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Year of the Rabbit - February 3 2011

Hong Kong*:  March 1 2011

Hong Kong has become the favored destination for Japanese firms that wish to go public, said international accounting firm RSM Nelson Wheeler. And despite the Singapore's aggressive plans, the Lion City does not pose any threat to the SAR. "Singapore is too far away from Japan, while Hong Kong - being the center of Asia - is also the gateway to China," said managing director Takafumi Otsuka. "It is becoming more attractive for foreign firms to tap the large booming mainland market through the SAR." Otsuka said a recent seminar held in Japan about listing in Hong Kong attracted more than 200 companies. Many of the firms eyeing a listing in Hong Kong are still at the planning stage with their floatations, he said. It usually takes about a year to list over here, compared to at least two years to float on the Japanese exchange, he said. "Many companies are tired of the lengthy preparation work required by conservative Japanese regulators," said Otsuka. And due to lower profit- to-earnings ratio they can raise much less money in Japan than in Hong Kong, he added. Given the same amount of pretax revenues, the market price for a stock in Hong Kong can be double that in Tokyo. "The tax rate is as high as 40 percent in Japan, compared to just 16 percent in Hong Kong," said Otsuka. With tight regulations usually making it difficult for foreign firms to set foot in the mainland, Hong Kong is the best choice for them, he added. Also the processing fees for an IPO in Hong Kong is much higher than in Japan, due to the difference in accounting systems. "Beside accounting, Japanese firms also need the services of a legal firm to go public, which is not required in Japan," said Otsuka, adding that companies usually spend quite a lot on translation and interpretation services. Two Japanese firms plan to go public in the SAR this year. Clothing retailer Baroque Japan aims to raise up to HK$2.34 billion and Internet financial services provider SBI Holdings plans to tap up to HK$3.9 billion.

The rush is on to buy a home despite the attempt to reduce the heat in the local property market with last week's budget promise of more land for building. Weekend sales moved smartly at new projects, with all 250 flats sold at Festival City 2, a Cheung Kong (0001) development in Tai Wai. Buyers can obtain a second mortgage of 20 percent of the price. That is interest free for the first two years. Over in Mid-Levels at CentrePoint from Henderson Land (0012), 60 flats out of 78 sold over the past two days at an average HK$16,500 per square foot. Sales now total around HK$650 million. More than 3,000 people visited show flats in two days, and "we're very satisfied," said Thomas Lam Tat-man, Henderson's general manager of sales. "We may put more flats on the market in the next few days." The secondary market is also hot. "Almost half of sellers are raising prices now as they do not feel any impact from the budget," said Jeffrey Lam, a Hong Kong Property agent at North Point's City Garden estate. Increases average 3 percent, he said, but "prices are still acceptable for a lot of buyers as many are end-users." Hikes of around 1-2 percent are seen at South Horizons on the south of Hong Kong Island where, according to Ricacorp, weekend deals numbered 58. "Transaction volume is quite good as there are so many new projects," said Ricacorp research head Patrick Chow Moon-kit. "Prices in the secondary market rose 5-10 percent after the budget." Elsewhere, Sino Land (0083) plans to put four residential projects and three commercial-residential projects on the market this year. These are1 Broadcast Drive, Pak Shek Kok at Tai Po (three projects), 270 Cheung Sha Wan, West Kowloon and Aberdeen.

The government is to investigate whether short-lived arts chief Graham Sheffield breached his contract by leaving Hong Kong to take up a new job in London. Chief Secretary Henry Tang Ying- yen - who is also chairman of the West Kowloon Cultural District Authority - said yesterday the government will study Sheffield's contract terms when he was appointed chief executive of the authority to see if there can be "any control over his post-resignation work." Sheffield, 58, was named to the Hong Kong post in March last year. He started in August and resigned in January citing ill health. Last Thursday, Sheffield was appointed the British Council's new director for arts in London. He takes up his new job in May. Online advertisements showed applications for the British Council job closed on December 3 - and Sheffield first said he wanted to leave the authority on December 15. "The health reasons cited [by Sheffield] at that time are based on his doctors' notes," Tang said. "At that time, we did not doubt whether the doctors' judgment was right or wrong." On suggestions the authority may have been cheated, Tang said: "We accepted his resignation based on his health reasons, his intention to resign and the doctors' notes." Sin Chung-kai, chairman of the authority's remuneration committee, said it has discussed requiring former workers to seek approval from the board before taking up a new job within six months of departure. Tanya Chan Suk-chong, a member of the Legislative Council's joint subcommittee to monitor the implementation of the West Kowloon Cultural District Project, said: "It seems the ill- health reason cited is no longer valid. It has raised doubts as to whether there is any management problems within the authority. "It feels like being cheated. It remains unknown whether someone deliberately cheated us or the board had got to know about it [Sheffield's new job] but did not tell us." Entrepreneur and West Kowloon board member Allan Zeman - who last month said the reason for Sheffield's departure was health-related - yesterday said he understands why some people feel cheated. On Saturday, Zeman said: "I could understand some people or many people in Hong Kong would feel cheated. I do know that he was not well. Probably if I hadn't talked to him, I would feel the same way." A source said 40 to 50 applications to succeed Sheffield have been received.

Hospital Authority chief executive Leung Pak-yin says that a special night-shift allowance and part-time doctors will help deal with the current manpower shortage. The authority is also in discussions with the Public Doctors Association and the Frontline Doctors' Union about creating more posts for promotions. It expects a solution to be ready to click in by April. This comes after doctors threatened a sit-in when talks to ease staffing problems in public hospitals fell through. "I don't think they're asking for money - I think they're asking for recognition," Leung said. But pay issues will also be addressed in fresh talks starting today. Staff will be shuffled internally as a short-term measure, but Leung sought to assure people that emergency services will not be affected. Still, people seeking non-emergency procedures and attention at specialist outpatient clinics might face longer waiting times - at least until July when new medical graduates join the system. Leung was speaking at an organ-donation event at Prince of Wales Hospital where recipients got to thank donors and their families anonymously by writing notes and pasting them on a board. The president of the Hong Kong Society of Transplantation, Philip Li Kam-tao, said 13 people in Hong Kong had heart transplants while three children received kidney transplants in 2010, which was the highest number yet in a single year. Among the children to benefit was nine-year-old Oscar Chan Chun- sin, whose kidneys were damaged when he suffered an infection at 18 months. He needed peritoneal dialysis for years. Said his mother, Annie Hu Yajing: "For a long while I was constantly worried about Oscar damaging the tube and infections at the tube site." A kidney donation was offered in September after Oscar had been on the waiting list for six years. Oscar's life has changed remarkably since the operation. He can even play football with his school pals. Contractor CY Yuen, 50, gave his wife a kidney in a four-hour surgery last year. The couple, who have been married 25 years, have five children. Mrs Yuen said: "Every day, I feel as though I'm carrying a piece of my husband in me. I'm very thankful for what he did because it has given our family a new lease of life." Raymond, in his late 50s, had a congenital heart defect discovered 10 years ago. Although a donation was available he backed out at the last minute for fear of side effects. But his condition deteriorated and he said yes in June last year when another heart was available. "Some have said that people show personality changes after a heart transplant," he said. "All I feel is a sense of gratitude to the family that gave up a part of a loved one so someone could have a better life."

 China*:  March 1 2011

Aviation sector has high hopes for next 5 yrs - 45 airports will be built, 700 planes to join the fleet as blueprint drafted. China plans to invest 1.5 trillion yuan ($228.2 billion) in the aviation industry, building 45 airports and adding 700 new commercial planes, over the next five years to meet surging demand, a top regulator said on Thursday. The figure is half a trillion yuan more than that for the previous five years, Li Jiaxiang, head of the Civil Aviation Administration of China (CAAC), told a news conference. By 2015, the country is expected to have 220 commercial airports and its fleet size will expand to more than 4,500 planes, according to Li. "The ability of the civil aviation sector to serve the national economy and the public will be further strengthened," Li said. The country currently has 175 commercial airports in operation and keeps more than 2,600 aircraft in its fleet, he said. In the next five years, the commercial aircraft fleet, which stood at more than 1,600 in 2010, will expand by some 700 planes, a scale similar to the growth in the past five years. The number of commercial airports will increase by 45, mostly regional, in the next five years, compared with the 33 new airports completed in the past five years. Despite concerns over losses reported by many regional airports, the construction process will be speeded up over the next five years, he said. Li admitted that 130 out of the 175 airports reported "a rather small amount" in losses last year, totaling 1.68 billion yuan. But "regional airports are public infrastructures, and their construction should not be profit-driven", he said. Besides, regional airports have brought large economic and social benefits to local communities, which "is why many local governments are still willing to subsidize their operations, despite losses", he said. The airport in Huai'an, Jiangsu province, which opened for operations in 2010, has attracted 61 foreign-invested companies to settle in the city, while an airport in remote Tengchong county in Yunnan province boosted local tourism, with the county's GDP rising 56 percent since it opened in 2009. Also, after a magnitude 7.1 earthquake shook Yushu in Qinghai province, killing 2,687 people, the local airport played a major role in disaster relief. Airlines transported nearly 3,000 injured people for treatment and prevented the death toll from rising further, he said. As proof of the enthusiasm of local governments to develop civil aviation, he said top officials from 29 provinces and regions visited the CAAC last year to discuss building airports and opening new routes. Li Lei, a civil aviation analyst at CITIC China Securities, said the increase in the number of airports will also benefit the entire industry. "With more airports built, it will drive market demand for civil aviation." Besides building more airports and increasing the fleet, the CAAC will also take measures to strengthen airline competitiveness in the international transportation market over the next five years, Li Jiaxiang said. He cited statistics saying that foreign airlines are gaining an upper hand in the country's lucrative international travel market. Statistics showed domestic airlines account for only 46 percent of China's international passenger market and less than 30 percent of China's international cargo market. The administration will boost the industry's overall strength by nourishing large-scale aviation hubs and super-network carriers, he said, without elaborating. Some analysts have expressed concerns that State-controlled airlines are too well-supported and resourced, but Li noted that the CAAC encourages the development of privately owned airlines as well. China has 43 airlines - eight privately owned or controlled and 35 State-controlled. Of these, 16 are joint ventures. The CAAC will soon accept three applications for establishing private airlines, he said. Demand for air traffic is booming as the world's second-largest economy roars ahead on near double-digit growth and increasingly affluent Chinese people travel more frequently. A total of 267 million air passenger trips were recorded in China in 2010, up 15.8 percent from the previous year, official figures showed. Domestic airlines reaped profits totaling 35.1 billion yuan in 2010, accounting for 60 percent of the world's total, CAAC statistics showed. The rapid development has benefited foreign aviation industry players as well, amid a huge demand for aircraft and airport facilities, according to Li. Of the 200 billion yuan in commercial deals China made in November when President Hu Jintao visited France, 104.1 billion yuan was spent on civil aviation-related goods. Also, when President Hu visited the United States in January, $19 billion out of the total $45 billion in commercial deals was spent in the aviation sector.

The French retailer Carrefour SA resells products bought from its suppliers to intermediate distributors at a discount in China to inflate sales figures, according to a report on the news portal on Friday. The retailer also increases the charges for promotional and management activities to its suppliers, to make up for losses incurred in the reselling process, the report said, citing former Carrefour store managers in Shanghai. These activities account for between 5 and 15 percent of sales at Carrefour stores in Shanghai, the report said, citing a former store manager. The people quoted in the report were not available for comment on Friday. Carrefour earned 36.6 billion yuan ($5.6 billion) in sales in 2009, according to a report last year by the China Chain Store & Franchise Association. That means, at the lowest rate of 5 percent, about 900 million yuan of the retailer's sales in China in 2009 came from the practice of reselling. The products resold by Carrefour are cheaper than those on the market, resulting in a situation where distributors make a profit at the expense of Carrefour's suppliers, the report said, citing a Carrefour supplier. Yu Guo, a public relations official with Carrefour in Shanghai, refused to comment on the NetEase report. The practice, if verified, casts doubt over the supermarket's rapid sales growth in China, which is among the fastest in the retailer's worldwide operations. Carrefour's sales grew 12.5 percent in China in the fourth quarter of last year, more than double the company's overall growth of 5.1 percent.

Classy 'hourglass lunch' at Shangri-La - Michelin-star Chef de Cuisine Fabrice Giraud works at the kitchen of Jade 36 in Pudong Shangri-La Shanghai. A business lunch can be both efficient and epicurean, especially when one lunches at the summit of Shanghai, rubbing shoulders with the sparkling skyline and gazing down at the Huangpu River. Jade on 36 Restaurant in the Pudong Shangri-La today launches business lunch from Monday to Friday, 12pm to 2pm. Helmed by Michelin-star Chef de Cuisine Fabrice Giraud, Jade on 36's fresh concept of "lunch reinvented" offers a unique set of experiences. The moment the guest is seated, a one-hour hourglass on the table is turned over to keep time in this culinary journey. Service is prompt. Guests can be out in an hour, when the hourglass empties - or they may well wish to linger. Lunch offers the best of French classics given a contemporary twist. A smorgasbord of appetizers on display in the open kitchen tempts the palate - guests go into the immaculate kitchen to make their buffet selection and are welcome to chat. The main course is selected from the menu. An array of desserts on a trolley gives a sweet ending to the meal. "They are all homemade, featuring classic French cuisine, from which guests can taste the true flavor of France," says Chef Fabrice. The menu is refreshed on a weekly basis. Diners with a limited time for lunch can experience an innovative lunch concept that combines culinary art, fashion, stunning views, wines and Champagne and timely service. It starts with a rich selection of appetizers, ranging from salads, soups and cold cuts to fresh oysters, shrimp, foie gras. But what makes it special is that diners are free to venture into the kitchen to choose their starters. And they may have a chance to chat with the welcoming chef or cooks, if they are not too busy, of course. Appetizers also include cured salmon with herbs, prawns with cocktail sauce, octopus salad, onion tart with Gruyere cheese. "It's in a buffet style. Guest can come to the kitchen to get them freely," the chef says. Though the appetizers are spectacular, the main course is the true highlight. Diners can choose from the roast beef sirloin and baked potatoes from the trolley; cauliflower gratin with béchamel sauce and Parmesan; seared cod with anchovy butter and zucchini; duck Magret pan-seared, with corn pancake and cherry sauce; and roast halibut and peas wasabi mousseline served with orange sauce. Then the dessert trolley arrives, offering fruit tarts, chocolate quenelles, cheese cake, Paris-Brest and other favorites. The unique flavors from the kitchen are paired with an extensive collection of wine and Champagne from Jade on 36's impressive cellar to celebrate the closing of business deals or toast to success.

Dealers discuss oil drilling equipment at an exhibition in Beijing. The growth of China's machinery exports is expected to slow in the coming years. Machinery exports growth seen slowing - The growth rate of China's machinery exports will slow during the 12th Five-Year Plan (2011-2015) because of yuan appreciation and rising costs, said Cai Weici, the vice-president of the China Machinery Industry Federation (CMIF) on Friday. "We will make some progress in high-end machinery exports in the coming years but for now, we will continue to focus on the middle and low-end markets in our overseas business," he said. China's machinery exports were $258.5 billion in 2010, up 32 percent compared with 2009, while imports were $255.3 billion, a rise of 41 percent from a year earlier. The average annual export growth during the 11th Five-Year Plan (2006-2010) was 20 percent, but Cai said it is impossible for the country to maintain such a growth momentum during the next five years. He said the industry will see slower growth in the coming five years both in overseas and domestic markets, but such a slowdown would aid sustainable development of the industry. The yuan's continued appreciation has added to exporters' difficulties, including those in the machinery sector. Meanwhile, the increasing price of labor and raw materials such as coal, oil, and electricity will add to the cost of machinery production, which may affect the industry's profits, the CMIF said in a statement. Cai also estimated that industry output is expected to register average growth of a 12 percent annually. The industry has seen annual output increase by an average of 28 percent during the last five years, 16 percentage points higher than the target set for the 11th Five-Year Plan. "It was expanding at a super-high pace, but we are now moving towards a steady developmental stage," said Cai. According to the CMIF, more of the country's machinery production now caters more to the domestic market than in previous years. In 2010, domestic sales increased to 85 percent from 80 percent of total sales in 2005. However, because of the strengthening of the yuan against the US dollar and increasing imports of foreign-brand products, the industry's competitiveness has been weakened. Zhao Xinmin, senior economist at CMIF, told China Daily that in some important high-tech fields, the market is being occupied by foreign companies, presenting a challenge for domestic producers. The trade surplus of the machinery industry in 2010 decreased 80 percent year-on-year compared with 2009, according to CMIF.

Fidelity plans to enter the mainland via trust venture - Mutual fund giant Fidelity is actively preparing to enter the Chinese mainland by securing a trust company license in one of the world's fastest-growing asset management markets, a person familiar with the situation said on Wednesday. Fidelity, which a few years ago dropped its venture talks with China's Hua An Fund Management Co, is now seeking to invest in a Chinese trust company, which will enable it to launch products on the mainland, said the source, who declined to be identified because he was not allowed to speak to the media. A spokeswoman at Fidelity International declined to comment. "Many foreign and domestic investors are seeking a trust company license, which will enable them to conduct a wide range of finance-related businesses," said Wei Tao, Beijing-based analyst at China Securities Co. Subject to less regulatory scrutiny than banks or mutual fund houses, Chinese trust companies are allowed to launch a range of products to invest in stocks, bonds, infrastructure and real estate projects. Some overseas banks including Morgan Stanley and Macquarie Group Ltd have already set up Chinese trust joint ventures, in which a single foreign institution can hold up to a 20 percent stake. The sector is attracting a new wave of foreign investor interest. The Financial Times reported on Wednesday that JPMorgan Chase & Co, in addition to Fidelity, was preparing to apply for a Chinese license. Fidelity is hoping that by investing in a Chinese trust company, it can launch products under China's Qualified Domestic Institutional Investor scheme, which channels money into overseas capital markets. Fidelity's star manager Anthony Bolton is well known in China. He frequently makes speeches at financial conferences on the mainland, and books promoting his investment philosophy are popular at Chinese bookstores. Last week, Bolton's Fidelity China Special Situation Fund wrapped up a share offering, raising its targeted proceeds of 166 million pounds ($269 million), more than a third of which came from new investors. The fund has risen about 8 percent in net asset value since its launch in April 2010.

China has set a lower average annual economic growth target of 7 percent for 2011 to 2015, Premier Wen Jiabao has revealed. Leaders of the world's second-largest economy will also take steps to keep inflation in check and stabilize home prices, making these top priority in the coming years. "During the 12th five-year plan, we have set our economic growth at 7 percent [a year]," Wen said yesterday at an online forum ahead of the National People's Congress and the Chinese People's Political Consultative Conference plenary sessions. This is because the government will focus on improving the quality of economic growth and benefits and use the results of development on people's livelihood, he added. So growth as outlined is lower than the 7.5 percent target for the past five years and significantly below the average annual gross domestic product growth - 11 percent - for 2005-10. Market concerns have arisen as Beijing is expected to launch more tightening measures that could mean a hard landing of the economy. Economists forecast that real GDP growth will be 8-9 percent in 2011 to 2015. A slightly lower annual GDP growth target in 2011 to 2015 is "a good thing" as it could help intensify the economic structural adjustment and enhance the quality of economic growth, said Citi Investment Research economist Shen Minggao. Besides, he added, a lower GDP growth for the next five years could help maintain long-term stable economic growth. Daiwa Capital Markets chief economist for Greater China Sun Mingchun agreed but added that real GDP growth will still be definitely higher than the targeted 7 percent and be around 8-9 percent instead from 2011 to 2015. Meanwhile, Wen said he is still confident of achieving his goals of stabilizing home prices and curbing inflation by controlling prices. "Having seven successive years of bumper harvests, we have ample [grain] reserves, plenty of raw materials and abundant foreign exchange reserves, which all offer favourable conditions for us to deal with price rises," Wen said. He also said the government will be resolute in curbing speculative investments, which can lead to higher home prices. "We will use economic and legal measures or even administrative measures when necessary," he said. Among these measures, he added, could be "different lending rates, tax rates and policies on land supply." Wen also said that the exchange rate of the yuan will be gradually revised to ensure social stability.

Hong Kong*:  February 28 2011

Furs on show at the International Fur and Fashion Fair. Hong Kong is the trade's global hub thanks to the surging mainland market. HK takes over as world's fur trade hub - City rides the coattails of mainland fashion boom - A subtropical city of seven million as the world's fur hub? Surely not. Yet, from a small start 30 years ago, when Hong Kong's furriers began selling people in China's remote northeast one of their first luxuries - fur coats - the city has, almost overnight, become the trade's capital. Hong Kong now handles 70 per cent of the trade in raw furs and 80 per cent of the world's processed furs, according to a United States Department of Agriculture report. Like a lot of the city's recent business successes, the mainland is the key to the story. Between 2000 and 2009 its fur imports more than doubled in value, from US$165 million to US$463 million. And in 2009 alone, its exports of fur products rose 47 per cent year on year, to US$1.3 billion. Domestic production has rocketed. Just five years ago, Russia - a natural market for furs and with a population of more than 150 million - was still the biggest importer of mainland furs. Now Hong Kong has taken over. Traders attending the Hong Kong International Fur and Fashion Fair in Wan Chai this weekend agreed with the US government report that the fur market had been reborn a decade ago thanks to the mainland.

Richard Li and Isabella Leong pose with first son Ethan in June 2009. Former actress-singer Isabella Leong Lok-si has split with entrepreneur Richard Li Tzar-kai just months after giving birth to twin boys in June. The 22-year-old announced the news in a press statement last night which read: "This new year has marked a new chapter in my life: I have parted with Richard Li. I will always have fond memories of our time together and will continue to share custody of our children. We will ensure the kids' happy and healthy developments." Their first son, Ethan Li Cheung-chi, was born in 2009. Leong's spokeswoman, Michelle Loo, said their relationship ended earlier this year and the decision was personal. No details were given. Li, 44, is chairman of PCCW (SEHK: 0008), Hong Kong's biggest telecommunications provider, and the younger son of Li Ka-shing, Asia's richest tycoon. Loo told the Sunday Morning Post (SEHK: 0583) last night that their separation was completely unrelated to an article that appeared in Next magazine 10 days ago, which reported that Leong was dating a man in Toronto. The magazine published a series of photo shots with Leong sitting in a bar and chatting with a young man. Loo said the man in the photo was a childhood friend of Leong's from school who was also known to Li. Loo said the pictures were taken last year, long before the couple split up. "The article is unfair. Even rich people can have friends," she said. Asked whether Leong had made any plans for her future, such as returning to showbiz, Loo replied: "Those issues are not Leong's priorities." Leong is now in Toronto with the couple's three sons. Li could not be reached for comment last night. Lawyer Lau Kar-wah, an expert in civil disputes, said when two people were not married it would be almost impossible for one party to claim assets from his or her partner after they split up, especially if the relationship had lasted for only a few years. Lau said the only possible dispute would be over the children's custody. "If the issue of custody has been resolved, there is basically no room for further legal dispute." The lawyer said that in such cases the natural father would have a legal duty to provide maintenance for his children even if they were born out of wedlock. Under the law the children would also have a claim on their father's assets. Leong, 22 years younger than the billionaire Li, was often described in media reports as a Cinderella. The couple reportedly met during the filming of Hollywood movie The Mummy: Tomb of the Dragon Emperor, in which Leong had a much-ballyhooed supporting role.

Developers yesterday launched sales at three new projects, offering a total of 112 flats. Henderson Land (SEHK: 0012)'s CentrePoint in Sheung Wan recorded the strongest sales. Property agents estimated that by 7pm more than 40 of the 50 flats available had been sold at an average price of about HK$16,400 per sq ft - a figure in keeping with surrounding properties. Danny Leung, associate director of Centaline Property Agency in Mid-Levels, noted Financial Secretary John Tsang Chun-wah had not announced news steps to cool the property market in his budget speech last week. "No bad news in Wednesday's budget is good news for the sales of new projects," he said. He estimated more than half the buyers at CentrePoint were investors. "They are prepared to hold the flats for at least two years to avoid paying the additional stamp duty and are expecting a substantial growth in property prices in next few years." Elsewhere, the asking price of Sun Hung Kai Properties (SEHK: 0016)' Avignon in Tuen Mun is 110 per cent higher than the prices on estates nearby. Nevertheless, by 6pm the company had sold around half the 57 flats on offer at an average price of HK$9,736 per square foot. Only three flats were sold at Cheung Kong (Holdings) (SEHK: 0001)' nearby development Crown by the Sea. Development minister Carrie Lam Cheng Yuet-ngor said soaring property prices could not be reined in simply by adjusting the land supply because Hong Kong faces ultra-low interest rates and an inflow of speculative "hot" money. Amplifying comments in Tsang's speech last week, Lam said the government would look at optimising land use by moving facilities such as Sha Tin's sewage works and the Kennedy Town water service reservoir underground. "The government has the responsibility to increase the supply of residential land, and the land-sale programme in the coming year will be more aggressive and proactive than in the past," she said. Last week she said enough land could be freed next year to build 35,400 flats. Yesterday she repeated Tsang's statement that HK$300 million would be spent studying whether rock caverns could be built and more land reclaimed outside the harbour. The government has earmarked a site in Kai Tak where 1,000 flats can be developed under the Urban Renewal Authority's "flat-for-flat" scheme. This gives owners the choice of moving into one of the authority's flats or taking compensation. Lam said a tenth of the budget's HK$10 billion for the Development Bureau would be spent on Operation Building Bright, a scheme to help renovate 3,000 rundown buildings over 30 years old. The rest would be spent on infrastructure.

 China*:  February 28 2011

In pictures: Chinese Premier Wen holds online chat with netizens - Wen Jiabao began online chat with netizens Sunday jointly hosted by the central government website and Xinhua News Agency website.

Surfers, such as these at a cafe in Beijing, can use Renren as the mainland's Facebook, Sina Weibo asTwitter and Jiepang as Foursquare. Chinese social media sites no mere clones - Copies of Facebook and Twitter improve on the originals, their operators say - It's called the "copy to China" model, but don't say that too loud in a room full of technology executives from the mainland. It's a reference to the way copycat versions of online products developed in Europe or the US tend to turn up in the Chinese market. Renren is the mainland's Facebook, Sina Weibo is Twitter and Jiepang is Foursquare. But it's not simple plagiarism, said Dr Lu Gang, observer of online media trends on the mainland, at a recent social media conference in Hong Kong. "We copy the product but we never copy the way to promote it, or marketing," he told the audience at Social Media Week, a conference organised by United States-based Crowdcentric Media and its Hong Kong partner Impact Asia. "If you look at products like Renren or Weibo or even Jiepang, I think you can see a big difference coming out of the Chinese local copycats. "The interface for Twitter is very simple, but on Weibo you can see the thread on comments which you can never see on Twitter. "Copying is not the problem. The problem is, after we copy the product how can we localise and innovate?" Growth strategies for Chinese social media products also differ.

China's vegetable doesn't always mean surging prices and contamination - (left to right) Providence Family Farm co-founder Andrew Lam, chairman Gary Cheng and co-founder Ada Lui at Corner Kitchen, Feb 24, 2011. Credit: Vivian Chen Byline: Vivian Chen. Buying mainland vegetables doesn't always mean suffering surging prices and risking the effects of contamination. Dr Andrew Lam, a Californian-born Hongkonger, grows more than 80 organic crops on his farm in Jiangxi province and has recently started to deliver his produce to Hong Kong. Lam, who is based on the farm in the rural Wuyi Mountains area, was in town this week and threw a tasting lunch for media yesterday at Corner Kitchen in Sheung Wan. The menu, created by Vivian Herijanto, chef at the restaurant, used a range of chemical-free produce from Lam's Providence Family Farm, and included beetroot salad with quail and braised ribs with purple carrots. Guests were also offered slices of raw radish and tomato. Lam, a former surgeon, quit his job of 30 years to start experimenting with alternative medicine in Jiangxi. He found the area to be ideal for agriculture. Lam's business partner Gary Cheng (pictured centre with (left) Lam and (right) farm-co-founder Ada Lui) was amazed by his first tasting at the farm and encouraged Lam to start the delivery business to Hong Kong. "My first tasting was mind-blowing," Cheng said. "It was like all this time I'd been watching black-and-white TV when there were already high-definition [colour] models available." With all the hype in town over organic produce, business has been good since it launched in September. A trial box of seasonal vegetables costs HK$390. Check out 

Officials in China's southernmost island province of Hainan are hoping a fledgeling yachting industry would give the famed tourism destination the edge to draw wealthy tourists from home and broad. "Yachting can strongly propel tourism and the local economy in a sustainable way," Lu Zhiyuan, director of the Hainan tourism development commission, was quoted as saying by Saturday's China Daily. China's yacht market was worth about 3 billion yuan (about 455 million U.S. dollars) in 2009 and has an annual growth rate of about 10 percent, the paper said, quoting an industry report. Government officials used to be wary of the luxurious image of yachting for fear of upsetting social harmony, particularly given the widening rich-poor gap in China, Wang Dafu, chairman of the Shenzhen Visun Real Estate Group, and a deputy to the Hainan provincial people's congress, was quoted as saying. He said that a change of attitude in recent years had helped the business to boom. More than 1,000 yachts are registered on the Chinese mainland and some 37 percent of the most luxurious ones are docked at one of the Hainan's five yachting clubs, said the newspaper. Officials are keen to turn yachting into one of the pillars of local tourism as the province's development plan for up to 2015 refers to yachting five times. The tropical island announced a plan early last year to build itself into a top international tourism destination by 2020.

Big spenders hit expo to plan big day - A young woman tries on a wedding dress at the China Wedding Expo in Beijing on Friday. The three-day event, which ends on Sunday, gathers 1,800 shops together in the hope of providing one-stop shopping for couples. Beauty may take your breath away, but a glamorous wedding is almost certain to take your savings away. That was the message many young couples took from the first day of the annual China Wedding Expo in Beijing on Friday. The expo, which lasts until Sunday, is a one-stop shop for those planning their big day. It is packed with 1,800 retailers, from caterers and florists to photographers and cake designers. Thousands of future brides and grooms were busy pinning down the little details that go into creating the perfect wedding, although many found the array of choices and high prices somewhat overwhelming. "I like this one better. It might cost more but I just want everything to be perfect," said newly engaged Peng Ning, as she looked in the mirror while trying on a 20,000-yuan ($3,000) Spanish-made La Sposa wedding dress at the expo. "It's a once-in-a-life event, so I don't want to settle for less." Peng's mother, who is paying for the wedding in July, could not agree more with her 28-year-old daughter. "Of course, it's a lot of money to spend on a dress that will only be worn once, but she has no interest in cheaper brands," she added. Ye Shichang, director of La Sposa, said Chinese's attitudes towards wedding dresses have changed much since the Spanish company started to do business in China 12 years ago. "Chinese people used to rent wedding dresses because it's cheaper, but now people want it tailor-made in Europe. Chinese have more money now, a lot more, and they want to show it," Ye said. He said three people have already shown an interest in the most expensive wedding dress he has brought to the expo, which cost almost 120,000 yuan. Wu Chao, a consultant at wedding planners Princess Dairy, said: "We can give couples any kind of wedding they can imagine, as long as they can afford it." However, Princess Dairy's clients Hu Xiaohan and her fiance Zhang Liang just want something simple. "We won't be wearing a wedding dress and tuxedo. Instead we'll just wear plain white T-shirts and jeans and hold the ceremony at the university dining hall where we first met," Hu said. The couple will use the money they save to travel around China for six months in the belief such memories will be more precious to them.

