in their first year of operation or after expansion. “Last year’s results were very encouraging. It demonstrated a strong vote of confidence in Hong Kong as a business location,” Galpin said. The mainland was the largest single source of this investment with a total of 52 projects, followed closely by the United States with 51, the United Kingdom with 36, Japan with 19 and Australia with 16.

 China*:  January 21 2011

President Hu attends Obama's State Dinner - US President Barack Obama and first lady Michelle Obama welcome President Hu Jintao for a State Dinner at the White House in Washington, Jan 19, 2011. US President Barack Obama Wednesday night hosted a state dinner at the White House in honor of President Hu Jintao, who is currently on a four-day state visit to the United States.

Chinese president attends private dinner hosted by Obama - Visiting Chinese President Hu Jintao attended a private dinner hosted by U.S. President Barack Obama at the White House Tuesday night. Obama held a 3+3 highly private dinner on the very night of Hu's arrival in Washington, with State Secretary Hillary Clinton and Assistant National Security Donilon on the US side, and State Councilor Dai Bingguo and Foreign Minister Yang Jiechi on the Chinese side attending the dinner. Obama and Hu made positive evaluation on the progress made on bilateral ties, and said they are ready to further advance the existing positive, cooperative and comprehensive relationship, according to a Chinese foreign ministry press release after the dinner. Hu said he comes to the US for the goals of enhancing bilateral understanding and mutual trust, and enlarging exchanges and cooperation, according to the press release. Hu also comes for the goals of strengthening effective coordination between the two countries on major regional and international issues, and to embark on new era in China-US relation. "I look forwards to exchanging in-depth views with Mr President Obama tomorrow, and jointly discuss blueprint of China-US cooperation," said Hu.

The People's Bank of China is considering a proposal to allow foreign firms to use the yuan for direct investment in the mainland, says Zhang Jianjun, president of the central bank's Shenzhen arm. There were several test programs in Shenzhen last year, he said yesterday, and "we are actively studying this plan and consulting with the State Council." But there is no timetable for action. The PBOC launched a pilot program last week to allow domestic firms to use the yuan for outward direct investments. Hong Kong Monetary Authority chief executive Norman Chan Tak-lam said more inflow and outflow mechanisms are needed to make the yuan more international. Allowing the yuan to flow in only a single direction is not sustainable and will be negative, he added. Tse Yung-hoi, BOC International's deputy chief executive, said Hong Kong could benefit from the yuan's spread, becoming its main offshore center by acting as a "firewall" for the currency's onshore market. He also expects a larger yuan liquidity pool in the local market to help deter excessive inflows to the mainland. Total yuan deposits in the SAR reached about 300 billion yuan (HK$355 billion) by the end of last year.

Mainland Chinese tourists flock to popular USA destinations - A child smiles as Chinese tourists to the United States check in at Terminal 3 of the Beijing Capital International Airport on June 17, 2008. They were the first mainland tourist group to visit the country after the US allowed tour groups from the Chinese mainland. After more than a month of preparation and anticipation, 28-year-old Beijing resident Zhang Weiguang and his wife were thrilled to learn their dream of traveling to the United States would come true. "Although we had to wait in a long line in front of the embassy to meet visa officials, it was worthwhile," Zhang told China Daily over the weekend. Zhang values the tour not only as an extraordinary cultural experience, but also a good opportunity to buy luxury goods. With tourist visas, the happy couple will knock around the US West Coast for a 10-day trip during the Spring Festival en route to famous tourist cities such as San Francisco, Los Angles and Las Vegas. Yet the couple is just a small drop in the torrent of US-bound mainland tourists, who numbered more than 1 million in the first 11 months of last year. "We estimate the number of US-bound tourists will exceed 1.2 million in 2010, with an annual growth rate of about 30 percent," said Jiang Yiyi, director of the International Tourism Development Institute at the China Tourism Academy. According to Jiang, the US is currently the fourth most popular foreign country for mainland tourists, thanks to the Approved Destination Status agreement signed between the two countries in late 2007. Under the agreement, mainland tourists can visit the US with less complicated visa processes. It also allows US destinations to market their tourism products in China and authorizes Chinese travel agencies to market and promote leisure group tours in the US. Chen Yanyi, director of the tourism sector of Ctrip, a leading Chinese online travel agency, said that the agency's US-bound business has boomed after the agreement. "Our packages to the US sold fairly well in 2010, along with a 100-percent increase in tourist numbers," he said. The market is heating up even more after its neighbor, Canada, also obtained the Approved Destination Status and rolled out the carpet for Chinese tourists last year, he said. According to Chen, the traditional routes in the US include trips to East and West Coast states and the offshore state of Hawaii.

China's Li stuns Russia's Rodina 2-0 at Australian Open - Li Na of China celebrates a score during the second round women's single match against Evgeniya Rodina of Russia at the Australian Open tennis tournament in Melbourne, Australia, Jan. 19, 2011. Li won 2-0.

The joy of New Year carved into red paper - Paper cutting expert Wang Zhenzhu (R) from Yunchen city, North China’s Shanxi province shows her creative work, Jan 18, 2011.

People burn incense at the Old City God Temple in Yuyuan Garden, downtown Shanghai January 18, 2011.

China is a crucial source of profits for US businesses but product piracy, red-tape and other problems remain serious obstacles, the American Chamber of Commerce (ACC) in Shanghai says in a report that coincides with President Hu Jintao’s visit to Washington. Data compiled for the report released on Wednesday showed American companies profiting more than ever before in the fast-growing mainland market. But companies surveyed said the country remains a very challenging place to do business. As Hu visits the US along with business leaders, the ACC appealed for help in addressing problems hindering growth and fair competition. Nearly nine in 10 of the 346 companies responding said their revenues grew last year and 80 per cent said they were profitable, the highest figures since the survey began in 1999. Nearly half said their profit margins in China were higher than their worldwide margins last year, another positive trend. Some 80 per cent of the companies surveyed intend to boost investment in the mainland to take advantage of the country’s fast growth, which is increasingly spurred by local investment and demand. “Companies realise that the future of their global business depends on being able to operate and capture domestic Chinese market share. They are here because they have to be here,” said Michael Klibaner, head of research for property company Jones Lang LaSalle Shanghai, who helped brief members on the report. The survey found that auto-related companies, which have relied increasingly on growth in China to offset slack sales elsewhere, were most confident about their opportunities in the mainland – now the world’s biggest car market. Chemical and electronics companies also said the local market was welcoming to them. But two-thirds of the respondents said they believed that regulation was deteriorating or not improving. Apart from intensifying competition from both foreign and local companies, companies said finding qualified staff was their most significant challenge. But other problems such as product and trademark piracy, preferential treatment of local companies and requirements for using locally-made technology are major hurdles, the report says. Nearly half of the companies responding to the survey reported that regulations favour domestic companies over foreign rivals, especially in the US$88 billion government procurement market. “It is essential that the US continues to aggressively engage China to address key business challenges that hinder market access today and could impact future investment,” said Brenda Foster, the ACC in Shanghai’s president. “Bureaucratic licensing procedures, information restrictions and uneven enforcement standards all present daily operational challenges that can hinder growth,” the report said. “A lack of transparency in China’s rulemaking process and regulatory oversight is also an ongoing challenge,” it said. Given China’s massive trade surplus, US businesses have long complained that the mainland sells far more to the US than it buys. China, in turn, chafes at restrictions on exports of sensitive technology that it says prevent it from buying many expensive, high-tech products. A 100-member Chinese business mission linked to Hu’s three-day state visit to the US was shopping for American products and services. Some US$600 million in deals were signed by a separate trade mission earlier this week, including purchases of porcelain and cotton and an agreement to collaborate on developing solar power equipment.

Hong Kong*:  January 20 2011

Mall operator K11 Concepts is planning to expand its footprint across the border by spending at least HK$8 billion to set up about seven malls on the mainland in the next three to five years. "They will offer a gross floor area of over 10 million square feet," Kenneth Lung Tze-ho, director of New World Group's subsidiary, said yesterday. The company set up its first mall, positioned as a young and trendy shopping arcade featuring art exhibitions, in Tsim Sha Tsui more than a year ago. It established its first mainland shopping arcade in July in Wuhan, which contains mainly restaurants but will offer more retail and commercial space by 2013. Lung said other projects in the pipeline included the refurbishment of the New World Building on Huaihai Road Central, one of the busiest streets in Shanghai. The company had been looking for tenants and expected to lease the retail space on the ground-floor level for 90 yuan (HK$106) to 100 yuan per square metre per day. It has also decided to run malls in other cities such as Beijing, Shenyang, Guangzhou and Haikou, which will be completed between 2014 and 2017. "We'll continue to look for appropriate sites," Lung said. "We have been approached by different people, which indicates how strong the retail business is on the mainland." The Tsim Sha Tsui mall had more than 300,000 visitors per week, up 32 per cent from a year ago. Salesrevenue at the end of December was up more than 80 per cent from June 30. Lung expected sales revenue to jump 30 per cent during the Lunar New Year festival. 

Tourism Board expects 40m visitors this year, a rise of 10pc - A 10 per cent year-on-year increase is expected in the number of visitors to the city in the coming year, the Tourism Board forecasts. About 40 million visitors are expected to come to Hong Kong in 2011, up from a record 36 million people last year, thanks to the increase in the number of mainland travellers visiting the city. Their numbers are predicted to increase by 12 per cent this year. "We believe the upward trend can be sustained," board chairman James Tien Pei-chun said. "Worldwide financial policies are building up the travelling confidence of overseas tourists." The board's annual projections exceed that of the United Nations World Tourism Organisation for international travel, which predicts a moderate increase of about 5 per cent. The board's promotion plans this year include using new technologies and enhancing annual events to attract more visitors. In the first two weeks of this year, the city saw a 22 per cent year-on-year increase in the number of visitors, including 30 per cent more mainlanders and a slight rise in both long-haul and short-haul travellers. Aside from the increase in mainland visitors, Tien said the currency also helped to boost tourism. "The depreciation of the Hong Kong dollar against major currencies, such as the Japanese yen, also helps in attracting travellers," he said. The board plans to launch a smartphone application to boost publicity. With the help of an interactive technology known as augmented reality, users would be shown the city's attractions. Also when they took a picture of a sightseeing spot the application would provide them with information about it. A Christmas town offering real ice-skating would be added to the annual Hong Kong WinterFest staged in Statue Square. The city's tourism sales figures for last year also paint a rosy picture, with overnight visitors' spending per capita increasing 16 per cent to HK$6,700.

Yuan deposits in Hong Kong rose to an estimated 300 billion yuan (HK$353 billion) at the end of last year, a massive 376 per cent rise over the previous year as the city became the epicentre of the increasingly international currency. The Hong Kong Monetary Authority said the figure was still a rough estimate and the final figures would be released on January 31. Norman Chan Tak-lam, chief executive of the HKMA, said a two-way flow of the currency was important for the long term and sustainable development of yuan business in Hong Kong. While yuan deposit growth rates have been the fastest in Hong Kong this year, it still accounted for only 4.8 per cent of total deposits in the city as of November last year, and only 0.4 per cent of total deposits on the mainland, which totalled 71 trillion yuan in November. An increase in Hong Kong's yuan deposits is just one part of the city's ambitions to become an offshore yuan centre. It also needs to become a trade settlement centre and investment platform for the currency, said Tse Yung-hoi, deputy chief executive of Bank of China International Holdings. "It is not enough for Hong Kong just to attract yuan deposits. The city also has to be able to keep the money," said Tse. "Developing yuan products will be a vital step to ensure that happens." Tse said he believes Beijing has less intention of attracting overseas yuan deposits to invest in the mainland and most likely would prefer to keep the yuan deposits offshore in Hong Kong. But Antony Leung, Blackstone Group's chairman for Greater China, said it would be in Hong Kong's interest to develop systems to channel yuan deposits back to the mainland for investment, even though the yuan was unlikely to become freely convertible in the near term. "We have to think about the situation if the yuan becomes freely convertible one day, and if we only positioned ourselves as an offshore centre, it would be quite dangerous," said Leung. Yuan deposit interest rates in Hong Kong are still much lower than onshore interest rates on the mainland, as banks have little room to raise interest rates due to low levels of lending activity in yuan, said Citi in a report. Still, the level of deposit interest rates for yuan is much higher than for US dollars or Hong Kong dollars. That means foreign and local demand is still high, which in return reduces the need for Hong Kong banks to raise deposit interest rates, said Citi. Banks, however, said recently that the spreads on the yuan deposit rate have narrowed as increased yuan-denominated bond issuances and limited opening of the onshore interbank bond market have prompted Hong Kong banks to offer higher interest rates to attract more yuan deposits. Competition intensified yesterday as the mainland launched a trial for the qualified foreign institutional investor scheme, or mini-QFII scheme. The scheme will probably shift 50 billion yuan of overseas capital to the mainland's bond and stock markets. The mini-QFII scheme allows domestic brokerages and fund houses to raise offshore yuan to invest in mainland bonds and stocks. This follows the eight-year-old QFII program, which allows foreign fund managers to invest in mainland stocks and bonds on behalf of overseas investors.

Hong Kong's unemployment rate declined from 4.1 per cent in September to November last year to 4.0 per cent in October to December last year, figures released on Tuesday showed.

Hong Kong's Disneyland theme park failed to turn a profit again last year but said on Tuesday its loss narrowed thanks to higher visitor numbers. The park reported that it lost HK$718 million (US$92.3 million) last year. It lost HK$1.315 billion in 2009. The number of visitors to the park rose 13 per cent last year to 5.2 million and each guest spent an average 7 per cent more than the year before. Hong Kong Disneyland opened in 2005 and is a joint venture between The Walt Disney Company and the Hong Kong government, which owns a majority stake. The park did not release attendance figures or disclose how well it performed until 2009. Set on 126 hectares on Lantau Island, Hong Kong Disneyland is the smallest of the company’s theme parks. Managing Director Andrew Kam Min-ho said three new attractions planned over the next three years would help the park turn a profit, but did not give a date for when he expected that to happen. The first new attraction, based on the “Toy Story” series of animations, is set to open this year. Two others, “Grizzly Gulch” and “Mystic Mountain” will open in phases through 2014. “We believe that with the completion of our new attractions, the park will continue to attract more tourists and hence we foresee that the park will turn to profitability fairly soon,” Kam told reporters. Kam said he’s not worried about potential rivalry from a Disney theme park planned for Shanghai, which he did not expect to open for another five or six years. The Shanghai park received formal approval from China’s economic planning agency in November. Figures show the park is growing in popularity with visitors from outside of Hong Kong, especially from the mainland. They accounted for the bulk of total visitors last year at 42 per cent, up from 36 per cent in 2009. Other international visitors edged up to 25 per cent from 23 per cent in 2009 while local visitors fell to 33 per cent from 41 per cent. Kam said Hong Kong’s status as a popular destination in Asia will help boost the park’s visitor numbers.

Home-grown retailers are fighting a costly war with big global brands to maintain a foothold in Hong Kong's upmarket shopping precincts. The bidding war over rentals with high-margin wealthy international players comes on top of rising operating costs as a result of inflation, and has proved too expensive for many of the city's lower-margin retailers, who have been forced into sub-prime shopping districts or offshore. "The Hong Kong retail sector is an increasingly competitive marketplace. Rents rose 12 per cent in 2010, following a 3 per cent increase in all of 2009," said Benedict Ma, associate director of research at property consultant CB Richard Ellis. The acceleration in rentals last year was largely due to a rebound in retail sales that lured big retailers and international players to expand in the market, Ma said. During the first 11 months of last year, retail sales increased by 18.2 per cent in value or 15.5 per cent in volume over the same period a year earlier. The robust performance was driven by an improvement in domestic consumption, as well as from a surge in mainland tourists arrivals and associated spending. "International retailers are fighting to get in on the action, and are willing to outbid existing tenants, who in many cases are smaller, local operators, in order to acquire prime shop locations," Ma said. Recent examples included US-based fast fashion retailer FOREVER 21 taking up space formerly occupied by local brand Giordano (SEHK: 0709) in Capitol Centre in Causeway Bay, and German luxury goods brand MCM taking over space previously occupied in Entertainment Building by another local clothing brand, Episode. Global brand Gap has committed to a 13,000 sq ft shop in Central. "This means that more local and smaller entrepreneurs will have an increasingly difficult time in trying to identify well-located shops and will therefore be pushed back into secondary or tertiary locations where rents are lower," Ma said. In some extreme cases, entrepreneurs hoping to set up shop thought they had a better chance of success if they went offshore. Brenda Lee is an example. After graduating from university in 2003 and working for a few years in hospitals, Lee planned to set up her own chiropodist clinic. Hong Kong was not her first choice and she and her partner opened a clinic in Macau early in 2009. The monthly rent plus management fee for her ground-floor shop is around HK$10,000, versus about HK$20,000 for a similar-sized location in Hong Kong. "We did not consider Hong Kong as rents were too high," she said. Since the business went well, the partners considered setting up shop in Hong Kong, but their hopes were dashed when they found out what rent they would have to pay. "We tried to look for space in office floors in Sheung Wan but asking rents were more than HK$20 per sq ft," Lee said. This meant she would have to pay about HK$20,000 a month to rent a shop. Caroline Mak Sui-king, chairwoman of the Hong Kong Retail Management Association, said rising rents had forced fast-food chains like Pizza Hut to move upstairs and there were fewer convenience stores in core shopping districts such as Causeway Bay and Tsim Sha Tsui. "The situation is getting worse," she said. CB Richard Ellis expected the situation for smaller retailers would continue to grow more difficult. Local retailers may have to think of more creative retailing formats, he said, such as "Ginza-type" vertical retailing, sharing shop space between one or more brands or operators, or maybe pursuing an online retailing model. Rising inflation, a continued growth in retail sales, and a limited supply of shops in prime areas, will see retail rentals of ground-floor units in shopping districts edge up a further 20 per cent over the next 12 months, Colliers forecast.

Building associations, construction companies and waste removal groups are investigating a new way to control the illegal dumping of construction waste - global positioning systems. They say that by installing GPS equipment on dump trucks that move construction waste around the city, any illicit activities will come to light almost instantly or be halted before they have any legal or public image fallout. The government already requires these systems to be installed on mud-dumping vessels and barges taking Hong Kong's bulk construction waste to the mainland's ever-expanding reclamation sites. But it remains uncertain if they will really take off on the road. For one thing, the main players - the contractors and truck drivers - are split over who should take the first step. The Hong Kong Construction Association (HKCA), which represents about 300 contractors, is exploring the system, which it believes could be an effective tool to reverse the tide of illegal dumping. But it says its hands are tied when it comes to promoting the method.

Tendering for the new Kai Tak cruise terminal will begin in the next few months, with the winning bid to be announced by the end of the year, Commerce and Economic Development chief Rita Lau Ng Wai-lan said. The terminal, with its first berth due to start operation in 2013, will be run by the winning bidder for 10 years. Under the leasing terms to be proposed to the Legislative Council's economic development panel next week, the operator will not be required to ensure a minimum patronage to keep the contract valid. The operator will pay both a fixed rent as well as a variable one, based on profits, but will be free to determine berthing fees. A mid-term review will be conducted five years after the terminal opens to ensure quality of service. Commissioner for Tourism Philip Yung Wai-hung said a committee of government and industry officials will be set up to supervise the operation. The government can terminate the rights of the winning operator if it performs badly, Yung said. But the authorities can also extend the operator's 10-year rights by five years, according to the leasing terms. Mechanisms are in place to ensure that the operator will have the experience and the ability to operate the terminal, he added. The 10-year lease is expected to provide a reasonable degree of certainty for the operator to work out a longer-term business strategy and secure bookings from cruise lines. Legislator Jeffrey Lam Kin-fung, who chairs the Legco economic development panel, said the leasing arrangement is reasonable. He said the clause establishing the authorities' power to revoke operating rights will ensure quality of service. Yung is confident the tender will attract bids from internationally renowned cruise terminal operators.

Hong Kong Fashion Week: Mossi Giancarlo - Models present creations designed by Italian fashion designer Mossi Giancarlo at Hong Kong Fashion Week for Fall/Winter 2011 in south China's Hong Kong.

Macau's VIP baccarat revenue surged 62 per cent in the fourth quarter, deepening the city's reliance on mainland high-rollers with access to cheap and abundant credit. Casino revenue from the VIP segment rose to a record 40.47 billion patacas during the quarter, up from 24.98 billion patacas a year earlier, data released yesterday by the Macau Gaming Inspection and Co-ordination Bureau shows. Macau's casinos have for decades relied on high-stakes play for the majority of revenue. But the dominance of credit-backed VIP play over cash-based mass market play has become increasingly skewed over the past 18 months in the wake of Beijing's economic stimulus measures. Moreover, Macau's increasing reliance on VIP baccarat - a traditionally volatile segment - comes as Beijing is pushing the city to diversify its casino-driven economy away into non-gambling forms of tourism. "I am sincerely concerned about this issue," says Davis Fong Ka-chio, director of the institute for the study of commercial gaming at the University of Macau. "There are huge potential risks around the operation of the VIP market." Fong cites potential interest rate increases by Beijing as the No1 risk for Macau in the year ahead. Beijing raised interest rates twice in the second half of last year but consumer prices have continued to rise, increasing 5.1 per cent in November from a year earlier. Aggressive mainland rate increases have historically had a direct impact on stock and property markets, with a three- to six-month lag before they begin weighing on Macau's gaming revenue growth, according to Fong. The mainland's surging liquidity, low interest rates and soaring bank lending over the past 18 months have created a credit boom that has boosted stocks and property markets from Shenzhen to Shanghai and Hong Kong to Hohhot. But Macau has also been a key beneficiary of the boom because of the credit-driven nature of the VIP segment and its heavy reliance on mainland gamblers. The resulting surge in high-stakes play saw the VIP segment account for 73.4 per cent of all casino revenue in the fourth quarter and 72 per cent for the full year last year. Between 2006 and 2009, the VIP segment accounted for 64-67 per cent of the market. By contrast, mass market casino revenue - which includes all public table games and slot machines - grew a more moderate 31 per cent in the fourth quarter to 14.63 billion patacas. For the full year, mass market revenue rose 33 per cent to a record 52.7 billion patacas. Analysts generally expect Macau's total casino revenue will rise 15-25 per cent this year from last year's record haul. But early indications are that these forecasts may prove too conservative. Macau's table games alone raked in 10.4 billion patacas during the first 16 days of this month, CLSA Asia-Pacific analysts wrote yesterday in a research note. At the current pace, CLSA calculates total casino revenue for January is on track to break through the 20-billion-pataca mark for the first time, smashing the record set last month and on track for a 49 per cent increase from a year ago.

The latest fines of between HK$450 and HK$800 imposed on workers involved in causing environmental damage, have been criticised as being too lenient. Three drivers, four employees of a development company and a machinery supplier were given the fines for illegally transporting diggers to a beach, in Sai Wan, Sai Kung Country Park, in July for excavation work that caused a public uproar. The cases were brought by the Agriculture, Fisheries and Conservation Department under the Country Park Ordinance and were heard in Kowloon City Court 12 days ago. The sentences have been criticised by green activists as being too soft. The ordinance allows for a maximum fine of HK$2,000 and three months' jail. "The sentence is too light," said Peter Li Siu-man, campaign manager of the Conservancy Association. "It is a deliberate breach of the law and not an accidental trespassing into the country park. What these people moved into Sai Wan were not private cars but construction machinery that have already inflicted serious damage on the scenic beach." Li called on the agricultural department and the Lands Department to file a request to the court via the Department of Justice to review the sentences, which he said did not match the severity of the offences. "A few hundred dollars of fines is just equal to tiny portion of the fuel costs they paid," he said. In related cases brought by the Lands Department, fines of HK$1,000 to HK$30,000 were handed down on unnamed parties for illegally excavating government land on the scenic beach. Another unnamed party was fined HK$3,000 for water pollution caused by the excavated site. The department said it brought "concerned parties" to court on December 29, but offered no further details of the case. It said it was seeking legal advice on the sentences and therefore could not provide more details. The land-excavation offence carries a maximum fine of HK$50,000 and six months' jail. The South China Morning Post (SEHK: 0583) broke the story about the damage to the scenic beach last summer. The story prompted a public outcry against the private works being carried out on the site, by a private company controlled by Simon Lo Lin-shing, Mongolia Energy chairman, and his wife. In the face of public pressure, the government finally introduced an interim zoning order on Sai Wan that was approved by the Town Planning Board. The case also exposed how other country park enclaves are unprotected. In September, the government also imposed temporary zonings on Sai Kung's Hoi Ha and Pak Lap, and Plover Cove Country Park's So Lo Pun. A senior AFCD official last night said evidence and testimony they collected had led to the successful prosecutions. "When we collected the testimony from the persons involved, they admitted the accusations and told us how they got to Sai Wan," he said.

Tsang Kai-wing, father of veteran filmmaker Eric Tsang Chi-wai and a member of a gang of corrupt police officers in the 1960s, died in Taiwan yesterday. He was 94. The former police officer died peacefully at Taipei Veterans General Hospital at about 6pm with his children and grandchildren at his bedside, the family said. A vigil would be held in Hong Kong after February 17, the 15th day of the Lunar New Year, which marks the end of festivities. News that Tsang Kai-wing, who was also an uncle of former secretary for commerce and development Frederick Ma Si-hang, was critically ill had been circulating for a week. Eric Tsang, who had been scheduled to be master of ceremonies for TVB (SEHK: 0511)'s Jade Solid Gold Best 10 Music Awards ceremony on Saturday, rushed to Taiwan to see his father. He also abruptly left a film promotional tour in Singapore on Monday. Tsang Kai-wing had served in the police force from 1940 to 1972, when he was a sergeant-major. He worked under the legendary "HK$500 Million Sergeant" Lui Lok, named for the wealth he earned in bribes received during his time on the force. Liu died in Vancouver in May. Lui was the most notorious among four corrupt staff sergeants at the time - the others were Hon Sum, Nan Kong and Ngan Hung. They were dubbed the "Four Great Sergeants", or de facto commanders of the officers on the beat in the colonial force. Tsang was sentenced to three years in jail for corruption in 1975 but fled to Taiwan after filing an appeal. The Independent Commission Against Corruption issued a warrant for his arrest on October 14, 1977. In 2001, the Department of Justice seized his house in La Salle Road. It was sold for HK$4.35 million when it was auctioned in 2005 after 10 years of civil proceedings. An ICAC spokeswoman said yesterday the anti-graft body had yet to learn more about Tsang's death. She said warrants on fugitives or wanted people would be valid until they were arrested or officially confirmed dead. Tsang Sing-ming, deputy controller of external affairs at TVB, said the station sent its condolences to Eric Tsang and his family.

 China*:  January 20 2011

Chinese president starts state visit to U.S. President Hu Jintao landed in Washington Tuesday for state visit aimed at enhancing the positive, cooperative and comprehensive relationship between China and the U.S.

Dinners could prove more important than formal meetings during President Hu Jintao's four-day visit to the United States this week. Hu was due to arrive at Andrews Air Force Base near Washington on Tuesday afternoon (early this morning HK time) and began the state visit with a private dinner in the White House residence hosted by US President Barack Obama. The significance of the next day's summit is not lost on observers: the global power structure has seen a major shift since Hu paid his first official visit to the United States in 2006. But there is little expectation of any tangible breakthroughs. The US national security adviser during the Carter administration, Zbigniew Brzezinski, has called the summit "the most important top-level United States-Chinese encounter since Deng Xiaoping's historic trip more than 30 years ago". He says it should aim to define a relationship that "does justice to the global promise of constructive co-operation".

When Hu Jintao makes what is likely his final trip to Washington as China's president, he will get an honour he desperately wanted but was denied during his first visit nearly five years ago: a White House state dinner. Symbolism and protocol are very important to the Chinese and the opulence of Wednesday’s black-tie affair with President Barack Obama should be plenty satisfying for Hu, a 67-year-old hydro-electric engineer who has ruled the country since 2002. That could help relations between the leaders of the world’s two largest economies. A grand soiree is in the works, but big questions remain. Will a celebrity chef do the cooking? Will first lady Michelle Obama’s gown have an Oriental flair? Will the Obamas try to turn Hu on to American pop culture with the entertainment? The White House has yet to release any details. But Michelle Obama, White House social secretary Julianna Smoot and other staffers deeply immersed in pulling off the administration’s third state dinner hope to avoid repeating the slights, both perceived and real, that marred Hu’s reception for an April 2006 summit. For starters, Hu was unhappy that President George W. Bush opted for lunch over a state dinner. Bush held few state dinners as president, preferring workman-like visits with foreign leaders over eating meals in a tuxedo. He also was sensitive to concerns in the US about human rights in China and was reluctant to be seen as going all out for Hu with a state dinner. Hu was welcomed with a pomp-filled arrival ceremony on the South Lawn, including a military honour guard and a 21-gun salute. But the reception was spoiled when a woman protesting China’s treatment of the banned Falun Gong religious movement began shouting during his remarks. Bush personally apologised after they had retreated to the Oval Office. During the ceremony, a White House announcer flubbed the mainland’s formal name by calling it the “Republic of China” instead of the “People’s Republic of China.” The Republic of China is the formal name for Taiwan, the democratic island that the mainland claims as its territory. Wednesday’s affair will return the hospitality that Obama was shown at a state dinner in Beijing when he visited in November 2009. A personal relationship between the two leaders is important, Asia watchers say. Obama and Hu will have at least two more years to work together; Hu is expected to step down from the presidency next year. “It’s such a big relationship. It’s like two aircraft carriers,” said Victor Cha, a former director of Asian affairs in the Bush White House. “The only way you can move policy is at the very top and it requires a personal connection.” Cha said that personal element seems lacking between Obama and Hu, who will meet for the eighth time in two years on Wednesday. “Maybe this visit will be an opportunity to create some of that,” Cha said. Hu is actually getting two dinners with Obama. A small, private dinner at the White House was on tap after Hu lands in Washington on Tuesday, including Secretary of State Hillary Rodham Clinton, National Security Adviser Tom Donilon and some Hu aides. The state dinner is the first for China in 13 years and follows Obama state dinners for India and Mexico. Michelle Obama has recruited a guest chef to help prepare the meal for each state dinner, but there was no word on who might cook for Hu. There also was no sign of a tent — used for the earlier dinners — going up on the South Lawn. President Bill Clinton and first lady Hillary Rodham Clinton welcomed President Jiang Zemin and his wife, Wang Yeping, in October 1997, serving chilled lobster in tarragon sauce, pepper-crusted Oregon beef and whipped Yukon Gold potatoes to more than 230 guests seated elbow-to-elbow in the East Room. They ate on tableware from the Eisenhower and FDR administrations laid out on gold damask tablecloths. Dinner tickets were highly sought and the lucky holders pointed to one of Clinton’s chief aims: access to China’s consumer market of more than 1 billion people. The guest list included CEOs from Xerox, PepsiCo, Walt Disney Co. and General Motors Corp. The National Symphony Orchestra provided after-dinner entertainment in a tent on the South Lawn that included the American classics “An American in Paris” by George Gershwin and John Philip Sousa’s “Stars and Stripes Forever.” White House officials suggested at the time that Jiang might be tempted to get up on stage. At a dinner the year before in the Philippines, he surprised his host by singing “Love Me Tender” and “Swanee River.” The Clintons had anticipated a level of interest in the dinner that would exceed the mansion’s ability to fit everyone inside. An offer was made to have it outside beneath a tent, but Jiang’s representatives held out for indoors. Jiang had been miffed years earlier when Clinton refused him an official visit and insisted on meeting at New York’s Lincoln Center instead. “The protocol is very, very important to the Chinese,” said Bonnie Glaser, who studies China at the Center for Strategic and International Studies.

China has lent more money to other developing countries in the past two years than the World Bank has – a sign of Beijing's growing economic might and thirst for natural resources, a report said on Tuesday. The state-owned China Development Bank and China Export-Import Bank agreed to lend at least US$110 billion to governments and companies in developing countries in 2009 and last year, the Financial Times said, citing its own research. That exceeds the record US$100.3 billion handed out by the various arms of the World Bank from mid-2008 to mid-last year in response to the global financial crisis, the report said. The newspaper said the statistics were collected by examining public announcements by the banks, the borrowers or the Chinese government. The World Bank figures were for loans granted by the International Bank of Reconstruction and Development, its main lending arm, and the International Finance Corporation, which lends to the private sector, it said. The volume of loans reflects Beijing’s efforts to forge stronger ties with developing countries as it winds back its economic dependence on Western export markets, it said. During the global credit crunch, China was able to push the commercial interests of its energy companies by offering loans to producer countries at a time when financing was hard to come by. The agreements included large loan-for-oil deals with Russia, Venezuela and Brazil, as well as loans for an Indian company to buy power equipment and for infrastructure projects in Ghana and railways in Argentina. Some of the loans were denominated in yuan as China tries to spread the use of its currency worldwide. China Development Bank and China Export-Import Bank offer more favourable terms than the World Bank and other lenders for certain deals that are strongly backed by Beijing, the report said. For less politically sensitive deals, the loan conditions are closer to international standards.

China is eager to further internationalize its currency and will boost the pace of the yuan's appreciation, analysts said following comments made by President Hu Jintao on the eve of his state visit to the United States. "We may see a 4-6 percent appreciation in the yuan this year, as opposed to 3-5 percent previously," said CITIC Bank International economist Liao Qun. Although the yuan may not replace the greenback in the short run, Standard Chartered chairman John Peace said the mainland currency's clout is obvious. "What I do see is the yuan, over time, becoming as important as the dollar," said Peace. "But I don't think this is necessarily measured in centuries. It can happen quite quickly." The current international monetary system dominated by the US dollar is a "product of the past," said Hu. "The monetary policy of the United States has a major impact on global liquidity and capital flows and therefore the liquidity of the US dollar should be kept at a reasonable and stable level," said Hu, in a written response to questions from the Washington Post and The Wall Street Journal. Hu was referring to the US$600 billion (HK$4.68 trillion) quantitative easing by the Federal Reserve in early November. BWC Capital Markets chief economist Daniel Chan Po- ming agreed with Hu on the impact of the easing. "Every time the US is hit by financial problems, everyone else feels the effects, and it upsets China very much," he said. Hu called for an international financial system that is more "fair, just, inclusive and well-managed." He said the financial crisis showed "the absence of regulation in financial innovation" - a reiteration of China's complaints against the loose monetary policy adopted by the United States that is fueling inflation in emerging economies. Chan noted that Hu's comments on the yuan issue is not only a political gesture, it also reflects the need to adjust China's monetary policy. This was despite Hu saying "inflation can hardly be the main factor in determining exchange rate policy." Chan said: "The yuan's appreciation can help relieve some pressure from imported inflation on the rising costs of commodities. China has pretty much exhausted its possible tools." While yuan appreciation is a focus of attention this year, the pace may not be entirely within China's control, as mainland officials hope. "I know that the Chinese authorities like to do things in a slow and measured way, and I think it is going to be successful in many areas acting on this, but currencies tend to take on their own momentum at some stage," said Anthony Bolton, president of Fidelity International. Separately, Agence France-Presse quoted Taiwan President Ma Ying-jeou as saying he is "concerned" about Hu's visit, urging the United States to sell the island the advanced F-16 jet fighters it has long sought.

China will need at least a decade before it can reprocess spent nuclear fuel on an industrial scale, the nation’s largest nuclear power developer said in comments published in state media on Tuesday. Earlier this month, the mainland announced on state television that it had become one of only a handful of countries to successfully reprocess fuel, thanks to the work of China National Nuclear Corporation engineers. However, CNNC officials told a briefing on Monday it would be at least 10 years before the technology could be used on a large scale to extend the lifespan of Beijing’s proven uranium deposits, the China Daily reported. The initial “breakthrough” — carried out at a CNNC plant in the country’s remote northwest — “is a crucial step toward initial practical application, which is likely to happen within a year,” said company spokeswoman Li Tao. Earlier reports said the technology has the potential to allow Beijing to use its own uranium deposits for the next 3,000 years, from the current forecast of 50-70 years. Beijing produces around 750 tonnes of uranium a year but annual demand could rise to 20,000 tonnes a year by 2020, according to state media. It has proven resources of more than 170,000 tonnes. An expert at the Vienna-based International Atomic Energy Agency, the UN nuclear watchdog, said on Monday China would first need to upgrade its facilities. “For China to enter into commercial recycling of irradiated nuclear fuel, they will need to construct and commission a much larger facility,” said Gary Dyck, head of the IAEA’s Nuclear Fuel Cycle and Materials Section. The pilot-scale plant in the mainland was based on the same aqueous recycle technology used in commercial-scale plants in France, Russia and other countries, he said. China currently has 13 nuclear reactors and has given the green light to plans for 34 others, 26 of which are already under construction. China overtook Japan in mid-last year to become the world’s second-largest economy. It is the world’s biggest energy consumer, according to the International Energy Agency.

'Experience China' debuts at Times Square - A video show about Chinese people made its debut on screens at Times Square on Monday, presenting Americans a multi-dimensional and vivid image of Chinese people. With China's traditional red as the theme color, the 60-second video was shown on six screens simultaneously at Times Square with a billboard written "Experience China" on top of the screens. The show highlights Chinese ordinary people and some important figures recognized by the international community, including Chinese pianist Lang Lang, basketball player Yao Ming and Chinese astronaut Yang Liwei, etc. "The layout of the video is quite smart. I like it," Charlotte Mcguckin, 18, a high school student in New York, told Xinhua, adding that "everyone (in the video) looks happy." "Look, that's Yao Ming. I can recognize him, and also the female table tennis player standing beside him. She is very famous, " she said, pointing to the giant screen. "I learned in class that US and China started diplomatic ties from playing the table tennis," she smiled. For Si Yaqin, who came to New York with her son for vacation, watching the debut of the video is a once-in-a-lifetime experience. "It's my first time to New York, first time to Times Square," she said. "How lucky I am here to witness this moment. I feel so proud as a Chinese." The video is part of the public diplomacy campaign by the Chinese government ahead of Chinese President Hu Jintao's US state visit. The video will be shown at Times Square 15 times every hour from 6 am to 2 am next day, totaling 20 hours and 300 times a day. It will last till Feb 14 with a total of 8,400 times of show time. Meanwhile, CNN also plans to run the video from Jan 17 to Feb 13.

The Ministry of Education has given its much-delayed seal of approval for a plan to build the mainland's first ultra-modern university to rival the world-renowned California Institute of Technology, or Caltech. South University of Science and Technology of China (SUSTC) founding president Dr Zhu Qingshi said he had received a Ministry of Education directive dated December 24 endorsing a Guangdong provincial government plan to build the university's infrastructure and recruit teaching staff. The approval came more than three years after the Shenzhen city government put forward the plan to build a modern university as part of a reform push under a central government medium- and long-term education development blueprint running up to 2020 and a similar reform plan for the Pearl River Delta region. The plan has also set off heated discussions, as SUSTC holds promise as an experiment that could lead to the overhaul of the entire university system on the mainland. The current system has been heavily criticised for losing quality teaching and creativity because of bureaucracy. Zhu, a former president of the University of Science and Technology of China was headhunted by the Shenzhen government. He is making it a priority to cut down bureaucracy, starting by scrapping the giving of official ranks to staff - something all other mainland universities do. He said it was a relief to have the ministry's approval, but he still felt as if he were "walking on thin ice" in dealing with government bureaucracy - especially since the school has to apply for separate approvals for student recruitment and accreditation to issue diplomas. His frustration over official red tape was underscored by a comment he made late last month, when he said they might have to go it alone in recruiting students as the ministry's approval was not in sight. Student recruitment was supposed to start in September, but instead, Zhu said, SUSTC would recruit 50 top Chinese students in a trial run in March. China National Institute for Educational Research professor Chu Zhaohui said SUSTC's ability to go forward free of ministry interference to build a modernised university was an ideal situation. However, the ministry has made it clear that it is not ready to abolish the administrative status quo, and the fact that it is the provincial and municipal governments backing the new university plan, but not the central government, speaks volumes. "Instead, a modernised university should be set up in accordance with a university charter approved by a legislature, a people's congress in the region [whether provincial or municipal]," Chu said. "So the future management of SUSTC will always be a delicate balancing act, but Zhu's team might just push the envelope further as long as the ministry does not flash a red light."

China draws record foreign investment - Foreign direct investment in China hit a record US$105.7 billion last year, highlighting growing confidence in the economy even as Beijing seeks to rein in growth.

Airbus sprinted past Boeing to win the annual orders race last year after a last-minute airline buying spree highlighted a recovery in emerging markets and the low-fare sector, the company said yesterday. The EADS subsidiary said it sold 644 planes worth more than US$84 billion at list prices last year, beating arch-rival Boeing's 625 planes, following a surge of 200 plane orders last month. "These figures show the economy is improving. We have dodged the bullet on a double-dip recession. Aviation is growing again because of Asia, low-cost carriers and emerging markets," Airbus sales chief John Leahy said. "The only negative on the horizon is the fuel price." Adjusting for cancellations, Airbus sold a net 574 planes worth US$74 billion at list prices compared with Boeing's 530, giving the European company a market share of 52 per cent. Industry sources said last week Airbus was poised to pull off a surprise win in both net and gross orders as it approached the 10,000th order in its 40-year history, while remaining ahead on jetliner deliveries. Boeing reported 625 gross orders and 530 net orders last year after more than doubling its sales from 2009 when business was left floundering by the financial crisis. Both companies more than doubled their order intake as airlines staged a stronger than expected recovery. They share the commercial market for large planes with at least 100 seats but face challenges from China, Canada, Russia and Brazil. For the eighth consecutive year, Airbus delivered more planes than its United States rival. Its total of 510 deliveries, compared with 498 in 2009, topped the 500 mark for the first time. The total number of jetliners reaching the market dipped as Boeing deliveries dropped 4 per cent to 462 aircraft. Airbus chief executive Tom Enders said the company would increase commercial deliveries to 520 to 530 planes this year and sell more than it delivered, without giving a more precise goal. "2010 has been better than we expected. We will look at 2011 more optimistically," Enders said. Airbus posted revenue of about €30 billion (HK$312 billion), he said, up from €28 billion in 2009. Planemakers get paid when jets are delivered, usually at least 18 months after they are bought and often longer. The results met EADS forecasts for deliveries of more than 500 and beat the top end of the target for gross orders. Airbus, which had started the year predicting up to 300 orders, raised the forecast to "north of 400" as leasing companies and low-cost airlines flooded back into the market at the Farnborough air show in July, and then targeted "up to 500".

Chinese Peng reaches Australian Open second round - Chinese Peng Shuai beat Ukraine's Kateryna Bondarenko 2-6, 6-3, 8-6 to progress into the Australian Open women's singles second round on Tuesday.

Five popular foreign pavilions at the World Expo last year have been given to Shanghai, mayor Han Zheng says. The five came from Saudi Arabia, Russia, France, Italy and Spain, Han told the annual meeting of the Shanghai People's Congress on Monday. He also said the Puxi section of the 5.28 square kilometre expo site would be developed to house mainly cultural activities and museums, while the Pudong part would become home to a conference and exhibition complex, the Shanghai Morning Post reported yesterday. Details will not be released until the second quarter of this year. Multinational corporations would be encouraged to set up regional headquarters in the area around the expo site, he said, without giving details. The Saudi Arabian pavilion, one of the most popular with expo visitors, now belongs to Shanghai in its entirety, including all its interior exhibits and its eye-catching giant high-definition, bowl-shaped screen. The Russian, French, Italian and Spanish pavilions given to Shanghai do not include their exhibits. "We are taking stock of the feasibility of opening the Saudi pavilion like the China pavilion," Han said. After the curtain fell on the six-month World Expo on October 31, Shanghai reopened the China pavilion from December 1 for another six months, charging 20 yuan (HK$24) per ticket. On the first day, more than 20,000 visitors scrambled for access. Han said some top museums would be built in the northeastern corner of the Puxi area. "The development of the expo site will not concentrate on residential property," he said. "However, there will be some residential projects, which will be put together in a designed area called the Expo Village." Those houses would be leased rather than sold. Two expo-related museums will be built in Pudong: the World Expo Museum and the 2010 Shanghai World Expo Mementos Museum. Collection for the latter museum has begun, with high-profile expo items such as Spain's Baby Miguelin robot, already acquired. Sun Yuanxin , from the Shanghai University of Finance and Economics' Institute for World Expo Economy, said it was rare for foreign pavilions to remain after an expo. "The foreign countries' rationale is that they want to boost cultural and business exchanges with China, as well as to attract Chinese citizens, especially the middle class," he said.

China Investment Corporation (CIC) the country’s sovereign wealth fund, plans to open an office in Toronto, its second outside the mainland, a source with direct knowledge of the matter said on Wednesday. CIC, with US$300 billion under management, plans to announce the new representative office on Friday, said the source, who declined to be named. A separate source familiar with the plans said CIC will hold an opening ceremony in Toronto later this week. A CIC spokesperson declined to comment. “The reason for [choosing] Toronto may be twofold – one for investment in Canada’s natural resources, the second is usually tax” as compared to New York, a Singapore-based fund manager said on condition of anonymity. The extension to Toronto comes as CIC is trying to expand its business operations internationally and be taken seriously as a global investment group. CIC opened a Hong Kong office last year, led by Laurence Lau, a former Stanford University professor and former vice-chancellor of the Chinese University of Hong Kong. CIC made a splash with two of its original investments, taking significant stakes in the investment bank Morgan Stanley and private equity firm Blackstone Group. Not long afterward, the financial crisis took a heavy toll on those stakes, and CIC quickly found itself in the spotlight and under pressure for the decline in the value of the holdings. Since then, the fund has sought to diversify away from financial holdings, turning toward natural resources-related investments in Canada and Indonesia. The fund was set up in 2007 with a mandate to earn a higher return for the state government on a sliver of its international reserves, which now total US$2.85 trillion, the largest in the world. CIC, which also holds big stakes in major state-controlled banks, added US$58 billion to its overseas holdings in 2009, mainly in publicly traded bonds and stocks.

Hong Kong*:  January 19 2011

More buyers outraged over 'rubbish flats' at The Icon - Complaints snowball over missing kitchens and flooring - A buyer of a flat at The Icon complains that what he found at his flat bore no resemblance to slick and glossy promotional material for the Mid-Levels project. More disgruntled buyers of the Mid-Levels upmarket project The Icon are complaining that they were given "rubbish flats". All are buyers of flats in block D at the luxury estate in Conduit Road. Their complaints are similar - flats with no or uncompleted flooring, electricity cables and water pipes that have not been fitted, as well as construction material scattered across the flat. Some said they were offered a special rebate but they might have to surrender their flat keys if they wanted the renovations completed. In response to a public outcry, the developer, Winfoong International, last night offered to pay three months' gas, water, electricity, management fees and property rates for affected buyers of block A and block D flats. Floors in blocks A and D have similar layouts. Complaints over the sale practices of The Icon, at No 38 Conduit Road, snowballed after a buyer took her case to the media last Thursday. The Civic Party, which is representing the buyers, says it has received five complaints so far, including one from a non-buyer. Dr Lawrence Poon Wing-cheung, chairman of the Institute of Surveyors' housing panel, said it was time the industry reviewed the practice of handing over new flats to buyers. Because The Icon's site has unrestricted land use, the developer did not need to obtain consent from Lands Department officials to start selling flats. At present, buyers of new flats usually arrange to clear payment and sign a sales agreement before getting the keys to check out their flats. "Perhaps the community should think about whether the order should be reversed," Poon said. In the second-hand market, buyers check their flats first before completing a transaction. Two buyers said they were offered a HK$140,000 rebate if they agreed to buy their flats without a completed kitchen. They each bought a 690-sq-ft two-bedroom flat. One of the buyers declined the offer and completed a purchase last month. He claimed he was asked to sign a pile of documents before he could inspect his flat. He agreed, thinking it was only procedural. "But when I went to inspect my flat the following day, I was shocked," he said. There was still no kitchen and there was no flooring." He complained to the developer but was told the work could take another eight weeks. During that time, he would have to surrender his flat keys to the developer or else the developer could not be responsible for any flat damage found during the renovation period. "I was totally disappointed. I was very surprised that such a thing could happen in a civilised city like Hong Kong." The other buyer also said she had been offered a HK$140,000 rebate. "I flatly rejected them," she said. "Even when buying a Home Ownership Scheme flat, there will be a kitchen." She said she refused to surrender her home key to the developers. "It is my home. How come I have to give them the key?" A Central Property Agency employee said buyers could opt for a flat with no renovations and get a HK$140,000 rebate on the flat's retail price. The Icon is a 17-storey project, with 68 flats of 690 sq ft to 781 sq ft, according to Winfoong International's website. A spokesman for the Estate Agents Authority said it received one complaint regarding The Icon and was following up the case. Louis Chan Wing-kit, managing director of Centaline Property Agency, last night declined to discuss the way his agents had promoted the project. The developer has set up a hotline on 2525 2855 for affected buyers.

Reward public doctors to halt exodus, pioneer says - Professor Fan Sheung-tat says public doctors should be allowed to treat private patients. A brain drain of surgeons is affecting the quality of care of public medicine in Hong Kong, says the city's father of liver transplants. To keep more doctors from leaving, Professor Fan Sheung-tat proposes that public doctors be allowed to make extra money by treating private patients. At the University of Hong Kong, for which Fan is head of surgery for Queen Mary Hospital in Pok Fu Lam, at least 10 of about 100 surgeons have switched to private practice in the past two years. Among them were four consultants and senior doctors. The team consists of doctors from the university's medical school and the Hospital Authority. "Although there's been no serious interruption to clinical services, the brain drain has to a certain degree affected the quality of care since we have lost some experienced doctors," Fan said. The Hospital Authority predicts that the turnover of doctors will rise from 4.4 per cent in the last financial year to 6.8 per cent this financial year, a five-year high. Fan's recommendation comes as the government tries to reform health care to encourage more people to buy private medical insurance. The government wants to introduce a voluntary medical scheme to cover at least 500,000 people. The professor said the Hospital Authority should take the opportunity to change the system for public doctors so experienced staff would be more rewarded and stay. A similar system is used in Singapore. However, an authority official poured cold water on the idea, saying it would complicate the system. "The whole thing needs a clear policy, we have to think about which doctors can do private practice," the official said. "If we expand private services, public services will be cut and the public may not accept this." An authority spokesman said its hospitals currently provided private services "on a very limited scale" as an alternative for patients. At present, university doctors can have a private practice and share the income with their departments and the medical schools. But doctors hired by the Hospital Authority are not allowed to do so, except in special cases. And they cannot pocket any income from the private services. Hong Kong's two medical schools - the other is at Chinese University - have been criticised for allowing academic staff to take private cases because of the harm it might do to public services. But Fan said this mindset must change. "In future, more and more Hong Kong people will have insurance protection and some middle-class patients will want to be treated by a designated doctor," he said. "Public doctors can generate extra income by treating private patients. This will give them some incentive to stay. Also, the extra income generated from private cases can be used to subsidise public services." Fan said the departure of public surgeons is an inevitable trend when the private sector is booming. "But money is not the only factor," he said. "Many doctors who left were not satisfied with work conditions in the public sector. "The good side of such a turnover is that it provides opportunities for young doctors to take up posts and bring in new ideas." Medical sector lawmaker Dr Leung Ka-lau agreed that the Hospital Authority should allow public doctors to handle private cases.

Seven in 10 mothers choose formula powder instead of breast-feeding their babies, and many are unclear about the long-term impact of early nutrition, a survey found. Only 30 per cent of the 504 mothers with children under three would feed them breast milk, the Chinese University poll discovered. While the majority of the respondents recognised the benefits of breast milk, 70 per cent of them fed their babies infant formula in the first six months, because of insufficient milk supply or work commitments. Ellis Hon Kam-lun, a paediatrics professor at Chinese University, said parents often choose the most nutritious formula powder regardless of their babies' weight and height. A clinical study of Asian infants found human milk contains 11-12 grams of protein per litre, compared with 14.1 grams in standard formula and 12.8 in lower-protein formula. "Almost half of the parents interviewed were unclear about the long-term impact of early nutrition," Hon said. "The babies might be fed with highly nutritious food in the early stages of development. Then they would be considered healthy, but this is a misconception." For example, children with too high a protein intake may face a higher risk of obesity and cardiovascular disease when they grow up. Owing to inadequate milk supply, Verona Mak, the mother of a 14-month-old boy, adopted formula feeding when her son was two months old and 2.72 kilograms. "My family preferred a chubby baby," she said. "I knew protein would be beneficial to his growth. But I never realised that excess protein intake would increase the risk of diseases in the long run." Berthold Koletzko, head of metabolic diseases and nutritional medicine at the University of Munich, said breast-feeding could enhance the immune system and protect infants against long-term health challenges such as obesity. "The risks of later obesity can be reduced by 20 per cent if babies are fed with breast milk," he said.

The Hong Kong Council on Smoking and Health has called on the financial secretary to raise the tobacco tax from 62 percent to at least 75 percent of the retail price to prevent smoking among youngsters and to encourage smokers to quit. "The amount of the tobacco tax in Hong Kong is just 62 percent, which is affordable and does not meet the minimum 75 percent level suggested by the World Health Organization," COSH chairwoman Lisa Lau Man-man said. Financial Secretary John Tsang Chun-wah is due to present his budget next month. Lau said teenagers have lower spending power and an increase in the tax will be an incentive for them to quit. "We urge the financial secretary to raise the tobacco tax for the financial year 2011/12 and we hope Hong Kong people's health can be further protected," she said. COSH said price and tax measures are effective in reducing tobacco consumption, particularly among young people. It added an analysis by the World Bank shows that in some high-income regions and countries like Hong Kong the demand for tobacco drops four percentage points for every 10 percent increase in the price of cigarettes, and that this is three times more effective among young people. "Generally, if a product becomes more expensive, consumers will consider more seriously whether to buy it or not," legislator Andrew Cheng Kar- foo said. "A drop in the number of smokers can reduce the impact of secondhand smoke." But he said a rise in tobacco tax may also lead to an increase in smuggling. He said the government will also have to step up action against illicit cigarettes. COSH said its price increase suggestion has the support of more than 200 organizations. Professor Lam Tai-hing, head of the school of public health at the University of Hong Kong, said smoking and secondhand smoke contribute to 7,000 deaths and economic losses in excess of HK$5 billion every year in Hong Kong. "The average loss of life for smokers is 10 to even 20 years. The adverse impact of tobacco is great. I hope the government can use the tobacco tax revenue to approve more smoking cessation services," he said. According to the COSH, there are about 750,000 smokers in Hong Kong. A pack of cigarettes costs HK$39.

Legislators and athletes have called on the government to learn from its failed bid to host the 2023 Asian Games and to concentrate instead on building public support by developing a sports culture in the SAR. On Friday, the Legislative Council's Finance Committee rejected a funding request for HK$6 billion to bid for the Games. Speaking at yesterday's City Forum, Democratic Party lawmaker Kam Nai-wai said sports facilities in the SAR are inadequate and there is no support for retired athletes. "Without a doubt the public did not support the decision to bid for the Asian Games. [They] also agree that sporting facilities in Hong Kong are inadequate," Kam said. He called on the government to help athletes in their retirement. "After devoting their youth to training, it should assist them when they retire by increasing the number of physical education classes in schools so they can be hired as teachers." Hung Chung-yam, honorary adviser to the Hong Kong Elite Athletes Association, also urged the government to promote a sports culture and to strengthen games education in schools. The failure of the bid shows there is still plenty of room for the development of sports. To win public support the government needs to develop a sports culture and this can be done through schools," the former cycling champion said. Hung added: "In Hong Kong, most students have just one physical education lesson a week. The government should consider increasing the frequency and length of lessons." He also called on the business sector to devote more resources to promoting sports and organizing events. Civic Party lawmaker Tanya Chan Suk-chong said the government should have a concrete plan on how to use the HK$7 billion it has proposed spending on sports over the next 12 years.

Home sales in the city's biggest housing projects surged 11 percent over the weekend from a week earlier to 81 as speculators exited the market. It was the first time since curbing measures were introduced in November that more than 80 homes in the secondary market were sold, Midland Realty said. Director Andy Ho Ming-pui said those who bought homes over the weekend were expecting prices to rise after the Lunar New Year. Sales on Hong Kong Island surged 64.7 percent to 28 homes, and in the New Territories they rose 10 percent to 35. But Kowloon saw 18 deals, a 25 percent drop. Ho said this was due to Kowloon owners being more bullish and seeking higher prices for their homes. Centaline Property recorded 102 deals, 9.7 percent from last week, while Ricacorp Properties closed 110 deals, 22 percent higher. Ho said speculation has been effectively curbed in the wake of the government's measures in November. "A limited supply and pay rises at the beginning of this year encouraged people to buy now," said Jeffrey Ng Chong-yip of Hong Kong Property. Prices rose 0.5 percent over the weekend, said Patrick Chow Moon-kit, head of research at Ricacorp. The government's anti-speculation measures have worked as registered confirmor transactions - which is usually used to measure the level of speculation - plunged 65 percent from December to only 30 as of Thursday, according to Hong Kong Property Services. The measures included additional stamp duties for units sold within two years of purchase.

 China*:  January 19 2011

Guangdong plans to increase wages "more rapidly" over the next five years, a move that will accelerate an exodus of labour-intensive factories to other mainland regions or abroad. The annual meeting of the Guangdong Provincial People's Congress over the weekend approved plans to "step up wage rises" and "set up mechanisms to determine wages and harmonise labour relations", part of the province's 12th five-year plan to 2015. The move is aimed at boosting living standards in an inflationary economy and creating what provincial secretary Wang Yang described as "happy livelihoods". However, higher wages send unhappy messages to tens of thousands of Hong Kong manufacturers across the border, with many expecting overall wages to jump as much as 30 per cent this year and the province's minimum wage to double by the end of the five-year plan. The chairman of the Hong Kong Small and Medium Enterprises Association, Danny Lau Tat-pong, said Guangdong's wages would jump between 25 per cent and 30 per cent this year as a combined result of worker shortages, the need to retrain people, yuan appreciation and more requirements for workers' social welfare and insurance. "We have even been subsidising the workers' canteen more because meat and vegetables are getting more expensive," said Lau, who runs a curtain-wall plant in Dongguan. "Factories have either to upgrade or move out of the province." The other factor expected to impact on the future of Guangdong's exports is a stronger yuan, which Lau expected would appreciate by 5 per cent this year. He said the number of Hong Kong factories would dwindle sharply in coming months, citing government estimate that less than 40,000 Hong Kong-owned factories now operate in the province compared with roughly 56,000 at the end of 2009. "Some will be forced out of the business, some will be sold and some will be relocated to remoter parts of the country or even overseas." The deputy chairman of the Federation of Hong Kong Industries, Stanley Lau Chin-ho, said he expected the minimum wage in Guangdong to jump by at least 18 per cent in March, the second increase in 10 months. It was raised by about 20 per cent in May last year. Lau said Guangdong wanted to double the minimum wage by the end of 2015. Pauline Ngan Po-ling, deputy chairwoman of cap maker Mainland Headwear Holdings, said the group was accelerating the operations of a plant it had just set up in Bangladesh to reduce costs. "It is no longer cost-effective in Guangdong," said Ngan, who started the group's production base in Shenzhen almost 20 years ago. "We are trying to boost the output of the Bangladesh factory as much as possible and as soon as possible." She said Mainland Headwear, which has a workforce of about 3,000 people in its factories in Shenzhen, Panyu and Dongguan, would increase its workforce in the Bangladesh plant from 200 now to 1,000 as soon as possible. She said the Bangladeshi workers were paid US$60 (about HK$468) a month on average, which was above the country's minimum requirement of US$43 but was much cheaper than the roughly 2,500 yuan (about HK$2,900) it pays its workers on the mainland. Ngan also said that every 2 per cent of appreciation of the yuan against the US dollar would pare 1 per cent off the gross profit margin of the group's manufacturing business.

Shanghai must ensure its long-awaited Disney theme park avoids the "Hong Kong model" and guarantee that the city gains a larger share of the park's income, a delegate to the municipality's top political advisory body has argued. In a proposal to the Shanghai People's Political Consultative Conference, which is meeting this week, Tu Haiming said the park - scheduled to be completed by 2015 - should take into account local culture and the needs of the local market. "It certainly must not be purely American culture," Tu told the Xinmin Evening News. Tu said the Hong Kong Disneyland agreement was "unfair" and favoured the US-based entertainment giant's interests over the government. Despite having footed the bill for 90 per cent of the park's investment, the Hong Kong government had gained little, he said. "[This] is the biggest lesson Shanghai should learn from Hong Kong, which hardly makes any profit from the Disneyland project so far," he told the Shanghai Daily. Tu said he understood that the Hong Kong government was entitled to only a share of ticket sales, and argued that Shanghai should fight for a cut of the park's overall revenue, including merchandising and income from Disney hotels. Hong Kong Disneyland has been plagued with troubles since it opened in 2005. It reported a loss of HK$4.4 billion from 2007 to 2009. The company's results for last year are due to be announced today, and the park is expected to record one of its best years, with higher attendance and better profitability, buoyed by an upsurge in mainland and overseas visitors and their increased spending. The Shanghai Disney theme park was finally given the green light by the State Council in November 2009 after more than a decade of negotiations. However, it is already dogged with controversy. Insiders have hinted that negotiations between the US-based entertainment giant and its local partner have not run entirely smoothly. A formal agreement with Shanghai Shendi Group was not signed until November, a full year after the announcement and eight months later than Disney management had initially predicted. Final plans are now awaiting State Council approval. The site of the park, close to Pudong International Airport to the southeast of the city, has been cleared. Local media recently reported that the main access roads to the park were due to be completed in April and main construction work would start in May. The Shanghai government was also forced to issue a statement earlier this month saying that the total investment for the project was still under review, following media speculation that the first stage of the park would cost 25 billion yuan (HK$29.5 billion) to construct.

President Hu Jintao urged an end to a "zero sum" cold war relationship with the United States and proposed new co-operation, but resisted US arguments about why China should let its currency strengthen. Indeed, in a sign that the future of the US currency continues to concern the most senior levels of the Chinese government, he said the dollar-based international currency system is a “product of the past”. Overall though, the president, who will visit Washington this week, struck an upbeat tone about ties with the United States in a rare written interview with two US newspapers, the Wall Street Journal and the Washington Post. “We should abandon the zero-sum cold war mentality,” he declared, and “respect each other’s choice of development path.” Hu suggested cooperation with the United States in areas like new energy sources, clean energy, infrastructure development, aviation and space. He also reassured foreign businesses in China that Beijing would continue to improve laws and regulations affecting them. And he spoke encouragingly about the outlook for resolving tensions on the Korean peninsula, an area of concern to both Washington and Beijing. But the Chinese president also indicated he does not accept US arguments for Beijing to let its currency appreciate. Critics say China’s undervaluing of the yuan gives it an unfair price advantage in international trade, contributing to the huge US trade deficit. Analysts thought Hu’s generally conciliatory tone augured well ahead of his Washington meetings with President Barack Obama and other officials. “Hu makes it clear that China intends to move forward on opening its markets, freeing up its exchange rate and restructuring its political system, but at its own pace and with little heed to external pressures for more rapid or broader reforms,” said Eswar Prasad, a Brookings Institution economist and former International Monetary Fund official. Last week US Treasury Secretary Timothy Geithner said China would be better off letting its currency strengthen to cap inflation. But Hu said China is fighting inflation with a range of policies including interest-rate increases, and “inflation can hardly be the main factor in determining the exchange rate policy.” He suggested that inflation was not a big headache, saying prices were “on the whole moderate and controllable.” Inflation in China hit a 28-month high in November. “We have the confidence, conditions and ability to stabilise the overall price level,” Hu said. US lawmakers are among the biggest critics of China’s exchange rate policy. Three Democratic senators – Charles Schumer, Debbie Stabenow, and Bob Casey -- said on Sunday that they would propose legislation to try and fix the problem. The legislation would impose stiff new penalties on countries that the Treasury Department designated as currency manipulators. The Treasury has not labelled any country a currency manipulator since July 1994 when it cited China. Hu called the US-dollar-dominated international currency system a “product of the past.” He added that it would be a “fairly long process” to make China’s own currency an international one. He also said “the liquidity of the US dollar should be kept at a reasonable and stable level.” China has argued that the Federal Reserve’s November decision to buy US$600 billion in US government bonds would undermine the greenback’s value and lead to competitive currency devaluations by other countries. China, with foreign exchange reserves of US$2.85 trillion, is the largest holder of US debt. The president’s comments add to the sense that China intends to challenge the post-second world war financial order largely created by the United States and dominated by the dollar, the Wall Street Journal said. The Chinese president responded to complaints that China does not always treat foreign companies registered in China fairly. “Their innovation, production and business operations in China enjoy the same treatment as Chinese enterprises,” he said. “China will continue to improve laws and regulations concerning foreign investment.” Hu said. Bill Reinsch, president of the National Foreign Trade Council, said Hu “glosses over the many problems foreign companies have had operating in China,” but added it was useful to have the head of China’s government state its goals. Questions were submitted to Hu by the two US newspapers in late December, and the answers were released by the Chinese government on Sunday, The Washington Post said. Hu said he sees “signs of relaxation” in tensions between North and South Korea, an issue of major concern to both Washington and Beijing. “Thanks to joint efforts by China and other parties, there have been signs of relaxation,” Hu said. He was convinced “an appropriate solution to the Korean nuclear issue” could be found, a reference to North Korea’s nuclear arms programs.

Quality, services keys to brand success, firms told - Lenovo, Air China and Bank of China are the three best-known brands of China, according to a joint survey by TNS. Mainland companies need to improve the quality of their goods and set up strong after-sales services if they wish to become globally recognised brands, market researcher Thomas Isaac said. Isaac, a director of research services at TNS, an international custom research agency, said the next five years would be a pivotal turning point for Chinese brands hoping to become global leaders across a range of industries. "Look at countries like [South] Korea. Not a long time ago, they were in a similar position with foreign enterprises flocking there for cheap manufacturing. But now they are no longer considered cheap manufacturers," he said. The Korean experience could serve as an example for China, he said, and research conducted by TNS together with the Association of Accredited Advertising Agencies of Hong Kong indicated Chinese brands had a good chance of breaking into the global branded market if they put more emphasis on quality. "There is not necessarily an inability to produce high-quality products. Chinese brands are presently not focusing on this, and they do not put the same effort as international companies into producing good quality for their brands." He cited Apple as an example of the quality of manufacture in China that was not being exploited. "A lot of their products are actually made in China, and there are no questions and concerns about those products," he said. Another weak point for Chinese brands was an inadequate after-sales service culture, Issac said. "It should not be a matter of `I made the product. I sold it. Now I wash my hands of it'. There must be a mechanism to ensure that consumers get good service." The joint survey of 490 brand experts from 29 countries showed only 9 per cent of the interviewees regarded Chinese brands as on par with or above their international competitors, with quality and safety rated the biggest concerns. But Paul Yang, the chief brand architect of CEO Brand Management Academy, a Beijing-based consulting company, said the result exceeded his worst expectations. "If 9 per cent of people show confidence in Chinese brands, this is a good signal. It is no longer zero," he said. Isaac said the survey showed Lenovo (SEHK: 0992, announcements, news) was the best-known Chinese brand, followed by Air China (SEHK: 0753), Bank of China and China Central Television. White goods maker Haier was fifth. Pan Lei, a manager of a Beijing cashmere company that owns the well-known domestic brand, Snow Lotus, said the biggest barrier for him to becoming globally recognised was China's image as a country. "Mention France and Italy, and you will picture a romantic country. Germany means quality. But China? A populous undeveloped communist nation!" Pan said. Isaac said the overall image presented by a country did have an impact on branding, "but the image of a company can be changed. So can the image of a country". To achieve this transformation, he said, Chinese companies should try to improve communications and inform consumers about quality improvements. "If there are negative perceptions about your goods, it is going to take an effort to communicate that things have changed. Otherwise, it will take a long time for people to notice it themselves," he said.

Made in China porcelain for British royal wedding - A Chinese porcelain manufacturing company has won the order to make the official tableware to be used at the British royal wedding of Prince William and his fiancee Kate Middleton. Guangxi Sanhuan Group, based in Beiliu, a city in China's southern Guangxi province known locally for its ceramics and porcelain ware, said they came out tops over more than 500 companies bidding to produce royal wedding porcelain, fighting off stiff competition from manufacturers around the globe. The company is now taxed with producing some 16,000 porcelain tableware products to be used at the wedding. Company officials said the products are divided into five categories including a dining plate, a coffee cup and saucer set, a commemorative mug and a souvenir plate. They will be either used at the wedding or given to wedding guests as souvenirs. The design is generally a uniform one featuring a photograph of Prince William and Kate Middleton inside a heart shape with the words "William and Catherine" written below. "When we won the order, our company bosses were very happy and excited," said Gary Qiu, a marketing manager for the Guangxi Sanhuan Group. "They paid great attention to it. The entire production process including its preparation was worked on a very tight schedule. Also, we used one of the most advanced kilns in China to make these products." Established in 1987, Guangxi Sanhuan is a modern Chinese success story -- a once State-owned company that has now gone private, tailoring a reputation of being a quality manufacturer for ceramics and porcelain over the last decade. It employs more than 8,000 and is known for producing high-end table and dining ware for export to Europe, the United States and Southeast Asia. Qiu said a special high-fire glazing technique is being used to manufacture the wedding porcelain, with the plates and mugs being set at temperatures of more than 1600 degrees C in the kilns. This will ensure the longevity of the china, a theme the company used in its winning bid for the order. "As long as this plate is not broken or smashed up, it will never change," Qiu added. "This fits into our theme for everlasting love and thus with this we give our blessings to the prince and his future wife, as well as to the wedding." The company is set to finish the production of the porcelain by the middle of January and its workers are pleased by the publicity generated by the order. "When we knew about this, we felt very happy and very proud," said 31-year-old worker He Kun. Besides this official order, other Chinese manufacturers have already been cashing in on the royal wedding as they churn out tens of thousands of replica royal engagement rings as well as other imitation wedding memoriabilia that are in demand globally ahead of the April 29 wedding.

Rosy times ahead for rosewood furniture - A yellow rosewood chair at a recent furniture fair in Beijing. More than 2 billion yuan ($3 billion) in hot money flooded into Vietnam from China to buy yellow rosewood goods last year. Guo Haibing, a rosewood furniture seller in Beijing, said he felt satisfied about his income this year at a friend's get-together because the market for his goods started to warm up in 2010. "I made more money than the previous year," said Guo. "At least the market is better than it has been for the past two years. Both the price of rosewood furniture and the number of buyers grew steadily in 2010." Industry insiders agreed the market was improving after turbulent times. According to Guo, a set of sofa and chairs made of rosewood can cost anything between 150,000 yuan ($22,727) and 2 million yuan. The price of different rosewood furniture depends on other raw materials used and the skill of the carpenter. There are several types of rosewood: yellow (huanghuali), the rare zitan and red (hongsuanzhi). The price also differs according to source and rarity. Currently, huanghuali, a rare species of rosewood from Vietnam, is 700,000 yuan a ton in the Chinese market and hongsuanzhi is 65,000 yuan a ton. A set of sofa, chairs and a wardrobe made of hongsuanzhi is 500,000 yuan in Huayi Furnishing Co, a furniture company based in Beijing that has been producing and selling rosewood furniture for 17 years. Rosewood furniture is not to everyone's taste but if someone likes it, he or she would probably want to decorate the home in the same style. As a result the cost can be prohibitive for a salary earner. The price of rosewood furniture used to be even higher in 2007 after year-on-year growth of 20 percent before 2005. At that time, the rosewood market was a playground for investors rather than a regulated market for collectors or homeowners who admire it. After 2005, the price of all kinds of rosewood began to soar at a surprising speed. One type - red sanders - increased up to 750,000 yuan a ton from 150,000 yuan and huanghuali rose to 1.2 million a ton from 200,000 yuan over the space of just two years. A representative of a trade company specializing in rosewood in Jiangsu province in East China said a 15 percent to 25 percent year-on-year growth in the price of rosewood is normal but the sixfold increase was extraordinary. "Too much hot money rushed into the market when investors could not find other places for their money in 2007," said the head of a wood trading company based in Fujian province who declined to be named. The market shrank fast when the bubble burst and, with the financial crisis of 2008, not only many furniture sellers but also the factories were bankrupted. Guo said he made more than 150,000 yuan a year in 2007,which is pretty high for a salesman in a rosewood furniture factory. However, afterward he suffered two poor years. Now he has regained his confidence in the market. Analysts said many investors speculated heavily in the rosewood market in 2007. Now, the prices of some certain types of rosewood are no less than they were in 2007, but they are mostly bought by regular buyers and collectors rather than by speculators. Yang Bo, general manager of Yuanhengli Rosewood Co, said the market is back in a healthy condition. He said the number of companies dealing with rosewood furniture increased 30 to 40 percent last year - a good sign. Zhang Yue, a 55-year-old woman from Beijing, is planning to buy a set of rosewood furniture in the coming new year for good luck. She said the highest price she could afford is 500,000 yuan for the whole set.

China property rise 'slowest in a year' - China's annual property price rise in December marked its slowest pace in a year, but the government may intensify cooling measure to further slow the upward march of home prices. Property prices grew 6.4 per cent in December from a year earlier, the National Bureau of Statistics said on Monday, the slowest since November 2009 when it hit 5.7 per cent. In month-on-month terms, property prices were still up 0.3 per cent in December, maintaining a positive trend since September despite intensified government measures to rein in the red-hot market. “Sales performance is still good recently, and developers will be very selective in cutting prices,” said Wang Xiao, a property analyst with CCB (SEHK: 0939, announcements, news) International in Beijing. Recent signs of a possible rebound in transactions and prices stirred market worries that China would issue more measures soon, weighing down the stock market. The Chinese central bank raised banks’ required reserve ratio on Friday for the fourth time in just over two months, stepping up its fight against inflation and asset bubbles. With consumer inflation and home prices expected to stay elevated in coming months, analysts believe more tightening is in the cards. Adding to that, Chinese media have reported that some banks, under tight lending quota, may scrap mortgage rate discounts this year to increase their interest margin. They also reported that Chongqing and Shanghai may start to levy the long-debated property tax this quarter, although a trial in Beijing is not considered likely any time soon. “That will push more home buyers to the sidelines,” Wang said. The property share sub-index ended the morning session down 3.77 per cent, underperforming a loss of 2.1 per cent in the main index in Shanghai.

China's securities regulator will begin a trial programme that for the first time allows local fund houses to raise money offshore for investment in the domestic financial market, two sources said. At least 80 per cent of the money raised will have to be invested in the domestic bond market, said the two sources who are familiar with the matter but who are not authorised to publicly disclose the details. “The move is based on the overall financial trend of the yuan increasingly becoming more international,” one of the sources said on Monday. “The banks are already moving forward in this aspect and it’s time for brokerages and securities firms to follow suit.” Mini-QFII takes after the 8-year-old QFII programme, which allows foreign fund managers to invest in Chinese stocks and bonds on behalf of foreign investors using money raised overseas. Frances Cheung, strategist at Credit Agricole in Hong Kong, said the presence of foreign investors would help increase liquidity in the bond market. “On the one hand there is concern about equity market bubbles, and on the other it is always good to have more foreign participants in the bond market because it can help boost secondary market liquidity with more trade ideas,” she said. Speaking at a financial forum in Hong Kong on Monday, Shang Fulin, chairman of the China Securities Regulatory Commission (CSRC), said China would continue to open its monetary and financial markets. “For renminbi assets, we are going to open the mainland market up more for Hong Kong enterprises, collaborate more with the Hong Kong Exchange and work out better settlement regulations and arrangements,” Shang told the forum. Chinese brokerages with international arms such as Guotai Junan are expected to participate in the mini-QFII program. “Most of the money will be allowed to invest in the bond markets, so as to ensure stable development of the trial programme,” one of the sources said. China has been trying to make its yuan currency more international by establishing Hong Kong as a offshore yuan centre. It will also trying to come up with new ways to use the yuan beyond current options, which are now largely limited to depositing money into offshore yuan accounts and buying yuan-denominated bonds issued outside China. Shang, said the CSRC would push closer cooperation and increase the scope of development with Hong Kong. “We will also arrange steps for the exchange traded fund (ETF) mechanism and support the development in Hong Kong of renminbi bonds,” he said .

Beijing plans tunnels to ease traffic gridlock - Vehicles are seen in a traffic jam during weekday rush hour in Beijing January 10, 2011. Auto sales in China rose more than 32 percent in 2010 to 18.06 million units, an industry group said on January 10 — a new record for the world's largest car market. Huge underground roads are to be built in the Chinese capital, state media said on Monday, in the latest effort to relieve the chronic gridlock paralysing Beijing. Mayor Guo Jinlong told local lawmakers at their annual legislative session that building tunnels in the city centre was a priority for this year, the China Daily reported. “The traffic jams result from the growth in the number of automobiles. The situation demands immediate attention,” Guo was quoted as saying. Officials in Beijing are battling dire traffic and air pollution — both of which are among the world’s worst — and the problems are only getting worse as the city’s increasingly wealthy citizens buy more cars. Last month, the city government announced new restrictions that will only allow 240,000 new passenger cars to hit the road in Beijing next year — a third of the number registered last year. China has also scrapped a tax cut on small passenger cars put in place as part of a massive stimulus package introduced to fight the global financial crisis. According to the report, the tunnels will be located on the east and west sides of a ring road around the city centre that is often severely congested. Zhou Nansen, vice head of the Beijing Municipal Commission of Urban Planning, said these would be “the world’s most difficult tunnels to dig” due to a complex underground sewage system and the presence of archaeological relics. Another two-kilometer (1.2-mile) long tunnel will be built under Wangfujing Avenue, a popular commercial pedestrian street in the city centre, the report said. Lawmakers also discussed the possibility of doubling the 336-kilometre-long subway network by 2015, and nearly tripling it in length by 2020, as other ways to relieve congestion, it added.

Hong Kong*:  January 18 2011

Watsons plans to open 1,000 mainland stores - AS Watson Group, the retail arm of Hutchison Whampoa (SEHK: 0013), is speeding up expansion across the border, aiming to open 1,000 personal care and beauty stores in more than 120 mainland cities by the end of this year. That will more than double the current 700-plus Watsons Your Personal Store units on the mainland. "The China market presented an unmatched business opportunity for us," said Christian Nothhaft, chief executive of Watsons China. With its first mainland store opened more than two decades ago, Watsons has grown into the largest health and beauty chain in the country. China is also the fastest-growing market for the retailer, which operates a total of 9,500 stores in 33 markets in Asia and Europe. Watsons serves more than three million customers on the mainland every week. "Chinese consumers' demand for better quality and more options of health and beauty products is growing fast, which is in line with the growth of their spending power," said Nothhaft. Meanwhile, Mannings of Hong Kong-based Dairy Farm International Holdings is also planning to accelerate shop openings on the mainland. It now has more than 100 shops across the nation since it entered the market in 2004. As in Hong Kong, the merchandising mix in mainland Watsons and Mannings stores consists of skin care products, cosmetics, and personal care and health products such as vitamins and slimming or dietary supplements. Over-the-counter medicines, which are sold in their Hong Kong stores, are not available in mainland outlets owing to government regulations. "We find that in China, customers are more open to try new brands and products; whereas in Hong Kong, most customers tend to shop for known brands," said Nothhaft. He said the company has a market positioning different from supermarkets and convenient stores, making each outlet a one-stop shopping destination for health and beauty products that also offers professional advice to customers. Last year, Watsons China launched a social network public site at renren.com, a mainland internet portal, and a smartphone user application. They enable users to access the shops' product and service information, membership promotions as well as the latest tips on health and beauty trends. Users can share their opinions on the platforms and download music, wallpapers as well as Watsons coupons. With the mobile phone application, a user can even apply virtual make-up on a self-portrait by using the camera function and share it with friends through the e-mail function. The digital platforms have attracted more than 120,000 fans and 300,000 downloads since October last year. http://en.wikipedia.org/wiki/AS_Watson 

Change of auditors may spark scrutiny - The Financial Reporting Council may double-check the financial reports of listed companies if they change auditors and if they opt to issue earnings statements according to Chinese accounting standards, FRC chief executive Kam Pok-man told Sing Tao, sister publication of The Standard. 

Developers are making a last-ditch effort to reverse new government rules on floor areas scheduled to take effect in April. Forget large swimming pools and luxury clubhouses, warned the Real Estate Developers Association. Water and drain pipes will be exposed. Covered walkways and easily accessible car parks could become a thing of the past, it said. The rules will cap the size of amenities and green features to no more than 10 per cent of gross floor area. And the association's secretary general, Louis Loong Hon-biu, said this could yield more usable space in flats. But in an interview with the South China Morning Post (SEHK: 0583), the powerful association spelled out, for the first time, its detailed stance and opposition to the rules. Loong warned that by putting a cap on the size of clubhouses, balconies, bay windows and many other features, the rules would discourage developers from building green and leisure facilities. "A swimming pool has to come with a water filtration plant room, which will be accounted for in gross floor area," he said. "Developers would reconsider whether to build a pool in the first place. If more buildings are devoid of pools, demand for public pools will rise. The Leisure and Cultural Services Department will have to step up its work." He warned that pressure on government recreational facilities may increase. The Development Bureau is fine-tuning the proposal and will issue technical guidelines later this month. The existing concessionary policy, introduced in 2001, grants exemptions to amenities and green features such as balconies, clubhouses and wide common corridors from the calculation of the gross floor area (GFA) of a private residential estate. Since developers do not need to pay land premium for most of these facilities but can charge flat buyers for them, these features have become so excessive that they can be more than 20 per cent of the GFA in some cases. Oversized developments have become commonplace across the city. The revised policy will impose a cap on these features so they add up to no more than 10 per cent of the GFA of an estate. "There is going to be a period of adjustment. Developers are working out with their advisers and architects to test different combinations. It takes time to know what sort of features are going to be found useful under the new regime," Loong said. Apart from swimming pools, some common features might also disappear under the new rules. "Probably no one will be building bay windows, which will [be down from 50cm to] be 10cm deep only. And what will be the use of a balcony if it's just like a platform on which an orchestra conductor stands?" Covered walkways could also vanish. "If it is less than two metres wide, how useful is that? Are they expecting rain in Hong Kong to fall vertically without wind?" he said. Under the new policy, a prerequisite for developers to get the concessions is that buildings must be constructed 15 metres from the centre of a road to help widen the footpath. Loong said it would result in an uneven street alignment. "The government should review the whole mechanism. Even if the policy goes ahead, a consultation with the industry should be held in no less than a year after implementation," he said. The Institute of Architects' spokeswoman on the subject, Susan Leung So-wan, said it supported the measures, but some facilities that did not increase the size such as covered walkways should continue to be exempted from GFA calculation.

Hong Kong International Airport passenger traffic up 10 pct in 2010 - Hong Kong International Airport (HKIA) saw a record of 50.9 million passenger traffic last year, representing an increase of 10.3 percent from 2009, the operating authority said on Sunday. HKIA announced it has set new annual records in its three traffic categories in 2010. In addition to passenger numbers, cargo increased 23.4 percent to 4.1 million tones and air traffic movements rose 9.7 percent to 306,535. Calling 2010 a record-breaking year on the back of the strong economic performance of the Chinese mainland and Hong Kong following the financial tsunami in late 2008, Stanley Hui Hon- chung, Chief Executive Officer of Airport Authority Hong Kong (AA) said, this further reinforces HKIA's position as a leading international and regional aviation center, and a preferred gateway to the Chinese mainland. Further growth is expected in 2011, which will likely be single- digit because of the high base achieved in 2010, Hui added.

Tiny camera forgives shaky hands - Wu Enboa (left), vice-president and group director of Astri, and AP Photonics chief executive Dr Lam Sio-kuan show tiny camera modules. Do you find it hard to take good photos with your phone during a bumpy bus ride? A locally developed mobile-phone camera has risen to the challenge, allowing sharp pictures to be taken even while riding a wild horse, its inventors claim. Next year, major phone companies such as Apple, Nokia and SonyEricsson are expected to begin selling phones with the device - the smallest optical camera in the world. Roughly the size of a fingernail, it was developed by a group of 11 engineers of the publicly funded Hong Kong Applied Science and Technology Research Institute (Astri) in less than three years. The camera adopts an anti-shaking technology previously used only in digital cameras. It detects the degree of vibration, and the lens moves in the opposite direction to produce stable photographs. Even those on a wild horse could take sharp photographs with it, said Dr Lam Sio-kuan, chief executive of AP Photonics, a private firm Astri licensed to market the camera. "But not when the horse jumps," he joked. The function can be switched off, allowing deliberate shaky pictures to be taken. Camera phones on the market with existing anti-shaking technology reduce the blurring effect of vibration by using computer software that compares many images taken in a split second and creates a photograph that it thinks is best. "Anti-shaking by software was a good try, but the result is not good," Lam said. His invention is said to be able to take photographs of up to five megapixels in resolution, which he said is as good as those taken by digital cameras.The device has attracted more than 10 of the biggest players in the smartphone industry around the world, including Apple, Nokia and SonyEricsson. Lam has also been approached by Japanese medical technology firms that want to use the camera to conduct internal examinations of the body, similar to using an endoscope. "I'd never imagined it could be used that way. It turns out many other industries are in need of such a device, too," he said. "Many thought it impossible to make an anti-shaking camera this small," Lam said. He has obtained two US patents on the work, with six still pending. The project was funded by the Innovation and Technology Fund, which the government established in 1999. The government, which put more than HK$13 million into the research and development, will receive royalties when the firm makes a profit. It took 2 1/2 years to complete the project, which ended in 2009. "If the government hadn't invested in the project and let our creativity take wing, this smallest phone camera in the world couldn't have been made," Lam said. Pricing for phones fitted with the camera would be up to the phone companies, but Lam said he would sell the device to them for about US$1.50 each. Because the camera is so small, Lam said it would be challenging to find assembly workers skilful enough for such fiddly work. Nonetheless, it is scheduled to be mass-produced in the third quarter of this year and will be sold in new mobile phones around the world early next year. Lam said the company was also looking at ways to make the smallest auto-focus camera. "I think mobile phones with good cameras are going to slowly take over from consumer-grade digital cameras. One device will be able to do both equally well. Why bring two?" he said.

As the US abuses the trust of creditor nations like China and Russia, it raises the threat of the dollar losing its reserve currency status, HSBC (SEHK: 0005) chief economist Stephen King said. "In time, the US will find other countries beginning to improve their reserve currency status, but that will take a long time to happen," said King. "In 10 or 20 years, the obvious possibility will be the [yuan]." King said the world would see a rising level of crisis between creditors and debtors. "What we're seeing in the euro zone today is a dress rehearsal for a much bigger global crisis between creditors and debtors," he said. In the euro zone, the major creditor is Germany, while the major debtors include many of the peripheral nations. At the global level, China, Saudi Arabia and Russia are major creditors while the United States is among the big borrowers. In the euro zone, the crisis comes from a sovereign bond crisis, and on the global level, the risk comes from a dollar crisis, he said. The difference is that the US can print dollars when it wants to. The consequences of printing money raises a threat to the dollar's reserve currency status because the US is abusing the trust of creditor nations by going down the printing press route, King said. He said the level of debt was far too high in the US, even though there had been some effort to deleverage in the private sector. This deleveraging, however, has been offset by an increase in debt within the public sector. Those high levels of debt would constrain recovery in the future, no matter what the US does in terms of quantitative easing or other measures, he said. Markets have speculated that the US might carry out more rounds of quantitative easing, and King said that was a possibility if the US unemployment rate remained at 9.5 to 10 per cent and if the country's core inflation remained low. While quantitative easing has helped prevent a complete market collapse in the US, it has led to rising inflation in emerging economies in Asia and Latin America. Moreover, it has led to some unintended consequences, said King. Shaking the dollar's status as a reserve currency was one of them, but another has been a rapid rise in commodity prices. "Investors realise that printing money is an unconventional and experimental policy, and they lack a sense of security," King said. "One way of finding security is to buy things that will rise in value if the experiment goes wrong, so you end up buying metal, you end up buying gold."

Tobacco duty increase urged in battle against smoking - Lobby group wants cigarette tax in line with WHO guideline - Pupils of Yan Oi Tong Tin Ka Ping Primary School present their written wishes for a smoke-free world during an anti-smoking campaign in Central. An anti-smoking group has called for the tobacco tax to be raised to at least 75 per cent of the retail price in the next financial year. The Council on Smoking and Health said yesterday the existing tax of 62 per cent was generally affordable for smokers, and an increase was needed to encourage them to quit. The price increase would also discourage youngsters from taking up the habit, it said. The tobacco tax was raised by half in 2009, with an extra duty of HK$8 to HK$12 charged on each pack of cigarettes. If the tax was raised to 75 per cent of the retail price, cigarette prices would increase by at least HK$5 per pack. Government figures show the number of people calling a hotline to give up has tripled in 10 months, and the number of smokers aged 15 to 19 has fallen by a quarter. The council gathered 30,000 written "wishes" from primary and secondary school pupils during an anti-smoking campaign in November, which will be sent to the office of Financial Secretary John Tsang Chun-wah. Tsang presents the government's budget next month.

 China*:  January 18 2011

A porcelain manufacturing company in Guangxi province has won the order to make the official tableware to be used at the British royal wedding of Prince William and his fiancee Kate Middleton. Guangxi Sanhuan Group is based in Beiliu, a city known locally for its ceramics and porcelain ware. The company said it beat off stiff competition from more than 500 companies bidding to produce royal wedding porcelain. Sanhuan will make 16,000 dining plates, coffee cup and saucer sets, commemorative mugs and souvenir plates. They will be either used at the wedding or given to guests as souvenirs. The design is generally a uniform one featuring a photograph of William and Middleton inside a heart shape. "When we won the order, our company bosses were very happy and excited," said Gary Qiu, a marketing manager for Sanhuan. "They paid great attention to it. The entire production process including its preparation was worked on a very tight schedule. Also, we used one of the most advanced kilns in China to make these products." Established in 1987, Sanhuan is a modern Chinese success story - a once-state-owned company that has now gone private, tailoring a reputation of being a quality manufacturer for ceramics and porcelain over the past decade. It employs more than 8,000 and is known for producing high- end table and dining ware for export to Europe, the United States and Southeast Asia. Qiu said a special high-fire glazing technique is being used to manufacture the wedding porcelain, with the plates and mugs being set at temperatures of more than 1,600 degrees Celsius in the kilns. This will ensure the longevity of the china, a theme the company used in its winning bid. Other Chinese manufacturers have already been cashing in on the royal wedding as they churn out tens of thousands of replica royal engagement rings as well as other imitation wedding memorabilia ahead of the April 29 wedding.

By importing Indian food and opening more restaurants, the Zhuhai-based India Kitchen group is building a spices kingdom in China with an annual sales revenue beyond $10 million. "As the population from Arabic regions increases fast in China, we are seeing a large demand in curry food, in which we have specialized for more than 20 years," said Roberto Gnanabelu, sales manager of Indian Kitchen Management Co Ltd. "We are going to open one or two new restaurants and a franchised store selling spices this year in Beijing." The business has grown from a small restaurant providing Indian cuisine for international tourists in 1985 in Macao, where the company founder, known simply as M. Antony, first stayed after he came to China from Chettinad, South India. It now incorporates importing and Anthony has his own factories producing fast curry sauce in Zhongshan and Zhuhai, Guangdong province, for which he is seeking an export license as a local food manufacturer. The fast curry sauce, of which it is said "even a blind man can cook", is designed for Chinese households who are not good at preparing complicated curry cuisine. Simply boiling with rice is sufficient. "It's very like Lee Kum Kee's XO sauce," Gnanabelu said, referring to the 122-year-old Chinese traditional soybean sauce. According to the company's website, it currently imports several brands of snacks, pickles, mango pulp, tea powder and Basmati rice from India, including Haldiram's Snacks, Mother's Pickle, Everest Masala, Kohinoor, Lalquila Basmati Rice, Pillsbury Atta (wheat flour) and Taj and Red Label tea. "We are the only legal importer of these Indian brands in China," Gnanabelu said, adding that a large amount of Indian food products are smuggled through Hong Kong and Shenzhen. "Hotels cannot purchase the smuggled food. We have a partner in Beijing called Jingguangjia Trading Group that helps us sell goods to clients, such as the Hilton hotels." Building on the reputations of its 18 chain restaurants in major cities including Beijing, Shanghai, Hangzhou and Qingdao, the company has developed a distribution network all over China. According to Gnanabelu, India Kitchen presently is well developed in Guangdong and nearby regions. People can find its products in big supermarkets there, such as Metro, PARKnSHOP and 1jia1. Some of its star products are also selling in Beijing's well-known imported-food supermarkets, including the friendship supermarket and Jenny Lou's, near the city's embassy district. As the biggest Indian spices trader in China, India Kitchen also hires Chinese natives from factory workers to executives. Indian chefs and Chinese waiters work alongside each other at its Beijing restaurant located next to a tranquil riverbank near Sanlitun. The restaurant is popular among overseas and Chinese gourmets alike and has joined a high-click-ratio public restaurants evaluation website. "We switched our business from only doing restaurants to trade and manufacture in 1990," Gnanabelu, who also has the Chinese name An Dawei, said. "We also see a huge market in other countries in Asia, such as Japan, South Korea, and the Southeast Asia countries," he added. To produce the spices these markets need, India Kitchen's Guangdong manufacturing base is undergoing the process of China's exporting standard evaluations for food. Trade between India and China in the first 10 months of 2010 grew by 58 percent, data from the Confederation of India Industry (CII) shows. "Processed and unprocessed food is among the seven sectors with most growth potential for investment in the future," said E.B. Rajesh, the chief representative of CII in China. The other six industries include IT, pharmaceuticals and auto components, which have been recognized as India's signature industries.

Pomp and pageantry for Hu Jintao in US - The White House is preparing to host President Hu Jintao this week with a 21-gun salute, black-tie state banquet and pomp galore. It is a clear signal that Washington is keen to address the issue of rocky relations last year with an increasingly assertive China. It is only the third time the White House with Barack Obama as president has honoured a foreign leader with a full state visit - exactly what a protocol-obsessed Chinese leadership wants. The elaborate trappings of Hu's four-day trip have been listed meticulously in the Chinese state media. "The United States rolls out top-notch reception to President Hu; the White House even did a rare rehearsal [for Hu's visit]," China News Service said in the headline of a lengthy article yesterday. The state banquet Obama is hosting on Wednesday night will be a highlight of Hu's trip. He was granted only an "official" visit by ex-president George W. Bush in 2006, which included a lunch instead of a state dinner. However, the dynamics between the two sides are vastly different today than five years ago, when Hu made his first visit to the United States as head of the state. More than ever, Washington seeks Beijing's help in managing a wide range of world troubles, from reining in a defiant North Korea, taming Iran's nuclear programme, reinvigorating the world economy to fighting global warming. "Hu's visit lasts only four days, but it can be taken as a four-month event because it involved months of planning from various teams on both sides. Hu's visit can be read as a barometer of the bilateral communication over the past two years," said Sun Zhe , director of the Sino-US relations research centre at Tsinghua University. Both sides have different expectations. Those of the US were easier to read than the Chinese ones - such as currency appreciation, the trade balance and North Korean and Iranian woes, Sun said. Beijing also has its specific requests to make, such as recognition of China as a market economy and lifting the hi-tech weaponry embargo that has been in place since 1989. "Despite all these differences and disagreements, you have to say that the two countries are serious about improving their relationship and about working together," Sun said. Hu yesterday called the international currency system, which is dominated by the US dollar, a "product of the past" but said it would be a "fairly long process" to make China's own currency an international one. In a rare written interview with two US newspapers, The Wall Street Journal and The Washington Post, he said "the liquidity of the US dollar should be kept at a reasonable and stable level." He said making the yuan an international currency would be a "fairly long process". He also saw "signs of relaxation" between North and South Korea and was convinced an appropriate solution to the Korean nuclear issue would be found. After flying into Andrews Air Force base to begin the visit and being welcomed by Vice-President Joe Biden, Hu will attend an intimate private dinner with Obama, Secretary of State Hillary Rodham Clinton and national security adviser Tom Donilon - in the Old Family Dining Room in the White House residence on Tuesday evening. "It's a very unusually small dinner that we'll have with President Hu," said Donilon, adding the setting would reflect "the relationship that we are building and the opportunity to have candid conversation in much less formal settings than you typically would see". Hu's 2006 US visit was marred by glitches. A Falun Gong protester interrupted a welcoming ceremony on the south lawn of the White House, and the Chinese national anthem was announced as that of the Republic of China, the official name of Taiwan. Aside from getting security and protocol straight, Washington attaches importance to the visit as an opportunity to reset a bilateral relationship that has gone through the wringer in the past year. Despite the leaders' promises in 2009 to seek co-operation, US arms sales to Taiwan, sovereignty scuffles in the South China Sea, China's currency valuation, its stance on North Korea, and its continued imprisonment of Nobel Peace Prize winner Liu Xiaobo proved to be points of serious contention in 2010. "We've had a very wild year. A lot of things happened that ended up heating up the atmosphere between the two nations," says Douglas Paal, a former National Security Council official and vice-president for studies at the Carnegie Endowment for International Peace in Washington. "We need to find a way to cool this atmosphere down, and that will be the principal goal." Kenneth Lieberthal, director of the John L. Thornton China Centre at the Brookings Institution in Washington, said: "It won't be the last meeting of the two men but it will be the last major summit before 2012" when Hu steps down from his final term as party chief, and Obama is up for re-election." Zhu Feng , professor of international relations at Peking University, said both countries understood neither could afford to jeopardise the ties.

Shanghai was poised to prepare to implement a pilot property tax as part of nationwide efforts to curb rampant real-estate speculation, the municipality's mayor pledged yesterday. "To curb irrational and speculative investment as well as develop a sound and healthy real estate market, we will step up macro-control measures, prioritise the supply of non-luxury residential flats to be owned and occupied by ordinary citizens, and prepare for the trial reform on property tax as required by the central government," mayor Han Zheng said at the opening of Shanghai's annual People's Congress. However, Han's first public reference to the proposed tax - one of the most widely speculated subjects in the run-up to the National People's Congress in March and due to be tested in Shanghai and Chongqing - gave no details of what form it might take or when it might be implemented. Several models have been floated for the tax, which is expected to be levied on high-end apartments in an attempt to deter investors from driving up the spiralling costs of property. The likeliest format would be a tax of between 0.6 per cent and 0.8 per cent on the value of new homes larger than 70 square metres, the Labour Daily reported yesterday. However, analysts in Shanghai doubt the tax would have a major impact on the market, saying its more likely outcome was a boost to municipal government revenue. In a report last week, property analysts Savills said the property tax would "result in falling transaction volumes and a possible slowdown of price growth or a minimal correction". Land sales on the mainland rose by a dramatic 70 per cent year-on-year in 2010 despite various government measures to cool the market and concerns about potential real estate bubbles. In Shanghai, property prices rose by 1.3 per cent month-on-month in November. Han made the property tax comment following lengthier remarks about support for families on the lower end of the property ladder. He promised to relax the criteria for applying for housing subsidies and committed the municipality to start work on 390,000 public housing flats by the end of the year. Later in his speech, Han increased the housing commitment to complete a million subsidised apartments by the end of the 12th five-year plan, which covers 2011 to 2015. Han's rhetoric-laden 2 1/4<121>-hour address was overwhelmingly positive, giving the city a mostly glowing report on its performance last year, with particular reference to the Shanghai World Expo. However, Han did concede the municipality faced a number of challenges, including rising business costs, balancing urban-rural development, "weak links" in safety management and government officials who needed to "enhance their competence". "Superficiality, bureaucracy and corruption still exist," he said. The city's image had also been tarnished by a fatal apartment block blaze in November that left 58 people dead and more than 100 in hospital. "The extremely serious fire accident of November 15 last year caused tremendous harm and loss to people's lives and property," Han said. "We are deeply overwhelmed with pain and guilt." Han underlined the municipal government's response to the blaze, but conceded "unshakable responsibilities" for lax regulations that contributed to the disaster. Although an investigation launched by the State Council into the incident had yet to report its findings, he said the fire "exposed widespread non-compliant practices in the construction market, institutional deficiencies in safety management of urban development and other insufficiencies in the government's work". "Over the years, while focusing on socioeconomic development, we failed to adequately appreciate the paramount importance of workplace safety and safety in general, to take enough precautions against major hazards or to completely resolve exposed problems," he said. "Some regulations remain only on paper, such as those on workplace safety accountability, and whole process safety supervision. "We must reflect on our problems and learn cruel lessons from this grave accident."

Chinese Estates pays £280m for London building - Chinese Estates Holdings (SEHK: 0127), a property investment and development company controlled by Joseph Lau Luen-hung, has acquired a grade A office building in London for £280 million (HK$3.45 billion). The deal follows the purchase by another local property investor, Lai Wing-to, of a six-storey retail and office building on Oxford Street in the British capital for £31.85 million in November. In the latest signal of Hong Kong investor interest in London property, Lau bought the office building, River Court, at 120 Fleet Street. The building is occupied on a long lease by Goldman Sachs, which uses it as its headquarters in Britain. Property agents estimated Chinese Estates could enjoy a rental yield of 5.5 per cent on its investment. The freehold office building occupies a 63,000 square foot site and provides a total gross floor area of about 430,000 sqft. The purchase translated into a price of £651 per square foot. Henry Lam, executive director of investment services at property consultancy Knight Frank, who brokered the deal, said London properties priced below £30 million were the most welcome in the investment market, particularly properties that also offered retail outlets. Despite the uncertain economic outlook in Europe and increased tax rates on the banking industry in Britain, London remained a major financial centre. "It is not easy for financial institutions to find a replacement, and the tax rates are still attractive to the institutions and foreign investors," he said. According to Jones Lang LaSalle, rents for London West End offices increased nearly 18 per cent to £88.50 per square foot last year and over 20 per cent in London City to £55 per square foot. The property consultancy expects both markets to continue to perform robustly this year and believes rental growth will be driven by a lack of grade A space, with the West End to reach £95 per square foot for larger units and in excess of £100 per square foot in smaller deals. In the City, rents could surpass £60 per square foot this year with pre-recession rents of some £66 per square foot forecast to be exceeded before the end of 2013. London City and West End offices resumed rental growth this month, at 0.2 per cent and 0.3 per cent respectively, according to the Investment Property Databank UK Monthly Index, in a month that also saw positive capital growth ease to 1 per cent.

ENN Energy Holdings, one of the mainland's largest distributors of piped and bottled gas, plans to step up research and development into alternative energy sources, according to its chairman. Wang Yusuo said the energy company, together with parent ENN Group, had earmarked a total of 1.5 billion yuan (HK$1.77 billion), or 5 per cent of the combined turnover, for new technologies and pilot schemes. That is almost double the 800 million yuan the group invested in new energy technologies last year. Developing new technology would help keep costs down and lift competitiveness, said Wang. "The race is on in innovation, research, and development. The future energy market will be a combination of renewable resources and fossil fuels," he said. New energy, energy conservation and environmental protection are among the nine sectors the central government identified for development in the 12th Five-Year Plan to 2015. It budgeted at least 4 trillion yuan in the period to provide financial support, including tax cuts and exemptions, to companies developing new technologies in the energy sector, along with new materials, information technology, biology and new medicine, aerospace, marine, advanced manufacturing and hi-tech services. The diversification into alternative energy by ENN, which runs an 80-strong portfolio of piped-gas distribution operations serving mainly coastal regions, would complement Wang's privately owned investments in new energy resources. These include the manufacture of thin-film solar cells used for generating solar power and producing methanol from coal. The company's solar energy division is on track to go public next year, Wang said, adding that to expand further ENN plans to form alliances with upstream energy companies. "We will stick with our asset-light approach," he said. "This means we don't have to pour huge capital in projects and can team up with strategic partners." Two months ago, ENN reached a memorandum of understanding with New York-listed Cheniere Energy Partners, which will pave the way for an agreement to import liquefied natural gas from Louisiana in the United States. ENN plans to build two LNG processing plants on the mainland. The company faces fierce competition from oil giants PetroChina (SEHK: 0857, announcements, news) , Sinopec (SEHK: 0386) and CNOOC (SEHK: 0883), which together are planning and building more than 10 LNG processing plants around the country. A Citigroup Global Markets research note forecast that ENN's profit margin would not contract as it had already passed higher costs of natural gas to end-users before the central government decided to control commodity and utility price increases last month to contain inflation. At least 26 piped-gas projects were approved with tariff increases of 29 fen per cubic metre on June 1 last year. Expecting more connections to service residential, industrial and commercial users, and higher gas sales, the brokerage forecast ENN's net profit would jump 26.5 per cent to 1.3 billion yuan this year from an estimated 1.03 billion yuan last year.

Hong Kong*:  January 17 2011

Stalls back in business, but out of pocket - Dai pai dong return to Central, but only after much red tape and hefty renovation bills. When six dai pai dong vanished from Stanley and Gutzlaff streets in Central last year, fans of wok hei street food were worried that the cooked food stalls had disappeared for good. Business is brisk at the recently reopened Shui Kee cooked food stall in Central. Dai pai dong owners say they had to pay for extensive renovations while still paying rent and licence fees while closed. Now they're back, shinier than ever after five months of renovations. With new gas lines, sewers and electric cables installed, the old green dai pai dong stalls have given way to custom-built stainless steel booths. The Chinese characters for dai pai dong mean literally "big licence-plate stall", referring to the size of these special restaurant licences. New regulations allows dai pai dong licences to be passed down to the owner's offspring, meaning that, for the first time since the 1970s, dai pai dong can outlive their licence holders. But the owners of Hong Kong's traditional eateries are far from happy. They say the renovation process was hampered by red tape and bureaucratic indifference, leaving them penniless and angry. "I'm very frustrated," said the owner of the Yue Hing, a tea stall in Stanley Street, who asked to be identified only by his nickname, Ah Fei. "The government dropped the ball and now we're suffering because of it. It shouldn't have had to be like this." Problems arose soon after dai pai dong owners agreed to the renovation scheme last summer, said Lam King-wing, who runs the Shui Kee, a beef offal stall on Gutzlaff Street. "At first they said they were going to find us sponsors," he said. "Of course you're going to say yes to that. But in the end, after we demolished our stalls, they said they couldn't find any." He ended up having to pay HK$160,000 for a new stall. "The other stalls on Stanley Street had to pay even more," he said. Despite being closed for months while the street was dug up to install the gas line, the dai pai dong were still charged rent by the Food and Environmental Hygiene Department (FEHD), along with an annual HK$28,770 licence fee. "They told us this was a heritage preservation project, and then they turn around and say that we're doing it on our own, it's entirely our responsibility," said Ah Fei. "We've lost income all these months, but we've kept paying rent. How does this make sense? We aren't getting one cent in compensation." Two stalls are still closed because a private construction project has blocked access to the new gas hook-ups, preventing them from opening on schedule. Stall owners also complain that the government offered little support during the renovations and that its enforcement of guidelines seemed haphazard. Though the Stanley Street stalls were demolished on August 14, rules governing the renovations were not sent to the owners until October 7. The rules were later revised on December 15th.

While Central's dai pai dong have been given a new lease of life, it's another story in Sham Shui Po, where their survival hangs in the balance. While the Central and Western District Council accepted the Food and Environmental Hygiene Department's proposal to loosen licence restrictions in 2009, the Sham Shui Po District Council rejected the offer. "The operations of dai pai dong in the district caused street obstruction, noise, littering, waste water and greasy fumes, resulting in complaints from nearby residents," a departmental spokesman said. As a result, the district council refused to support any change to the status quo until the problems were dealt with. But the district council's vice-chairman, Tam Kwok-kiu, said the council's position was more nuanced. "Some types of dai pai dong just provide breakfast, late-night meals, coffee or toast, and they're quite welcomed by residents," he said. "On the other hand, some operate like restaurants with fried food and Chinese dishes, and they really cause much nuisance." Tam said the council wanted the department to move some of the offending dai pai dong to government-run cooked food centres. "That way the others can stay in the streets and keep the dai pai dong heritage alive," he said. "But we're yet to have a positive response." The council receives about three complaints a month during summer. "That's when a lot of people like to sit outside and drink beer," Tam said. The Sham Shui Po businesses are very popular. The five stalls in Yiu Tung Street are kept busy with diners eating noodle soups, seafood and dim sum. One of the adjacent blocks is set for redevelopment, which might force the stalls to relocate. "We're just working until we can't any more," one stall owner said. "We don't know what will happen."

From near and far, the villagers of Ho Chung gathered for four days of Taoist rites: burnt offerings, incense, drum sounds and dances to preserve the life and spirit of their ancestral home. Four-fifths of the inhabitants of the New Territories village left to work overseas, mainly in the 1960s, said village representative Cheung To-shing. But last week many returned to offer prayers for the wellbeing of the Sai Kung community in the Tai Ping Ching Chiu ceremony, held once every 10 years. "Over 400 villagers came back from overseas this time," Cheung said. The reunion of just one family - that of Lau She-tim, 73, and his British wife Lesley Lau, 67 - brought adults and children from Denmark, the United Kingdom, Botswana and Russia. "I grew up here as a child, left for the UK as a young boy and spent half a century there," said Lau She-tim, who lived in Sheffield, England. He returned home after retiring 12 years ago with his wife. Though he was away most of his life, Lau took an active part in the local ritual, volunteering to be one of the five leading worshippers. "Three times a day, we had to follow the priest to pray in the north, south and east points of the village. The ceremony lasted for 12 hours on the third day. It was such hard work. I don't think I'll do it again next time," he said, chuckling. He spoke as villagers gathered outdoors on Wednesday at the end of the four days of rites for a communal lunch, the first during the rites at which they could eat meat. They chattered in different languages as colourful flags fluttered nearby. Sam Ingram, one of three young tourists from the UK who were staying with a friend in the village, wore a "helper" badge. During the ceremonies he had worked as a fire dumper when offerings were burned, and carried gongs and incense "like a slave labourer", he said, laughing. "We are very privileged to be here," he said. "It's nice to see a traditional and very different side of Hong Kong, a big contrast to the city centre." Sitting beside him at the table, Kay Davis said they ate with the villagers three times a day during the ritual. "It's a good way to get people together," she said. "The most special part was the unicorn dance when there was a big parade, drums banging, and lots of dancing. It was a unique experience." A key part of the ritual was a Cantonese opera performance in a temporary bamboo shed that held about 1,000 spectators. Tradition demanded that the opera troupe observe several rules. Before an offering was made to the "white tiger", a piece of fat pork was hung on a table at centre stage. Stage workers worked in silence to avoid a bite from the tiger. Only after that ritual could people talk again. When getting up onto the stage, performers took their last step with the left foot, to ensure good luck. And in a rule that may sound discriminatory, girls were not allowed to sit on the main wooden costume-container, known as the "God's box", with hats and crowns hung above it. And all took care not to kick the box, or else actors would lose their voices. An epidemic killed many people in Ho Chung about 200 years ago and the ritual has been held since then to ensure people's wellbeing. While it holds the Tai Ping Ching Chiu only once a decade, some communities, like Cheung Chau, hold it annually.