Hong Kong*:  February 27 2011

Hong Kong's on track to get land for 35,400 new private flats in the year ahead. Secretary for Development Carrie Lam Cheng Yuet-ngor is confident the housing target can be met. "The figure is not hot air," she said. The government has control over the supply of around 19,000 units through initiating land sales and kick-starting government-owned residential projects atop West Rail stations. "Our disposition with regard to supplying land is very vigorous this year," Lam said. In the government's land application list announced yesterday, four are residential sites specified for government- initiated sale by open auction or tender this year. The plots are in Mid-Levels West, Hung Hom, Stubbs Road and North Point, ranging from 0.1902 hectares to 1.49 hectares. About 1,500 flats can be built. Besides the 64 plots in the application list, the government will put up for sale by tender five residential sites, including two sites in Hung Hom and one each in Tung Chung, Tsuen Wan and Yuen Long. They will be designated for building about 3,000 small and medium-sized flats. The government sites at Tsuen Wan West and Nam Cheong West Rail stations, Lam said, are expected to provide 6,700 flats. The three MTR projects at Tai Wai, Tin Shui Wai Light Rail Transit terminus and Tseung Kwan O may offer 7,900 units. "We are a major shareholder of MTR Corp," Lam said. "We have negotiated with the MTR and it firmly believes that it will put forth those three sites in the coming year." In his policy address in October Chief Executive Donald Tsang Yam- kuen promised enough land to build 20,000 private flats a year. On Wednesday, Financial Secretary John Tsang Chun-wah increased the figure, saying land will be made available to provide 30,000 to 40,000 private flats in the coming year. Of the 71 sites available to the market in the coming year, 52 will be residential. Eighteen of the 52 are new. Seven of these are in Tseung Kwan O and the largest plot, covering 6.697 hectares, is in Tuen Mun. However, Ricacorp research head Patrick Chow Moon-kit said the figure of 35,400 units is unrealistic since it depends on whether the developers like the sites or not. "Like buying raw food, you have to cook it before you can eat it. These plots have nothing built on them yet," he said. Eddie Hui Chi-man, deputy director of the Research Centre for Construction and Real Estate Economics at Hong Kong Polytechnic University, said the release of so much land poses a threat to flat prices in the affected areas. Donald Choi Wun-hing, managing director of Nan Fung Group, said the company is interested in the residential project above Nam Cheong Station as well as two plots in Hung Hom for tender in April. Thomas Jefferson Wu Man-san, managing director of Hopewell Holdings, said the added land supply will help stablize the property market.

Exporters and freight forwarders have thrown their weight behind plans to build a third runway at Hong Kong International Airport. They said the facility needed to be built within the next seven to 10 years if the city was to maintain its position as a trading and airfreight hub. Paul Tsui, chairman of the Hong Kong Association of Freight Forwarding and Logistics (Haffa), said the current runways at Hong Kong International Airport would reach full capacity in 2016 or 2017. "If by 2016-17 we don't allow any new landing slots, airlines will go to other airports - Shenzhen or Guangzhou," he said. The Hong Kong Shippers' Council said building the runway was vital to trade and the logistics industry. The group said the need for another runway should be put into "the context of the phenomenal growth of Hong Kong's air cargo industry". The volume of airfreight rose 23.4 per cent to 4.1 million tonnes last year and is forecast to climb to 5.9 million tonnes by 2014. Sunny Ho Lap-kee, executive director of the council, said the runway was needed "as soon as possible" and the "government should make every effort to advance the construction date". He said taking into account the public consultation, environmental impact assessments, feasibility and engineering studies and construction, the runway could not be operational before 2020. Council chairman Willy Lin Sun-mo said Hong Kong recently overtook Memphis to become the world's busiest international air cargo hub. Haffa and the Shippers' Council are planning a series of seminars and press events in April to coincide with the start of the public consultation on the Airport Master Plan 2030 which includes the third runway. With protests over the high-speed rail link to Guangzhou and environmental sensitivity about a third runway in mind, Ho said the public consultation should see if there was a solution for runway development that was "acceptable to all parties". Tsui, who is also managing director of the freight forwarding company Janel Group, warned that without the runway investment Hong Kong International Airport could follow London's Heathrow and Japan's Narita airports, which had been starved of expansion. Heathrow had seen its number of flight connections with other airports fall to 184 from 220, and this would likely result in cargo and passenger traffic easing in the next two years. Support for the third runway came as Cathay Pacific (SEHK: 0293) said it will expand its cargo carrying capacity with 15 new aircraft this year. The first, an Airbus A330-300, will be delivered today in Toulouse, France, and make its first revenue flight to Sydney on March 1. A Boeing 777-300ER will delivered at the end of March and enter service on routes to California. A further 13 aircraft, including six 120-tonne capacity Boeing 747-8 freighters, will join the fleet by December.

Promenade plan for waterfront - It's a waterfront of many parts now, but as the Planning Department envisions it, Hongkongers will be able to walk around the harbour on a promenade stretching from North Point to Chai Wan. And if they get a little tired, they can take a water taxi instead. The Island East harbourfront improvement proposal, released by the Planning Department yesterday, aims to transform a 200-hectare area now occupied by various government facilities and private concerns, many of poor design. Under the proposal, walkways, including a boardwalk under the Island Eastern Corridor and a sky trail along the hillside of Hong Kong Museum of Coastal Defence, will enable an uninterrupted stroll from North Point to Quarry Bay, Shau Kei Wan and Chai Wan. A new boardwalk will revitalise North Point and its piers with cafes, shops, benches, plantings and art displays. A water taxi will take passengers to North Point ferry piers, Sai Wan Ho Harbour Park, Shau Kei Wan Typhoon Shelter and Hong Kong Museum of Coastal Defence. At least nine pedestrian areas along the promenade will be beautified and an entertainment hub with themed restaurants, multi-purpose performance centre or an IMAX theatre is proposed for Hoi Yu Street in Quarry Bay. A heritage trail will be created along the Shau Kei Wan Typhoon Shelter to commemorate the district's history as an old fishing village. "It is an excellent and a realistic proposal," said Paul Zimmerman, a member of the Harbourfront Commission. "The idea of setting up a boardwalk under the highway is particularly interesting. However, the government should ensure that the connectivity of the boardwalk and the hinterland in Oil Street is sufficient." But Patrick Lau Hing-tat, a landscape architect and Eastern district councillor, said the proposal lacked innovation. He said the Chai Wan section of the promenade would be far from the harbour, blocked from the water by the Heng Fa Chuen residential development and unattractive facilities such as a water treatment plant and refuse transfer station. "Instead of relocating the facilities and opening up the private site to the public," Lau said, "the government has avoided the troubles and selected an unattractive route." He proposed an alternative - build a bridge on the Chai Wan waterfront that would connect with the harbour park in Siu Sai Wan. The government proposal will now be subject of a two-month public consultation.

Norman Foster has produced the most popular design for the West Kowloon Cultural District, according to a public poll that ranked the three finalist design teams. The huge green park proposed by the British architect for the 42-hectare arts hub site won the most public support in a poll of 7,310 questionnaires - even after excluding about 600 submissions that appeared to be suspiciously in his favour. The results of the poll, conducted through self-returned answer sheets and in exit polls at exhibition venues last year, were released yesterday. The West Kowloon Cultural District Authority will announce its selection next week. Foster's plan was seen as the "preferred option" based on the design of public open space, green setting, relaxing atmosphere, arrangement of hotel, office and residential facilities, environmental friendliness, and site accessibility. Rocco Yim Sen-kee, leading the local team in the race, ranked first in the design for core arts and cultural facilities and connectivity to the neighbourhood. But in showcasing Hong Kong's unique local and traditional characteristics, Dutch architect Rem Koolhaas got the highest score. Peter Yuen, of Polytechnic University who analysed the feedback, said an "irregularity" was spotted in self-returned questionnaires. Yuen said 629 of the 4,817 self-returned questionnaires were mailed to the authority in five batches in a week in November. "Most of them do not contain demographic information. All except 25 do not contain any written comments. The responses appear to be similar," he said. The responses, all favouring Foster's scheme, pushed his score higher than his competitors' in three aspects: good connectivity with neighbouring districts, catering to needs of different users, and provision of core arts and cultural facilities. When they are taken out from the analysis, Foster remains the top scorer on average, winning by a close margin. Asked if he was worried the poll results were rigged, Stephen Cheung Yan-leung, the chairman of the West Kowloon Cultural District Authority's consultation panel, said: "Whether the flagged cases are included or excluded, the overall results are the same. "I believe the board will fully understand [the situation] and make selections based on objective views, taking into account public views and other criteria." A spokeswoman for Foster and Partners said the team was unaware of the problem questionnaires. "None of us knew about the copies until today," she said. A spokeswoman for Koolhaas' Office for Metropolitan Architecture said it was a pity that people had tried to influence the results. "That the flagged questionnaires tend to support Foster doesn't say anything. We are certain they didn't submit the questionnaires themselves." Yim declined to comment on the flagged questionnaires but said public views were a useful reference and any scheme that eventually won could be further improved with the merits of the other two. Dr Chan Man-wai, a project delivery executive director of the authority, said a 10-member vetting panel had selected a scheme as a base blueprint and its recommendation - which it is keeping secret - would be submitted to the authority's board next week. The board will make a final decision based on public opinion, planning merits, creativity, technical merits, land-use distribution and financial viability.

The government's controversial HK$4.8 billion transport subsidy scheme was passed yesterday, giving low-paid workers a monthly allowance of up to HK$600, despite firm opposition from within and outside the Legislative Council.

Ashley Chan, 16, got the highest marks in the world for the IGCSE chemistry exam. Two more Hong Kong pupils have come out top of the world in international exams. Ashley Chan and Terence Young from the French International School scored the highest marks in their respective subjects in the Cambridge IGCSE (International General Certificate of Secondary Education). Their success follows that of Anthony Leung Chi-hin, a Form Six student at Sha Tin College who topped the global scores in the IGCSE mathematics exam. Chan scored the highest mark in chemistry, while Young did the same in Mandarin. Chan, who took the exam in June when she was 15, said she worked hard on chemistry out of intense interest in the subject, although she was intrigued by other subjects as well, such as languages and mathematics. She already has 10 A* - the best grade - and a B under her belt in other exams. She came out top in Hong Kong in geography and foreign language Spanish. A native English, Mandarin and Cantonese speaker, she also took French classes at school, and notched up an A* in foreign language French and a B in mother language French, which she took to challenge herself. "I work hard, but I also make sure I keep a healthy balance of life," she said. Outside the classroom, she says she does not spend all her time glued to social networking websites. She has played on the school's netball and tennis teams and does athletics training. She came 12th out of 2,000 runners in her category in the 10 kilometres at the Standard Chartered Marathon last week. She has not yet decided whether to study law or chemistry at university. However, she said she was not under any pressure to choose from her family. "They let me do what I enjoy most. They're not like tiger mums, and that's very important to me," she said. Tung Chit-cheung, also from the French International School, scored the highest mark in the Latin exam in Hong Kong. Mary Lawton, who heads the school's international section, said: "I'm very proud of my students. I thank the parents and teachers for delivering the A-team and providing one of the best educations in town."

 China*:  February 27 2011

Chinese premier to chat with Internet users - The chat scheduled for 9 a.m. (Beijing time) will be lively shown on the central government's website ( and  in video, picture and text.

Beijing police sent out rare warnings to foreign media outlets yesterday in an attempt to stop repetition of Sunday's drama outside the McDonald's in Wangfujing during a crackdown on a rally prompted by an online call for a "jasmine revolution". Numerous foreign media organisations received phone calls or were summoned to meet police officials yesterday. They were told to abide by reporting regulations, issued after the Beijing Olympics in 2008, that require prior consent for interviews. A rare notice repeating the regulations was also published on the front page of Beijing Daily, a publication under the municipal government, yesterday. The Foreign Correspondents' Club of China issued a statement to its members yesterday saying that the phone calls "perhaps indicate there may be tighter-than-usual reporting conditions this weekend in Beijing". "Please be aware of the situation and notify us if you encounter any problems or interference with your work," it said.

A PLA Navy frigate is heading towards the Libyan coast on an unprecedented mission to protect Chinese citizens in a conflict zone. The missile frigate Xuzhou is under orders to "support and protect" the more than 30,000 Chinese nationals being evacuated from Libya on civilian ships as the regime of Colonel Muammar Gaddafi teeters on the brink of collapse. The Ministry of National Defence reported the move on its website yesterday, saying the order was issued on Thursday, which means the vessel could be off the Libyan coast early next week after being pulled off anti-piracy patrols in the Indian Ocean. It is just the second time People's Liberation Army Navy ships have been deployed to the Mediterranean - and the first time the PLA has intervened in a humanitarian crisis. The situation in Libya grew even more tense yesterday as security forces and militias loyal to Gaddafi opened fire on marchers who defied a fierce clampdown to hold their first major protest in the capital in days. Across rebellious cities in the east of the country, tens of thousands held rallies in support of the Tripoli protesters. Protesters chanting for Gaddafi to be ousted streamed out of mosques in Tripoli after prayers and were confronted by a force of troops and militiamen who opened fire in streets near Green Square, said a number of witnesses who reported several deaths. Tripoli remains under Gaddafi's control after the uprising swept over nearly the entire eastern half of the country, breaking cities there out of his regime's hold. Even in the pocket of northwestern Libya around Tripoli, several cities have also fallen into the hands of the rebellion. Meanwhile, the Chinese frigate's mission highlights both the growing confidence and reach of the navy as well as a new effort to better protect the spiralling numbers of mainlanders based overseas. Scholars and PLA analysts inside and outside China said the move reflected an array of strategic interests for Beijing - and could prove to be the first of many such missions. Major General Ji Mingkui , a professor with the PLA's National Defence University, told the official China Radio International last night that the role of the PLA Navy abroad should be further expanded into other less traditional areas. "With non-security missions ... increasing, our navy's participation in the evacuation of overseas Chinese people [during crisis] is just one of their tasks," Ji said. "We will not only dispatch warships to evacuate our people overseas [when needed] in future, but in other ways ... to protect our national interests overseas because our navy's missions will be expanded as time goes on." Gary Li, a PLA analyst at the London-based International Institute for Strategic Studies, said the Xuzhou would probably stay close to the other international navies arriving on the scene, including British, French and German vessels, and would probably initially stay out of Libya's territorial waters. "It is a highly significant and logical development," Li said. "China knows it must be part of the naval club during this kind of turmoil - and it is clear that the leadership is very sensitive to criticism on the Web that it did not react swiftly enough to evacuate citizens in Egypt. "In some respects it highlights just how significant the two-year-old fight against pirates in the Indian Ocean has been for China - they are in the neighbourhood and can respond with ships for the first time." He noted that the 4,000-tonne Xuzhou did not have much room for evacuees, given the detachment of special forces' troops on board, its Z-9 helicopter and hangar and its store of surface-to-air missiles. Instead, the ship - just three years old - would probably escort merchant ships rescuing Chinese civilians, unless the threat level rose significantly. The Jiangkai-II class vessel is the most advanced in the PLA's rapidly modernising fleet. While PLA ships have successfully broken up pirate attacks by opening fire, they have yet to storm captured ships - a vastly more risky operation. Professor Cheung Tai-ming, a PLA expert at the University of California San Diego's school of international relations and Pacific studies, also said it was a highly significant step that showed a growing confidence. "The evacuation shows a peaceful element of China's growing military power in its projection capability, which provides a good opportunity for the PLA and the PLA Navy to push their boundaries domestically and internationally," he said. But Beijing-based military analyst Song Xiaojun said while the mission was a "good beginning" it also showed the PLA's projection of military force was still weak because the air force should have been used. "I think the PLA Navy's participation in the humanitarian crisis in Libya would help our army to fight for more funding and resources for our defence budget," Song said. "With more ... Chinese workers and technicians working overseas, in less and underdeveloped countries with unstable political situations, our country needs to protect their lives and safety as they are also working for our overseas investments." In a commentary, US Naval War College professor Andrew Erickson and security specialist Gabe Collins wrote: "China has global interests, cannot ride free forever, and requires a presence in critical areas and situations in order to have a voice."

China Petrochemical Corp, the nation's second-largest oil and gas producer, has signed a preliminary agreement worth billions of US dollars to buy coal seam gas from Queensland, Australia, and take a minority stake in the gas project. If realised, the 20-year import agreement would be the first Australia gas deal for China Petrochemical - the unlisted parent of listed China Petroleum & Chemical (Sinopec (SEHK: 0386)) - and the mainland's third acquisition in the emerging industry Down Under. No transaction price was disclosed. Analysts said it would be difficult to put an estimate on what is believed to be a multibillion-dollar gas purchase since the gas price is confidential and is linked to future crude oil prices through an undisclosed formula. The agreement would help China, which is relatively poor in natural gas compared with its vast population, especially in its goal of cutting pollution. It would raise the contribution of cleaner-burning natural gas to its energy consumption mix to 10 per cent from 4 per cent by 2020. With domestic gas output trailing demand, China has been searching for gas in Russia, the Middle East, Southeast Asia and Australia. China Petrochemical yesterday said in a statement it had signed a framework agreement to buy 4.3 million tonnes of liquefied natural gas (LNG) annually for 20 years. It will buy the gas from Australia Pacific LNG - a joint venture between United States energy major ConocoPhillips and Australia's Origin Energy. It also plans to take a 15 per cent stake in Australia Pacific LNG, leaving the two partners with 42.5 per cent each. The price of the 15 per cent stake was not disclosed. But United States-based brokerage Sanford Bernstein senior analyst Neil Beveridge pointed to the US$650 million that the French energy company Total paid last September for a 15 per cent stake in Gladstone LNG, which is also in Queensland. The estimated development cost of Gladstone LNG's project is A$16 billion, (HK$125.5 billion) compared with A$35 billion for Australia Pacific LNG. Frank Harris, London-based head of LNG at energy consultancy Wood Mackenzie, said he believed China Petrochemical had struck a slightly cheaper price than rival China National Offshore Oil Corp's gas purchase deal from the Queensland Curtis LNG project in May 2009. Australia Pacific LNG is the last of four Queensland advanced projects to secure buyers for their coal seam gas - natural gas trapped in coal seams - which need big cornerstone customers to proceed with production. "Chinese buyers are pretty much the only Asian buyers other than [South Korean utility] Kogas that can buy large volumes in any one deal," Harris said. "China Petrochemical should have leveraged on this." China National Offshore already struck a deal to buy from Queensland Curtis, while PetroChina (SEHK: 0857, announcements, news) last year joined with European energy major Royal Dutch/Shell to buy coal seam gas developer Arrow Energy. Harris said Korean, Japanese and Taiwanese gas buyers have difficulty using large amounts of coal seam gas due to its lower energy content than conventional gas that co-exists with crude oil. Mainland buyers, on the other hand, are building gas processing facilities from scratch that can better handle coal seam gas. He said gas from Australia Pacific will most likely primarily supply the planned 3 million tonne-a-year, 17 billion yuan (HK$20.12 billion) import terminal in Guangxi autonomous region. Any leftover may supply the 3-million-tonne-a-year, 10 billion yuan terminal in Shandong province, which began construction last September.

Three years after the establishment of third-generation (3G) networks by China's three major telecommunications companies, the number of 3G users passed 50 million in January, according to the Ministry of Industry and Information Technology (MIIT). That number is expected to swell to 150 million by the end of the year, the ministry said. "Now telecom carriers have a large number of subsidized 3G phones available to attract users", which will intensify the competition between China Mobile, China Unicom and China Telecom, said Kevin Wang, research director of China operations at the US-based research company, iSuppli Corp. China Mobile, China's largest telecommunication company by user numbers, plans to license up to 12.2 million units of 3G network cell phones. China Unicom announced on Thursday that the number of subscribers using its 3G services reached 2.34 million for the month of January, an increase of 27.6 percent month-on-month. Meanwhile, as a means of regulating and boosting its 3G market share, China Unicom will launch its own line of 3G phones - named the Wophone - to compete with China Mobile's Ophone. The company also is formulating an anti-piracy alliance with distributors to regulate its computer 3G Internet-adapter market. Computer 3G Internet users account for 15 percent of China Unicom's new 3G users in January. China Telecom is accelerating the pace of introduction of Apple Inc's iPhone 4 to the Chinese market to attract new users. The company announced on Friday that it will provide customized services, such as tailor-made cell phone shells, to attract the youth market. Wang from iSuppli said that application stores will become another battlefield for the telecom carriers. "All three carriers want to build their own application stores in the hope that the profit from selling applications will offset the subsidies for cell phones," said Wang. China Mobile has already established its application store, Mobile Market. China Unicom will launch its own store - using applications based on Google's Android operating system - on Monday. According to statistics from China Mobile, it had a total of 22.6 million 3G users in January, while China Unicom had 15.47 million and China Telecom attracted 13.64 million.

Dell to open 1,000 stores in China - The US computer maker Dell Inc said on Thursday that it will aggressively expand its sales and after-sales service network in China this year as part of its efforts to tap the local market, where domestic player Lenovo Group dominates. Michael Yang, president of Dell's operations on the Chinese mainland, said in an interview that the world's third-largest PC maker by market share will establish more than 1,000 new retail stores for commercial customers and also double the company's after-sales service sites in China this year. "Although China's PC market has slowed down since last year, computer demand is still robust," Yang said on Thursday. He said the company is expected to grow faster this year than last and that the new after-sales service sites will be mainly in rural areas. Dell's business grew 21 percent in China last year, but still lags far behind market leader Lenovo Group Ltd, which dominated one-third of China's PC market in the last quarter, according to figures from the research company IDC. In the past few years, Dell has been trying to expand its China sales coverage beyond the major cities by partnering with big retailers such as Gome Electrical Appliances Ltd and Suning Appliance Co Ltd. It has also established about 1,000 after-sales service sites across the country. Yang said that Dell's expansion plan is part a sales channel restructuring in which it will rely more heavily on sales partners to expand its consumer and small-enterprise business. China still hold enormous potential for Dell's growth, he said, adding that the company plans to introduce its tablet computers in the country in April. According to IDC figures, China's PC market grew by only 4 percent in the fourth quarter of last year. The slowdown is due mainly to the government's recent efforts to cool the economy. Dell's market share in China dropped to 7.5 percent from 10 percent in the previous quarter, according to IDC. Other players besides Lenovo have also seen their market share drop in the period, said Antonio Wang, an IDC analyst. However, Yang said on Thursday that Dell has made a strong market recovery this year, as the demand for computers in China is still robust. "I think China's economy is still very healthy," he said. Dell has a big manufacturing base in Xiamen, Fujian province. In September, it opened a new factory and service center in Chengdu, Sichuan province, in order to supply the booming demand in the West China region.

Hong Kong*:  February 26 2011

Yuan settlements in Hong Kong hit ¥369 billion in 2010 - from ¥2 billion in 2009 - More than 70 per cent of cross-border yuan trade settlements conducted in Hong Kong last year came from mainland buyers paying yuan to settle bills with overseas sellers in Hong Kong, according to the Hong Kong Monetary Authority. Yuan trade settlements in Hong Kong totalled 369.2 billion yuan (HK$437 billion) last year, up from only 2 billion yuan in 2009, according to a paper submitted by the HKMA to the legislature. A breakdown showed most of these trades, or 262.95 billion yuan, were related to mainland importers using yuan to pay overseas exporters via the Hong Kong banking sector. The amount of yuan overseas buyers used to pay mainland exporters stood at 106.25 billion yuan last year, representing about 30 per cent of the total. As a result there was a net inflow of 156.7 billion yuan into Hong Kong, explaining the substantial growth in local yuan deposits by corporates last year. Total yuan deposits in Hong Kong stood at 314.9 billion at the end of last year, up 402 per cent from 2009. Corporate customers had a total of 182 billion yuan on deposit, 58 per cent of the total. They represented only 1 per cent in 2009. Beijing first allowed companies to use yuan to settle their trades in a pilot scheme in July 2009, but restrictive rules meant few did so that year. Yuan trade settlements only took off in February last year when the HKMA expanded the scope of that activity. About half the small- and medium-sized enterprises in Hong Kong may opt to use yuan to settle cross-border trades in the next 12 months, according to a survey by HSBC (SEHK: 0005). Last month the bank released a 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. Andrew Fung Hau-chung, a general manager and head of treasury and investment at Hang Seng Bank (SEHK: 0011, announcements, news) , said overseas companies did not have yuan on hand, which explained why fewer overseas firms were paying yuan to mainland exporters. "As the yuan appreciates against the US dollar, foreign companies will not like to borrow yuan to settle their trades as they would need to repay more money when the yuan gains against the dollar," Fung said. For the same reason, because overseas and Hong Kong firms believe the yuan will increase in value, they would prefer to accept yuan rather than US dollars from mainland buyers. The yuan has risen in value against the US dollar by 20 per cent during the past six years and many believe it will rise by another 3 to 6 per cent this year. "People may like to accept the US dollar when the yuan depreciates or when the US increases interest rates," Fung said. "But neither situation will occur in the near term... We are going to see the current trend continue and more yuan will flow to the Hong Kong market through these trade settlement activities. The yuan deposits in Hong Kong will thus go up to 600 billion yuan or even 1 trillion yuan in the next few years."

A worker unloads a shipment of Pfizer Nutrition's Wyeth Gold milk formula at Terminal 3, Kwai Chung, yesterday. The company's Clarence Chung told consumers it had enough stock to last for a month. The second-largest supplier of milk formula for the city's babies said yesterday its sales hit a new high last month, up 50 per cent from the same period last year, but declined to say how much it had sold. Strong sales is one of many signs that demand for baby milk formula in Hong Kong has increased dramatically, probably because of traders from the mainland buying up stock to sell across the border. The trend has angered many parents who complain about shortages of milk powder for their own babies. Clarence Chung Chi-wai, general manager of Pfizer Nutrition, which manufactures Wyeth Gold milk formula, told a news briefing held to reassure consumers that it was unnecessary to fret over supplies, because the company had enough stock to last for a month. Pfizer is one of three companies that have set up customer hotlines to help parents find stores with baby formula in stock. However, only two local mothers had telephoned it for advice on where to buy milk powder since December, he said. Chung said shipments of Wyeth Gold milk formula usually took about six weeks to reach Hong Kong from Ireland, where it was made, from the time the order was placed. After landing in Hong Kong, it usually took a day or two for stock to be delivered to retailers. After the mainland's melamine milk-contamination scandal three years ago - in which hundreds of thousands of babies fell ill - mainlanders' confidence in the quality of baby milk formula produced there has been destroyed. With mainlanders sourcing milk powder in Hong Kong and Macau, some retailers have seized the opportunity to cash in by selling formula at a premium. The normal price for a can of milk formula is between HK$150 and HK$190, but some traders have been seen reselling it for HK$250 on the mainland. Some Hong Kong parents have urged the government to impose a tax on people taking milk powder out of the city, but last week Secretary for Food and Health Dr York Chow Yat-ngok said there was no need for such a measure. According to figures from the Census and Statistics Department, imports of milk formula have increased strongly in the past two years, from about 15 million kilograms in 2008 to more than 17 million in 2009 and 23 million last year. Meanwhile, public confidence in milk products sold on the mainland is far from being restored. Some media reported last week that some manufacturers added leather protein powder to dairy products, using scraps from tanneries. The Ministry of Agriculture said last week fresh milk being sold on the market was "generally safe" and that no leather hydrolysed protein nor other prohibited materials had been detected in its tests in recent years.

More than 150 secondary schools have agreed to cut their number of Form One classes, with King's College in Sai Ying Pun the latest to sign up after long deliberations last night. Tam Koon-che, chairman of the school's management committee, said reducing class numbers could improve the quality of teaching. It was the only one of the 15 government schools still holding out against joining the scheme ahead of today's deadline. "We understand some stakeholders object to reducing class numbers, but other schools also face similar problems," said Tam. "[If] they can overcome such problems, I believe we also can." But the decision was criticised by paediatrician Dr Cheng Man-yung, the alumni representative on the school board. "We don't have to join just because others do," he said. Elite schools like Kowloon Wah Yan College have also agreed to join the government scheme in spite of strong opposition from alumni. Districts hardest hit by falling student numbers but holding out against the scheme relented in the week leading up to the deadline for applications. But the heads of secondary school associations said a further crisis would be delayed by only two years and called for small-class teaching as a long-term solution. Six of the nine Wong Tai Sin schools that offer five classes agreed to join the scheme yesterday. Ho Sai-man, former chairman of the Association of Heads of Secondary Schools for Wong Tai Sin District, said joining the scheme could enhance the quality of teaching. The scheme aims to share the problem of falling pupil rolls by encouraging schools to reduce their number of Form One classes from five to four. Students originally assigned to schools running five classes would go to those with too few students. The Education Bureau has offered an extra annual subsidy of HK$250,000 for five years to participating schools. The deadline for joining the second round of the scheme was extended from November to today after only 23 schools signed up for the first round in April. In spite of strong opposition from alumni, Wah Yan College will reduce Form One intake from 180 to 144 pupils in September. The principal, the Reverend Stephen Chow, said alumni objected to the scheme due to their love for their alma mater. "They want our education to benefit as many students as possible ... but a temporary reduction in student intake can improve the quality of our education as teachers can [provide] better personal care under less pressure," he said. Of those areas hardest-hit by the falling rolls, Yuen Long and Tuen Mun were among the districts where previous holdouts have pledged to join the scheme. Twenty-seven of the 29 schools that offer five classes in Yuen Long have agreed to join. Teddy Tang Chun-keung, president of the Association of Heads of Secondary Schools for Yuen Long District, said the two remaining holdouts - Yuen Long Lutheran Secondary School and Yuen Long Merchants Association Secondary School - were traditional elite English-medium schools. There are 400 secondary schools in the city, more than half of which offer five classes. Education Bureau figures show that the Form One student population will reach a low point in 2016-17, when only 53,900 pupils join, a 20 per cent drop from the 69,000 students who joined Form One this academic year. Hong Kong Subsidised Secondary Schools Council chairman Liu Ah-chuen said the loss of 150 classes accounted for only 5,000 places, not enough to offset a fall in student numbers of 15,000 by 2016. "While there won't be any school closures for the forthcoming two years, the government needs to thrash out other proposals to solve the problem of falling rolls in the long term," he said. Permanent Secretary for Education Cherry Tse Ling Kit-ching said the voluntary class reduction scheme could stabilise the secondary sector for two to three years. "We still need to study long-term solutions [to the problem]," she said. The principal of a traditional English-medium school in Sha Tin said four English-medium schools there would make a decision today. But Baptist Lui Ming Choi Secondary School in Sha Tin would not join, principal Cheng Cho-chak said.

John Tsang was never going to please everyone when he stood up yesterday to deliver his fourth annual budget speech. Given the clamour for government handouts coming from all quarters of the economy, that would have been impossible. But in refusing tax giveaways to the middle classes while simultaneously launching the government's most expansionary budget in years, the financial secretary both drew condemnation for being miserly and risked failure in what he described as the government's major task for 2011: fighting inflation. With the government expecting to turn in a consolidated surplus of HK$71.3 billion for the current fiscal year - in stark contrast to Tsang's original forecast of a HK$25.2 billion deficit - the financial secretary faced strident demands to hand cash back to Hong Kong's middle class by extending last year's salary tax rebate. Yet with the inflation rate running at a two-and-a-half-year high of 3.6 per cent in January and sure to climb further over the coming months thanks to the lagged impact of rent increases, Tsang rejected calls for a large-scale tax handout as dangerously inflationary. Instead, he gave away HK$24 billion by injecting HK$6,000 into each and every Mandatory Provident Fund account, where the beneficiaries can't get their hands on the money. Yet although Tsang's MPF injection artfully avoided fuelling price pressures, his other inflation-fighting measures are likely to be ineffective at best, and at worst could end up exacerbating price rises. Action to assist the poorest sections of society - a HK$1.9 billion, two-month rent holiday for public housing tenants and an extra HK$1.9 billion in social security payments - are welcome. Inflation is running at 3.9 per cent for the least well off but only at 3.4 per cent for the rich. But Tsang's other relief measures are questionable. His HK$9.9 billion waiver of private property rates will both fuel demand and help to drive housing prices higher, which will add to inflation by pushing up rents. Meanwhile, handing out HK$4.7 billion in subsidies for household electricity bills is only likely to encourage waste, making a nonsense of Tsang's claim that "we have been making good progress in promoting energy saving and improving energy efficiency". And his promise to protect savings by issuing up to HK$10 billion in inflation-protected government bonds is laughable. HK$10 billion is less than 0.8 per cent of the funds in Hong Kong dollar time deposits. Still, government officials were insisting yesterday that Tsang's measures would be effective, knocking 1.4 percentage points off the average rate of inflation this year. Their claims look optimistic. The small print in the budget statement's appendices forecasts the headline inflation rate for 2011 will average 4.5 per cent, and that the underlying rate - stripping out the government's relief measures - will also be 4.5 per cent. In other words, Tsang's inflation-fighting initiatives will not reduce consumer price rises this year. Meanwhile, with government revenues projected to be flat over the next fiscal year, overall public spending is set to rise by HK$69.6 billion thanks partly to the government's ambitious programme of infrastructure projects. That will push public spending up from 18.5 to 21 per cent of Hong Kong's gross domestic product, making Tsang's latest budget the city's most expansionary in years. And that will only add to inflation.

The sacked policeman who hijacked a busload of Hong Kong tourists in Manila last year warned at least eight times in live broadcasts that he would start shooting hostages if the police did not release his younger brother, who had been arrested as an accomplice. These warnings were repeated over a five-minute period - from the time Rolando Mendoza said in a radio broadcast that he was watching his brother Gregorio's arrest on television to the shooting of the first two hostages. On the eighth day of the Hong Kong inquest into the deaths of seven Hong Kong tourists and a guide in Manila on August 23, the court heard an English translation of the gunman's interview with RMN radio news reporter Michael Rogas and TV5 news reporter Erwin Tulfo. At 7.15pm, Mendoza was watching his brother's arrest on television inside the bus. Before the first two gunshots were heard at 7.20pm, he repeatedly said: "If they are not going to release him, I am going to shoot that one in front of the bus." This was probably a reference to tour guide Masa Tse Ting-chun, 31, who Mendoza had handcuffed to a railing near the front door of the bus, the court heard earlier. When Mendoza noticed snipers and SWAT officers surrounding the bus earlier, he also warned police that he would start shooting if they did not leave. The two journalists told the gunman that they were talking to police and had appealed for them to release Gregorio Mendoza. The court watched news footage aired on television that Mendoza was believed to have been watching before the bloodbath. In the broadcasts, police officers were seen dragging and lifting Gregorio Mendoza to a police car. The younger brother, a traffic police officer, was also seen surrounded by his three children, who were crying. Gregorio Mendoza told television reporter Susan Enriquez: "If something happens to the hostages, they will accuse me of being the accessory." The gunman said on air: "I can see it here. It's in front of the TV. They are treating my brother who is a police [officer] like a pig. He has done nothing wrong. Tell them I will give them only five minutes. You will hear a gunshot if they will not release him." RMN radio reporter Rogas said: "Erwin, please go to the police so that this will stop." Mendoza, as Rogas asked him to calm down, said: "Someone is punching his back, son of a b****." In a four-minute televised scene from 7.15pm, officers were holding Gregorio Mendoza in front of a police car - pushing his arms and head into the car as he resisted. They eventually handcuffed him and pushed him inside the car. "If that [car] leaves with my brother, I will shoot the one in the front," Rolando Mendoza said. Not long after, a police car's siren was heard on the television broadcast before it was seen driving away. Gunshots, followed by crying and screaming, were heard on the radio broadcast. Rogas and Tulfo briefly lost communication with the gunman. While still on air, Rogas said: "Please tell the [police] to release Captain Mendoza's brother ... there are people crying." When Mendoza came back on the line, he said: "I shot two Chinese, if they are not going to change this situation, even the youngest inside, I will finish them all." At 7.22pm, a live broadcast on television aired around seven gunshots in a row. By then, Rogas and Tulfo had lost communication with Mendoza. At 8.23pm, a series of gunshots could be heard on the television broadcast. Bullet holes appeared on the window on the right side of the bus. TVB (SEHK: 0511) engineer Wan Ming, who was at the scene and slightly injured by a stray bullet, told the court that the bullet did not look like the ones used in M16 rifles. He said that it was more similar to bullets used in hand guns. The court heard earlier that Mendoza had both a hand gun and an M16 rifle. The inquest continues today before Coroner Michael Chan Pik-kiu.

Clashes between tour guides and mainland holidaymakers over forced shopping have prompted the government to seek public opinion on reforming the travel industry. A consultation lasting two to three months will be launched in April, according to a paper sent to the Legislative Council yesterday by the Commerce and Economic Development Bureau. It will give four options for reforming the Travel Industry Council and the industry's regulation. Two of the proposals aim to make the council - a 32-year-old self-regulator run by tourism companies - more transparent and to dismiss accusations of conflicts of interest. One of these involves turning the council into a statutory body, with the number of non-trade directors increased to form the majority of its board. A non-trade member would be appointed by the government as its chairman. The other proposes to transfer disciplinary functions, such as regulation of tour guides, from the council to government departments. The other options propose that the council should retain its status only as a trade organisation, with a new statutory body or a government department taking over its regulatory functions. The government will announce reform proposals at the end of this year. According to the bureau's paper submitted to lawmakers, the government is aware that the council lacks sufficient authority. The council also gives the public an impression that there is a conflict of interest, with 17 of its 29 board members coming from the travel industry. The remaining 12 are appointed by the government. Rule-breaking agencies are named by the council, but their names stay on its website for only a month. The council currently costs HK$20 million a year. But the government has pointed out it would be more expensive to set up a statutory body or government department. The government's proposals come amid divisions within the industry over the council's role.

The price of cigarettes rose by HK$10 a pack, with the government increasing tobacco tax by 41.5 per cent in the hope it will persuade more people to quit. The financial secretary yesterday announced a series of measures to provide enough land in the coming year to build 30,000 to 40,000 flats.

 China*:  February 26 2011

Swedish car maker Volvo hopes to become a global luxury brand and turn China into a major manufacturing base by investing US$10-11 billion over the next five years, a report said on Friday. Volvo, which was bought by Chinese group Geely last year, plans to build a new assembly plant in the southwestern city of Chengdu as it expands its China operations, chief executive Stefan Jacoby told the Wall Street Journal. The company wants to boost annual sales to 800,000 cars globally by 2020 – more than double the 373,000 sold last year – with half of that growth coming from China, the world’s biggest automotive market, Jacoby said in an interview. “We’re in the middle of a big transition – a big transformation. We are redefining the brand,” Jacoby said ahead of a news conference in Beijing later Friday at which Volvo and Geely will officially announce the strategic plan. Geely, which bought Volvo from Ford in August for US$1.5 billion, said in September it planned to increase Volvo sales to 300,000 cars a year in China alone. Geely chairman Li Shufu, who is also Volvo chairman, said he wanted three new Volvo plants to produce that volume. Jacoby said however the China target was 200,000 units by 2020, nearly seven times the 30,500 sold last year. Volvo expects cars to start rolling off the assembly line in Chengdu in early 2013, which will have an initial capacity of 125,000 units a year. Jacoby said the company was also considering exporting cars from China to the rest of Asia, as well as to North and South America. In Europe, Volvo plans to increase sales to 380,000 cars a year from the 242,000 it sold last year and more than double sales in the United States to 120,000 units a year. Volvo hopes markets such as Russia, Brazil and India will drive global sales outside China, the United States and Europe to 100,000 cars a year from the 46,500 it sold last year in those markets.

Rescuers stand by the ruins of the Canterbury Television building, which held King's Education College, an Englishlanguage school where 48 staff and students – many of them Asian – are feared buried after the Christchurch earthquake in New Zealand. Nearly 100 people are dead and hundreds missing. Prime Minister John Key said: ''We can’t give up hope, but need to be realistic.'' China joins international rescue effort in Christchurch - The Chinese government sent a team of 10 yesterday to strengthen rescue efforts. One team leader, seven rescuers, and two earthquake experts from the Chinese Earthquake Administration will stay for at least a week depending on the situation, the Beijing Evening News reported.

A spokesman for the central government's top advisory body yesterday rejected the notion that an uprising inspired by the "jasmine" revolts in Egypt and Tunisia could break out in China. He was the first high-ranking official to respond directly to fledgling protests in mainland cities on Sunday. "I can tell you in full confidence that kind of revolution will not happen in China," said Zhao Qizheng , a spokesman for the Chinese People's Political Consultative Conference. Zhao's comments came as a renewed call for activism was being distributed online, appealing for demonstrations in 18 cities this Sunday and as news broke of further arrests in relation to last weekend's protests. Meanwhile, Vice-President Xi Jinping , wrapping up a four-day study session on strengthening social control, told provincial government and military leaders to investigate new methods to "work with the masses through every aspect and every segment of social management to maintain social harmony by eliminating social contradictions at their source". Xi made no direct reference to the recent protests. An open letter posted on the US-registered blog encouraged mainlanders to go for a "walk" at 2pm every Sunday in prominent locations across the country. "You only need to walk to the allotted venue, watch from a distance, follow in silence, and go with the flow, bravely call out your slogans," the letter said. It gave the operation the code name "dual sessions" - a reference to the simultaneous meetings of the CPPCC and the National People's Congress in Beijing, which start on March 3 and March 5 respectively. It added new cities to the list of demonstration venues - including Urumqi in Xinjiang and Lhasa in Tibet , both scenes of protest in the past. There were minor protests and scuffles with authorities in 13 cities on Sunday. The protests - styled after the "jasmine revolution" in Tunisia - saw several hundred people gather in Beijing, Shanghai and other major cities, but many were onlookers and it was difficult to estimate the number of genuine protesters. Activists received an unexpected boost when the US ambassador to China, Jon Huntsman, was photographed near the Beijing protest. The US embassy said yesterday his presence was "purely coincidental". Rights organisations condemned the response to the protests, which a Hong Kong campaigner called "white terror" tactics. China Human Rights Defenders estimated on Sunday that 70 to 80 dissidents and lawyers had been detained or placed under house arrest, including Beijing-based rights lawyers Teng Biao , Jiang Tianyong and Xu Zhiyong. Internet censorship also appears to have been tightened, with mainland-based search engines rejecting searches for terms including the word "jasmine" in Chinese. The Hong-Kong-based Information Centre for Human Rights and Democracy said yesterday that Beijing-based dissident Chen Wei was now formally under arrest, while another activist, Wuxi resident Hua Chunhui , had also been detained for distributing information about the rallies on the internet. There were unconfirmed reports in Shanghai that at least three activists detained after Sunday's demonstration could not be contacted. CPPCC spokesman Zhao dismissed as absurd any speculation that the disturbances could build into something akin to the storm of pro-democracy protests that have spread across the Middle East. "In a city of 15 million people only a handful of people on the street voicing their concerns, I don't think that's going to result in an immediate change," he said. "I believe there is a small proportion of people who wish to see China in turmoil and chaos, but turmoil and chaos will not happen in China." Zhao conceded "many problems" had arisen due to the country's rapid economic growth but insisted the government was not blind to them. In Hong Kong yesterday, about 30 activists - from the China Human Rights Lawyers Concern Group, the Hong Kong Alliance in Support of Patriotic Democratic Movements in China and the Justice and Peace Commission of the Hong Kong Catholic diocese - marched to the central government's liaison office to call on Beijing to release detained activists and lawyers.

Shuai Peng of China returns the ball to Francesca Schiavone of Italy during the third day of the WTA Qatar Ladies Open in Doha on Wednesday. Third seed Francesca Schiavone was upset by China's Peng Shuai as world number one Caroline Wozniacki moved into the quarter-finals of the Qatar Open with a 6-3, 6-2 win over Russian Nadia Petrova on Wednesday. Second seed Vera Zvonareva also secured a spot in the last eight with a 6-1, 6-2 win over Slovakia’s Dominika Cibulkova, while fifth seed and former world number one Jelena Jankovic of Serbia thrashed India’s Sania Mirza 6-0, 6-1. “There’s a lot of good players here, so it’s not easy to win,” said Dane Wozniacki, who will meet Italian Flavia Pennetta in the last eight on Thursday. “It’s not going to be easy tomorrow, but I’m looking forward to it.” French Open champion Schiavone had a less memorable day with Chinese qualifier Peng in top form on her way to a 7-5, 6-3 victory. “I missed a lot of easy balls. I should take some days off perhaps, but there is no time,” the Italian said. Peng’s compatriot Li Na, who beat Wozniacki to reach the final of the Australia Open last month, was upset 6-2, 6-1 by Czech Klara Zakopalova, while France’s Marion Bartoli eased past Israel’s Shahar Peer 6-1, 6-0.

A senior mainland official arrived in Kaohsiung on Thursday, a hotbed of anti-Beijing sentiment, as protesters threw eggs and flowers in a reference to Tunisia's revolution. Close to 200 demonstrators were waiting for Chen Yunlin, Beijing’s top negotiator for Taiwan, as he arrived for a forum at the port of Kaohsiung, the island’s second-largest city. “Support Taiwan independence,” the protesters chanted, as some of them threw eggs and chrysanthemums in the direction of Chen’s motorcade. They said the chrysanthemums served as a substitute, since it is not the season for jasmine. None of the projectiles hit the passing vehicles, as the demonstrators were kept at a distance by a large police presence. Chen’s trip, which began on Wednesday, is his fourth to Taiwan, but it is the first time he has visited the south of the island, where anti-Beijing feelings are stronger than anywhere else in the society of 23 million. Chen, who heads a semi-official body in charge of Taiwan ties, has brought a delegation of representatives from about 20 state-owned companies, saying that he wishes to put business at the top of the agenda during his six-day trip. “It’s good that Chinese companies come to Kaohsiung to invest, but I worry that China is using economic means to back its real intention of unification,” transportation worker Lu Kuo-hua told reporters. Taiwan and China have been governed separately since the end of a civil war in 1949 but Beijing still considers the island part of its territory and has vowed to get it back, even if it must go to war. Ties have improved considerably since 2008 when Ma Ying-jeou of the Beijing-friendly Kuomintang party was elected president of the island.

China plans to invest more than 1.5 trillion yuan (US$228.2 billion) in the aviation industry over the next five years to meet surging demand as its economy booms, the sector's top regulator said on Thursday. By 2015, the country is expected to have more than 220 commercial airports and its fleet size will expand to more than 4,500 planes, Li Jiaxiang, head of the Civil Aviation Administration of China (CAAC), told reporters. “The ability of the civil aviation sector to serve the national economy and the public will be further strengthened” by that time, Li told a news conference. The country currently has 175 commercial airports in operation and keeps more than 2,600 aircraft in its fleet, according to Li. China has 43 airlines, including eight privately owned carriers. The major airlines are Air China (SEHK: 0753), China Southern Airlines and China Eastern Airlines (SEHK: 0670). Demand for air traffic is booming as the world’s second-largest economy roars ahead on near double-digit growth and increasingly affluent Chinese people are travelling more frequently. Li had previously said the country’s civil aviation fleet was expected to have up to 5,000 aircraft by 2015, according to earlier Chinese media reports. He predicted 450 million to 500 million air passenger trips would be made annually by 2015, and the CAAC aims to expand that target to 1.5 billion by 2030, according to the reports. A total of 267 million air passenger trips were recorded in China last year, up 15.8 per cent from the previous year, official figures showed.

An employee at a bag factory in Yiwu, Zhejiang, works on amid a labour shortage, which factory owners say is just one of the issues putting them under great pressure. Mainland factory owners face up to three years' imprisonment if they fail to pay their employees in what is another shot in the battle to beef up protection for migrant workers. The Standing Committee of the National People's Congress (NPC) yesterday released details of the proposed penalty, which still needs approval at the annual congress meeting in Beijing next month. It is the latest in a string of planned worker-friendly policies, including collective wage bargaining, democratic management and a new regime for social welfare and security. Hong Kong bosses across the border complained they were being exposed to greater policy risks and costs. Human resources experts, however, said the proposal cleared up uncertainties and meant an improvement in the legal system. "The trend is for greater protection for migrant workers," Hong Kong NPC deputy Priscilla Lau Pui-king said. "The democratic management initiative, particularly, will hit factories' management hard." The deputy chairman of the Federation of Hong Kong Industries, Stanley Lau Chin-ho, said the mainland's labour regime was getting tougher at the expense of Hong Kong manufacturers. Lau said one of the main impetuses for the drive was the desire of the central government to avoid social unrest arising from discontent among laborers. He said protests and riots in the Middle East and across North Africa, and last weekend's so-called Jasmine Revolution pro-democracy movement in Beijing, Guangzhou and other mainland cities, sent an alarm call to leaders about the risks of social unrest. "It is easier to go to jail by doing business than by committing a crime," Lau said. "Workers are better off than bosses." He said he would not be surprised to see one in three Hong Kong-owned factories across the border - or 22,000 of the estimated 65,000 plants - forced to downsize their operations or go bust in the next three to five years, as a combined result of more stringent labour rules, labour shortages, surging salaries, an appreciating yuan and stubbornly high prices for raw materials. "The mainland's next five-year period is a period of consolidation for Hong Kong factories," Lau said. "Factory owners must seriously look for a way out - whether to relocate or upgrade their operations." The official tide is already turning against wage defaulters. One Hong Kong factory owner, surnamed Tse, has been detained in Shenzhen since December 2009 for failing to settle wages for about 1,000 workers. Lau said that despite repeated attempts Hong Kong industry bodies had not been able to contact Tse and the authorities had not revealed a final decision about his detention. Nelson Siu Nai-sun, president of the Hong Kong Professionals and Executives Association, was more optimistic about the changes. He said they were a step forward for the mainland legal system because penalties previously could vary from city to city or province to province. An All-China Federation of Trade Unions survey of about 4,500 workers found that the average monthly pay of migrant workers was 1,748 yuan (HK$2,072), about half of the 3,047 yuan earned by urban residents, despite recent increases in minimum wages across the country. It also found that wages were a key cause of friction between labourers and bosses, even though the labour contract law was implemented two years ago.

China to account for 8-9% of global M&A deals: JPMorgan - China should account for 8 to 9 percent of global mergers and acquisition (M&A)activity this year, continuing close to its strong levels in 2009 and 2010, according to the head of JPMorgan's China M&A unit, Brian Gu on Tuesday.

Hong Kong*:  February 25 2011

Italian fashion house Kiton is one of the new tenants to have taken space at the upmarket IFC Mall in Central. Jewellers and luxury international brands have edged out restaurants in the upmarket IFC Mall in Central. Commercial landlord Sun Hung Kai Properties (SEHK: 0016) has revamped the tenant mix of its joint-venture retail arcade by not renewing lease agreements with 10 restaurants to make room for those willing to pay much higher rents for the prime space. "Over the past 18 months we have replaced the restaurants with tenants selling jewellery, watches, and international fashion brands who could afford to pay higher rents," said Karim Azar, assistant general manager for retail leasing at the mall. The restructuring has seen space for food and beverage trimmed from 28 per cent of the total retail space available to 24 per cent. The mall has a lettable area of 450,000 sq ft. Remaining food outlets would occupy reduced areas, down from as much as 4,000 sq ft to between just 300 and 500 sq ft. "These smaller outlets will now be selling things such as ice cream and yogurt," said Azar. The change in tenant mix by the largest developer in Hong Kong in terms of market capitalisation sees the new tenants paying rentals up to three times higher than those paid by the restaurants. While restaurants typically paid HK$100 per sq ft per month, said Azar, watch and jewellery retailers could afford to pay up to HK$300 per sq ft. "We are benefitting from the limited supply of space in Central and have been able to raise our rents as so many big brands want to have a presence here," he said. Visitors to the mall would not be inconvenienced by the changes because there were lots of restaurants nearby, said Azar. Among the restaurants to close as a result of the restructuring was the 3,800 sq ft Lian Vietnam, and the 4,000 sq ft Union Bar. To keep up with the IFC Mall's luxury image, Azar said the landlord had brought in new tenants such as luxury watch retailer Elegant Watch and Jewellery which carries 50 international luxury brands such as Omega, Cartier and Chopard; and Italian menswear shop Kiton, which charges at least HK$50,000 for a suit. Mall tenants saw a strong increase in their sales last year, said Azar, but now faced further increases in rents as their leases fell due during the year. He expected renewals would see increases in rents of between 15 and 20 per cent. At present, average rents at the mall were HK$250 to HK$300 per sq ft. Property consultants said IFC mall - which achieved a record rent of HK$650 per sq ft per month in Central's shopping centres - generated exceptionally good business last year with more than HK$6 billion in sales. The mall's top retailers each achieved more than HK$3 million sales in a single month, say agents. Restaurants, which depend mostly on local consumers, have become victims of rising rents that has triggered an exodus from prime locations as retailers serving mainland customers move in at higher rentals. Last week, property consultant DTZ announced that HMV, currently at the street level shop in Hankow Road, in Tsim Sha Tsui, would relocate to iSquare shopping mall nearby next month. DTZ advised HMV on its relocation move. Property consultants attributed the relocation to the fact that the landlord raised the rent by some 130 per cent to HK$3 million a month, from its previous HK$1.3 million. Another retailer, Old San Yang, which has sold traditional food and hairy crabs in Causeway Bay for 29 years, as well as two neighbouring outlets have quit their premises for less expensive locations to make way for a European watch retailer in April. The watch retailer is believed to have agreed to pay HK$1.43 million a month for the spaces currently occupied by the three who together paid less than HK$800,000 a month. Jeannette Chan, a regional director of consultancy Jones Lang LaSalle's retail department, said retailers targeting tourists had become very aggressive in bidding for space at prime locations.

The public's rating for the city's rule of law has risen to its highest since 2007, the latest University of Hong Kong survey shows. The university's public opinion programme polled 1,035 people by phone between February 9 and 17 and they rated the city's compliance with the rule of law at 6.99 points out of 10, up 6 per cent when compared to the previous survey in August. Programme director Dr Robert Chung Ting-yiu said this was probably because the Court of Appeal recently dismissed fung shui master Tony Chan Chun-chuen's appeal. He claimed billionaire Nina Wang Kung Yu-sum gave him her fortune out of love. It was probably also helped by the jailing of Amina Mariam Bokhary, a judge's niece, for six weeks when she breached her probation order for assaulting a police officer after crashing her car in Happy Valley last year. But the support rating for new Chief Justice Geoffrey Ma Tao-li was 62.9, 7 per cent lower than his predecessor, Andrew Li Kwok-nang. Ma succeeded Li as chief justice on September 1 last year. It was the first measure of his public support taken by the university. Respondents were also asked to rate other social and freedom indicators. Their rating for the degree of equality and social welfare sufficiency plunged to a record low since the handover in 1997. The degree of equality was rated 5.92, down 0.8 per cent from six months ago, while the degree of social welfare sufficiency was 5.86, down 9 per cent. Chung said the declines warranted attention. For other core social indicators, the degree of stability scored 7.21, up 2 per cent, while the degree of prosperity (SEHK: 0803) and democracy fell 1.5 per cent and 2.7 per cent, respectively. Chung said twenty-somethings rated democracy and freedom significantly lower than other age groups. Those polled rated the degree of freedom at 7.42, slightly lower than six months ago. All the 10 sub-indicators for freedom, except freedom to strike, scored higher than seven on a scale of 10. Chung said this showed that people generally agree that Hong Kong is a free society. Freedom of religious belief was rated the highest at 8.66. Freedom to enter or leave Hong Kong was rated 8.19, while freedom of the press scored 7.12, the third lowest.

Yick Siu-ling, who was shot in the face during the Manila bus hijacking, said her two-year-old daughter did not recognise her when she came out of hospital. Yik Siu-ling, 33, was testifying on the seventh day of the inquest into the deaths of eight Hongkongers held hostage by sacked police officer Rolando Mendoza on August 23. "I can't even buckle my bra. I have to wear a mask every day. People ask me if I'm sick," said Yik, the last survivor to testify, who wept as she gave evidence. Her sister Yik Tai-lam sat beside her during the hearing. Outside court, the tearful survivor expressed her disappointment at the absence of Filipino witnesses from the inquest. "They made the mistakes, why don't they come over [to testify]? she said. "[They treat it] as a trivial matter. They pretended nothing has happened even though so many people died." She hoped that the inquest would bring justice to the victims, survivors and their families. Coroner's officer Jat Sew-tong said outside the court that 72 Filipino witnesses had officially refused to testify. The remaining 44 who were invited had yet to respond. Yik's lawyer, Daniel Wong Kwok-tung, asked her to show her injuries to the jury. Yik complied and removed her mask, revealing a misshapen chin below a missing lower lip. Her teeth were broken and she could no longer speak clearly, she said. Recalling events on August 23, Yik testified that Mendoza, after watching his brother's arrest near the hijacked bus on television, threw down his phone and started shooting. "As soon as I heard a gunshot, I shut my eyes ... I was shot in under a minute," Yik said. She said she had held up her hands to cover her eyes, and she did not see the rifle pointed at her. Pretending to be dead, she kept her eyes shut throughout the shootings until she heard police talking outside the bus. About an hour after she was shot, she heard a "boom". "Something hit my head from the right. I said to myself: `Oh no! I'm definitely going to die this time'." She thought at the time that it was another gunshot, but it was a blow to her head. She was sitting by the window on the right side of the bus, the court heard. "When I opened my eyes, my left thumb was blown off and it was dangling [at the joint]," she said. Her right index finger was also smashed. Yik, who remained composed while giving evidence, burst into tears as the court was shown Filipino news footage showing police officers standing around Mendoza's relatives. The footage was aired on the evening of the bus hijack, about 7pm, 20 minutes before the shootings inside the bus began. Survivor Chan Kwok-chu, 47, testified earlier that Mendoza first shot in the direction of tour guide Masa Tse Ting-chunn, 31, and then in Yik's direction before shooting others. Before Yik heard gunshots, she saw the tour guide standing on the steps at the door to watch the television. His right hand was handcuffed. She did not see him getting shot. Later, as she was waiting to be rescued, she looked out the window and saw Tse's body lying on the ground outside the bus. "No one was attending to him," she said. At 8.55pm, police smashed the bus window and lifted Yik out. Outside court, Yik said that she has to see a psychiatrist, "I have flashbacks when I close my eyes." She told Commercial Radio she couldn't go out without wearing a mask because she thinks she looks ugly. Once, when she forgot to wear a mask, a little girl had pointed at her, crying out: "Mummy, she is so terrible." Grief-stricken, she had returned home. But she described her survival as a miracle and said she looked forward to the time she could lift her little daughter up again and embrace her, take her to school, play with her and go shopping. The inquest continues today before Michael Chan Pik-kiu.

Dr Cheung Wai-lun, acting chief executive of the Hospital Authority, says it will address the problems. Angry frontline doctors are threatening to take industrial action over the Hospital Authority's failure to tackle heavy workloads and poor morale resulting from high staff turnover, the union president said yesterday. Dr Loletta So Kit-ying, president of the Public Doctors' Association, said the union was considering a "sit-in or work-to-rule protest". However, in response to the threat by the biggest union of public doctors, the authority yesterday announced eight emergency measures to cope with the crisis. "We don't need any sweet-talking [from health officials], we need some concrete measures," So said before the new measures were announced. Some of the frustrated doctors proposed abandoning clerical duties such as writing medical reports, adhering to a reasonable consultation time for patients, such as 30 to 45 minutes for each new case, and taking at least a 45-minute lunch break. In reaction to the threat, the authority said last night it would create senior posts for junior doctors, hire part-time retired doctors to work at outpatient clinics, and redeploy staff from other specialities to help the overloaded internal medicine departments, which would also be allocated more trainee positions. It would also hire more health care assistants to take blood samples from patients, employ more clerical staff and provide special allowances to doctors on night shifts. The authority also said it would deploy at least 12 doctors to Tuen Mun Hospital by July to relieve the shortage. Dr Cheung Wai-lun, the authority's acting chief executive, said last night the new measures could be implemented immediately. He said details on the senior posts would be announced next month, but he did elaborate on the cost. "We understand that frontline staff are experiencing heavy workloads, especially during the winter surge - we are grateful for their dedication and hard work," Cheung said. "These new measures may not be able to solve all the problems but with the collaboration of staff our chances of a good solution are better. "We will first address the pressing problem at the internal medicine departments and also look at the needs of other specialities." But it is unclear whether these new measures are part of a HK$100 million package announced last week to stop the brain drain of nurses and doctors. It aimed to create more senior posts and hire more trainees. Dr Ho Pak-leung, a former head of the doctors' association, said he was unhappy with the proposed new measures because there were no operational details or timetables. Ho said the authority should also consider raising doctors' pay. Public hospitals are losing doctors and nurses at a rate of 5 per cent. Some internal medicine departments are seeing turnover of 10 to 25 per cent, the highest since the authority was set up 20 years ago. The South China Morning Post reported this month that it took 16 years for doctors in internal medicine departments, known as physicians, to be promoted from medical officer - the lowest rank - to senior medical officers. This is the longest wait for advancement in any speciality. The lack of prospects has sparked an exodus of physicians - who are responsible for diagnosis and treatment of chronically ill and elderly patients - to other specialities or into the private sector. On Saturday, Tuen Mun Hospital doctors escalated demands for better work conditions in an open letter written in conjunction with the association. It said at least 16 junior doctors at the hospital's internal medicine department had quit since January last year and two more would leave in July, representing 25 per cent of the frontline doctors. In reaction, the authority said it would send medics from other departments and more paramedics to help ease workloads, and it would create more senior posts for doctors. Authority chief executive Leung Pak-yin will visit Tuen Mun Hospital today to listen to staff concerns. Ho said each physician at Tuen Mun Hospital took care of 200 inpatients overnight, compared with an average of 110 elsewhere. "A doctor there told me that he wanted to grab a few minutes to hide himself in the consultation room to finish his lunchbox, but a patient stormed into the room and accused him of being lazy," Ho said. "These are terrible work conditions."

The financial secretary is expected to announce a one-off injection into the Mandatory Provident Fund accounts of workers on low incomes, and an electricity subsidy when he delivers his budget speech today. A person familiar with the situation, who refused to be named, said John Tsang Chun-wah (pictured) would also announce the issuing of inflation-linked bonds worth several billion dollars to help Hongkongers offset inflation. But to avoid adding further to inflationary pressure, Tsang would not give any new tax rebates. The relief package to be unveiled today, which will cost the government more than HK$30 billion, was likely to include rises in the child and dependent parent allowances, the person said. Last year's budget relief package cost HK$20.4 billion. Today's budget comes a day after the announcement of the city's biggest increase in overall consumer prices in 2-1/2 years, with food prices soaring by 8.2 per cent. The year-on-year consumer price index rose to 3.6 per cent in January, according to the Census and Statistics Department. It was the biggest increase since August 2008, when the figure was 4.6 per cent. Last month's 8.2 per cent year-on-year rise in food prices was the biggest increase among the index categories. The person familiar with the situation said Tsang, who granted a tax rebate of up to HK$6,000 last year, decided against a rebate this year because extra disposable income would further fuel inflation. The government would help people counter inflation by issuing inflation-linked bonds, with the interest paid to holders linked to the annual inflation rate. Such bonds have been sold in the United States for some years and are called Treasury inflation-protected securities, or TIPS. The Democratic Party wants the administration to issue HK$30 billion worth of inflation-linked bonds. Households are expected to receive an electricity subsidy of HK$1,800. Homeowners will not have to pay property rates for a year, subject to a ceiling, and public housing tenants will probably get a two-month rent-free period. A lump sum is also expected to be injected into the MPF accounts of the poorly paid. "Injection of money into MPF accounts of low-income people will not fuel inflation because they can only draw the cash after their retirement," the person said. In the 2008-09 budget, Tsang made a one-off injection of HK$6,000 into MPF accounts of those earning not more than HK$10,000 a month. Comprehensive Social Security Allowance and disability allowance recipients are expected to receive an extra month's payment, and Tsang is also expected to increase the child and dependent parent allowances. At present, parents receive a child allowance of HK$50,000 a year, while taxpayers caring for dependent parents or grandparents aged 60 or above receive a tax allowance of HK$30,000 a year. But Tsang was unlikely to increase the personal salaries tax allowance for the next financial year, the person said. He is likely to increase the duty on tobacco in an attempt to further discourage smoking. He is also expected to earmark more than 10 land sites for auction in the forthcoming financial year in an attempt to increase land supply for flats. He is expected to reveal the government will study development of underground land use. HSBC (SEHK: 0005, announcements, news) Greater China economist Donna Kwok said the latest CPI rise underscored why the bank believed the last thing the economy needed was an expansionary budget. "With Chinese and global food prices still rising, liquidity conditions extremely loose, domestic demand vigorous and residential property activity robust, a fiscal squeeze, not a handout, is now needed," he said. Chinese University political scientist Ma Ngok said the government had to tackle structural problems instead of blaming foreign influences, such as imports, for the rising CPI.