High inflation is worrying consumers on the mainland, Hong Kong and Macau, with confidence on prices plunging to a two-year low in the final three months of last year. A study by six universities shows the consumer confidence index fell to 63.9 on the mainland, 49.7 in Hong Kong and 51.2 in Macau in the quarter. The index peak is 200. The figures are between two and eight points lower than the previous quarter, indicating consumers have a pessimistic view of the price trend over the next three months. Confidence in Taiwan, which was also covered in the poll, rose slightly to 71 from 70 in the previous quarter. "Chinese consumers have been more confident of the economic prospects. But many of them showed worries on inflation as consumer prices rose to a more than two-year high of 5.1 per cent in November," said Ren Tao, an associate professor at Capital University of Economics and Business in Beijing, who took part in the research. He said it was interesting that the index in Hong Kong was lower than the other places. "Hongkongers may feel they are vulnerable to inflation across the border as the city relies on imports from the mainland in many aspects such as food, fuel and other commodities," he said. The CCI statistics released yesterday are separate from those issued by the China National Statistics Bureau quarterly. The six universities, which have jointly released the index since 2009, include Renmin University of China, Central University of Finance and Economics, and Capital University of Economics and Business. Others that take part are City University of Hong Kong, Macau University of Science and Technology and Fu Jen Catholic University in Taiwan. The researchers polled from 1,000 to more than 3,000 respondents in each region through random telephone interviews every quarter, asking for their views on economic prospects, employment, prices, quality of life, flat purchases and investment. The study also found people's outlook on the overall economy was slightly pessimistic with readings of 92.6 on the mainland, 83.3 in Hong Kong, 84.7 in Macau and 76.6 in Taiwan, all below the neutral 100 points. However, more consumers believed in stronger economic prospects in the next few months and a steady employment environment. Because of inflation, respondents were less keen on buying property. Consumer investment confidence remained steady on the mainland, while in Hong Kong, Macau and Taiwan confidence rose by 3 to 12 points year on year.

A mass housing project in Yuen Long - the first to be put on sale after the introduction of government cooling measures to curb prices in November - is expected to elicit a good response. Market sources said buyers had snapped up about 20 units at Park Nara, which is jointly developed by Sun Hung Kai Properties (SEHK: 0016) and Luk Hoi Tong, in the first hour after sales kicked off at 7pm yesterday. Prices for the first batch of 84 units, from 595 square feet to 1,081 sq ft, range from HK$2.87 million to HK$8.49 million. The cheapest unit, on the first floor, is 595 sq ft and has an asking price of HK$2.87 million and a saleable area of 465 sq ft. Sammy Po Siu-ming, a director of Midland Realty in the New Territories, said it would be wrong to treat buyer response to this project as an indicator of the market mood. "Because of the location and the small scale of the development, it is not a correct measure for the market amid the austerity measures," he said. Po said he believed small units would be the most sought after in this project given that speculators have retreated from the market because of the new rules. In November, the government announced an increase in stamp duty on homes resold within two years. The duty was set as high as 15 per cent if a home was resold within six months. The Hong Kong Monetary Authority has also reduced the amount banks can 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 HK$8 million and HK$12 million properties has been slashed from 70 to 60 per cent. Park Nara in Hung Shui Kui comprises 173 units. They are due for possession in the third quarter of this year. Po expects sales to be slow as most buyers are end-users, who tend to take more time in making purchase decisions. Ricacrop Properties said the number of reservations for flat viewing today in the 50 major housing estates it monitors closely rose 2.5 per cent from last week to 3,075. "The figures increased for the second consecutive week as more end-users enter the market," according to Ricacorp. Ricacorp says 507 secondary market transactions were recorded at the 50 housing estates in the week to January 9 - an increase of 18 per cent from the previous week and the highest in 10 weeks.

 China*:  January 17 2011

The internationalization of the yuan is a significant step for advancing the reform of the international monetary system, Dai Xianglong, chairman of China's National Council for Social Security Funds, said when speaking at annual economic forum in Beijing.

Clinton lays out U.S. strategy on ties with China - Hillary Clinton on Friday laid out U.S. strategy on relations with China, reaffirming that the United States welcomes China as a rising power.

The People's Bank of China announced on Friday that it will raise the reserve requirement ratio for lenders for the fourth time in two months. The increase comes as the central bank strengthens efforts to mop up liquidity and tame surging inflation. The 50-basis-point increase in the ratio - the proportion of money banks must keep as reserves - will be effective from Jan 20, the central bank said in a statement on its website. The ratio for the country's biggest banks will be at a record 19.5 percent after the move. The hike is in line with the official stance of reducing liquidity, which is believed to be an important contributor to inflation. The nation is battling to keep inflation under control after it wrapped up the annual Central Economic Work Conference in early December. At that meeting the authorities vowed to shift to a "prudent" monetary policy from the previous "moderately loose" one. China's consumer price index (CPI), a key measure of inflation, rose to 5.1 percent in November, a 28-month high, driven higher by food price surges. Apart from its $586 billion stimulus package released in late 2008, the country registered 9.6 trillion yuan ($1.45 trillion) in new lending in 2009. The two are thought to have fanned the flames of inflation in the world's second-largest economy. "China needs to mop up liquidity as the market has been full of money," said Xia Bin, economist and an academic member of the central bank's monetary policy committee. "The move will help manage the inflationary expectations of the public," Xia said. China's M2, or broad measure of money supply that includes cash and all deposits, had reached 72.6 trillion yuan by the end of 2010, a rise of almost 20 percent. The country's constantly rising level foreign exchange reserves - which hit $2.85 trillion at the end of 2010 - and a possible rebound in lending in January also make the hike a reasonable move, analysts said. "With surging foreign-exchange inflows late last year and a possible rebound in bank lending in January, the central bank needs to ratchet up the reserve ratio to soak up liquidity," Ken Peng, a Beijing-based economist at Citigroup Inc, said. "The hike will help control loose bank lending this month," said Dong Xian'an, chief economist at Industrial Securities. In a December survey by the central bank, 74 percent of respondents said they were dissatisfied with rising inflation, the highest number of complainants for 11 years. China raised the reserve requirements six times and lifted interest rates twice in 2010, with the last rate rise on Dec 25. China's stocks tumbled on Friday on concern that monetary tightening may slow economic growth. The Shanghai Composite Index dropped 1.29 percent, bringing its losses over the past 12 months to 13 percent. Bloomberg News contributed to this story.

Boeing is moving a 787 flight simulator to Shanghai, to join five simulators for the 767 model already housed there. The partnership between China and the airplane maker, Boeing, is a long-standing one, and is set to increase. According to the US-based company, its procurement from China is "significantly greater than other aviation companies. Boeing is China's aviation manufacturing industry's largest foreign customer". "When you look at all our joint ventures in China, we employ about 6,000 people in total," said Randy Tinseth, vice-president of marketing at Boeing Commercial Airplanes. Ray Conner, vice-president and general manager of supply chain management and operations, made his first trip to China in 1988. He was part of the Boeing team that moved the production of vertical fins to Xi'an, Shaanxi province. Conner showed me a map of China marked with dots indicating field services, technical support, training and flight simulators across the country. Its field services reach as far west as Ngari, in the Tibet autonomous region, to Harbin in Heilongjiang province in the northeast, and to Haikou in the south. It also covers some second- and third-tier cities such as Dunhuang in Gansu, Jiuzhaigou in Sichuan, and Nyingchi, again in Tibet. Apart from the vertical fins manufactured in Xi'an, horizontal stabilizers are made in Shanghai and a joint venture in Tianjin produces interior component parts and non-metallic composite components for airplanes, Conner said. Chinese manufacturers in Shanghai, Xi'an, Tianjin, Chengdu and Shenyang also contribute parts to Boeing's "next-generation" 737, the 787 Dreamliner, and the 747-8. "I've watched our relationship grow" and China is "participating in every one of our airplanes today," Conner said. Emphasizing that Boeing has been a "solid, quiet and dependable" partner, Conner said his company has been "part of the fabric of the whole aviation industry in China". Since 1993, Boeing has helped train more than 37,000 Chinese pilots, mechanics, engineers and other professionals in flight operations, maintenance, air-traffic management, manufacturing, quality assurance, finance and industrial engineering. A model of a Cathay Pacific freighter stands by the door in the office of Lou Mancini, senior vice-president in charge of commercial aviation services. A piece of an airplane is displayed on the other side of the door. The piece was cut from a 747-400 Cathay Pacific plane to create a cargo door when the craft was converted into a freighter in 2005. It was the first conversion undertaken by Taeco-Taikoo (Xiamen) Aircraft Engineering Co Ltd, a joint venture in Xiamen which specializes in airplane repair, maintenance, part manufacturing, component service and conversion. Boeing holds a 9.1 percent stake in the venture. The piece was cut out in April 2005, and since then, Taeco has produced between 35 and 40 new 747-400 converted freighters, Mancini said. A computer monitor in Mancini's office, which is linked to its operations center, maintains an almost real-time watch over the 1,500 Boeing airplanes while they are in the air. It is a "fancy prognostic forecasting system, so you can monitor your airplane and figure out what maintenance it is going to need in the next few days," Mancini said. Around the world, 40 customers, including Air China, use the systems, so that their fleets can be serviced 24 hours, seven days a week. "You can know the exact status of an plane in 20 seconds," Mancini said. "I can log on at home with my iPad and watch planes flying." In terms of pilot training, Boeing is moving a 787 flight simulator to Shanghai, to join five simulators for the 767 model already housed there, Mancini said. Boeing is also involved in cruise scheduling in China. Before the 2008 Beijing Olympic Games, the company worked with Beijing Capital International Airport to optimize the airspace around the airport to help increase capacity. Mancini highlighted the Boeing service teams now spread across China. With the required navigation-performance technology, Boeing has worked with Chinese airlines, enabling them to fly into Nyingchi, between the mountains on the roof of the world. "We are very interested in air-traffic management, and we would like to help China out," he said. As Chinese airlines fly more Boeing aircraft, its services will also grow in China. "We are global but local," Mancini said. "I cannot imagine supporting the world without being local." Despite a Mandarin table at the operations center, Mancini said Boeing will build a satellite facility in Beijing which will be operational around June. It will also be connected to the computer systems at a main operations center and with all the telecommunication systems in the United States. "It will allow us to better understand China's market and its growing needs," Mancini said. He said Boeing is likely to employ more local people who understand the culture. "I will never be able to understand Chinese culture, so I need to get more people on the team who do," "You have an massively expanding market, and we want to be part of it obviously," Mancini said. "So we think we'd better be very close to you, geographically and culturally so that we are providing such good support that you want to be on our team". Nicole Piasecki, vice-president of business development and strategic integration for Boeing Commercial Airplanes, highlighted China's need to train young pilots to the highest possible standard. Meanwhile, technological upgrades are essential in the growing aviation industry. "The 787 Dreamliner has so much technology on it that it is a completely new generation in aviation that no one has seen before," she said. "We want to be viewed not as a company that goes to China to sell airplanes. We want to be viewed as a partner. A partner that not only sells airplanes, but buys parts there, contributing to the infrastructure, and to the future of the aviation industry," said James F. Albaugh, executive vice-president of Boeing Commercial Airplanes.

Extra trains for Spring Festival travel period - People are seen buying train tickets yesterday in this combined photo at a temporary ticket agency in Ningbo, Zhejiang Province. China will deploy more trains and intensify its crackdown on ticket scalping during the upcoming 40-day Spring Festival travel rush, when hundreds of millions return to their hometowns for family reunions, the vice minister of railways said.

Metallurgist Shi Changxu won a top national science award yesterday for his contribution to the development of high-performance jet engines - three days after the first public test flight of the mainland's J-20 stealth fighter plane. Professor Shi, former director of the Chinese Academy of Sciences' Institute of Metal Research in Shenyang , developed several families of top-secret, heat-resistant alloys, according to mainland scientists working on jet engines. The secret alloys were developed decades ago, but because jet engine metals take a long time to test, Shi's alloys have only recently begun to be used in the mainland's jet engines. In 1955, Shi left his teaching post at the Massachusetts Institute of Technology and boarded a ship for the East. He was one of 30 or so Chinese scientists held by the United States government to prevent them from returning to communist China. Shi left the US about the same time as Qian Xuesen , a rocket scientist from the California Institute of Technology, who later founded the Chinese space program. After he landed in Shanghai, Shi was immediately sent to Shenyang, a heavy industry base in the northeast province of Liaoning , to boost steel production. Beijing's relationship with Moscow then soured rapidly and the Russians stopped helping their old ally develop fighter jets. The military turned to Shi for help. With hard work, genius and luck, Shi not only came up with the required alloys using the traditional approach he learned in the West, but also devised something entirely new. The laboratory performance of the new alloys was so good that no one dared to use them. For safety concerns, plane designers stuck with traditional alloys for China's mass-produced jet engines, whose performance lagged significantly behind their overseas counterparts. Shi's alloys then began a long march for industrial acceptance. Only recently, with their application in some of the mainland's most advanced fighter jets such as the J-20, have designers fully accepted them. Professor Zhang Lanting , from the school of materials science and engineering at Shanghai Jiaotong University, said the mainland's aviation material science sector had been waiting too long for this award. Some people thought China did not have the materials to make high-performance jet engines, but they were wrong, Zhang said. "The fact is, we have lots of top-quality materials, but to convince plane designers to use them we need to test it for decades - normally 30 years - for absolute safety," he said. "Within 10 years Chinese engines will begin to replace foreign ones in the civilian sector. In the military sector the replacement has already begun." Professor Wu Suojun , a specialist in new materials at Beihang University, China's top aviation research institute, said the mainland was quickly narrowing the technological gap with the world's leading engine makers. "With the successful test flight of the J-20 and other new planes, it is time to reward the heroes behind the scenes," Wu said.

China economy overtakes US based on purchasing power - China overtook the United States last year as the world's biggest economy when measured in terms of purchasing power, according to Arvind Subramanian, senior fellow at the Peterson Institute for International Economics in Washington. The size of China's economy last year was US$14.8 trillion, compared with US$14.6 trillion in the US, when accounting for differing costs of living, Subramanian wrote in a note published yesterday, a week before President Hu Jintao visits Washington. So-called purchasing power parity calculates gross domestic product using exchange rates, which adjusts for price differences of the same goods between nations. Growth in the world's most populous nation has averaged 10.3 per cent a year over the past decade, nearly six times faster than the US. China was the biggest car market for the second year running, created the world's fastest supercomputer and was ranked the biggest user of energy last year. In a poll of Americans before the summit of Hu and US President Barack Obama next week, 47 per cent said China was the leading economic power and 31 per cent named the US, according to the Pew Research Centre for the People and the Press. A February 2008 Pew Poll found 41 per cent of Americans considered the US the top economic power, with 30 per cent naming China. Subramanian said his calculations were based on new estimates of GDP that will soon be published by the Penn World Tables, which correct biases in previous estimates by the International Comparison of Prices project and the World Bank that underestimated China's purchasing power. Adjustments also account for a different appreciation estimate in China's currency compared with that made by the International Monetary Fund, Subramanian said. China's GDP per capita would increase to US$11,047 from the US$7,518 estimated by the IMF in its World Economic Outlook, according to Subramanian's calculations. That would still leave US GDP per capita 4.3 times higher than China's, he said.

Google is reloading its guns in China to focus on display advertisements and the booming export sector a year after a blowout with Beijing over censorship and hacking all but ensured its demise in the country. The road to recovery will certainly be a bumpy one, but the internet giant looks to have enough in place to rebuild its presence in the world's biggest internet market with more than 400 million users. "Do I think they can do it? Yes, the market is still growing very fast, a small piece of the big pie is still a big piece," T.R. Harrington, chief executive of search marketing consultancy Darwin Marketing, said. China's search market was worth 11 billion yuan (HK$13 billion) last year and was expected to grow an average of 50 per cent each year over the next four years, iResearch said. While Google's share in China's search arena is set to further decline for a few more years, the sheer size and the rampant pace of growth of the overall market should provide it with a buffer for now. Under the new game plan, Google is targeting Chinese firms to advertise on its dominant overseas search market, a business which constituted about half its China revenues, Harrington said. Google is betting that rapidly growing Chinese exporters, keen to contact overseas customers, will make use of the company's global reach through its international search sites. Since last year, the firm restructured its operation to focus on getting small and medium Chinese businesses to advertise on its platform. "We have many new export products being rolled out which will be more helpful for the local SMEs," a Beijing-based Google spokesman said. Google said it would increase sales staff in China this year to boost its advertising business targeted at the rapidly growing export sector. Last January, Google announced it may withdraw from China after a serious hacking episode and that it was no longer willing to self-censor searches. Months of incrimination between the search firm and China followed, resulting in a diminished Google China presence. Google's search engine market share fell to about 26 per cent last year from 30 per cent in 2009 due to the company's partial pullout from China, while rival Baidu raised its stake to 73 per cent from 69 per cent. Google is likely to give up more ground this year. "Google's China market share won't return to the level seen before the incident, even though their revenue in China is increasing, the rate is much slower," said Li Zhi, a Beijing-based analyst with Analysys International. Its mobile operation system Android, seen as Google's bright spot in China, is now coming under threat from rivals Baidu and Tencent (SEHK: 0700). Local websites have reported that Baidu, China's top search engine, is set to create its own mobile operating system and Tencent bundles its highly popular QQ free instant messaging services with mobile phones. Google Maps is also under siege as China's new regulations require online map providers to acquire a licence. Google said it was still examining the impact of those new rules. While weakness in such products will dent its branding in China, it is unlikely to directly hit its revenue stream, which is still dominated by its search business. Investors have priced in Google's struggles in the China market and are now focusing on other areas of growth. Google shares fell 5 per cent last year, underperforming the Nasdaq.

Hong Kong*:  January 16 2011

Miao ethnic performance staged in Hong Kong - Actors of Miao ethnic group perform dance at a plaza in Hong Kong, south China, Jan. 14, 2011. The troupe from Bijie area of southwest China's Guizhou Province will hold five performance for Hong Kong residents to greet the upcoming Spring Festival. 

Restrictions on commercial use of public space at malls - Developers can use 10pc of area but have to pay a waiver fee - The government is seeking damages from Times Square, accusing it of making excessive profits from renting out public space in its ground-floor piazza. Guidelines unveiled yesterday grant developers the right to use 10 per cent of the public open space at their shopping malls, commercial blocks and other developments for commercial use - but only after they have paid a waiver fee. Legislators are split over the new government guidelines but share the same concern at possible legal loopholes open to abuse by developers. The commercial use of public open space became mired in controversy in June 2008 when the government began legal action - which is still ongoing - against the operator of Times Square in Causeway Bay, for allegedly profiting by charging exorbitant rents for the use of public space. In a 32-page document released yesterday, the Development Bureau spells out guidelines for the future design of public open space and the management of existing sites. The new policies will take effect from February 14. Developers will be required to apply for a waiver and permission from the lands and buildings departments to make commercial use of public space up to a limit of no more than 10 per cent of those public areas. Commercial uses include open air cafes, kiosks, book and newspaper stands, eating and drinking stalls as well as commercial exhibitions. Developers will be required to pay a waiver fee to the Lands Department after applications are approved. "The guidelines provide that, as a rule of thumb, areas permissible for commercial activities should not exceed 10 per cent of the public open space in private developments," the bureau said. "This percentage is on the low side compared with international standards so as to reflect the relatively high pedestrian flow in Hong Kong and the supplementary function of such uses in public open space." However, the level of the waiver fee and length of time for commercial use would be determined on a case-by-case basis, a bureau spokeswoman said. For non-commercial or charitable activities, developers are only required to approach the Lands Department for a waiver and then the Buildings Department for permission, not subject to charges. For future design of public spaces, such as plazas and courtyards, developers are advised to maintain at least 30 per cent green coverage. Legislative Council development panel member and Civic Party lawmaker Tanya Chan said the guidelines were unclear about the time limit for commercial use of public areas that might be subject to abuses by developers. "Also, the government has to be cautious in assessing each application to ensure that residents living nearby will not be disturbed," Chan said. However, fellow panel member Paul Tse Wai-chun said the government should be more flexible in using public areas regardless of whether they were for commercial or charitable use. "But the government has to step up law enforcement to ensure the waiver of land use will not be abused," Tse said. The operators of Times Square said yesterday they were studying the guidelines without saying whether they would apply for commercial use. Another major developer, Swire Properties, did not comment on the guidelines, only saying it would need more time to study them carefully. In a High Court writ filed by the government against Times Square more than two years ago, it alleged that for 15 years the company had charged up to HK$124,000 a day for use of space reserved for the public in its ground-floor piazza. The government sought damages from Times Square - a key asset of the Wharf group - for excessive profits from renting out two piazza sites. A date has yet to be fixed for a hearing.

Next arts hub chief may get a deputy to share workload - The next chief executive of the West Kowloon Cultural District may get a deputy or a chief operating officer to ease the pressure of the job. This follows the sudden departure of arts hub chief Graham Sheffield last week for health reasons. The idea by the board of the West Kowloon Cultural District Authority was tabled at yesterday's Legislative Council meeting. Chief Secretary Henry Tang Ying-yen, chairman of the board, answered inquiries from lawmakers about Sheffield's abrupt resignation. Many believe that Sheffield's departure was triggered by operational issues rather than health problems. But Tang was adamant that Sheffield left because of his health, showing three doctors' notes to prove the point. He described the resignation as unfortunate. Sheffield quit after only months on the job. Tang said the former artistic director of the Barbican Centre in London first expressed his wish to go on December 15. This was just days before he flew back to London after attending a Christmas gathering with the media on December 17. Sheffield appeared chatty at the time, albeit a little tired. Tang said he tried to talk Sheffield out of resigning. But a week later, Tang received a doctor's note instructing Sheffield to stay in London and said he should be released from duty immediately. A second doctor's note came through at the end of last month, again saying that he should remain in London. "[The doctor] insisted that he should not travel back to Hong Kong ... and should under no circumstances go back alone," Tang told lawmakers, quoting part of the doctor's notes. The doctor repeated the instructions in a third note and suggested 58-year old Sheffield end his three-year contract with the Hong Kong government with immediate effect. "[Sheffield] is not fit to travel back to Hong Kong," Tang read from the note. But he refused to disclose details of his illness or the identity of the doctor. Chief Executive Donald Tsang Yam-kuen agreed to let Sheffield go last Friday. Some lawmakers remained unconvinced yesterday. But Tang said: "If you have a doctor saying it three times and you still don't believe it, I cannot understand why." Sin Chung-kai, chairman of the board's remuneration committee, said Sheffield had been exempted from the required three-month notice. No compensation from either side was involved. Lawmakers yesterday continued to question the arts hub's operation as Sheffield is not the only person to have walked out since the authority was set up in 2009. Sin revealed that between April 1, 2009 and last Friday, 15 staffers have resigned - including Angus Cheng who quit his executive director's job after just seven days. At present, the authority has 58 staff and has posted a staff turnover of more than 25 per cent in about 1-1/2 years. Some lawmakers asked if the workload of heading the HK$21.6 billion arts hub was too much to handle, especially for someone new to Hong Kong. "Do you need to have a deputy CEO, especially for a CEO from overseas?" asked Democrat Lee Wing-tat, vice-chairman of the joint subcommittee monitoring the arts hub's development. Tang said that the board would look into reviewing the authority's structure. The hub's chief executive heads seven divisions, each led by an executive director, and has an office, led by another director, to support the chief's role. "There may be a COO [chief operating officer]," Tang said. "We will strive to improve the organisation's structure and will see if some of the CEO's duties can be split up and shared by someone else."

The outcomes of surgical procedures at public hospitals have deteriorated overall, an internal audit by the Hospital Authority shows, and there are some big variations between hospitals in performance. The audit, which covers all 17 surgical departments of Hong Kong's public hospitals from 2009 to last year, found that some hospitals, including Yan Chai Hospital in Tsuen Wan and Tuen Mun Hospital, continued to come low on the list. The authority regards the audit findings as sensitive information for internal use only, but some details were given to the South China Morning Post (SEHK: 0583, announcements, news) by people familiar with it. They show that Queen Mary Hospital in Pok Fu Lam - the University of Hong Kong's teaching hospital - continues to be the best performer. The Hospital Authority's "surgical-outcomes monitoring and improvement program" checks the results of more than 20,000 important operations, including elective and emergency procedures. It looks at the morbidity rate, meaning serious complications such as infections, acute kidney failure, strokes and other problems causing readmission, and the death rate. Last month the Post reported the findings of the first audit, covering July 2008 to June 2009. That report showed that one in 10 patients who underwent emergency operations in public hospitals died within 30 days, and nearly 40 per cent suffered complications. The authority said these outcomes were "good" compared with health systems overseas. The second report will be shared among senior staff tomorrow. It shows that big variations exist between surgical departments and overall performance has declined. Some small hospitals registered better results than large ones. Princess Margaret Hospital, in Kwai Chung, which performed below average in the first audit, has caught up with the average. Since the last audit, Tuen Mun Hospital, in trying to improve its standards, has held several meetings between management and surgeons to find ways to improve outcomes. A Tuen Mun Hospital doctor said a number of factors led to its results, including management problems in the surgical department, which had lost several experienced doctors. "Another problem is that Tuen Mun Hospital has to take care of a one million population but it has only two emergency operating theatres, a very low figure compared with other hospitals," the doctor said. "Sometimes doctors have to conduct emergency operations at night, and this affects quality." It is understood that the hospital has requested the authority to increase the number of operating theatres in the coming year. Doctors from the hospital have visited counterparts at Queen Mary Hospital to exchange views. "The teaching hospital has a very strong culture of quality assurance and audit, and this is something other hospitals can learn from," a person familiar with the situation said. The authority has pledged to release more information when the audit has been in operation longer. The findings are shared among surgeons and senior staff only. But some health care workers say they can accept more transparency. One hospital executive said: "I see no harm in the authority disclosing which hospital does the best and which the worst. Right now only the very senior staff know the rankings. If we make the information public, frontline staff will have an incentive to improve their standards." A department head said he did not mind sharing the findings with other health care workers but had reservations about making them public. "Disclosing the findings to the public may be demoralising to frontline staff," he said.

Adult mainland children of Hong Kong residents can apply for a single entry permit to come to Hong Kong to be reunited with their father or mother from April 1, Secretary for Security Ambrose Lee Siu-kwong said in Beijing on Friday. Lee made the announcement after he met with Beijing officials and received approval for the plan. He said tens of thousands of mainland adult children would qualify for the visa – although he does not expect all those would travel to the city for a family reunion. Lee said security bureaus in the mainland would give priority to applications from children whose father or mother held a Hong Kong identity card before December 31, 1979. “There is no deadline for applications. Any qualified person can apply. The application for ‘adult children’ will not take up the quota of immigrants from mainland in other categories,” he said. This new measure resembles a similar scheme operating in Macau. Following an announcement in 2009 by mainland and Macau authorities, adult children residing in the mainland with at least one parent who is a Macau permanent resident are be able to apply for a one-way permit from December 1 2009.

HKU team develops new method eliminating risk of rejection - Stem cell breakthrough holds potential to treat organ disease. A Hong Kong university says it has developed a method that could potentially lead to treatment of diseased organs using a patient's stem cells. The advance could see the end of long queues, frustrations and health risks of organ transplants and the use of embryonic stem cells. A medical team at the University of Hong Kong found an enzyme that avoids the need to use animal tissue to culture stem cells.The university claims it is the first in the world to do this. Using adult stem cells in research and therapy is less controversial than using embryonic stem cells because destruction of an embryo is not involved. At a press conference yesterday, the university's cardiology team - Professor Tse Hung-fat, Dr David Siu Chung-wah and Dr Lian Qizhou - described the method as a major breakthrough in stem-cell induction, in which the cells multiply and are differentiated for specific functions. The enzyme can prolong the survival of the induced stem cells, allowing them to stay active until reprogramming is completed, without depending on another animal cell or serum. The team said it used the enzyme to successfully induce various types of cells to become stem cells that develop into vessel and heart muscle cells. Stem cells, which can be found in many tissues, such as skin, can be turned into pluripotent stem cells, which can develop into any cell and be used to repair damaged organs. Treatment of diseased organs involves transplants, the use of human embryonic stem cells, or the use of adult human stem cells. Embryonic stem cells can become any other type of tissue or organ cell. Adult human stem cells require animal cells and serums to do the same. But Professor Kenneth Lee Ka-ho, deputy chief professor at the School of Biomedical Sciences at the Chinese University of Hong Kong, played down the announcement, saying that the method was "of very low efficiency". And he warned of a danger. "The stem cells could turn into anything in your body," Lee said. "If they turn into some pieces of bones in your heart, that could only make the matter worse. "Actually now we don't even need stem cells to generate other cells. The latest technology allows us to generate heart cells by directly putting genes in skin cells. I am sceptical how much longer we would look into stem cells," Lee said. Tse, of the research team, said he expected the method to undergo clinical testing within two years. Tse said the team would need a germ-free laboratory and more resources in its research before its discovery could apply to humans. They have not decided which kind of patients would be the first to try out the new treatment. Human-induced stem cells would be a more reliable option than using the cells in cord blood, Siu said. "If you haven't reserved your cord blood at birth, then you lost the chance," he said, "but we only need some of your skin cells, so it could be applied to everybody." Lian, who successfully treated leg ulcers in mice by injecting blood vessel cells created from the new method, said such treatments could also be a more effective than bone marrow transplants, as the cells were not vulnerable to the age and diseases of the donors. The team started the research in the middle of 2008, a year after Japanese scientists successfully generated pluripotent stem cells in a laboratory. It generated its first batch of human stem cells after two weeks. Now it plans to focus on how to develop an even easier way to get the cells from hair, saliva or blood. Hospital Authority figures show there were 1,732 patients waiting for organ transplants in public hospitals as of the end of last year - 1,621 in need of a donated kidney. A total of 534 organs were donated in the past three years; only 81 were kidneys. Stem cells are a controversial issue among religious groups, mainly because they often involve the use of discarded human embryos. US President Barack Obama allowed public money to fund embryonic stem cell research in 2009. But a year later, it was overturned by a court as it involved illegal destruction of human embryos. Three months ago, a patient in the US, the first in the country, was treated with human embryonic stem cells.

Hong Kong should not be looking at delinking its dollar from the greenback as such an action would be dangerous, Chief Executive Donald Tsang Yam-kuen argues. Tsang was at the Legislative Council's question-and-answer session when he rejected the idea, saying it was a non-starter until the yuan is traded freely. That was after financial services sector lawmaker Chim Pui-chung called for setting up a panel to study whether now is the right time for delinking the local currency from the US dollar. In the wake of two financial crises, Tsang said, Hong Kong was not ready to unpeg. He went on: "When should we really have to consider the matter? It is when the capital account of the renminbi, our biggest trade partner, can be traded freely." That would be the time "to consider whether we should peg the Hong Kong dollar to the renminbi. "We should not suddenly unpeg [the Hong Kong dollar] from the US dollar and let it float in the sea. I believe it would be very dangerous." Freeing up the yuan capital account would mean allowing non-trade-related flows in and out of the mainland. Additionally, Tsang said, if there was an announcement that Hong Kong was to study the peg to the US dollar "it would be a big deal. Speculators would immediately come." That could mean another threat to Hong Kong if financial markets fluctuated sharply. Against that, he said, the peg has operated effectively for 29 years, and a stable currency is paramount to Hong Kong's trade. Chim also argued that a continuous depreciation of the US dollar could worsen inflation in Hong Kong. Tsang countered that inflation is not limited to places pegged to the US dollar. "There is inflation on the mainland," he noted, "and even the whole of Asia." He is confident that problems arising from short-term currency fluctuations can be overcome and pledged that his administration will address inflation to ease suffering at the grassroots. But Chim argued: "We see the boat of the US dollar sinking. Why are we obliged to sink with it? Why do you have to lead some seven million Hong Kong people [to sink with it]?" He also recalled the time when the exchange rate for the Singapore dollar to the Hong Kong dollar was about one to 1.6, "but now it's about one to six. Did [Singapore] peg with foreign currencies before? " The Malaysian ringgit pegged to [the US dollar] when it was under attack from speculators [but] appreciated after it was unpegged."

 China*:  January 16 2011

Commemorative stamp for China's Year of the Rabbit on sale in France - Photo taken on Jan. 14, 2011 shows the commemorative stamps for China's upcoming lunar new year, Year of the Rabbit, in Paris, capital of France. The French postal department put on sale on Friday the commemorative stamp for China's Year of the Rabbit which is due to begin on Feb. 3, 2011.

China defends yuan policy before Hu trip - China defended its exchange rate policy on Friday, days before President Hu Jintao heads to Washington, with a senior diplomat saying the value of the yuan is based on the country’s own national interests. US President Barack Obama is likely to raise US complaints that Beijing maintains the yuan at artificially weak levels, giving China has an unfair trade advantage. The comments by Chinese Vice Foreign Minister Cui Tiankai suggest that President Hu may push back with China’s own counter-argument. “First of all, I want to say that in undertaking reform of the exchange rate formation mechanism for the renminbi ... that is based on China’s own developmental interests and needs, and is not in response to demands from another country,” Cui said. “Of course, in doing this, that can benefit both China’s own reform and opening up and development, and also trade and economic relations with other countries, including with the United States,” he added, speaking at a forum hosted by the Foreign Ministry. US Treasury Secretary Timothy Geithner said on Wednesday that Washington was “willing to make progress” in giving China greater access to the American market and high-tech goods, provided that it saw some flexibility from Beijing on its tightly controlled exchange rate regime. Cui said he agreed with a comment he cited as coming from Geithner: “Both sides have a great deal invested in each other’s success”.

Air China profits double as traffic surges - China shares rose on Friday after the flag carrier said its estimated last year net profit more than doubled from last year, as the nation’s passenger and cargo traffic continued to surge. The flagship carrier, which had a 2009 net profit of 5.03 billion yuan (US$759.8 million) did not provide a specific earnings figure for last year in the preliminary forecast filed to the Shanghai Stock Exchange. Shanghai-listed shares of Air China (SEHK: 0753) rose 0.84 per cent to 13.2 yuan in late morning trading. “Benefiting from the rapid growth of the macro-economy of China and the steady recovery of the global economy, the company was able to seize the market opportunity of a strong demand for both passenger and cargo transportation services,” it said in a statement. The company is due to release its annual earnings report in late March. China’s aviation industry has been boosted by strong economic growth with the number of passengers expected to reach 300 million this year, up from 267 million last year, according to state media. The total air cargo volumes for this year are estimated to reach 6.2 million tonnes, up from 5.6 million tons last year.

The biggest-ever Lunar New Year travel rush is expected in coming weeks, prompting authorities nationwide to brace for potential complications such as bad weather, state media said on Friday. The movement of hundreds of millions of commuters for the Lunar New Year, the country’s most important holiday, is considered the biggest annual mass human migration in the world. The number of separate passenger trips on the nation’s transport grid is expected to reach 2.85 billion during this year’s travel period from late January to late February, up 11.6 per cent, Xinhua news agency said. Lunar New Year’s day falls on February 3 this year. Xinhua said the figures were given by Liu Tienan, deputy director of the National Development and Reform Commission, the country’s top economic planning agency, in a nationwide video conference on Thursday on travel preparations. Each year, masses of Chinese swamp the transport grid on their way back to their hometowns to celebrate the holiday with families. The mainland has well over 200 million migrant workers working away from their homes. The numbers will swell further this year due to the rising ability to afford travel, but the situation could be complicated by icy weather across large areas, Liu said. A record 230 million passengers are expected on the mainland’s railways, up 12.5 per cent, Liu said. Road passenger trips will reach 2.55 billion, up 11.6 per cent, while air trips will reach 32 million, an increase of 10.8 per cent. Liu and other officials ordered authorities across the nation to take measures to ensure rapid responses to transport problems such as accidents, vehicle breakdowns, and weather-related hurdles. Millions of New Year travellers were stranded for days in early 2008 when freezing rain and other icy weather across much of the country’s south and central regions threw the transport network into chaos.

Two cities (Shanghai and Chongqing) set for homes tax - Property buyers in two mainland cities are bracing for taxes. Chongqing is going to release the details of its property tax plan next week, and Shanghai is awaiting approval from the central government, mainland media reported. The introduction of a property levy is an important breakthrough for China's tax system. But it will only have a mild impact on home prices, analysts say. The Chongqing government is going to levy property tax on both new and existing luxury houses and focus on curbing speculation, with a proposed tax rate of 0.5 percent to 1.5 percent, sources told China Securities Journal. The proposed property tax will be levied on all villas and high-end commercial flats which cost more than double the average home price in the city. Flats of more than 144 square meters may be subject to property tax, sources said. The city government will also levy tax on people who own more than one flat, to curb speculators. Meanwhile, Shanghai is tipped to first levy property tax of 0.5-0.6 percent on flats of more than 70 square meters. The plan will be extended to existing flats later, a source said. "I don't think a property tax is going to have a big impact on China's housing market," said CLSA strategist Andy Rothman. The launch of a property tax in China would be an important source of income for local governments, but would not damage the property sector and prevent speculative bubbles from developing, he added. China Society of Macroeconomics secretary-general Wang Jian also said home prices may still increase slightly this year. They would decline only in five years after a large amount of affordable housing had been brought on to the market. He said mainland home prices would increase sevenfold over the next 10 years.

 

Li Na beats Kim Clijsters in Sydney Int'l final - Li Na, who became the first Chinese ever to win a Premier title, said the tennis gods shone on her. It was a first loss in 14 semi-finals and finals for US Open champion Clijsters since her return from retirement in August 2009 and the manner of defeat will be a big psychological blow just three days from the start of the year's first grand slam. The 28-year-old Li, a semi-finalist at Melbourne Park last year, sealed her fourth career title when she volleyed home a winner with Clijsters stranded off the court after 90 minutes. It had taken Clijsters just 18 minutes to rack up a 5-0 lead in the first set but her game then fell apart, with seven double faults and 27 unforced errors telling the tale of a spectacular collapse. 

Ferrari's 999th car sold in China - The Italian car manufacturer held a car show to celebrate its 999th car sold in China.

Spring Airlines net profit reaches $71m in 2010 - Spring Airlines, a Shanghai-based low-cost carrier, reported a net profit of 470 million yuan ($71.2 million) in 2010, a year-on-year increase of 240%, Friday's China Business News reported. The carrier's chairman Wang Zhenghua said the company's transportation capacity didn't increase too much in 2010, but its business turnover rose 62%, reaching 4.32 billion yuan ($654.4 million). "This shows that the demand is quite good," Wang said. Wang predicted China's air transportation market in 2011 will not be as robust as last year and Spring Airlines' profit margin may dip accordingly. "We plan to increase transportation capacity 30%-40% this year, but our target for profits is approximately the same as last year," said Wang. According the report, Spring Airlines, the country's only low-cost carrier, planned to set up a secondary hub in northeast China's Shenyang city or north China's Shijiazhuang city this year. Wang said he also hoped to operate more flights to and from Shanghai. The chairman said he is satisfied with its Shanghai - Hong Kong route and Shanghai - Ibaraki route (about 80 kilometers northeast of Tokyo), saying the average passenger load factor is as high as 90%-95% on the two routes. Spring Airlines will continue to expand its international route network this year. The possible international and regional destinations include Macao, Taiwan, Southeast Asia as well as other cities in Japan, the report said. Wang stressed that this ambitious plan still needed approval from the Civil Aviation Administration of China (CAAC). Established in 2004, Spring Airlines is one of China's first private airline companies. It operates more than 50 domestic routes and two regional and international routes. Its fleet comprised 21 Airbus A320 jetliners by late 2010. China's aviation industry boomed last year as 267 million Chinese traveled by air, up 15.8% year on year, with profits of domestic airline companies hitting 35.1 billion yuan ($5.32 billion), Xinhua reported Wednesday.

Film premiere of wartime drama film 'Shaolin' in Beijing - Director Benny Chan (4th from left) and cast members promote the premiere of the film "Shaolin" in Beijing on Thursday, January 13, 2011.

China's leading steelmaker halts production in capital - Workers watch a furnace operate for the last time at Shougang Group's steel plant in Shijingshan district, in the western suburbs of Beijing on Dec 19, 2010. The country's leading steelmaker halts operations in Beijing amid efforts to cut the capital's air pollution. It has built a 21-square-kilometer new plant in Caofeidian, an islet 220 kilometers east of Beijing in Bohai Bay, to replace Shougang's old facilities. Shougang Group, a leading heavyweight steelmaker in China, announced Thursday it had halted all its steel-making operations in Beijing amid efforts to cut air pollution in the capital. A shutdown ceremony was held Thursday morning in Shougang's Shijingshan site in western Beijing, marking the end of the company's plant that was founded almost a century ago and had an annual production capacity of 8 million tons. That also means Shougang had reduced air pollutants it had discharged into the capital's sky from the maximum of 9,000 tons a year to zero now.

Hong Kong*:  January 15 2011

Telefield aims to raise HK$135m from IPO to sign new brands - Telefield International chairman Cheng Han-ngok hopes to continue selling RCA phone products in North America. Hong Kong-based electronic components manufacturer Telefield International Holdings, which makes products for Pioneer of Japan, is raising up to HK$135 million in an initial public offering to expand production capacity and acquire new brands. Apart from mass producing products for large firms, Telefield has been selling branded products primarily in North America and Europe. It has a licence for the RCA brand, one of its more profitable product lines, to distribute small and medium-sized phone products in North America. Telefield said the RCA was the second largest small and medium-sized business phone system in the US retail market. In 2009, it bought a German brand TrekStor, which makes multimedia products and portable storage devices. The company filed for insolvency in 2009. Telefield said that in the first eight months last year, gross profit margin of its branded products was about 22 per cent, of which the RCA operation constituted 32 per cent. Chairman Cheng Han-ngok said he was confident the company would be able to extend its licence, which will expire in 2013, to continue to distribute the RCA products. "We are in talks now," said Cheng. "We have a good relationship [with RCA]. I am very confident that we can get the licence extended." Cheng said the company hoped to make higher margin products such as those for medical devices and automobiles, but he declined to say when the loss-making TrekStor brand would become profitable. According to the listing prospectus, TrekStor booked a net loss of HK$22.3 million during the eight months ended August 31 last year. One of the reasons, the prospectus said, was a slowdown in sales following the acquisition. This was because Telefield had to form relationships with customers of TrekStor, which was being liquidated, and pay staff costs and rent. The company's earnings for the first eight months of last year were lower than the same period in 2009. For the eight months ended August 31 last year, Telefield reported a total net profit of HK$36 million, down from HK$53.6 million for the eight months ending August 31, 2009. Chief financial officer Poon Ka-lee attributed the drop in profits to the loss-making TrekStor and the cost of the listing. "Our investment in TrekStor is still at an early stage," said Poon. "We estimated that we did well for the rest of 2010." The Telefield offering has been priced at an indicative range of HK$1.01 to HK$1.35 per share and the target listing date is January 27.

Games opponents stabbed us in the back, says Tsang - Tsang says dissidents' individual cases will be considered. Officials had been stabbed in the back in the government's bid for the Asian Games, Chief Executive Donald Tsang Yam-kuen told lawmakers yesterday. During the process of lobbying, others let us slide down and stabbed [us] with many holes in the back," he said. Facing certain defeat in a crucial vote today, Tsang appeared before the Legislative Council yesterday to make a final push for the 2023 Asian Games bid. Only 14 lawmakers have openly promised their support. Tsang said the government would lobby until the end, saying that to host the Games would bring long-term benefits to the city. He said the government would continue to develop sports facilities even if the HK$6 billion funding was voted down by Legco's Finance Committee today. "[But] if we win the bid to host the Games, we'll have a clear timetable [for building sports facilities]," he said. The government has pledged HK$2.25 billion to improve the existing 41 sports venues, a document from the administration to Legco shows. Last night a government official said Tsang was referring to criticism the government faced during its campaign for the bid. The official also noted that Legco passed a motion last January urging the government to consider bidding for the 2019 Asian Games. Pang Chung, honorary secretary of the Hong Kong Olympic Committee, warned yesterday that sport in Hong Kong would enter a 12-year-long "Dark Ages" if Legco voted against the bid. "The athletes all have high hopes of competing in front of their families, friends and colleagues on home soil at the 2023 Asian Games," Pang said. "But if the councillors say no, their hopes will simply be dashed. "Hosting a major games will benefit not only the athletes but it is also a great experience for many people in the sports community - the sports administrators, venue management personnel, and even the sports media covering such a big event. "More importantly, it will provide the sports community a target to work for and boost the sporting culture which has been lacking for many years in Hong Kong. The councillors should consider these long-term factors which will have great impact on the development of sports here." Meanwhile, a Home Affairs Bureau spokesman said it did not selectively disclose a government-commissioned poll result that surveyed public opinion on the Games bid in an attempt to mislead the public. Civic Party lawmaker Tanya Chan said earlier the government did not disclose the full results of the poll to a Legco panel last month.

Property ban takes toll on applications for HK residence - Interest in a scheme that grants Hong Kong residence to investors of a specified sum has plunged since property was removed from the list of approved investments three months ago in an effort to cool the market. The number of applications under the Capital Investment Entrant Scheme dropped 67 per cent in November, the month following the change, from an average of 570 a month in first nine months of last year, to 188. Applications rebounded to 242 in December, but were still only 40 per cent of the average for the first three quarters of last year. The government announced on October 13 that real estate had been temporarily suspended from the investment list and the minimum value of investments had been raised from HK$6.5 million to HK$10 million. The move followed concerns that an influx of mainland money was fuelling property speculation. "We cannot reach a conclusion so soon [on whether the revised scheme is not attractive] and we will monitor the effectiveness of the scheme on a regular basis," Director of Immigration Simon Peh Yun-lu said in a year-end review. From the launch of the scheme in October 2003 until the end of last year, the Immigration Department received 16,600 applications and approved 8,294 with investments totalling HK$63.3 billion, an average of HK$7.09 million each. Under another revision to the scheme, applicants will be able to invest in insurance products, but details of this have yet to be announced. The department said it would work closely with airlines to plug loopholes that enabled smuggled mainlanders to be given boarding passes in the names of others, while inside the airport secure area. Airline ground staff have been arrested on suspicion of handing out the boarding passes, including in the highly publicised case of a young mainlander who used a mask to disguise himself as an elderly Caucasian while boarding a flight to Canada. "The mainlander using a mask was an individual case, and the situation of this smuggling ring using Hong Kong as a transit point was not a severe one," Peh said. Immigration officers conducted spot checks on 24,889 flights and 43,391 travellers at the airport last year and 213 people were charged with smuggling-related offences, receiving penalties ranging from jail terms of two months to 48 months or fines of HK$3,000 to HK$20,000. Traffic at control points was heavy last year and immigration authorities recorded an increase of 18 million passengers, or 8.1 per cent, compared with 2009. The number of mainland visitors travelling through Hong Kong control points rose 27 per cent, from a daily average of 48,467 in 2009 to 61,551 in 2010. The review said more e-channels would be installed at the border this year, including 20 more at Lok Ma Chau to bring the number to 46 and nine more at Man Kam To to bring the total to 18. The department would also recruit about 100 officers to cope with the increasing workload at the borders and elsewhere.

One of the mainland's most prominent lunar experts has given Hong Kong scientists stellar reviews for their contributions to China's lunar exploration program. Ouyang Ziyuan, the chief scientist of the national lunar orbiter project, repeatedly thanked local researchers yesterday for the roles they had been playing. "The Hong Kong University of Science and Technology has made a great contribution to our country's lunar probe project," Ouyang said at a lecture covering explorations of the moon and Mars. Ouyang also hailed remote-sensing technology contributed by the Chinese University, a sample-picking device invented at Hong Kong Polytechnic University; and information provided by the geology faculty of the University of Hong Kong. Invited by the China National Space Administration to join the lunar program in 2007, Professor Chan Kwing-lam, an astrophysicist with the University of Science and Technology, and his research team used microwaves and the first 3-D lunar pictures to analyse the thickness of the moon's surface. They found huge temperature differences between day and night and at different altitudes. The finding was considered crucial to China's future lunar landings - not only unmanned missions before 2017, but also the first manned one, scheduled for 2020. Chan said his team would next try to ascertain the exact quantity of helium-3 on the moon. The answer was far from clear, he said, although earlier reports said there were 10 million to 50 million tons. Abundant on the moon, helium-3 is a clean and safe material for nuclear energy that is not naturally found on earth. Earlier reports said the moon's rich reserve of helium-3 was adequate for about 10,000 years of use globally. However, Ouyang said it would take at least 30 years before the moon's store of helium-3 could be exploited.

HK still the world's freest economy, but for how long? Hong Kong has been named as the world's freest economy for the 17th year running by a conservative American think tank. But the organisation warns that the looming minimum wage and the proposed competition law may contribute to the city's lead being eroded, while an academic cautions that growing economic integration with the mainland might do the same. Singapore came a narrow second, also for the 17th year running. Australia was third and New Zealand came fourth. Created by The Heritage Foundation and The Wall Street Journal, the index ranks economies on a scale of one to 100 according to 10 economic measurements of openness, the rule of law and competitiveness. The assessment has been made annually since 1995, to measure the freedom of the world's economies. This year's index took into consideration 183 economies' policy developments since the second half of 2009. The mainland ranked 135th. According to the index, Hong Kong led the world in areas of business, fiscal and investment freedoms and in property rights. However, the foundation warned that the city's leading position might be threatened by the proposed competition law and the introduction of a statutory minimum wage from May 1. "We are looking very carefully at the new minimum wage ... and we'll be looking to see what kind of impact that has on the economy, and it might have an impact on the economic freedom score as well," said Terry Miller, director of the foundation's centre for international trade and economics. The Journal's opinion page editor, Hugo Restall, said the city's ranking might drop if the government insisted on sitting on its reserves, expected to hit HK$600 billion this year. He urged the administration to give half of it back to the community. The index was released just weeks after Chief Executive Donald Tsang Yam-kuen proposed that the city play a bigger role in Beijing's 12th five-year plan for 2011 to 2015 - and received a promise from President Hu Jintao that the city's views would be included. The foundation did not elaborate on whether the city's growing economic integration with the mainland would hamper its freedom. Cheng Yuk-shing, an associate professor of economics at Baptist University, said it was more a case of the mainland needing to open up rather than Hong Kong being less free. "No substantial [mainland] economic policy has intervened in the free market. Hong Kong is still very free. But we can't know if any meddling policy will be brought in later."

At least 10 asset managers are preparing to launch yuan-denominated funds in Hong Kong to tap robust overseas demand for yuan assets amid expectations of faster yuan appreciation and broader investment channels, two people with direct knowledge of the matter said. One source said the fund unit of HSBC (SEHK: 0005) was among the asset managers planning the launch while Guotai Junan Securities has said its Hong Kong unit was preparing a yuan fund. The plans come after five institutions including UBS, Schroders and Haitong Securities, launched yuan funds in Hong Kong in recent months that drew feverish demand from investors despite a shortage of investment channels for the Chinese currency in the city. Most of the planned yuan funds will be raised through private placement, with some institutions planning to start marketing as soon as this month ahead of the lunar New Year holiday in early February, said the sources, who declined to be identified because they are not authorised to speak to the media. China is encouraging international use of its currency and aims to develop Hong Kong into an offshore yuan centre, part of efforts to reduce reliance on the US dollar in the aftermath of the global financial crisis. Yuan circulation in Hong Kong totaled 280 billion yuan (US$42.3 billion) at the end of November, and in an effort to create an offshore market for yuan products, China has allowed global institutions and companies, including the World Bank, McDonald’s and Caterpillar to issue yuan-denominated bonds in the city. In addition, China may let companies conduct yuan-denominated IPOs in Hong Kong, and is also planning to allow offshore yuan to be invested in the mainland under the so-called mini-Qualified Foreign Institutional Investor (mini-QFII) scheme. Overseas demand for yuan assets is also driven by expectations that China may allow the yuan to appreciate faster, with some economists forecasting a 6 per cent rise in the currency’s value this year.

Scientists at The University of Hong Kong’s Faculty of Medicine have successfully generated new human-induced pluripotent stem cells (hiPSCs) that are free from animal products, the Cardiology Department’s Medical Professor Tse Hung-fat said on Thursday. Speaking at a press conference, Tse said these human-induced pluripotent stem cells could be used to produce different human cell types and tissues used to study the potential clinical applications of stem cell therapy for the treatment of critical limb ischemia – a major cause of limb amputation in the elderly – as well as for the modelling of human genetic diseases that cause premature ageing, such as progeria. “The patient-own human-induced pluripotent stem cells provide an unlimited source of human live cells without the need to really operate on the patients to get tissue samples from different organs. This allows scientists and clinicians to investigate the use of those cells for tissue regeneration, to study the disease process and to test the response of drugs in a culture dish,” he explained. “The same technology and strategy can also be applied to more commonly-encountered diseases such as neurodegeneration [Parkinson’s and Alzheimer’s diseases, for example] and heart failure to provide insights into the disease development,” he added. In the near future, he expects the new technology to help clinicians understand the growth of these diseases and to bring new impetus towards developing human stem cell technology so that it can be applied to clinical treatment. Led by Tse, the HKU research team is now building up a disease-specific human-induced pluripotent stem cells library to facilitate the research.

Henderson seeks review on wetland area plan - The popular wetland of Nam Sang Wai in Yuen Long, which Henderson Land wants to develop into luxury houses and a golf course. Henderson Land (SEHK: 0012) is testing the resolve of the government's planning advisers again, seeking a review of its decision not to allow the developer more time to start work on its 14-year-old housing project on the Nam Sang Wai wetland. The application was received by the Town Planning Board yesterday. Planning laws require a review, conducted by board members, to be scheduled within three months. The application flies in the face of ferocious opposition from environmentalists to Henderson's plan for luxury houses and a golf course. The developer has not ruled out going to the courts it if does not get its way. "The law allows us to seek a review and go to the board personally to present our case to the members," a spokeswoman for the developer said. "We hope to finish all these processes before we can work out proposals that can make everyone happy." Opponents who have been calling on Henderson to drop the project to improve its image said they were extremely disappointed with the latest move and would organise a public rally in Central on January 23. "Henderson Land should know well what the public thinks. It is wrong for them to go ahead with the review and it shows how reluctant they are to become a socially responsible company," said Kwong Chun-yu, a Yuen Long district councillor and rally organiser. The board last month rejected Henderson's application to extend the development deadline for the project that comprise more than 2,500 flats, a 10-hectare golf course and a wetland protection area. In making its decision, the board said Henderson had had ample time to comply with 29 conditions covering such items as traffic and environmental issues that were set out when the development project was first approved in 1992. But by the time the final development deadline - which has already been extended three times - expired on December 18 most of these conditions had not been met to the satisfaction of government departments. The board indicated that the developer should file a new planning application that met present-day public expectations and planning. As well as the three deadline extensions since 2001, Henderson won a reprieve for the project in 1994 when the Town Planning Appeal Board overturned a Town Planning Board decision to reject the project as then proposed. The appeal ruling was then challenged by the Town Planning Board and eventually the Privy Council in Britain upheld the ruling in 1996.