The Eastern Harbor Tunnel operator has not ruled out accepting a toll reduction plan proposed by the government days before its management is due to appear before the Legislative Council to ask for a massive increase. The management of New Hong Kong Tunnel, which runs the eastern tunnel, will present its case to legislators on Friday to demand a 40 per cent rise in the toll - a move they say is necessary to keep the operation profitable. But a person close to the company said it would not commit to anything until the government showed its own preference. The company is studying a temporary toll reduction for commercial vehicles - as proposed in a government consultant's report on balancing traffic flows among the three cross-harbour tunnels. The consultant has urged a system of strategic pricing to spread out traffic. The report recommends the eastern tunnel lower toll fees for cars from HK$25 to HK$20 in exchange for government subsidies. The Cross-Harbour Tunnel should simultaneously raise tolls to HK$25 from HK$20. This, the government consultant argues, will divert more traffic away from the heavily congested Cross-Harbour Tunnel and give more business to the eastern crossing, making it possible for it to keep profits up without raising tolls. According to the study released in November, the price adjustment could cut the long queues at the Cross-Harbour Tunnel by 52 per cent - by sending up to 4,300 cars a day to the eastern tunnel, which connects Quarry Bay and Cha Kwo Ling in Kowloon. Those added cars would bring the New Hong Kong Tunnel an extra HK$47 million a year. The idea has so far failed to convince shareholders of New Hong Kong Tunnel, according to the person close to the company. The company's application for a toll rise is the last before its 30-year franchise expires in 2016. It is intended to bring the company's internal rate of return to a pre-approved level to 17 per cent from 15 per cent. If a toll rise is approved, car and taxi drivers will pay an extra HK$10 on top of the current toll at HK$25. That could bring the company an extra HK$164 million a year - more than four times the consultants' proposal, even taking into account a potential 13 per cent customer drop-off from the higher toll price. Democratic Party lawmaker Wong Sing-chi said New Tunnel Hong Kong should drop the application and increase its revenues through other means. "We believe the consultant's rebate proposal is worth trying out," he said. "Of course, they could always seek arbitration again if the Executive Council rejected the toll rise request, but that could take years and their franchise [ends in] 2016. Co-operation sounds like a better option." The consultant's study laid out several scenarios for changes in the toll structure. If the gap were narrowed between the two crossings' truck tolls, for example, the queue at the Cross-Harbour Tunnel could be further cut by 77 per cent. More than 2,339 trucks, or 60 per cent of the city's trucks, use the Cross-Harbour Tunnel every day. That is largely because a light-goods vehicle below 5.5 tonnes is charged just HK$15 - less than a car. Medium and heavy goods trucks are charged HK$20 and HK$30, respectively. By contrast, the Eastern Harbour Tunnel charges HK$38 to HK$75.

 China*:  February 25 2011

Tianjin latest mainland city to set tighter measures on property sales - Tianjin has become the latest mainland city to try to clamp down on soaring property prices, following the example of Beijing, Shanghai and Guangzhou.

China-inspired looks in the 2011/12 autumn-winter show - They were a tribute to Ermenegildo Zegna's biggest market. The Italian fashion house's autumn-winter 2011/12 styles presented at Milan men's fashion week earlier this year featured China-inspired pieces carefully integrated into the collection. The highlights appeared in an ambitious interactive catwalk show titled "In The Mood for China" that reflected Zegna's plans. "When you get into a new product like that you never know what you are going to get," the company's CEO, Gildo Zegna, says after the show. "To figure out the balance of China images and the models' tempo, it wasn't easy ... but it worked and was a way to promote China and the digital world effectively." Gildo Zegna is following a modern strategy with his focus on China and interactive presentation; even so, it came as a shock to traditional fans of the label founded by his grandfather 100 years ago. Sitting behind a huge blonde wood table in his Milan headquarters, the 56-year-old acknowledges there was some risk of alienating long-time supporters with the shift, but responses suggest he has won them over. "They did not expect the jump because they still have in mind the classical Zegna that just specialises in textiles. However, the reaction is positive. "They loved the decoration of the China-inspired wardrobe with the autumn-winter collection. They loved the balance and that we were inspired by the colours of the landscape and places like the Great Wall ... They appreciated the sophisticated rough wear look with the suits, too." Zegna's designers drew inspiration from China's rich cultural heritage, in particular the Song dynasty painting, Along the River During Qingming Festival, to create a mix of beautifully tailored suits and casual wear featuring the luxurious textile that Zegna is known for, as well as more rough textured material. Theirs was a warm palette of red, mahogany, terracotta and bronze, leavened with slivers of bamboo green and shades of grey. There was casual outerwear made with waxed cotton, leather peacoats and shearling duffle coats, and baby-soft cashmere sweaters, some with unusual suede detail. Eastern influences blended surprisingly well with Zegna's Italian sartorial tradition. The timing couldn't have been better, coming just after the fashion house's centennial celebrations in Beijing last year, which also marked Zegna's 20 years in the mainland.

Volvo badges on a production line at a plant in Sweden. The Chengdu factory is due to open in 2013 with initial capacity of 125,000 units. Mainland officials say Volvo Car Corp plans to set up a manufacturing base in Chengdu as it aims for expansion in the world's biggest market following its buyout by independent carmaker Geely. An official with the city's Automotive Industry Investment Bureau confirmed a report on Tuesday that the Swedish carmaker has chosen Sichuan's capital as a base, but would not give further details. The Volvo factory is expected to focus on making compact and economy cars on a large scale. Shanghai and the northern city of Daqing also had been vying for new Volvo factories since the Geely deal last year. Volvo plans to hold a news conference to announce its strategy in China later this week in Beijing, the Chengdu Overseas Media Service, a local, non-governmental media group, reported, citing officials from the city's trade development zone. Ning Shuyong, a Geely spokesman, would not confirm the report but said a decision was pending. Chengdu is among many mainland cities aspiring to become carmaking hubs and is one of the country's biggest inland markets. While sales of cars are forecast to slow slightly from their torrid growth in recent years, sales in the provinces are surging as increasingly affluent families buy their first cars or trade up. Chinese media reports say work on the factory is already under way and it is due to begin production by 2013 with initial capacity of 125,000. Privately owned Geely Holding Group agreed in March last year to buy Volvo Car from Ford Motor for US$1.8 billion, the biggest acquisition by a major Chinese carmaker so far. The buyout gave small but ambitious Geely access to a prestigious brand and top technology and enabled Ford to unload the loss-making carmaker to raise cash and focus on its core Ford and Lincoln brands. Analysts have expressed doubt about 13-year-old Geely's ability to make a success of Volvo, a perennial money-loser on another continent. Hangzhou-based Geely has built a business selling cars and motorcycles with little government support. Volvo recently set up a new China headquarters in Shanghai. Geely has said it plans to keep its production arrangements in Europe and contracts for assembling 15,000 cars a year by a Ford joint venture, Changan Ford Mazda Automobile, in Chongqing. The longest of those contracts runs until 2018.

BMW's Rolls-Royce aims to increase sales at least 10 per cent this year as the maker of luxury vehicles boosts deliveries in China and seeks to attract younger buyers. "We will see for China this year quite strong growth," the division's chief executive Torsten Muller- Otvos said. Young Asian entrepreneurs would help the company increase sales by "at least a two-digit figure" in percentage terms, he said. The carmaker, which competes with Daimler's Maybach and Volkswagen's Bentley divisions, almost tripled sales to a record last year. Rolls-Royce said sales rose to 2,711 cars last year, led by growth in Asia, the United States and the Middle East. The manufacturer's previous sales record was set in 2008, when it delivered 1,212 vehicles. China would form the carmaker's biggest market as early as 2014, with its Ghost sedan driving demand, Muller-Otvos said. The US$245,000 Ghost is Rolls-Royce's second product line after the Phantom, which starts at US$380,000. "It's difficult to overstate the importance of the Chinese market to the premium carmakers," said Tim Urquhart, a senior analyst at consultancy IHS Automotive in London. "China will provide the vast majority of volume growth for the premiums for the next decade at least." He expects sales in China to increase by a third to 287 cars this year. The Ghost has spurred growth for the marque after the financial crisis depressed sales 17 per cent in 2009. The US remained the biggest market for Rolls-Royce last year.

France's nuclear policy council announced the start of discussions to set up a wide-ranging partnership with top nuclear client China. The council, chaired by President Nicolas Sarkozy, also unveiled measures to streamline and unify a nuclear industry plagued by technical issues and public disputes that have tarnished its image abroad. Among a set of measures aimed at reshaping one of France's most sensitive industries after the loss of a landmark deal in Abu Dhabi in 2009, the council called on Areva to turn its uranium mining arm into a subsidiary and co-operate with EDF and GDF Suez to develop a new reactor. The government holds more than 80 per cent of EDF's capital and about 90 per cent of Areva's. On the China talks, Sarkozy's office said: "Beyond the supply of products and services for existing and future facilities, this partnership could include the building of new EPR (reactors) and the joint development of a medium-sized 1,000-megawatt reactor." China, which currently has 13 working reactors with just under 11 gigawatts of total generating capacity, aims to raise its capacity to 40 gigawatts by 2020. Sarkozy's office said Energy Minister Eric Besson would set up a nuclear power strategic committee, which will gather all of France's nuclear power players. Besson will chair the committee, and EDF chief executive Henri Proglio will be his deputy. This appeared to be another effort by the government to put behind public disputes between the heads of Areva and EDF after the Abu Dhabi loss and delays in a Finnish project, which have harmed the French nuclear industry's image abroad. Areva, EDF and rival GDF Suez will also work jointly on the development of ATMEA, a medium-ranged reactor, which is reported to be more fit to win deals abroad.

Beijing has made it harder for non-locals to buy a flat, but there's one way they can beat the restrictions - by getting married. Non-locals were targeted when the government in the capital launched fresh measures earlier this month to clamp down on speculation in the property market. They can buy only one home providing they have lived in Beijing for at least five years. Beijing residents are restricted to two homes. The fastest way to become a local is to marry a Beijing resident. This has created a gray area when it comes to purchasing homes in the capital. Some people may even go through a fake marriage in order to buy a home and then divorce afterward. And Beijing couples seeking to double their property just need to divorce, creating two "households" with each entitled to two homes. But anyone planning to exploit the loophole should heed what Beijing officials say - the restrictions will not last forever. The measures may be relaxed when home prices return to "reasonable" levels, said Beijing Real Estate Association vice secretary-general Chen Zhi. For example, people not registered in Beijing may only have to provide proof of income and social security taxes paid for three successive years, rather than the original five years, before they can buy their first home in the city. Despite the curbs, developers are continuing their expansion in the mainland property market. Meanwhile, HKR International (0480) plans to acquire a plot of land in the Yangtze River Delta for residential and commercial purposes. The company is still negotiating with the local government, said executive director Abraham Chung Sam-tin. Construction on a Shanghai shopping and office project which HKR is developing in cooperation with Swire Properties is expected to begin after March, Chung said.

Best Buy close close all nine of its branded stores in China to grow - Best Buy close close all nine of its branded stores in China to grow. Best Buy, the world's largest consumer electronics retailer, will close all nine of its branded stores in China and concentrate on the profitable domestic chain it acquired in 2006. The Minnesota-based retailing giant said it was shutting down the Best Buy stores in the country as they were doing poorly. Instead, it plans to open up to 50 branches of its Five Star Appliance chain, which it bought five years ago, by February next year, as part of efforts to "refocus on the profitable retail platform". The company announced the appointment of Five Star co-founder Wang Jian as global vice-president of Best Buy and chief executive of Five Star yesterday. Some market observers said Best Buy had missed the opportunity to challenge rivals such as Suning Appliance and Gome Electrical Appliances (SEHK: 0493), the two largest home appliance retailers in China. "The biggest mistake that Best Buy made in China was its slow pace of expansion," said Zuo Yingjie, the chief executive of, the country's largest consumer appliance shopping portal. Best Buy formally entered China in June 2006, when it bought Jiangsu-based Five Star, the fourth-biggest operator in the market, which then had 136 stores, mainly in the Yangtze River Delta area. Five Star has 168 stores. Over the next four years, Best Buy opened its nine branded outlets in Shanghai, Hangzhou, Beijing and Suzhou. Suning had about 1,300 stores in more than 200 cities last year while Gome operates about 1,200 outlets, including 370 owned by founder Wong Kwong-yu. "That's why Best Buy's bargaining power has been weak in its negotiations with suppliers and the prices it got were higher than what its rivals were able to wrest," Zuo said. "Actually, Best Buy did bring some fresh shopping experience for Chinese consumers, yet it's not competitive at all in terms of retail prices." Liu Buchen, a veteran analyst in the appliance industry, said Best Buy had failed to seize the initiative. "It has not found a proper profit growth model in China, as is evident from the frequent changes of management over the past years," Liu told Sina Finance. "I am not optimistic on its future in China." Best Buy yesterday also said it would shut its two stores in Turkey. The company's restructuring, which includes improving its US operation, will save US$60 million to US$70 million annually, Bloomberg reported.

Huawei Technologies, the mainland's largest telecommunications equipment manufacturer, has been contracted to overhaul all the 2G and 3G infrastructure of Vodafone Hutchison (SEHK: 0013) Australia (VHA) in a massive network upgrade. "We're installing the latest technology from the company that we believe is the best network hardware and software vendor in the world," VHA chief executive Nigel Dews said yesterday. The project, the financial terms of which were not disclosed, will replace about 5,800 existing 2G and 3G base station sites with Huawei's SingleRAN solution. VHA, which was formed in 2009 from the merger between Vodafone Australia and Hutchison 3G Australia, will also install the Huawei network equipment at more than 2,200 base station sites that the carrier will bring into its nationwide network over the next 18 months. The Huawei system can deliver 2G, 3G and the Long Term Evolution (LTE)-standard 4G services from a single base station site. "Huawei's SingleRAN solution will enable Vodafone to upgrade to 4G at the flick of a switch, with the first LTE next-generation services expected to come online later this year," Peter Rossi, chief technology officer at Huawei Australia, said. VHA confirmed that all its customers' mobile phones and mobile broadband devices will remain compatible with the new Huawei equipment being introduced across the network. The carrier has more than 7.4 million subscribers in Australia. According to market research firm Ovum, Huawei scooped the VHA contract from the carrier's incumbent suppliers Ericsson and Nokia Siemens Networks. "It was not a surprise that Huawei was on the shortlist for this contract," Ovum analyst Nicole McCormick said. "But it is surprising that Huawei has ousted Vodafone's long-standing vendors. Price played a key part in this decision." "This network overhaul is long overdue, and Vodafone and Huawei must proceed quickly to deploy the network infrastructure, which includes 42-megabit per second Evolved High-Speed Packet Access-standard wireless broadband at the 850-megahertz spectrum, to address Vodafone's network capacity issues." Vodafone will also replace its radio network controller equipment with new Huawei technology at sites in Sydney, Melbourne, Brisbane, Adelaide and Perth.

Farmers forced into juggling act as wells run dry - "This is my favourite sheep," said Liu Guangjun , pointing at a large ram among 13 that he was herding near a dry wheat field in Liukou village of Heze , Shandong. Breeding sheep is the major source of income for Liu, 59. By selling eight, each weighing about 50kg, he can earn 8,000 yuan (HK$9,455) a year. This income is particularly important as his arable farming income from a half-hectare of wheat is expected to drop after the worst drought in 60 years hit his village on the plains. "Farming offers very little profit," said Liu, holding a leather whip tied to a wooden stick in his rough hand. "It doesn't leave much after feeding us. It's too dry this year. Our farming income will drop by perhaps 2,000 yuan." It may not be quite as bad if only a little rainfall arrives. "Irrigation costs are higher in a dry season," Liu said. "We have decided not to irrigate because part of our land is too high for water to flow into the irrigation channel, and there are no wells nearby." Yao Jianfu , a former senior research fellow with the State Council's Research Centre for Rural Development, said: "Farmers are born economists who know very well when to give up on irrigation or change to plant other grains in different weather." As badly as farmers living on the plains are suffering because of the drought, those in mountainous areas have it even worse. In mountainous Lanwo village of Jining , Shandong, drinking water has been much more scarce than on the dusty plains. The drought since October has reportedly affected some 2.57 million people and 2.79 million head of livestock in the province, state media reported. Tang Jinlan , 58, goes out twice a day, carrying drinking water in two steel buckets on a shoulder pole. She has to walk down a small hill to a well and back up with 40kg of water. "It's a lot of hassle, but I'm used to it. If I'm too weak to carry the water, my daughter replaces me." In Tang's village, a few wells are already dry, said Tang Jingui , the village chief. "A few families have begun sharing water from a well," he said. "Some have to walk hundreds of metres farther." The drought is taking its toll on those whose income depends solely on farming, but the losses can be lessened by getting jobs in urban areas, said Yao. "Usually farmers rely on farming for food. They make their profits through working in urban areas or doing other businesses at home." In a dry season such as this one, the wheat harvest can be expected to drop by 20-30 per cent, and poor profits from farming have suppressed the incentive to stay in villages for the young as a rapidly modernising China pursues development and urbanisation. The drought has already pushed some farmers to work longer at other jobs this year. Shi Weibing , 43, in Heze's Linzhuang village, planned to go to Beijing for a job in early March even though "working at a construction site can be very tough", he said. "I was sometimes bullied by bosses and co-workers." Unlike Shi, the severe drought has posed a problem for some farmers, who have to decide whether to work more at other jobs or stay and help with farming. His hands and ears ruddy, Liu Zhengwei , 30, helped his father plough sandy soil in a light snow last week. The temperature had dropped below zero as icy western winds howled in Lanwo village, where the average resident earns 2,000 yuan a month. Liu, father of a one-year-old girl, came home for the Lunar New Year holiday and helped out with farming duties. He normally works at a brick factory in Jining, earning about 1,500 yuan a month, but goes home every few months to help with sowing, planting and harvesting. "My two-month income equals a year's harvest from a two mu [0.133 hectare] crop," said Liu. "It's a main source of income for my family of five." Liu also had another reason to come home: his baby girl had just learned to call him Daddy in October. He said he missed her so much that he sometimes weeps when they talk on the phone. This year he faced a dilemma: either work in the city and miss his daughter, or stay home with her and make less money.

Hong Kong*:  February 24 2011

Consumer prices were continuing to rise this year in Hong Kong – largely on the back of higher food prices and housing rentals, a government spokesman said on Tuesday. The Consumer Price Index (CPI) increased 3.6 per cent year-on-year in January, according to the latest Census and Statistics Department figures. For the three-month period ended January 2011, the monthly average rate of the CPI was up a seasonally-adjusted 0.5 per cent, compared with a 1.0 increase in the October to December period, the figures showed. A government spokesman said underlying consumer price inflation rose further in January – mainly reflecting higher food prices and continued feed-through of earlier fast increases in private housing rentals. The spokesman said some of the faster price increases in the latter part of January were also related to the timing of the Lunar New Year, which fell in early February this year but in mid-February last year. The spokesman said the economy would continue to face higher price pressures in coming months. This would include rises in global food and commodity prices, higher imports. “The whole Asian region is subject to greater inflation risk,” he said. “The government will monitor the situation closely, especially the impact of inflation on lower-income people,” the spokesman added.

Shares of (SEHK: 1688) tumbled as much as 10 per cent after an internal probe prompted resignations of its top executives and forced the company to clean up a vendor mess that defrauded buyers. China’s biggest e-commerce company, founded by billionaire and former school teacher Jack Ma, now faces the challenge of coping with the abrupt replacement of its CEO and COO and with revamping its payment and credit-ranking system to prevent the fraud it announced on Monday.’s shares fell by as much as 9.6 per cent to HK$15.08 and ended down 8.6 per cent, logging the biggest fall since September 2009, during the global financial crisis. The broader Hong Kong market shed 2.1 per cent., which dominates China’s business-to-business internet space, needs to rework its business model, but most analysts say the latest management shakeup will have limited impact on its financial performance in the next few quarters.

Cyclist Wong Kam-po admitted he might have won his last "Best of the Best" Sports Stars Award after claiming the biggest annual prize in Hong Kong sport last night. At a presentation ceremony at the Convention and Exhibition Centre in Wan Chai, the veteran rider, who will turn 38 next month, collected the highest number of votes from the selectors among 53 candidates who achieved outstanding performances for Hong Kong in 2010. "I treasure this one very much although this is already my third `Best of the Best' award," said Wong, who won a record third Asian Games road race gold medal at the Guangzhou Games last year and a silver medal in the points race on the track. "I know it is getting harder and harder for an athlete of my age, especially when there are so many promising athletes from my sport and others coming through the ranks recently. I think it will be difficult even for me to get nominated next year against these strong opponents." The top eight votegetters out of 53 candidates for the 2010 Sports Star award, as voted on by selectors comprising a judging panel, the sports media and a public ballot, each received HK$30,000. Wong drew the highest number of votes and became the "Best of the Best" for 2010 and got an additional HK$50,000. The eight Sports Stars include five Guangzhou Games gold medallists - cyclist Wong, snooker player Marco Fu Ka-chun, BMX rider Steven Wong, windsurfer Chan King-yin as well as fencer Au Sin-ying - and two disabled athletes - wheelchair fencer Yu Chui-yee and swimmer Leung Shu-hang. Wong, who won the top prize for 2006 and 2007, dedicated the success to his coach Shen Jinkang, who has been working with the cyclist since 1994. "Shen has played a pivotal role in developing our sport for almost two decades and it is not just me but many other riders who have benefited through him," said Wong. "We could never achieved what we have without his hard work and effort over these years." The coach masterminded a remarkable nine-medal haul at the Guangzhou Games - four gold, four silver and one bronze - making cycling the most successful sport from the 400 strong Hong Kong delegation. Wong also set an Asian Games cycling record by winning three gold (1998, 2006 and 2010) and one bronze medal (2002) in the road race. No other cyclist has won more than two medals in this event at the Games. Wong, who has just returned from the Asian Championships in Bangkok where he failed to secure a 2012 Olympic Games entry berth by reaching the first two places, will now focus on the Asian Tour in order to get the Olympic ticket. His next race will be the Tour of Taiwan which starts early next month. Among other awards last night were the two Team Event Awards (women's snooker and women's wheelchair fencing), the Team Sport Award (rugby), the Sportsmanship Award (Wong Wan-yiu of cycling).

Beijing loyalist Rita Fan Hsu Lai-tai is the most popular choice as Hong Kong's next chief executive, according to a poll released yesterday. Sixty per cent of the respondents would back Fan, if she ran. The poll, conducted by research institute Hong Kong Transition Project in late November, interviewed 807 people by phone on a range of political and current issues. Presented with the names of the four possible candidates frequently referred to as front runners in the next chief executive race, 53 per cent said they would "strongly support" or "support" Chief Secretary Henry Tang Ying-yen. In third place was Civic Party leader Alan Leong Kah-kit (45 cent) followed by Executive Council convenor Leung Chun-ying (37 per cent). Pollster Professor Michael DeGolyer attributed the popular support for Fan in part to her former post as the Legislative Council president, which he said helped her build an image of being fair and willing to listen. Leong, a legislator who represented the pro-democracy camp in the 2007 chief executive election, declined to discuss if he would run again. He said of yesterday's poll results: "It shows that people are disappointed with Mr Tang and Mr Leung. The result for Mr Leung, I have to say, is quite pathetic." Under new procedures approved last year, the next chief executive will be chosen in 2012 by an expanded 1,200-member election committee. Despite being widely tipped by media as front runners, Tang and Leung have also not confirmed they will run. And the candidacy of Fan, who is a member of the National People's Congress Standing Committee, also remains speculative. Recently, legislator Regina Ip Lau Suk-yee formed the New People's Party while hinting she might be interested in seeking the top post. In keeping with the political tradition of China, there may well be some other contestants whose names will not be made known until later. Tang said through a spokesman yesterday only that he would continue to devote himself to his current job of chief secretary. Neither Fan nor Leung could be reached for comment. Some 94 per cent also responded to a question asking them to name others they would like to see run. Among suggested names were former chief secretary and legislator Anson Chan Fang On-sang, veteran Democrat Martin Lee Chu-ming and League of Social Democrats legislator "Long Hair" Leung Kwok-hung. Almost one-third of respondents said none of Hong Kong's political parties could represent their interests. Among the rest, 18 per cent said the Civic Party would be their choice, followed by the Democratic Party (15 per cent) and the pro-Beijing Democratic Alliance for the Betterment and Progress of Hong Kong (13 per cent). On other policy issues, about 80 per cent of respondents supported taxing developers on their unused land holdings, while 85 per cent supported resuming the Home Ownership Scheme. Sixty per cent supported scrapping all appointed seats on the district councils.

Customs officers have officially moved into a new ultramodern headquarters complete with an indoor shooting range and equipped with a computer simulation system for scenario-based training. The HK$135 million, 32-story building at 222 Java Road, North Point, has a gross floor area of 41,000 square meters. It will house more than 18,000 officers and civilians - about one-third of the workforce - who were previously split among different districts. "With state-of-the-art training facilities and a management information system, customs can excel in what we do best: to protect society, facilitate trade and ensure the integrity of our border," Commissioner of Customs and Excise Richard Yuen Ming-fai said at the building's opening ceremony yesterday. In addition, a customer service center on the third floor provides an integrated, one-stop shop for license applications and permits for dutiable commodities, controlled chemicals, replication equipment and assessment of first registration tax for vehicles. Chief Executive Donald Tsang Yam- kuen, who officiated at the opening, said: "Placing the department's major operations under one roof at the Customs Headquarters Building will enhance the efficiency, communication and unity of the department." He said customs play a pivotal role in maintaining Hong Kong's image as a clean city and officers will be able to take full advantage of the working environment. The advanced operational and training facilities in the building will better equip them for the challenges ahead, he added. A 200-square-meter exhibition, themed "The History and Development of Hong Kong Customs in the past 100 years," will give the public a good understanding of their work. Seizures from various customs operations such as intellectual property rights protection, and consumer and revenue protection are also on display.

Hong Kong's biggest political party in the legislature is urging the government to expand its aid to food banks with an extra HK$500 million. The wish list from the Democratic Alliance for the Betterment and Progress of Hong Kong also includes a one-off HK$3,600 subsidy on electricity for each household, and waiving the rates for one year, capped at HK$3,000 a quarter. The DAB's calls came yesterday - two days before Financial Secretary John Tsang Chun-wah announces his budget tomorrow. On measures to curb property price rises, the government is expected to hold auctions for at least 10 plots of land in the coming fiscal year, on top of land sales triggered by developers under the application list system. Meanwhile, Sham Shui Po district councillor Vincent Cheng Wing-shun said the current food assistance scheme mainly helps the jobless. "In most cases, they can only receive aid once every six months," Cheng said. "I hope by setting aside more money for the scheme, it can help more low-income people and they can be allowed to receive aid more frequently." The Social Welfare Department commissioned nongovernmental organizations to run five food assistance service projects in February 2009. Government figures show that up to November 30, nearly 40,000 people have benefited. The government said in 2008 that HK$60 million would be given to the NGOs for operational expenses, while another HK$27.5 million would be reserved to meet future service demand. Secretary for Labour and Welfare Matthew Cheung Kin-chung said last month the department estimates the available funding will help food assistance projects to operate up to 2013. "However, the department will closely monitor the service demand," Cheung told legislators. The NGO which has spent the most so far is Kwun Tong Methodist Social Service, providing food aid in Kwun Tong, Wong Tai Sin and Sai Kung. It spent HK$5.62 million up to November. St James' Settlement, which serves Hong Kong Island, Tung Chung, Tsuen Wan, Kwai Tsing and outlying islands, spent HK$3.02 million. Highly anticipated to focus on combating inflation and boosting housing supply, Tsang is expected to increase tax allowances and tax rebates, waive property rates, and provide a one-off allowance for welfare recipients and the old.

 China*:  February 24 2011

Kazakh President Nursultan Nazarbayev, left, meets with Wu Bangguo in the Great Hall of the People in Beijing on Tuesday. A visit to China by Kazakhstan's long-standing leader is further reinforcing the growing role Beijing is playing in the resource-rich Central Asian nation, with deals to be signed on Tuesday relating to supplies and financing for oil projects. Kazakhstan President Nursultan Nazarbayev’s meetings with President Hu Jintao and other leaders will in part showcase the shifting dynamics in Central Asia as China elbows aside the United States and even Russia to become a dominant force in the region. China is now Kazakhstan’s second-largest import supplier, after Russia, its largest export market and increasingly a source of capital. During the visit, the two sides are expected to sign a contract worth several billion US dollars for long-term Kazakhstan supplies of uranium to China, part of a co-operation programme with Guangdong Nuclear Power, the chairman of Kazakhstan’s Samruk-Kazyna National Welfare Fund, Kairat Kelimbetov, told the official news agency Kazinform. Also to be agreed on is a US$1 billion plan for the Export-Import Bank of China to finance construction of an oil refinery in the Kazakh city of Atyrau, on the Caspian Sea, Kelimbetov said. That is part of a US$4 billion programme to modernise the country’s three refineries. The deals add to China’s already extensive involvement in the Kazak economy, from their US$20 billion in trade last year to various railway, road and construction projects. Among them is a bitumen factory to help pave a highway to run from China to Western Europe. Economic ties stretch beyond big state companies to private firms. In comments to China’s official Xinhua News Agency reported last week, Nazarbayev urged more mainland investment in his country and praised the more than 1,000 companies from China already there for spurring development. Kelimbetov said Kazakhstan is also keen to obtain additional credits from Chinese banks through the regional Shanghai Co-operation Organisation, a security grouping dominated by Russia and China that also includes Kyrgyzstan, Tajikistan and Uzbekistan.

Delegates from Taipei and Beijing met on Tuesday to discuss issues arising from a sweeping trade pact that has set the stage for unprecedented economic interaction between the two sides. It was the first meeting between Taipei and Beijing since the Economic Co-operation Committee was launched last month to address issues related to the comprehensive Economic Co-operation Framework Agreement (ECFA). “Both sides have sent a big group here as they attach great importance to this meeting, the first since the committee was set up last month,” said Kao Koong-lian, deputy chairman of Taiwan’s Straits Exchange Foundation. The foundation is a quasi-official body authorised by the Taiwan government to handle civil exchanges with the mainland in the absence of official contacts. Kao’s mainland counterpart in the talks is Zheng Lizhong, executive vice chairman of the Association for Relations across the Taiwan Straits, also a semi-official body. The two sides will discuss trade in goods and services, the establishment of a dispute settlement mechanism, and the possible exchange of liaison offices.

More than 1,000 Chinese construction workers in Libya were forced to flee after gun-wielding robbers stormed their compound, stealing computers and luggage, the company and state media said on Tuesday. Beijing has warned Chinese citizens not to visit the North African country and urged companies to take precautions as protesters overran several Libyan cities, threatening to put an end to leader Muammar Gaddafi’s 41-year grip on power. The looters raided Huafeng Company’s compound in the eastern city of Ajdabiyah on Sunday night, the Beijing News said, citing the Chinese embassy in Tripoli and a friend of one of the employees. No one was injured in the attack, the report said. The workers, clutching their passports, plane tickets, food and water, are walking to Tripoli, “several hundred kilometres” away, where they hope to catch a plane to China, the report said. A company spokeswoman confirmed the workers were walking to Tripoli but said the distance was “not that long”. She did not provide further details. Huafeng, which is based in Zhejiang, is involved in residential construction projects in Libya. On Monday, some 500 Libyans looted a South Korean construction site west of Tripoli, injuring South Korean and Bangladeshi workers, Seoul’s foreign ministry said. British energy giant BP was also on Monday making preparations to evacuate some of its staff from Libya amid escalating unrest in the country, a company spokesman said.

Chinese and Bahamian dignitaries celebrated on Monday as workers broke ground on what is being billed as the largest project of its kind in the Caribbean – a mega-resort financed and largely built by Beijing. Baha Mar, a US$3.4 billion complex on Nassau’s Cable Beach, will employ some 8,000 workers and is projected to generate a 10 per cent boost to the Bahamas gross domestic product, according to development company Baha Mar. The development plan calls for four hotels with a total of about 2,250 rooms, as well as a golf course, retail space, a convention centre and what the developer says will be the largest casino in the Caribbean. It is scheduled to open in December 2014 and is aimed largely at North American consumers, who make up the vast majority of tourist visitors to the Bahamas, said Don Robinson, president of Baha Mar. In overall size, it will be comparable to the Atlantis resort on nearby Paradise Island. But that project was built in stages over a number of years, not all at once like Baha Mar. Robinson said the resort’s ambitious scope is part of its marketing plan, an effort to capture the public’s imagination and attract tourists who have abandoned the Bahamas for other destinations. “The vision was a large destination resort that would drive visitation,” he said in an interview before the ceremony. “Anything smaller became less of an ability to increase the market. It needed to be large enough on the world stage that it could significantly drive demand.” Caribbean tourism took a steep dive with the global economic downturn, but there have been signs of life: Hotel room revenue in the region rose about three per cent and occupancy edged up nearly one per cent last year, compared with 2009, according to travel industry watcher STR of Nashville, Tennessee. The crisis forced some developers to scale back plans made in rosier times, but Baha Mar appears to be wagering that it can create a destination resort and keep people spending money at stores and shops within the walls of the complex, said Jan Freitag, vice president for global development at STR. “The question is: Is that a good enough driver in this economic environment?” Freitag said. For the resort’s concrete and steel main structure, Baha Mar hired China State Construction Engineering, which brought in the Export-Import Bank of China to finance the project when a previous partner dropped out. This is the first tourism project outside China for either of the state-owned enterprises, Robinson said. As part of its agreement with the Bahamian government, Baha Mar will import about 7,000 Chinese construction workers in stages. The project is also expected to create about 4,000 construction jobs for local workers, the developer said. “The great geographical distance between our two countries has not impeded our friendship,” China’s Ambassador Hu Dingxian said at the groundbreaking ceremony.

Photo taken on Feb. 22, 2011 show the view of advection fog in downtown Shanghai, east China. 

Hong Kong*:  February 23 2011

Marathon chiefs want more time - Extra two hours eyed next year for city's biggest participatory sporting event to expand - Race day brought out the hard-core runners as well as light-hearted competitors dressed in costumes. It ended in collapse for some and a father-and-baby photo opportunity. Organisers of the Standard Chartered Hong Kong Marathon are hoping to get at least two more hours for next year's race, to expand the city's biggest participatory sporting event. A record 65,000 runners were entered for yesterday's event - a 10-kilometre race, a half-marathon and a full marathon - across Kowloon and Hong Kong Island with the finish at Victoria Park in Causeway Bay. But although only 54,800 runners actually showed up, organisers are still looking for more participants as the quota this year was snapped up in just over two weeks. "We are given six hours to finish the marathon race, and if we want to get more people next year, we have to either change the route or extend the finishing time," said William Ko Wai-lam, chairman of the organising committee. "But I don't see any great chance of moving the event to another route, as it is difficult to find another 42.195 kilometres for the competition in Hong Kong. "What we can do is to ask the authorities to give us some more time, possibly another two hours in the afternoon. We don't want to start the competition any earlier." Yesterday's first race, the 10km run, started at 5.15am. The marathon had to finish by 1pm at the latest, six hours after it started in Tsim Sha Tsui, as the police had to reopen the routes for public use by 2pm. The five 10km races, held along the Island Eastern Corridor, finished at 10am. The Singapore Marathon, which has a flat course in contrast to Hong Kong's hilly route, has eight hours, according to Ko. The hilly nature of the Hong Kong race makes world-class distance runners shun the event. "The big names come to a marathon race only for two reasons - a flat course to set a record or big prize money as incentives," said Ko. "We have doubled our prize money for the overall winner this year to US$34,000, but the marathon in India offers US$100,000 to the champion. It will be very difficult for us to match the amount." Ko said the organisers were keen to expand the event. "People train for months to take part; you can see them running on the roads every day," he said. "They may first start with the 10km run and then half-marathon, with the marathon as their ultimate target. We have to keep expanding the race to accommodate the ever-increasing number of runners." The organisers introduced two new starting times this year in the marathon races and one in the 10km run, after they expanded the quota from the previous year's 60,000 runners to 65,000. "My first report looks positive for adding more starting times, but we still need more discussion with the authorities before we can come up with any concrete plans for next year," he said. Eastern district councillor Hui Ka-hoo, however, opposes any enlargement of the competition, saying it would play havoc with public transport. "The roads have been occupied for longer and longer in recent years," said Hui, the chairman of the council's traffic and transport committee. "It is already seriously affecting the region's transport. Any further extension will only exacerbate the situation." Another member of the council, Andrew Chiu Ka-yin, said yesterday's event had affected the schedule of some community events. Meanwhile, the Hong Kong Amateur Athletic Association said it made a profit of under 10 per cent from entrance fees. Each of the 65,000 entrants has to pay HK$300 - raising HK$19.5 million for the association.

Customers search for bargains on the last day of operation of Chung Hing Chinese products store in Shanghai Street, Mong Kok. One of the city's last remaining China products stores closed its doors for the last time yesterday. The family owner of Chung Hing Company, a household name which operated in Mong Kok for more than half a century, said the store had to close because of rising costs, a strong yuan and rapid urban renewal, which forced many clients out of the neighbourhood. "Business was already difficult enough: this year import prices have increased by 20 to 30 per cent," said Li Siu-tong, 51, the sixth son of the family who ran the two-storey shop. His father and uncle opened the shop in 1958. The family business thrived in the late 1970s to '80s and opened three more branches in the district. "We used to have up to 10 sections selling clothes, medicine, food, furniture, electronic appliances - just like what you'd find in today's department stores," said Li. The three branches closed one after another in the past 20 years and the main store kept shrinking in size. It mainly sold school uniforms, underwear and blankets in recent years. "Our customers are mainly old folks and old folks don't spend much these days," Li said. He said many of them had to make way for urban renewal and resettle in public housing in other districts. "I used to come here a lot, usually when I went to a teahouse nearby. But now, not so often since I moved to the New Territories," said long-time customer Tam Oi-chuan, 75. She revealed she had come yesterday to visit the shop for the last time. "It's nostalgic," she said. "The clothes they sell are warmer," she added as she showed off the blue jacket she was wearing. "I bought it here 40 years ago." Another customer, Sarah Li, said she used to visit the shop frequently 30 years ago to buy underwear and school uniforms for her children. She came with her husband yesterday to look for bargains. "Times change and it's difficult for these traditional shops to survive, especially in Hong Kong where land is scarce," she said. Economic liberalisation on the mainland meant there was no longer the demand in the 1970s and 80s for the store's goods. "In those days, especially before Lunar New Year, people bought cooking oil, dried seafood, all kinds of things to bring back to their hometown on the mainland. The whole shop would be filled with people," Li, the store operator, said. Older brother Li Siu-leung remembered the good old days. "People would place orders for fans, fridges and other electrical appliances here, and they could get the products on the mainland," he said. Hong Kong people then were allowed to bring only one electrical appliance a year across the border. The two brothers said they would not be missing the store too much. "I can stop worrying about the store now, and I can finally get a holiday," one of them said.

Hong Kong's jobless rate fell to 3.8 per cent for the November-January quarter – the lowest level for more than two years, new figures released on Monday showed.

1970s files show projects to thaw HK-Beijing chill - Proposals to build a new airport and a nuclear power plant serving Hong Kong from north of the Shenzhen River were first made well before China and Britain began negotiating the handover of the colony in the 1970s, in attempts to improve the relationship between the two sides. The two ambitious plans, presented by some of Hong Kong's most influential figures at the time, have been revealed in secret files recently declassified by Britain's National Archives in London. In 1980, Chung Sze-yuen, then the most senior Chinese member of Hong Kong's Executive Council, raised with British officials the idea of building an airport on the Chinese side of the border, in the hope of fostering closer ties with Beijing. Six years earlier, Lawrence Kadoorie, who was then chairman of China Light & Power, came up with the idea of building a nuclear power station on the mainland, to build trust between the colony and Beijing. Kadoorie's plan, which was not made public at the time, came a decade ahead of Beijing's approval in 1983 of the Daya Bay nuclear project, the 1,968 MW power station just east of Shenzhen that now sells 70 per cent of its output to Hong Kong. These proposals were made in the late 1970s, at a time when the relationship between Hong Kong and Beijing remained frosty as the city began to fret over its future beyond 1997, when Britain's 99-year lease on the New Territories would expire. Chung and Kadoorie understood that Hong Kong's fortunes would be intertwined with those of the mainland and that imaginative ways were needed to engage the communist neighbour in the city's long-term interests. According to a report compiled by Britain's Foreign and Commonwealth Office (FCO) in July 1980, Chung "thought that there were strong arguments for considering an airport on the Chinese side of the border, for political reasons". Veteran politician Allen Lee Peng-fai, who is close to Chung, said Chung had confirmed that he had raised the idea with British officials who visited Hong Kong at the time. Chung, the highest-ranking Chinese member of Exco from 1980 to 1988, suggested the planned airport could be jointly used by Hong Kong and the mainland. Hong Kong and mainland travellers would use different arrival/departure halls. "Chung also proposed that the Hong Kong government foot the bill for constructing the airport. At that time, China was a poor country with only a small amount of foreign reserves," said Lee, who was a lawmaker from 1978 to 1998. Chung, Exco's convenor under Tung Chee-hwa's administration from 1997 to 1999, broached the idea of an airport a year after Hong Kong governor Murray MacLehose talked with paramount leader Deng Xiaoping in Beijing in March 1979. During that historic talk, Deng left open the options of taking back Hong Kong in 1997 or allowing the status quo to continue after the expiry of the New Territories lease. "But Chung's idea [for an airport on the mainland side of the border] died a natural death, as apparently the British government was not interested," Lee said. In 1974, Kadoorie came up with the idea of a nuclear power plant north of the border when he made the proposal to British officials Kenneth Wilford and Edward Youde, who became governor in 1982. In a telegram sent to MacLehose in August 1974, Wilford, who was then the FCO's deputy undersecretary of state, noted that Kadoorie wanted to "see the building of a nuclear power station as part of the process of accommodation between Hong Kong and China". "He mentioned the possibility of exporting power to China, but he seems to have begun his thinking from the position that China might well feel upstaged by Hong Kong in that Hong Kong had got a nuclear power station before China had," Wilford wrote. "Therefore, I think, that if Kadoorie had any choice in the matter he would much prefer to have seen the power station built in China and exporting power to Hong Kong. He hankers after using the power station as a means of easing the colony's future relationship with China," the British official wrote. When Kadoorie conceived his idea, China was still plagued by the upheavals wrought by the Cultural Revolution, which ended in 1976. Kadoorie's dream came true in 1983, when Beijing approved the Daya Bay nuclear project in Guangdong, just east of Shenzhen, a year before the joint Sino-British declaration on Hong Kong's handover was announced. Michael Kadoorie, CLP Power (SEHK: 0002)'s current chairman, said his father had always believed in encouraging dialogue with the mainland. "With respect to the nuclear power station, my understanding is that the Chinese authorities came to my father and he certainly encouraged involvement as he believed that working together would build trust between the two sides, which must augur well for future relationships between the mainland and Hong Kong," he said. "Clearly, the Hong Kong government was involved but I have no knowledge of the dialogue that may have taken place at that time [in 1974]." CLP's involvement with Daya Bay dates back to 1979, when a feasibility study was jointly conducted with Guangdong General Power. The study recommended two pressurised water reactors be built at Daya Bay. In 1985, Hong Kong Nuclear Investment, a wholly owned subsidiary of CLP, and Guangdong Nuclear Investment formed Guangdong Nuclear Power Joint Venture Co to build and operate the Daya Bay facility. Guangdong Nuclear Investment owns 75 per cent, while Hong Kong Nuclear Investment has the remaining 25 per cent of the company.

Hong Kong 'is Asia's toughest marathon' - Nelson Rotich of Kenya celebrates his victory in the Hong Kong Marathon yesterday. The Standard Chartered Hong Kong Marathon was described as the "hardest race in Asia" by Kenya's newest King of the Road, Nelson Rotich, after he won the local showpiece quite comfortably yesterday. Rotich, a policeman, has won seven races in Asia including marathons backed by title sponsors Standard Chartered in Kuala Lumpur and Bangkok. Yesterday he added the Hong Kong title to his long list of accomplishments and then said that in terms of being runner-friendly, this event was the toughest. "I have run all over Asia but this course is the toughest," said Rotich after his two-hour, 16-minute triumph. "Many people have said it before and I'm saying it again today. The course is very hilly, up and down, and it makes it very difficult to record a good time." The tough nature of the course has been a sore point in the past among the elite overseas runners who say they could have recorded faster times if Hong Kong had a flatter course. This view is shared locally too. Hong Kong's top female marathon runner, Alison Chow Chi-ngan, decided against taking part this year and instead opted for next month's Rotterdam Marathon to register a faster time and concentrate on qualifying for the London 2012 Olympics. "Not only is it up and down, but running through the tunnel [Western Harbour] takes a lot out of you. Oxygen is at a minimum and it is very hard to breathe," Rotich said as he held off a late challenge from fellow-Kenyan Julius Kiplimo to cross the tape first. Kiplimo finished six seconds behind. The dominance of the pair extends Kenya's stranglehold on the race. Rotich became the 10th Kenyan to win the Standard Chartered Hong Kong Marathon, now in its 15th year. Only four outsiders have been able to wrest the title away from the high-stepping marauders from the Kenyan highlands - Ethiopian pair Belay Wolashe (1998) and Dube Jilo (2001), Zimbabwe's Tendai Chimusasa (2003) and Koichiro Fukuoka of Japan (2008), the only Asian to win. The winner of the race the last two years, Cyprian Mwobi, failed in his bid to become the only person to win a hat-trick when he couldn't quite find the same form which saw him take the honours in times of 2:20:12 in 2010 and 2:14:57 in 2009. "I struggled today," Mwobi said. "I started to get stomach problems at the eight-kilometre mark and although I finished the race, I knew quite early today wasn't my day." The day belonged to Rotich who ran a "tactical" race to add his name to the list of Kenyan champions. "The first 36 kilometres was easy but then it just got harder," Rotich said. "At one stage, I was just praying that I would be able to finish the race in the top 10. "At the 37km mark, I decided to go for it whatever happened and made a break. Nobody followed me and it dawned on me then that I might just be able to win this race. With two kilometres to go, Rotich had a clear lead and although Kiplimo tried gamely to close the gap, the race was all but over with Rotich running away with the first prize of US$34,000. "I'm happy to finish second. I wasn't one of the invited runners and had to pay for my own way to get here. I'm very happy to win the second prize and take home something," said Kiplimo who pocketed US$15,000 as well as an extra US$1,000 time bonus for finishing under 2:17.

Shoppers continue to have a wide variety of food products from which to choose after the introduction of compulsory nutrition labelling, but they might be paying more as a result of the law, food importers say. Only 5 to 10 per cent of products had disappeared from the city's shelves as a result of manufacturers failing to provide nutrition information, said Harmander Brar, manager of the Brar Group, an importer of Indian food and operator of some Indian supermarkets. "Many producers are willing to provide labelling information to us, so it did not really affect my revenue," he said. But as he had to hire extra staff to translate and stick on the labels, which were created in-house, costs rose by HK$1 to HK$1.20 a pack. Coupled with the general inflation in previous months, Brar said he had to raise prices by "less than 5 per cent". However, even if shoppers are willing to pay more, some may have to wait for months for a product to reappear on the shelves. This is because it takes time for manufacturers in India to test and send over relevant nutrition information. Brar said some hotels and restaurants were complaining because they had waited seven months for a particular brand of spices to arrive. "But individual customers do not complain, as they know Hong Kong is a small market. If they cannot buy it here, they cannot find it anywhere else in Hong Kong," he said. Checks of minority supermarkets in Tsim Sha Tsui and Causeway Bay revealed that almost every product carried nutrition labels. An Indonesian shopper said she did not notice any product missing from the shelves. "I rarely read the nutrition labels. I do not think the policy has affected me," she said. A Chinese shopper said she noticed a slight price increase, but "it was acceptable as there was inflation everywhere". Fok Hing (HK) Trading, an agent that imports more than 1,000 Indonesian food products, said the policy was implemented well. "There were not too many products that needed to come off the shelf," marketing executive Carmen Fung said. The company had a team to check whether the nutrition information supplied by manufacturers met the requirements, she said. The policy's impact on revenue remained unknown, she said, and the company would wait a few more months before drawing a conclusion. Since July last year, all packaged food products must carry labels that state eight aspects of nutritional content - energy, carbohydrates, protein, total fat, trans fat, saturated fat, sugar and sodium. The Centre for Food Safety said that among some 14,000 food products it checked, only 98 irregularities were found, involving 67 vendors. The overall compliance rate was 99.3 per cent. The centre had received 22 public complaints over nutrition labelling, but only four were found to be justified and follow-up action had been taken, a spokeswoman said. About 23,000 products are exempt from the nutrition labelling law because fewer than 30,000 units are sold in the city annually.

Yuan trade must look west, says HKMA chief Chan - Let's go to places we have never been before, said Norman Chan Tak-lam. The chief executive of the Hong Kong Monetary Authority believes Russia, Latin America, Eastern Europe and the Middle East are all good destinations. Yet he is not offering travel advice - rather urging local bankers to prepare for the business opportunities presented by Beijing's 12th national five-year plan and the internationalisation of the yuan. The master plan, which will include a programme for the nation's development until 2015, will include Hong Kong as a significant part of the national agenda. It is scheduled to be approved at the annual meeting of the National People's Congress next month. "The new 12th five-year plan would have more plans to further develop the international use of the yuan," Chan said. "This will strengthen Hong Kong's role as an offshore yuan trading centre. Hong Kong lenders need to prepare for that." "Banks will need to expand to a new customer base in the new areas: Latin America, Russia, Eastern Europe, and the Middle East. These markets have a strong trade relationship with the mainland and their companies would like to use Hong Kong's offshore yuan trade settlement services and other yuan banking products." In the 11th five-year plan, China encouraged the use of the yuan in international markets, which was how the yuan trade settlement pilot scheme came to be introduced in 2009. After a slow start and several further relaxations of regulations last year, the cross-border yuan trade settlement and other yuan investment products expanded fast in the city. The amount of trade settlement in yuan in Hong Kong was 369 billion yuan (HK$436 billion) last year, compared with only two billion yuan in 2009. Before the scheme began in July 2009, the yuan could not be used to settle cross-border trades. By the end of last year, total yuan deposits in Hong Kong stood at 314.9billion yuan, up 402 per cent on the end of 2009. On average, each individual yuan depositor has 58,833yuan in their account while the average yuan corporate account had 1.41million yuan. Hong Kong banks have been accepting yuan deposits since 2004. Chan said those lenders with international networks would be in a better position to expand, although smaller local lenders could also establish overseas affiliates. "We cannot sit back, relax and wait for overseas customers to come to us, but we have to go to contact these potential new customers ourselves." Banks such as HSBC (SEHK: 0005), Standard Chartered and Citi have already introduced yuan trade settlement services through their international networks. Standard Chartered will hold a yuan business roadshow next month. Chan said another key issue for yuan business in Hong Kong under the new five-year plan would be to have clear guidelines on how Beijing would allow companies to use yuan, instead of the US dollar, for direct investment in the mainland. Many firms want to issue yuan bonds and yuan shares in Hong Kong to finance projects on the mainland. But there are fears that money raised in Hong Kong may not be allowed to cross the border. All transfers of money in or out of the mainland need approval by the State Administration of Foreign Exchange and decisions are made on a case-by-case basis. "A clear guideline on how and when yuan could be used for foreign direct investments in China would be a crucial factor to determine how far the yuan business can be developed in Hong Kong over the next five years," Chan said. Hong Kong has always been a gateway for foreign investment in China. Last year, there was US$105.7billion of foreign direct investment n China, with 64 per cent of such investments conducted through Hong Kong. In the same year, there was US$59 billion of China direct investment in overseas markets, of which 57 per cent was conducted through Hong Kong. "Since January, Beijing has allowed mainland companies to use the yuan to settle their overseas takeover deals or other investment projects. Hong Kong banks could provide yuan funds to facilitate such transactions," Chan said. "This would increase the business opportunities for Hong Kong lenders, since if the companies could settle the deals in US dollars or the euro, they could go to the US or European banks to handle the deals. "If they are settling the overseas acquisitions in yuan, the companies would like to hire banks in Hong Kong, which has the largest pool of yuan outside of China. If the foreign direct investment can be done in yuan, too, this will further benefit the local banking sector." China has become the world's largest exporter and the world's second largest economy, but 85per cent of international trade is still conducted in US dollars, while the rest is mainly settled in euros or yen.

Jimmy Lee Kong-eng, Asia chief executive of Clariden Leu, which is seeking clients whose assets exceed US$30 million. Private banks have shifted their focus from the West to the East as they bid to serve the growing number of millionaires in Asia, in particular in China and India. Clariden Leu, a Swiss private bank more than 250 years old and now majority-owned by Zurich-based financial services company Credit Suisse Group, is among many bankers to the wealthy that have moved to Hong Kong in recent years as a stepping stone to winning millionaire customers on the mainland and in Taiwan. It has also opened offices in Singapore and Indonesia. "We have doubled our staff in the offices to 160 and we also plan to hire more staff as Asia will be our key growth market in the next five to 10 years," said Jimmy Lee Kong-eng, Asia chief executive of Clariden Leu. The global financial crisis hit the US and European markets hard, said Lee, but Asian markets were not as badly affected thanks to India and China's fast-growing economies. "We believe Asia will have the highest number of initial public offerings worldwide in the next five to 10 years. These activities are going to produce more wealthy entrepreneurs who could turn to us to take care of their wealth," he said. Clariden Leu targets clients who have total assets of more than US$30 million. While it focuses on wealth management products and services, it is part of Credit Suisse Group which also offers investment banking services. Unlike commercial banks that face a need to raise their regulatory capital levels under post-crisis regulatory requirements, private banks, which focus on managing wealth for customers, do not need a large capital cushion, said Lee. "Private banking is not a capital-intensive business but it is a very labour-intensive business. We have to ensure we have many high-quality relationship managers to serve our clients." The bank now has one relationship manager to serve 25 clients. By comparison, many retail banks have one staff member to serve about 250 to 300 customers. Other private banks and the private banking arms of commercial banks also want to expand their services in Hong Kong. Standard Chartered Bank says it will increase its team of relationship managers to 750 in 2013, up from about 450 now. China, India and Indonesia are its focus in Asia. JPMorgan Private Bank, which aims to triple its Asia business in the next five years, has relocated top staff to Hong Kong. Douglas Wurth, who is in charge of JPMorgan's private banking business outside the US, moved to Hong Kong from New York in February last year. Wurth is responsible for over US$200 billion worth of assets under management for wealthy clients. The bank, which now has over 100 senior client-relationship staff to handle wealth management for customers in Hong Kong and Singapore, plans to increase its headcount by 30 to 40 per cent this year. French private bank CIC Investor Services has also expanded aggressively in recent years. Timothy Lo, its managing director, said Asia was a natural target of expansion for private bankers. "Asia has produced the largest number of millionaires worldwide in recent years. The region has also looked increasingly attractive after western markets were hard-hit by the global financial crisis," he said. Lo said this trend was set to continue in the next few years as the mainland, India, and Taiwan were expected to see rapid economic growth while some western markets were still recovering from the crisis. Clariden's Lee believes yuan-denominated investment products will be one focus of private banks' product line-up for wealthy customers. "Many customers want to know more about yuan products. But we will not hard-sell them any products. We would seek to understand their needs and tailor-make solutions to help them to manage their wealth and to pass it onto the next generation," Lee said. CIC's Lo said private bank clients also demanded more simple and conservative products. "After the financial crisis private bank customers are more aware of risk factors. They want plain-vanilla products that are easy to understand and do not carry excessive risk," he said.

The number 16 may not be everyone's idea of luck, but a businessman has forked out a whopping HK$8.5 million for the car registration. Garment equipment supplier Suen Siu-man, yesterday recorded the fourth- highest mark for a car plate sold in Hong Kong at the Lunar New Year auction of vehicle registration numbers. "I enjoyed it very much," Suen said after the auction, adding that he was willing to shell out such a large sum because 16 is his lucky number and he recently learned that 26 had sold for HK$7 million. "It's a [good] start to the year," he added. "I hope it will bring me luck." More than HK$18.5 million was raised at the auction, which was held in a packed room at the Hong Kong Convention and Exhibition Centre in Wan Chai. The proceeds go to charity. Suen also tried to get 668 as a gift for his wife but was outbid by number plate collector Ngan Man-hon, who paid HK$3 million for it. Ngan said that he liked 668 as it sounds auspicious in Cantonese. In recent years, he noted, lucky car plates have become popular among mainland collectors so the prices for the better ones remain high. "Demand is higher than supply," said Ngan, who is director of Lucky Number Plate Centre. There were 45 number plates put up for auction with four remaining unsold. Among them, number 84 had to be withdrawn as no one was willing to go to the HK$4.75 million reserve price. Also in the action, the founder of the Society for the Protection of the Harbour, Winston Chu Ka-sun, paid HK$180,000 for number plate 2368. Chu said that the plate was special for him because his father used it 70 years ago. The sale trumped Saturday's auction under the Personalized Vehicle Registration Marks Scheme. Then, car plate B0NUS was sold for HK$220,000 while 201314, which sounds similar to "Love you forever" in Putonghua, went for HK$22,000. Suen's lucky number trails 18 and 9, which were sold for HK$16.5 million in 2008 and HK$13 million in 1994, respectively. The third most expensive number was 2, which went for HK$9.5 million in 1993. Last year, number plates 13 and 26 sold for HK$7.4 million and HK$7 million, respectively, in the Lunar New Year auction of vehicle registration marks.

HSBC (0005) is aiming to hire 1,000 more employees for its personal financial services department. And 1,000 staff are due for promotions this year. A spokesman said the additional employees will staff the front and back offices. But the lender has no plans to hold large recruitment events. Instead hopefuls can attend walk-in interviews. Mark McCombe, chief executive of HSBC in Hong Kong, said last month new blood is needed to develop the unit serving small and medium-sized enterprises as well as its retail services. During the last financial crisis, the bank laid off as many as 600 employees. But in 2009 it held a series of large recruitment exercises to build up its employee strength. Last year, 3,600 employees - front line and sales staff - looked after the 4.2 million accounts in its personal financial services department, according to Francesca McDonagh, head of personal financial services in Hong Kong. Separately, HSBC has doubled the space of its branch at Patterson Street in Causeway Bay to 14,000 square feet. The two-story branch offers full banking services. Apart from local customers, the branch will also provide services to visitors from the mainland and Taiwan as Causeway Bay is popular with tourists. HSBC will announce its full-year results next Monday.

 China*:  February 23 2011

Police officers urge people to leave as they gather in front of a cinema that was a planned protest site in Shanghai on Sunday. China's domestic security chief said the government must find new ways to defuse unrest, underscoring Beijing’s anxiety about control even after police squashed weekend calls for gatherings inspired by Middle East uprisings. Zhou Yongkang, the ruling Communist Party’s top law-and-order official, told cadres they had to “adapt to new trends and imperatives in economic and social development”, official newspapers reported on Monday. “Strive to defuse conflicts and disputes while they are still embryonic,” he told an official meeting on Sunday, the China Police Daily and other papers reported.

David Wei Zhe, Alibaba’s current chief executive. The e-commerce giant annnouced on Monday that Wei would resign and be replaced by Jonathan Lu Zhaoxi, chief executive of affiliated company Taobao. Chinese e-commerce giant Alibaba announced that two of its top executives were resigning to take responsibility after a probe discovered more than 2,000 suppliers had defrauded customers, sometimes with the alleged collusion of its sales staff. Alibaba said in a notice Monday to the Hong Kong Stock Exchange that its chief executive and chief operating officers, who were not implicated by the investigation, were resigning to take responsibility for the company’s “breakdown in integrity”. The company said 100 sales representatives, out of a total workforce of 14,000, allegedly involved in defrauding customers were fired. Some supervisors and sales managers had either intentionally or negligently allowed the creation of fraudulent “storefronts” by letting some 2,326 suppliers evade authentication and verification measures, it said. Most purchases involved offerings of popular consumer electronics at bargain prices with low required minimum orders. “The methods of the perpetrators suggest that they have engineered an organised and systemic attack on the integrity of the (SEHK: 1688, announcements, news) platform for illegal gains,” the company said. “The investigation concluded that the pursuit of short-term financial gain at all cost had tainted parts of our sales organisation, risking serious damage to our company’s core values,” it said. Jack Ma, the entrepreneurial whiz and former English teacher who founded Alibaba in 1999, said he was sending a strong message meant to reinforce trust in his company, which has thrived in this age of online commerce and outsourcing. “One of our most important values is integrity. That means the integrity of our employees and the integrity of our online marketplaces as trusted and safe places for our small business customers,” Ma said in a statement. Jonathan Lu Zhaoxi, chief executive of affiliated Chinese e-commerce company Taobao, will replace David Wei Zhe as Alibaba’s chief executive, the notice said. It did not say who would replace resigning COO Elvis Lee Shi-Huei. Alibaba, based in the eastern Chinese city of Hangzhou, claims more than 56 million registered users in more than 240 countries and regions. The company said it started investigating after noticing an increase in complaints of fraud by buyers using its websites in late 2009. The probe found that 1,219 of its “Gold Supplier” customers who joined in 2009 and 1,107 that joined in 2010 had engaged in fraud against buyers. Alibaba terminated the “storefronts” of those allegedly fraudulent customers and will collaborate with authorities to seek redress, said company spokeswoman Linda Kozlowski. But such efforts would depend partly on buyers deciding to take legal action, she said. The average amount of fraud involved in the cases was less than US$1,200 (HK$9,340), the company said. It gave no total amount involved. But Kozlowski said the company has paid out US$1.7 million (HK$13.2 million) since 2009 from a fund set up to redistribute to buyers any revenues from companies found to be engaged in fraud. “We decided we did not want to take revenue from fraud,” she said. Alibaba, whose shares are traded in Hong Kong, said the cases would not have an impact on its overall finances.

Trade ministers of Taiwan and China will hold talks Tuesday to review the implementation of a historic trade deal struck by the political rivals. Taiwan’s Straits Exchange Foundation that handles trade talks with China said the two ministers – China’s deputy commerce minister Jiang Zengwei and his Taiwanese counterpart Liang Kuo-hsin – will review the tariff cuts being implemented under the trade deal signed last June. At the one-day meeting in Taiwan, the two will also discuss other issues such as the signing of an investment protection agreement, the semiofficial group said on its website. Taiwan and China slashed tariffs on hundreds of products traded between the two sides under the deal known as the Economic Co-operation Framework Agreement – a significant step for efforts by Taiwanese President Ma Ying-jeou to engage China economically. The deal also lets Taiwanese firms enter the banking and insurance businesses in the mainland to further boost trade that amounts to US$110 billion annually. Taiwanese business leaders are pushing to expand the tariff cuts to include items such as flat display panels and automobiles to help them penetrate the vast mainland market. On Wednesday, Chen Yunlin, Beijing’s top envoy for talks with Taiwan, will lead a business delegation to visit southern Taiwan – stronghold of the Taiwanese opposition that has long seen Beijing as a hostile regime. Taiwanese business leaders have welcome Chen’s visit, expecting his delegation to help foster industrial collaboration in new energies, LED, automobiles and other areas. But members of the opposition Democratic Progressive Party have threatened to stage demonstrations against Chen. They see Beijing’s trade measures as an attempt to soften Taiwan’s rejection of Beijing’s goal of eventual unification.

China factory growth at 7-month low - A worker does about his chores at a steel mill in Hefei, Anhui province in December. The steady ratcheting-up of monetary tightening has combined with the Lunar New Year holiday to weigh on China's factories in February, even as inflation has continued to accelerate, a survey showed on Monday. The HSBC (SEHK: 0005) flash manufacturing purchasing managers’ index (PMI), making its debut, hit 51.5 in February, down from a final reading of 54.5 a month earlier. The flash PMI, designed to provide an early indication of the final data, which is due a week later, suggested that China’s industrial sector was expanding at its slowest pace in seven months. “The Chinese New Year holiday may be a factor but not the only reason. It also implies that quantitative tightening is starting to filter through, yet more still needs to be done to check inflation,” said Qu Hongbin, HSBC’s chief China economist. The sub-indexes measuring input prices and output prices were both on track to accelerate to three-month highs in February, as manufacturers facing rising global commodity costs tried to charge consumers more to recoup their spending. Beijing on Friday raised required reserves to a record 19.5 per cent, the fifth increase since October, during which time it has also raised interest rates three times and ordered banks to lend less. Economists believe that China may be just about past the mid-point in a tightening cycle to tamp down on inflation, which is running near its fastest in more than two years. According to the flash PMI, new orders have increased more slowly in February, while export orders have registered an outright decline, indicating that business growth has been generated almost entirely domestically. Monday marked the launch of the flash PMI, which will serve as one of the earliest available performance indicators for the world’s second-largest economy. The flash PMI is based on up to 90 per cent of total responses to the monthly survey and is designed to be an accurate snapshot of the final data, which is usually released on the first working day of every month.

Jaguar, Land Rover explore China tie-up - Jaguar and Land Rover is in talks with top mainland sport utility vehicle maker Great Wall Motor about a potential China tie-up, two executives told Reuters on Monday.