100 schools sign up for class-reduction scheme - About 100 schools will join a voluntary class-reduction scheme aimed at staving off closures due to falling enrolment, Secretary for Education Michael Suen Ming-yeung said. The number of participating schools is a big leap from the 23 that signed up in the first round of the scheme in April. There were now enough schools to make the scheme work, he said. Suen attended a class-reduction accord signing ceremony yesterday at Chan Young Secondary School in Northern district, the first district where all 14 eligible schools offering five classes or more have pledged to join the scheme. He said the good response would greatly relieve the crisis over school closures. "There will be absolutely no closure of schools next year," he said. Education Bureau figures show the city's Form One population will fall from 75,400 in the 2009-10 academic year to 53,900 in 2016-17. The scheme aims to share the load of falling rolls by encouraging schools to reduce the number of their Form One classes from five to four, so that students originally assigned to schools running five classes can go to those suffering from insufficient enrolment. The deadline for joining the second round was extended from November to the end of February. An about-turn came in districts including Yuen Long and Sha Tin, which are among those hard hit by the falling student population but held out in the first round. Most schools in the districts have now pledged to join. Chau Hau-fung, chairman of the Sha Tin District Secondary School Heads Association, said more than half of the 20 eligible schools in his district would join in the latest round. "The remaining hold-outs are still considering whether to join ... They have to consult parents and teachers before making a decision," he said. A Yuen Long school principal said most of the 20-plus eligible schools in the district would join the scheme. Northern District Secondary School Heads Association chairman Yim Chi-shing said joining the scheme could improve the quality of teaching. "We have fewer students but the same number of teachers. We can practise split-class teaching," he said. With the exception of King's College, whose alumni objected to joining, all 16 eligible government schools agreed to take part the scheme, which offers cash incentives and a pledge not to lay off surplus staff for up to nine years.

 China*:  January 15 2011

China sets goals to reduce emissions of pollutants - China said on Friday it would cut emissions this year by rejecting construction projects that pollute too much and developing new technologies that curb greenhouse gases.

The central government plans to screen short television advertisements in the US next week featuring Chinese celebrities to coincide with President Hu Jintao's visit to the country, a senior official says. Wang Zhongwei, deputy director of the State Council Information Office, told The Beijing News there would be two versions of the advertisement, one 30 seconds long and another lasting a minute. Wang said the advertisements had been completed and it was planned to air them on the giant screen in New York's Times Square as well as on television networks. "The two versions will be aired on different platforms," he said. The advertisements feature celebrities from all walks of life including basketball star Yao Ming and astronaut Yang Liwei as well as ordinary mainlanders. Analysts say China has begun to realise in recent years that a positive public relations campaign can play a key role in boosting its soft power. The Guangming Daily's website reported earlier that the advertisement would feature 50 celebrities including Hong Kong property tycoon Li Ka-shing, Hong Kong film director John Woo Yu-sum, Olympic diving gold medallist Guo Jingjing and pianist Lang Lang. Professor He Hui , from the Communication University's school of advertising, said China had become more confident. "It is a positive move to communicate with the rest of the world through advertising, an internationally recognised communication method," He said. "But it's impossible to know Chinese culture through one advertisement ... the actual behaviour of the country is more important." Wang said the state-sponsored image campaign would also include a 12-minute film on China's accomplishments in politics, economics, society, culture, science and research, education, the environment and ethnic minority relations that is still being made. Wang said the film also would be aired in Europe, Latin America and the Middle East. The advertisement and film would also be aired on new media platforms including the internet.

China's central bank guided the yuan past 6.60 per dollar on Thursday, setting the mid-point above that level for the first time, ahead of President Hu Jintao's visit to the US.

China to drive Asian growth: World Bank - China's rapid growth should slow to 8.5 per cent this year from 10 per cent last year but the world’s second-largest economy will remain the focus of Asia's expansion, the World Bank said on Thursday. In a report on the global outlook, the bank said overall growth for developing Asian economies should ease to 8 per cent from last year’s 9.3 per cent as exports moderate and governments rein in credit to cool inflation pressures. China’s growth is easing as Beijing winds down its stimulus and tightens credit to cool inflation and surging housing prices, the bank said. Still, it said continued strong Chinese demand for raw materials and components should buoy exports by its Asian neighbours. “East Asia is well positioned to enjoy further years of strong – albeit more moderate – growth over the period to next year,” the Washington-based bank said. “China will remain the focal point of regional activity.” The bank’s forecasts for developing economies in East Asia and the Pacific include China, Indonesia, Thailand, Vietnam, the Philippines, Malaysia and Pacific Island nations Fiji and Vanuatu. Many economies are trying to rein in high or rising inflation, with hikes in food prices especially acute, the bank said. It said prices of staple foods might climb further if investors start buying more commodities in hopes of earning higher returns at a time of low interest rates in the West. “The pickup of inflation in China is tied in large part to higher food prices; and for a number of countries, import bills would escalate substantially,” the bank said. China’s inflation surged to a 28-month high in November of 5.1 per cent, driven by an 11.7 per cent jump in food costs that analysts blamed on a flood of bank lending. Beijing has hiked interest rates twice in the past four months and tightened investment curbs to keep inflation from spreading to other parts of the economy. China’s growth has slowed as Beijing tries to steer it to a more manageable level. The expansion eased to 9.6 per cent in the three months ending in September from a stimulus-fuelled post-crisis high of 11.9 per cent in the first quarter. Region-wide, exports should expand by 12 per cent this year-12, down slightly from 15 per cent during the boom, the bank said. Indonesia’s this year growth should accelerate to 6.2 per cent from last year’s 5.9 per cent, the bank said. It warned that Thailand’s expansion should slow sharply, falling to 3.2 per cent from last year’s rapid 7.5 per cent. Vietnam’s growth should moderate to 6.5 per cent from last year’s 6.7 per cent, the bank said.

China said it will be "difficult" for its ambassador to the International Atomic Energy Agency to tour Iran's nuclear facilities, potentially smoothing a source of friction ahead of President Hu Jintao's trip to Washington next week. The mainland has backed United Nations Security Council resolutions pressing Iran to abandon its disputed nuclear activities. But China has close energy and trade ties with Iran and has opposed unilateral sanctions imposed by Europe and the United States. “The Vienna representative is still in China right now, so it will be difficult for him to go to Iran,” Foreign Ministry spokesman Hong Lei said at a news briefing, without elaborating further. Western diplomats had said last week that Russia and China were being actively discouraged from going on the tour as this could erode the united front between the six world powers involved in talks on Iran’s disputed uranium enrichment programme — the United States, China, Russia, Britain, France and Germany. Western diplomats have described Iran’s invitation as an attempt to split the six to weaken sanctions.

China confirmed it staged a test flight of its J-20 stealth fighter yesterday - the day US Defence Secretary Dr Robert Gates met President Hu Jintao in Beijing. But Gates said Hu assured him that the J-20's maiden test flight was not timed to coincide with his visit. Gates said: "I asked President Hu about it directly and he said that the test had absolutely nothing to do with my visit and had been a pre-planned test." Asked whether he believed that, Gates added: "I take President Hu at his word."

Border agreement settles century-old dispute with Tajikistan - China confirmed on Thursday it has signed a border treaty with Tajikistan settling a long-running land dispute between the neighbors.

China Telecom poised to be Apple domestic carrier - China Telecom (SEHK: 0728), the mainland's No 3 mobile network operator, may have moved a step closer to becoming Apple's next domestic carrier partner after a new version of the iPhone 4 was announced yesterday. Apple and Verizon Wireless, the largest mobile carrier in the United States, confirmed at a news conference in New York that an iPhone 4 based on the 3G standard called CDMA2000 1x EV-DO would be widely available from February 10. That is the same 3G standard supported by China Telecom's mobile network. Current Apple carrier partners, such as China Unicom (SEHK: 0762, announcements, news) on the mainland and AT&T Mobility in the US, operate 3G networks based on the more widely adopted WCDMA and higher-speed HSDPA standards. Lu Libin, of Beijing-based market research firm Analysys International, said the new CDMA iPhone 4 could be available on the mainland around three months after its US release. "We expect China Telecom's 3G business to grow rapidly once it secures an agreement with Apple," Lu said. A China Telecom spokesman said: "Our company does not have any timetable for launching the CDMA 1x EV-DO version of the iPhone 4 in China."

Hong Kong*:  January 14 2011

Court hears Tony Chan driven by 'greed' - 6:06pm Fung shui master Tony Chan Chun-chuen's fight to overturn a court ruling that quashed his claim Nina Wang Kung Yu-sum's estate was driven by greed, a court heard on Wednesday.

2011 Fendi spring-summer collection fashion show held in HK - Model present fashion creations and new style of handbags during the 2011 Fendi spring-summer collection fashion show in Hong Kong.

Hong Kong ranked as world's freest economy - Two tramcars pass by the Causeway Bay commercial district, south China's Hong Kong, Jan. 12, 2011. Hong Kong has been ranked the world's freest economy for the 17th consecutive year in the 2011 Index of Economic Freedom rankings released by the Heritage Foundation and Wall Street Journal Wednesday. Hong Kong remains the world’s freest economy for the 17th straight year and ranked 1st out of 41 countries in the Asia-Pacific region – followed by Singapore and Australia –according to a report released by the Heritage Foundation and the Wall Street Journal on Wednesday. The city’s score remains unchanged from last year at 89.7 out of 100 in the 2011 Index of Economic Freedom, with small declines in the score for government spending and labour freedom offsetting improvements in fiscal freedom, monetary freedom, and freedom from corruption. The report said Hong Kong is one of the world’s most competitive financial and business centres, demonstrating a high degree of resilience during the global financial crisis. “It’s effective legal and regulatory frameworks and openness to global commerce strongly support entrepreneurial dynamism.” The report also pointed out that Hong Kong has been Asia’s second largest destination for foreign direct investment for the 12th consecutive year, trailing only the mainland. But the report warned about the threats posed by the introduction of the statutory minimum wage from May 1 and competition law to Hong Kong’s economic freedom. The index, released by the Heritage Foundation think-tank and the Wall Street Journal, measures economic liberty in 10 areas.

AIG sells US$2.1b stake in Taiwan unit - American International Group Inc. has agreed to sell its 97.6 per cent stake in Taiwan’s third-biggest insurer to Ruentex Group for US$2.16 billion, five months after regulators nixed AIG’s first attempt to sell the business. The deal announced Wednesday is part of AIG’s efforts to raise funds to exit government ownership after it received the largest US bailout – US$182 billion – of any financial firm in the wake of the 2008 financial crisis. AIG’s sale of Nan Shan Life Insurance Co. will have to pass muster with Taiwan’s Financial Supervisory Commission, an independent government body that is far from certain to give approval. In August last year the FSC turned down AIG’s effort to sell Nan Shan for US$2.15 billion to Hong Kong-based Primus Financial Holdings, because of fears that Primus might be a front for mainland Chinese interests. Taiwan law prohibits Chinese investment in the island’s financial sector. “Ruentex has demonstrated that it is able and willing to invest in Nan Shan’s future, and that it will protect and serve the best interests of Nan Shan’s policyholders, employees and agents,” AIG President and Chief Executive Officer Robert Benmosche said in a statement. Ruentex counts among its allies powerful Taiwanese politicians including legislative speaker Wang Jin-pyng but FSC approval of this latest deal is not guaranteed. For one, Ruentex has a history of turning its acquisitions over fairly rapidly while the FSC would like the Nan Shan purchaser to hold the company for at least 10 to 15 years. For another, as a non-financial sector company, Ruentex looks set to borrow significant sums from local banks rather than using its own money as the FSC would prefer. Ruentex chairman Samuel Yin is also believed to have strong Chinese connections, just as was the case with Primus. Ruentex tried to allay some of these concerns. “We intend to be a long-term stakeholder in Nan Shan, and we want to ensure the sustainability of its operations,” the company said in a statement. Nan Shan is the third biggest insurer in Taiwan by market share. It owns about four million insurance contracts on an island with a population of 23 million. In a series of noisy demonstrations last year many of its approximately 40,000 employees expressed concern that they could lose their jobs if the company were sold.

UBS sets sights on Asia-Pacific - With two members of its group executive board located in Hong Kong, Swiss financial giant UBS plans to step up its game in the Asia-Pacific, saying it would double its revenues in the region within three to five years. It also plans for Asia to contribute a full third of UBS Group revenues in the long term. Doubling revenues in the Asia-Pacific means contributions from the region will increase from the mid teens to about 25 per cent, said Yoon Chi-won, co-chairman and chief executive of UBS Asia Pacific. Alex Wilmot-Sitwell, former co-chief executive of UBS investment bank, joined forces with Yoon in November to act as co-chairman and chief executive of UBS Asia Pacific. "If you take a look across the competitive landscape, there are few companies that have two executive board members sitting in Asia and it speaks volumes about our commitment to the region," Yoon said. After assets write-downs of more than US$41 billion, the bank laid off about 100 staff in Hong Kong in 2009, as part of its plan to cut more than 10 per cent of its global workforce that year. But now as markets rallied, especially in Asia, UBS said it saw competition picking up in the region. "It is not surprising that we, and unfortunately many others, are increasing investment and footprint in this region," Wilmot-Sitwell said. "However we are in an advantageous position in helping our clients from those who only now are entering the market and attempting to build their business off of a much lower base." UBS has said the challenge is finding talent, especially for its expansion in China. China had a large number of well-educated, highly motivated young professionals, but it lacked middle managers with five to 10 years of experience, Yoon said.

 China*:  January 14 2011

Bank of China has offered yuan trading to US customers, a sign that Beijing this year may increasingly promote the use of the Chinese currency in major financial centres. The change at Bank of China announced in a posting dated Dec. last year means that customers can trade in yuan in the United States for the first time rather than having to do so in Hong Kong. The New York branch of China’s fourth-largest bank said it now lets companies and individuals buy and sell the yuan via accounts with its US branches, although US businesses and individuals can also trade the currency through Western banks. “The authorities are promoting the use of the yuan in international trade and this is another step in that direction and this means we should see the growth of yuan trading in other regional centres across the world,” said Robert Minikin, senior currency strategist at Standard Chartered Bank in Hong Kong. The move is seen as another small step towards denominating trade in yuan after persuading mainland importers and exporters to reduce settling trade in the US dollar and striking trade settlement agreements with Russia, Brazil and other countries. These efforts have paid off with the yuan deposit base expanding sharply since the July last year trade liberalisation rules leading to the emergence of an offshore yuan and yuan-linked instrument market in Hong Kong. Yuan deposits in Hong Kong jumped to 280 billion yuan by the end of November from just 63 billion yuan at the end of 2009, and with the likelihood of more trade being settled in yuan in other centres, more pools of liquidity could mushroom. In Singapore, HSBC (SEHK: 0005, announcements, news) has started offering yuan deposits to customers in Singapore with investible assets of more than 200,000 Singapore dollars and DBS will offer yuan deposits to customers soon. “Every step has been a small step. It is with small steps to a more flexible currency, but at their pace and what they are comfortable with. It is also not a shock that the Chinese did this just when they are meeting with US officials,” said David Watt, senior currency strategist at RBC Capital Markets in Toronto. While this would bolster trade settlement in yuan, it still has a long way to go before it assumes the status of an alternative reserve currency as Chinese policymakers ultimately control the yuan liquidity taps in offshore markets and investing in mainland assets is still strictly controlled. The move comes before a scheduled visit to Washington by Chinese President Hu Jintao for a summit on January 19. The bank’s website, which outlines details of holding renminbi accounts, said the bank offers yuan savings, demand deposit and time deposit accounts to business customers in New York and Los Angeles. A savings account requires a minimum balance of the equivalent of US$5,000, while the minimum in demand deposit accounts is US$3,000.

Gates tours China nuclear base - US Secretary of Defense Robert Gates, right, is followed by an officer as he visits the Mutianyu section of the Great Wall, outskirt of Beijing on Wednesday. China invited US Defence Secretary Robert Gates inside its nuclear warfare headquarters on Wednesday, giving him a rare glimpse into the control of weapons at Beijing's disposal. Both the US and China have long-range missiles that could reach the other’s shores. Both nations say they have no intention of using the weapons that way. “There was a discussion of nuclear strategy and their overall approach to conflict,” including China’s policy of not using nuclear weapons pre-emptively, Gates told reporters afterward. “It was a pretty wide-ranging conversation, pretty open,” Gates said. He spoke from the Great Wall, where he paid a brief tourist visit before leaving the country. Gates’ assignment during the four day trip to China was to patch up damaged ties between the two militaries. He claimed the talks a success on Wednesday, saying military leaders he met support broader engagement. “I think the discussions were very productive and set the stage for taking the military-to-military relationship to the next level,” he said. Gates said that during the base visit China’s commander of nuclear rocket forces, General Jing Zhiyuan, accepted an invitation to visit US Strategic Command headquarters in Nebraska. The weapons command centre in the Beijing suburb of Qinqhe is a site a few US officials have visited previously, including former US Defence Secretary Donald Rumsfeld in 2005, so Gates was unlikely to learn much about China’s capabilities that was not already known. Chinese military officials also routinely scrub all traces of truly sensitive materials before allowing Westerners inside such places, as Gates seemed to acknowledge on Tuesday. Reporters were barred from the site. Gates’ visit to the base was sought by the United States to balance the 2009 visit of a senior Chinese general to US Strategic Command. The Chinese base maintains control over nuclear and conventional strategic missile forces, although US analysts have said wartime operations probably would be conducted from another, more secretive site. China has short-, medium-, long-, and intercontinental-range ballistic missiles. China maintains a nuclear arsenal of about 200 warheads deliverable by land- and submarine-based missiles as well as bomber aircraft, according to the Federation of American Scientists. China last week reaffirmed its commitment not to use nuclear weapons pre-emptively. Foreign observers have suggested China might abandon its no first-use policy in the event of a major crisis over Taiwan or other crucial concerns, although ranking Chinese military officers and government-backed scholars repeatedly have denied such speculation. Gates’ four-day trip to China was dominated by the effort to repair strained military ties ahead of President Hu Jintao’s state visit to Washington next week. Gates met Hu on Tuesday. The US defence secretary’s visit turned the page on a rocky year in which China pulled out of military talks and withheld an earlier invitation to Gates in protest of a nearly US$6.4 billion (HK$50 billion) arms sale to Taiwan. China agreed on Monday to more direct military co-operation with the United States but stopped short of the broad give and take the United States says would benefit both nations. Gates said Beijing was taking seriously his proposal to erect a new, more durable framework for military talks. He hopes to convene the first such discussions in the first half of this year. The security talks would be a step beyond current contacts largely focused on maritime issues, and would cover nuclear and missile defence issues as well as cyberwarfare and military uses of space. Hu praised the renewal of lower-level military exchanges with the US during his meeting with Gates. Beijing made sure Gates saw the highest-level officials, and threw lavish banquets and lunches for him. Gates’ long-delayed visit would be “very helpful in promoting mutual understanding and trust and facilitate improvement and development of military-to-military relations between our two countries,” Hu said during their meeting at the Great Hall of the People, the seat of parliament in downtown Beijing. For now, the United States and China will expand the fragile discussions between the two militaries and work more closely in noncombat areas such as counter-terrorism and counter-piracy. Chinese Defence Minister General Liang Guanglie said China wants to avoid “misunderstanding and miscalculation” between the two military powers. China conducted the first test flight of a stealth fighter jet just hours before Gates met with Hu on Tuesday. Gates told reporters afterward that he asked Hu whether the test was timed intentionally to coincide with his visit and that he took Hu “at his word” that it was not. Guan Youfei, deputy director of Foreign Affairs Office of the Defence Ministry, said later, “The development of China’s military hardware is not aimed at any other country or any specific target” and the timing of the stealth fighter test “was a matter of routine working arrangements.”

A property tax to be launched on a trial basis in Chongqing will cover new and existing homes, city mayor Huang Qifan was quoted as saying on Wednesday by state television. Chongqing will be the country’s first city to introduce a long-debated property tax, encouraging some investors to rush to buy new homes before the levy is implemented on the expectation only cover newly purchased homes would be affected. Huang said: “Both existing and new homes will be covered” by the tax, according to China Central Television. Details of the tax including the rate would be announced soon, state television reported. Chongqing’s municipal government has said the tax will only cover “high-end” property. China has taken a number of steps to cool its red-hot property market since last year to combat asset bubbles and counter inflows of speculative funds. Housing prices in major cities soared by more than a fifth last year, according to the China Real Estate Index System (CREIS), run by Soufun, China’s biggest online real estate company.

China said it had halted the import of German pork and egg products after authorities in Germany announced some were found to contain high levels of dioxin.

Beijing tougher on copyright cheats - Authorities had arrested more than 4,000 people for violating intellectual property rights since November and would enforce tougher punishments to combat the "rampant" problem, a senior mainland government official said yesterday. Gao Feng , deputy director of the Ministry of Public Security's Economic Crimes Investigation Bureau, told a news conference his agency had uncovered more than 2,000 cases of IPR violations since the launch of a six-month campaign to beef up enforcement of rights last November. The value of the cases totalled 2.3 billion yuan (HK$2.7 billion) Gao said, and the number of arrests, cases and financial value was triple that of the same period a year ago. "On one hand this demonstrates the achievements we've made in cracking down on the violation of IPR, on the other hand it also indicates that it is still quite rampant and frequent," Gao said. "So we want to introduce heavier punishments." The mainland's lax enforcement of intellectual property rights could feature in trade talks between US President Barack Obama and President Hu Jintao , when he visits America next week. Under mounting pressure from the US, Beijing has vowed harsher punishment of copyright piracy.

China has the world's largest money printing operation but still fails to meet demand for yuan, a central bank official said, amid rampant lending and a flood of foreign exchange into the country. The remarks by vice governor Ma Delun, posted on the central bank website Tuesday, highlight the challenges facing Beijing as it tries to control the value of its currency and reduce the volume of money flowing into the economy. China employs more than 30,000 people to print money and offers them incentives to work extra hours to ensure there is enough yuan in circulation to match demand, which is growing by 20 per cent a year, Ma said. But it is not enough. “The growth of yuan production capacity has failed to keep up with the pace of demand,” he said, adding that the central bank was also struggling to crack down on the increasingly sophisticated production of fake notes. He gave no other details. China had 4.23 trillion yuan ($640 billion) in circulation – excluding bank deposits – at the end of November, up nearly 80 per cent from the 2.4 trillion yuan washing around the economy at the end of 2005, he said. That expansion in money supply coincided with surging demand for Chinese exports, growing foreign direct investment and massive government spending and bank lending during the global financial crisis. Foreign currencies entering China are snapped up by the central bank in return for yuan, enabling authorities to control the value of the local unit. The practice – criticised by trade partners for grossly undervaluing the currency – adds to China’s world-beating foreign exchange stockpile and increases the amount of yuan in the domestic economy, fuelling inflation. Rather than let the yuan trade freely against the dollar, China has adopted other measures to stem the flood of liquidity into the economy which has pushed inflation to the highest level in more than two years. The central bank in December raised interest rates for the second time in less than three months and has ordered banks to keep more money in reserve, effectively limiting the amount they can lend.

China Southern profit to jump 15-fold - China Southern Airlines estimated last year's profit would be about 15 times that of 2009 as demand for passenger and cargo transportation services soared. In a filing with the Hong Kong bourse late on Tuesday, the Chinese airline said net profit attributable to equity holders amounted to 358 million yuan (US$54 million) in 2009 in accordance with Chinese accounting standards. China Southern Airlines said it also would report currency gains reflecting the appreciation of the yuan against the US dollar.

Grand ice fall on mountain cliffs in N. China - Photo taken on Jan. 11, 2011 shows grand ice fall on mountain cliffs in Pingshan County, north China's Hebei Province.

Hong Kong*:  January 13 2011

Giveaways of HK$20b planned in next budget - Inflation still a risk as Tsang shares surplus - Financial Secretary John Tsang Chun-wah is set to announce relief measures worth about HK$20 billion in his coming budget, despite an earlier attempt to play down public expectations of fresh handouts. Among options being considered by Tsang are a waiver of property rates, a tax rebate and a one-off allowance for welfare recipients and the old, according to a person familiar with the government's fiscal position. Tsang is under huge political pressure to offer fresh giveaways on February 23 as government coffers are flush with cash from land sales and stamp duty on property and stock deals. But he is also acutely aware of the dangers of inflation. A budget surplus of about HK$70 billion is expected this financial year, according to consensus estimates by leading accounting firms. The latest treasury figures show the government had a net surplus of HK$17.2 billion for April to November, after recording a monthly surplus of HK$21.5 billion in November. This compared with a deficit of HK$38.9 billion from April to November in 2009 and HK$9.3 billion in the same period of 2008. Tsang delivered a HK$20.4 billion relief package in last year's budget after forecasting the government would have a HK$13.8 billion surplus for the 2009-10 financial year. The person familiar with the government's fiscal position said given the expected healthy surplus in the current financial year, it was politically unrealistic for any handouts to be worth less than last year's. "The HK$20.4 billion package delivered in last year's budget can be seen as the benchmark for any relief package from the finance chief in the upcoming budget," the person said. On January 5, Tsang said such measures were not the best way to alleviate inflationary pressure. The Legislative Council passed a motion the next day urging the government to introduce relief measures in the budget amid high inflation. The non-binding motion lists 16 recommendations for the budget, including setting up a HK$30 billion fund to reduce pressure from transport-fare increases, and enhancing food aid to the needy. Lawmakers also demanded a two-month rent waiver for public housing tenants, household electricity bill subsidies, a salaries-tax deduction, additional cash for the old and a review of the salaries tax regime. There have been calls for relief measures amid public concern over surging prices. Consumer prices rose 2.9 per cent in November year on year, up from 2.6 per cent in October. The government-friendly Democratic Alliance for the Betterment and Progress of Hong Kong has tabled a spending proposal involving about HK$70 billion. The government, which has returned HK$122.31 billion since February 2007, is likely to reuse previous measures because they will be non-controversial. Undersecretary for Financial Services and the Treasury Julia Leung Fung-yee told Legco last Thursday that the government was concerned about inflation and would strive to relieve the pressure on groups hit hard by price rises. The person familiar with the government's fiscal position said an electricity subsidy would further fuel inflationary pressure as people would have more disposable income. In the 2008-09 budget, Tsang implemented a HK$1,800 electricity subsidy for households, while people earning less than HK$10,000 a month received a one-off credit of HK$6,000 into their Mandatory Provident Fund accounts to boost their retirement protection. A similar cash injection into low-earners' MPF accounts would not stoke inflation as it was not in the form of disposable cash.

Hong Kong-listed patent owner Dragonite International is hoping to secure its hold on the estimated US$500 million global market for electronic cigarettes by suing potential infringers in the United States. Dragonite International, formerly Ruyan Group (Holdings), intends to take legal action against all the major e-cigarette manufacturers and distributors in the US. The company has won a number of patent infringement cases on the mainland, but a victory in US courts for Dragonite International would probably bolster its claim on the burgeoning e-cigarette market. The smokeless e-cigarettes are battery-powered devices that vaporise a liquid nicotine solution. They work by emitting a puff, or fine mist, of nicotine, which is inhaled by the user. They are mostly made on the mainland. Legal action by Dragonite, which is expected to begin in Los Angeles tomorrow, would probably serve as a litmus test for the protection of patents based on Chinese innovations. "The lack of protection of intellectual property rights in China has permitted a deluge of illicit and poorly manufactured Chinese-made e-cigarettes to export markets," Dragonite International executive director Angela Ching said. "The confusion [over] the safety of these products has delayed the development of this otherwise breakthrough [one], which holds the potential to reduce global smoking-related health costs by hundreds of billions of US dollars." Even if Dragonite wins the suit and stops copyright-infringing rivals from doing business, it wouldn't be able to bring its product to the US market without approval from the US Food and Drug Administration. The FDA has classified e-cigarettes not as regular cigarettes and other tobacco products, but as unapproved smoke-cessation "drug delivery devices". As pharmaceutical products, e-cigarettes would have had to undergo years of clinical trials and extensive testing, something e-cigarette companies have argued against. In March 2009, the FDA imposed a formal import ban on the products. But 10 months later, federal Judge Richard Leon ruled that the FDA could only regulate the products and not ban them. The ruling was upheld by the District of Columbia Court of Appeals, which said e-cigarettes should be considered tobacco products, and that the FDA couldn't regulate them as drugs or devices if they weren't marketed as therapeutic. Even if the FDA agrees to regulate e-cigarettes as tobacco products, they must still be licensed and taxed. The FDA may also need to establish new inspection processes as the manufacturing of e-cigarettes differs from that of traditional cigarettes. In Hong Kong, the Department of Health declared the devices illegal in 2009, viewing any product containing nicotine as a pharmaceutical product that needs to be registered. The company's patent application for the "electronic atomisation cigarette" was recently approved by the US Patent and Trademark Office and covers all the main components, including the battery, vaporisation mechanism, activation switch and flavour cartridge. Hon Lik, who co-founded the company, is stated as the "first named inventor" of the e-cigarette on the approved patent application. The patent has already been granted in the European Union, Russia, the mainland, Malaysia, Taiwan, India, Mexico, Singapore, Israel and other major countries.

Travel chaos is drawing nearer for the Lunar New Year holidays after Cathay Pacific Airways chief executive Tony Tyler said the airline will no longer hold pay talks with flight attendants. Tyler's response yesterday came a day after Cathay Pacific Airways Flight Attendants' Union authorized its leaders to launch work-to-rule action "anytime" in demanding a pay rise higher than the 4.5 percent proposed by management. Following a meeting yesterday to draw up an action plan, union chairwoman Dora Lai Yuk-sim refused to say how many of her 5,000 members would join in industrial action. Cathay's management condemned the union's threat to stretch routine duties, adding it has contingency plans to cope with disruptions over the holidays. "We are disappointed the union has yet again chosen a time just before a big holiday when a lot of Hong Kong people have booked their holidays, and they choose this time to cause a lot of unnecessary concern and worry," Tyler said. He said discussions for pay were made in November with the union. "We've gone ahead and made those arrangements. So we're not going to discuss salaries any further," he said. The Labour Department said last night it is working to resolve the matter, while Tourism Board chairman James Tien Pei-chun expressed concern. Cathay issued a statement saying "the union needs to explain to the Hong Kong public why they are threatening Chinese New Year holiday plans." After hearing that no salary talks would be held, some 50 flight attendants protested outside the company's headquarters on Lantau. Waving placards, they shouted slogans, such as "no talk no peace," outside the offices. Union senior members were inside Hong Kong airport's arrival hall to pick up crew who had finished their duty and ask them to join the industrial action. Depending on their seniority, the majority of Cathay flight attendants earn a basic salary of between HK$7,000 and HK$24,000 per month, excluding allowances. Cathay proposed a raise of 4 to 4.5 percent. But the union said the actual pay rise is just 1.5 percent if the guaranteed annual increment is excluded. The work-to-rule plan includes checking all hand-carried luggage and requiring all overweight bags to be checked in. The union will encourage its members to take sick leave should they feel unwell. The action can cause a delay of at least 15 minutes for each flight.

Hong Kong Stock Exchanges and Clearing is looking into establishing a yuan liquidity pool to help improve trading of securities denominated in the mainland currency. "I personally do believe there will be an IPO of a yuan equity product on the exchange this year," HKEx chief executive Charles Li Xiaojia said. "We have seen some applications already." He said the small local yuan pool limited the development of an equity market in the currency. "HKEx hopes a liquidity mechanism can be introduced in the second half of this year," said Li, adding that the exchange operator is still constructing feasibility models. "This is something that nobody has done before. We may end up dropping the idea, but we are working on it for now." In fact, yuan- denominated equity products seem a foregone conclusion. Beijing will launch more yuan-related policies in Hong Kong, providing more flexibility for the currency in the territory, JPMorgan China equities and commodities chairwoman Jing Ulrich said. There will be more demand for yuan- denominated assets owing to the rapid growth of such deposits. "I hope this year yuan products will achieve some breakthroughs," Ulrich said. "The next step may be having ... some equity products." Meanwhile, the yuan is receiving more exposure globally, as HSBC begins payments in yuan for foreign trade transactions in Turkey. The bank is also planning to start spot trading between the yuan and the Turkish lira in March. Despite global volatility, HKEx led the world in initial public offerings for the second straight year in 2010, with firms raising US$57 billion (HK$444.6 billion) through share sales.

 China*:  January 13 2011

Chinese city allows individual overseas investment - Residents in a Chinese city boasting of its entrepreneurship are allowed to invest overseas as individuals in a pilot scheme that authorities say will help manage the burgeoning capital flow in the private sector. The city of Wenzhou, in the eastern Zhejiang Province, will allow adult residents to invest up to 3 million U.S. dollars in a single project and no more than 200 million U.S. dollars a year, the municipal bureau of foreign economic and trade cooperation has announced. A group of individuals are only allowed to buy 10 million U.S. dollars worth of foreign exchange in a single offshore investment. But their offshore investments are banned from stock markets, and the real estate, energy and mining sectors. All investments need to be approved by the municipal bureau of foreign economic and trade cooperation. Under the pilot scheme, individual investors can own, control or manage foreign companies (excluding financial institutions) by setting up entities, buying shares or initiating mergers and acquisitions. "Allowing individual overseas investment will help authorities monitor and manage the flow of private capital overseas," said Su Xiangqing, head of Wenzhou's foreign economic and trade cooperation bureau. In the past, individual investors circumvented restrictions on personal investment by setting up offshore firms to channel funds overseas, Su said. Wenzhou is one of a string of boomtowns along China's southeast coast that prospered with private business in recent years. Official statistics show the private capital amassed by the city's residents has exceeded 600 billion yuan (90.9 billion U.S. dollars). Official figures show that Wenzhou natives had established around 600 offshore companies by the end of 2009. Enditem

China, US closer to security dialogue - Hu, Gates put aside differences on Taiwan - US Secretary of Defence Robert Gates greets President Hu Jintao at the Great Hall of the People in Beijing yesterday. China and the United States agreed to explore a formal platform for dialogue on strategic issues between the two militaries despite their deep disagreement over the sensitive Taiwan issue. President Hu Jintao told visiting US Defence Secretary Dr Robert Gates that he would "seriously consider" an initiative by Gates to start a formal military dialogue between the two powerful armed forces. Welcoming Gates in the Great Hall of the People, Hu said his visit signalled "new progress" in defence relations, adding that the Pentagon chief's meetings had allowed the two sides to exchange ideas "in a very candid manner". Stressing the principles of respect, mutual trust, equality and reciprocity, Hu urged the defence departments of the two countries to expand dialogue, foster and increase strategic trust, respect and address each other's major concerns and make joint efforts for healthy and stable military ties, Xinhua reported.

Maiden test flight for stealth fighter as Hu greets Gates - China confirmed it staged a test flight of its J-20 stealth fighter yesterday - the day US Defence Secretary Dr Robert Gates met President Hu Jintao in Beijing. But Gates said Hu assured him that the J-20's maiden test flight was not timed to coincide with his visit. Gates said: "I asked President Hu about it directly and he said that the test had absolutely nothing to do with my visit and had been a pre-planned test." Asked whether he believed that, Gates added: "I take President Hu at his word." In a statement that appeared to implicitly acknowledge the existence of "J-20" and its test flight, the Ministry of National Defence said the nation's weapons development "is not directed at any country." "In terms of timing, there was no intent," Guan Youfei, a deputy director of the ministry's foreign affairs office said in answer to a question about the flight, Xinhua reported. He also denied the test flight was timed to coincide with Gates's visit. But military observers insisted the first known flight of the J-20 was deliberatley intended to send a message to the United States that Beijing was responding to demands for greater military transparency and more openness about China's defence modernisation. It was also an intentional display of China's military advancement.

Intercity rail link start of world-beating network - Guangdong has completed the first step in its aggressive plan to have one of world's most comprehensive regional rail networks, with the launch last week - after a year's delay - of a railway linking cities along the west bank of the Pearl River Delta to Guangzhou. The first intercity railway in the western part of the PRD, the 143-kilometre Guangzhou-Zhuhai intercity rail line, is the start of a bigger network that will link all nine PRD cities in the next decade. Song Jinsong , a regional planning expert close to the plan, said the network would take the PRD from "the era of the highway" to "the era of public transit". The China Railway (SEHK: 0390) Fourth Survey and Design Institute Group, which helped plan the PRD's intercity rail system, said the network would have 16 routes and about 1,500 kilometres of track by 2020. Experts and officials say people will be able to travel between any two PRD cities in around an hour. It will when finished take about 50 minutes to travel from Guangzhou South Station, the terminal of the intercity rail network, to Zhuhai by train - compared to at least an hour and a half by bus. Residents of Zhongshan and Jiangmen have welcomed the project because it means the two cities and Zhuhai will be connected by rail to Guangzhou and the cities on the PRD's east bank for the first time. Three more lines are under construction. One, on the east bank of the PRD, will connect Guangzhou, Dongguan and Shenzhen. Another will link Dongguan and Huizhou , and the third will connect Foshan and Zhaoqing . All three are expected to be operating by 2013. Song, director of the Guangdong Urban Development Research Centre, a government-backed think tank, has been involved in plans for the network since 2003, when Guangdong was only considering a 600-kilometre-long intercity rail network. Echoing the Ministry of Railways' call for railway construction to be ramped up, the province revised the plan two years ago to include nearly 2,000 kilometres of track. The Yangtze River Delta and Bohai Rim region have similar plans but Song said the PRD's would have more routes, with the "density of the railways being close to that in Tokyo and London". Zheng Tianxiang , a consultant for various infrastructure projects in Hong Kong and the PRD, including the Hong Kong-Macau-Zhuhai Bridge, stressed the significance of the new line. "It is very important that the railway can gradually balance the development of PRD cities," he said. "Now people can work in Guangzhou and buy their properties in Zhongshan or even Zhuhai, which will boost real estate markets and other services in those cities." However, the whole intercity rail network will cost more than 300 billion yuan (HK$351 billion), and Zheng warned that planners should calculate input and returns wisely. He said that for big cities such as Guangzhou, Shenzhen, Dongguan and Zhuhai the service was necessary because the passenger flows would be large and stable. "But does it really need to have so many routes in such a short time?" he asked. Local media and officials say rapid economic growth will boost demand for the services and new facilities will trigger waves of tourists. But Zheng cited the example of the Western Corridor between Shenzhen and Hong Kong, saying that after three years traffic was still only about a fifth of its designed capacity. "It really needs smart calculation and not just wishful thinking," he said.

Norwegian conglomerate Orkla is selling its Elkem unit to China National BlueStar for US$2 billion, in one of the biggest industrial takeovers by a Chinese group in Europe. The deal followed a row between China and Norway over the award of the Nobel Peace Prize to Chinese dissident Liu Xiaobo. Orkla said yesterday the deal covered the sale of Elkem's silicon-related operations such as Elkem Silicon Materials, Elkem Foundry Products, Elkem Carbon and Elkem Solar but not the energy unit Elkem Energi. The size of the deal put it in the same ballpark as Geely's US$1.8 billion purchase of Ford's Volvo cars unit last year and behind Sinopec (SEHK: 0386)'s US$7.2 billion deal for Swiss Addax Petroleum in 2009. Argo Securities analyst Henrik Schultz said the price was too low. "This is about three crowns per [Orkla] share too low so I think most will be disappointed. Everything indicates that [Orkla's] share price will fall on this." Elkem could have been worth about 15 billion Norwegian crowns (HK$19.48 billion) including the energy assets, analysts have previously said. Other estimates without the energy production assets have put the prospective value of the deal at US$1.5 billion to US$2 billion. BlueStar said acquiring Elkem would help it get access to "industry-leading" technological know-how. "We strongly believe in the huge potential for Elkem's new solar-grade technology with its leading energy efficiency and environmental safety characteristics," chairman Ren Jianxin said. Elkem's website says its patented production methods for solar-grade silicon use a quarter of the energy consumed using traditional technology, which could prove especially useful for China - the world's biggest emitter of carbon gas. "For Elkem, with BlueStar as our new owner, we will achieve one of our main targets, namely a stronger presence in Asia in general and China in particular," Elkem chief executive Helge Aasen said. BlueStar is a Chinese state-run specialty chemicals company backed by US private equity firm Blackstone Group.

Jet Li's One Foundation goes public - Jet Li attends activities celebrating One Foundation's official registration as a public foundation in Shenzhen, Guangdong province, on Tuesday. One Foundation, established by Chinese movie star Jet Li, on Tuesday celebrated its official registration as a public foundation. The move signals the start of a new era for China's charities, experts said. "It's a cornerstone of China's charity development," said Deng Guosheng, associate professor of NGOs at the public policy and management school under Tsinghua University. "For the first time, we have seen the successful transition of a private charity attached with a public organization into a formal public foundation." Since its establishment in 2007, One Foundation has been running as a private charitable project under the Red Cross Society of China, and encountered legal problems when it tried to fundraise as an independent organization. Although there are no specific laws or regulations banning civil organizations from being established as public foundations in China, in practice the majority of public foundations have connections with government organs. But under an agreement between the Ministry of Civil Affairs and the Shenzhen government, the city is a pilot site for civil affairs reform, including foundation registration. It was in Shenzhen on Dec 5 that One Foundation managed to register as a public foundation. "The government has sent a clear signal that creates more opportunities for civil organizations and individuals to take part in philanthropy," said Wang Zhenyao, chief of Beijing Normal University's One Foundation Community Research Institute and former director of the Ministry of Civil Affairs' social welfare and charities department. The civil affairs department of Shenzhen also showed its enthusiasm for One Foundation's decision. "We would like to open our doors wide to foundations or organizations as long as they fulfill the qualifications of registering," said Ma Hong, an official of the city's civil affairs department. The successful transition of One Foundation may stir activity in China's philanthropy, Deng at Tsinghua University said, adding they may copy the example of first setting up a foundation and then developing it enough to become a formal registered operation. However, while most people applauded One Foundation, another grassroots public foundation in East China's Zhejiang province is faced with closure. Due to scandals connected with charity fraud, local authorities will soon ban the Ningbo Anti-cancer Health Foundation, which was established in 2006, the Hangzhou-based Youth Times reported on Monday. The report said the foundation had gradually lost its creditability since it raised 1.5 million yuan ($227,000) in 2007 but gave 45 percent of its donations to an advertising company involved in its fundraising campaign. Charitable organizations should take more responsibility when they get the right to raise funds from the public, said Jin Jinping, director of the Center for Nonprofit Organizations Law at Peking University. Compared with private foundations that follow the desires of the founders, public foundations are required to run more openly and show transparency in their use of funds, Jin said. "To guarantee the future of One Foundation, I've asked its most excellent leadership for help to protect every yuan donated," Li said on Tuesday in Shenzhen. The foundation published the names of a five-member board of supervisors, including one Shenzhen government official.

 

China's yuan hits new record high at 6.6128 per USD - The Chinese yuan strengthened to a record high against the U.S. dollar on Wednesday to reach 6.6128 per dollar, according to the China Foreign Exchange Trading System.

Foreign exchange reserves hit record high - An employee counts yuan banknotes at a bank in Hefei, Anhui province. China's foreign exchange reserves hit a record $2.85 trillion at the end of 2010. China's foreign exchange reserves rose to a record $2.85 trillion at the end of 2010, an 18.7 percent increase year-on-year, sparking concerns about the country's already excessive liquidity, analysts said. Compared with nearly $2.65 trillion in foreign reserves by the end of September, the figure increased by $199 billion in the fourth quarter, marking the fastest rate on a quarterly basis in 2010, according to a statement from the People's Bank of China released on Tuesday. Spurred by yuan appreciation, the expectation of further interest rate hikes, and the monetary-easing policy in the US, the country's foreign reserves have grown rapidly since the third quarter of 2010, analysts said. Yi Gang, vice-governor of the central bank and head of the State Administration of Foreign Exchange (SAFE), said in an article in China Forex magazine that the country will increase the flexibility of its currency exchange rate this year to reduce the trade surplus and inflationary pressures caused by ample liquidity. As the yuan's value rises, the reduced trade surplus (a major ingredient of the foreign exchange reserves) and possibly lower inflows of speculative capital from overseas would help ease the problems caused by excess liquidity, ranging from inflation to asset bubbles, analysts said. Wang Tao, head of China economic research at UBS Securities, said in a research note that the central bank is facing the challenge of persistently large foreign reserves accumulation, and she expected further net issuance of central bank bills and more hikes to banks' reserve requirement ratios in 2011. The reserve requirement is the ratio of money that lenders are required to keep in reserve. It is a tool used by the central bank to control market liquidity. China has been facing the problem of excessive liquidity since the government instigated stimulus measures worth $586 billion in late 2008, and adopted its "moderately loose" monetary policy to heat up an economy battered by the global financial crisis. It is believed that increased capital inflows, as investors sought a safe haven in China, could also have contributed to the problem. In 2010, inflation has become more apparent as a result of the expansion of lending in previous years. In November, China's consumer inflation jumped to 5.1 percent, the fastest clip in more than two years. In 2010, new yuan loans reached 7.95 trillion yuan ($1.2 trillion), exceeding the government's target of 7.5 trillion yuan. Meanwhile M2, the broad measure of money supply that includes cash and all types of deposits, rose 19.7 percent from a year earlier, the central bank said on Tuesday. The monetary easing policies adopted by the world's major economies also posed the threat that increased capital inflows will fuel inflation, said Liu Mingkang, the country's chief banking regulator in December. "Cross-border capital inflows could have increased remarkably in the fourth quarter, based on a rough calculation of the newly added foreign exchange reserves, deducting foreign direct investment and the trade surplus," said E Yongjian, an economist with the Bank of Communications. "They (capital inflows) have contributed a lot to the rapid growth of portfolios." As China's import growth outpaced that of exports, its trade surplus in December was $13.1 billion, an eight-month low, while foreign exchange reserves increased by $16.4 billion over the period. E said the big increase in foreign reserves in December was mainly attributable to stronger expectations of yuan appreciation. As of Dec 31, the yuan's reference rate against the dollar was 6.6227 yuan, the highest since 2005, and it was more than 3 percent higher than in June. Most institutions have predicted that domestic GDP growth will remain above 8 percent in 2011, and the yuan will appreciate at a pace between 3 and 5 percent, which may further attract foreign capital inflows. "The yuan is expected to appreciate about 5 percent against the US dollar, partly due to a systematic depreciating pressure of the US dollar," said Shen Gaoming, head of China Research of Citi Investment Research with Citigroup.

Chrysler looks to China to drive a sales recovery - A model poses for photographers with the Jeep Grand Cherokee at 2010 Beijing International Automotive Exhibition. Overall, Jeep sales increased 26 percent in 2010 to 291,138 units, according to Agence France-Presse. Chrysler has its eye on China and is counting on its iconic Jeep brand to boost global sales and help return the US automaker to profitability after a government-backed bankruptcy. The first boatload of the new Jeep Grand Cherokee exported from Detroit is expected to reach China soon and Chrysler is also preparing to expand sales in South America, Eastern Europe and Russia, officials said. The push coincides with the brand's 70th anniversary, which Chrysler celebrated on Monday at the Detroit auto show. "Jeep is one of the best known brands in world - it's as recognizable as Coca Cola," said Mike Manley, president of the Jeep brand who noted that in many parts of the world, driving a Jeep is a status symbol. "Since they were first produced in 1941, Jeep vehicles have been the authentic benchmark for off-road capability, having mastered more terrain, led more adventures and provided drivers more freedom than any other vehicle before or since." Part of Jeep's fame reaches back to the legendary vehicles built exclusively for the US military during World War II. Relatively few of the original Jeeps, which remained in production for more than 40 years, ever came back to the United States and wound up on roads and rugged trails across the globe. "We left free samples all over the world," Manley said recently. In fact, Jeep has become so synonymous with four-wheel-drive vehicles that Chrysler's lawyers regularly file suit against companies misappropriating the trademarked name. The new Grand Cherokee has earned a host of honors from the automotive press and the Jeep brand led Chrysler's recovery in its home market. Overall, Jeep sale increased 26 percent in 2010 to 291,138 units, and accounted for a quarter of Chrysler's US sales, even though the Grand Cherokee was available for only half the year. Sales in China also surged as Chrysler, with Fiat's help, restarted Asian sales. In 2010, Jeep sales increased 10 percent at 149,000 vehicles. "The Jeep brand continues to be the best thing Chrysler has going," said Karl Brauer, senior analyst at Edmunds.com. Chrysler has yet to come close to tapping Jeep's potential in overseas markets, said Jesse Toprak, senior analyst for TrueCar.com "It's substantial," he said. Jeep is also working to boost its reputation among US consumers, who considered the original Grand Cherokee a luxury vehicle when it first appeared in the mid-1990s. "We want to recapture that and we think we can," Manley said, noting that a significant number of Grand Cherokee customers are now trading in luxury cars like Lexuses and BMWs at dealerships in California. Jeep's reputation in its home market suffered greatly in recent years as product design and quality were neglected amid the internal turbulence. It began in 2007 with the Chrysler's divorce from Mercedes, followed by two years of inept management by private equity group Cerberus. After seeking billions of dollars in federal aid after the 2008 financial crisis, Chrysler entered bankruptcy protection in June 2009 and emerged a month later under the management of Fiat's Sergio Marchionne. Fiat gained a 20 percent stake in Chrysler in exchange for sharing technology, and Marchionne instigated a major product revamp, introducing 16 new or revised vehicles last year. Chrysler is expected to show a profit on an operating basis in 2010 and return a net profit in 2011. It is expected to launch an initial public stock offering in the second half of 2011. Marchionne said earlier this month that Fiat may boost its holding to 51 percent before the IPO which will help the US government wind down its eight percent stake in Chrysler. Marchionne has set ambitious targets for the two companies, saying they should produce 6 million vehicles combined by 2014.

Hong Kong*:  January 12 2011

Regina Ip launches new political party - Regina Ip launches the New People's Party yesterday. The launch ceremony was attended by government ministers and members of the pro-democracy camp. Hong Kong has a new major political party. Legislator Regina Ip Lau Suk-yee yesterday inaugurated the New People's Party, pledging to chart a new path for a "quality democratic system" and economic growth. Ministers - including Tsang Tak-sing, Michael Suen Ming-yeung, Edward Yau Tang-wah, and Carrie Lam Cheng Yuet-ngor - were eager to shake hands and pose for pictures with Ip and deputies Michael Tien Puk-sun and Dr Louis Shih Tai-cho. Financial Secretary John Tsang Chun-wah, who was not present, sent a bouquet to congratulate Ip on the launch of the new party, which has got off to a humble start with a membership of 266. Ip said she appreciated officials' presence, but added: "Business is business. Their coming here today will not affect our stance toward the government policies." Former chief secretary Anson Chan Fang On-sang, who defeated Ip in the 2007 Legislative Council by-election, also attended. Chan said a new political party in Hong Kong could encourage more people to take part in politics. Liberal Party defector and now a vice-chairman of the New People's Party, Michael Tien, said: "Many people are apathetic. They cannot find a party to truly represent them ... Hong Kong needs a rational and level-headed party that is willing to speak for the citizens." No Liberal Party leaders were seen yesterday. However, senior figures from the pro-democracy camp - including Audrey Eu Yuet-mee of the Civic Party, Wong Yuk-man of the League of Social Democrats, and James To Kun-sun of the Democratic Party - did show up. Widely regarded as a pro-establishment legislator, Ip said she had not discussed the formation of a party with Beijing, or sought its endorsement. But among the 15 party advisers are some pro-Beijing figures, including Business and Professionals Federation chairman Sir David Akers-Jones, and local National People's Congress deputies Fanny Law Fan Chiu-fun and Bernard Chan. Ip dismissed speculation that she had formed the party to pave the way for her running for chief executive. "I have not thought of other things." Meanwhile, Democratic Party chairman Albert Ho Chun-yan said the party was strong despite "young turks" breaking away last month to form the NeoDemocrats. Vice-chairman Sin Chung-kai said the loss of 32 members over the past year was offset by 73 new members. "We will field 130 candidates for the coming district council election," he added.

Retiring chief urges new officers to be wise, kind - Police chief Tang King-shing inspected his last passing-out parade of new officers yesterday before he steps down as commissioner tomorrow. A total of 31 probationary inspectors and 204 recruit constables formally made the grade before Tang at the Hong Kong Police College yesterday. Tang will be replaced by new commissioner Andy Tsang Wai-hung, 52, on Tuesday. In his final speech as police commissioner, Tang, 56, reminded the new recruits to fulfil their mission and duty, rather than simply treating their work as an ordinary job. "Your mission is to uphold the rule of law, to fight crime, and to safeguard and protect life and property, so that Hong Kong remains one of the safest and most stable societies in the world," Tang said. He added that police should also have the qualities of "benevolence, wisdom and bravery". "The benevolent person is one with integrity and honesty, acts fairly and impartially, respects individual rights and shows understanding for others, and endeavours to work in partnership with the community and the public," he said. Tang leaves as the force faces a number of pressing issues. One of the key challenges is maintaining an even-handed approach in dealing with protests, amid criticism that police are doing Beijing's bidding. The new chief also faces growing calls by police staff unions to address a slump in morale in the detective ranks due to a shortage of officers wanting to serve in the Criminal Investigation Department. Tang urged graduates to show patience, understanding and care at work, and respect people regardless of their identities, be they victims, informants, witnesses or suspects.

Last night to live la vida Laguna - It's one of Wan Chai's best-known watering holes, and the place where for years some of the city's domestic helpers let their hair down on a Sunday afternoon after a long week's work. But the Laguna Music Club and Bar on Fenwick Street will close its doors for the last time at the end of trading tonight. The bar, which has operated for nearly 10 years, has been sold. An entertainment operator with knowledge of the situation said Laguna was bought by the group that owned the nearby Escape (formerly Fenwick's) and Traffic clubs. It is understood that between HK$50 million and HK$60 million changed hands in the deal. "It's a sad day for us because Laguna has become such a well-known place over the years, but the old landlord who we had been leasing the premises from was offered a figure he couldn't refuse and sold it, so we were left with no other option but to close," one of Laguna's directors said. "We will try to relocate somewhere else in Wan Chai, but it won't be easy. Rents are escalating here all the time and we don't want to move just anywhere for the sake of it. It'll take some time." The director had hoped that some of their bar and security staff, many of whom were long-term Laguna employees, would be kept on by the new management, but the new owners will be employing their own people. The club has a colourful history. The director recalled that he regularly met couples who told him that they first met in Laguna and they've "ended up happily married". "That's unlikely to be the case in the premises' next manifestation," he said. "Not just our customers, but many of our female bar staff have met their future husbands here in Laguna. It has always been a happy and safe place to be. We've been something good in Wan Chai." The end may be near for the nightclub, but it's apt that it is happening on a Sunday. While Sunday is a day of rest for many, at Laguna some of the city's domestic helpers would dance their way through the afternoon and long into the evening. "I'll shed a tear," the director said. "It's been a great adventure for all the investors involved. I think we will be missed. There has always been a happy welcoming vibe here. We put a smile on people's faces." He wasn't the only person to feel that way. "Maids' Day at the 'guna was one of the great attractions of Hong Kong. The room would be rocking on a Sunday afternoon," one customer said. "I guess another place will come along eventually to replace it. But it seems like the fun police have had their way again."

Sleepless in TST: how the strain got to arts hub chief - The stress and strain of heading Hong Kong's most ambitious and large-scale cultural project began to show on ex-West Kowloon Cultural District chief executive officer Graham Sheffield late last year, says one of the top executives who worked closely with him. Sheffield's shock resignation last week on health grounds came just five months into his three-year, HK$3.5 million-a-year contract. The chairman of the West Kowloon Cultural District's performing arts committee, Allan Zeman, said signs that the pressure was mounting on Sheffield, 58, began to emerge in late November. Around that time, Zeman said, Sheffield, the former artistic director of London's Barbican Centre, told him he was feeling "more and more unwell as time went on". "Graham told me that he was having trouble sleeping and was increasingly suffering from fatigue. He felt constantly tired," Zeman said. "I did not think it was that serious at first and thought that a good rest back at his home in the UK over the Christmas holidays would recharge his batteries and he would return to Hong Kong revitalised. "He consulted his doctor in the UK and afterwards his doctor contacted us to say that he needed complete rest. "It was soon after this that Graham phoned to say that he had decided to resign because of ill health. "We were not informed as to exactly what the illness is and it's really none of our business. It was simply just an unforeseen health problem. He loved Hong Kong and made the transition to living here easily. I only hope that he gets back to full health soon." Sheffield did not return phone calls yesterday. Members of the arts community have speculated that over-the-top government bureaucracy and excessive red tape may have contributed to his illness, but Zeman denied this. "That's not the case at all. If anything the government has been completely hands-off. They have left us to proceed with our plans with no problems whatsoever and no interference," he said. Zeman also did not believe that Sheffield's departure would radically affect the arts hub's operation and it was still "all systems go". "Graham's departure will not delay the project in any way and everything is still going very much to plan," Zeman said. The first phase of the HK$21.6 billion project is due to open from 2015, and the second phase from 2026.