Yuan hits record high for third day - The yuan hit its highest trading level against the dollar again on Monday after the PBOC fixed the mid-point at a record high for a third day, allowing the yuan to appreciate.

Apology demand for racist US act - More than a century after the United States shut its doors to Chinese, Asian- American lawmakers want an apology. Approved by Congress in 1882, the Chinese Exclusion Act banned immigration by Chinese workers and their naturalization as US citizens, marking the first time the United States explicitly closed itself to a particular nationality. More than 100,000 Chinese lived in the country at the end of the 19th century. Many had been recruited to build the transcontinental railroad but faced racism from white workers. Representative Judy Chu, a Chinese- American and now chairing the Asian- American caucus in Congress, said legislation offering an apology for the act will be a key priority. Congress repealed the act in 1943 after Japan cited the law in propaganda questioning China's alliance with the United States. But apology advocates note that the US government has never voiced regret. After the repeal, the United States still let in only 105 Chinese each year. It took until 1965 for an opening up to large- scale immigration by non-Europeans. Representative Mike Honda, outgoing chair of the Congressional Asian Pacific American Caucus and interned during World War II for his Japanese ancestry, called the anti-Chinese law "a shameful chapter" in America's history. "Chinese were used as cheap labor to do the most dangerous work laying the tracks of our transcontinental railroad to strengthen our nation's infrastructure only to be persecuted when their labor was seen as competition when the dirtiest work was done," he added. 

Hong Kong*:  February 22 2011

Move over Barbie - here comes Pinky, the real doll for Hong Kong girls - Artist Jacqueline Nielsen with Jessica Yeung Yin-sum, the inspiration for Pinky - a doll Nielsen says is a realistic portrayal of Hong Kong girls. Hong Kong girls are misunderstood, says artist Jacqueline Nielsen. Instead of seeing them as noisy, picky and materialistic girls like many people do, Nielsen has another perspective. She thinks they're mysterious and sexy and she's designed a doll - Pinky - to celebrate that. Pinky's a piano instructor who loves photography and travel. She wears a pink dress and fluffy scarf, has wavy hair, does her make-up to perfection, and wears a shoulder bag. She's also probably the first doll which realistically portrays modern Chinese girls in Hong Kong. Designed by Nielsen, she goes on sale for HK$299 in late March at Toys R Us in Tsim Sha Tsui, the Design Gallery in Wan Chai and at the airport. The first batch of Pinkys will be numbered from one to 2,000. The doll's looks are based on a Hong Kong woman, Jessica Yeung Yiu-sum, 26, who worked in the financial sector, Neilsen says, adding that she hopes to make a series of such dolls, with different faces and different outfits. She is also looking into the possibility of deals with big brands that Hong Kong girls like, such as Chanel and Louis Vuitton, to produce small items for the dolls. Nielsen, who was brought up in Colombia and has lived in the United States, says Hong Kong girls are fashionable and present themselves in their best light. "Hong Kong girls always manage to look in style on any budget, because fashion is a must in Hong Kong," she says. "And they do make-up on the run. I don't know how they master it, but they always look good." They are also silent leaders, who can strike a balance between work and family, she says. And Hong Kong girls are not as self-centred and materialistic as many think. "People misunderstand them as being materialistic because they're fashionable and always try to look their best." Nielsen says being self-centred and thinking the world is revolving around you is not just a part of the "princess syndrome", which describes girls who constantly require to be taken care of - it's part of the process of maturing. "When they realise life doesn't revolve around them, they start to discover and do what they love, and that's when passions come in," she says. "They will tackle the problems they encounter, and become unbeatable." Nielsen came to Hong Kong two years ago with her husband and teaches painting at her seven-year-old son's school. She was inspired to investigate what makes Hong Kong girls tick when her older son, 24, fell in love with a piano instructor in Hong Kong on a visit here. "My son said to me Hong Kong girls are mysteriously sexy and I agreed, and I began to observe them more closely," she says. She watched young women while on public transport and found them admirable. When she was looking for toys for her niece in the US, she found there was no doll that represented Hong Kong girls well and decided to design one. For each doll sold, HK$5 will be donated to the Autism Partnership Foundation. And that, Nielsen says, is "a Hong Kong girl giving back to the city".

ECA's Lee Quane announces its findings on rental costs. Hong Kong was Asia's second costliest city. No-hassle homes from home on the up - Rents rise on surge in expatriate arrivals, and serviced apartment market is booming. A rebound from the recession coupled with foreign companies increasing their expatriate headcount in Hong Kong has fuelled double-digit rent increases in the city. And it's not just apartment landlords raking in the money - there has been an explosion in the serviced apartment sector. ECA International's annual survey of expatriate living costs, released last week, shows Hong Kong is the third most expensive place to rent a two-bedroom flat in the world, after Tokyo and Moscow. Rents for serviced apartments have shot up in the past year, Lee Quane, regional director of ECA, said, citing high demand from expatriates wanting to move into ready-made homes. Anne-Marie Sage, regional director and head of residential leasing and relocation services for Jones Lang LaSalle, said there was a 15.6 per cent rise in rents for serviced apartments last year. Serviced apartments are usually fully furnished and often include a gym, pool and business facilities. They can be rented on short or long-term contracts. Clara Chu, director of residential leasing for Colliers International, said the banking and finance industries were leading the demand for luxury housing in Hong Kong, especially as families of senior executives from abroad relocated to the city. She said typically serviced apartments were a temporary option while expatriates looked for longer-term accommodation. "But right now, some of the staff don't want to buy furniture or sign a two-year lease, and some prefer the serviced apartments for longer term so six months or more. "There are more serviced apartments on the market but mainly for smaller studios or apartments like 500 to 700 square feet so it's okay for a single or couple but not for a family." Quane said there were more serviced apartments on the market now, but the quality varied. "For example, you'll see at the very high-end level something like the Four Seasons suites at IFC, all the way down to low-cost options around places like Sheung Wan, Western and even in Kowloon." Sage said boutique serviced apartments such as the high-end properties offered by Shama and Ovolo have also created a niche market. "They've become popular with younger executives that are travelling a lot. Why furnish an apartment in Soho when it's done for you? "With the boutique sector growing, we have seen people taking them longer term. They used to be so hotel-like and people got fed up with that environment but they are done really well now and you can put your own mark on them." Family-sized serviced apartments at the luxury end have also been in high demand, Sage said, with a 90 per cent occupancy rate at the Lily, a giant Chinachem development in Repulse Bay with 34 serviced apartments. The complex also has 66 unfurnished apartments. A two-bedroom 1,800 sq ft serviced apartment costs between HK$98,000 to HK$145,000 per month while a three-bedroom 3,600 sq ft apartment will set you back HK$195,000 to HK$280,000 depending on the floor. The 3,900 sq ft penthouse rents for HK$320,000 per month. Based on client surveys and data collected from real estate agents last September, the ECA survey found the monthly rent for an unfurnished, 80 square metre, two-bedroom flat in Hong Kong was US$2,830. In Tokyo, it was US$4,352 and in Moscow, US$3500. Hong Kong recorded the biggest year-on-year increase in rents, at 22 per cent, followed by a 15 per cent jump in Singapore. Quane said the increase in Hong Kong rents was fuelled by a rebound from the recession and came after a 25 per cent drop during the global financial crisis. "Companies were repatriating their staff or terminating their expatriate staff, so basically people were going home, so that unleashed a large amount of supply onto the market," Quane said. "We also saw softening of demand locally. However as the economy has grown, we've seen companies moving people back in and we are also seeing some industries continuing to increase their headcount in Hong Kong."

When PLA naval brass visit US warships, they keep a keen eye out for any sign of technological advance by their strategic rival. But when they visit the USS Blue Ridge in Hong Kong harbor this weekend they might also get a lesson in growing old gracefully while getting more bang for your buck. The command ship and floating nerve centre of the US Seventh Fleet - the key to ongoing US power projection in East Asia - is also one of the oldest vessels among its 70-odd ships. Now 42 years old, the Blue Ridge was earmarked to be scrapped before being tasked to remain at the Seventh Fleet's base in Yokosuka, Japan, until 2020. The ship was recently inspected to find ways of keeping it going for another 20 or 30 years, commanding officer Captain Rudy Lupton said yesterday - meaning the vessel could be 70 by the time it is finally retired. "Like others on the ship, I may not even be around when it is finally decommissioned," Lupton said, speaking shortly after the ship dropped anchor off Green Island yesterday morning. Locally-based People's Liberation Army officials were expected to attend a party on board last night - the kind of activity frozen during the chill in military relations after US arms sales to Taiwan last year. Lupton said the ship had passed all tests, including checks of the hull beneath the waterline, and the navy devised a plan to keep it in service for some time. As a command and control ship, the Blue Ridge's technological edge is found in its constantly upgraded array of communications facilities and radars rather than its ageing hull and boilers. It boasts few weapons to minimise interference to vital communications signals. Such longevity makes the Blue Ridge a symbol for the challenges facing the Pentagon in the coming decades as it braces for structural cuts in defence spending while attempting to expand its naval reach into the Asia-Pacific. US Defence Secretary Robert Gates, warning of a shift from a "culture of endless money" to a far more prudent regime, is plotting extensive cuts to contain a military budget that has blown out to US$700 billion a year - more than the combined military budgets of the next 20 leading defence spending nations including No2, China. Sensitive to claims that Washington represents a declining power, Gates and other officials also stressed in recent months that long-term cuts would not stop the US gradually increasing its Asian presence to reflect shifting strategic imperatives, in large part due to the rise of China. That shift has seen more submarines deployed to East Asia in particular, several now operating permanently out of Guam, the tiny Pacific island that is the closest piece of US territory to the China coast. The Blue Ridge is a symbol of that effort in other ways, as the US seeks to strengthen ties not just with old Asian allies such as Japan and South Korea, but new friends, too. Famous for its role in the Fall of Saigon in 1975 - fleeing US ambassador Graham Martin was flown to its decks, US flag tucked under his arm, as North Vietnamese forces closed in - the ship and its crew of 1,500 recently visited Vietnam as part of US efforts to build a highly-sensitive strategic partnership with Hanoi. TV footage of helicopters hastily being dumped into the South China Sea from decks of US carriers to make way for evacuees were some of the most striking images from the 11-year conflict. The 19,200-tonne Blue Ridge has spent most of the years since the war in the Pacific and is a frequent visitor to Hong Kong.

 China*:  February 22 2011

The Group of 20 countries yesterday moved towards an accord on what indicators could be used to measure and then tackle global economic imbalances after a compromise with China, diplomatic sources said. "There is an accord on the indicators," one source said. "Things are moving in a positive direction," said another. Other sources, however, stressed that while there had been progress after earlier disagreement, no accord had been approved by the finance ministers and central bank heads of the world's top 20 developed and developing countries meeting in Paris. One source said that an accord seemed possible after France won China's agreement with a compromise on the indicators to be used. Faced with Chinese opposition to several key indicators being considered, French Finance Minister Christine Lagarde had earlier decided to delay discussion on them to the end of the talks. Four indicators are under discussion. Two measure imbalances within countries - the public deficit and debt, plus the level of private savings. The others measure external imbalances - the current account balance or trade balance, and foreign currency reserves or real exchange rates. China had earlier rejected attempts to use real effective exchange rates and currency reserves to measure imbalances and wanted trade figures rather than current account balances used to assess economic distortions, diplomats said. It has resisted Western pressure to substantially revalue its yuan to help rebalance global growth. Germany held out hope for a deal despite the Chinese stance. "I think we will reach agreement today on which indicators we [use to] measure imbalances in the future, to fight timely mis-developments, to come to a balanced growth," Finance Minister Wolfgang Schauble said. French President Nicolas Sarkozy on Friday urged ministers not to get sidetracked by the indicators dispute and welcomed China's move to host a seminar on reforming the international monetary system next month. "I want to avoid your debates getting bogged down in interminable discussion about these indicators, which are distracting us from the essentials," Sarkozy said. He said a joint approach was the only way forward. "Giving priority to national interests would be the death of the G20," he said. Even if all the yardsticks are agreed, there is no sign of numerical targets even being broached. One option mooted was to allow China to opt out of the balance of payments criterion and use its trade balance instead. But two G20 sources said an opt-out was a non-starter. Some delegates said there was doubt whether the Chinese delegation, led by Finance Minister Xie Xuren , was empowered to compromise. France wants agreement as soon as possible so that in the second half of this year the International Monetary Fund can make economic policy recommendations to nations.

Beijing-Shanghai high speed railway starts test run - The Beijing-Shanghai high speed rail service provides a 4-hour link between the twin cosmopolitan cities in China once fully operational late 2011.

China hikes gasoline, diesel prices - China raised the prices of gasoline and diesel by 350 yuan (about 53.2 U.S. dollars) per tonne beginning Sunday, the National Development and Reform Commission (NDRC) announced Saturday night.

Hong Kong*:  February 21 2011

A court has ordered Times Square to produce documents on the amounts it charged exhibition and display organisers to use its piazza as well as other related information. The order was in response to a lawsuit filed by the Building Authority against Times Square to reclaim money it received for the use of its public piazza. Under the order, Times Square has 30 days from yesterday to collate documents related to its granting of permission for exhibitions and displays held in the public space from 1993 to 2008; the fees it charged; and expenses, including costs for crowd control, technical support, cleaning, and certain other services. In a statement after the ruling, Times Square said it "respects the court's decision and will comply with our discovery obligations". Discovery refers to the process through which parties to a lawsuit can obtain evidence from the other side before trial. Deputy Judge Louis Chan Kong-yiu made the order in a judgment at the Court of First Instance yesterday, after a hearing on preliminary issues on the government's lawsuit against Times Square Limited, which owns the land on which the mall and office complex of the same name stands. The Secretary for Justice filed the claim seeking damages from the company for breaching a deed of dedication under which it agreed more than 3,000 square metres of land on the street level of Times Square would be available for pedestrian passage and temporary recreation. That, the judgment said, was in return for the government granting bonus site ratio, or building space, for the site. The authority alleges Times Square breached the deed by taking in more than permitted charges, claiming it sought HK$124,000 a day for use of public space. The judgment said Times Square was "obviously trying not to comply with its discovery obligations". The documents that the authority is seeking are "clearly relevant". Times Square should have disclosed them, but did not do so. The company earlier declined to provide the documents and the authority applied to the court to get them, the written ruling said. Meanwhile, the company asked that the court rule on certain preliminary issues before the trial. At the hearing, Ambrose Ho SC, argued for Times Square, on a point of law, that the authority was not entitled to claim damages for profits from leasing out the piazza. He said damages were usually granted to an innocent party that suffered loss due to breach of contract by the other party, while in this case the authority had not suffered losses. But Benjamin Yu SC, for the authority, insisted it was entitled to claim more than nominal damages. In addition to the order on the documents, the judge dismissed the company's application to have the preliminary issues determined before the trial, noting they were not simple and might be fact-sensitive, and might require canvassing of the facts of the case at trial. Times Square said it had not been charging for exhibitions at the piazza since 2008. "The piazza has been and will continue to be used by government, non-governmental organisations and charitable organisations for activities upon applications and subject to certain criteria," it said.

Fears over solar flares fizzle out as geomagnetic storm fails to materialise - The geomagnetic storm warning was issued after the solar flares shown in this Nasa image erupted on Tuesday. It had been feared that the charged particles could disrupt satellite and shortwave radio. Fears that three major solar eruptions could bring major magnetic storms to the earth, causing power failures and communication disruptions in the region, yesterday proved to be unjustified. The National Centre for Space and Weather Monitoring in Beijing had issued a warning that charged particles created by the eruptions would hit the earth yesterday. It said they could cause satellite and shortwave radio failures, and urged the relevant authorities to take precautions. The solar flares, which erupted on Tuesday, were the most powerful since 2006. However, US space agency Nasa said the impact on earth was weak and produced "nothing but some beautiful auroras" around the polar regions. No abnormal disruption was observed in Hong Kong. The Observatory issued a minor geomagnetic storm alert - the lowest in the warning system. The Office of the Telecommunications Authority had been in contact with two local satellite operators, but a spokesman said there were no reports of disruptions. The Civil Aviation Department said no flights were affected - air traffic control uses high frequency transmission for communication, which is not as prone to solar storm interference as shortwave transmissions. However, a spokeswoman said there could be problems when air traffic control adopts more satellite-based technology and the department had set up a monitoring station at the airport to study the impact on GPS signals. "Scientists do not know why geomagnetic storms occur. All we know is that there is an activity cycle of about 11 years and ... we are getting nearer [to the peak]," Dr Chau Hoi-fung, associate professor in physics at the University of Hong Kong, said. A geomagnetic storm in 1989 caused a nine-hour electricity blackout in Quebec and the failure of a number of American satellites. The last significant one occurred in 2003.

In a surprise move, legislators yesterday approved funding to start building a HK$60 billion cross-harbour railway link from Sha Tin to Central. Despite fierce criticism about the planning and cost of the project, legislators voted 38-4 to approve the spending of HK$7.7 billion for the preliminary works - including expanding Admiralty station and building a new station at Ho Man Tin. The four opponents were Andrew Cheng Kar-foo, who recently quit the Democratic Party, and Wong Kwok-hing, Wong Kwok-kin and Dr Pan Pey-chyou of the Federation of Trade Unions. Leung Kwok-hung, of the League of Social Democrats, who did not vote, questioned if it was the right time to build the railway, given the high cost. The link was first proposed about a decade ago and scheduled for completion in 2008. But Liberal Party chairwoman Miriam Lau Kin-yee said more delay would only boost costs. "If the project was built some 10 years ago, it might not have been so costly," she said. In 2007, the estimated cost of the cross-harbour link was put at HK$38 billion. The latest estimate would make the 17-kilometre line almost as expensive as the 26-kilometre, HK$66.9 billion high-speed railway link between Hong Kong and Guangzhou. Government officials have repeatedly attributed the sharp rise in cost to a surge in the price of construction materials. Undersecretary for transport and housing Yau Shing-mu said the new railway was worth the money because it could generate an economic benefit of about HK$4.4 billion a year. At yesterday's committee meeting, some legislators criticised the MTR Corporation (SEHK: 0066)'s consultancy fee of 16.5 per cent, which would net it about HK$9.9 billion. Peter Lau Ka-keung, director of highways, told them this was the usual percentage paid and would be spent on design, contract management and site supervision. "The MTR Corp will not make extra money," he said. Legislator Cyd Ho Sau-lan urged the government not to link the consultancy fee with the project cost. "The price of building materials might have gone up a lot. But the work of the consultant remains more or less the same," Ho said. "A consultant does not need to buy building materials to build the project." Speaking after the vote, Democratic Party legislator Lee Wing-tat said his party may still refuse to give the full project the go-ahead. "We have given the government a warning. If it cannot satisfy us when it puts forward the HK$60 billion funding request for the main rail project next year, we may not so easily endorse it," Lee said. Meanwhile, the railway debate meant there was no time for the committee to debate the controversial travel subsidy scheme for low earners. The vote was instead postponed until next Friday. Some 100 people staged a petition outside the Legislative Council demanding committee members block the subsidy scheme to force the government to make more concessions. This week it increased the threshold to cover an extra 106,000 people, making 436,000 people eligible.

A trip to Ocean Park as a treat for visiting relatives brought an extra surprise for a Hong Kong family yesterday afternoon. One of them was the 100 millionth visitor to the park since it opened in 1977. The lucky one was Leung Wai-man, 35, who brought his wife Fok Wing-yi, 26, their two sons Tin-man, three, and Hoi-man, nine months, as well as Leung's cousin, her husband and son from Hangzhou to the park to see the new aquarium. His family was given a lifetime pass to the park and the children received stuffed toys from staff. The seven visitors were also treated to a meal at the park's new restaurant in the aquarium and received a pass to the aquarium's behind-the-scenes tour. Park chairman Allan Zeman described yesterday as a milestone and "a really great day for Ocean Park". He said inflation was putting pressure on the park, but it had no intention of increasing the admission fee at present, as restaurants and retail outlets were doing well. The last time the park raised its entrance fee was two years ago. Zeman expected an increase of 10 to 15 per cent in admission numbers this year and the 200 millionth visitor in 15 years. He was confident new rides and expansion of the park would help boost attendance. Leung, who works in an insurance company, said he was surprised and overwhelmed when he learned of his luck. "Ocean Park is a part of my childhood, and I like the marine life here very much," he said. The last time the family went to the park was a year ago. The park received more than five million visitors last year, and 60 per cent of the visitors were from outside Hong Kong. It is estimated there will be 36 million visitors from the mainland this year and 40 million in 2012.

Singapore is slowly losing its lustre as a capital-raising venue for Chinese companies - More Singapore-listed mainland firms going for dual listings. More than a dozen Chinese firms trading on the Singapore Exchange are expected to seek dual listings in Taiwan, Hong Kong and Seoul in 2011, exceeding last year's total, drawn by higher valuations and aggressive marketing efforts by rival bourses. "We should see about 13-15 companies this year because markets are getting hotter and Singapore investors are still not showing lots of signs that good companies are being appreciated," said Roger Tan, head of research at SIAS Research. "After a year of seeing successes and failures, companies are now more knowledgeable about dual listings. The good ones will definitely have more confidence to list and the not so good ones will put in more effort to get there." Last year, about 10 Singapore-listed Chinese companies, known in the city-state's market as S-chips, ventured into Taiwan and Hong Kong. South Korea is also increasingly becoming a dual-listing destination. Yangzijiang Shipbuilding, one of China's largest shipyards, raised some NT$4.8 billion (HK$1.27 billion) from issuing Taiwan depositary receipts (TDRs) in September last year as trade links between China and Taiwan expanded. Analysts said the trend could become worrying for the Singapore Exchange, which has launched a US$7.9 billion bid for ASX, if these companies also begin to delist from the bourse. So far, however, companies are only seeking dual listings and very few have delisted. Chinese firms, mainly small ones, pursue primary listings in Singapore because they are being edged out by larger mainland firms in the Hong Kong and Shanghai IPO markets. Some 157 Chinese companies were listed in Singapore at the end January. Those that were primary-listed had a total market capitalisation of around S$49.5 billion (HK$301.6 billion), while secondary-listed ones were valued at S$4.5 billion. By comparison, the 30 firms which are the constituents of the main Straits Times Index are valued at nearly S$500 billion. The FTSE Straits Times China Index trades at about nine times current earnings, compared with about 14 times for the main index. Hong Kong's H-share index of top mainland firms trades at around 16 times. Singapore investors' confidence in S-chips took a hit when steelmaker FerroChina defaulted on loans just weeks after it announced strong quarterly earnings in 2008. It was followed by news of accounting irregularities at several other S-chip firms.

A selection panel has been set up to identify and consider suitable candidates from the globe for appointment as Securities & Futures Commission (SFC) Chief Executive Officer (CEO), upon the expiry of the contract of incumbent Martin Wheatley in June, the Hong Kong government said Saturday. According to the government, the selection panel is chaired by Financial Secretary John C Tsang and comprises Chan Kam-lam, Moses Cheng Mo-chi, Eddy Fong Ching, Lawrence Lee Kam-hung, Carlson Tong and the Secretary for Financial Services and the Treasury, K C Chan. "The new CEO will be pivotal in leading the operations of the Commission. He will have the executive responsibility for the day-to-day running of the SFC, and is tasked to implement the regulatory objectives under the Securities and Futures Ordinance, as well as the policies and strategies set by the SFC Board," said a government spokesman Saturday. The selection panel will commence a global recruitment of the proposed chairman of the commission. "A comprehensive search will be conducted both locally and overseas to identify the most suitable candidate to succeed Martin Wheatley who will leave the SFC in June 2011", the spokesman added. Advertisements for the post are published in the local and international press starting on Saturday. An executive search firm has been engaged to broaden the network of search and assist in the recruitment exercise. The current CEO of SFC Martin Wheatley joined the SFC in June 2005, and he was appointed as the commission's first CEO in 2006.

 China*:  February 21 2011

China's emergence as an aviation powerhouse could culminate in the mainland driving the biggest overhaul of the international air transport industry since 1947 - one that would see global liberalisation of routes and airline ownership. That is the belief of Giovanni Bisignani, director general and chief executive of the International Air Transport Association, which represents about 230 airlines. "Growth comes with responsibility," Bisignani said. The head of the world's biggest airline industry group said that while mainland authorities had to tackle issues such as air traffic control bottlenecks, once these were resolved China would become more vocal on global aviation matters. This would mirror the mainland's growing influence on the wider international economic, political and military stage in such areas as regional security, including anti-piracy missions off the coast of east Africa and the Gulf, and in the Indian Ocean. As a result, the industry could be discussing replacing the existing international civil aviation agreement - the so-called Chicago Convention - and suggesting "let's do a Beijing Convention", Bisignani said. The Chicago Convention has governed the international air transport industry since 1947. It not only set up the International Civil Aviation Organisation, a UN agency that co-ordinates and regulates international air travel, but established airspace rules, aircraft registration and safety. Asked what he would like to see in the Beijing Convention, Bisignani said, it would allow "airlines to fly where the traffic is" and "give airlines the freedom to run their business as a normal business". Such moves would end all restrictions on aircraft routes and airline ownership, he said. Drawing an analogy with the car industry, he said that while foreign cars might have to meet local safety rules, there were no government-to-government agreements needed before car manufacturers could sell their vehicles in foreign markets. But the airline industry needed governmental agreements to govern flight frequencies, destinations, aircraft size and passenger numbers. Opening airline ownership would outlaw the 25 per cent limit the US imposes on foreign airlines owning US carriers, as well as the 49 per cent cap imposed in Europe. It would also affect airlines such as Qantas, where the Australian government has pledged that Australians would own at least 51 per cent of Qantas and other Australian global carriers. "These rules are old," said Bisignani, who retires as the head of Iata at the annual general meeting in June to be replaced by director general and chief executive designate Tony Tyler, Cathay Pacific (SEHK: 0293) chief executive. With many of the regulatory controls on airlines scrapped, Bisignani said the Beijing Convention would limit governments to overseeing airline and aircraft safety and security. Pointing to China's rising importance in the aviation industry, Bisignani said the mainland was forecast to be the fastest growing market for international and domestic passengers up to 2014. Air China (SEHK: 0753, announcements, news) is the world's largest carrier with a market capitalisation of US$20 billion and China Southern Airlines is fifth with US$11 billion, he said. China is also moving on the use of biofuels in aircraft with a tie-up between Air China and PetroChina (SEHK: 0857) that will see the first transpacific flight by an aircraft partially powered by biofuel. Bisignani said the involvement of PetroChina was significant and "something that should not be understated" given that major oil companies in other countries had largely ignored biofuels. "PetroChina could be the start of a more proactive role of the big oil companies" in biofuels, he said. Iata has a target that by 2020 biofuel should make up 5 per cent of the fuel used to power aircraft, although given the levels of biofuel production, Bisignani thought a more realistic target was around 3 per cent. Explaining the growth forecasts, he said China would see 10.8 per cent annual growth in international passenger traffic up to 2014, compared with the second placed United Arab Emirates which will grow by 10.2 per cent per year. The number of domestic passengers in China is set to rise by 13.9 per cent each year to 2014, equivalent to an extra 181 million travellers. Vietnam is in second place, with a forecast annual rise in domestic passengers of 10.9 per cent. China will also be the second fastest growing cargo market, with an 11.7 per cent rise in airfreight volumes each year, behind Hong Kong where air cargo tonnage is set to climb by 12.3 per cent a year to 2014.

Factories struggle to fill vacancies - Migrant workers take their pick as labour shortage drives up wages - Foxconn sends free buses to pick up returning migrant workers from long-haul train and bus stations, and bring them to its Longhua plant where they undergo a brief selection process and are signed up on the spot. Twenty-one-year-old Lan Chenghai landed a job in Shenzhen on Thursday, just two days after leaving his home village in rural Guangxi province. He found it by taking one of the free coaches sent by electronics maker Foxconn to meet workers stepping off long-haul buses and trains returning from the interior. After having their identity card details recorded, a 15-minute test and an interview at Foxconn's giant Longhua plant, which makes products for Apple and other global technology brands, Lan and a number of other young migrant workers signed up on Thursday morning. He was told he could move into one of its dormitories that night. Factories in the Pearl River Delta are offering a range of incentives to migrant workers - including higher wages, paid annual leave, good working conditions, free accommodation with swimming pools and gyms, and commissions for recruiting fellow villagers - as a labour shortage sweeps the country following the Lunar New Year holiday. After a series of suicides at its main Shenzhen factory last year, Foxconn is offering a basic monthly salary of 1,550 yuan (HK$1,830), about 200 yuan or 13 per cent more than the city's minimum wage. It's attracting more than 6,000 jobseekers a day. Wu Xiaohui , the man in charge of recruitment at Longhua, said that with overtime pay, a worker could earn between 2,100 and 2,800 yuan a month. "After they've worked at Foxconn for nine months we will increase the basic salary to 2,000 yuan a month," Wu said. "That means they could earn between 2,700 and 3,600 yuan a month." With soaring overseas orders, Foxconn still needs to employ about 400,000 people in Shenzhen, even though it is now operating several new factories in inland provinces. Since February 6, Wu and his human resources team have recruited 4,000 migrant workers a day but they still have 20,000 vacancies to fill.

The People's Bank of China has been raising lenders' required reserve ratios and interest rates in bids to rein in inflation, but some economists fear further monetary tightening might drag the world's fastest-growing economy into a slowdown. Beijing has increased for the second time this year the amount of money banks must keep in reserve as it seeks to curb increasingly stubborn inflation in the world's second-biggest economy. The required reserve ratio was increased by 50 basis points yesterday, bringing the total to 19.5 per cent for bigger banks and 17.5 per cent for smaller lenders. The latest change would take effect on Thursday, the People's Bank of China said. The move follows three rounds of interest-rate rises in the past four months and the central bank's order to banks to issue fewer loans. Despite the monetary tightening inflation rebounded to 4.9 per cent last month from 4.6 per cent in December. The State Administration of Foreign Exchange revealed on Thursday that US$35.5 billion of speculative money poured into the country last year, 42 per cent higher than the average in the past decade. Economists widely expected Beijing would implement more increases in the required reserved ratios, interest rates and yuan exchange to keep loan growth, property price rises and inflation at bay. This would call for an interest-rate increase of 50 basis points by the end of June, according to Mizuho Securities Asia. The value of the yuan will appreciate 5 per cent to 7 per cent this year, according to China International Capital Corp. But some economists warned of growing risks that increasing monetary tightening might drag the world's fastest-growing economy into a slowdown. The Conference Board Leading Economic Index for China slipped 0.5 per cent in December to 154.3 following a 0.5 per cent rise in November and a 0.8 per cent jump in October. Jing Sima, an economist with the New York-based independent research organisation, said yesterday that the upward trend of the economic indicator was moderating, but it was too early to tell if this meant a slowdown in economic activities. "The Chinese economy is unlikely to accelerate sharply in the near term," she said. "While the construction and consumer sectors are weakening, growth in the industrial sector remains strong." Introduced nine months ago but plotted back to 1986, the Conference Board index aims at showing turning points in China's economic cycles. It is composed of six major components, including loans statistics from the People's Bank of China and data from purchasing managers and consumer expectation indices compiled by China's National Bureau of Statistics. However, UBS economist Wang Tao saw no signs of an economic slowdown on the mainland in the fourth quarter of last year. This is despite the fact that she forecast the mainland's economy would slow to 9.6 per cent this year from 10.3 per cent last year. "Construction activities may be a bit slower since the government tightened up the property sector but exports and imports held up very well," Wang said. February's set of economic data would give "a clearer picture". China levied taxes on real estate transactions in Chongqing and Shanghai this month in its latest move to cool soaring home prices, which have since resulted in fewer transactions.

Russian, Chinese spacemen walk on "Mars" second time - Wang Yue, a Chinese volunteer participating in the Mars-500 experiment, conducted the landing on the "Martian" surface with his Russian colleague Alexander.