Lax rules that let in lashings of sushi may be about to close - That a city restaurateur could buy a 342kg bluefin tuna - the most expensive ever sold at Tokyo's Tsukiji market - last Wednesday and have it on the plates of Hong Kong diners by Friday is not just down to the city's appetite for speed and sashimi. Hong Kong has stretched its lead as the world's biggest importer of Japanese food mainly because it is less demanding about health certification. But that could change if a new food safety law under consideration is passed. This cycle of easy supply and high demand has made Hong Kong the number one overseas food market for Japan since 2008, and imports are increasing year on year. In the first half of 2010, the city accounted for 27 per cent of all Japanese food exports, according to figures from the Japan External Trade Organisation (Jetro). Seafood makes up nearly half of all Japan's food exports and Hong Kong imported 58 per cent more of it between January and November 2010 than it did in the same time period in 2009. Three tonnes of preserved seafood - such as dried scallops - valued at more than HK$2.6 billion came into the city in the first 11 months of last year, making it Hong Kong's biggest category of food imports. The US and the mainland require certificates on all seafood imports verifying that the country of origin has deemed it fit for human consumption, according to Caroline Wong, from the office of the director of business development at Jetro. But health certificates are not mandatory at Hong Kong customs, even though the Agriculture, Fisheries and Conservation Department "strongly encourages" their use for seafood imports, according to the department's website. Rather, it is up to the importer to ensure that the product is fit for consumption. According to a Food and Health Bureau spokesman, consignments of seafood are randomly checked for health certificates. If the consignment has no certificate, a sample of the product is tested. But the frequency of the random checks is up to the on-site health inspector from the Centre for Food Safety. This is a time saver for Japanese exporters for whom speed is of the essence. According to Wong, a health certificate from the Japanese government takes up to five days to process. However, raw sashimi should ideally be served less than a week from the time a fish is caught, she said. "[Not requiring a health certificate] makes it so much easier for the Japanese to bring over their products to Hong Kong," Wong said. After they are imported to Hong Kong, products could be re-exported elsewhere, she said. It's a privilege that may not last long. Legco will vote this year on the Food Safety Bill, which aims to make health certificates mandatory for every import of unprocessed seafood. All importers of seafood will have to register with the Food and Environmental Hygiene Department, notify the department before the arrival of each new shipment and keep records of their stock's location. "There won't be zero effect," Jetro's director of business development Yoshiko Yanai said.

Fund on the money to draw talent, tourists and fame - The Hong Kong Tennis Classic - the latest edition of which climaxed yesterday - was one of the first events to benefit from a special fund set up by the government to boost the city's ability to host major events. And, so far, it looks like money well spent. Launched in May 2009, the Mega Events Fund had HK$100 million in the kitty and aimed to help non-profit organisations stage major sports, arts or cultural events and help draw visitors to the city - the overall number of which reached a record 36 million last year. The scheme's injection of HK$5 million this time and HK$9 million last year to help stage the tennis event has kept the tournament at Victoria Park afloat and they're not the only ones benefitting. Officials say the Mega Events Fund assessment committee has earmarked up to HK$17.8 million to support five events this year. They are the Dragon and Lion Dance Extravaganza, the Hong Kong Well-wishing Festival, the Hong Kong Dragon Boat Carnival, the Hong Kong International Jazz Festival 2011 and the UBS Hong Kong Open Championship 2011. "They'll add colour and vibrancy to Hong Kong. Apart from attracting more visitors to our city, they will also help enhance Hong Kong's international profile and raise our status as the events capital of Asia," a government spokesman said. "It is expected that more than 220,000 visitors and local people will participate in these five events." The Hong Kong Tennis Classic lost its title sponsor over a year ago after JB Group, which came on board in 2008, pulled out. That left organisers, the Hong Kong Tennis Patrons' Association, looking for a backer. However, landing a sponsor proved extremely difficult due to the economic recession and the association applied to the government in 2009 for a piece of the HK$100 million pie, which is expected to last until March 31 next year. This year women's world number one and two players, Caroline Wozniacki and Vera Zvonareva, competed along with seven-time grand slam winner Venus Williams and veterans John McEnroe, Stefan Edberg and Yevgeny Kafelnikov. Although the tournament is not an officially sanctioned competition by the Women's Tennis Association, it has generated news worldwide because it is used by the top women's players as a warm-up for the first grand slam of the year, the Australian Open in Melbourne, which will begin in just over a week. The money from the fund paid the players a substantial appearance fee, but organisers would not reveal exactly how much this was. Tournament co-director Brian Catton said the event generated value for money and promoted Hong Kong in the best possible way. "The return for the money that has been invested is mind-boggling in its scope when you take into consideration not just who pays to see the tournament, but the coverage it gets worldwide from television and the internet," he said. "The returns are huge. These returns are both tangible and intangible. What's tangible is that tourists are coming and what's intangible is what the future holds. Everyone knows about this tournament, it has huge potential." Last year the Hong Kong Cricket Association applied for mega event funding for its Hong Kong International Sixes tournament, but was turned down. However, rather than criticise the Hong Kong Tennis Classic for its successful application, the cricket association is using it as a model to improve its next bid for cash from the fund. "In my opinion the Hong Kong Tennis Classic does attract people from overseas, and that's what makes it attractive to the fund. This is what we'll emphasise when we make a new application for funding for the Hong Kong International Sixes," association president and Hong Kong International Sixes committee chairman Shahzada Saleem Ahmed said. "When you can prove fans are coming from abroad to see your event it significantly helps your application."

 China*:  January 12 2011

Chongqing to impose controversial flat tax - Chongqing is seeking to contain surging property prices. Chongqing will impose a tax on high-end properties to curb speculation in the real estate market and contain surging prices, according to state media. The municipal government confirmed that the tax would be levied during the next five-year plan at the ongoing annual plenary sessions of the Chongqing People's Congress, the municipality's legislature, and the Chongqing People's Political Consultative Conference, its political advisory body. Xinhua reported that the Chongqing government had already received permission from the Ministry of Finance to impose the tax and was now deliberating its details. These details are expected to be unveiled by the end of March. Previous media reports said Shanghai and Chongqing had been approved to take the lead in imposing the long-anticipated property tax, a measure partly designed to contain rocketing property prices. Chongqing mayor Huang Qifan previously said that the tax would apply to villas, flats of more than 200 square metres and those with prices that were more than three times the city average, China Times, a business daily, reported. It also quoted the mayor as saying that a family that owns more than four homes and those who own several homes but do not have a local hukou, or household registration, might be subject to the tax. Shanghai had also drafted a framework on the tax, the report said. A detailed draft will be discussed at the sessions of the National People's Congress and the Chinese People's Political Consultative Conference in March, an unnamed source from Shanghai's housing bureau was cited as saying. A property tax has been proposed by housing authorities for a long time but it remains a controversial issue. Some say that it "robs both the rich and the poor". Others have complained that the tax will raise the cost of owning homes and that it will push up property prices in the long term.

Gates seeks to boost ties amid hi-tech arms fears - Robert Gates is welcomed to Beijing by General Ma Xiaotian. US Defence Secretary Dr Robert Gates arrived in Beijing last night, hoping to bolster uneasy military relations with Beijing, but voicing concern over China's latest hi-tech weaponry. The trip by Gates comes just 10 days ahead of a state visit to Washington by President Hu Jintao , and both sides are keen to show progress in defence ties. Speaking en route to Beijing for three days of talks, Gates said the anti-ship ballistic missile Beijing was developing posed a potential threat to the US in the Pacific region. He also said the country's first stealth fighter "may be somewhat further ahead in the development" than US intelligence had foreseen, though the aircraft is considered years away from becoming operational. "They clearly have the potential to put some of our capabilities at risk. And we have to pay attention to them, we have to respond appropriately with our own programmes," Gates said ahead of his second visit to China since 2007, when he was defence secretary in the George W. Bush administration. But he said the advances in weaponry underlined the importance of building a dialogue with the Chinese military, and voiced hope that his visit would help the US persuade Chinese military leaders to cut back on their pursuit of advanced military capabilities in exchange for deeper defence ties. Gates is scheduled to meet Hu, Vice-President Xi Jinping and his counterpart, General Liang Guanglie , today and tomorrow before he heads to Tokyo and Seoul later this week. His itinerary also includes a visit to the headquarters of the 2nd Artillery Corps, which commands China's nuclear arsenal. Military and diplomatic analysts said Gates had clearly laid out his top agenda for his visit, which would focus primarily on the transparency and intensions of China's military build-up. "It is obvious that the US has underestimated the pace of China's development of hi-tech weaponry," said Andrei Chang, editor-in-chief of the Canadian-based Kanwa Asian Defence Monthly. "That's why Washington is very much concerned despite the fact that China's military capabilities have yet to pose serious threats to the American military power in general." Pang Zhongying , a professor of international relations at Renmin University, also noted China's unusual display of its advanced weaponry would facilitate Washington's intention to push for greater openness and regular military contacts. Gates' visit was previously scheduled in June, but it was cancelled amid the downgrading of military ties after the US announcement of a US$5.4 billion weapons sale to Taiwan. With the overall Sino-US relationship seemingly on an upswing, mainland media have lauded Gates' visit, describing it both as a breakthrough in the troubled military ties between the countries and as a prelude to Hu's state visit. Gates said it was clear Beijing wanted him to visit China to set a positive tone before Hu's trip to Washington. "I think the Chinese's clear desire that I come first, come to China before President Hu goes to Washington, was an indication of their interest in strengthening this part of the relationship," Gates said. But Pang cautioned against rosy expectations of warming military ties and the Sino-US relationship as a whole. "Bumpy roads are still ahead for the ties of two militaries. It is still too early to tell if the spring of the Sino-US ties has arrived because of the US domestic political landscape after the mid-term elections." Days before the US defence chief's highly symbolic trip, photographs appeared showing a prototype of China's first stealth fighter, the J-20, at an airfield in the southwest. Gates said he had been concerned about China's pursuit of "anti-ship, cruise and ballistic missiles ever since I took this job" four years ago, which remained at an advanced stage. Because of the potential threat posed by Chinese missiles and other hardware, Gates said his proposed defence budget placed a priority on technology designed to counter "anti-access" weapons. Although China may be years away from fielding fully capable anti-ship missiles or jet fighters, analysts say it is gaining ground and military leaders are displaying an increasingly assertive stance. The Pentagon has for years sought a more "durable" bilateral dialogue as a way of easing tension with China and its fast-modernising military, but there is little sign that China's military leadership wants the kind of regular contacts the Pentagon wants.

US Defence Secretary Robert Gates' four-day visit to China, beginning today, sets the seal on the resumption of military contact after almost a year's suspension. Gates' visit came a week before President Hu Jintao's state visit to Washington, giving hope that both sides may be willing to make headway on some sticky security issues. Analysts also expect a series of military exchanges will resume this year. It is the first visit by a defence secretary since William Cohen in 2000, and follows a series of disagreements last year that showed the volatile nature of military ties between the two powers. China froze military contacts with the United States in response to Washington's decision to sell arms to Taiwan early last year. Things started to thaw in October when Defence Minister Liang Guanglie and Gates met for the first time last year in Hanoi, Vietnam, and agreed to resume contacts. The visit gives Gates and his counterparts an opportunity to hash out the usual unpleasantries over US arms sales and reconnaissance, according to Rear Admiral Michael McDevitt, a former Pentagon official who directs strategic studies for the Centre for Naval Analyses, a US military research organisation. "It takes these issues off the table," said McDevitt, freeing Hu and US President Barack Obama to tackle other matters. Gates was likely to reassure his counterparts that US military exercises in the Yellow Sea have "remarkably little to do with China and everything to do with North Korea", said Jonathan Pollack, senior fellow at the Brookings Institution and an expert on US military strategy in East Asia. Gates is expected to meet Hu and top People's Liberation Army leaders before he sets off for Japan and South Korea, the US' closest allies in Asia. But Sino-US affairs observers maintain that it is hard to remove some of the obstacles in the development of Sino-US military relations simply as the result of a single visit. Since last year, there were significant changes in both countries' military strategies, as policies and tactics towards each other became more critical and provocative, they said. Jin Canrong , associate dean of Renmin University's school of international relations, said: "While China is adjusting its diplomacy to match its fast-rising economic clout by adopting a more aggressive stance, Washington is becoming less confident and more suspicious about China's growing military by adopting a policy of `returning to Asia'." Observers noted signs of friction ranging from a war of words over "national interests" between Foreign Minister Yang Jiechi and US Secretary of State Hillary Rodham Clinton in July at the Asean Regional Forum in Hanoi, to joint exercises by US and South Korean forces in the Yellow Sea and by US and Japanese forces in the Sea of Japan in the past few months and counter drills by the PLA following the Korean peninsula crisis and the spat between Beijing and Tokyo over the Diaoyu Islands. Jin said Beijing was adopting tougher stances on old issues than it had in the past, citing Beijing's reaction to Obama's decision to sell arms to Taiwan, and the presence of the aircraft carrier USS George Washington in the Yellow Sea. He said China's pronouncement that territorial disputes in the South and East China seas involved its "core national interest" meant Beijing would brook no compromise in any confrontation with Washington. The Asia-Pacific region has been peaceful since 1979, but the series of high-profile feuds last year speak volumes about China's increasing naval ambitions and intensifying competition in Asia's oceans between the two Pacific military powers. Policymakers in Washington believe that the strategic architecture has been unsettled by China's growing influence and ability to project power. China's advances in developing anti-ship ballistic missiles, dubbed "carrier killers", blue water and aircraft carrier fleets, and the prototype of its first stealth fighter jet all suggest Beijing's intention to challenge American forces in the Pacific and beyond, raising questions in the Pentagon over whether China's growing strength should be compared with the US position at the end of the 19th century or, more ominously, with the rise of Germany and Japan during the same period. On the other hand, strategists in Beijing view US diplomacy in Asia as increasingly aggressive in the past year, a contrast with what some believe was neglect of the region under the previous US administration. Beijing has worried about the increasing US military presence and the upgrading of America's military ties with its traditional allies in the region. Beijing was particularly annoyed over Washington's courtship of Southeast and South Asian nations, such as Vietnam and India, and Clinton's assertion that the US had a stake in those countries' territorial disputes with Beijing. Rear Admiral Yang Yi , a hawk who was previously head of strategic studies at the People Liberation Army's National Defence University, says there are three major obstacles to the development of Sino-US military ties: US arms sales to Taiwan; US congressional bills restricting exchanges between the two militaries; and high-intensity, close reconnaissance by US military ships and aircraft in China's exclusive economic zone. Professor David Shambaugh, director of the China Policy Program at George Washington University, said last year was not an easy year for US-China relations in general and "a terrible one" for the military-military relationship. "With Gates' visit, at least a modicum of normalcy will be restored and the two sides will discuss a series of bilateral exchanges for the year." Zhu Feng , deputy director of Peking University's Centre for Strategic and International Studies, said Gates' visit signified the start of an all-round resumption of exchange and dialogue before Hu's state visit. Shambaugh said the agenda might include joint naval exercises, a new strategic issues dialogue, discussion of the Military Maritime Co-operation Agreement mechanism to manage potentially destabilising incidents at sea, defence educational exchanges, and higher-level exchanges between the armed services. US-Chinese military contacts have been subject to direct military friction or political winds in recent decades, ever since the establishment of diplomatic ties in the latter years of the cold war, with regular "start-stop-restart" cycles seen under most previous US administrations. "The military is subject to politics, thus the former has often been hijacked by the latter whenever political ties turned sour," Zhu said. Former US president George H. W. Bush ordered a halt to contacts and exchanges shortly after the PLA attacked pro-democracy demonstrators in Beijing in 1989. Contacts were frozen in 1996, after China lobbed missiles near Taiwan and, in a show of force, then US president Bill Clinton ordered two aircraft carrier battle groups to the area. Beijing cut off military contacts after the US bombed the Chinese embassy in Belgrade in 1999 during the Nato air war over Yugoslavia. Contacts were suspended again over the collision of a US Navy surveillance plane and a Chinese jet fighter in April 2001 after China detained the US crew on Hainan , where they made an emergency landing. Since Obama assumed office at the beginning of 2009, top American and Chinese officials have repeatedly stressed that the two countries are "in the same boat" and need to work together to weather the storm. Hu and Obama have launched campaigns to make their relations "a constructive and co-operative partnership" in all areas bar the military, where they have advocated a "sustainable and reliable" relationship. But unlike their co-operation in other areas, "military relations are the most sensitive, difficult and complicated", Zhu said.

Vice-Premier Li Keqiang begins a four-day trip to Britain today, during which he will hold talks with Prime Minister David Cameron and visit several businesses. Li, on a European tour which has taken in Spain and Germany, will also give a speech to a China-British Business Council event attended by top businessmen from both countries. The trip comes two months after Cameron visited China with a team of his top ministers and business chiefs. Cameron, who will welcome Li at his Downing Street office tomorrow, said: "Stronger relations with China offer a real opportunity for Britain in terms of trade, jobs and economic growth. Vice-Premier Li's visit to the UK will build on the momentum created by my visit to China last year." Deputy Prime Minister Nick Clegg, who is also due to meet Li, said the talks would focus on "everything from trade and investment to climate change and educational links". He added: "No subject will be off limits." In Germany, Li presided over the signing of US$8.7 billion worth of business with China. China's ambassador to Germany, Wu Hongbo, said the deals covered the purchase of vehicles, financial co-operation, energy and machinery. On Friday, Li met German President Christian Wulff and then held talks with Chancellor Dr Angela Merkel. Li told Merkel that China would stand by the European Union when the latter was facing "temporary" financial difficulties. He also reiterated China's stance on the yuan, rare earths exports, protection of intellectual property rights, and government procurement, Xinhua reported. Germany's economy minister, Rainer Bruderle, told he Li he hoped China would rethink its decisions or plans to restrict the export of rare earths - minerals used in domestic appliances, mobile phones and hi-tech weapons. Bruderle told Li: "Rare earths are a very clear precondition for the technological progress of all industrial nations." During his visit to Madrid last week, Li - widely tipped to be China's next premier - said Beijing was willing to buy €6 billion (HK$60.5 billion) worth of Spanish debt, El Pais newspaper said, quoting people in the government. After euro zone members Greece and Ireland were forced to seek bailouts worth tens of billions of euros last year, Spain, together with Portugal, have been seen as next in line in the 17-country currency union to need help.

Spring Festival train tickets sales start - Railway Stations across China start to sell tickets for the 2011 Spring Festival travel on Sunday. The Spring Festival travel will start on Jan. 19.

Int'l ice sculpture contest held in NE China's Harbin - More than 60 contestants across the world took part in the 25th Harbin international ice sculpture contest in northeast China's Harbin.

Chinese vice premier visits BMW project in Munich - Visiting Chinese Vice Premier Li Keqiang visits BMW new energy vehicle project in Munich, Germany, Jan. 8, 2011.

Shanghai authorities are still studying the Disneyland project and the total investment amount remains undecided, a government statement said Saturday. Shanghai has established committees for it but we are still in the research and policy-making stage, said Jiang Xujie, an official in charge of the city's construction work, in the statement posted on the municipal government's website. The investment will be properly arranged and the amount will be made public after officially approved, said Chen Qiwei, spokesman of the city government. Chen said Shanghai Shendi Group Co. Ltd., a state-owned company that signed the deal with Walt Disney Co. for the theme park November last year, will set up a joint venture with Disney. The construction timetable is being examined by Chinese authorities and will be made public as soon as it's signed off, he said. Disney and the Chinese authorities have been negotiating on and off for more than a decade over the project, and the last round of negotiations took months. The project is expected to cover a relatively small 4 square kilometers in the heart of a planned "international tourism resort" that covers 20 square kilometers in Shanghai's Pudong New District. Earlier reports said the first-phase construction will cost 25 billion yuan (3.6 billion U.S. dollars). Shanghai Disneyland will be the U.S. entertainment giant's third theme park in Asia after Tokyo and Hong Kong.

Rabbit toys are displayed at a store in Nanchang, capital of central China's Jiangxi Province, Jan. 9, 2011. The year 2011 is the "Year of the Rabbit" under the 12-year Chinese lunar calendar in which each year is named after one of the twelve Chinese zodiac animals in turn. Therefore, besides traditional decorations for the Spring Festival, products related to rabbit won popularity among buyers this year.

Hong Kong*:  January 11 2011

China's Li Na beat American's Venus Williams at the Hong Kong Tennis Classic on Jan 7 2011 - Laughing Li triumphs over Williams, but Chinese world number 11's poker face will be back in Melbourne as hard work begins. Li Na returns to Venus Williams en route to a straight-sets win over the former world number one at Victoria Park. The Chinese player is now focused on the Australian Open. Li Na allowed her poker face to slip at the Hong Kong Tennis Classic yesterday but the relaxed attitude did not stop the Chinese world number 11 adding to Venus Williams' early season woes. The 28-year-old held off a late rally from the American seven-time grand slam singles champion to record a 6-3, 7-6 (7/3) victory to maintain a perfect career record against Williams, who suffered a second consecutive straight-sets defeat in just her second tournament appearance in six months following a knee injury. Li was also in an upbeat mood despite losing in straight sets to world number one Caroline Wozniacki earlier in the week, but after beating Williams en route to reaching the semi-finals of the Australian Open last year, knows the hard work begins now with the first grand slam of the year just over a week away. "After this match I feel 50-50. Playing in a tournament like this I do not feel too sad when I lose or too happy when I win because they are just for practice in preparation for the Australian Open. All players are careful not to push to 100% this early in the season because the Australian Open is coming up and you need to hold a little bit back," said the two-time Wimbledon quarter-finalist. "I now need to be more focused for the new season. I was laughing on the court and if I do that in the Australian Open my opponent will see that I am relaxed. When I play in a grand slam you do not want to show an opponent emotions if you are happy, nervous or sad, I need just one face for the opponent." Li needed just a solitary break of the Williams serve to edge a tight opening set before moving into a seemingly dominant position at 4-3 in the second set. Li saved two break points in the next game to consolidate the break and take a 5-3 lead and had one match point on the Williams serve, but the American dug deep to fight back. And after saving another match point on her own serve she forced the tie-break with a key break of her own. But with Williams still not looking comfortable after playing in just the US Open since a quarter-finals appearance at Wimbledon in June, Li raced into a 5-1 lead in the tie-break before wrapping up the win in one hour and 45 minutes. "I was able to find a better rhythm especially in the second set," said Williams, who also lost to world number two Vera Zvonareva in straight sets on Thursday. This is her only tournament before the Australian Open. "I started to hit my shots better and hit big serves on big points so I felt very positive. "I was happy to be able to play points and move forward and get back into the swing of playing points and just competing. It was great to be able to face break points and save those and come back from a break down, all those things I haven't done in a while. "These games have been very valuable for me because I haven't played a lot of tennis. I have been feeling more like myself on the court and I wish I had more matches in Hong Kong. Now I want to continue to get stronger and play more points as I can and be as healthy as I can in Australia." Team Asia Pacific moved into a 2-1 lead in the four-match silver group final ahead of today's mixed doubles after 19-year-old world number 61 Melanie Oudin beat Hong Kong's Zhang Ling 6-3, 6-1 and Australian Mark Philippoussis beat John McEnroe 6-4, 6-4. Maria Kirilenko beat France's Aravane Rezai 6-3, 4-6, 6-3 to hand Team Russia the early lead over Europe in the gold group final.

Hong Kong shipowners appear to have escaped any direct impact from the flooding which has disrupted coal exports from Queensland in eastern Australia, although they could feel an indirect effect as ship charter rates fall in the coming weeks. Only Cosco Hong Kong, an offshoot of China's largest shipping company, has a vessel waiting to load coal at Gladstone, the world's fourth-largest coal export terminal. No new coal deliveries via the inland rail network are expected at the port until the end of next week at the earliest, according to acting Gladstone Port Corp chief executive Craig Walker. Two trainloads of coal were delivered to the port via the Moura rail line on Tuesday. The Cosco vessel, the 74,382 deadweight tonne Yong Li, has been anchored off Gladstone since December 31. It is one of 18 ships waiting to load coal cargoes. At least a further 17 large panamax and capesize dry bulk carriers of between 76,000 dwt and 175,000 dwt are scheduled to arrive at Gladstone to load coal in the next month, the port corporation said. Another Cosco Hong Kong ship, the 76,557 dwt Hong Dai, is due to arrive today for loading at either the Hay Point or Dalrymple Bay coal terminals. Other ships which are linked to Hong Kong that are waiting to load at Gladstone are the coal car- riers Dias, a 134,964 dwt Hong Kong-registered capesize vessel, and the 152,065 dwt Hong Kong-registered capesize Creciente, managed by Hong Kong's Bernhard Schulte Shipmanagement. Fleet Management, a subsidiary of the Noble commodities and trading group, manages the daily operation of the 92,000 dwt Ocean Garnet which is waiting to load a coal cargo. The 58,791 dwt Florinda owned by Portline, the Portuguese shipping company linked to Stanley Ho Hung-sun, is also waiting to load coal. Most of the other ships waiting to load coal at Gladstone are owned by Japanese or Greek shipowners. Jan Rindbo, chief operating officer at Pacific Basin Shipping (SEHK: 2343, announcements, news) , said: "At the moment, we have not been directly impacted on our handysize and supramax vessels. We have one handysize vessel scheduled to load a cargo of sugar at one of the affected Queensland ports this month, but we don't expect delays for this vessel." The Gladstone Port Corporation said the 28,747 dwt Pacific Basin ship Cape Scott was due to arrive on January 12 to load sugar. Rindbo said a second handysize vessel, the 32,919 dwt tonne Tiwai Point, was expected on January 23 to unload a cargo of petroleum coke. Richard Kendall, managing director of China Navigation, the shipping company privately owned by John Swire & Sons, said its services have not been affected as the Queensland ports to which its operates - including Townsville and Brisbane - had escaped the floods. However, he said the Pacific Explorer was involved in relief efforts and had arrived in Townsville with supplies for affected communities.

 China*:  January 11 2011

China and Germany, the world's top two exporters, should deepen their economic co-operation, Vice-Premier Li Keqiang said, ahead of a meeting yesterday with Chancellor Dr Angela Merkel. Li, widely tipped to be the next premier, made the remarks at a closed dinner on Thursday for businesspeople in Berlin, Xinhua said. Li said the two economic powerhouses should expand ties both in traditional areas such as machinery and cars but also explore new co-operation in low-carbon technologies and energy efficient industry. He noted that bilateral trade between the two is thought to have topped US$140 billion last year, around 30 times more than in 1990. For his part, German economics minister Rainer Bruderle, who met Li, pressed Beijing on the issue of market access in China for German firms, technology transfer and raw material supplies. "Technology transfer offers both sides great opportunities when it takes place willingly and under fair terms," Bruderle said after the meeting. "I am convinced that everyone will benefit if China ensures open, free and orderly access to its raw materials." Bruderle's spokeswoman said: "The minister pointed out that rare earths are a clear requirement for the technological progress of the industrialised countries ... He requested [Li] to facilitate open and fair access, and to reconsider possible restrictions that China plans or has already carried out." Bruderle also noted that "given the scope for improvement on market access [in China], it is encouraging that Li announced a greater opening up of the service sector." Li replied in his dinner speech that China would continue improving its investment environment, providing a "fair, stable, orderly, transparent and predictable market environment for all foreign companies in China," Xinhua said. Li was to meet Merkel yesterday but Berlin said no press conference was planned. Later, he was set to hold talks with German Foreign Minister Guido Westerwelle. According to a German government source, car giants Daimler and Volkswagen will ink contracts worth more than US$5 billion with Chinese partners following Li's meeting with Westerwelle. Following his trip to Berlin, Li is due in London.

Land sales rose 70 per cent year on year on the mainland last year despite government measures to rein in the red-hot property market. Land and Resources Minister Xu Shaoshi yesterday said land sales across the country rose to 2.7 trillion yuan (HK$3.16 trillion), with the top five cities accounting for more than 500 billion yuan. As land sales remain a major source of income for local governments, indirectly pushing up property prices, Xu said there was a need for land reforms. He did not elaborate. Alan Chiang Sheung-lai, the head of mainland residential property at consultancy DTZ, said the sharp increase in revenue showed developers were bullish about the market's prospects. "In spite of the government's move to crack down on speculation, demand from genuine homebuyers remained solid," Chiang said. Developers were not showing signs of slowing down their buying spree despite banks tightening lending to property firms, he said. The developers were also encouraged by the boom in home sales. Beijing topped the list in land sales, raising about 163.6 billion yuan, followed by Shanghai with 147.7 billion yuan, according to China Real Estate Information Centre, a unit of the mainland's largest property website, soufun. Last month, Beijing sold six prime commercial sites in Chaoyang district for 22.3 billion yuan. Tianjin notched up sales of 90 billion yuan, while Wuhan raised 68.7 billion yuan and Chengdu raked in 62.8 billion yuan. The central government began taking measures to cool the property market in April last year amid worries about an asset bubble. They included suspending mortgages for third-home purchases, tightening the limit on new home purchases and promising to speed up trials of a new property tax. On December 26, the People's Bank of China raised the benchmark interest rate by 25 basis points for the second time in just over two months. Banks also increased their preferential mortgage rates from 70 to 85 per cent of the benchmark rate, effectively raising the rate borrowers have to pay. Analysts said the risk of property lending remained highest among third-tier regional banks. It was unlikely that the property market would see a crash this year. "Provincial banks have no transparency as to where their money is going, and the fear is that a lot of it has gone into projects that are not as viable," said Lorraine Tan, a director of Standard & Poor's equity research. Analysts said on the whole, the mainland property market was unlikely to face a severe slump. "The average mortgage is paid back in five years; the average down payment is over 40 per cent. The government is proactively pricking the bubble, before giving it a chance to form," said Howard Wang, JP Morgan's regional investment manager and head of Greater China. "China is completely unleveraged in terms of loans as percentage of GDP [gross domestic product] and the average household is extremely unleveraged also." Chiang believes the supply of new homes will reach a record this year, which might bring down prices by 5 to 10 per cent. According to DTZ's projection, the supply of new homes would increase by 32 per cent this year to 50 million square metres in the four major first-tier cities. Supply would grow 64 per cent in Beijing, while Shanghai would see a 37 per cent increase and Guangzhou 11 per cent. In Shenzhen, the supply of new homes would drop 21 per cent.

Shanghai claims world's busiest container port - Shanghai overtook Singapore as the world's busiest container port in 2010, helped by continuing growth in Chinese trade and the business generated by the World Expo it hosted last year, the city government said. Shanghai's port handled 29.05 million twenty-foot equivalent units (TEUs) in 2010, the municipal government said in a statement on its website, citing a work meeting on turning Shanghai into a global shipping centre. That compared with the 28.4 million TEUs handled by the Port of Singapore in 2010, which was up 9.9 percent from 2009, according to the Maritime and Port Authority of Singapore. Shanghai's cargo throughput rose to around 650 million tonnes in 2010, maintaining its top global spot, according to the statement. China's State Council, or cabinet, has set an aim of making Shanghai a leading shipping centre by 2020 - the same year by which the government hopes the city will become a global financial centre. Shanghai will continue with a pilot project for export tax rebates, potentially expanding it, and is looking into developing shipping-price derivatives and an index on shipping prices, the city government said. Shanghai's port is operated by Shanghai International Port (Group) Co.

6th naval flotilla returns after escort mission - Relatives welcome Chinese naval officers and soldiers home after their 192-day escort mission in the Gulf of Aden, Zhanjiang city, Guangdong province, Jan 7, 2011. About 1,000 Chinese naval officers and soldiers Friday returned home, to South China's Guangdong province, after serving a 192-day tour of escort mission in the Gulf of Aden and in waters off the coast of Somalia. Their tour of duty was China's sixth naval escort mission in the region. The flotilla escorted 615 ships - 306 Chinese vessels and 309 foreign ones - during the mission. The previous five Chinese missions in the Gulf of Aden escorted a total of 2,248 Chinese and foreign ships. The Chinese navy's escort work in the region began in December 2008. The sixth naval escort flotilla set sail for the Gulf of Aden from Zhanjiang, Guangdong, on June 30, 2010. The flotilla began its escort work on July 16.

China's Online ad revenue to beat newspapers - The Internet is expected to overtake newspapers in advertising revenues in China by 2012 as more and more advertisers take advantage of the country's booming online market, according to a new report by the Data Center of China Internet (DCCI). Online advertising revenues are forecast to reach 46.1 billion yuan ($6.95 billion), exceeding the 42.39 billion yuan earned by newspapers, by 2012, and become the second-largest media for advertising in the country, said the report. Last year, television advertising maintained the lead among the different media, registering total revenues of 75.86 billion yuan, more than twice that of newspaper advertising at 36.5 billion yuan, and almost three times that from online advertising, which was 25.66 billion yuan. "Online advertising is going to take up a larger proportion of the country's advertising market, but its value is still underestimated," said the report, referring to the disparity between Internet user penetration rates, and the proportion of online advertising accounting for the whole advertising market. Internet users in China totaled 450 million by the end of November, and represented around 34.8 percent of the population, but online advertising only accounted for 11.2 percent of the market. "Companies will surely spend more and more on Internet marketing in the future, even though they still have to figure out how to use the Internet well," said Chen Gang, associate dean at the School of Journalism and Communications at Peking University. "Traditional media, however, have begun to experience a 'warm winter'," he said, explaining that although the adverting revenues of traditional media are increasing, growth is slowing and will continue to do so. Chen said that newspapers don't compete in a fully market-oriented environment, a factor which poses difficulties for the sector to integrate resources and therefore influences the advertising performance of newspapers. The country's online advertising market will continue with its prosperous growth as advertisers begin to recognize the marketing value of online videos, social networking sites and other types of Internet products, said the report. The biggest advertiser online last year was the computer industry, accounting for about 36 percent of total online advertising spending, followed by autos, clothing, and real estate, according to the report.

Hong Kong*:  January 10 2011

 

Sudden exit of arts hub chief may delay project - Cultural critics say city's reputation is at stake - Arts development experts fear the opening of the trouble-plagued West Kowloon Cultural District could be delayed for at least year as a result of the sudden resignation of its chief executive officer, Graham Sheffield. The departure of 58-year-old Sheffield for "health reasons" - the second top-level resignation from the West Kowloon Cultural District Authority in a year - has damaged the international reputation of the arts hub and made the job of finding someone to replace him much harder, say members of the arts sector. Art critic Oscar Ho Hing-kay said the project now faced a critical period without a leader looking at the overall picture. "It will be delayed for another year at least," he said. A fellow critic, Mathias Woo Yan-wai, was also worried that without a leader's artistic vision, construction of the hub would be delayed. "We might not even have it till 2020," he said. The first phase of the HK$21.6 billion project is due to open from 2015, and the second phase from 2026. Another global search will be launched for a successor to the former artistic director of London's Barbican Centre, who only managed to serve five months of his three-year, HK$3.5 million-a-year contract. His resignation was accepted and takes immediate effect. Sheffield, who took up the post in August, was not required to pay compensation for the early termination of his contract. The authority's chairman, Chief Secretary Henry Tang Ying-yen, said Sheffield had been advised by his doctor to resign immediately, but he gave no more details, saying it was a private matter. But he added that Sheffield "loves Hong Kong, loves the team and the project". Tang thanked Sheffield for his contribution to the early stage of the arts hub's development, praising his recommendations on developing talent and his engagement with the arts community and the public.

Warning of worsening congestion as visitor arrivals hit record 36 million - A record 36 million people visited Hong Kong last year, a 21.8 per cent year-on-year jump from 2009, according to provisional official statistics released yesterday. But the traveller surge came with a downside: rising hotel room rates and more congestion. "Hong Kong's tourism experienced a strong rebound in 2010 after the severe blow dealt by the financial tsunami and human swine influenza in 2009," said Tourism Board chairman James Tien Pei-chun. However, the rosy picture sparked a warning from the board's executive director, Anthony Lau Chun-hon, who said that hotel room rates are on the rise and traffic congestion might worsen. A night's stay in a hotel cost 10 per cent more last year than in 2009. Hotels were also fuller: the average occupancy rate was 85 per cent in the first 11 months of last year, up from 76 per cent in 2009. Roads to The Peak and other attractions were also jammed at times, causing inconvenience to tourists, Lau said. Michael Li Hon-shing, executive director of the Federation of Hong Kong Hotel Owners, warned that it would be risky to build more hotels based on a short-term increase in arrivals. Hotels were 90 per cent occupied over Christmas as a result of a combination of factors, including one-off ones such as the snowstorms in Europe and tension on the Korean peninsula, Li said. "It would be risky to increase the supply of rooms based on Christmas' performance," he said. "It takes owners more than 10 years to reach break-even." Wong Wai-wing, chairman of the Association of Registered Tour Co-ordinators, agreed popular tourist spots like Stubbs Road lookout were often congested. "We always tell tourists that congestion is the norm in Hong Kong," he said. There also were not enough drop-off points for tourists, especially along Nathan Road in Mong Kok and Canton Road in Tsim Sha Tsui, he said. The board said mainland tourists continued be the main source of visitors, jumping 27 per cent to 22.5 million or 63 per cent of total arrivals last year. They also spent more. In the first six months last year, mainland tourists spent an average of HK$7,400, up from HK$6,600 in 2009. Policies making individual visits by mainlanders easier and promotions such as the Dragon Boat Carnival, the Wine and Dine Festival and the New Year countdown celebrations increased arrivals, Tien said. From April 2009, year-round multiple-entry Hong Kong visas were made available to Shenzhen residents. Eight months later, up to three million migrant workers became eligible to apply in Shenzhen, rather than their home provinces, to visit Hong Kong under the individual visit scheme. At the end of last year, that scheme was further expanded to allow almost all migrant workers, or an additional four million people, in the special economic zone. "We hope the central government will extend the individual visit scheme to even more mainland cities, such as the major cities in the three provinces in the northeast and to the entire Zhejiang and Jiangsu provinces," Tien said. Excluding visitors from the mainland, short-haul arrivals rose 16.5 per cent to 8.7 million. Long-haul arrivals increased 9.6 per cent to 4.8 million. New tourist events will be staged this year. The world's largest lantern will be built to celebrate the Mid Autumn Festival, and a "big bowl feast" - a traditional meal in which the food is stacked in layers in one big bowl - will be organised, Lau said. The board will also explore more overseas markets such as Vietnam, the Netherlands and the Indian cities of Chennai and Bangalore. There were 176 hotels in Hong Kong providing a total of 60,457 rooms as of November, a spokesman for the Commerce and Economic Development Bureau said. By 2016, it is estimated that the number of hotels will increase to 233, offering 70,601 rooms.

Mainlanders more upbeat than Hongkongers - Consumers in Hong Kong and the mainland were the seventh- and fourth-most confident respectively in a survey of 28 major economies by research company Synovate. The survey, for which 23,000 people were questioned between August and November, compared the perceptions of people about the overall economy, their personal finances and the job market. The mainland scored 123, trailing only Brazil, Sweden and Colombia. It was followed by the United Arab Emirates and South Africa, with Hong Kong seventh on 114 points. Japan, France and Italy scored under 80 and ranked among the bottom five. Some 56 per cent of mainland consumers expected the overall economy of the nation to improve in the next six months, compared with 30 per cent in Hong Kong. Nearly half of mainland people expect their personal income will rise while only 17 per cent of Hong Kong people think they will earn more. "The survey showed that mainland people are very optimistic about the economy, translating to positive momentum in the consumer markets in both the mainland and Hong Kong," said Susanna Lam, research director of Synovate. "Less discounts and promotions will be needed to lure consumers to spend in these two economies." However, Hongkongers and mainlanders alike appear reluctant to dip their toes in the property market. Only 9 per cent of Hong Kong people believed it is a good time to buy a home while 84 per cent thought the timing was bad. The survey has yet to factor in the impact of the special stamp duty imposed on property sales in the city since November. On the mainland, some 74 per cent of the respondents said it is a bad time to buy a flat, while 23 per cent think now is a good time to do so. That contrasts with other economies. For example, 60 per cent of the respondents in the United States thought it is a good time to purchase a home. Lam attributed the difference to the surging property prices in Hong Kong and mainland over the past two years, which discouraged people purchasing. Hong Kong and mainland people tend to have a more balanced view towards selling homes. Some 41 per cent of Hong Kong people thought it is a good time while 52 per cent said it is a bad time to sell a home. On the mainland, 40 per cent felt it is a good time while 56 per cent thought it is a bad time to sell their home. Synovate, a member of Aegis Group, offers market research in more than 60 countries.

 China*:  January 10 2011

For the first time, Shanghai overtook Singapore as the world's busiest container port last year. Hong Kong retained its third spot but Shenzhen appeared to be catching up quickly. Shanghai's container throughput rose 16.3 per cent to 29.1 million twenty foot equivalent units (teu) in 2010 while its cargo tonnage grew 17.3 per cent to 428.35 million tonnes, according to the website of Shanghai International Port Group (SIPG), the Shanghai-listed port operator of the city. Announcing Singapore's preliminary port throughput figures on Thursday night, Raymond Lim, Singapore's minister for transport and second minister for foreign affairs, said: "Our advanced estimates show Singapore's container throughput for 2010 was 28.4 million teu. This is an increase of about 10 per cent over 2009." Undeterred by losing the top position to Shanghai, Lim said: "As a major transshipment hub, we are well positioned to capitalise on the growth momentum in Asia." Last year, Shanghai and Singapore were in a see-saw battle in terms of monthly container throughput. Singapore beat Shanghai in January, February, March and October, but Shanghai was ahead the other months. Finally, for the first time Shanghai overtook Singapore in annual container throughput. Nomura's outlook for Shanghai's container throughput growth for this year is in high single digits, Nomura analyst Jim Wong said. "Shanghai became the largest container port in the world in 2010 surpassing Singapore but Shanghai's December volume growth slowed to 3.2 per cent year on year from 17.7 per cent in January to November 2010." The world's container shipping volume would grow 7 to 8 per cent this year, slower than last year's growth of 14 per cent, a Macquarie report said. This is largely due to the likelihood that weak demand could continue early this year in the US and to a lesser extent in Europe, it said. "Weaknesses in the major global economies persist and [container] growth in 2011 is expected to be uneven and cannot be taken for granted," said Eddie Teh, group chief executive officer of PSA International, Singapore's government-linked port operator. Daiwa Greater China chief economist Sun Mingchun said: "The European debt crisis may hurt Chinese exports but the Chinese government will not take aggressive policy measures like stimulus or loan growth." The government has learnt from the global financial crisis of late 2008 when China's sharp drop in exports in 2009 had a limited impact on the nation's overall economy, Sun said. Meanwhile, Shenzhen port's container throughput soared 23.3 per cent to 22.5 million teu in 2010, exceeding the Shenzhen government's target by 12.6 per cent, said the Shenzhen Ports Association website. This includes 14.4 million teu of laden containers, which saw a 19.2 per cent increase last year. However, for December last year, Shenzhen's container throughput grew only 1.9 per cent year on year to 1.79 million teu, much slower than the 23.3 per cent growth for the whole of last year. Shenzhen's rapid growth was not enough to topple Hong Kong as the world's third-busiest, however. Hong Kong's Port Development Council has yet to issue its throughput figure for Hong Kong in 2010, but industry insiders said Hong Kong handled about 23.6 million teu last year, up almost 13 per cent year on year. This was slightly higher than the 23.5 million teu handled in 2006, but not enough to break the record 24.5 million teu handled in 2008.

Minsheng placement taps shareholders for 21.5b yuan - China Minsheng Banking Corp is seeking to raise additional funds ahead of higher capital requirements under Basel III rules. China Minsheng Banking Corp is looking to raise 21.5 billion yuan (HK$25.21 billion) through a private placement of A shares to boost its capital adequacy ahead of the expected introduction of higher capital requirements. The Beijing-based lender said in a statement it would place 4.7 billion A shares to seven shareholders including China Life Insurance (SEHK: 2628, announcements, news) and Sichuan South Hope Industrial at 4.57 yuan a share, which represented a discount of 9.1 per cent to the stock's close of 5.03 yuan on Thursday. All the proceeds raised from the placement would be used to replenish its capital. The placement is subject to shareholders' and regulators' approvals. The fund-raising comes 14 months after the bank's listing in Hong Kong, which netted more than HK$30 billion. "The banking regulator will heighten capital levels required of banks," Shenyin Wanguo Securities analyst Li Yamin said. "Those banks with the need to boost capital have to seek fresh funds ahead of the official announcement [of a higher capital requirement]." The China Banking Regulatory Commission said earlier it would raise the capital requirement in line with the global Basel III accord reached in September last year, which required banks to increase tier-1 capital ratio to 8.5 per cent from 4 per cent. Tier-1 capital ratio is the ratio of a bank's core equity capital to its total assets. Minsheng, which said last year it had no need to raise extra funds in the near future, reported tier-1 capital adequacy ratio of 8.1 per cent at the end of September. Analysts said other medium-sized banks such as China Merchants Bank (SEHK: 3968) and Shenzhen Development Bank were also expected to sell shares to raise fresh capital. China Merchants' tier-1 ratio stood at 8.03 per cent in September while Shenzhen Development reported a ratio of 7 per cent. Mainland banks faced mounting concerns over bad debts after they granted a record 9.6 trillion yuan in loans in 2009. The lending binge continued last year with an expected 7.5 trillion yuan in loans extended. In order to cover potential soaring bad loans and support new lending growth, all of the country's Big Four banks resorted to the stock markets to raise fresh capital last year. Agricultural Bank of China completed a US$22.1 billion dual listing in Shanghai and Hong Kong, the world's biggest-ever initial public share offering. In November, Industrial and Commercial Bank of China (SEHK: 1398), the last of the Big Four to raise funds on the stock markets, completed a 45 billion yuan rights issue. Mainland investors appear more cautious on the banking sector's outlook than their global counterparts. A-share banking stocks are now trading at a discount to H shares. Minsheng's A shares closed at 5.03 yuan on Thursday before trading was suspended yesterday. The H shares last traded at HK$6.59.

China is sending two surveillance ships to the Yellow Sea, near waters where a joint drill involving a nuclear-powered US aircraft carrier, the USS Carl Vinson, and South Korean forces is scheduled later this year. The China Maritime Surveillance Force added two large ships to its fleet on Thursday to better protect the country's maritime rights and interests, Xinhua said. The two patrol vessels, one of 1,000 tonnes and the other 1,500 tonnes, joined the force's northern fleet, based in Qingdao . The fleet oversees the country's territorial waters in the Yellow Sea, it said. The ships will be used to crack down on violations of China's maritime interests, illegal use of Chinese waters and damage to its marine environment, resources and infrastructure, Xinhua quoted Fang Jianmeng , head of the North Sea branch of the State Oceanic Administration, as saying. The new ships are part of a State Council plan unveiled in 1999 to add 13 patrol ships with displacements of 1,000 tonnes or more and five patrol helicopters to guard China's waters. The first six ships and two helicopters joined the maritime surveillance force in November 2005, while the other vessels and helicopters were expected to be deployed by June this year, Xinhua said. After the expansion, China will have 47 sea patrol ships, with 26 in the 1,000-tonne-plus class, it said. But maritime security experts said this was not enough to deal with the increasingly heavy burden of guarding the country's maritime interests. The US and South Korea held joint naval drills in the Yellow Sea in November despite repeated opposition from Beijing. Wang Hanling , a maritime affairs and international law expert at the Chinese Academy of Social Sciences, said: "China has a coastline of 32,000 kilometres and 350,000 square kilometres of territorial sea and internal waters. And indeed, under the United Nations' Convention of the Law of the Sea, we also have three million square kilometres of exclusive economic zone. "Unlike the fishery administration department under the Ministry of Agriculture, which oversees the domestic fishery industry, the maritime surveillance force is under State Oceanic Administration and is more involved in international events." Wang said that in peacetime, the administration was the frontline safeguard for China's territorial sovereignty and maritime interests.

Entertainment giants buy naming rights to Chinese venues - Beijing's former Olympic basketball arena will host shows and basketball events. Naming rights to some of the mainland's most high-profile buildings are up for grabs as Beijing pushes to boost domestic consumption as a driver of the world's second-biggest economy. Chinese companies are positioning themselves for a surge in the urban entertainment market in mainland cities, and foreign companies are stepping up for a slice of the action. In line with the new strategy, two of the mainland's newest facilities will be renamed for foreign businesses, and will reopen as multi-purpose entertainment centres. Beijing's former Olympic basketball arena in Wukesong will be rechristened MasterCard Centre this month, and will host variety shows - although it will still be a basketball venue for activities associated with the US National Basketball Association (NBA). Separately, Shanghai's flyingsaucer-shaped former World Expo cultural centre will be renamed the Mercedes-Benz Culture Centre and will also become a municipal entertainment centre. US industry sources said the Beijing naming-rights deal cost US$4 million annually for five years, and the Shanghai deal cost US$6 million annually for 10 years. According to Chinese executives of Los Angeles-based AEG, one of the world's largest sports management and entertainment presentation companies, these are beachheads for a major campaign in China, with the goal of ultimately signing up management of five venues. John Cappo, president and chief executive of AEG China, said deals were in the pipeline in three other cities: Dalian in the northeast, Hangzhou in the Yangtze delta, and Chengdu in the southwest. Yang Boning, a senior executive of NBA China, said his company also had an activity centre in Dongguan, Guangdong, to host junior events and for training Chinese coaches. The entertainment business is showing strong momentum in urban China, Cappo said, and importing shows was easier than staging sports events, which needed longer lead times. In the meantime, mainland sports authorities still face major decisions about how to make the market more open and competitive without giving away too much, said an executive with Bloomage Investment Group, developer of the Wukesong Arena and also a partner of the renaming deal. The executive declined to be identified. All five AEG China facilities would be built and revamped to the standards of Los Angeles' Staples Centre so they could stage world-level sports events and performances, said Sam Piccione, AEG China's general manager of sales. AEG said it was trying to schedule more than 200 dates for the Beijing MasterCard Centre in the next five years, including sports events like NBA basketball, table tennis and badminton. Concerts by the Eagles, the Black Eyed Peas and Hong Kong singer/songwriter Jacky Cheung Hok-yau are already booked for this year. According to the National Bureau of Statistics, the added value of the mainland's cultural industry reached 840 billion yuan (HK$984 billion) in 2009 and would be worth more than 100 billion yuan last year. Last year, 24 imported feature films generated more than 4 billion yuan in box office revenue, while total box office revenue exceeded 10 billion yuan for the first time in history. Economists say entertainment spending generally starts to boom when per capita GDP reaches US$4,000. GDP per capita on the mainland was US$3,744 in 2009, according to the World Bank, putting it on the cusp of that spending bonanza. According to the Communist Party theoretical journal Seeking Truth, in 2009 the entertainment sector contributed more than 5 per cent of GDP in five places: Beijing, Shanghai, Guangdong, Yunnan and Hunan. The draft five-year plan covering the years to 2015 targets a doubling of value-added service from 2010 levels for the entertainment sector, the journal said. National Bureau of Statistics figures show that urban dwellers typically devote 12 to 15 per cent of their total consumer spending on education and entertainment. In 2008, that translated to average spending on these sectors of 2,383 yuan per person in Beijing, 2,874 yuan in Shanghai, and 1,936 yuan in Guangdong, in comparison with the national average of 1,358 yuan. Sometimes, entertainment offers local governments the perfect pretext for undertaking development schemes. Chinese-language media reported that Shanghai's total budget for its future Disney park and surrounding resort area, to cover more than 100 square kilometres, is more than 100 billion yuan. At the same time, the city claims that, having built a multitude of business districts, it will also develop a so-called central activity area around the former expo buildings, including the future Mercedes-Benz centre. In Guangzhou, the government is spending a lot of money on cultural facilities in the newly planned "central cultural district". Many cities are following the examples of Beijing, Shanghai and Guangzhou in commissioning big-ticket public buildings, from opera houses to sports stadiums. The mainland is a magnet for overseas artists because it is a market where demand remains so much higher than supply and, in comparison with Hong Kong and Taiwan, much greater box office sales can be generated. Tickets for a concert in Beijing by Taiwanese pop singer Jay Chou cost from 280 to 1,680 yuan - making them between 30 and 40 per cent more expensive than those for his concerts in Taipei. The most expensive ticket to the New Year's Eve concert in Beijing's Great Hall of the People cost 8,880 yuan, and tickets for the forthcoming Eagles concerts in the AEG venues in Beijing and Shanghai will cost between 350 yuan and 2,580 yuan.

Hong Kong*:  January 9 2011

The chief executive of the West Kowloon Cultural District Authority has resigned for "health reasons" just five months after arriving in the job. Graham Sheffield is the second top executive of the authority - the organization in charge of creating an art and culture hub on a 40-hectare reclamation site on the Victoria Harbour waterfront - to quit within relatively short order. Sheffield was a high-profile organizer in the London arts scene before being lured to Hong Kong last August, which was soon after Angus Cheng Siu- chuen's shock resignation. Cheng spent a week in the position of executive director before quitting for "personal reasons." Members of the authority board will be informed about Sheffield's resignation at an emergency meeting being convened today, a source told Sing Tao Daily, sister paper of The Standard. "He has resigned for health reasons and the board will soon reopen the recruitment exercise," the source said. "Related matters or arrangements will be discussed at today's meeting." Sheffield, now back in London, refused to comment on the resignation, telling a reporter only that he was at a gathering with friends. The 58-year-old Sheffield had been artistic director of London's Barbican Centre. His recruitment for the Hong Kong job was sealed last March after a months-long global search by the West Kowloon Cultural District Authority. His employment package during his three-year contract included an annual salary of about HK$3.5 million. A second source close to the authority said there were rumors Sheffield's girlfriend, an artist in the United States, was unhappy about him being in Hong Kong. But the other source insisted Sheffield's decision had nothing to do with his personal life and was purely for health reasons. Sheffield said during a Hong Kong media gathering on December 17 that he was heading back to Britain for a 10-day stay with his family. He had said earlier that he had little insight on local arts and culture but vowed to create a "global impact" with the HK$21.6 billion Kowloon project. "We will put Hong Kong firmly on the map of a must-see, must-experience destination for culture seekers across the world," he declared. A recruitment exercise to replace Sheffield as chief executive is expected to be launched quickly. The authority says the successful candidate will have at least 20 years' experience leading an organization and shaping its business model and cultural and artistic experience. The first phase of the construction of the cultural district is due for completion in 2015.

Hong Kong's 40 richest individuals have boosted their total net worth to US$163 billion (HK$1.27 trillion), up US$28 billion from US$135 billion last year, thanks to closer ties with the booming mainland economy, Forbes magazine reported. And despite the SAR's rising dependence on the mainland, the wealth of the city's 40 richest still exceeded the US$137 billion amassed by their counterparts across the border. But the mainland outstripped Hong Kong in the number of billionaires, hitting 128 against Hong Kong's tally of 40. Li Ka-shing, chairman of Hutchison Whampoa (0013) and Cheung Kong (Holdings) (0001), retained top spot on the Forbes list with a net worth of US$24 billion, up from US$21.3 billion. Li's wealth was three times that of the mainland's richest individual, Zong Qinghou of the beverage producer Hangzhou Wahaha Group, who clocked in at US$8 billion. The Kwok family, led by Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen, vice-chairmen of Sun Hung Kai Properties (0016), held on to the No 2 spot with net worth of US$20 billion, up from US$17 billion a year ago. Lee Shau-kee, chairman of Henderson Land Development (0012), came in third with US$19.5 billion, followed by Cheng Yu-tung of New World Development (0017) with US$9 billion. Newcomers were Simon and Eleanor Kwok of cosmetic retailer Sa Sa International (0178), Albert Yeung Sau-shing of watch chain Emperor Watch & Jewelry (0887) and Chok Kam- lok, head of the generic antibiotics maker United Laboratories Holdings. While developers continued to dominate the SAR list - with more than one third of the tycoons on the list making their fortune from real estate - the mainland list was much more diversified. In addition to the thriving entrepreneurs in industries that serve the consumers, the rise of the internet has sent Robin Li Yanhong, co-founder of the country's most popular search engine, Baidu, soaring to second on the mainland's list, with his net worth estimated at US$7.2 billion.

Hot business cheers city flower growers as the mercury falls - Lee Tak, at Choi Lee Nursery, said the cold had not greatly hurt business. But temperatures are tipped to stay low. The cold snap has not cooled business for Hong Kong's flower gardeners ahead of the Lunar New Year. With the holiday a month away and temperatures tipped to remain low, the gardeners say their plants are doing well and orders are coming in earlier than usual. Fung Ho, 73, said the chilly conditions had done little damage to the hundreds of peach blossom trees at his Choi Lee Nursery at Shek Kong, where he has grown flowers for 40 years. A 4.9 metre tree, which has been growing for six years and costs HK$60,000, was reserved last month. "Reservations have come earlier this year," he said. "Last year, people went for the cheaper plants from the mainland but were not satisfied with the quality. So this year more people are buying their holiday plants with us." Fung said farm workers covered cold-sensitive plants such as chrysanthemums and peonies with cloth at night to protect them from the cold. He said the nursery would raise prices a little this year, to cover inflation. "Buyers should not judge the plants by their prices," Fung said. "They have to look at the quality of the plants and decide by themselves whether they're worth it." Li Wing-keung, 45, owner of Keung Kee Garden, said the cold snap was not unexpected. But, he said, if the temperature continued to drop, half his crop would not be ready before the Lunar New Year. If the sun shone, more than 70 per cent would be fine. Li said he had sowed a little earlier this year, so the plants would have more time to grow in the cold. He has also installed spot lamps to shine on some plants such as rhododendrons to increase the surrounding temperature. During a cold Christmas, when frost was found in many places in the New Territories, Li covered the plants with cloths and plastic sheets. Li said the influence of the cold weather had affected the crops more at his two farms on the mainland, where the temperature was even lower. He had more new customers this year, he said. Prices for plants grown in Hong Kong would not be raised. For those grown on the mainland, prices would increase by a few per cent, to cover the rising cost of diesel. "Customers are buying holiday plants for a good start to the year," he said. "If they find our prices are lower than expected, they will be very happy."

The HSBC (SEHK: 0005) Hong Kong Purchasing Managers' Index rose to 55.0 in December, the highest since April, showing a marked expansion in Hong Kong's private sector economy. The rate of growth was above the long-run average for the series, pointing to a strong finish to the year. New business orders rose sharply in December and at the fastest pace since January, contributing to marked output growth. New orders received from China rose but the rate of growth slowed from the five-month high reported in November. Private sector employment fell marginally for a second consecutive month, despite substained growth in new orders and activity. Backlogs increased and at the fastest pace in 11 months, suggesting that pressure on operating capacity persisted. Overall input costs increased considerably in December, driven by a further rise in raw materials prices and wages. Output prices increased markedly because of higher input costs. Output price inflation has now been sustained for 14 months. “The momentum in Hong Kong’s economy is showing no signs of easing as last year draws to a close. Internal and external demand are holding up strongly, leading to further tightening capacity constraints,” said Mark McCombe, Chief Executive of HSBC, Hong Kong. “However, inflationary pressures are emerging in Hong Kong, and as we enter this year, this issue should be monitored closely,” he said in a statement.

New police chief aware of the pressure - First task is to lift morale amid claims of heavy workload and shortage of officers - Outgoing Commissioner of Police Tang King-shing (right) with his Beijing-appointed successor Andy Tsang Wai-hung at police headquarters in Wan Chai yesterday. Deputy Commissioner of Police Andy Tsang Wai-hung will succeed Tang King-shing as the new commissioner of police, a government spokesman said on Thursday. Tsang will take up the new appointment with effect from next Tuesday. Tang, 56, takes pre-retirement leave on the same day. Tang has served in the police force for 34 years and was due to retire in May – but is taking pre-retirement leave. Speaking at a press conference, Tsang said he was honored to take up the post and vowed to follow on the good work of Tang and ensure stability and safety in Hong Kong. Chief Executive Donald Tsang Yam-kuen said Tsang has extensive knowledge and experience in the operation and management of the police force. “Mr Tsang has served in the Hong Kong Police Force for 33 years... Over the years, Mr Tsang has made great efforts in enhancing the efficiency and professionalism of the police. I am confident that he will lead the force in meeting the challenges that lie ahead,” he said. The chief executive also thanked the contributions made by Tang King-shing. “Since taking up the appointment in January 2007, Mr Tang has made commendable efforts in maintaining law and order in the community. Under his able leadership, the police force has continued to excel as a world-class professional law enforcement body. We sincerely wish Tang a happy retirement,” he said. Long tipped for the top job, Tsang, 52, joined the police force in January 1978 as a probationary inspector. He has held a variety of posts in the force, including frontline operational duties, leading criminal investigations and taking up managerial positions. Between 1993 and 1995, he was seconded to the Metropolitan Police in London, where he worked as a detective superintendent. He served in a number of posts including Senior Superintendent (Crime) in the New Territories North Headquarters, District Commander in Wan Chai, and Chief Superintendent of the Organised Crime and Triad Bureau between 1996 and 2003. He became deputy commissioner of management in January 2008 and took up the present post of deputy commissioner of operations in March last year. Commenting on the appointment, Democratic Party lawmaker and security panel chairman James To Kun-sun – who has worked with the new commissioner – said he was likely to exert stricter controls towards protests than his predecessors. To said that, given Tsang’s background in the Organised Crime and Triad Bureau, he would expect the new commissioner to focus on the investigation of serious crimes and improving crime detection rates. 

Bowled over - Hong Kong's love of ramen is being given a boost by a new batch of noodle joints whetting appetites. Hongkongers have never lost their love for ramen since the first homely eateries opened about 30 years ago. In the late 80s, cult movie Tampopo, the quirky tale of a young widow's quest to master the art of the Japanese noodle, may have given it another fillip. But a clutch of new ramen joints is now whetting appetites as never before with distinctive soup stocks and noodles. The hottest of the bunch is also the most recent: Butao, a tiny, 12-seat outlet in Lan Kwai Fong that opened just three months ago. Set up by Japanese culture aficionado Meter Chen Fong-tang and partners, it has been attracting crowds with its Sapporo-style ramen, which features a unique blend of miso paste, minced pork and spice powder in each bowl.

The financial secretary yesterday played down public expectations of handouts in next month's budget. John Tsang Chun-wah said "giving out sweeteners" was not the best way to alleviate the inflationary pressures people faced. "Hong Kong's economic growth has returned to normal," he said in a speech at a luncheon hosted by the Chinese General Chamber of Commerce. "Facing rising inflationary pressure, we must watch various policies pragmatically, taking into consideration whether such measures would overstimulate consumption, thereby further increasing inflationary pressure." Tsang's comments were seen as pre-empting lawmakers' demands. The government is conducting a public consultation on possible budget measures. Lawmakers today are scheduled to debate a non-binding motion on budget measures in an attempt to pressure the government to offer more concessions. There have been calls for relief measures amid public concerns over surging prices. Consumer prices rose 2.9 per cent in November year on year, up from 2.6 per cent in October. Just weeks before he delivers his budget on February 23, Tsang said he would stick closely to the strategy of prudent financial management. "To avoid creating a continuous and heavy burden on the government, we cannot see the giving out of sweeteners as the only solution to problems," he said. The government's fiscal position is much better than officials had expected. The public coffers enjoyed a surplus of HK$17.2 billion from April to November, despite a forecast by Tsang of a deficit of HK$25.2 billion for the whole fiscal year. Most accounting firms expect a surplus of at least HK$60 billion for the full year. Lawmakers across the political spectrum have submitted proposals demanding the government help people cope with inflation. The Democratic Alliance for the Betterment and Progress of Hong Kong want a HK$30 billion "transport fare stabilising fund", which would subsidise transport companies in case they applied for rises to cover cost increases. The Democratic Party wants the administration to issue inflation-linked bonds with a total amount of HK$30 billion.

Swire paves way for housing of elderly - Demand for quality projects for senior citizens will rise with ageing of the population - The site in Victoria Road, Pok Fu Lam, where Swire Properties plans to build a 28-storey residential project for the elderly. Demand for quality residential projects designed to cater for the needs of the elderly is set to rise in Hong Kong as the population ages and the wealth of retirees increases, say analysts and developers. Paving the way for what is likely to become a new trend among developers, Swire Properties last week won approval from the Buildings Department to build an upmarket housing project for the elderly in Pok Fu Lam, making it the first private developer to enter the sector. The provision of housing developed specifically for the elderly has until now been undertaken mainly by the non-profit Housing Society, which plans to build two further upmarket housing projects catering for the elderly - one in Tanner Hill, North Point, the other in Tin Shui Wai. The two will provide about 1,500 flats. "We already have 300 eligible applicants on our waiting list," a society spokeswoman said. The society runs two Senior Citizen Residences (SEN) projects at present, in Tseung Kwan O and Jordan Valley. The SEN flats are managed under a "long lease" arrangement. After paying an entry contribution, tenants can occupy a flat without further costs except for a management fee that may range from HK$1,200 to HK$2,000. On their death, the society resumes ownership of the flat. But Swire has not yet finalised what model it will adopt for its proposed project in Pok Fu Lam. The society's Tanner Hill development, which will have 600 flats, will be completed in 2013. Phase one of the development of the Tin Shui Wai project, located near the Wetland Park, is scheduled to be completed in 2014. The 900-flat development will include a hotel and wellness centre with associated facilities. "The Tin Shui Wai development will be a resort-style project as it is close to the Hong Kong Wetland," said the spokeswoman, who added that the hotel could be used to accommodate visiting relatives or friends. While application details have yet to be finalised, the two upmarket projects would target higher income earners, she said. According to the Census and Statistics Department, the number of people aged over 60 in the city could rise to 2.99 million in 2039 from the present 1.28 million. By 2039 the elderly population is projected to account for 33 per cent of the estimated 8.89 million population, from 18 per cent in 2010. Because of low birth rates, there will be fewer young people supporting a growing elderly population. The Housing Society's 243-flat Jolly Place in Tseung Kwan O and its 333-flat Cheerful Court in Jordan Valley, both of which cater for middle-income retirees, are fully let. Jolly Place was the society's first retirement housing project. The project offers accommodation for residents aged over 60 as well as a rehabilitation and health care centre, and comprises 81 studio flats of 268 square feet each, and 162 one-bedroom flats of 398 sq ft each. Tenants have to pay a lump sum, ranging from HK$300,000 to HK$600,000, for the use of the flats for the rest of their lives. To ensure that the project caters to its middle-class target group, asset limits for single applicants have been set at between HK$1 million and HK$3.3 million, and between HK$1.5 million and HK$4.95 million for couples. Swire Properties, meanwhile, envisages a 28-storey residential project for the elderly, with a gross floor area of about 28,000 square metres on a site formerly occupied by the Pok Fu Lam Kennels. The site secured a change in permitted land use to residential purposes in 2000. In a written reply to the South China Morning Post (SEHK: 0583, announcements, news) , Swire Properties said the relevant land exchange application to build its project was now being processed by the Lands Department and it was therefore unable to provide further details of the development programme at this stage. Nicholas Brooke, chairman of Professional Property Services, said that depending on pricing there should be strong demand for flats in the project since many elderly people would prefer to live close to their families if they could afford to do so. "There seem to be two models operating outside Hong Kong. In the first, the unit is sold outright with the only restriction being age - say over 60 - and that restriction will bind future sellers as well. The second involves the sale of life-time tenancies with the property reverting to the developer on death." Brooke said that while returns to developers might be lower than in ordinary residential projects, they were likely to be more secure and less volatile. He believed the government should designate sites for their development and dispose of them through auction or tender in the normal way. "This will establish a market value for sites for this type of use and to do so would be part of government's wider social responsibility," he said.

Developments accelerate with speed train - Hong Kong-listed Shui On Land (SEHK: 0272) plans to accelerate completion of developments in Wuhan and Foshan to meet burgeoning demand for housing. This demand was triggered by the launch of high-speed train services in those areas. Shui On was one of the first Hong Kong developers to go to the mainland, beginning its activities there in the 1980s. The company, controlled by Vincent Lo Hong-sui, believes its two projects - Wuhan Tiandi and Foshan Lingnan Tiandi - will be a major beneficiary of the Guangzhou-Wuhan high-speed train that began operating in December 2009. It expects that it will likewise gain from the opening of the first phase of the Guangzhou-Foshan metro, which began services in November. "We have already seen our retail tenants reporting strong increases in sales at our commercial properties in Wuhan," Shui On Land managing director Freddy Lee said. Pre-leasing of its grade A office project at Wuhan Tiandi had also generated a strong response among prospective tenants, given the large number of multinational corporations and local firms that plan to expand to Wuhan, added Lee. "With the improvement in accessibility arising from the rail network, Wuhan will become an ideal location for such corporations to set up headquarters in the central part of China," he said. Negotiations were already underway with blue-chip tenants seeking to lease one to two floors at the office block. The tenants showing an interest in taking up space in the grade A office development include global auditing firms and local law firms, he said. The 30-storey grade A office is part of the Wuhan Tiandi project, with a gross floor area of 1.5 million square metres. The project will include a five-star hotel and high-end department stores. Shui On said it recently sold 200 units at its residential project in Foshan when it put the development on the market in Hong Kong. "The percentage of Hong Kong buyers in our Foshan project was three times higher than we recorded in all our other housing developments excluding Shanghai," said Lee, who attributed the increased demand to improved accessibility created by the new rail network. "We now find that people living in Foshan are commuting to work in Guangzhou as the travelling time has been cut sharply," he said. An increasing number of people and companies will relocate to Foshan given that costs are low there compared with Guangzhou, added Lee, who signaled an interest in buying land along the high-speed rail route. "It will provide a good business opportunity for us," he said. In September, Shui On acquired land in Shanghai's Hongqiao district for 3.19 billion yuan (HK$3.76 billion). The firm will build a 233,140 square metre mixed-use development on the site. The site is part of the Shanghai city government's plan to transform the Hongqiao Business Area - a transfer point for passengers - into a business centre. The 26.3 sq km site, equal to the size of Macau, is designated for office, retail and convention-centre use.

Airline IPO prepares for HK take-off - A ticket office of Hainan Airlines in Haikou, Hainan. Grand China Airlines owns 41.6 percent of Hainan Airlines and plans to increase its presence in the regional air market. Grand China Airlines, the flagship of the country's fourth-largest airline company HNA Group, plans to raise 10 billion yuan ($1.51 billion) in private placement and then float shares on the Hong Kong Stock Exchange this year. The move is part of the parent company's plan to increase its presence in the regional air market, industry insiders said. HNA Group originally tried to list Grand China in 2006, but this time it aims to raise 10 billion yuan in a private placement first, according to the Economy & Nation Weekly. The funds will be used to develop Grand China into a national carrier by combining its operations with those of other regional carriers, including Chongqing-based West Air and Tianjin-based Tianjin Air, formerly known as Grand China Express, a HNA-controlled business. The two companies are valued about 5 billion yuan ($759 million) each. Industry analysts said the timing is ripe for the carrier to go public. "Last year, the airline industry witnessed historic growth in terms of market growth and profits," said Li Lei, an analyst at Citic China Securities. He said the growth was at least 200 percent, with profits of between 20 and 30 billion yuan. The speculation about the airline's public listing in Hong Kong came as a result of the group's restructuring during the past year to optimize the company's portfolio. Analysts believe that Grand China's listing will provide the company with more resources to expand its regional flight market. "HNA Group has a long tradition of growing up with the support of the capital market. Now, facing a bottleneck in its development, the Hong Kong listing will provide the company with more capital to enhance its domestic regional flight market," said Li Xiaojin, a professor with the Civil Aviation University of China. HNA Group owns 24.07 percent of Grand China and 7.21 percent of the Shanghai-listed Hainan Airlines. With 19.7 billion yuan in revenue and 220 million in net profit in 2009, Grand China Airline owns 41.6 percent of Hainan Airlines and gains its 90 percent revenue from it, said the weekly. The controlling shareholder of Grand China Airlines is the State-owned Assets Supervision and Administration Commission of the Hainan provincial government.

 China*:  January 9 2011

The Chinese securities regulator on Friday approved the joint ventures of J.P. Morgan Chase & Company and Morgan Stanley, bringing the banks a step closer toward operating securities businesses in China that they, and other banks, have long sought. The approval will enable the two Wall Street banks to underwrite stocks and bonds in one of the fastest growing securities market in the world. While foreign banks are attracted to China’s rapidly growing and markets, finding the right JV partner and the regulatory restrictions have delayed and sometimes derailed foreign banks’ attempt to enter the Chinese markets. For J.P. Morgan, the approval allows it to make its maiden entry into the Chinese securities market, while Morgan Stanley will make a come back after exiting its earlier joint venture with China International Capital Corporation (CICC) last year. J.P. Morgan will link up with First Capital Securities, a Shenzhen-based brokerage and hold 33 per cent of the venture. For Morgan Stanley, the green light allows it to move on with its new Chinese partner, Huaxin Securities, also known as China Fortune Securities. Morgan Stanley was the early entrant into China when it formed the JV with CICC in 1995 but recently sold its stake to a group of investors including KKR, TPG and Singapore’s GIC. Morgan Stanley will hold one-third stake in the new joint venture, which will be called Morgan Stanley Huaxin Securities and registered and principally located in Shanghai. Chinese IPO markets have just taken off in the past two years, with total proceeds from last year’s offering rising to US$69.5 billion, compared with just US$9.5 billion in 2008, according to Thomson Reuters data. China has dominated the global IPOs, accounting for about 27 per cent of the global volumes last year. Similarly, the bond market in China has grown three times since 2008 to US$449 billion last year. The approval by the China Securities Regulatory Commission was expected, as more and more foreign banks enter into joint venture partnerships in China, which are subject to a mandatory ownership cap of 33 per cent. Credit Suisse Group, Deutsche Bank, Goldman Sachs , and UBS have similar ventures in China. Other global investment banking banks, including Bank of Merrill Lynch , Barclays an Citigroup are on the lookout of joint ventures partners.

Landmark deal puts US blockbuster online - Chinese online video company www.Youku.com said on Thursday it had begun streaming the Hollywood thriller Inception online as part of a deal with Warner Bros. In a country where piracy is rampant, Youku said the deal allows internet users to legally watch the blockbuster, one of 2010's highest grossing films, for five yuan (HK$5.86) on Youku Premium, an on-demand paid video service. The premium service offers other Hollywood films along with educational programmes while licensed television programs such as Desperate Housewives are available through the regular site for free, but feature advertising. "Through building long-term partnerships with copyright holders and communicating with our media partners, Youku Premium is creating a whole new way for people to find and watch the content they want, when they want it," Youku founder and chief executive Victor Koo said. Company officials declined to provide details of the deal with Warner Bros. Youku - whose name means excellent and cool - and its Chinese rivals differ from online video in the US, such as YouTube, because 70 per cent of their content is professionally produced movies, music and television series. Youku and rival Tudou have been licensing content for years to differentiate themselves from similar sites that infringe copyright. China has long been accused by the United States of turning a blind eye to piracy, which it claims costs the film industry billions of dollars. Youku and rival Tudou provide custom-made and licensed programming and also stream concerts, stand-up comedy and World Cup matches. Youku made its US stock market debut last month.

Former HK chef in bold bid for British aircraft carrier HMS Invincible and convert into an international school at Zhuhai - A UK-based Hong Kong businessman has made an audacious bid to buy one of Britain's most famous aircraft carriers - HMS Invincible - which he plans to tow to China and convert into an international school. Chef-turned-entrepreneur Lam Kin-bong, who is also a Zhuhai lawmaker, has offered £5 million (HK$60 million) for the 30-year-old, 200-metre long carrier, which is being sold in an internet auction by Britain's Ministry of Defence through the UK government's Disposal Services Authority. The Invincible - which played a key role in Britain's war against Argentina over the Falkland Islands in 1982 - is being sold off as part of the UK's military restructuring plans and comes at a time when China is known to be working towards building its first aircraft carrier. However, Zhuhai-born Lam, 48, who runs a chain of Chinese restaurants in the West Midlands of England, says the purchase - done through his Zhuhai-based company Sunway Yacht Limited - is purely commercial. Military analysts are scrutinising the deal but say the stripped-out hulk of the Invincible would be of little value to China's advancing carrier program. If he wins the auction, for which bids closed on Wednesday, Lam says he wants to tow the vessel to Zhuhai and berth it at a marina he is building at the city's Lovers' Promenade, a project he says is due for completion within a year. "My intentions are purely commercial and have nothing to do with the military. We are building a marina in Zhuhai and if my bid is successful our first option is to berth the carrier there and convert it into an international school to help foster communication and cultural ties between China and Britain," Lam told the South China Morning Post (SEHK: 0583). He said it would cost £11 million to buy the Invincible, tow it to China and convert it. "My second option - if I can't take it to China - would be to berth the Invincible in Liverpool and make it into a school to boost the understanding of China and the Chinese in Britain." Lam said he had spoken to the Chinese Embassy in London about the bid and received a supportive response. Lam left Zhuhai for Hong Kong when he was 15 and lived in Sha Tin, where he trained and worked as a chef before moving to London when he was 30. He then moved to Birmingham and helped set up the Wing Wah chain of restaurants, which he runs with his wife, Dorian Chan, who was brought up in Wan Chai. The couple have business interests in Zhuhai and property investments in Hong Kong. Lam is chairman of the Zhuhai Co-operative Association in the UK. His restaurants are popular with Chinese officials visiting Britain. Gary Li, a PLA specialist at the London-based International Institute of Strategic Studies, said he was puzzled by the bid, saying the Invincible offered little China needed for its carrier program. As a sell-off to civilians, the ship would be stripped of anything remotely useful militarily and would almost certainly come without all important blueprints. "The Invincible is relatively small, an old design and is built to serve the Harrier jump-jet - it is really hard to see the value beyond the scrap iron in this deal for the Chinese," Li said. "Even if they wanted to rebuild it and use it as an extra training platform, that would be a real money pit - and even then it would not serve their purposes. What it may point to is the absolute obsession with aircraft carriers among not just the Chinese government, but civilians as well." Asian and Western military attaches are following developments closely and also expressed surprise at the deal. "We're not sure really what is behind it, or why China would want it at this point in their domestic programme," one Asian diplomat said. "They need hard operational experience and good engine designs, both for their future carriers and planes, and a hulk of British scrap will not help them very much." PLA naval engineers have spent the last decade re-fitting the Soviet-designed Varyag carrier, bought partially completed from a shipyard in Ukraine for US$20 million in 1998. The PLA paid extra for blueprints. The rusting hulk, first purchased privately, was towed to China via Macau, prompting early speculation that it might be used for a casino. US military officials said they expected to see the Varyag in operation for training by 2012 - China's first operational aircraft carrier. It is expected to be used to train naval pilots at sea for later deployment on domestic-built carriers China is planning to have operational by 2020. A full-scale concrete replica of its flight deck and superstructure was built at a technical school near Wuhan , Hubei province, over the past year. At 66,000-tonnes, the Varyag dwarfs the 22,000-tonne Invincible. While they both use a jump ramp rather than catapaults to get planes airborne, the Varyag was designed to use planes similar to those China is developing based on Russian-technology. A spokeswoman for Britain's Ministry of Defence declined to give details of the bidding process but said the vessel would be stripped of all its components before being sold. "In effect, whoever buys equipment like this is buying a shell," she said. Another mainland military expert said the Invincible was of little military value. "It cannot compare with Varyag because the HMS Invincible has been stripped bare. Varyag is a semi-completed product and is newer," said Song Xiaojun , a Beijing-based naval expert. However, Song said the bid had symbolic and historic importance. "If Mr Lam could win the bid and take the aircraft carrier to Zhuhai, it will serve as a symbol of the rise of China. It's a dramatic change that the United Kingdom - the former colonial master of Hong Kong who forcibly took Hong Kong from China with its powerful navy, defeated the Qing dynasty and sold the Chinese people opium, now has to sell its warship to China to help it cope with financial difficulties." Shanghai-based military expert Ni Lexiong said: "The British will just hand over a shell to Mr Lam, if he wins the bid. I don't think London is interested in helping China's aircraft carrier project. On the other hand, the incident shows that the world's centre of conflicts is shifting from Europe to Asia, where you see many new countries interested in acquiring aircraft carriers."

Lenovo's LePad seen as strong challenger to iPad on mainland - Lenovo's LePad tablet computer is expected to be released in selected international markets in the second half of this year. More than a year after introducing its media tablet at a United States trade show, mainland computer giant Lenovo Group (SEHK: 0992) is expected to mount a strong challenge to Apple's iPad and others in the domestic market when its LePad slate device finally goes on sale this first quarter. Analysts said Lenovo, the world's fourth-largest supplier of personal computers, had a presence on the mainland that other media tablet providers could not match, despite the long delay in releasing the LePad. "Lenovo was no later than others in jumping onto the tablet bandwagon to catch up with Apple," Michael Clendenin, the managing director at Shanghai-based research firm RedTech Advisors, said. "In China, Lenovo's strong distribution and branding will give it a slight advantage." Sun Peilin, of market research firm Analysys International in Beijing, estimated the growing number of media tablet models on the mainland would help drive domestic sales to 4.5 million units this year from about 600,000 units last year. At the Consumer Electronics Show this week in Las Vegas, Lenovo announced the release of the 10.1-inch touch-screen LePad on the mainland. Prices start at 3,499 yuan (HK$4,100) for the device, which runs on the Google-developed Android operating system. Buyers can combine the media tablet with a keyboard-equipped dock, which turns it into the display on the IdeaPad U1 laptop computer. Prices for this hybrid product, which runs Microsoft's Windows 7 operating system, start at 8,888 yuan. Clendenin said there were "at least 100 different tablets" made by many small local electronics manufacturers that sold for an average cost of 499 yuan. "These white-box makers out of Shenzhen will still do decent business and exhibit some strength in certain regions, but Lenovo is more trusted nationwide by consumers who have the disposable income to buy tablets," he said. Joseph Ho, an analyst at Daiwa Capital Markets Hong Kong, said LePad and IdeaPad U1's release was a positive for Lenovo because of its large market exposure. "We don't see a huge contribution this year from LePad because of competition from other tablet computer brands, led by market leader Apple," Ho said. Lenovo would start to roll out LePad in selected overseas markets in the second half.

Taobao making 48,000 sales per minute in 2010 - Taobao, which operates the country's largest internet retail portal, sold an average 48,000 items per minute last year as more consumers in inland provinces shopped online. The Hangzhou company, which counts more than 370 million users and hosts about 3.65 million online stores, said its average number of transactions per user grew 35 per cent on the year. "Consumers all over China, even in the most remote inland areas, have access to the more than 800 million product listings on Taobao and they are taking advantage of this medium to meet an increasingly greater proportion of their shopping needs," Jonathan Lu Zhaoxi, the chief executive of Taobao, said at the company's inaugural data-sharing event in Beijing last night. Of the 48,000 items sold every minute last year, 864 pieces were clothing, 880 cosmetic products, 85 books, 53 diapers, 36 mobile telephones and 13 light fixtures. Online sales of home furnishings and food - normally thought of as offline purchases - also rose strongly last year, by 120 per cent and 95 per cent, respectively. There was also strong growth in demand for branded goods as sales volume on Taobao Mall - the online shopping service's dedicated business-to-consumer platform - quadrupled. Privately held Taobao, which is the other flagship company of internet conglomerate Alibaba Group after Hong Kong-listed Alibaba.com (SEHK: 1688), declined to provide last year's gross merchandise value (GMV) - the total worth of the goods sold across the e-commerce service. That figure reached 200 billion yuan (HK$234.6 billion) in 2009. While large coastal cities and provinces continued to record the highest GMV totals, provinces in the central and western regions saw the biggest annual growth, according to Taobao. Zhejiang, for example, showed the biggest gain of 52 per cent, and was followed by Shandong and Hubei, which grew 46 per cent and 37 per cent, respectively. The top 10 areas with the highest GMV totals were, in descending order: Guangdong, Zhejiang, Shanghai, Jiangsu, Beijing, Shandong, Fujian, Sichuan, Liaoning and Hubei. "E-commerce has brought about changes in people's lifestyles and eliminated the boundaries of traditional distribution channels," Lu said. That appetite for online shopping was also helped by a fast-growing internet population. There were 450 million internet users at the end of November, up from 384 million in 2009. Shopping through the mobile phone also showed significant growth for Taobao, which recorded about 17 million visitors daily. It said the Yangtze River Delta had the highest concentration of mobile retail users, accounting for 15 per cent of the firm's mobile shopping accounts. About 75 per cent of the account holders are aged between 19 and 28. The top 10 best-selling items in this sector were, in descending order: mobile-phone credit, women's clothing, consumer electronics, men's clothing, gaming cards, skincare products, snacks and other dry food items, sports shoes and bags, car accessories, and books and magazines.

Yang, Clinton pledge co-operation - Chinese Foreign Minister Yang Jiechi, left, shakes hands with Secretary of State Hillary Rodham Clinton at the State Department in Washington, on Wednesday. Foreign Minister Yang Jiechi and US Secretary of State Hillary Clinton vowed on Wednesday that their countries would co-operate closely despite differences on China's currency and other issues. “We are preparing diligently for the upcoming state visit by President Hu Jintao,” scheduled for January 19, Clinton said as she posed for photographs with Yang at the State Department. “And both the minister and I feel a great sense of responsibility to ensure that it continues the positive, cooperative comprehensive relationship between our two countries,” the chief US diplomat said. Yang said: “I think China-US relationship is on the right track. “It’s in the best interests of China, the United States and the world for us to continue to work together so that our relationship will bring more benefits to both our two peoples and to the people of the world,” he said. Preparations for Hu’s visit are “proceeding very well,” Yang added. As part of the preparations, Yang met US President Barack Obama at the White House on Tuesday to discuss the row over the Chinese yuan, US-China trade, Iran’s nuclear program, North Korea and the upcoming referendum in Sudan. Iran, North Korea, efforts to fight climate change and the issue of disputed US weapons sales to Taiwan came up during Clinton’s two hours of talks with Yang, Clinton spokesman Philip Crowley told reporters. Crowley said the pair also discussed “maritime issues,” an allusion to concerns about China’s assertive stance towards islands in the South China and East China seas which are also claimed by other countries in the region. He gave few details about each issue. The White House has signaled it will keep up pressure on Beijing to allow its yuan currency to appreciate. Critics say the mainland keeps the yuan undervalued to gain an unfair trade advantage that has cost thousands of US jobs. “China plays an enormously important role in our global economy, and China has to take steps to rebalance its currency,” White House spokesman Robert Gibbs told reporters on Wednesday. “And the president will continue to make that point when President Hu is here, as he did with the foreign minister,” he said. Gibbs said human rights, the global economy, and North Korea will be on the agenda. Washington has been urging China to rein in its Communist ally North Korea, which in November shelled a South Korean island, killing four people. Crowley said both Beijing and Washington shared the interests of ensuring stability on the Korean peninsula. “We both want to see a reduction of tension,” he added. Gibbs also dismissed criticism that Obama had soft-pedaled human rights with China, saying he had raised the issue personally with Hu himself. Obama and Hu last met in Seoul on the fringes of the Group of 20 summit in November and are due to hold talks at the White House and a state dinner during the Chinese president’s visit. Yang also met with Commerce Secretary Gary Locke on bilateral trade issues and Hu’s visit, the US department said on its website. “Locke and Minister Yang had a positive meeting, discussing the US-China commercial relationship, as well as the implementation of commitments made from last month’s Joint Commission on Commerce and Trade (JCCT),” the department noted.

Sinopec makes huge oil find in Myanmar - Sinopec International Petroleum (SIPC) has discovered proven reserves of 909 billion cubic feet of gas and 7.16 million barrels of condensate in central Myanmar, state media reported on Thursday. The international trading arm of China Petroleum & Chemical Corporation (SEHK: 0386) (Sinopec) , made the find in the Pahtolon oilfield after extensive testing and planned to carry out more in the future, official newspapers in Myanmar said. Myanmar has been exploring oil and gas in 49 onshore sites and 26 offshore blocks in Rakhine, Tanintharyi and Mon states after entering joint ventures with foreign companies since 1988. The discovery was made by SIPC Myanmar Petroleum, a joint venture between state-owned Myanma Oil and Gas Enterprise and Sinopec , which has been exploring oil and gas in the former Burma since 2004. China is Myanmar’s biggest economic and political ally and has taken advantage of Western sanctions to pour money into its resource-rich neighbour, which it sees as vital for its fast-growing energy needs. Sinopec, Asia’s top refiner, has forecast China’s oil demand to grow 5-6 per cent over the next five years as its economy is seen expanding by 10 per cent annually. Thailand is currently the biggest investor in Myanmar but China is expected to become the biggest buyer of Myanmar’s gas when construction of a 1,100 km (680 mile) pipeline from Rakhine State to China’s Yunnan province is completed in 2013. Myanmar and China have agreed a deal on the sale of gas from the country’s two biggest blocks in Rakhine, known as A-1 and A-3, which have proven reserves of up to 10 trillion cubic feet, with up to 8.6 TCF recoverable. Official data shows Myanmar exported US$2.38 billion of gas, mainly to Thailand, during its 2008-2009 fiscal year (April-March) and $2.52 billion a year later. The latest data shows Myanmar exported gas worth US$1.2 billion in the first half of the current fiscal year.

The mainland announced on Thursday it will require all domestic dairy companies to renew their production licenses this year or face closure in the latest bid to ensure safety following a scandal over melamine-tainted infant formula that killed six babies. Consumer confidence in the dairy industry nose-dived in 2008 after it was revealed that the industrial chemical melamine was being added to watered-down milk to make its protein content seem higher and boost profits. Infant formula made from the tainted milk killed six children and sickened hundreds of thousands. Despite a sweeping crackdown that included the execution of a dairy farmer and a milk salesman, melamine has continued to show up in Chinese dairy products. The official Xinhua News Agency reported that a top food safety official told a conference in Beijing on Thursday that all dairy product makers would have to get new production licenses this year or be closed down. Zhi Shuping, director of the General Administration of Quality Supervision, Inspection and Quarantine, was quoted by Xinhua as saying the measure was meant to improve quality and safety in the dairy industry. Melamine, which is used to make plastics and fertilisers, has also been found in pet food, eggs and fish feed, although not in levels considered dangerous to humans. The chemical, which like protein is high in nitrogen, fooled inspectors. It can cause kidney stones and kidney failure.

Chinese vice premier meets Spanish king to promote ties - Visiting Chinese Vice Premier Li Keqiang Wednesday met Spanish King Juan Carlos to boost ties between the two countries.

27th Harbin Ice Festival kicks off - Thousands of tourists visited the Ice and Snow World in Harbin which officially opened to tourists on Wednesday.

Expanding clean-energy cooperation between China and United States - China and the United States, the world's two biggest energy consumers, are seeking to expand cooperation on clean energy. The latest area of interest, according to experts, is energy-saving infrastructure. Several Chinese companies are studying the feasibility of investing in energy-saving infrastructure, such as high-speed railways and intelligent electric grid networks, in the United States, said Wang Boyong, executive deputy secretary-general of the China Institute for Innovation and Development Strategy. "Such infrastructure projects can help diversify China's overseas investments and take advantage of the country's advanced solutions in such sectors," Wang said. "At the same time, they have great potential to offer more job opportunities in the United States," he added. The second strategic forum on US-China Energy Cooperation will be held in Washington on Jan 18 and 19. The forum is organised by the institute and the Brookings Institution. China Investment Corporation, a sovereign wealth fund responsible for managing part of the nation's foreign exchange reserves, will attend the meeting to discuss possible infrastructure projects with governors from different US states, Wang said. China and the US are expected to sign a number of agreements relating to clean-energy cooperation during the forum. The Chinese companies involved include Shenhua Group, State Nuclear Power Technology Corp Ltd and China Guodian Corp. Guo Hongbo, a senior manager of State Nuclear Power Technology, said the company expects to further its cooperation with Westinghouse Electric Co. The two companies plan to develop new types of reactors that will be based on Westinghouse's existing AP1000 design, Guo said. Zhou Dadi, former director of the energy research institute of the National Development and Reform Commission, said China and the United States have great potential for cooperation in sectors such as nuclear, renewable energy and clean coal. Zhou called on the US government to lift the restrictions on clean-energy technologies that have no military application in order to help foster cooperation.

Hong Kong*:  January 8 2011

It is official - Hong Kong's first statutory minimum hourly wage is HK$28 and it will come into force in May. After years of fierce discussion, the Legislative Council finally passed controversial minimum wage legislation last night after a long debate from about 1pm to 10pm. As expected, all three amendments to the legislation proposed by lawmakers were blocked. League of Social Democrats lawmaker Leung Kwok-hung sought to repeal the Minimum Wage Ordinance, saying the minimum hourly rate of HK$28 was too low and should be set at HK$33. "I am not trying to revoke the whole minimum wage legislation but only the wage level determined by a commission appointed by the Chief Executive," he said. He was referring to the Provisional Minimum Wage Commission, which advised the chief executive on the initial statutory minimum wage. "I am furious that all unionists and lawmakers, who campaigned for HK$33 for so long gave up the fight once the commission and the chief executive laid down the wage level," Leung said. "The government and the chief executive just want to make use of us as a rubber stamp ... " But even unionist legislators rejected Leung's proposal. Federation of Trade Unions lawmaker Wong Kwok-hing said approving the legislation would offer immediate relief to at least 314,000 workers who earned less than HK$28 an hour. "We have been striving for a minimum wage for years. If we repeal the ordinance now, how long will we need to wait again?" he said. Wong said many unions had accepted the HK$28 wage. "Of course, we are not satisfied as our goal is HK$33. But at least we are taking our first step first and then we will carry on our fight," he said. Confederation of Trade Unions lawmaker Lee Cheuk-yan said the CTU approved the HK$28 wage only reluctantly. "For HK$28, it is a victory with regrets," he said. Lee proposed activating the minimum wage law in February instead of May. FTU lawmaker Ip Wai-ming wanted a regulation requiring employers to record the number of hours worked by employees whose monthly wages were less than HK$20,000 instead of HK$11,500. Both amendments were vetoed.

A Hong Kong sushi chain has paid a record price for a giant bluefin tuna at the world's biggest wholesale fish auction - and plans to sell the fish to customers at a big discount, drawing fire from conservationists. The 342kg Pacific bluefin tuna on its way to auction at Tokyo's Tsukiji market. The fish was sold yesterday to a Hong Kong restaurant chain for a record-breaking HK$3 million. Taste of Japan, which runs the Itamae Sushi and Itacho Sushi restaurants in Hong Kong, won the bidding for the biggest fish at the first auction of the new year at the Tsukiji market, for the fourth year running. In partnership with Tokyo-based restaurant Kyubey it paid 32.49 million yen (HK$3.07 million) for the 342 kilogram Pacific bluefin tuna, breaking the previous record that saw a 202kg fish fetching HK$1.9 million in 2001. Cuts from the giant fish will go on sale today or tomorrow for as little as an eighth of the auction value of the tuna, and are expected to sell out within hours. "We will sell it below the market price as we do not aim to make any profit, just to express our gratitude to the loyal fans of Itacho Sushi and Itamae Sushi in the new year," Sharon Chan of the chain's marketing department said. However, conservationists saw it differently. "We don't agree with the use of an overfished and endangered species as a promotional gimmick," Allen To, a WWF Hong Kong marine conservation officer, said. The tuna - estimated to have been over 20 years old - will be flown to Hong Kong today or tomorrow and will go straight to Sesson Kushiyaki and all Itamae Sushi and Itacho Sushi restaurants in Hong Kong and Macau, except for those at the airport. A piece of sushi with a standard cut of tuna will cost diners HK$38, despite the fact that Taste of Japan paid about HK$238 for the cut at auction. Fatty tuna, or toro, will cost HK$68, compared with an auction price of HK$475, and a piece of sushi with the prime cuts of "supreme toro" will cost restaurantgoers HK$98 despite an auction value of HK$855. Regular tuna sushi sells for HK$13 apiece while toro goes for HK$35 in the restaurants. "I expect once it comes to Hong Kong it will sell immediately," Chan said. To of the WWF said imports of bluefin tuna to Hong Kong had increased thirteenfold since 2004. "The high price paid for the bluefin tuna is a concern in itself ... Economic drivers can make it very difficult to sustainably manage the fishery, as the fishers have a major incentive to continue fishing even when populations get very low." Of the three types of bluefin tuna in the world, two have been labelled critically endangered species by the International Union for Conservation of Nature, with their numbers dropping about 90 per cent since the 1970s. The third type, Pacific bluefin tuna, has not been assessed, but the WWF says it is overfished. Taste of Japan has bid over HK$6 million in tuna auctions since 2008.

Sixty gods to worship - for a HK$100 fee - Wong Tai Sin Temple to charge for entry to hall - After visitors have prayed to a god, smoke will rise from behind it and a lamp will light up to signify the message has been received. A new worship hall will open in crowded Wong Tai Sin Temple on Sunday, but unlike other parts of the temple, visitors will have to pay HK$100 to get in. Sik Sik Yuen, the 90-year-old Taoist group managing the temple, has spent three years and over HK$100 million from donations to build the underground hall where visitors can worship 60 gods of the stars. Group chairman Lee Yiu-fai said the fees collected would be used for maintenance of the hall and to employ cleaners. Any surplus would go to charity, he said. "The temple attracts millions of visitors every year. We don't want to use our donations to serve tourists. So, if they wish to worship the gods, they should pay for themselves," Lee said. For the entrance fee, visitors would get three joss sticks, and volunteers would help them tell the gods their wishes. After the wishing is done, smoke will rise from behind the god they are praying to and a lamp will light up, meaning the god has received the message. The hall features an astrology diagram on the ceiling. Two reliefs of the gods made of natural and semi-precious gems, each costing HK$1.5 million, are on the sides of the doors. The banners on top and on the sides of the doors were written by sinologist Jao Tsung-i. Asked why only part of the temple had an entry fee, Lee said: "Isn't it more beautiful here? That's why we need to charge our visitors for that." Or Wai-shun, a director of the Taoist group, said the new hall was part of the group's charity work. "By having a new hall, we can collect more donations to do charity work." Yuen Kwok-keung, Wong Tai Sin district councillor, objected to the idea of charging visitors to go into the hall. "The hall is built with donations, and Wong Tai Sin Temple is a very popular landmark among the public and the tourists. It's unreasonable they charge visitors for that when they have got enough funding." Another district councillor, Joe Chan Yim-kwong, said the HK$100 entrance fee was acceptable. "They are not forcing the visitors to go in. It's just a part of their plan to get more donations and to compete with other temples." 

Police inquiry into Yuen Long dumping case - Subcontractor suspected of forging waste delivery papers - Police are investigating a subcontractor on suspicion that it delivered construction material to an unauthorised dump in a green belt in Yuen Long, then used forged papers to convince the developer it had used an authorised site. The developer, Chinachem, said the investigation followed the dismissal of the subcontractor. The case has prompted its main contractor for the development, Chevalier, to immediately end the practice of dumping excavated materials on private sites. All materials will now be sent to government facilities or landfills that impose a charge and are more stringently supervised. "Chevalier was let down by its subcontractor, which went to the great length of forging documents to deceive. Apart from the termination of the subcontractor, the matter had been reported to the police for further inquiry," a Chinachem Group statement said. The Planning Department confirmed it had gathered evidence on the illegal dumping on the green belt and was ready to take enforcement action against the owner of the dump site. Villagers said there had been no dumping since Thursday. All these developments were triggered by a South China Morning Post (SEHK: 0583, announcements, news) 's report on December 31 that disclosed that truckloads of excavated materials from the Chevalier worksite were dumped on a massive area of farmland in Hung Shui Kiu in late December. Yet last week the Environmental Protection Department said it would not intervene because it found no evidence of construction waste dumping. Last night, a Chinachem spokeswoman clarified that the company did not report the matter to the police. She said police officers had approached them after receiving media inquiries about the dumping. The group was not sure if Chevalier filed the case to the police. The police would not confirm the report and Chevalier did not return calls. The dismissed subcontractor was not identified. During a visit to Hung Shui Kiu on December 29, the Post identified at least nine different trucks unloading material 16 times over the course of 2 1/2 hours in the morning. One truck was later traced back to Chinachem's work site in Tsing Fat Lane, Siu Lam. The truck then returned to the site fully loaded. Chinachem and Chevalier investigated upon inquiries and with information such as the number plate of the truck provided by the Post. The companies then said that "some trucks" went to the unauthorised site and presented forged stamped delivery notes to Chevalier. But Chan Lung, from a construction company that hired the dismissed subcontractor to transport the waste, said last night he had heard nothing about the forgery allegation and the police investigation.

Chilled beef proved a strong competitor for fresh beef as it hit supermarket shelves yesterday, with careful shoppers praising its taste and price. Nine tonnes of chilled beef from Jilin arrived in the city on New Year's Eve - 70 per cent of it went on display at ParknShop outlets, where it sold for around HK$50 a catty (600 grams), compared with HK$62.7 a catty for fresh beef. For those with a little more cash to spend, chilled ribeye steak was on offer for HK$73.2 a catty, compared with HK$91.8 for fresh steak. Customers at the Tseung Kwan O branch of ParknShop were offered samples of the meat. "It is good. Very fresh. I cannot tell the difference between chilled and fresh beef," one woman said. Another woman said: "The taste is similar to fresh beef, but the price is so much cheaper. I find no reason to buy fresh beef now." But some customers were sceptical. "I still think fresh beef is tastier," one man said. "I will see how others think about chilled beef first, and see if the meat quality can be maintained." Another woman said that as the price difference was not too great, she still preferred fresh beef. About 30 per cent of the first batch of mainland chilled beef went to noodle shops and other restaurants. The chairman of the Hong Kong Chilled Fattener Retailers Association, Steven Wong Wai-chuen, was disappointed that most individual vendors did not get any stock. "We all advocated the importing of mainland chilled beef, but only ParknShop got the first batch." He quoted a company which imports cattle from the mainland to the city as saying that as the first batch was small, they let ParknShop sell it first. More would arrive in the coming weeks. The company raised the price of its fresh beef by 2.8 per cent in November due to rises in rearing costs and the stronger yuan.

A Court of Appeal judge yesterday blasted the Official Receiver's Office for grossly overcharging a person in a bankruptcy case and lowered the fee it charged from the original HK$2.3 million to HK$70,000. Handing down her judgment on separate appeals by both the plaintiff and the office, Justice Doreen Le Pichon said "the suggestion that scale fees of the order of HK$2.3 million should be paid is both scandalous and outrageous." The court was told the man, Suen Kin-ning, 75, had assets worth HK$27.5 million. But he failed to pay HK$86,000 in management fees from 2007 to 2008 for a shop he owned in Tsui Wah Building in Sai Ying Pun. In August 2009, the management company successfully applied for a bankruptcy order against Suen. But Suen found out only about two months later. Four months later the Official Receiver charged him HK$2.3 million for holding his assets in the interim period, citing "realization fees" of HK$1.57 million. Suen objected to the demand and a lower court reduced the fee to HK$1.5 million. However, both sides filed appeals against the new figure. Yesterday, Justice Le Pichon accused the Official Receiver's Office of lacking grounds for the fees and failed to see how it had arrived at HK$2.3 million since the original debt was only HK$86,000. The court referred to a similar case in 2000 in which the office was also criticized for imposing unreasonable fees. "That situation was considered unsatisfactory but, regrettably, nothing seems to have been done about it in the decade that has elapsed since that decision," Le Pichon said. The court understood the effect of multiple bankruptcies in Hong Kong in recent years had caused considerable manpower and financial difficulties at the office. However, it is the court's function to ensure the present legislation does not result in the wholly inequitable imposition of a financial burden where it is not justified or justifiable. The Official Receiver's Office said it was studying the Appeal Court's judgment but stressed the fees were calculated according to the office's Bankruptcy (Fees and Percentages) Order. Barrister Albert Luk Wai-hung said the fees sought by the office are administrative costs of the insolvency service and should not be measured by debtors' assets in any case. "The office should review the existing policies to set a reasonable upper limit of charges in bankruptcies to be paid by debtors," he said. Suen, who emigrated to Canada in 1993, lives in a care center there and returns to Hong Kong from time to time. His last visit to Hong Kong was in early 2007. He left for Canada in April that year and since then has been unable to travel due to ill health. Suen first became aware of the bankruptcy order when his daughter found the letter dated October 2009 from the Official Receiver sent to his Hong Kong residence.

Sun Hung Kai Properties (0016) is targeting more than HK$50 million in retail sales from mainland "corporate shoppers" coming to Hong Kong on special tours. "We are planning 50 tours for corporate shoppers from China," said Fiona Chung Sau-lin, general manager for leasing at Sun Hung Kai Real Estate Agency. "With 9,000 people on 200 such tours planned this year, our malls will reap HK$56.4 million from retail sales." The corporate shopping tours - aimed at office workers - are organized by a mainland travel publisher. "The publisher will find registered mainland travel agencies to run the tours, while SHKP will provide services, including traffic and accommodation," said Eric Lau Man-ho, a senior promotions manager at SHKP Estate Agency. Lau said SHKP is also planning tours for "VIP shoppers" who spend at least HK$50,000. SHKP's rental income from its malls surged 20 percent last year to hit an all-time high of HK$1.36 billion as mainlanders continued to lift retail sales. SHKP has earmarked HK$55 million for promotions, up 10 percent from a year ago. Around HK$17.8 million will be spent on Lunar New Year promotions. 

 China*:  January 8 2011

Li Na returns a shot from world No 1 Caroline Wozniacki, who eventually defeated the mainlander at the Hong Kong Classic last night. World number 11 Li, 28, said: “I lost the first match of the year, but I do not feel sad inside. I can see I have had good winter training.”

PLA reshuffle hints at the next generation of leaders - Air force commander Xu Qiliang is a strong candidate for vice-chairman of the CMC. The latest reshuffle in the upper ranks of the People's Liberation Army gives some hints about the likely make-up of the Central Military Commission next year. Lieutenant General Wei Fenghe , 56, chief of staff at the Second Artillery Corps, had been named deputy chief of the general staff, China Central Television's military channel reported recently, meaning he is likely to join the CMC next year. Most of the commission's 12 members will reach the retirement age of 68 next year, leaving only three of them young enough to stay on and become vice-chairmen: General Chang Wanquan , 61, director of the general armaments department; navy commander Admiral Wu Shengli , 65; and air force commander General Xu Qiliang , 60. October's appointment of Vice-President Xi Jinping as the CMC's sole civilian vice-chairman, seen as a strong signal that he will eventually succeed Communist Party General Secretary Hu Jintao as its next chairman, still leaves plenty of guesswork about the other members of the body that wields ultimate power over the PLA. Wei's promotion appears to clear the way for him to succeed General Jing Zhiyuan as commander of the Second Artillery Corps, the PLA's strategic missile force, and to secure a seat on the commission. Vice-Admiral Sun Jianguo , another deputy chief of the general staff, is widely tipped to succeed Wu as navy commander next year, a promotion that would also assure him a position on the CMC. General Ma Xiaotian , 61 and also a deputy chief of the general staff, is tipped to lead the air force and represent it on the CMC once Xu is promoted as one of the commission's vice-chairmen. Speculation surrounds former president Liu Shaoqi's son Liu Yuan , political commissar of the PLA's Academy of Military Science - specifically, that he will be transferred to the army's general logistics department. The move could open up a seat for him on the CMC. Liu, 59, is a close ally to Xi because of their similar backgrounds as "princelings" - descendents of old revolutionaries. He was promoted to general in 2009. According to his resume, he was one of the deputy political commissars in the general logistics department in 2003. A source from the PLA academy said Liu opted to be its political commissar in 2005 because of a lack of prospects for promotion in the logistics department at the time. Another rising star with a chance to become a commission member is General Zhang Qinsheng , 62 and another deputy chief of the general staff. Zhang is seen as a strong contender to succeed either General Chen Bingde as chief of the general staff or General Liang Guanglie as defence minister. Veteran PLA watcher Anthony Wong Dong, president of the International Military Association in Macau, praised Zhang as a competent officer who had taken a firm stance in safeguarding the nation's interests while keeping a low, conciliatory profile in past dealings with American and Japanese counterparts. Meanwhile, the elevation of a Second Artillery Corps officer to deputy chief of the general staff is seen as an upgrading of the missile force's strategic importance in the PLA. "Agree or not, there is a considerable disparity in terms of military muscle between America and China," Wong said. "Highlighting the missile force will help in the pursuit of a better balance of strategic weapons between the two countries." The missile force was particularly important at a time of territorial disputes in the South China and East China seas, he said, as well as tensions on the Korean Peninsula that have led to a series of military exercises involving US forces coming close to China. The latest reshuffle also saw the political commissar of the Nanjing military region, Lieutenant General Zhu Yimin , named political commissar of the Shenyang military region. China affairs analyst Johnny Lau Yui-siu said such promotions could be viewed as normal personnel transfers in preparation for the party's 18th National Congress. "Hu boasts much less influence in the PLA after taking the reins of the CMC for just seven years, whereas his predecessor, Jiang Zemin , was at the helm for some 15 years," Lau said. "I doubt that Hu has the power to manipulate personnel reshuffles to the extent Jiang did."

FedEx starts direct cargo flight from Guangzhou to India - FedEx's David Cunningham says one-third of India's imports and exports are with Asia. Growing trade between India and Asia, particularly China, prompted FedEx Express to launch direct cargo flights between its Asia-Pacific hub at Guangzhou's Baiyun International Airport and Mumbai and Delhi. David Cunningham, president of FedEx Express Asia-Pacific, said the five-times-a-week service would directly link two of the world's fastest-growing economies and regions. He said a third of India's imports and exports were directly attributable to Asia while the volume of overall trade between India and Hong Kong increased by 50 per cent last year. Cunningham said China's economy grew by 10 per cent last year, while India's grew by about 8.8 per cent. "I expect it to continue," he added. Asked about the outlook for the company's business this year, given global economic uncertainties, he pointed out that the previous 18 months had seen "some pretty big wobbles". He added that there were "certainly challenges out there in front of us. With every one of these challenges there is an opportunity." FedEx has forecast that its margins would "improve in the second half of fiscal 2011 and in fiscal 2012" based upon "solid global demand for our differentiated services and as certain cost headwinds subside next fiscal year". This came after parent FedEx Corp reported a 12 per cent rise in revenues to US$9.63 billion in the quarter to November 30. This included a US$5.99 billion contribution from the FedEx Express division which saw revenue rise 13 per cent compared with a year earlier on the back of an 11 per cent surge in daily international priority package shipments led by exports from Asia. FedEx Express inaugurated the direct flight from Guangzhou on Tuesday night using an Airbus A310 freighter, which has the capacity to carry about 40 tonnes of cargo. Cunningham said although "it was very early days", cargo volumes east and westbound were "reasonably balanced". Cargoes typically comprise textiles, electronics and other high- value goods. While he declined to give a breakdown of how much cargo on the Indian flights was transshipped at its Guangzhou hub to and from other Asian countries, Cunningham pointed out the flights would give quicker access for Indian exporters to other markets particularly to the United States. He added that the new service would cut two days from the transit time for priority freight and high-value shipments from Asia to India and allow a next-business-day document delivery service from Asia to selected locations in Mumbai. There would also be a one-day cut from the delivery of expedited freight shipments from India to Asia. The Guangzhou-India flights come weeks after FedEx Express strengthened existing Greater China services. These included the deployment of a larger, more fuel-efficient Boeing 777 freighter on flights from Hong Kong to its European hub in Paris that will add almost 22.7 tonnes of extra capacity per week. This "positions FedEx well for an anticipated increase in trade as the European economy gradually recovers", he said. Boeing 777 freighters were used to launch a four-times-weekly direct service between Shenzhen and the FedEx US hub in Memphis in early November.