As the salaries earned by Chinese residents continue to gain ground on the pay granted to workers recruited from elsewhere, mainland employers are becoming more open to hiring overseas talent, a recent survey showed. The number of businesses that are willing to recruit job candidates from North America, the United Kingdom, Australia and other places outside the Chinese mainland increased from 50 percent in 2009 to 70 percent in 2010, according to the survey, which was released on Friday by the international recruiting group Hays. In the past year, the company polled more than 1,000 employers based in the mainland. It found a growing demand for overseas talent, especially for Chinese citizens who have returned home after studying or working in other countries. Yue Yang, 24, who is studying banking in the United States, said he is thinking about going back to China after he gets a master's degree. "The banking business in China has more room for career development than in the US," he said. "So I will definitely have better opportunities back there." In 2009, some 108,000 people returned to the Chinese mainland from abroad, a number that had risen 56.2 percent from the previous year, according to a Guangming Daily citation of statistics recently released by the Ministry of Education. "For Chinese employers, a 70 percent willingness to hire overseas workers, although that is still lower than the average rate of 76 percent for Asia, is quite a high figure when compared with the past," said Emma Charnock, regional director of Hays in Hong Kong and the mainland, who was in charge of the survey. Company executives, she said, have recently come to prefer hiring Chinese natives who have returned home after studying or working elsewhere. Expatriates - or people living in a foreign country - have fallen to the status of a second choice, she said.

Hong Kong*:  February 20 2011

The financial tsunami should teach Hong Kong to shore up its defenses during good times for maintaining financial stability, the head of the monetary authority said. "During the Asian financial crisis, the Exchange Fund played a critical role in stabilizing Hong Kong's monetary and financial systems, and the fund achieved the mission again in the recent global financial crisis," Hong Kong Monetary Authority chief executive Norman Chan Tak-lam said. But Chan said "it is difficult, if not impossible" to quantify the optimal size of the Exchange Fund. The size of crises and resources needed to defend the financial system are hard to predict, he added. At the end of 2010, the accumulated surplus of the Exchange Fund and the fiscal reserve stood at HK$1.2 trillion, up from HK$720 billion a decade ago. The banking system's total assets nearly doubled to HK$12.3 trillion in 2010 from HK$6.7 trillion in 2000. In 2008, the government said it will use the Exchange Fund to provide a 100 percent guarantee for all local Hong Kong dollar and foreign-currency bank deposits. Since the total deposits in the Hong Kong banking sector amount to HK$6 trillion, the task was "enormous," Chan said. Foreign-currency assets of the Exchange Fund hit HK$2.2 trillion as of December 31. 

Gateway Capital plans to list its mainland property assets by way of a yuan-denominated Real Estate Investment Trust (reit), aiming to raise up to US$800 million, the Hong Kong Economic Journal reported on Friday. The Hong Kong-based real estate investment and management company was expected to list the reit in Hong Kong in the second quarter. Morgan Stanley, HSBC Holdings (SEHK: 0005) and Bank of China International would handle the deal, the newspaper said citing sources. China-focused Gateway Capital had more than 10 commercial and hotel properties in the mainland, the report added. It gave no further listing details. Billionaire Li Ka-shing’s Cheung Kong (Holdings) (SEHK: 0001) is expected to launch Hong Kong’s first offshore yuan product in the form of a reit this year, spinning off some of its Beijing properties for listing in the city. Hong Kong Exchanges and Clearing (SEHK: 0388) said earlier this week that the territory’s first yuan-denominated equity product was likely to be a reit.

A Beijing official yesterday hit out at a "small number of people" who "treated Hong Kong as an independent or quasi-independent political entity". Qiao Xiaoyang , deputy secretary general of the National People's Congress Standing Committee and chairman of the Basic Law Committee, made the comment at a closed-door talks with local Beijing loyalists on the 12th national five-year plan, which will be deliberated by the NPC next month. Speaking in Shenzhen to 137 Hong Kong delegates to the NPC and Chinese People's Political Consultative Conference, he called for better understanding of the "one country, two systems" policy. "To discuss the issue of including Hong Kong in the national strategic planning, we must have a correct understanding of the position of the `one country, two systems' policy in the national development strategy, and a correct understanding of the indispensable relationship between Hong Kong and the country," he said, according to the central government's liaison office, which invited him to give the speech. Over the years, Beijing has been concerned about "two systems" potentially overriding "one country", threatening its authority in Hong Kong. CPPCC member Lew Mon-hung quoted Qiao as saying "a small number of people treated Hong Kong as an independent or quasi-independent political entity". Lew said the official cited three examples to illustrate what he considered to be deviation from the "one country, two systems" policy: the reluctance of some Hong Kong officials in the years immediately after the handover to strengthen economic co-operation with the mainland; the ruling by the Court of Final Appeal in 1999 that granted mainland children born to Hong Kong parents the right of abode; and Civic Party candidate Alan Leong Kah-kit's platform in the 2007 chief executive election, which suggested that the power to appoint principal officials should be transferred from the central government to the chief executive. Albert Ho Chun-yan, chairman of the Democratic Party, said Qiao's remarks were a distortion of the facts. "Who in Hong Kong are resisting the central government's sovereignty? No one. I don't think Alan Leong's platform amounted to a challenge, to suggesting Hong Kong as an independent political entity." The Democrat was surprised by the official's comments. "The constitutional reform package was passed recently. Why would he stir up more social conflict? This is very unwise."

Hong Kong's Chief Secretary Henry Tang Ying-yen with the president of Hong Kong Rugby Football Union Brian Stevenson at the tournament draw in Exchange Square One, Central, yesterday - Credit Suisse closes its account with Hong Kong Sevens. The worst-kept secret in town was confirmed last night when Credit Suisse announced this is its last year as Hong Kong Sevens title sponsor. Just minutes before Hong Kong were drawn with South Africa, Wales and Spain in pool E at next month's Cathay Pacific (SEHK: 0293)/Credit Suisse Hong Kong Sevens, Dumith Fernando, chief operating officer for Credit Suisse (Asia-Pacific), confirmed the bank's links with the tournament will end on March 27 after the Cup final. "Although this is the last year of our relationship, we are very proud of our partnership [since 1998]," said Fernando. "We have thoroughly enjoyed our partnership." Fernando's words to the large crowd at yesterday's official draw, which included the chief secretary Henry Tang Ying-yen, all but confirms that former title sponsor HSBC (SEHK: 0005, announcements, news) is waiting in the wings to return. The Hong Kong Sevens is the fifth leg of the IRB Sevens Series sponsored by HSBC. As Credit Suisse is title sponsor, the presence of their rival will hardly be seen at the sold-out Hong Kong Stadium this year as England and New Zealand strive to take the upper hand in the series. Both teams are joint top in the standings on 80 points, with Fiji and Samoa - the defending Hong Kong Sevens champions - tied in third place on 64. With this event offering the most points due to it being the only 24-team tournament in the eight-leg series, all the core teams will know the importance of winning the Cup Championship. Hong Kong will face Wales for the second year running. The Mark Wright-led team defeated Wales 21-19 last year in the pool competition and the Welsh brigade will be looking for revenge. "I suppose they will look at it as a grudge match," said Hong Kong head coach Dai Rees, a Welshman himself. "That was our big scalp last year and we will be looking to claim another this time too. They are still the world champions, although they haven't come on since winning the World Cup [in 2009]. We will look forward to this match." Rees was also happy that Spain were drawn in Hong Kong's pool. "I was hoping we wouldn't meet another Asian side as we play against them regularly. This will be a new challenge and I'm happy we avoided coming up against China, South Korea or Malaysia." Top seeds in the pool South Africa will arrive on a high having won the last leg in Las Vegas. But they have some catching up to do. They are currently in fifth position. Hong Kong Sevens draw, Pool A: New Zealand, France, Portugal, South Korea. Pool B: England, USA, Japan, China. Pool C: Samoa, Scotland, Tonga, Mexico. Pool D: Fiji, Kenya, Russia, Malaysia. Pool E: South Africa, Wales, Hong Kong, Spain. Pool F: Australia, Argentina, Canada, Zimbabwe.

A family dispute may see the closure of a preserved egg store in Sheung Wan known for drawing long queues. Shun Hing Hoo has for years supplied and sold preserved and salted eggs from its shop in Wing Lok Street. Its previous owner, Kwok Wing-fai, died recently. According to a court filing, he left the business to a son, Kwok Tak-shing. "The shop was so famous that even television interviewed them, and customers had to queue outside the shop to buy their duck eggs," a nearby shopkeeper said yesterday. Gold World Investments, owner of the site since 1991, filed a High Court writ this week seeking an order for Shun Hing Hoo to leave. Gold World said it had not been paid licence fees since February 2005. A Gold World director, Kwok Tak-ming, who said he was a son of Kwok Wing-fai, noted that shops near the store attracted rents of HK$40,000 to HK$50,000 a month. The filing names Kwok Tak-shing, Kwok Shuk-ching, Shirley Kwok Suk-ling and the estate of Kwok Wing-fai as defendants. Kwok Tak-ming says these three are his siblings. Kwok Tak-ming said Gold World filed the court claim after a decision by him and his mother, 72. According to an annual return last year, they were Gold World directors along with Kwok Tak-shing and Kwok Wing-fai. They could not be reached at the shop yesterday. The shopkeeper from a nearby store said Shun Hing Hoo was closed four to five days before the Lunar New Year and had not opened since. Another shopkeeper said the store used to be in Wing Sing Street but had to make way for high-rises.

Yamato's man in Hong Kong Junta Maejima will oversee the HK$170 million investment. Japanese courier Ta-Q-Bin is investing HK$170 million on a service in Hong Kong targeting home delivery for online shoppers. It is the start of an aggressive expansion campaign into southern China by its parent company Yamato Holdings. It plans to launch a service in Shenzhen next year, followed by Guangzhou in 2013 and Zhuhai and Zhongshan in 2014. In a bid to fend off cutthroat competition from the numerous local couriers in Hong Kong, Ta-Q-Bin will concentrate on door-to-door deliveries of perishable products such as fresh fruit, ice-cream, and deliveries of high-end ingredients for fine-dining restaurants Its drivers will also collect payments for vendors of up to HK$10,000 per shipment and will operate from 8am-10pm 365 days of the year. Ta-Q-Bin has a logo featuring a black cat carrying a kitten in its mouth to underline how it aims to carry precious cargo with care. It has grown into a household name in Japan since being launched in 1976. In 2001, Yamato introduced the service to Taiwan and opened its first mainland office in Shanghai last October. "In Japan, you could say that Ta-Q-Bin induced the boom in online shopping," said Junta Maejima, managing director of Yamato Transport (HK). Yamato handled 1.26 billion domestic express parcels in Japan last year, of which 11 per cent was related to online shopping. "Online shopping parcels are also expected to account for a major proportion of sales in Hong Kong and the mainland," Maejima said. The company is hoping to team up with online names such as Taobao, the most popular shopping portal on the mainland, which currently works with state-owned Worldwide Express Mail Service and Shenzhen-based SF Express (Group) to deliver products to individual customers on the mainland and in Hong Kong. Maejima said volumes in Hong Kong were expected to be modest at first, with 600 and 3,100 shipments expected in 2011 and 2012 respectively. He estimated the volume would gather pace from the third year, when the company hopes to break even, and increase to 11,600 parcels a year by 2015. The company will set up seven delivery centres -in Kwai Chung, Kowloon Bay, Tsim Sha Tsui, Quarry Bay, Mong Kok, Central and Tai Po. The number of centres will gradually be increased to 16 by 2015 and 26 by 2020. The number of courier staff is expected to increase from 70 by the end of this year to 400 by 2015 and 700 by 2020. A hundred Circle K stores will also serve as delivery and pick-up points.

 China*:  February 20 2011

McDonald will open 1,000 restaurants in China during the next three years - China's foreign direct investment (FDI) will continue to experience robust growth this year, following an increase of 23 percent in January, said the Ministry of Commerce. The expansion will come despite accelerating inflation, and the establishment of a ministerial panel responsible for reviewing overseas takeovers of Chinese companies concerned with military or national security work. The country's strong economic growth and the transformation of the economy to one led by domestic consumption will help to sustain China's appeal to the foreign investors, said experts. The ministry said on Thursday that China's FDI last month reached $10.03 billion, an increase of 23 percent and higher than the growth rate of 15.6 percent in December. In 2010, foreign investment grew by 17.4 percent year-on-year to a record $106 billion. In a statement released on Feb 13, the State Council said a ministerial committee will be set up to review approvals for proposed overseas merger and acquisition (M&A) deals concerning companies in the defense, agriculture, energy, transport, and technology sectors. The new process raised questions about whether foreign investment in China would be affected. Yao Jian, a spokesman for the ministry, said the government is confident about the influx of foreign investment, and the new mechanism is a sign that China is fulfilling its commitment to further open up market. "China is following international practice. Many nations have already adopted such an approval process. It will help China to further open up and improve policy transparency," he said. "The new rules will help improve the quality and structure of China's FDI and create a better environment for foreign businesses," he added. During the past three decades, China's FDI activity was mainly realized through green investment. During 2010's record FDI high, only 3 percent of the deals by value were made through M&A, whereas the global figure was more than 70 percent. "More and more of the nation's foreign investment deals will be made through M&A, and will probably rise to 8 or 10 percent," Yao said. According to the ministry, the nation's service industry continues to outperform the manufacturing sector in attracting foreign investment. In January, investment worth $4.69 billion went into the service sector, a rise of 31.8 percent, accounting for 46.8 percent of the total. China's western region saw FDI surge 81 percent to $510 million, far exceeding that of the eastern part of the country which registered 23 percent. Experts said China's greatest asset in attracting foreign investors is the fast-growing economy and the government's commitment to the stimulating domestic consumption. "Double-digit growth (in FDI) is an easy target to reach. China's strong attractiveness as an investment destination will remain for quite a long time," said Li Xiaogang, director of Foreign Investment Research Center at the Shanghai Academy of Social Sciences. The world's largest maker of digital cameras, Canon Inc, said it is considering expanding its production capacity in China to cut costs and counter mounting competition, according to Masaya Maeda, Canon's head of image communications products operations, in an interview with Bloomberg. McDonald's Corporation said the company will accelerate expansion and open 1,000 restaurants in China during the next three years, hoping to be well placed as the nation takes steps to spur individual incomes.

Peace at a price - China had sent 1,573 peacekeeping police to seven UN assignment areas by May 2010. A book about China's contribution to the United Nations' peacekeeping police is a timely reminder of its increasingly influential role in world affairs. Liu Zhihua reports. "I am Pick's direct superior and if Pick doesn't fulfill his duties I have the power to deal with and even sack him," says Lian Changgang, general supervisor of the United Nations' peacekeeping police in East Timor, in the book Fighting for Peace, by Yu Yin. The deputy commissioner general has barged into his office and ordered him not to upset his friend, Pick, whom Lian had scolded for disobeying orders. "I'm very busy. Please leave," Lian says to the stunned official, before leaving the office. The story encapsulates the complicated relationships Chinese peacekeepers deal with as they participate in the UN's missions around the world. Yu's book, published by China Intercontinental Press, has been translated into English and French and examines the development of China's involvement in UN peacekeeping missions through individual Chinese officers' stories in East Timor, Bosnia and Herzegovina, Liberia and Haiti. "Peacekeeping is not as romantic as it sounds. When a country needs other countries to help keep order in society, the disorder must be unimaginable," Yu says. "Our peacekeepers are so brave and devoted. I felt I must write up their stories." Yu became a journalist at Northeast Window magazine in 1999, the same year the government decided for the first time to send police officers to participate in UN peacekeeping operations. As a retired navy officer, Yu was fascinated by the news and keen to learn more. When the first squad of 15 Chinese peacekeeping police officers returned to China two years later, Yu interviewed Lian Changgang, the former "number two" official among UN's peacekeeping police in East Timor. The interview was published in People's Liberation Army Daily and was widely reprinted. Yu, however, wasn't satisfied. "In the past, Chinese went to a foreign land to get an education or to make a living, but peacekeeping forces are different. They are to help foreigners," Yu says. Lian has a master's degree from Michigan State University in the United States in criminal law in 1997, and worked at a county level public security bureau before he was selected for the mission in East Timor. Impressing other UN police officers with his ability and integrity, Lian was made general supervisor, through open competition, four months after he arrived in East Timor. "Lian is a good example of Chinese peacekeeping officers, whose stories are impressive and encouraging," Yu says. By May 2010, China had sent 1,573 peacekeeping policemen to seven UN assignment areas, demonstrating the commitment of a major economy to the peace of international society. With help from Lian, Yu interviewed nearly 30 Chinese peacekeeping police officers. Wang Ran, one of the first three Chinese women officers in East Timor, shares her gruesome job experience in East Timor with the author. East Timor was covered with mass graves everywhere, in the aftermath of genocide. In rebuilding the country, locals often unearthed bodies whose identities were hard to verify. Wang's task was to conduct surveys of the missing population, including unidentified bodies. She and four colleagues worked more than 10 hours a day, visiting burial sites to take careful notes and track down relatives of the deceased. When there weren't enough helping hands, Wang and her colleagues had to dig up the bodies themselves. The cadavers were often decomposed due to the tropical island country's high temperatures. After a day's work at the stinking graveyard, Wang felt nauseous at night. Their task determined they could only spend the night in tents beside the graves. "I finally got a taste of the Chinese idiom 'feng can lu su' - 'eating in wind and sleeping in dew'," Wang says. "We used to be looked down upon by foreign countries, but now peacekeepers have gained honor for our country," Yu says. "They fulfilled their tasks perfectly. They deserve salutes." In April 2010, China Intercontinental Press approached Yu to have his book on Chinese peacekeeping operations translated. "China has made great contributions to world peace. We hope the world understands the efforts of our peacekeeping police force," says Jing Xiaoming, director of the Books Business Development Department at China Intercontinental Press. "I never dreamed of writing books for foreign readers," Yu says. "But it feels great to be able to introduce our peacekeeping force to the world."

China calls for more US transparency - China hopes the United States will make the approval process for Chinese enterprises seeking to invest in the US more transparent, the spokesman for the Ministry of Commerce (MOFCOM) said Thursday.

The big four banks in the mainland are planning to set up a second headquarters in Shanghai - a move that will take the city a step closer toward becoming an integrated financial center for the domestic and international markets. The Bank of China (3988) has already declared its intention to do so and its application is with the China Banking Regulatory Commission, the Securities Times reported. The Industrial and Commercial Bank of China (1398), China Construction Bank (0939) and Agricultural Bank of China (1288) are "actively" planning to follow suit, the source added. The big four lenders, as well as the nation's financial regulators, are headquartered in Beijing. China has said it wants to develop Shanghai into an international financial center by 2020 to compete with New York and London. BOC also plans to set up a cross-border trade settlement department in Shanghai, where demand for such services has grown rapidly, staff of the China's fourth-largest lender told the paper. The Shanghai Stock Exchange, meanwhile, is set to sign an agreement with Brazil's BM&FBovespa - Latin America's biggest exchange operator - on Monday. This may lead to cross-listings of stocks, the Financial Times reported. Cross-listings will give blue-chip Brazilian companies - such as oil group Petrobras and miner Vale - access to mainland financial clout and increase trading of their shares during the daytime in Asia. This would add another element to one of the world's most important emerging bilateral trade relationships, the paper said. A spokesman for BM&FBovespa said Asia offers more opportunities than the United States or Europe because of the time-zone differences. Separately, Shanghai has submitted a proposal to the State Council to set up an insurance exchange, the Securities Times reported. The exchange will initially focus on re- insurance. The city is also looking at setting up a yuan fund for overseas investment, and real estate investment trust funds for affordable housing, the Oriental Morning Post reported.

In the aftermath of the mainland's biggest food safety scandal, Premier Wen Jiabao promised to restore public confidence within two years, maybe "sooner". Melamine-tainted infant milk formula left six children dead and more than 300,000 ill with kidney problems in 2008. But more than two years on, the public still needs some convincing. And reports this week that at least 10 per cent of rice contains excessive amounts of the heavy metal cadmium show that it is still a problem. Almost 70 per cent of mainland consumers have serious doubts about food safety, according to a survey released by Insight China magazine and Tsinghua University's Media Survey Lab. With staples such as cooked meat, dairy products, fresh meat, canned food and cooking oil among the top 10 food concerns, the level of distrust is unprecedented. It is also well-founded. The National Food Safety Regulating Work Office said there were 130,000 food safety cases last year. More than 165 tonnes of edible oil failed to make the grade in a crackdown on "gutter oil", usually refined from discarded kitchen waste. And more than 27,000 tonnes of melamine-tainted milk powder recycled from stock that should have been destroyed in 2008 was seized in another crackdown. Industry insiders and other observers blame poor regulation, weak safety laws and a dysfunctional system that fails to prevent or severely punish hazardous behaviour. Consumers have to arm themselves with sound knowledge, keep their eyes open and even roll up their sleeves to keep fake wine, dyed mushrooms, dirty bean curd, mouldy rice noodles, toxic dairy drinks and cancer-causing cooking oil off their dinner tables. The chairwoman of a Beijing company that processes and sells cooked meats said the problem stemmed from the need to feed the mainland's 1.3 billion people. "What you're told in newspapers or as hearsay is not exaggerating at all," she said. "The government encourages big farms and they require you to meet market demand. "The pig farmers cannot afford to have sick pigs and it's convenient for them to feed pigs with antibiotics so that they don't get sick. "Meeting market demand is the big premise. When meeting market demand is a problem, food safety cannot be a priority." She said coming from a family that had been engaged in the cooked meat business for generations, what she found most scary about pork nowadays was that slaughterhouses no longer removed sick pigs. "Like people, pigs can fall ill with all kinds of diseases. But now, even the big state-owned slaughterhouses do not enforce that," she said. "It was not like that when I was young and it is very scary." Zhou Jianping , a chicken farmer in Wenzhou , Zhejiang , said it was common for farmers to mix hormones in feed so that the rearing period could be shortened, with chickens less than 40 days old sometimes being sold for meat. A fishing industry insider told the Economic Observer feeding fish antibiotics and then soaking them in formalin to preserve their freshness had become a common practice. Regulation was lax and easy to avoid, he said. And when the regulators fail to do their job properly, consumers become victims. The Beijing chairwoman said her company used pork from big state-owned companies such as COFCO because its quality was controlled. But some small companies used meat from suspicious sources because it was cheap. When they failed quality inspections, they would just switch packaging. "Those companies always come back with a different brand, but it's the same company," she said. "If there was a stricter policy, with a five-year or even a lifetime ban from entering the market, I think those owners would be more cautious and pay more attention to food quality." The mainland rushed through a food safety law in the wake of the melamine-tainted milk scandal. But the law, which came into effect in June 2009, is generally considered weak and not intimidating enough. The law ended the practice of exempting certain companies from product quality inspections, established a product recall system and instituted uniform, nationwide standards for everything from allowable additives to nutritional labelling. But although the law increased fines for companies that produce substandard food, it said violators should be punished according to criminal laws, without being more specific. Criminal law at present pertains only to those who produce and sell substandard food, but food safety also involves food processing, packaging, transport, storage and the supervision of not only food, but also food additives. "The real problem is that in China, whenever such a scandal comes out, the government regards it as a social incident that might affect the stability of its rule, but not as a legal matter," said rights lawyer Wang Zhenyu , who is also deputy director of the Research Institute of Public Policy under the China University of Political Science and Law. The rampant food safety scandals also spoke volumes about declining ethics in Chinese society, Wang said. "There is no religion, no fear and no belief in karma," he said. "There are no public ethics at all." Wang said irresponsible government agencies were turning a blind eye to food safety problems. While they lacked the scientific or technological ability to conduct inspections, they also lacked the motivation because conducting such inspections brought them no benefit. And as long as there were no big scandals their jobs were safe.

Sichuan pig who survived amid quake rubble for 36 days - Is the reason the strong-willed pig managed to survive 36 days under the rubble of the 2008 Sichuan earthquake, which left nearly 88,000 people and 4 million pigs dead, that it is genetically superior to other pigs? A mainland tycoon and the country's leading DNA sequencing institute said they would find out by studying the four-year-old pig's DNA and comparing it to average pigs, according to a mainland media report. Sichuan-based New Hope Group - an animal feed company owned by billionaire Liu Yonghao , who ranked 21st on Forbes' 400 Richest Chinese list last year - would co-operate with BGI, formerly the Beijing Genomics Institute, the Chengdu Economic Daily reported yesterday. "Zhu Jianqiang [literally, strong-willed pig, the name given by Fan Jianchuan , the curator of a museum in Chengdu opened in the pig's honour] survived in such a harsh environment; what kind of special genes made it adapt to the environment?" BGI researcher Li Wei was quoted as saying. The institute would also analyse the pig's genes to predict what kind of diseases it was likely to contract. The company, which has given the pig a home since its rescue, said it hoped to preserve the pig's genomic advantage, if any is found, through technological means. A BGI researcher flew to Chengdu to collect skin samples from the pig on Wednesday. He had to fly back "to our Shenzhen laboratories within five hours in order to maintain the skin tissue's activity and [the report's integrity]," Liu Huan, another BGI researcher, told the newspaper. Zhu Jianqiang is probably the first pig in the world to have pets - two dogs. Shen Shuibao , technical director of the company, said two dogs were living with the pig, which had not seen another pig in the past two years. China has long hailed the pig as a symbol of the will to live. A Sichuan insurance company even offered a 5,000 yuan (HK$5,900) life insurance policy to it - a value generally five times that of agricultural insurance policies that cover pigs because, as the company said, the miracle would inspire victims of the May 12 quake and encourage Sichuan people to rebuild their towns. Fan, the curator, who bought Zhu Jianqiang for 3,008 yuan (HK$3,552) after it emerged from the ruins of its sty, said he would apply to Guinness World Records on the pig's behalf.

China's foreign exchange regulator published its first public report on the volume of speculative cash entering the country, saying that "hot money" from investors actively looking for quick returns was not nearly as big a problem as officials often suggest. The amount of hot money entering China is more an anthill than a mountain, the State Administration of Foreign Exchange said yesterday, countering the popular view that it faces a torrent of potentially destabilising speculative inflows. A net US$35.5 billion of hot money sneaked into China last year, accounting for 7.6 per cent of the country's increase in official currency reserves and just 0.6 per cent of China's GDP, it said. "This suggests that the hot money issue is not a major problem for managing the currency, nor a key source of asset price bubble threat," said Dariusz Kowalczyk, a senior economist at Credit Agricole CIB in Hong Kong. Illicit cash inflows were more like "ants moving home", coming in bits and pieces via multiple deals and transactions, the regulator said. "We have not found evidence of any large-scale capital inflows co-ordinated by any established financial institution," it added. "The argument that cross-border capital flows are driving domestic stockmarket performance lacks evidence in the data," it concluded. Nevertheless, it warned that all global liquidity was building up because of loose monetary policies in developed economies, and that all countries would need to step up their defences against capital inflows. Over the last decade, net hot money inflows averaged about US$28.9 billion a year, contributing roughly 9 per cent to China's foreign exchange reserve growth during that time, SAFE said in its 45-page report. China registered about US$400 billion in net capital outflows from 1994 to 2002. With the economy booming, property prices taking off and expectations for yuan appreciation mounting, the tide shifted from 2003 to 2010, with China seeing about US$300 billion in net inflows, SAFE said. In order to make capital flows more balanced, SAFE reiterated a long-standing pledge to broaden capital outflow channels. It also said that it would design financial, legal and administrative measures in order to make it more difficult to bring speculative capital into the country. China is struggling to contain inflation, which has remained stubbornly high despite cooling measures. The People's Bank of China has raised major lenders' reserve requirement ratios seven times since the start of last year. The central bank also boosted borrowing costs last week for the third time in four months to help dampen inflation. The monetary authority has permitted the yuan to strengthen 3.6 per cent since a two-year dollar peg was scrapped on June 19.

Demand from mainland investors for gold jumped 70 per cent last year as an increasing number of wealthy Chinese saw the precious metal as a hedge against inflation. Investment demand for gold totalled 179.9 tonnes in 2010 while demand from the jewellery sector hit a record 400 tonnes, according to a World Gold Council report. Demand for gold bars and coins surpassed that of the United States and Germany in 2010, making it the second-largest investment market behind India. Global annual demand hit a 10-year high of 3,812.2 tonnes last year, increasing 9 per cent to US$150 billion. There expected to be a "healthy level of demand in 2011", said Eily Ong, investment research manager at the council and author of the report. Ong said Asia, particular China and India, will continue to buoy gold demand. "China's strong gold demand is fuelled by rising income levels, high saving rates and strong economic growth," she said. The report reveals that China and India together constituted 51 per cent of global jewellery, bar and coin demand in 2010. Ong said the main motivations for gold investment in China were concerns over domestic inflation and the poor performance of alternative investments amid continued negative real interest rates on deposits and lacklustre equity market performance. "These factors have combined with expectations of further gold price gains," she said. Kenix Lai, a gold analyst with Sun Hung Kai Financial, said China is expected to contribute to strong demand for gold globally this year. "Mainlanders' purchasing power is rising and they will buy gold and jewellery," she said. "This choice is associated with Chinese tradition." She said given the lacklustre performance of the mainland stock market and Beijing's austerity measures in the overheated property market, gold is seen by local investors as an effective hedge against runaway inflation. Middle-class Chinese are also increasingly recognising gold as a way to store wealth. Lu Wujing, a civil servant in Guangdong, bought a pure gold bracelet for her friend's newborn son recently. The four-gram gift cost her 1,300 yuan (HK$1,535). "The alternative was to give her a red envelope with 1,000 yuan," she said. "But gold will only get more valuable with time, while paper money will not be as valuable." Lai said Beijing's desire to increase the ratio of gold in its asset portfolio would be more good news for the market. "The ratio of gold in China's massive US$2.8 trillion foreign change reserves is 1.8 per cent, which is seriously low." She said gold made up 60 to 70 per cent of the foreign exchange reserves of the US, Germany and Japan. China's store of gold was 1,054 tonnes by 2010 and Lai said the cache had increased only gradually. "Beijing will not like pushing up the price too quickly," she said. "There is a good opportunity for China to increase the ratio of gold to 2 per cent, and higher and higher in the following years." Given the 27 per cent appreciation in the value of gold in 2010, Lai said she expects gold to record historical highs this year. "It might challenge US$1,500 per ounce," she said. Gold hit a one-month high of US$1,382 a troy ounce on Wednesday.

Hong Kong*:  February 19 2011

Shek Kwu Chau island, south of Lantau, favoured site for a new waste incinerator. A new incinerator would be built on an artificial island south of Lantau Island as part of Hong Kong's waste management strategy, Secretary for the Environment Edward Yau Tang-wah said on Thursday. The incinerator will have a daily capacity of 3,000 tons. The plan comes after lawmakers opposed a government proposal to expand the Tseung Kwan O landfill site into a nearby country park last year. The government then suggested building an incinerator on two shortlisted sites. One was at Tsang Tsui in Tuen Mun and the other on an artificial island off Shek Kwu Chau. After consulting district councillors and lawmakers, Yau said the government had decided the artificial island would be the best site. “We have considered the proximity of the major population clusters around the facility and clearly Shek Kwu Chau is further away from major population clusters,” he explained. Yau admitted current waste disposal practices in Hong Kong were not sustainable. “There is a pressing need for Hong Kong to develop [waste management] facilities,” he added. Friends of the Earth spokesman Edwin Lau said he opposed the building of the incinerator. He said it could cause ecological damage and harm a nearby community of pink dolphins. Greenpeace also opposes the plan. It said the government should put more resources into alternative methods – including waste separation and recycling.

The government said on Thursday it had extended its HK$4.4 billion transport subsidy scheme to cover more low-income earners. This is in order to obtain the support of more lawmakers – who are planning on Friday to vote on funding arrangements for the scheme. Secretary for Labour and Welfare Matthew Cheung Kin-chung met with representatives from different political parties to discuss the scheme on Wednesday. After some said they were concerned it did not cover enough workers, Cheung put forward new proposals on Thursday. The welfare secretary said he believed the changes would make 50,000 more low-paid workers eligible for the scheme. Cheung also proposed increasing the monthly income limit qualification for a two-person household from HK$10,000 to HK$12,000. Those who work 36 hours or above a month would now be eligible to apply for half of the HK$600 monthly subsidy. The transport-subsidy proposal is an expansion of the Transport Support Scheme, which since mid-2008 has offered a HK$600 monthly subsidy to some 40,000 low-paid workers living in Yuen Long, Tuen Mun, North District and the outlying islands. Eligibility is based on income and the assets of individuals. To qualify, applicants need to earn HK$6,500 per month or less and have assets of HK$44,000 or less. Cheung said the new revised scheme would cover more than 430,000 low-paid workers living in all districts. “I hope the legislators could support it so low-income groups can benefit from the scheme to alleviate the pressure brought about by inflation,” Cheung said. If the revised scheme is passed by the Legislative Council’s financial committee on Friday, its estimated cost would be HK$4.8 billion for the first three years. He expects eligible employees could start receiving the subsidies by the end of the year.