Icy weather, sleet disrupt lives of over 3.83 mln in south China - Icy weather and sleet have disrupted the lives of more than 3.83 million people in five provincial areas in southern China since Saturday.

Hong Kong*:  January 7 2011

Cathay upbeat as China growth fuels demand - Cathay Pacific Airways (SEHK: 0293) is "reasonably confident" about 2011 as economic growth on the mainland spurs travel and cargo demand. "The emergence of China as a travel market is going to be one of the big stories of the decade," chief operating officer John Slosar (pictured) said. "Also, consumer demand in China is starting to pull in high-value goods." The airline expects to begin operations at a Shanghai-based air-cargo venture with affiliate Air China (SEHK: 0753, announcements, news) by next month, Slosar said, as exports of electronics and imports of luxury goods spur freight volumes. The carrier will also boost passenger capacity 11 per cent this year as mainland growth stokes demand for business and leisure flights. "Hong Kong is still very much an important gateway," said K. Ajith, a Singapore-based analyst at UOB-Kay Hian Research. "It's a financial centre and its premium traffic should be strong." Cathay said last month it will spend at least HK$1 billion upgrading business-class cabins and services to woo premium travellers. The company is also "seriously considering" offering premium-economy seats, said Slosar, who will succeed Tony Tyler as Cathay's chief executive in April. Tyler is set to become the head of the International Air Transport Association. Cathay rose 3 per cent to close at HK$22.40 in Hong Kong, after rising as much as 5.1 per cent in earlier trading. The stock rose 48 per cent in 2010, compared with a 5.3 per cent gain for the benchmark Hang Seng Index. The airline carried 24.5 million passengers in the first 11 months of 2010, an 11 per cent increase. Full-year profit likely surpassed HK$12.5 billion, more than double the year-earlier figure, boosted by rebounding travel demand and the sale of stakes in an air-cargo handler and a maintenance company, the carrier said. "2011 is early days so far but we're reasonably confident about prospects," Slosar said. Being based next to China "is just the perfect position".

Lawmakers and politicians from all parties joined government officials in Statue Square on Wednesday morning to pay tribute to Szeto Wah, who died on Sunday. Three organisations founded by Szeto – the Alliance in Support of Patriotic Democratic Movement of China; the Democratic Party; and the Professional Teachers’ Union – organised a memorial outside the Legislative Council chambers and opened a public book of condolences. By 10.30am, hundreds of people from across the political spectrum had joined the memorial, gathering in front of a black backdrop bearing a photo of Szeto and printed with the words “In Loving Memory of Mr Szeto Wah”. People bowed three times in mourning, observed a minute’s silence and offered a white chrysanthemum as a sign of memorial. Some also tied yellow ribbons to a fence in Statue Square to symbolise their willingness to fight for the vindication of the June 4 incident – in accordance with Szeto’s last words. Those attending the memorial service included Democratic Party founding chairman Martin Lee Chu-ming, Democratic Party chairman Albert Ho Chun-yan, vice chairman of the Hong Kong Alliance in support of Patriotic Democratic Movement of China Lee Cheuk-yan, Secretary for Education Michael Suen Ming-yeung, and other lawmakers and citizens. Labour-sector lawmaker Wong Kwok-hing praised Szeto’s efforts to move Hong Kong’s political development forward. “Uncle Wah was the foundation pillar in opposing the referendum on universal suffrage [launched by the Civic Party and League of Social Democrats] and in supporting the government’s political reform proposal. I came here to express my deepest condolences for his passing,” Wong told local media. Independent lawmaker Lam Tai-fai said he respected Szeto’s contribution to the education sector. On Wednesday afternoon, Chief Executive Donald Tsang Yam-kuen visited Statue Square and signed the book of condolences. He did not stop to answer questions from the media before he left. Financial Secretary John Tsang Chun-wah and some deputy ministers visited the memorial late on Wednesday afternoon. The memorial at Statue Square began on Wednesday, is open from 8am to 8pm, and will continue until January 27. The public will also be able pay their respects at St Andrew’s Church from 9am to 2pm on January 29. The funeral committee has appealed to the public to bring only one flower each as space in the church is limited, Szeto died of lung cancer at Prince of Wales Hospital at 12.56pm on Sunday at the age of 79. Szeto was a teacher-turned-politician who fought for democracy and human rights in Hong Kong. He was born on February 28, 1931.

The World Bank issued its first yuan-denominated bond, raising US$76 million and trying to promote the use of the Chinese currency in international markets at a time when China’s stake in the institution is about to increase. The World Bank said in a statement on Wednesday the International Bank for Reconstruction and Development, its low-interest lending arm, had priced the two-year paper at 0.95 per cent, representing the lowest yield so far on same-maturity dim sum bonds – the nickname for yuan-denominated bonds issued in Hong Kong. The offshore yuan market in Hong Kong has seen explosive growth in less than a year, with renminbi deposits surging more than 150 per cent in the six months to October last year. Global companies and institutions such as the Asian Development Bank, McDonald’s and Caterpillar have all issued yuan bonds. The World Bank’s 500 million yuan bond issue arrived when China’s shareholding in the World Bank is about to increase, potentially making China the third-largest stakeholder in the lender after the United States and Japan. “This is a landmark transaction for the World Bank as it is the first World Bank issuance in RMB, and signals the strong interest of the World Bank in supporting the development of the RMB market,” Doris Herrera-Pol, Global Head of Capital Markets at the World Bank, said in a statement. “It is a privilege for us to have this opportunity that establishes the institution as a premier issuer in the fastest growing capital market in the world.” HSBC (SEHK: 0005) was the lead manager for the deal, which will settle on January 14.

Scramble for capital to stoke IPO bonanza - Fund-raising not likely to set records, PwC says - The initial public offering bonanza in Hong Kong and on the mainland will continue this year as the mainland's small and medium-sized firms scramble for capital to speed up technological innovations, according to PricewaterhouseCoopers. But despite a growing number of listings, funds raised from the two markets would drop from a year ago because of a lack of mega offerings, the accounting firm said. A total 110 IPOs in Hong Kong may raise up to HK$350 billion this year, compared with HK$445 billion raised by 102 companies last year. The number of IPOs last year does not include those moving from the Growth Enterprise Market to the main board. On the Shanghai and Shenzhen stock exchanges, PwC sees 400 IPOs this year, raising up to 400 billion yuan (HK$471 billion). A record 349 companies listed in these markets last year, raising 478.3 billion yuan. Hong Kong led the world last year in IPOs, buoyed by two massive listings by Agricultural Bank of China and AIA Group. "Last year, HK$250 billion came from two mega deals. Take out these deals and the rest only accounted for around HK$200 billion," said Edmond Chan, assurance partner at PwC. Hong Kong is unlikely to see IPOs of last year's magnitude, but Chan expects about 10 IPOs to raise between HK$10 billion and HK$20 billion each. PwC said most of the predicted 110 IPOs in Hong Kong will come from mainland companies looking to raise capital in the region. On the mainland, the accounting firm estimates that 250 companies would list shares on the Nasdaq-style ChiNext market and the SME board, both of which are on the Shenzhen exchange. "The continued growth of the GDP, ample fund supply and the limited channels for fund-raising will ensure the IPO market remains strong this year," said Frank Lyn, PwC China Markets leader. The mainland was the world's third-worst performing stock market last year, beating only Greece and Spain. Analysts and investors say the flood of IPOs soaked up liquidity, causing the downturn. The China Securities Regulatory Commission controls the pace of IPO approvals on the mainland. It normally suspends offerings or slows approvals to boost the market when the sentiment is weak. IPOs on the mainland are still believed to be a safe bet because the shares mostly rise on the first day of trading. Last year, only 26 stocks traded below the offer price on their debut while the rest rose. Thirty-one stocks rose more than 100 per cent on the first day. The number of IPOs on the Shanghai exchange - the bigger of the two mainland bourses that is normally home to big-cap stocks - would jump from 28 to 150 this year, PwC said.

New China Life (SEHK: 2628), the Chinese joint venture of Swiss insurer Zurich, is aiming for a dual-listing in Shanghai and Hong Kong this year, the official Shanghai Securities News reported on Wednesday, citing unidentified sources. The listings will likely happen in the third quarter of the year, the newspaper said. New China Life was initially planning to submit its IPO application to the Hong Kong Stock Exchange in March and if everything goes smoothly it may be able to complete the dual-listing in July, it said. The Chinese insurer has appointed UBS and China International Capital Corporation as joint co-ordinator for its listing plans, the newspaper said. New China Life was not immediately available for comment. Apart from Zurich, Central Huijin Investment, the domestic investment arm of China’s sovereign wealth fund as well as top steel company Baosteel also own a stake in New China Life.

Wan Chai pool, sports track move for rail line - Sha Tin-Central link work brings disruption - Sports facilities on the Wan Chai waterfront will have to be demolished to make way for the Sha Tin to Central link, the largest of four domestic railway projects now underway or on which work will start soon. This emerged yesterday as the MTR Corporation (SEHK: 0066) disclosed further details of the HK$60 billion project. The Harbour Road Sports Centre and the Wan Chai Swimming Pool - scene of most inter-school competitions - would be torn down to allow for station-related construction, the link's design manager, Clement Ngai Yum-keung, said. But the corporation pledged that new facilities to replace them would be built nearby before demolition. The link, designed to provide more direct and reliable transport for cross-harbour commuters from the New Territories, will also cause road diversions and deal another blow to franchised bus operators, which are already dealing with a drop in cross-harbour patronage. The new sports facilities will be built on an existing car park to the south. It is not clear if the lost parking spaces will be replaced. Ngai said the first section of the link to be built would be from the MTR's Mong Kok East station to a new concourse below Hung Hom station. From there the existing East Rail line will be extended, through a new cross-harbour tunnel, to Wan Chai North and Admiralty. "We believe the new line will be an attraction to railway commuters who have to switch to cross-harbour buses outside Hung Hom station," Ngai said. However, passengers using the new line to get from Sha Tin to Central will have to change trains at Hung Hom to take the East Rail extension to its terminus in Admiralty, and change trains again there. Visitors from the mainland, though, will enjoy direct travel from Lo Wu to Admiralty in 50 minutes. The Tai Wai to Hung Hom section of the 17-kilometre link is expected to be completed by 2018, and the cross-harbour East Rail extension is due to be finished two years later. The first station on the East Rail extension will be Exhibition, which will be underneath the existing Wan Chai North transport interchange outside the Harbour Centre. Admiralty station is undergoing major renovation for its future role as the converging point of four rail lines. On top of traffic diversions introduced for other MTR lines now being built, the link will bring closures on sections of Chatham Road North in Tsim Sha Tsui and Convention Avenue and Fleming Road in Wan Chai, which will be closed in phases for up to six years when work begins next year. Ngai said, however, that the MTR would stick to the principle of "replacing every borrowed lane", so as not to reduce the roads' capacity to handle traffic. The new line is expected to deal a heavy blow to KMB, New World First Bus and Citybus, which rely heavily on their cross-harbour routes for profits. Transport Department figures show that cross-harbour bus journeys have declined steadily since 2007. Meanwhile, the MTR saw persistent growth in cross-harbour patronage, with annual passenger journeys jumping from 303 million in 2005 to 336 million in 2009.

The Housing Authority's construction goals should be easier to meet over the next few years, thanks to a bigger-than-expected surplus. In the 2010-11 financial year, the provider of public housing and Home Ownership Scheme flats achieved an overall consolidated surplus of HK$6 billion, according to a revised budget announced yesterday by Stanley Wong Yuen-fai, chairman of the authority's finance committee. This was 58 per cent more than the HK$3.8 billion the authority projected in an earlier approved budget. It is also the biggest surplus since The Link real estate and investment trust took over management of estate malls in 2005. The authority promised to build 15,000 public housing flats a year, at a cost of HK$7.5 billion over five years. To ensure it met this goal, its investment profile was now more adventurous, Wong said. Hong Kong stocks used to constitute 1 per cent of global stocks in which it invested, but that had been lifted to more than 5 per cent. The revised budget noted that sales and pricing of Home Ownership Scheme flats were better than expected, resulting in an additional HK$500 million for the authority. "A general rise of property prices in Hong Kong lifted the prices of Home Ownership Scheme flats," Wong said. Prices of the scheme's flats were linked to prices of private housing and priced about 30 per cent lower than private flats in the same district. Spending also dropped because of a shift in accounting rules. Estates could now depreciate public housing for 50 years instead of 40 years, Wong said. The authority estimated the surplus would shrink to HK$4.4 billion in 2012, dwindling further, to HK$3.7 billion, in 2015. Income was expected to slip after the Home Ownership Scheme was phased out next year. In 2010, the authority sold 3,000 flats under the scheme. A total of 800 would be sold this year. The authority's financial performance had nothing to do with the rent paid by public housing tenants, Wong said. According to an adjustment system introduced in 2008, rents were adjusted according to changes in the average income of tenants, calculated every two years. The authority last raised rents by 4.68 per cent in September, but it also waived one month's rent, which nearly offset the increase.

 China*:  January 7 2011

China joins elite offshore energy club - China has joined the world's elite club of offshore oil producers after China National Offshore Oil Corp (CNOOC) announced that its oil and natural gas output surpassed 60 million metric tons in 2010. The country's largest offshore oil explorer's oil and gas production last year totaled 64.13 million metric tons of oil equivalent, of which 50 million was produced domestically, said its president Fu Chengyu on Tuesday. "It marks a milestone that China has become one of the world's largest offshore oil producers after the United States, the United Kingdom, and Norway ... And the marine petrochemical industry will boost the country's energy supply," Fu said. China's surging energy demand has led the nation's foreign oil dependence ratio to reach a new high of 55 percent in 2010. "We estimate that 60 percent of China's oil consumption will be imported by 2020," said Wang Jiacheng, a researcher at the Academy of Macroeconomic Research under the National Development and Reform Commission. Consequently, offshore oil exploration, which is still at an early stage, has become a major factor in quenching the nation's thirst for the natural resource. "We expect our gas and oil output to exceed 200 million metric tons of oil equivalent by 2020, including 50 million tons of LNG (liquefied natural gas)," Fu told China Daily. He added that about 800 billion yuan ($121 billion) to 1 trillion yuan would be invested during the 12th Five-Year Plan (2011-2015), with the majority going to offshore oil exploration. The company's total profits exceeded 90 billion yuan in 2010, up over 70 percent from 2009's 52.4 billion yuan, Fu said. Offshore oil will make up 40 percent of the world's oil output by 2015, compared with 34 percent in 2004, according to figures from the China Petroleum and Petrochemical Engineering Institute. Offshore gas will account for 35 percent of the world's gas output over the same period. China's central government said in its 12th Five-Year Plan that the country should develop and implement a marine development strategy, and improve technical ability and comprehensive management. CNOOC has tapped into Africa, South America, the Middle East, and Australia for cooperation opportunities in oil and gas projects. "We hope to integrate into the global economy through international cooperation and support other countries' development," Fu said. In addition, CNOOC has also tried to develop deepwater oil and gas resources, an area that has a large growth potential. The company has invested 15 billion yuan into manufacturing state-of-the-art deepwater equipment, including drill-ships and geophysical and survey vessels. The equipment is expected to be used in 2011, said Zhou Shouwei, vice-president of CNOOC. "The world's offshore oil detection rate is 73 percent on average, while in China the rate is only 12.3 percent. There's still large room for offshore oil exploration, particularly in the deepwater area," said Rui Dingkun, a senior analyst at China Jianyin Investment Securities. "We'll speed up technology innovation to develop more homegrown equipment to meet a need for deepwater exploration," Zhou said, adding that the company has also focused on deepwater drilling safety. Zhou, also a top offshore oil exploration engineer, said that based on facts released by the US authorities, the BP oil spill in the Gulf of Mexico last year might have been caused by a series of simple mistakes, rather than technological faults, because the technologies for operating in ocean depths of 1,000 to 2,000 meters have been proven. He claimed CNOOC is very strict in following technological specifications, so the company can avoid mal-operations. He believed that after the Gulf of Mexico spill, technological requirements will be higher and regulations will also be tougher, which may lead to higher costs for oil companies and the withdrawal of some players from the offshore business. "It may also be an opportunity for us," he said.

China to let yuan rise 5% in 2011: paper - China will let the yuan rise about 5 percent against the dollar in 2011 as it needs a stronger currency to combat inflation and avert asset bubbles, an official newspaper said on Wednesday. The yuan's gains would be particularly strong in the first half of this year, the China Securities Journal said in a front-page editorial. The Chinese-language newspaper is a leading voice on domestic economic affairs. "Yuan appreciation will make imports cheaper to reduce the impact of rising commodity prices in the international market, providing relief from inflationary pressure," it said. Investors expect the yuan to rise about 3 percent in a year's time, according to pricing in offshore forwards markets. But China-based traders expect the yuan to appreciate about 2 percent in the first quarter of 2011 alone. However, Chinese Vice Commerce Minister Jiang Yaoping said appreciation would have limited impact on reducing China's trade surplus with the United States. Jiang noted that much of the imbalance was explained by the processing trade in which multinational companies import intermediate goods and assemble them as finished products in China before exporting them to the United States. "We have adjusted the yuan's exchange rate since 2005, but we can see that China's trade surplus with the United States, especially the surplus in the processing trade, basically did not change," he told a forum on Wednesday. "That is to say, the yuan's exchange rate has no big impact on the trade surplus."

Despite tight credit, banks' profits to grow - A Nanjing-based branch of Industrial and Commercial Bank of China is adorned with festive decorations for the upcoming Lunar New Year. Chinese commercial banks earned unprecedented profits in 2010, and are projected to secure a profit growth rate as high as 20 percent this year, said officials and analysts. Yang Zaiping, deputy head of the China Banking Association, said Chinese banks' profits in 2010 will exceed 800 billion yuan ($120.8 billion), setting a historical record. Guo Tianyong, a professor with the Central University of Finance and Economics said the figure will certainly exceed 900 billion yuan and might even reach 1 trillion yuan. In 2009, the profits of Chinese banks totaled 668.4 billion yuan, a 14.6-percent increase on 2008. For the same period, assets reached 78.8 trillion yuan, up 26.3 percent year-on-year. The rapid growth in profits was mainly attributable to the expanding scale and rising difference between lending and deposit interest rates, said analysts. In 2010, the net interest margin of 16 listed Chinese banks rebounded by 11 basis points on average, it said. In addition, fast growing intermediary business with a 35.1 percent year-on-year in revenue growth also helped the banks gain more profits. It predicted the growth rate of banks' profits in 2011 may slow down to between 15 and 20 percent, mainly due to the country's tightening monetary stance and shrinking new yuan loans, said the report. To tame inflation and stabilize economic growth, the Chinese government has put suppressing inflation at the top of its agenda for 2011 while shifting its monetary stance to "prudent" from "moderately easy", which analysts said means tighter policies. Analysts predicted the amount of the new yuan loans would be reduced to around 7 trillion yuan this year from 7.5 trillion in 2010. "The banks will raise lending interest rates to compensate for the negative effect brought by the declining credit scale. But as the government liberalizes deposit interest rates gradually, the interest margin may not be big enough to offset the shrinking credit," said Guo, predicting banks' profits will grow by 10 percent this year. Although the growth rate will decline in 2011, it will still be a rapid clip, said the Bank of Communications. The Guotai Junan Securities predicted if the regulators won't require higher provisions for the banks, profits would even reach 21 percent. It said the central government's moves to raise interest rates, banks' increasing bargaining capability, and assets and liabilities restructuring will jointly drive the net interest margin up in 2011. The net interest margin will rise 12 to 18 basis points, or 6 to 8 percent year-on-year in 2011, said Industrial Securities. On the other hand, fee income will grow steadily this year, as banks further optimize their revenue structure, said analysts. Bank of Communications predicted net fee income of Chinese banks will grow at a rate of 30 percent, becoming a major contributor to rising profits. Essence Securities expected 2011 profit growth of the banking industry will be around 17 percent, among which profits of the State-owned banks will increase by 16 percent, profits of the shareholding banks up by 20 percent, and that of the smaller city commercial banks will rise by as high as 28 percent as they are in the expansionary phase. Although Chinese banks may not earn as much money as they used to, international investors should still be optimistic about their profit prospects, said Elaine Wong, managing director and head of Professional Services Asia-Pacific at Moody's Analytics. "Despite the government soaking up excessive liquidity and planning to further tighten credit, new loans will still grow rapidly in the next year," she said.

Factories to shed 'labor camp' label in 2011 - Experts say last year's wave of suicides at Foxconn Technology Group and strikes at other manufacturers marked a low point for labour relations on the mainland, but warn that 2011 will have its share of challenges. Mainland factories make many of the world's most coveted electronic devices, including personal computers and Apple's hot-selling iPhones, iPad tablet computers and iPod media players. Prickly labour issues are expected to persist this year, despite wage increases and efforts by electronics manufacturers to improve conditions at their mainland factories. "There is a deep mistrust that manufacturers need to overcome," said Richard Wong, the vice-president for global corporate social responsibility and employee relations at Singapore-based Flextronics International, the world's second-largest electronics manufacturing services provider after Taiwanese market leader Foxconn group. "We saw the worst year for labour relations in China's electronics manufacturing industry, based on the huge amount of media coverage about the issues affecting workers rights," Wong said. He said there may be "more flare-ups", such as strikes, this year. "There is greater boldness among these, mostly young, migrant workers to take management head on," he said. "There is better organisation behind their actions. We're not dealing with motley crews anymore, since people outside are finding ways to reach and advise the workers in factories." A Hong Kong labour-rights organisation, Students and Scholars Against Corporate Misbehaviour (Sacom), has been one of the most active to investigate and publicise the plight of mainland migrant workers in the electronics manufacturing sector. "We will continue to track working conditions at Foxconn," Sacom spokeswoman Debby Chan Sze-wan said. "Public pressure can help drive improvements, so more consumers should ask the makers of the electronics products they buy about the working conditions in factories." The spokesman for labour relations at Hon Hai Precision Industry, the Taipei-based parent firm of the Foxconn group of companies, could not be reached for comment. "Ideally, workers should know about their rights and have the ability to organise themselves to defend these rights," Chan said. "Unfortunately, the manufacturers and the electronics brands they serve have not shown a commitment to facilitate a genuine workers' representative system on the shop floor." Asked which electronic manufacturers on the mainland have significantly boosted their corporate social responsibility programmes in the aftermath of the worker suicides at Foxconn, Chan said: "It's difficult to compare one bad supplier with other bad suppliers." Hon Hai and its Foxconn companies, which employ more than one million workers in China and led the US$280 billion global contract electronics manufacturing market last year, have maintained a corporate social responsibility programme to improve conditions at all its mainland operations. There are five publicly traded firms among the many subsidiaries and affiliates of Hon Hai on the mainland. The parent owns about 72 per cent of Hong Kong-listed Foxconn International Holdings (SEHK: 2038), which is the world's biggest contract maker of mobile phones. The group's Taiwan-listed subsidiaries are Foxconn Technology, which makes video-game consoles and the metal casing for handsets and computers; Foxsemicon Integrated Technology, which assembles semiconductor-manufacturing equipment and light-emitting diode displays; Pan-International Industrial Corp, which provides electronic turnkey services, cable assembly connectors and printed circuit boards; and Chimei Innolux Corp, which makes flat-panel displays for television, desktop monitors and laptop computers. In the 2009 corporate social responsibility report, Hon Hai said: "Foxconn worked vigorously to reduce the societal impact on the younger generation by way of employee welfare initiatives in combating psychological and work-related stress through appropriate interventions of counselling." Even with that programme in place, an 83-page research report released in October and jointly produced by 20 universities in Hong Kong, Taiwan and the mainland described Foxconn as a "labour camp" that severely violates China's labour laws and abuses workers physically and mentally. Based on interviews with more than 1,800 workers from 12 Foxconn-owned factories in nine mainland cities, the report also found that at least 17 Foxconn workers had attempted to commit suicide - of whom 13 died - since January last year, rather than the 14 suicide attempts widely reported by the Hong Kong media. In November, despite the company's moves to improve conditions - such as implementing large pay raises and improving mental-health support services, another young migrant worker committed suicide at Foxconn's Guanglan manufacturing complex in Shenzhen. Many cities and provinces across the mainland raised their minimum wage last year. Beijing and Guangdong are now considering another round of increases as more manufacturers seek workers from the country's shrinking labour pool. "Migrant workers helped China become a manufacturing giant," Wong said. "While their basic economic needs might have been met, many of their other needs haven't been sufficiently addressed." Wong said continuing labour strife on the mainland this year will also be caused by smaller electronics manufacturers that do not care about corporate social responsibility.

Chinese shipyards weather hard times - Workers in a shipbuilding base in Yichang, Hubei. China became the world's largest shipbuilder in terms of contracts volume in the first half of 2010. China's shipyards delivered less than 80 percent of their existing orders in the withering global shipping market, said a report from the China Association of the National Shipbuilding Industry (CANSI). A total of 70 million deadweight tonnage (DWT) of ships were scheduled for delivery in 2010, but only 56.76 million DWT were actually delivered by Chinese shipbuilders by the end of November, 72.8 percent of the total orders, according to the CANSI report. The global financial meltdown has dealt a severe blow to the global shipbuilding industry, and many China shipbuilders' clients had to postpone deliveries due to stringent cash flows or shrinking demand, said Zhang Shengkun, president of the Shanghai Society of Naval Architects and Marine Engineers. Clients usually pay upfront 20 percent of the total price of their orders, followed by the remaining 80 percent upon delivery. "Small-time customers are more speculative than regular clients. Before the outburst of the financial crisis, some small-size companies ordered many products from China's shipbuilders to make a scoop, but the financial crisis dashed their hopes," said Li Guanghua, an industrial analyst from Sinolink Securities. According to Li, the price of a standard capesize bulker, a 175,000 DWT vessel for delivering iron ore, has dropped 40 percent to $60 million from nearly $100 million before the global financial crisis. "The 20 percent reduction in down-payment is merely half of the price gap," Li said. The Baltic Dry Index, which tracks the worldwide international shipping price of various dry bulk cargoes, dropped from above 10,000 before the global financial crisis to below 1,800 post-crisis. Statistics showed that China has surpassed the Republic of Korea to become the world's largest shipbuilder by volume of contracts, newly increased contracts and completed orders in the first half of 2010. Domestic shipbuilders received 43.9 million DWT new orders in the first 10 months in 2010, up 118.2 percent year-on-year, accounting for 46.1 percent of the global total volume, according to Guo Yaling, an analyst from CITIC Securities. "Such momentum will continue in 2011 with a more than 30 percent increase in terms of completed orders," he said. Shanghai Bestway Marine Engineering Design Co Ltd and Hunan-based Sunbird Yacht Co Ltd were successfully listed on the ChiNext board for start-ups in Shenzhen in 2010. In November, Jiangsu Rongsheng Heavy Industries Group Co raised as much as HK$14 billion ($1.8 billion) in a public offering exercise in Hong Kong, quickening its objective to be the nation's top shipyard. CANSI estimates China's shipyards will realise more than 670 billion yuan ($101.39 billion) of revenues in 2010, and more than 40 billion yuan of profit. The shipbuilding industry made a profit of 31.64 billion yuan in the first 11 months in 2009. But Zhang warned China's shipbuilding industry still faces many problems. "Although China has become the world's largest shipbuilder, the sector can't produce value-added, high-end products," Zhang said. "In addition, China's shipbuilders have to counteract the appreciation of the yuan and rising costs. That will be a real challenge," he added.

United States President Barack Obama met on Tuesday with China’s foreign minister ahead of a visit by President Hu Jintao in which a currency dispute was to top a wide-ranging agenda. Foreign Minister Yang Jiechi was at the White House discussing issues ranging from US-China trade to Iran, North Korea and the upcoming referendum in Sudan with Obama’s advisors when the president came into the room. “The president joined the meeting and reaffirmed his commitment to building a bilateral relationship that is comprehensive in scope, positive in achievement, and cooperative in nature,” the White House said. “The president said he looked forward to the visit of President Hu and to the US and China working together effectively to address global challenges,” it said in a statement. Obama is hosting Hu in the White House on January 19 against the backdrop of a simmering currency dispute that is likely to top an agenda that will include recent tensions on the Korean peninsula and human rights issues. The White House has signaled it will keep up pressure on Beijing to allow its yuan currency to appreciate. Critics say China keeps the yuan undervalued to gain an unfair trade advantage that has cost thousands of US jobs. White House spokesman Robert Gibbs on Monday outlined the administration’s priorities in a question-and-answer session on the online microblogging service Twitter. “They must do something about their currency — trade, N Korea and rights on agenda,” Gibbs wrote in Twitter shorthand. In November, US National Security Adviser Tom Donilon told reporters in Japan that Hu’s visit would be a good time to assess “the quantum of progress” on the currency issue. And in recent weeks Chinese authorities appear to have allowed the yuan to gradually appreciate. The People’s Bank of China set the yuan central parity rate — the middle of the currency’s allowed trading band — at 6.6227 to the dollar Friday, meaning it has appreciated about three per cent since June 19. Obama and Hu last met in Seoul on the fringes of the Group of 20 summit in November and are due to hold talks at the White House and a state dinner during the Chinese president’s visit. But serious divisions between the two largest economies will linger beneath the diplomatic pageantry, including Washington’s repeated demands that China rein in its communist ally North Korea. Tensions soared on the divided peninsula in the wake of Pyongyang’s deadly assault on a South Korean border island in November. The visiting Chinese foreign minister was to meet with US Secretary of State Hillary Clinton on Wednesday and had held closed-door talks with US Treasury Secretary Timothy Geithner earlier on Tuesday. US Secretary of Defense Robert Gates is due to visit China next week, a year after Beijing snapped off military relations with Washington in protest against a multibillion-dollar US arms package for Taiwan.

China plans marriage database - Expanding wealth has created a culture of secret mistresses and second wives in the mainland and officials are now putting marriage records online so lovers and spouses can check for infidelity. State media on Wednesday said Beijing and Shanghai will be among the first places to put marriage databases online this year. The plan is to have records for the whole country online by 2015. But the Ministry of Civil Affairs a few years ago said such a project would be operational by last year. Officials have not explained the delay, but not all areas have such databases ready yet. Bigamy is illegal in the mainland, and corruption inspectors with the Communist Party have said several officials have been found guilty. That includes the former head of the National Bureau of Statistics, Qiu Xiaohua. He was called a “vile social and political influence” and expelled from the party in 2007. The expanding economy over the past few decades has led to a high degree of mobility among cities and regions, creating what Beijing-based lawyer Chen Wei described as a “strangers’ society” in an interview with the China Daily about the marriage database plan. One study of extramarital affairs published in the US in 2005 said 20 per cent of 1,240 married men surveyed in urban areas and 3.9 per cent of 1,275 married women said they had had an affair in the past 12 months. The details of some secret romances have found their way online for a captivated public. In one of the most recent cases, a county official in the central province of Hubei was detained last month on suspicion of killing his mistress, who was pregnant with twins, after she reportedly asked him to marry her or give her 2 million yuan (HK$2.35 million). In this atmosphere, the number of divorces is rising. The civil affairs ministry has said 2.47 million couples split in 2009, an increase of almost 9 per cent on the previous year. The Shanghai Daily and other state media say the third area to put its marriage database online this year will be the northern province of Shaanxi.

The color of snow and ice in Harbin - A man takes a photograph using a camera phone as he walks past an ice sculpture on a main street in the northern city of Harbin, Jan 3, 2011. The sculpture is part of the Harbin International Ice and Snow Festival which will be officially launched on Jan 5.

Hong Kong*:  January 6 2011

Szeto funeral door still open for dissidents - Exiled activists seek permits for Hong Kong trip. Reverend Chu Yiu-ming (centre), chairman of Szeto Wah's funeral committee, at Tsim Sha Tsui Baptist Church to help organise the funeral. The government has not ruled out allowing exiled mainland dissidents to attend democracy icon Szeto Wah's funeral in Hong Kong. But an official said they should keep a low profile and that public discussion of their request to attend would not help their case. The government is pondering whether to grant exiled dissidents such as Wang Dan and Wuer Kaixi entry to the city to pay their respects to Szeto, who died on Sunday of lung cancer. An official familiar with the matter said "a low-key approach" would help the dissidents' application for entry to Hong Kong. A memorial service for Szeto will be held on January 28 and his funeral is the next day. Democratic Party lawmaker Cheung Man-kwong said yesterday he had conveyed the two exiled dissidents' requests to be allowed to enter Hong Kong - along with their pledges to refrain from talking to the press and making public statements if they were granted entry - to the Chief Executive's Office. Wuer was allowed to visit Hong Kong in 2004 to attend the funeral of Canto-pop singer Anita Mui Yim-fong, who supported the 1989 prodemocracy movement. But the official said the government remembered that Wuer breached an agreement with the administration about keeping a low profile during his trip to the city. The former student leader gave a public speech and accepted media interviews at the time. Both Wuer and Wang were on the central government's most-wanted list after the 1989 Tiananmen Square crackdown. But Wuer denied he had made a deal with the government over his 2004 visit and said he had not broken any promises by talking to reporters. He said no one had complained about his conduct in Hong Kong. "I'm very surprised about this [the Hong Kong official's remarks]," Wuer said. "[At the time] even if they didn't want us to be high profile during our visit to Hong Kong, they were sophisticated enough to know they should not [say so]. [They knew] they were supposed to claim that Hong Kong was a society with freedom of speech." Wuer made a statement upon his arrival at Chek Lap Kok Airport in 2004 saying he was a political dissident wanted by Beijing, but he was still able to enter Hong Kong. He also made a speech at the Foreign Correspondents' Club during that visit. Asked if he would pledge to keep a low profile this time, Wuer said: "Yes, I would. I pledge that I will comply with the conditions laid before me. "We want to do it this time for Uncle Wah ... but I wouldn't hide my disappointment." He said he would go as far as accepting conditions such as refraining from talking to the press while in the city and accepting supervision. That includes limiting his visit to just a few hours to pay his respects to Szeto. Wang volunteered on Monday to refrain from talking to the press and making public statements if he were allowed to come to Hong Kong.

600 cannabis plants seized in Yuen Long - A forest of marijuana grows under lights in one of the rooms of a Yuen Long house raided by police yesterday. Four rooms were under cultivation. Police seized 600 cannabis plants yesterday at a two-storey Yuen Long house used as a base for growing, packing and distributing marijuana. The plants were growing in four of the six bedrooms in the house, off Shui Tsiu San Tsuen Road. The windows and doors of the flat had been sealed with plastic tape to contain the strong smell of cannabis, police said. The windows were daubed with paint and covered with plastic sheets to prevent outsiders from seeing into the house, Inspector Jonathan Kwan Chun-hin of Yuen Long district's special duty squad said. "Air conditioners were used to pump fresh air into the bedrooms to grow cannabis plants," Kwan said. Solar lights, used to speed up growth, bags of fertiliser and soil, and gardening and packaging equipment were seized from the house. "We believe the facility was capable of producing six kilograms of cannabis every three months," Kwan said, adding that the estimated turnover could reach at least HK$2.4 million a year. Police believe cannabis seeds were bought overseas and smuggled into Hong Kong. Two brothers, aged 36 and 41, who are not indigenous villagers, were arrested in the operation. The younger brother was arrested when he left the house and was about to get into a car at about 11.30am. The other was seized when officers raided the house. "Initial investigations indicated that the two suspects allegedly provided a one-stop service from growing cannabis, packaging and delivering it," Kwan said. The finished products were to supply drug users in Kowloon West, he said. Officers were investigating how long the production centre had been in operating. Police said the house was also used for accommodation for the two brothers. Last night, the two men were being held for questioning. No charges have been laid. Kwan said a three-week investigation into the source of cannabis led police to discover the house. Police and customs officers seized nine kilograms of cannabis in the first 10 months of last year, a sharp drop from the 98kg seized in the same period of the previous year. Cannabis seizures in Hong Kong have been dropping since 2007. A total of 107kg of cannabis was seized in 2009, a 58.8 per cent drop from the 261kg seized in 2008. A total of 569kg of cannabis was seized in 2007.

New police chief in job next week - A shake-up at the top of the Hong Kong Police will begin later this week when deputy commissioner Andy Tsang Wai-hung is formally named as the new head of the force. Long tipped for the top job, Tsang, 52, will succeed Tang King-shing, 56, who is due to retire in May but is taking pre-retirement leave. Tsang, a respected investigator with wide and varied experience as a detective, will take over as commissioner on Tuesday. His appointment requires Beijing's approval, which should be a formality. Senior assistant commissioner Xavier Tang Kam-moon, 54, is expected to be promoted to deputy commissioner, and assistant commissioner Stephen Lo Wai-Chung, 49, tipped eventually to succeed Tsang, will be promoted to senior assistant police commissioner. Insiders say Tsang's five-year term will allow him to push through reforms and plan new strategies. Tsang, who heads police operations, joined the force as an inspector in January 1978 after studying at Raimondi College in Mid-Levels. He has a long background with the criminal investigation department (CID), which many believe will help the force address a lack of experienced CID officers, which has become an issue in recent years. Early in his career, he worked in the narcotics bureau, carrying out a range of duties, including undercover and surveillance work. From 1993 to 1995, he was seconded to the Metropolitan Police in London and was a detective superintendent. After the handover in 1997, Tsang worked as Wan Chai district commander and led the organised crime and triad bureau from 2000 to 2002. He was tipped as a future police chief after he was promoted to assistant commissioner in 2003. Tsang's leadership style has been described as "hardline, smart, capable and decisive". Tsang met his wife, an interpreter, in the force. They have two sons. Tsang faces a number of challenges, including how to maintain the 30,000-strong force as an impartial law enforcer when dealing with multiplying disputes on political issues in an increasingly divided society, police reform and how to retain talent in the force. "There might be possible demographic changes in the force, as there is no longer a pension scheme to keep people in the force," a senior officer said. Hong Kong Police Inspectors Association chairman Tony Liu Kit-ming said staff hoped the new commissioner would carry out reforms, including making officers more focused on core policing. The staff association suggested a comprehensive review of disciplinary proceedings be carried out, and a review of police ranks. "Several ranks could be merged, such as the rank of deputy commissioner and senior assistant commissioner, into one new rank, or merging the rank of chief inspector and senior inspector," Liu said. The force had 15 ranks from constable to police commissioner. Streamlining the organisation could help put more emphasis on frontline police work and reduce paperwork, Liu said. Outgoing commissioner Tang will take the salute at a passing out parade on Saturday, and a farewell guard of honour will be held at police headquarters on Monday, his last day in the job.

The government would introduce new waste treatment facilities – including the extension of landfills, the Secretary for the Environment said on Tuesday. The administration has backed down on a plan for part of a country park to become a landfill. It has decided not to mount a legal challenge against a Legislative Council resolution to halt its waste-dumping plan. A chief executive's order to use five hectares of Clear Water Bay Country Park to expand the Tseung Kwan O landfill was knocked back by a legislative resolution in October. So a constitutional crisis loomed when the administration said it was ready to seek a judicial review on the repeal. But Chief Secretary for Administration Henry Tang Ying-yen emerged from an Executive Council meeting yesterday to say there will not be a move into court. The decision was made to maintain a "good relationship" between the executive and legislative councils, Tang said. But he argued that the administration backing down does not set a precedent and it reserves the right to seek a court review of its powers. Indeed, said Tang, officials hold to their view that legislators cannot undo an order from the chief executive. According to Secretary for Justice Wong Yan-lung, that is also the view of two QCs - Lord Pannick from the United Kingdom and former Hong Kong attorney-general Michael Thomas. Tang said the Country Parks Ordinance and the Interpretation and General Clauses Ordinance stipulate that the chief executive and the Legislative Council cannot repeal such an order, which is subsidiary legislation after being passed by the Executive Council. "Even if there were any legal flaw, it is not for Legco to assume the role of the court to correct it by repealing the order," Tang said in a letter sent to Legco president Jasper Tsang Yok- sing. Eric Cheung Tat-ming, an assistant professor in the University of Hong Kong's Faculty of Law, said a nonlegal resolution is strange. In fact, he said, by maintaining that the legislature has done something wrong but not seeking a legal review it "sounds like they are doing something that they think is illegal." Legislators welcomed the decision. The Civic Party's Tanya Chan Suk- chong, who tabled the motion to reject the landfill plan, believes the decision is solely a political consideration. But the administration has not clarified the role of the legislature, she added. Tam Yiu-chung, chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong, said staying out of court means a good relationship between legislators and the administration can be maintained. Legislative president Tsang, meanwhile, said a panel will study the role of councillors in amending legislation.

The East Rail Line will be extended across the harbor when the HK$60 billion Sha Tin-to-Central Link is completed in 2020. This means a 50-minute direct train ride from Lo Wu to Admiralty station without having to change trains. The 17-kilometer rail extension from Tai Wai will have 10 stations, with the other nine being Hin Keng, Diamond Hill, Kai Tak, To Kwa Wan, Ma Tau Wai, Ho Man Tin, Hung Hom, Exhibition and Admiralty. The section from Tai Wai to Hung Hom will be completed by 2018, while the cross-harbor section, the fourth in Hong Kong, will be completed in nine years. The line has been delayed due to changes in planning, a surge in cost from an initial HK$38.2 billion and the addition of Hin Keng station to cater to demand. MTR Corporation design manager Clement Ngai Yum-keung said yesterday the link will connect with the current East Rail Line, meaning passengers from the northeast New Territories can ride all the way from Lo Wu to Admiralty station without changing trains. Residents of Tai Wai, where the station will become a major interchange and loaded with massive property projects, will need just 17 minutes to get to Admiralty. Some roads in Hung Hom and Wan Chai may have to be diverted temporarily to allow construction. Admiralty Station will be expanded to incorporate the new line. Work will be mainly at night. Meanwhile, in Wan Chai, the Harbour Road Sports Centre and a nearby swimming pool will have to be relocated for the new Exhibition Station, which will be built near the Hong Kong Convention and Exhibition Centre. Passengers may change there for the future North Island line. Stations will be equipped with footbridges and walkways to provide "seamless connectivity" to each neighborhood. Ngai said that train frequencies on the East Rail Line will be increased during peak hours to take more passengers. Completion of the new line will lead to two rail corridors - the "north-south corridor," which starts at Lo Wu, and the "east-west corridor," running from Tuen Mun to Wu Kai Sha. The improved system can ease both rail and road traffic between the New Territories and the city, the company said.

The Hong Kong stock market may raise up to HK$350 billion from initial public offerings this year, more than 20 percent lower than the record HK$445 billion reaped in 2010, according to a forecast by auditor PricewaterhouseCoopers. "There are no more mega deals as large as AIA Group (1299) and Agricultural Bank of China (1288), but Hong Kong will still be among the largest IPO markets globally in 2011," said PwC partner Benson Wong Wai-pong. Listing candidates are mainly from the retail, consumption, industrial, financial, energy and mining sectors. There were 17 energy and mining IPOs last year, compared with nine in 2009. More firms from these sectors are set to tap the local market this year. At least 10 overseas firms are waiting to float shares, with each seeking HK$1.7 billion on average, said PwC partner Edmond Chan Chiu-kong. The market expects Italian luxury brand Prada to raise HK$10.4 billion. Last year, seven overseas firms listed in Hong Kong, including UC Rusal (0486) and AIA Group. About 90 percent of the listing candidates this year are expected to come from the mainland. Yuan-denominated IPOs may not be a major listing platform in the next two years, Chan said, noting that technical problems have to be resolved first. These include setting up a system for yuan IPOs and deciding how yuan raised in the city can flow back to the mainland. "But this type of IPO can make the local market more diversified, and help Hong Kong maintain its leading position in the world and its competitiveness. Demand for yuan-denominated IPOs will be larger than for Hong Kong dollar IPOs in the future," Chan added. Last year, 114 companies raised HK$445 billion on both the main board and Growth Enterprise Market. Another firm, Ernst & Young forecast the local IPO market will raise at least HK$400 billion this year.

Hong Kong's initial public offering market will continue to be active this year, but proceeds may fall by up to a third on a lack of the mega-deals that made the territory world leader with more than US$57 billion raised last year, PricewaterhouseCoopers said on Tuesday. “We forecast this year that the market will continue to be volatile given that the debt problems in Europe may continue, the United States does not show clear signs of recovery and there are still a lot of uncertainties,” Edmond Chan, partner at PwC Capital Market Services Group, told a news conference. The Chinese economy would continue to grow, especially in the consumer sector, and Hong Kong would continue to be a safe haven for international investors, so Hong Kong’s initial public offering market would remain active, he added. PwC forecast 110 new listings for this year raising between HK$300 billion (US$38.6 billion) and HK$350 billion versus 114 IPOs last year raising a record HK$445 billion. In last year, AIA Group and Agricultural Bank of China alone raised a combined HK$250 billion. “There are no mega-deals in sight for the year,” said Benson Wong, partner at PWC Assurance Practice. Chinese companies would continue to dominate new listings in Hong Kong this year, with key drivers being consumer goods and the retail sector, industrial products, financial services, mining energy and natural resources related industries, Chan said. He also said there was strong demand for yuan IPOs in Hong Kong and a few deals could be launched this year but a clear listing mechanism was needed, including rules and regulations for the remittance of yuan to China, before the vehicle could really take off. Cheung Kong (Holdings) (SEHK: 0001), property flagship of tycoon Li Ka-shing, planned to launch the first yuan-denominated share offering in Hong Kong this year by spinning off a rental property in China, sources told reporters last month.

The Philippine justice secretary will be a witness at Hong Kong's inquest into the Manila bus hijacking. This was despite an earlier suggestion by President Benigno Aquino that there might be no need to send witnesses. "I have to go as chair of the IIRC. I really don't have a choice," Justice Secretary Leila de Lima said yesterday, referring to the Incident Investigation Review Committee that conducted an inquiry into the August 23 tragedy in central Manila. It found all eight Hong Kong victims were killed by bullets fired by hostage-taker Rolando Mendoza, a disgruntled former policeman dismissed from his job. Hong Kong's inquest is expected to start in February. De Lima recommended charges against a dozen people, including a former national police chief and Manila Mayor Alfredo Lim, for the bungled rescue that brought a bloody end to the hostage drama. But Aquino ordered a second review, which called for only minor charges to be filed against four police officers, Lim and another government official. Last Thursday, two days after De Lima said Manila planned to send 20 witnesses, far fewer than the 116 sought by Hong Kong, Aquino suggested there might be no need to send witnesses at all. Aquino said the planned questioning would be better held in the Philippines because "the issue of sovereignty and the protection of our citizens is paramount". The difference between the two officials indicated the Philippine government was in a "mess", said Ma Ngok, an associate professor of government and public administration at Chinese University. A power struggle could be in progress, he said. "Normally ... when the president says something, it is the final word of the country, but it is obviously not the case in the Philippines. To me, there is clearly a political struggle between Aquino and De Lima," Ma said. While an inquest's goal was to see justice done, Ma said, witnesses from the Philippines might have another agenda. "There might be a political motive for the justice secretary to attend the inquest. She may make use of what she says in the court to attack her political rivals or try and win political support," he said.

Taiwan plans billion-dollar scheme to boost births - Taiwan is planning to offer about US$1 billion a year in a fresh bid to boost its dwindling birth rate, one of the world’s lowest, a report said on Tuesday. The Council for Economic Planning and Development is proposing an annual budget of 38 billion Taiwan dollars (about HK$10 billion) for birth incentives and child-care support from next year, said the Economic Daily News. Under the plan, parents will be entitled to a minimum monthly subsidy of 3,000 Taiwan dollars for each newborn up until two years old and an annual schooling stipend of 30,000 Taiwan dollars for children aged two to six years. The government hopes to encourage the public to have more children during the Year of the Dragon next year, which is considered the most auspicious year in the Chinese zodiac and a favourite birth sign for children, it added. Government data showed that fewer babies were born last year, which was a Year of the Tiger, as some parents were anxious to avoid having children under one of the fiercest signs in Chinese astrology. Taiwan’s authorities have been offering various incentives to try to boost birth rates, amid growing concerns that a severe manpower shortage will trigger serious social and economic problems. The average number of children Taiwanese women have fallen to 1.03 in 2009. In general, every woman needs to give birth to 2.1 children on average, merely to prevent the population from shrinking. The island’s capital Taipei, where birth rates dived to an all-time low in 2009 with fewer than 20,000 babies born, started paying couples 20,000 Taiwan dollars for every newborn from January 1.

Casino revenue in Macao soared 58 percent in 2010 to a record 188.34 billion patacas ($23.51 billion) year on year, bolstered by a flood of gamblers from the mainland on continued strength in the Chinese economy. December gambling revenue jumped 66.4 percent to a record monthly high of 18.883 billion patacas, the Macao Gaming Inspection and Coordination Bureau said on its website. In recent years, the once sleepy southern Chinese city has metamorphosed into the world's largest gambling hub, with the latest numbers pushing it even further ahead of rival Las Vegas. The stellar growth in revenue in 2010 contrasts with 10 percent growth in 2009, even without the relaxation of visa restrictions on Chinese mainland visitors and a recent reminder from China's premier Wen Jiabao for improved regulation and diversification of Macao's economy away from gambling. Some analysts said discretionary spending by affluent Chinese would continue to power Macao's gambling sector -- the only place in China where casino gambling is legal -- to new heights in 2011 despite global economic storm clouds, although growth could moderate somewhat. "The absolute level of the market is massive so it's hard to sustain that level of growth," said Aaron Fischer, CLSA's head of Asian gaming research, who expects Macao gambling revenue growth of 20 percent this year and 25 percent in 2012. Janet Brashear of Bernstein research expects 17 percent market growth this year but noted in a recent report that limits on new gambling table capacity, a reluctance to approve new casino developments and possible tighter regulations on the junket operators that run lucrative VIP rooms, could eat into profits. "There could easily be a 10 percent swing in either direction," Brashear wrote. "Government and economic variables abound however, which could alter the growth rate dramatically in either direction." With a skyline already crammed with neon edifices, two new integrated casino resorts will be finished within 18 months on the Cotai strip, modelled as Asia's answer to Vegas' neon alley. Macao's six casino operators include US giants Las Vegas Sands Corp via Sands China Ltd and Wynn Resorts Ltd through Wynn Macao Ltd, along with homegrown players Galaxy Entertainment Group Ltd and SJM Holdings Ltd, and joint ventures Melco Crown Entertainment Ltd and a casino jointly operated by MGM Mirage.

 China*:  January 6 2011

Major rail line to open in mid-June - Beijing-Shanghai high-speed link to slash travel time to four hours - The landmark Beijing-Shanghai high-speed rail line will open in June, months ahead of schedule, the Minister of Railways Liu Zhijun said on Tuesday. Addressing a conference in Beijing, Liu also announced a major expansion of the high-speed rail network, which will be extended by nearly 5,000 km this year, taking it past 13,000 km by the end of 2011. At the end of 2010, the network stretched to 8,358 km, the world's longest. Some 5,149 km of high-speed track were put into service last year. The network now accounts for one third of the world's total, almost 25,000 km in 17 countries and regions, including Japan, France, Germany and Italy, according to the Ministry of Railways. There are plans to invest 700 billion yuan ($106 billion) in railway construction this year, Liu said, a figure that almost reflects last year's 709 billion yuan investment. A worker is seen at the Shanghai Hongqiao Station of Beijing-Shanghai high-speed rail line in Shanghai, Jan 4, 2011. As a result, the national rail network has expanded from 86,000 km in 2009 to 91,000 km in 2010. This year's investment is expected to expand the network by 7,901 km to some 99,000 km in total, and the high-speed rail network will be extended by 4,715 km to just over 13,000 km, according to the ministry. The opening date of the eagerly anticipated Beijing-Shanghai line has been rescheduled twice - the initial schedule was for 2012, but earlier last year officials suggested it would be operational at the end of 2011, according to previous reports. But rapid progress in the construction of the 1,318-km railway track, which started in April 2008 and ended in November 2010, has seen the completion date moved up to mid-June. Workers are now installing the railway's power supply and communication systems. Once in service, trains with a top speed of 380 km/h will slash the travel time between the two cities to only four hours, down from the current 10 hours. Liu also stressed that ensuring "absolute safety" of operations is the priority for all railway departments. "There will be zero tolerance for errors or defects," he said, as a perfect operation record will be crucial for the construction of high-speed networks as well as China's reputation and railway technology exports. The ministry now aims to export its technical knowledge of high-speed railways to other countries hoping to build or expand their own networks. "Given the scale of China's high-speed rail network, it is possible for China to take a lead in establishing the technical standards for high-speed railways of around 350 km/h," Yang Hao, professor at Beijing Jiaotong University, said. Liu urged that potential overseas high-speed rail markets be explored, including in the United Arab Emirates, Brazil, the United States and Russia. He also said preparation work for cooperative railway projects in Laos, Myanmar and Turkey should speed up this year, so that "these railway projects can start construction as soon as possible". According to earlier media reports, China will help build a railway linking Laos and China as early as 2012 as well as a 1,920-km railway from Kunming, capital of Yunnan province, to Yangon, Myanmar's largest city.

First flight of China's stealth fighter within days - China will test-fly the much-rumoured J-20, its first fifth-generation stealth fighter, in the next few days in the southwestern city of Chengdu if weather permits, say military analysts who have followed the aircraft's development closely. The test flight will follow a successful high-speed taxiing test at the airfield of Chengdu's Aircraft Design Institute last week. The new fighter is emerging much earlier than Western military analysts expected. US Defence Secretary Dr Robert Gates said previously that China would have "no fifth-generation aircraft by 2020". Military analysts say it will take China longer than a decade to mass produce the J-20, but it still signals a major step forward for the Chinese air force, which is gradually shaking off its dependency on obsolete Russian and Israeli designs. Andrei Chang, editor-in-chief of the Canadian-based Kanwa Asian Defence Monthly, said the J-20 would have a test flight at Factory 132 in Chengdu in the next few days if the weather was good. "The testing aircraft will be equipped with a modified WS10 engine that is made in China," Chang said. The new stealth fighter was not yet up to the standards of the Russian T-50 and the US F-22, which it aims to emulate, but it showed plenty of potential, he said. It fell short of its US and Russian rivals in terms of stealth technology and cruising speed. The J-20 is capable of long-range missions with mid-air refuelling, can launch long-range cruise missiles and carry heavy weapon loads. It is also larger than most observers expected. "This is a very mature and creative design; Chengdu 132 is a successful plant with a real strength," Chang said, adding that the emergence of the fifth-generation fighter marked the end of the era of imitation for China's military aircraft industry. Photographs posted on the internet by mainland military enthusiasts show the J-20 has a canard delta layout similar to its sister fighter, the J-10, but with moving vertical stabilisers like Russia's new fifth-generation T-50 fighter. With smaller, canted ventral fins, its stealth body shaping is similar to the American F-22. Antony Wong Dong, president of the International Military Association in Macau, said the new generation stealth fighter was a key military project in the 10th Five-Year Plan and was driven by two crises in 1999. "The bombing of China's embassy in Yugoslavia by the US Air Force, and Taiwan's then president Lee Teng-hui's pro-independence `two-state theory' really got the project going," he said. Professor Cheung Tai-ming, a PLA expert at the University of California San Diego's School of International Relations and Pacific Studies, said the J-20 could not form a near-term threat to US air power because the US Air Force would be churning out a large number of fifth-generation F-35 stealth aircraft. "The big issue is whether other regional countries would see this as a major concern and push for their own acquisition of stealth aircraft," he said. "The Japanese are already looking at purchasing the F-35, and the pressure will be on the Taiwanese and South Koreans. Russia and India have also recently signed a major agreement to push ahead with their joint next-generation fighter program." Shanghai-based military expert Ni Lexiong said the internet release of photographs of the J-20 taxiing test might be part of a plan by Beijing to deter its neighbours from involvement in any US-led scheme to contain China. "The taxi tests were done at the countryside airfield of Chengdu's Aircraft Design Institute at Huangtian Dam, where many military enthusiasts gather regularly to wait for something to happen. "Whether or not it was a deliberate arrangement, I believe Beijing was skilfully warning its Asian neighbours that besides economic development, China will stick with its principle of building a powerful military."

Shipbuilder Rongsheng joins global green trend - China Rongsheng Heavy Industries Group Holdings' directors Chen Qiang (left) and Sean Wang brief the media about the firm's plans. The green revolution is not only gathering pace in the aviation and car industries, it is also encouraging shipyards to build vessels that are more environment-friendly and comply with the increasingly rigid regulations on ships globally. China Rongsheng Heavy Industries Group Holdings, for one, is making its mark with plans to build hybrid ships that can be fuelled by both oil and liquefied natural gas. "Low-carbon economy is a global trend," said Chen Qiang, an executive director of Rongsheng, the largest private shipyard on the mainland which listed on the Hong Kong stock exchange in November last year. "In the 12th five-year plan, which starts this year, environmental protection is also one of Beijing's top priorities." LNG could cut down greenhouse gas emissions by 40 to 50 per cent, compared with traditional bunker fuel. Rongsheng has teamed up with two international marine engine manufacturers - Finland's Wartsila and Germany's Man Diesel & Turbo, a member of the Man Group - to study and develop ships with dual fuel propulsion systems or solely powered by LNG, Chen said. The company said they were ready to build clean ships if shipowners wanted them. One of the major obstacles for shipowners ordering hybrid or LNG-powered vessels is the lack of LNG supply at ports. There is only one LNG terminal on the mainland, in Fujian. But that is about to change as more than 12 LNG terminals are being built by oil and gas giants PetroChina (SEHK: 0857) and CNOOC (SEHK: 0883). Banking on the growing popularity of the low-carbon thrust, Rongsheng has also worked with international ship classification bodies such as Lloyd's Register and Det Norsk Veritas to increase the fuel efficiency of diesel engines. Last year, Rongsheng launched a new type of ship, a 78,000 dwt bulk carrier, which can cut daily fuel consumption by one-sixth to one-seventh. Orders for more than 40 such fuel-efficient vessels will be delivered in two years. "The demand for low-emission ships will see stellar growth on the mainland from 2013 as China will inevitably adopt this global trend," Chen said. Rongsheng builds a large variety of vessels, ranging from 78,000 dwt bulk vessels and 156,000 dwt suezmax tankers to 400,000 dwt large ore carriers. This year, the shipyard will tap the container ship market by offering 10,000 teu vessels. In the first 11 months of last year, the company's outstanding order book exceeded 4 million dwt, the third-biggest order book among mainland shipbuilders. It was boosted by a US$1.6 billion order for 12 large ore carriers that was placed by Brazilian miner Vale in August 2008. The Vale deal is being supported by the Export-Import Bank of China and the Bank of China, which signed a credit line in September last year to provide up to US$1.23 billion to finance the construction of the ships.

Chinese characters top student survey of cultural symbols - Chinese characters are China's top cultural symbol, according to the results of a poll of about 2,000 university students, mainland media reported yesterday. A joint research group led by professors from Beijing Normal University asked undergraduates at 24 universities in 18 provinces, cities or municipalities to choose their top 20 Chinese cultural symbols from a list of 270. The others to make the top five were Confucius, calligraphy, the Great Wall and the national flag. Mao Zedong , Deng Xiaoping , the Forbidden City, Xian's terracotta warriors and traditional Chinese medicine rounded out the top 10. Surprisingly, the top 20 symbols don't include the legendary Chinese dragon or Shaolin kung fu, even though Chinese people often identify themselves as "Descendants of the Dragon" and are proud of the martial art, which has a history of more than a thousand years. Instead, less famous Chinese cultural symbols made the top 20 list, including the Analects of Confucius, the four traditional Chinese forms of stationery (brush, inkstick, paper and inkstone), papermaking and ancient Chinese poems. Academics who study propaganda say the dragon and kung fu could have been omitted because China wants to present a peace-loving image to the world as it exercises its "soft power" to polish its international image and acceptance. The list of items that students chose from has not been released. Yin Yungong , of the Chinese Academy of Social Sciences, said the more combative symbols were left out because Beijing wanted to build an international image of "China's peaceful rise". "I believe that's why the dragon and martial arts aren't included on the list. Personally, I'll include the panda and the dragon in the top 10 symbols." Professor Wang Yichuan , of Beijing Normal University, said the fact that most of the cultural symbols selected by young people came from ancient China suggested that the mainland should look more closely at contemporary culture to find symbols from newer generations. Internet users poked fun at the survey yesterday, saying the research group should have included contemporary items such as Li Gang and chengguan as cultural symbols. Li Gang, a local police chief in Hebei , became the object of widespread ridicule after his son killed and injured two undergraduate students while drink-driving in October. The son brushed off witnesses' accusations by saying: "My father is Li Gang." City administration officials known as chengguan often beat and sometimes kill street vendors. Internet users said Li Gang and the chengguan represented the worst of the mainland's deeply rooted and corrupt bureaucratic culture.

US cable tells of Xi Jinping's strong ambition - The man likely to take over as the mainland's paramount leader next year is an "exceptionally ambitious" person who has chosen to survive by becoming "redder than red", a close friend reportedly told American diplomats. Vice-President Xi Jinping is of only "average intelligence", but incorruptible and women find him "boring", according to a US diplomatic cable released by WikiLeaks. The cable from the United States embassy in Beijing followed interviews with an unnamed professor who was a childhood friend of Xi. According to the professor, Xi is "exceptionally ambitious, confident and focused" and has had his "eye on the prize" from early adulthood, the cable says. After winning several key posts, including the vice-presidency, the 57-year-old is now almost certain to take over as party chief from Hu Jintao in 2012, after his promotion to the vice-chairmanship of the party's Central Military Commission at October's party plenum. He is also expected to succeed Hu as president in the spring of 2013. The Shaanxi native - the son of former vice-premier Xi Zhongxun , who was a close ally of late leader Deng Xiaoping - rose rapidly from relative obscurity as a local official in Fujian and Zhejiang when he was made party leader in Shanghai in early 2007. Unlike many young people who "made up for lost time by having fun" after the Cultural Revolution, Xi, a "supreme pragmatist", devoted himself to Marxist ideology to "become redder than red" and prosper in the communist system, the professor is quoted as saying. Xi is neither corrupt nor a fan of democracy. "He isn't corrupt, and money seems unimportant to him. He apparently has enough." But hopes for greater reform of the political system in the next five years are quashed by descriptions of Xi as a true "elitist" who believes "that rule by a dedicated Communist Party leadership is the key to enduring social stability and national strength". Xi spent his childhood in the Beijing district reserved for high-ranking officials. In 1966, when Mao Zedong launched the Cultural Revolution to remove opponents from the party, Xi's father landed in prison and Xi was sent to the countryside to work in the fields. In the early 1970s, Xi and many princelings were allowed to return to Beijing. But while many set about enjoying their freedom, Xi returned to the countryside in the belief "he could only become a career politician if he removed himself from Beijing's power clique and gathered experience in rural areas". Xi's strategy paid off as "he had promotion to the centre in mind from day one", the professor says. Some cables published earlier by WikiLeaks contained rare detailed accounts of a meeting in 2007 between Vice-Premier Li Keqiang , then party chief in the northeastern province of Liaoning , and Clark Randt, then US ambassador in Beijing. Li, expected to succeed Premier Wen Jiabao in 2013, is believed to be Xi's main rival. Cheng Li, a China expert at the Brookings Institution in Washington, refers to the future rival leadership coalitions as the elitists, or "blue team", led by Xi, and the populists, or "red team", led by Li. The platforms of Xi and Li are strikingly divergent. Xi's enthusiasm for market liberalisation and development of the private sector are well known to the international business community. Li is more concerned about the plight of the unemployed. Cheng said Li had made affordable housing more widely available and understood the importance of developing a rudimentary social safety net, beginning with basic health care.

Tehran invites China and allies to visit nuclear plants - Move to garner support ahead of talks with world powers - The Russian-built Bushehr nuclear power plant will be one of the sites opened to the visitors. Iran has invited China, Russia, the European Union and its allies among the Arab and developing world to tour its nuclear sites, in an apparent move to gain support before a new round of talks with six world powers. The invitations were sent to ambassadors of some of the nations represented in the United Nations atomic watchdog, the International Atomic Energy Agency (IAEA). Iran foreign ministry spokesman Ramin Mehmanparast said the invitation was part of the nation's attempt to demonstrate co-operation with the IAEA and show "the goodwill of our country and the peaceful and co-operative nature of our [nuclear] activities". But diplomats in Vienna said the United States, Britain, France and Germany were not among the invited world powers. The other countries who have been invited include Hungary, as rotating president of the EU, Egypt and Cuba. The US State Department in Washington reacted to the announcement by saying the planned tour amounted to mere "antics" and was no substitute for co-operation with the UN watchdog.

Freezing rain has pummeled parts of southern China in the past few days, paralysing traffic and straining power networks ahead of the Lunar New Year holiday next month.

Beijing to buy Spanish debt as jitters grow over bailout risk - China is confident Spain will recover from its economic crisis and Beijing will buy Spanish public debt despite market fears of an Irish-style bailout, a top Chinese official said yesterday. The comments by Vice-Premier Li Keqiang (pictured) were made in an op-ed article in Spain's daily El Pais one day ahead of his arrival in Madrid for a three-day official visit, the start of a European tour that will include Britain and Germany. "Since China is a responsible investor country in the long-term on the European financial markets, and in particular in Spain, we have confidence in the Spanish financial market, which has been translated into the acquisition of its public debt, something we will continue to do," he said. "China supports the measures adopted by Spain for its economic and financial readjustment, with the firm conviction that it will achieve a general economic recovery", said Li, who is widely tipped to become China's next premier. Investors have shown deep concern over the annual deficit being racked up by the Spanish government, and its heavy reliance on the bond markets, leading them to demand higher and higher returns. An economic and financial rescue for Spain would be far bigger than anything seen to date in Europe: the size of its economy is twice that of Greece, Ireland and Portugal combined. Spanish public debt rose to 57.7 per cent of GDP at the end of September from 53.2 per cent at the end of 2009. Chinese state media yesterday also quoted Beijing's ambassador to Madrid as saying China was willing to make positive efforts to help Spain with its economic recovery. Li's meetings this week with Prime Minister Jose Luis Rodriguez Zapatero and Finance Minister Elena Salgado would play a key role in financial stabilisation, Xinhua quoted the ambassador, Zhu Bangzao, as saying. Their talks would focus on expanding trade and economic co-operation. The Spanish economy, the EU's fifth largest, slumped into recession during the second half of 2008 as the global financial meltdown compounded the collapse of the once-booming property market. It emerged with growth of just 0.1 per cent in the first quarter of 2010 and 0.2 per cent in the second, then stalled with zero per cent growth in the third.

China will open its US$33 billion high-speed rail link between Beijing and Shanghai in June, state media said on Tuesday, cutting the journey between the two cities in half to less than five hours. The 1,318-kilometre (819-mile) railway, which has cost 220.9 billion yuan (US$33.45 billion) to build, began construction in April 2008 and was originally planned to open next year. Xinhua news agency cited railways minister Liu Zhijun as saying it would start operations ahead of schedule in June this year. The new line is expected to provide a serious challenge to airlines including Air China (SEHK: 0753, announcements, news) , China Eastern Airlines (SEHK: 0670) and China Southern Airlines. The route, connecting China’s capital with its most important economic hub, is one of the most lucrative for Chinese airlines. China’s high-speed rail network has been developing rapidly over the past decade, reaching a total of 8,358 kilometres, the world’s longest. It was expected to reach 16,000 kilometres by 2015, Xinhua cited minister Liu as saying. China planned to invest 3 trillion to 4 trillion yuan in its high-speed rail network between this year and 2015, state media said last month.

CSR aims for No 1 in high-speed railroads in China - A visitor views a video at an industry exhibition in Beijing. China's CSR said it may replace Bombardier to become the world's No 1 transport facilities manufacturer by 2015. China South Locomotive & Rolling Stock Corporation Limited (CSR) is aiming to become the world's top high-speed train manufacturer in the next five years, a top executive said on Monday. CSR, the word's third-largest high-speed train producer, behind Bombardier and Alstom, will focus on the domestic market and tap more overseas opportunities, including those in the United States and Europe, to become No 1 in the high-speed railway manufacturing sector, Zheng Changhong, president of CSR, was quoted by 21 Century Business Herald as saying. Since China rolled out its first high-speed railway between Beijing and Tianjin in 2008, the country has ranked top in high-speed rail for speed and distance. China's latest fast train, the CRH380A, built by CSR, set a world record on Dec 3 by traveling at a maximum speed of 486.1 km an hour during a trial run on the Beijing-Shanghai high-speed railway; as fast as a jet cruising at slow speed. The country is operating a high-speed rail network with a combined length of 7,531 kilometers, the world's longest. By 2012, this figure will almost double to 13,000 km. "CSR has set a target to achieve 150 billion yuan ($22.7 billion) of revenue in the 12th Five-Year Plan (2011-2015), more than double of that in 2010, propelled by the country's massive investment in the high-speed railway sector," Zheng said. "The next five years will also be a peak period in terms of railway construction, with annual investment touching 700 billion yuan," he said. CSR's overseas deals hit $1.24 billion in 2009 and it plans to further explore the overseas market. "CSR's overseas business only accounted for 10 percent of the company's total revenue, and we will raise the proportion to 20 percent," Zheng said. "We will especially target the Middle East, South America and Africa as new markets." China has also stepped up efforts to take a bigger slice of the global market, he said. High-speed rail projects in Thailand and Laos, which China will help to build, are likely to start in 2011. CSR also signed an agreement with General Electric to establish a 50-50 joint venture to manufacture high-speed trains in the US using China's technology. "CSR has successfully absorbed overseas' technology and innovated its own, which will help the company tap the international market at a competitive price," said Yang Hao, a railway transport professor at Beijing Jiaotong University. "The Chinese government also encourages Chinese companies to go overseas and transfer technology and products." Since 2003, China has signed agreements or Memoranda of Understanding for bilateral cooperation on railways with more than 30 countries, including the US, Russia, Brazil, Saudi Arabia, Turkey, Poland and India. According to the government's blueprint, China's railway network will serve more than 90 percent of the population by 2020, with a budgeted cost of 2 trillion yuan.

Price rule ensures 'normal' room rates in Sanya - A visitor swims at a beach resort in Shimei Bay, Hainan. Local authorities said they will step up efforts to ensure that hoteliers abide by price regulations. Hotel room rates in China's beach resort of Hainan island during the upcoming traditional Chinese festival are set to remain stable following recent moves by the provincial government to curb price hikes by hoteliers. The price regulation is an initiative by the local authorities to rebuild Sanya's reputation as the preferred island destination for foreign and local tourists. Hoteliers are not permitted to raise room rates by more than 10 percent from the average rates in Jan 27, 2009. Sanya is a popular getaway destination for Chinese northerners to escape winter. For room rates over 5,500 yuan ($834) per night - excluding those at suites and villas - it has to first gain approval from local authorities, according to a circular issued by the provincial price control bureau. "Skyrocketing room rates have led to a sharp and abnormal fluctuation during last year's Spring Festival, causing extremely negative impact on the image of local tourism. As a result, hotel occupancy rate declined and more consumers filed complaints," the provincial price bureau said on its website. "Tourism is not a once-off deal, but a long term development." By Jan 1, the Sanya pricing bureau had approved room rates of 139 hotels for this year's Spring Festival. The approved room rates are published online with the highest room priced at 6,600 yuan per night. Suites and villas are not included in the regulation. "Unreasonable prices will only push tourists away," said an official at the charging office of the bureau. "Intervention will help the island rebuild its image." The InterContinental Sanya Resort - which has 343 rooms including villas, suites and standard rooms - said it will adjust its standard room rates according to the government's policy. But most of its rooms - villas and suites which are not included in the scope of the regulation - will be rated based on market price. During the Spring Festival, one of its beach villas is priced at 51,000 yuan per night including service fees and a standard room costs about 5,000 yuan per night. Wang, who is InterContinental Sanya Resort's public relations manager, considers it normal for the hotel to raise prices during peak seasons. "It is very natural for hotels to raise its room rates during international games events or a festival," he said. During the upcoming holiday season, local authorities said in a circular that it will enhance its monitoring works to ensure hoteliers abide by the recent price regulation. Taxi and seafood restaurant operators will also be scrutinized during the holiday season to ensure stable prices, the circular added.

Individual Chinese tourists are likely to visit Japan with multiple-entry visas from this summer, local media reported on Monday. The Japanese government has decided to issue the visas with an aim to encourage repeat visitors with high purchasing power, Kyodo News reported. Japan relaxed its requirements for Chinese visitors last July by issuing individual tourist visas to those with annual incomes from 250,000 yuan (about 37,929 U.S. dollars) to 60,000 yuan and for those who own gold credit cards. The move was believed to attract the middle-income Chinese visitors to the country. The statistics from the Ministry of Foreign Affairs revealed that a record 390,000 visas were issued to Chinese tourists to Japan in 2009. Enditem

Hong Kong*:  January 5 2011

A bridge proposed for the West Kowloon arts hub does not involve any reclamation and will enhance harbor features, its design team says. Led by renowned architect Rem Koolhaas, the Dutch team has defended the bridge proposal against harbour protection activists who worry about losing more of the shoreline to reclamation. The bridge is seen as a stumbling block to winning over critics for a design that otherwise has been gaining public support. The bridge, to hover above the Yau Ma Tei typhoon shelter, is designed to alleviate traffic brought by the future cultural venues. It does not actually land on the harbour. The team's lead architect, David Gianotten, said the bridge would not violate legislation protecting the harbour because it did not involve any reclamation and nor would it reduce the size of the harbor. "Instead of taking away the harbour, we give something back," he said. "I think the government also trusts this [legal advice] or else we would be disqualified." Legal advice obtained by the team says the bridge does not create new land and it lands on an existing breakwater and shoreline. As the bridge is designed as a suspended arc with no pillar, vessels can still pass through the typhoon shelter and marine traffic will not be disturbed. Gianotten said the plan gave the district a net gain of water. Due to the provision of a floating black-box theatre and use of water taxis as alternative transport, the plan creates two water inlets of 0.7 hectare. The team calculated that traffic at at least five road junctions - on Jordan, Austin and Canton roads - will worsen critically, and not only during peak hours, when the arts hub opens. But with the bridge, traffic congestion at most junctions will improve. However, Canton Road still faces congestion and the team advises that it be widened. Gianotten, who briefed the selection panel of the arts hub authority on the team's financial model last month, said the bridge was financially viable. He refused to confirm its cost, but said it would be far less than the economic loss from traffic jams. Described as the most creative and realistic design for the arts hub, the Dutch plan does not conform as closely as the other teams' designs to the planning guidelines set by the authority. Dividing the hub into three villages, it proposes fewer cultural venues and sets aside a substantial amount of the budget as endowment for cultural development. Some critics say the plan could spark public controversies and slow down the development process. "If you want to build the arts hub, there will be controversy - or else you will build something mediocre," Gianotten said. "This high ambition that should put Hong Kong on the map of world culture, make it the cultural hub of Asia, without having controversies or stepping on somebody's toes, it's simply impossible. "There will be things in a plan with that ambition that need the government to change. Or else you can't realise an ambition like that." Despite a sharp increase in construction costs in the region, he said the budget of HK$21.6 billion was more than enough. "The only thing you need to do is to spend it wisely. It's an enormous amount of money that has never been set aside for culture anywhere in the world." He said the authority should wisely invest the endowment so revenue from it could cover the rising construction costs. "Don't maximise the profit of developers because it's simply not needed," he said. "You don't have to sell all the houses there with top prices. The thing is feasible, sustainable, in our belief." The authority is expected to announce the winner early this year. The rivals of the Dutch team, Britain's Norman Foster and local architect Rocco Yim Sen-kee - whose design features a large urban park and interconnected open space - have also defended their schemes in the past few months. The latter has gained the support of the Arts Development Council.

Mourning takes priority over the naming of Szeto Wah's successor - A woman weeps as she signs the book of condolence - next to a statue of Szeto - at the Professional Teachers' Union offices in Mong Kok. Szeto Wah refused to name a successor to lead the Alliance in Support of Patriotic Democratic Movements in China. Now it is an inevitable issue for his colleagues. Szeto, known as "Uncle Wah", was re-elected as the alliance's chairman for the 21st time in November, despite his worsening health. He died of cancer at the age of 79 on Sunday. His colleagues say his work will go on. "Szeto's departure as chairman will have little impact on the alliance's work," said Richard Tsoi Yiu-cheung, a vice-chairman of the alliance, "because the core members have taken on his responsibilities for a period of time." Lee Cheuk-yan, another vice-chairman, said the standing committee will meet next Tuesday to discuss the succession issue. However, whether an election will be held during the meeting would be up for discussion, Tsoi said. Lee and Tsoi were widely tipped as likely successors to Szeto. But both said the new chairman should gain wide consensus from the committee members and the public. They also declined to say whether they would run for the chairmanship, saying arranging a funeral and memorial service for Szeto was the top priority at the moment. Another possible candidate would be the chairman of the Democratic Party Albert Ho Chun-yan, but he said in a radio talk show yesterday that he hardly had spare time to lead the alliance on top of his heavy duties as party chair. Meanwhile, a large public memorial service for Szeto was being planned for late February at Victoria Park, where the annual June 4 candle-light vigil is held. "Victoria Park is a very important place in Uncle Wah's life. He had June 4 candle-light vigils for 21 years there. The mass assembly in 1988 calling for universal suffrage was also symbolic for him," said Reverend Chu Yiu-ming, chairman of Szeto's funeral committee. But Chu said the park has been booked for the annual flower show. The funeral committee will meet today to discuss a solution. Three mourning sessions have been scheduled for the evening of January 28 at Tsim Sha Tsui Baptist Church for Szeto's family, pan-democrat friends and teachers. Szeto's funeral will be held the next day at St Andrew's Church, followed by a public memorial service. Political scientist Ivan Choy Chi-keung said the Alliance should not make a rash decision to elect a new chairman. "Szeto's staunch image is irreplaceable and has drawn respect from all walks of life, regardless of political ideologies. "It's better to take time and have in-depth discussion before electing a new leader," said Choy. Hundreds yesterday visited the Mong Kok and Causeway Bay offices of the Hong Kong Professional Teachers' Union, which Szeto founded in 1974, to sign the condolence book. A minute's silence was observed at Queen's College, where Szeto graduated.

A side of Szeto Wah never seen before was revealed yesterday - and the love he bore for a woman who passed away 27 years ago. In an exclusive interview with Cable TV, broadcast for the first time a day after his death, a wheelchair- bound Szeto was seen weeping as he paid tribute at the niche of his beloved together with a handful of his former students. The date of the visit was not revealed, but viewers were told he visited the columbarium containing the ashes of English teacher Wong Siu-yung every year. "Of all my colleagues, she was the closest to me. She was well remembered by students who graduated from our primary school in 1966. We taught them for three years. Miss Wong taught English, and I taught Chinese and mathematics," he told the reporter. When asked whether Wong was the woman he had earlier mentioned as his "soul mate," he nodded and his expression changed. He sighed, coughed and then broke into tears and needed to be comforted by his former students. "If you have someone you loved, even though you and her were separated by heaven, you will also feel fortunate," Szeto said. A black-and-white picture of Wong was shown during the interview. Szeto revealed how he resolved a crisis faced by Wong when three of her students made her cry after threatening to leave school and asked for a refund. Szeto gave them banknotes and asked them to leave immediately. The students were stunned and became docile. Two of them were among those who accompanied Szeto to the columbarium. Szeto earlier revealed he had decided not to marry after his girlfriend died in 1983, aged 41. He also became a Christian at her urging.During the interview, Szeto spoke of his early life and said his father did not have high expectations of him. On one occasion, his father asked what he and his brothers would like to become. His elder brother, and one of his younger brothers, were praised as they wanted to become a scientist and general, respectively. "I was speechless and failed to answer him. My father sighed and said I had no grand vision," Szeto said. Other childhood tidbits he revealed included his nickname "Stupid Guy Wah" as he was often deep in thought.

Hutchison snaps up port, property assets - Shares in Hutchison Whampoa (SEHK: 0013) rose 5.25 per cent yesterday to close at HK$84.40 after the ports, property, telecoms and retail conglomerate confirmed a HK$5.7 billion deal to buy port and property assets from China Resources (Holdings). The acquisitions, expected to be completed by Friday, will see Hutchison Whampoa increase its stake in flagship container terminals in Hong Kong and Shenzhen and strengthen its property portfolio. But the company refused to give details of the size of its new shareholding following completion of the acquisition. Under the agreement, China Resources (Holdings) will sell its stakes in both HIT Investments and Hutchison Ports Yantian Investments. The company, which is the parent of Hong Kong-listed China Resources Enterprise (SEHK: 0291), will also sell its entire interests in Eckstein Resources and Splendid Resources, equivalent to 10 per cent of the issued share capital of the two firms which are British Virgin Islands-registered subsidiaries of Hutchison Whampoa. China Resources (Holdings) has agreed to dispose of its 12.5 per cent stake in Omaha Investments, a Hong Kong-registered Hutchison Whampoa subsidiary. The deal also includes the disposal to Hutchison of unspecified loan interests in these companies and Hongkong International Terminals together with the interest China Resources (Holdings) has at inland lot 444 in Kwun Tong and 9 Chong Yip Street, Kwun Tong. "HIT Investments, Splendid, Eckstein, Hutchison Ports Yantian Investments and Omaha are all subsidiaries of the company, but we would rather not go into details as to how much stake they hold in our ports," A Hutchison Whampoa spokesman said. "Nor do we want to discuss who the other shareholders are and how much stake they hold." Commenting on the deal, a Macquarie Capital Securities analyst said investors viewed Hutchison's acquisition as "quite positive". He added that they viewed the purchase price as "inexpensive and we concur". The analyst said China Resources had previously swapped its stakes in the Hutchison companies between various separate entities, but would now completely dispose of them to Hutchison because these "assets were not a core business". Hutchison Whampoa owned a 53 per cent stake in Hongkong International Terminals and 80 per cent interests in Cayman Islands-registered Hutchison Port Investments and Luxembourg-registered Hutchison Port Investments Sarl, together with an 88 per cent interest in Omaha Investments, according to its 2009 annual report. No details of its shareholdings in the other companies involved in the share and loan deal with China Resources (Holdings) were given in the annual report. PSA International, Singapore's government-controlled terminal operator, bought a 20 per cent equity and loan interest in both of Hutchison Port Holdings and Hutchison Ports Investments Sarl, for US$4.39 billion in May 2006. This came after PSA International paid Hutchison Whampoa US$925 million for a 20 per cent stake in Hongkong International Terminals and a 10 per cent interest in Cosco-HIT in June 2005.

An average of about 100,000 people crowded into Victoria Park daily over the past 24 days to snap up everything from seafood to household appliances at the annual Hong Kong Brands and Products Expo, which closed yesterday.  Burmie Wong Wing-kwan was named Miss Exhibition. Shoppers look for last-day discounts yesterday at the expo. The spending spree saw some 2.4 million local and mainland shoppers, up from last year's 2.29 million, splash out amid inflation fears and a recovering economy. A number of retailers reported an increase in business, mostly because of big-spending mainland visitors. One mainland shopper paid HK$300,000 for bird's nest, ginseng and dried abalone at Tung Fong Hung Foods Company on the expo's first day, while another paid about HK$200,000 for home appliances at German Pool (Hong Kong). Compared to last year's expo, total sales this year were up about 30 per cent at Tung Fong Hung and 20 per cent at German Pool, which recorded HK$1 million in sales on New Year's Day alone. "Most products are a bit more expensive than last year. But I bought some because they are still much cheaper than those sold in the supermarket," said a 40-year-old woman who spent about HK$3,000 in three hours. A Shenzhen shopper at the expo with two friends bought HK$600 worth of snacks. "I came here because I know products are usually cheaper on the last day. The prices are more favourable than in Shenzhen. Besides, locals have to go back to work on Monday, so there'll be fewer people," he said. The last day of the expo usually attracts hordes of bargain hunters eager to take advantage of last-minute discounts as retailers attempt to clear their stock. Arthur Lee, vice-marketing supervisor for Macau Koi Kei Bakery (Hong Kong), said there was an apparent rise in visitors on the last day. The expo is organised by the Chinese Manufacturers' Association of Hong Kong and was held from December 11 to yesterday, with more than 400 exhibitors and 900 booths.

Animal 'unfortunates' find a loving family - Gloria Chan plays with one of her three-legged dogs, Cody. She has adopted a family of handicapped animals comprising five dogs, three cats, four birds and a rabbit. Gloria Chan Nongyao watched her pet Dalmatian Bobo fight for life for a year after having a leg removed because of cancer. But when Bobo died aged 10 in 2006, she started going out of her way to look for pets with problems or deformities that would put off other would-be owners. "We have always been strongly opposed to buying pets," Chan said. "But we started to believe we should adopt the unfortunate ones which have more difficulty finding new owners, such as those which are sick, disabled and don't look appealing." Now her animal family of five dogs, three cats, four birds and a rabbit, includes dogs missing legs and a cat with deformed teeth. Chan, a civil servant, said: "Those animals have been severely emotionally traumatised as many of them were injured or abused by humans. "They looked frightened when they first came to my family. So we needed to take a longer time and give them more love so they could regain their confidence and trust in humans." Of the dogs, two mongrels have each lost a leg due to severe injuries and a doberman had its voicebox viciously removed before it was abandoned. A Persian cat has its teeth badly out of shape due to abuses by a former owner. The three injured dogs were adopted from the Society for Prevention of Cruelty to Animals (SPCA). The rabbit was saved from an owner who was planning to kill and cook it. Even two of the birds have a sad story behind them. Chan recalled: "The two love birds were very ill in their cage in a shop in Bird Street. The shop owner sold them to me at a big discount in order to get rid of them. "I took the birds to the vet immediately and found they suffered from parrot fever." Four-year-old mongrel Wong Jai was her more recent adoption, in August last year. When it was rescued from Diamond Hill Cemetery in June, its right front leg was tightly wrapped with a rubber band that had cut off blood circulation. The leg had to be amputated. Chan, her husband, her mother and maid are kept busy every day taking care of the pets. But Chan said it was all worthwhile. "They make not only good companions for each other, but also for all my family members. They are adorable," she said. SPCA communications manager Rebecca Ngan Yee-ling said animals with disabilities should not be put down as long as they could live a normal life without suffering. "Even with three legs, a dog can live a normal life if it has a good owner. Bear in mind that they are pets and don't need to hunt for food like wild animals," Ngan said. But she reminded owners that because disabled pets were usually not as active as healthy ones, they could easily become overweight.

The largest global port operator Hutchison Whampoa (SEHK: 0013) has lifted its stake in Shenzhen and Hong Kong container ports, the world’s third- and fourth-busiest, through an asset purchase worth more than US$700 million. Hutchison said on Monday that it had agreed to buy port and property assets from partner China Resources (Holdings), parent of China Resources Enterprise (SEHK: 0291), for HK$5.7 billion (US$732.5 million). “China Resources has been looking to divest its port operations, and selling to Hutchison is a win-win situation,” said Credit Suisse analyst Cusson Leung. Hutchison, a ports-to-telecommunications conglomerate controlled by tycoon Li Ka-shing, has gone through the third-generation mobile network investment phase and is now realising cash flow returns. “The most important mission for Hutchison going forward is to seek investment opportunities to deploy its cash,” Leung said. “This is the best way to utilise the resources,” he said, referring to the acquisition of port assets. Shares in Hutchison climbed as much as 3.75 per cent to HK$83, the highest since December 8, but gave up some gains to by the midday trading break, up 3.63 per cent. The acquisition included a 10 per cent stake each in HIT Investments, Splendid Century, Eckstein Resources and Hutchison Ports Yantian Investments, representing all issued shares held by China Resources in these companies. Hutchison would also take a 12 per cent stake in Omaha Investments and the shareholder loans of Omaha and Hongkong International Terminals (HIT) owe to China Resources, it said. Hutchison’s HIT is the biggest container port operator in Hong Kong, managing 12 berths in Hong Kong’s Kwai Tsing Container Terminals. The deal also included land and buildings in Hong Kong’s Kwun Tong, in east Kowloon. The move would allow Hutchison to increase its stake in HIT Investments and some properties, the company said without elaborating.

After saving colleague's life, customs officer inspires others to donate organs - Simon Hui urges people to sign up as organ donors. Customs officer Simon Hui Sai-man, who donated part of his liver to save an injured colleague, was out and about yesterday in Victoria Park promoting organ donation. Hui, who is still on sick leave, acted as an organ donation ambassador for the Department of Health at the Hong Kong Brands and Products Expo, persuading shoppers and passers-by to sign up as donors on the spot. His presence attracted crowds at the department's booth and solicited a number of signatures. Hui said he still does not know when he will be back at work. "Usually, a donor can totally recover two to three months after the operation." Hui donated two-thirds of his liver to his colleague Yuen Wai-cheung in November after Yuen damaged his liver when he fell on metal railings during a raid targeting illicit cigarettes in Tseung Kwan O in October. Regina Ching Cheuk-tuen, assistant director for health promotion, said more than 3,400 people signed up as donors with the department in November - nearly three times the usual number. She attributed the rise to Hui's high-profile donation. "I hope the surge is not flash-in-the-pan public enthusiasm driven by Hui's example," she said. "Over 1,000 people register every month. But the queues for organs are long, with some kidney patients on dialysis for 20 years as they wait. Some patients with heart and lung diseases die before they can get an organ." By the end of last year, more than 68,000 people had signed up as donors with the Centralised Organ Donation Register since it began in 2008. "One-third of relatives object to donating the organs of their loved ones after they die. They might find an organ donation card later, but by then it might be too late. So it's important to register with us," she said. Hui said the operation had not affected his life at all. "I still get regular check-ups, but I'm not taking any medicine now. I think I'll be able to go back to work soon. Most people, when they donate part of their liver, might have to eat less oily food - but I'm vegetarian, so the operation hasn't affected me," he said. Tang Kin-wa was one of those who signed up as a donor yesterday. Tang has been in a wheelchair for three years because of polio and said he was inspired by Hui's donation. "I can understand how patients waiting for organs must feel," he said. "People should cast off their superstitious beliefs about burying their loved one's bodies intact."

Hang Seng up 1.7pc as holiday sales cheer - The Hang Seng kicked of the year with a firm start as robust holiday spending provided a lift for shares of mall and casino operators, as energy stocks extended their strong run.

Hong Kong people generally have a happy disposition these days, with those in Kwai Tsing smiling the most and people in Sham Shui Po the least, a political party has found. However, one in three residents claimed they are unhappy with the transport system, and the Democratic Alliance for the Betterment and Progress of Hong Kong urged the government to act on their concerns. DAB legislator Gary Chan Hak-kan said financial and living conditions are the key factors behind the smiles and the frowns. The DAB polled 1,761 people in 18 districts, including Kwun Tong, Wan Chai and Sha Tin last month. Sham Shui Po residents had the lowest happiness index, with an average score of 2.92 on a scale of one to five, because of financial stress, substandard housing conditions and lack of recreational facilities. "People living here have a lot of financial stress due to their low incomes," Chan said. "Also, many live in old buildings with poor living conditions." Kwai Tsing scored the highest among the 18 districts with a score of 3.67. The party said this was probably related to less traffic congestion and more living space in the New Territories West. "There are many more leisure facilities in the New Territories, and this gives residents a good feeling about their lives," Chan said. The DAB said although the average happiness rating of 3.45 shows Hong Kong people are generally happy, it found that many of them are dissatisfied with the government's transport policy. In the poll, which also asked respondents to list what annoyed them the most, around 32 percent pointed at transportation, 25 percent at community facilities and nearly 20 percent at environmental and hygiene issues. Chan said the rising cost of transportation could explain people's dissatisfaction. "Hong Kong people are living under the pressure of inflation and the government should help them overcome this and improve their livelihood," he said. He also called on the government to build more sports facilities and enhance the quality of people's lives.

CLP Power plans to build a 172-kilowatt solar power system for a drug rehab center on Dawn Island in southeast Sai Kung. This will be the company's second free solar power system for Operation Dawn, the first of which was a 20-kilowatt system involving 100 solar panels built a year ago. The additional system will generate sufficient power for 192 air conditioners of one horsepower, or 746 watts, each. The construction is part of the Dawn Island Drug Treatment & Rehabilitation Center redevelopment plan to add 50 to 70 places for addicts. Construction will begin in June. CLP construction manager Ma Chun-fai did not say how much the project will cost but said the tender will be for 572 solar panels and two windmills. "From January to November last year, we saved about 6,000 kilograms of carbon dioxide emission," Ma said. "With the planned 572 solar panels to be installed by 2012, we expect 70,000 kilograms of carbon dioxide emission can be saved each year." Apart from solar panels, Ma said CLP will host a fund-raising Operation Dawn Orienteering Game on March 19 to raise HK$300,000 for the island's redevelopment. It will also organize a scheme to teach addicts skills required to operate the power system. Operation Dawn general secretary Mamre Lilian Yeh said since the building of the first 100 solar panels inmates are able to use electric fans on hot summer nights. "We hope to raise more funds to redevelop the simple and crude equipment on the island," she said. In the first phase of the redevelopment project, 10 blocks of small old houses will be converted into four blocks of three-story village houses, providing 20 more places. A church, water supply facilities, and a sewage and drainage system will be built. Yeh said about HK$60 million is needed but the rehab center has only HK$9 million so far. Dawn Island currently provides a year's drug treatment for 40 addicts.

Hopes are mounting that the Hong Kong special administrative region's government will lift its ban on mainland maids after a caregiver from the southern boomtown recently received the first Hong Kong work permit. Xu Qingling, 44, became Shenzhen's first Hong Kong-employed domestic helper since 1997 when she got a two-year work permit for a job in a private nursing home for the elderly, said Li Zhongyou, deputy manager of Shenzhen Foreign Enterprises Service Co, the city's only organization authorized for labor export. Li made the comments at a high-profile farewell ceremony last week. Xu, who has worked as a caregiver for five years, told reporters her salary could increase from about 3,000 yuan ($455) to a minimum of HK$4,800 ($617) a month working six days a week in Hong Kong. "The employer will provide me with free meals and accommodation, and every benefit in accordance with Hong Kong's labor laws," she said. Although her employment is not a breakthrough in Hong Kong's labor policy - the rules exclude mainland workers from becoming housemaids but allow a limited number of mainland caregivers - some home economics industry insiders in Shenzhen believe the Hong Kong government has been showing positive signs of change. "The case is meaningful," secretary-general of the Shenzhen Home Economics Association Lu Zhenkun said. "It took just two months for Xu Qingling to complete the whole procedure from application to approval. It would usually take six months, as we have learned," he said. "Hong Kong's labor policy in this field might soon be eased." Lu's association set up a preparatory committee with its Hong Kong counterpart, the General Chamber of Hong Kong Manpower Agencies, in mid-December. More than 70 home services companies from both sides participated. The Shenzhen association will lobby the Hong Kong government to permit mainland maids to enter the special administrative region's huge home services market. The sector is valued at more than HK$13 billion annually and is dominated by Filipino and Indonesian workers. There were 140,000 Indonesian maids in Hong Kong as of October 2010, official figures show. They accounted for about half of the special administrative region's foreign domestic helpers. There were 136,000 Filipino maids during the period, while the remaining 7,000 foreign domestic helpers came from Thailand, Sri Lanka and Nepal. The Hong Kong government's Central Policy Unit recently finished a feasibility study on allowing mainland maids but did not make immediate policy changes. Hong Kong's labor department was in talks with home economics industry representatives two weeks ago but no details of the discussions have been released, the General Chamber of Hong Kong Manpower Agencies said. Hong Kong is about 100,000 domestic helpers short of demand, and the gap will likely increase to 500,000 in five years with the graying of its population, the chamber said. But the proposal was strongly opposed by those worried about illegal immigration from the mainland and increases in extramarital affairs.

Nearly 75,000 government flats for low-income families will be built in the coming five years, according to the housing minister, who also indicated that the average waiting time of about three years for such families to move into the subsidized units would not change. "If we can build about 15,000 units a year and gain back 15,000 flats [from occupants who are moving out], we can achieve the [waiting time] target of around three years," the Secretary for Transport and Housing Eva Cheng said at a Legislative Council housing panel meeting yesterday. The housing bureau forecast that about 74,600 of the public rental flats would be built by 2015. This includes the completion of about 13,800 flats this year and 11,200 flats next year. About 90 per cent of these flats will be located in urban or suburban areas, it said. At the meeting, some legislators expressed concern about whether there would be sufficient land supply for the housing. Sophie Leung Lau Yau-fun, lawmaker for the textiles and garments functional constituency, asked if the government would consider reclaiming land. Cheng said the government would explore the feasibility of reclaiming land near Tung Chung on Lantau Island and study the possibility of another station on the Tung Chung MTR line. In response to concerns from Liberal Party lawmaker Vincent Fang Kang about the increasing number of single younger people queuing for government flats, the housing minister said the surging demand had brought added pressure. "I agree that this creates pressure and has to be dealt with," Cheng said. She said about one-tenth of the public rental flats were allocated to single people under the age of 60. For those in urgent need, their cases are considered under the Compassionate Rehousing scheme. There were about 137,000 applications on the waiting list for public rental flats at the end of September, government statistics released last month showed. Of these, over 41 per cent, or 57,000 applications, were filed by single people under 60, compared with 75,000 family applications and 5,000 elderly one-person applications. The bureau also said there were about 5,600 households classed as under-occupied, where those living inside had over 323 square feet per person in living area and were without elderly or disabled occupants. Director of housing Duncan Pescod said the department wanted to resolve 3,000 cases of under-occupation in the next two years, involving flats where there were no elderly or disabled tenants and the living area exceeded 366 sq ft per person. Under the Housing Authority's standards, single occupants of government flats should have less than 269 sq ft, while two people no more than 377 sq ft.

Green themed wedding dress decoration show held in Taipei - The theme of the wedding dress decoration show was on low carbon and eco-friendly decorations for wedding dresses.

Macau gaming revenue soars 58pc to record US$23.5 billion - Casino revenue in Macau soared 58 per cent last year to a record 188.34 billion patacas (US$23.51 billion) year on year, bolstered by a flood of gamblers from the mainland on continued strength in the Chinese economy. December gambling revenue jumped 66.4 per cent to a record monthly high of 18.883 billion patacas, the Macau Gaming Inspection and Coordination Bureau said on its website. In recent years, the once sleepy city has metamorphosed into the world’s largest gambling hub, with the latest numbers pushing it even further ahead of rival Las Vegas. The stellar growth in revenue last year contrasts with 10 per cent growth in 2009 – even without the relaxation of visa restrictions on mainland visitors and a recent reminder from China’s premier Wen Jiabao for improved regulation and diversification of Macau’s economy away from gambling. Some analysts said discretionary spending by affluent Chinese would continue to power Macau’s gambling sector – the only place in China where casino gambling is legal – to new heights this year despite global economic storm clouds, although growth could moderate somewhat. “The absolute level of the market is massive so it’s hard to sustain that level of growth,” said Aaron Fischer, CLSA’s head of Asian gaming research, who expects Macau gambling revenue growth of 20 per cent this year and 25 per cent next year. Janet Brashear of Bernstein research expects 17 per cent market growth this year but noted in a recent report that limits on new gambling table capacity, a reluctance to approve new casino developments and possible tighter regulations on the junket operators that run lucrative VIP rooms, could eat into profits. “There could easily be a 10 per cent swing in either direction,” Brashear wrote. “Government and economic variables abound however, which could alter the growth rate dramatically in either direction.” With a skyline already crammed with neon edifices, two new integrated casino resorts will be finished within 18 months on the Cotai strip, modelled as Asia’s answer to Vegas’ neon alley. Macau’s six casino operators include US giants Las Vegas Sands via Sands China and Wynn Resorts through Wynn Macau, along with homegrown players Galaxy Entertainment Group (SEHK: 0027) and SJM Holdings, and joint ventures Melco Crown Entertainment and a casino jointly operated by MGM Mirage.

 China*:  January 5 2011

Foxconn Technology Group, the world's largest electronics manufacturing services provider, has been given leave to appeal against a court ruling in its long-running legal battle with mainland rival BYD. In a decision handed down on December 31 at the Court of First Instance, Deputy High Court Judge Louis Chan Kong-yiu said leave was granted because "the appeal by the Foxconn parties has a reasonable prospect of success". This latest twist in the acrimonious dispute is a setback for BYD, whose handset-manufacturing business competes directly with Foxconn, after claiming it suffered damages as the Taiwanese group conspired to cause harm to its business. In October 2007, three Foxconn units - Shenzhen Futaihong Precision Industry, Hong Fu Jin Precision Industry (Shenzhen) and Foxconn Precision Component (Beijing) - brought a joint action in Hong Kong against BYD and its six subsidiaries for breach of mainland law against unfair competition. BYD and its subsidiaries, in response, brought a counterclaim last year in Hong Kong against locally listed mobile-telephone maker Foxconn International Holdings (SEHK: 2038), Shenzhen Futaihong, Hong Fu Jin and their Taipei-based parent firm Hon Hai Precision Industry, whose subsidiaries and related operations are known under the Foxconn Technology Group trade name. It was claimed by BYD, in which US investor Warren Buffett's Berkshire Hathaway has a 10 per cent stake, that the Foxconn group had, since 2006, been unlawfully interfering with its business to damage the company. BYD alleged the group "embarked upon a course of conduct of procuring and using false and fabricated evidence, or evidence unlawfully obtained, to launch proceedings" and to publish alleged defamatory statements against it. On August 24, Chan dismissed Foxconn's motion to strike out certain allegations made by the "BYD parties" in its counterclaim. He said the BYD plea "should be allowed to develop and be decided by the trial judge who would be able to hear all the evidence of the parties". In his latest ruling, Chan again stressed the matter should proceed to trial. But, the BYD parties may be found liable to Foxconn if they "fail to satisfy the court that such evidence [used by Foxconn] is wrongful or wrongfully obtained, and hence should not be relied on".

Taiwan has decided not to deploy a new powerful rocket system on outlying islands near the mainland, deeming it unnecessary in the context of fast warming ties with Beijing, local media reported on Monday. Taiwan is scheduled to start mass-producing the multiple launch rockets this year after having spent more than a decade researching the system, called Ray Ting 2000 or “Thunder 2000”, the Taipei-based China Times said. But given the recent detente, the defence ministry has decided not to deploy it on Kinmen, a fortified island group just six kilometres (four miles) from southeast China’s port city of Xiamen at the nearest point, it said. “Since Taiwan is unlikely to fire the first shot under the circumstances, it does not make sense to place such attack weapons on the offshore islands,” an unnamed military officer told the paper. The paper said the ministry plans to produce more than 50 systems at a cost of 14.5 billion Taiwan dollars (US$475 million). The weapon, which will replace another Taiwan-made rocket system, is considered particularly useful in neutralising enemy amphibious craft before they reach the beach. It is capable of launching 40 rockets with a range of up to 45 kilometres within a minute, covering an area the size of 80 football pitches. Ties between Beijing and Taipei have improved markedly since Ma Ying-jeou of the mainland-friendly Kuomintang party became president in May 2008, promising to improve trade with and tourism from the mainland. However, despite more than 60 years of separation, the mainland still considers the island part of its territory and has vowed to take it back even if it means war.

Cities vie for centenary honors but Beijing trumps - Four cities on the mainland are competing for the honour of leading celebrations of the 100th anniversary of the Xinhai revolution - Wuhan , Guangzhou, Nanjing and Shanghai. Gaining the title would bring prestige and commercial benefits and attract thousands of visitors during the centenary year. Leading the race is Wuhan, the city where troops of the Qing dynasty mutinied on October 10, 1911, and captured the palace of the provincial governor. It was the spark for the fire that brought down the dynasty. The city started preparing for the anniversary in 2008 and is spending 20 billion yuan (HK$23.46 billion) on projects related - more or less - to it. They include a Xinhai revolution museum, tower and park, a cultural district, restoration of buildings connected to the rebellion, a 10-part television documentary, a four-volume history and real estate and commercial projects. The four-storey museum, costing 334 million yuan, is due for completion in April. The city regards these projects as its equivalent of the World Expo in Shanghai and the Asian Games in Guangzhou; but scholars have questioned whether such enormous spending is justified, especially on property projects that have no relation to the anniversary. "Is the government's intention to remember a revolution or start another one?" said one. Guangzhou also has a good claim to be the birthplace of the revolution, since many of Sun's comrades-in-arms were Cantonese and 130 of them staged a failed uprising there in April 1911 - 72 are buried in a cemetery on the city outskirts. The city government is spending 200 million yuan on a museum to the Xinhai revolution. Nanjing argues that it was the city where Sun took the oath of office on January 1, 1912; he made it the capital of his new government and is buried there. In June last year, it unveiled in the city centre a statue of Sun; in August, it held a major seminar with 140 scholars from around the world on Nanjing's role in the history of Republican China. For its part, Shanghai argues it was a center of revolutionary activity - since its foreign concessions were off limits to the police of the Qing dynasty - and the place which organised the armies of Jiangsu and Zhejiang to unite and capture Nanjing for the new government in December 1911. But, in the end, the central government refused to award the title of "centenary capital" to one city, saying that the Xinhai revolution was too important an event to be limited to a single place. It said each city could celebrate the anniversary with appropriate events but that Beijing would be the most important venue.

Taiwan is expected to lift its decades- old ban on visits by individual mainland tourists from April in another sign of warming ties, officials and media said. Mainlanders are allowed to travel to the island only in groups at the moment as authorities are concerned they might otherwise overstay their visas and work illegally. "We're ready for the further opening measures," an official at Taipei's China policy decision-making body, the Mainland Affairs Council, said. The Taipei-based China Times said that up to 500 residents of Shanghai and Beijing would be permitted to travel to the island each day on a trial basis. "The two sides have reached a consensus on the long-anticipated policy, with the measures starting around Tomb Sweeping Day," which falls on April 5, the Times said, without giving a source. Solo tourists would be allowed to stay in Taiwan for up to 15 days. Chen Chiung-wen, an official at Taiwan's Tourism Bureau, said she expects the new measures soon. The daily quota of mainland visitors was increased from 3,000 to 4,000 from Saturday, according to an agreement reached in Taipei last month. Mainland tourists made 1.6 million visits to Taiwan last year and the figure is expected to rise to two million this year.

China's 56 leading hi-tech industrial zones have led the country's industrial innovation, playing an important role in the nation's social and economic development, a government statement said Saturday. The statement came from the Ministry of Science and Technology's Torch High Technology Industrial Development Center. The center is in charge of China's "Torch Program", which started in 1988 to boost Chinese industrialization through advanced science and technology. The statement summarized the achievements of the 56 state-level hi-tech industrial zones, which are home to over 50 percent of China's hi-tech firms and provide employment to over 8 million people. With over 700 research centers and laboratories, research and development expenditure was more than one-third of the national R&D budgets at the zones. Some 16,020 patents were granted to zone-based firms, accounting for nearly 50 percent of all patents registered to enterprises in 2009. The hi-tech zones' overall output reached 2.31 trillion yuan (350 million U.S. dollars), or 6.7 percent of 2009 GDP. Estimated at 284,000 yuan (43,083 U.S. dollars), their GDP per capita was more than 10 times higher the average Chinese person (3,744 U.S. dollars), exceeding that of Japan (39,738 U.S. dollars), according to World Bank 2009 data. Half a tonne of standard coal energy-equivalent was consumed for every 10,000 yuan of GDP output in the zones, less than half the national level. Numbers for land-use efficiency, investment density and input-output ratios were also high in the zones. The statement called on all hi-tech industrial zones to contribute more to China's economic restructuring and development pattern adjustment.

Giant pandas enjoy fun time in snow - Pandas play in snow at Qinling Giant Panda Research Center in Foping Natural Reserve of Foping County, northwest China's Shaanxi Province, Jan. 2.

Hong Kong*:  January 4 2011

Sun Yat-sen's granddaughter improving after head-on crash - The condition of Nora Sun Sui-fen (pictured), a granddaughter of the late founder of the Chinese republic Dr Sun Yat-sen, has improved slightly after more than eight hours of emergency surgery. Doctors said Sun, who was in a coma after a serious car accident in Taipei on Saturday, would need close attention until today before they could list her condition as stable. Sun, 72, suffered serious injuries to her chest and abdomen after her car was hit by another car coming from the opposite direction. The accident happened at 7.40am as Taiwan celebrated the centennial anniversary of the Republic of China, founded in 1911 by Sun's grandfather. A friend was taking her to Taoyuan International Airport for a Hong Kong-bound flight when a car driven by a 19-year-old university student went out of control and rammed into a crash barrier before running directly into Sun's car. Sun's condition was critical and some reports said her heart had stopped when she was taken to the nearby Shin Kong Wu Ho-su Memorial Hospital for emergency treatment. Doctors said, however, that she was only in a deep coma as the result of the multiple traumas, lacerations of the liver and massive internal bleeding. "Her coma condition has improved from Condition 3, which is the worst, to Condition 9, and her eyes can respond to light, indicating there is a marked improvement in her brain," said Dr Chen Ching-lin, the hospital's chief of surgery. She was also able to react to some simple directions, such as moving her eyes and fingers. Chen said the surgery, which required a massive blood transfusion, was to repair her aorta and later her chest trauma. Taiwanese President Ma Ying-jeou expressed regret over the news and said the Presidential Office would be in close contact with the hospital and take speedy action when needed. Like her grandfather, Nora Sun herself is a legendary figure. She was born in Shanghai, and her mother was the second wife of Dr Sun's sole son, Sun Fo. Sun Fo, who died in 1973 in Taiwan, had been premier twice and legislature Speaker once when the Kuomintang still controlled China. He was head of the government's civil-service branch, the Examination Yuan, when the KMT fled to Taiwan after losing the civil war in 1949 to the Communists on the mainland. Nora Sun spent her youth in Taiwan and at 17 became the youngest ever flight attendant on the island. She quit the job two years later to marry an American pilot, with whom she had three sons. Nora Sun attended university - along with her eldest son - when she was 39. She graduated four years later and worked for the US foreign service, becoming a commercial charge d'affaires at the US embassies in Paris, Shanghai and Guangzhou. She retired in 1994 and since then she has lived in the US, Hong Kong and Shanghai.

Friends recall the passionate man who remained true to his ideals - I first met Szeto Wah in the late 1980s when he gave a lecture to a group of first-year students at Chinese University on Hong Kong's constitutional development. It was organised by the university's student union amid heated debate on the post-1997 constitutional set-up. Szeto was helping draft the Basic Law at the time. In the lecture he spoke passionately of the need to fight for democracy and the early introduction of direct elections. I asked Szeto, who was already one of the leaders of the city's pro-democracy movement, how the goal could be achieved given Beijing's determination to st