Hong Kong will offer four pieces of land for the development of private hospitals, with the first to go up for tender before the end of this year, the city's health minister said. “We decided last year to promote private hospital care in Kong Kong,” Secretary for Health York Chow Yat-ngok told reporters on the sidelines of a healthcare conference in Hong Kong on Thursday. “One way to encourage people to build private hospitals is to provide dedicated land and conditions,” Chow said. “If we use commercial land tenders, people will prefer to build offices or residential buildings, but now we are limiting development to hospitals.” Hong Kong’s residential property is the most expensive in the world and its office rents are also among the highest, according to real estate consultants. Healthcare in Hong Kong is primarily provided by the government, but the authorities have long said the system will become unsustainable in the future. In recent years, the government has been formulating a policy to encourage the private sector to shoulder a bigger part of the responsibility in the form of private healthcare insurance. Chow said the first site would be tendered before the end of the year, with the remainder to be offered by middle of next year. “The successful bidders will have to build hospitals, nothing else. They will own the hospitals, but whether they operate the facility is their decision,” he said. The first hospital should be completed by 2016. The four sites were in Wong Chuk Hang, Tai Po, Tung Chung and Tseung Kwan O, he added. The government has received more than 30 letters of interest for the projects, with some from international companies, he said, declining to identify any of them.

Office tenants at The Metropolis Tower in Hung Hom may enjoy a free battery charge for their electric cars as part of the landlord's strategy to woo corporate customers concerned about protecting the environment. "It is one of the ideas I'm thinking of as the building's energy-saving system generates more electricity than we need," said Stephen Chu, chief executive of ARA Asset Management (Prosperity (SEHK: 0803), the manager of Hong Kong-listed Prosperity Real Estate Investment Trust. Chu is considering installing a cable linking the building's environmentally friendly battery system on the rooftop to the car park. "Then we will be able to provide a free battery charge for one electric car per day. The service will be on a `first-come, first-served' basis," he said. Prosperity Reit last year invested HK$1 million on a "green roof" for the 15-storey grade A office building built by Cheung Kong (Holdings) (SEHK: 0001) and the Kowloon-Canton Railway Corporation. The investment included the installation of three solar panels, a wind turbine and a battery system to capture energy. Cheung Kong owns about 20 per cent of Prosperity Reit. The green roof also has a four-hole putting green and a Japanese-style bridge as half the tenants of The Metropolis Tower are Japanese firms such as Canon and NEC. Canon Hong Kong, the building's biggest tenant, occupies 46,151 square feet and accounts for 18.9 per cent gross rental income. "These were some of the suggestions from our clients when we said we planned to renovate the rooftop," said Chu. The rooftop now also has a garden divided into 12 small "pots", each six sqft in size, for tenants to grow their own plants and vegetation, said Chu. "The plants are irrigated with water from the 1,000-litre rainwater collection system," he said. The green roof opened last November and it quickly became apparent that the alternative-energy sources were generating more electricity than was needed to run the rooftop ambient lighting and services - hence the offer of a free battery charge for tenants' electric cars. In 2009, Prosperity Reit spent HK$400,000 opening its first green roof at Prosperity Tower in Kwun Tong. "We are now looking to expand the green-roof concept to all the buildings in our portfolio," said Chu. The fund owns seven commercial properties offering a total of 1.21 million sqft of office space in Hong Kong - The Metropolis Tower in Hung Hom, Prosperity Millennia Plaza in North Point, Prosperity Place in Kwun Tong and Trendy Centre in Cheung Sha Wan; as well as stakes in Harbourfront Landmark in Hung Hom, Prosperity Centre in Kwun Tong and New Treasure Centre in San Po Kong. Chu said the installation of green rooftops could help tenants cut utility costs. Tenants occupying the floor immediately below the green roof at The Metropolis Tower, for example, could save 15 per cent in energy expenses as the ambient temperature on the floor was two degrees Celsius lower than on other floors. In a highly competitive leasing market, premises that provided such environmentally friendly facilities would enjoy a competitive advantage over rivals, said Chu. The average occupancy rate of the fund's buildings was 99.1 per cent as at December and would be higher when its final result for 2010 was unveiled on February 25, he said. "Investors now pay more attention to the environmentally friendly features of office buildings and whether they use less power," Chu said. Before the renovation, he said the rooftop produced no revenue, but now the area was available for private hire by tenants for meetings, private functions and meetings. Rebecca Lam, supervisor of sales and marketing at Sun-Wa Technos (Hong Kong), a tenant at The Metropolis Tower, said the rooftop was an attractive area for informal meetings and relaxation.

A major portion of a residential property on Stanley Market Road is being offered for public tender. The unidentified owner is offering for sale units on the second, third, fifth, seventh, eighth and ninth floors of the 30-year-old 10-storey U-C Court, together with its main roof and the commercial units on the ground floor and in the basement. The asking price is HK$200 million, or HK$16,000 per square foot, which sole agent Jones Lang LaSalle describes as "reasonable". The unit portfolio offered for sale comprises a total gross area of about 12,484 sqft, accounting for about 77 per cent of the undivided shares of the building, situated at 25 Stanley Market Road and built in 1981. "Given its strategic location and panoramic sea view, we expect U-C Court to attract tremendous interest," said Danny Chan, a national director of Jones Lang LaSalle Hong Kong's capital markets division. Chan said after a renovation or introduction of serviced-apartment elements, rentals could rise to HK$50 per square foot. The tender will close at noon on March 29. Meanwhile, property consultancy Savills said it had been appointed as the sole agent for another public tender due to close on the same day, the Skyline Commercial Centre at No 77 Wing Lok Street, Sheung Wan. The 25-storey building, with a gross area of about 48,000 sqft, features two shops on the ground floor and flexible layouts of the commercial floors.

Macau billionaire Stanley Ho Hung-sun filed a new lawsuit against family members yesterday to get back shares of his gaming empire. However, a source said it was Ho's fourth wife, Angela Leong On-kei, who wanted to pursue the court case unless the four families agreed to redistribute his wealth. Five parties are being sued: Pansy Ho Chiu-king and Daisy Ho Chiu-fung, the two daughters of the second family; Action Winner Holdings, which is owned by third wife Ina Chan Un-chan; Ranillo Investments, owned by second wife Lucina Laam King-ying and her five children; and Lanceford Company, whose shares are mainly held by the second and third families. "Daisy and Pansy are the most reluctant to go to the negotiation table. They don't want to talk to their father," said Gordon Oldham, Stanley Ho's lawyer, adding he had written to their lawyer, who did not respond. Three weeks ago, Stanley Ho filed a lawsuit against 11 parties, including members of the second and third families in addition to the three companies. He dropped the case a few days later when his family members orally agreed to return his stakes to him. Oldham said yesterday that Ina Chan is also being sued this time as she is the owner of Action Winner Holdings. A source close to the second family said they have not formed their team of lawyers yet and will do so if the court case proceeds. He said Pansy asked her father why he sought legal action again during Lunar New Year, and Ho responded it was Leong who wanted to do so. The source added that Leong had requested the four families surrender for redistribution all Stanley Ho's assets. Meanwhile, in the new writ, an injunction was sought to prevent Daisy and Pansy from exercising undue influence over Stanley Ho's interests and equities in other companies belonging to him, including Shun Tak Shipping. He is also demanding a remedy for the breach of agreement by Pansy and Daisy to return Lanceford to him. Again, he wants the return of his shares originally held in STDM that were transferred to Lanceford. On January 24, SJM announced that Stanley Ho offloaded his 31.7 percent stake in STDM, which owns 56 percent of SJM Holdings (0880), to Lanceford, which is co-owned by the second and third families. Stanley Ho used to hold 100 percent of Lanceford but, in his old writ, he said his stake was diluted to 0.02 percent after an "improperly and/or illegally" massive share issuance in December. Oldham said his client expressed his disappointment and frustration at the refusal of family members to return what is rightfully his. "Other family members may well be added as additional defendants unless their full cooperation is forthcoming," Oldham said. SJM shares slumped further yesterday, closing at HK$11.6, down 2.7 percent. They have fallen 16 percent since the saga began at the end of last month.

Working hard to satisfy festival appetites in HK, Macao - A worker carries a large fish to a market stand in Causeway Bay in Hong Kong on Feb 2. He Hanbiao has spent the past 12 Spring Festivals hard at work. This year, when the country celebrated the lunar new year with family reunions, He, a clerk with the Zhongshan Port branch of Zhongshan exit-entry quarantine and inspection bureau, has been busy since Feb 2 expanding the inspection and quarantining of fish and other freshwater produce sold to the Hong Kong and Macao special administrative regions. "Festivals are usually the busiest time for me and my colleagues. My family and I have come to an understanding," he said. As a major freshwater fish export base, the city of Zhongshan, in Guangdong province, sells more than 80 tons of fish and other freshwater produce to Hong Kong and Macao every day. This accounts for 40 percent and 70 percent respectively of Hong Kong's and Macao's markets. The amount of fish and other freshwater produce exported to Hong Kong and Macao usually increases by about 30 percent during the Spring Festival. To ensure only quality fish and other aquatic products are sold to the two special administrative regions (SARs) during holiday seasons, He and many of his colleagues in Guangdong sometimes have to work overtime. At Dongsheng Farm in Guangzhou's Panyu district, many staff members have to work 12 to 15 hours a day during the holidays. The farm, which is the largest vegetable export base in Guangdong, now sells between 50 and 60 tons of vegetables to Hong Kong and Macao every day. Deng Yuanming, general manager of the farm, said vegetable exports to Hong Kong have grown at least 30 percent since the beginning of the month compared to previous months. Huang Weiming, deputy director of the provincial administration of exit-entry quarantine and inspection, said the administration has drawn up contingency plans to guarantee safe and sufficient supply of farm produce and sideline products to the two SARs during the Spring Festival holiday. In addition to the 50 registered pig farms, 40 spare farms have also been required to prepare to increase pig exports to Hong Kong and Macao if needed, Huang said. "The mainland can ensure abundant supply of chicken and duck in the city even at the peak season of the lunar new year so that the robust local demand for poultry can be satisfied during this peak season," Mr Yeung, a chicken and duck meat retailer in the local food market in Wong Tai Sin district of Hong Kong, told China Daily. Yeung said that to diversify his business he has sourced chickens from both the mainland and the region's New Territories. Market demand for mainland chicken has always remained robust, he added. "As the market supply is now stable even at the lunar new year peak period, the prices of chicken and duck have even dropped 10 percent compared to the same time last year," Yeung said. According to statistics from Guangdong provincial department of foreign trade and economic cooperation, Guangdong has become the largest source of fresh agricultural products for Hong Kong and Macao. More than 75 percent of the mainland's fresh agricultural products sold to the two SARs come from Guangdong. The province now sells more than 2,000 tons of edible agricultural products to Hong Kong and Macao every day, including some 3,000 live pigs, 180,000 live and frozen chickens, 150 tons of fish and freshwater produce and 50 tons of fresh milk. Chicken is usually a major dish on Chinese family dinner tables and at restaurants during festivals, particularly the Spring Festival. Guangdong also sells more than 1,500 tons of vegetables to Hong Kong a day, representing more than 50 percent of the local market.

 China*:  February 19 2011

Foreign direct investment in China rose 23.4 per cent in January from a year earlier, the government said on Thursday, despite an official campaign to stem liquidity and control inflation. China attracted US$10.03 billion in foreign investment last month, commerce ministry spokesman Yao Jian told reporters. The figure indicated continued revival in investment after growth slowed sharply in August and despite moves by the government to slow the economy -- including last week’s third interest rate hike in four months. The January figure compares to growth of 15.6 per cent in December, when US$14.03 billion in investment flowed into China. Foreign direct investment (FDI) hit a full-year record of US$105.7 billion last year, the government said last month, reflecting growing foreign confidence in the economy despite Beijing’s dampening measures. Investment by overseas companies last year rose 17.4 per cent year-on-year, with more than a fifth of the money flowing into the booming property sector, Yao said last month. Analysts say strong growth in the world’s second-largest economy and expectations for a stronger currency have attracted a growing number of foreign investors to China, hoping for a better return on their money. But the government, alarmed by soaring food and property prices, has been trying to reduce the volume of money flowing into the economy as inflation continues to soar. Figures released Tuesday showed January’s annualised inflation remained high at 4.9 per cent, despite adjustments to the consumer price index that reduced the weighting of soaring food costs. “China’s internally-driven economic growth momentum remains very strong” despite government tightening measures including interest rate hikes, said Ren Xianfang, IHS Global Insight’s analyst in Beijing. “It is a consensus that the appreciation of the Chinese currency will certainly accelerate this year as it is an important part of the tightening, which will (make China) even more attractive to foreign capital,” she said. China’s foreign direct investment data include investment by overseas companies in industries such as manufacturing, real estate, services and agriculture but exclude money put into banks and other financial institutions. The State Council, or cabinet, announced Saturday it would vet proposed mergers and acquisitions by foreign firms to “safeguard national security”, a move that could complicate business dealings in the country. A panel is being established that would examine foreign investment in areas pertaining to national defence, agriculture, energy, resources, infrastructure, transport, technology and equipment manufacturing, it said. But Ren expected FDI to grow steadily this year, saying the security measure was unlikely to have a significant impact because China already tightly controls investment in the sectors named.

Lenovo (SEHK: 0992) reported a forecast-beating 25 per cent jump in third-quarter net profit, its best result in more than two years, but a slowdown in key home China market threatens to darken its this year outlook. Economic uncertainty in mature markets such as the United States and Europe also could offset the positive impact it gets from a strengthening Chinese currency and lower component costs. “China’s growth in the PC market is showing signs of slowing right now,” said Jenny Lai, head of Taiwan research at HSBC (SEHK: 0005). “Lenovo has a lot of exposure in China, and that means it is likely to be affected by any slowdown in the country and so it will likely have to focus on other markets.” Lenovo, one of China’s best-known brands, reported October-December net profit of US$99.6 million, up from US$79.5 million a year ago, and beating expectations for a US$86.2 million net profit from seven analysts polled by Thomson Reuters I/B/E/S. The results come a day after bigger rival Dell Inc reported forecast-beating earnings and margins on lower component costs and demand from companies replacing older technology. Lenovo shares extended gains after the results and were up 4.1 per cent by 2.40pm in a steady market. Operating profit margin, a key performance indicator in assessing profitability, rose to 2.2 per cent from 1.9 per cent in the previous quarter, boosting Lenovo’s earnings. Such razor-thin margins have forced PC brands to look to acquisitions and alliances with rivals. Last month, Lenovo signed a US$175 million agreement with NEC to jointly sell and develop PCs in Japan. Part of the improvement in Lenovo’s operating margin is likely to have come from an appreciating yuan, which rose about 1.5 per cent against the greenback in October-December. A supply glut in LCD panels and other parts such as DRAM chips have also driven down costs for Lenovo and other PC brands. “I expect that most of the margin improvements came from favourable component prices, as anticipated, similar to what we saw at Dell’s results and Asustek’s results last week,” said Kirk Yang, head of Asia hardware research at Barclays Capital. LCD makers such as LG Display and Chi Mei Innolux have been warning of lower shipments and weaker screen prices, all of which is beneficial to PC brands because it drives down their component costs. China still accounted for the largest portion of Lenovo’s sales, making up 46.2 per cent of revenue in the third quarter, down from 47 per cent in July-September. “The company’s earnings were better than expected, but just by a little,” said Macquarie’s Stephen Chow. “The improvement is likely to have come from emerging markets outside of China, but the European and US market has been very ordinary.” Its mature-markets business, much of which it inherited from International Business Machines, retained its profitable record for a second straight quarter, making up about 34.6 per cent of total sales with an operating profit margin of 1.1 per cent. Lenovo saw the biggest jump in shipments among the top PC brands, up 21 per cent during the three months, according to research firm IDC. This was better than rivals Hewlett-Packard, Acer and Dell, and about eight times the overall market’s 2.7 per cent growth.

National property price index scrapped - China has said it will stop publishing its national property price index – a lighting rod for public anger over soaring housing costs – and replace it with two new property indexes.

Rising from ground zero of the September 11 attacks, the 541-metre 1 World Trade Centre (centre) is set to open in 2013. More than 50 storeys of the 104-storey tower have been built. Ground zero tower lures firms from China - Landmark building offers prestige, history - The quest for tenants to fill office space at the World Trade Centre site's signature skyscraper has gone global - all the way to China. A Chinese real estate company is the first - and only business - to sign a lease at 1 World Trade Centre, the 541-metre tower under construction at ground zero. The building, with its height, state-of-the-art technology and international symbolism, has generated "tremendous interest" among Chinese companies seeking to move overseas, developer Douglas Durst said last week. "It's going to be the tallest building in the city," Durst said. "Everybody is going to know where they are when they say they're in the World Trade Centre." One World Trade Centre is set to open in 2013; more than 50 floors of the 104-storey tower have been built. It is one of five towers once planned for the site, along with a September 11 memorial, transit hub and performing arts centre. Vantone Industrial of Beijing signed a lease in 2009 for about 200,000 square feet, out of about 3 million sq ft of office space. Conde Nast has tentatively agreed to anchor several floors of its media empire in the tower, but the lease is not finalised. Federal and state agencies also have agreed to lease office space. But Durst is seeking worldwide interest in a symbolic skyscraper with a name that is internationally known. "It's a very well-known building in China," said Ya Xue, the president of China Centre, an organisation started by Vantone that acts as a resource for Chinese firms coming to the United States. "The people in China, they recognise the landmark building." The China Centre is also leasing space at a trade centre building, 7 World Trade Centre. Other Chinese businesses have started taking an interest in New York. At least 25 Chinese companies have taken about 750,000 sq ft of commercial space, said Ann Li, a senior director at the city's Economic Development Corp. Li said New York made sense as a first stop for Chinese firms looking to expand into North America because of its diversity and cosmopolitan style. And if Chinese firms take up office space in the city, they want it to be somewhere high-profile. That is one reason locations such as 1 World Trade Centre generate interest. The city has been working over the past several years to build relationships with Chinese firms, said Kathryn Wylde, the president and chief executive of the Partnership for New York City, a group of business leaders who work with the city to strengthen New York's economy. "We've bent over backwards to roll out the welcome mat," Wylde said. "We should be partners, not competitors."

Gamesa powers up Chinese wind projects - An employee stands on a wind turbine maintenance platform in Shantou, Guangdong province. Gamesa SA, a global leader in wind turbine manufacturing, said on Wednesday that it signed contracts with two Chinese companies to co-develop projects with a total of 600 megawatts of power. Gamesa SA, a global leader in wind turbine manufacture and wind-farm development, said on Wednesday that it has signed contracts with China Guangdong Nuclear Wind Power Group and China Huadian New Energy Development Co. The agreements mean that the companies will co-develop a total of 600 megawatts (mW) of power in projects in Jilin province and the Inner Mongolia autonomous region. The new agreements, which will see the manufacturer deliver several batches of its G8X 2mW turbines during the next five years, have brought Gamesa's Chinese projects to 2,726 mW in total. The new projects will use wind turbines produced in Gamesa's factories in Jilin and Inner Mongolia. The company currently has four manufacturing plants in Tianjin, and two more under construction in Jilin and Inner Mongolia. The plants also provide components for Gamesa's assembly lines in other countries, such as India. "By working with Chinese partners through wind-farm joint ventures, we hope to become a top player in wind-power production in China," said Jorge Calvet, Gamesa's chairman. The Spanish company has 30 percent of its market in China and plans to install its first 4.5 mW wind turbine in the country this year. "For onshore wind turbines, 4.5 mW is the most efficient," said Calvet. He added that 5 to 7 mW is an appropriate range for the offshore wind turbines. The manufacturer is also in the process of developing a 5mW offshore wind turbine that will be unveiled in Spain next year. "Reliability and quality are going to be the key for offshore turbines," said Calvet. "Maintenance is a big problem for those offshore." "Gamesa would not sacrifice quality for the No 1 position in market share," Calvet added. At the same time, the company is working on lowering the cost of energy per mW. It is aiming for a 15 percent cut within three years and 30 percent in five. According to a recent report by the State Electricity Regulatory Commission, a huge amount of the power generated by wind in Jilin and Inner Mongolia is going to waste due to the lack of an efficient grid infrastructure. "Grid constraint is not a problem unique to China," said Calvet. "The wind industry is developing so quickly that the infrastructure cannot keep up." "Spain has seen outstanding performance in wind-energy grid connection thanks to its policy of planning ahead, and that's where the two countries can cooperate," he added. China's Vice-Premier Li Keqiang, who visited Spain in January, said during his visit that China was willing to expand two-way investment and develop cooperation on new-energy technology. In a separate development, China's largest wind-power generator manufacturer, Sinovel Wind Group Co, announced on Feb 14 that the country's first independently developed 6 mW offshore wind turbine will become operational in June.

Small, mid-size firms facing financial strains in Wenzhou - Employees manufacturing footwears at Hashan Shoe Plant in Wenzhou, Zhejiang province. Small- and medium-size enterprises (SMEs) in Wenzhou are faced with severe cash-flow problems as they find it hard to access bank loans or personal loans due to tight lending policies. "A recent survey found that over 70 percent of 1,000 enterprises in our association have severe financial problems and only a few managed to get enough money to finish orders," said Zhou Dewen, the head of the Wenzhou Small- and Medium-sized Enterprises Promotion Association. Zhou said many enterprises are borrowing money from all available sources to keep their businesses running and to fulfill orders from their clients. Many SMEs are borrowing money from the gray market private money lenders for short-term financial needs. Borrowing money from the gray market in Wenzhou was the last option for Zheng Songtian, who owns a factory manufacturing leather products for export. "I needed money to pay my workers and suppliers as I was cash-strapped due to a delay in payments from two-thirds of my overseas buyers," Zheng said. The interest rate he had to pay the lenders, at the monthly rate of 10 percent, which goes up as much as 240 percent a year, was exorbitantly high. But "I had no choice. The regular banks weren't interested in my business," he said. Guarantee companies, who serve as an agency between banks and borrowers, make profits by skirting the law and lending money at exorbitant interest rates after taking savings from individuals. Wenzhou is turning out to be a hotbed for such lending activities, mainly due to the large availability of private funds anxiously looking for investment opportunities. According to a survey released by the Wenzhou branch of the People's Bank of China, in the second quarter, about 89 percent of families or individuals and nearly 57 percent of enterprises participated in the non-bank personal lending deals. "The bank loan application takes at least one month, apart from going through cumbersome procedures by providing contract details. Therefore, local businesses that need short-term credit choose the gray market with options of daily or monthly interest rates," said an owner surnamed Ding who is involved in regular private deals between individuals and local enterprises. China introduced credit guarantee agencies in the mid 1990s. Initially these agencies were mainly government invested and policy driven, charged with improving loan access for local SMEs. At the moment, there are some 240 guarantee agencies, asset management and investment consultancy firms in Wenzhou. According to the official statistics released by Wenzhou municipal government, there is more 600 trillion yuan ($91 trillion) of 'hot money' in the personal loan market. However, it is very difficult for small- and medium-sized enterprises to afford the high interest loans that were raised by the guarantee companies for local residents. Zhou urged that greater attention and financial support are needed to ease the problem facing SMEs. "Although the tightening policy toward bank loans and personal lending is applied to prevent inflation, the development of SMEs also needs to be considered otherwise there are fears that a large number of them may collapse." The China Banking Regulatory Commission, and Zhejiang provincial government, last month appointed the Economic & Trade Commission as the department responsible for regulating and managing the balance between private capital and bank savings. "At the moment, we're working on a detailed plan to provide a monitoring platform for guarantee companies to deal with legal businesses in the gray market," said Huang Shoujun, director of the small- and medium-sized enterprise department at Wenzhou Economic & Trade Commission.

Ford may build new plant in China - A woman examines a Ford Motor Co Focus on display at a dealership in Beijing. With Chinese customers buying Ford vehicles, the automaker is considering building a new plant in Tianjin. Ford Motor Co may build a new car plant in northern China after its three-way car venture splits into two separate entities, a newspaper said on Wednesday. Ford, which makes cars in China with Mazda Motor Corp and Chongqing Changan Automobile Co, operates two plants, one in Chongqing and another in Nanjing. But Ford and Mazda are awaiting regulatory approval to split their venture into two 50-50 entities with Changan. After the split, the Nanjing plant, which currently makes Mazda 2, Mazda 3 and Ford's Fiesta compact cars, will belong to the Japanese automaker, the 21st Century Business Herald said, citing unidentified people. Ford, which aims to sell 1.5 million vehicles annually in China and to have an 8 percent market share by 2015, is considering building a new plant, possibly in Tianjin, it said. "Certainly, we have ambitious plans to continue to grow in China, the world's largest automotive market, just as we do for the rest of the growing markets in our Asia-Pacific and Africa region. We have nothing to announce at this time, however," the automaker said in a statement. A Changan spokesman declined to comment. Ford, the only US-based automaker to have steered clear of a US government bailout and bankruptcy in 2009, is a relative late-comer to China. However, it has been accelerating its expansion, building its third China car plant in Chongqing, and its second plant - with its partly owned Jiangling Motors Corp - in Jiangxi province. Ford sold 582,467 vehicles in China last year, with a 3.2 percent market share. Sales in January rose 20 percent year to 53,340 units.

Hong Kong*:  February 18 2011

A proposed monthly travel subsidy for low- paid workers is hanging in the balance with labor chief Matthew Cheung Kin-chung making last-ditch efforts to win backing from lawmakers. That came after Confederation of Trade Unions lawmaker Lee Cheuk-yan said he had secured more votes - he now has 35 - to defer discussion of funding for the Work Incentive Transport Subsidy Scheme at Legco's Finance Committee meeting tomorrow. Secretary for Labour and Welfare Cheung - who in the morning failed to get the Democratic Party to support the plan in its current form - last night met with other lawmakers. They said he may have softened his stance. Lawmakers are pushing for a more generous scheme than the one proposed, which would see 380,000 workers get a HK$600 monthly subsidy for travel. Among those at the meeting last night were independent Priscilla Leung Mei-fun, the Federation of Trade Unions' Wong Kwok-hing and Wong Kwok-kin and Liberal Party chief Miriam Lau Kin-yee. The FTU and Liberals earlier said they would back Lee. Cheung listened patiently, according to some of the lawmakers, and said he was willing to consider views expressed so far. Wong Kwok-kin said he will wait to see if Cheung tables further amendments to the scheme and only until then will he decide whether to back Lee's move. The Democratic Alliance for the Betterment and Progress of Hong Kong, after meeting with Cheung, said the government may consider its compromise plan to allow workers in four districts covered by a Transport Support Scheme to benefit for one more year. Asked if the DAB was giving the government a way out, chairman Tam Yiu-chung said the party wants to break the deadlock and is willing to change its stance. On Tuesday, Lee said he had the support of all pan-democrats and five pro-establishment unionists. Yesterday he said he won support from a few more lawmakers, including the real estate and construction sector's Abraham Shek Lai-him, architectural, surveying and planning's Patrick Lau Sau-shing and Lam Tai-fai of the industrial sector. Emily Lau Wai-hing, chairwoman of the Finance Committee, meanwhile, said she may allow last-minute amendments to the meeting agenda and waived the five-day notice.

The record 65,000 runners participating in Sunday's Hong Kong Standard Chartered Marathon are advised to put personal health and safety above all else. The alert comes after dozens of runners collapsed during last year's event, with 55 hospitalized. Most of them suffered from heatstroke, or had breathing difficulties because of air pollution. Accident and emergency doctors said those most at risk are the inexperienced who don't know how far to push themselves. Participants are urged to take precautions against the cold to avoid hypothermia, and to watch for slippery roads if running in the rain. According to the observatory, while there will be sunny intervals, the day will begin with patches of rain all over the territory, with temperatures ranging from 13 to 17 degrees Celsius. The Auxiliary Medical Services will provide support, with more than 400 personnel spread over 20 first-aid posts. The annual event features three separate runs, including the 42-kilometer full marathon and 21km half marathon. AMS doctor Chan Man-chung said risks are greater at the 10km mark and the finish. The 10km mark is where most runners who are not fully prepared start experiencing leg cramps. As for the finish, runners tend to go all out when sprinting towards the line, and very often collapse from exhaustion, Chan said. The marathons start in Tsim Sha Tsui, then wind through Kowloon and the New Territories before reaching through Hong Kong Island to end in Victoria Park. The less strenuous 10km challenge starts at the Eastern Island Corridor and also finishes in Victoria Park. To facilitate the marathon, several roads in Hong Kong, Kowloon and the New Territories will be closed, with more than 130 bus services disrupted. The MTR will begin services from 3.25am to allow runners to get to the starting point. Members of the public can go onto for details of the affected roads, as well as the alternative transport services available.

Hongkong Electric (SEHK: 0006) Holdings, which yesterday cast away its old brand name for the more international-sounding Power Assets Holdings, says it has Britain's second-largest power grid in its sights. Managing director Tso Kai-sum yesterday said the company "was studying bidding documents" and had yet to make a decision on whether to bid for the electricity distribution networks that E.ON of Germany owns in central Britain. He declined to say whether the group would team up with its immediate holding firm, Cheung Kong Infrastructure Holdings (SEHK: 1038) (CKI), to compete for the E.ON assets against rivals - believed to be MidAmerican Energy Holdings and PPL Corp. CKI, Li Ka-shing's infrastructure flagship, which has also been reported to be bidding for the E.ON assets, has in the past joined Power Assets to buy energy assets in Britain and Australia. CKI did not comment on reports of its bid. "We have a strong desire to have more power assets abroad," Tso said. "In the UK, there are definite regulations that we can follow and we may have a chance to raise our interests in a transparent, straightforward market." Explaining the rationale for dropping a name the company has used since it went public in 1976, Tso said: "The new name reveals our future strategy. We will actively pursue overseas investments. We are looking at projects in other markets such as Australia, Canada and the mainland." He said he would miss the old corporate name. The new company's logo retains part of the red Hongkong Electric symbol. The company's international business, which comprises 21 projects in power production and distribution and gas distribution, is expected to account for at least half of Power Assets' total earnings within three years, compared with about 30 per cent last year, Tso said. Its operation in Hong Kong might see an increase in sales of 1 to 2 per cent this year but demand was nearly saturated, he said. Citigroup global markets research estimates Power Assets' net profit grew 5.45 per cent to HK$7.06 billion last year and will increase 19 per cent this year, driven by newly acquired power assets in Britain. The group's stake in UK Power Networks, which runs electricity distribution networks in London, southeast and eastern England that were formerly owned by Electricite de France, is expected to contribute HK$254 million to the bottom line last year and HK$1.52 billion this year. Power Assets and CKI have a 40 per cent stake each in UK Power Networks, with the rest being held by companies linked to the Li Ka-shing Foundation. The deal, completed in November, was worth HK$70 billion. Power Assets shares climbed 15 HK cents, or 0.3 per cent, to HK$50.10 yesterday.

Malaysian and Singaporean restaurants are taking off in Hong Kong, but even the experts have trouble telling the two cuisines apart - Hainanese chicken (top left) and char kway teow (top right) from Hainan Shaoye; laksa at Kitchen 65 (above left); interior of Kitchen 65 (above right). Fans of Malaysian and Singaporean dishes such as Hainanese chicken rice and laksa must be delighted by the number of new dining options that have sprung up around town in recent months. The casual but comfortable restaurants serving Straits cuisine appear to be the latest craze among foodies, who are queuing up at peak times or booking days in advance to secure tables. "More people are travelling to Singapore. When they come back they talk about the food and want to find the same flavours in Hong Kong," says Chris Chan Hon-sun, manager of Kitchen 65, which opened in Tsim Sha Tsui in October. The man who has arguably been the key instigator in the craze for Straits cuisine is Tony Cheng Shai-yin, owner of Hainanese chicken rice specialist Hainan Shaoye, which opened its first branch in June. "I love chicken rice. But I noticed a disconnect in Hong Kong - either it was very cheap and poor quality, priced below HK$50, or nice and authentic in dishes offered by hotels at HK$180 or more. I wanted to offer quality chicken rice at an affordable price," says the 28-year-old, who is also co-owner of Italian restaurant The Drawing Room in Causeway Bay. After trying chicken rice at many places in Singapore, Cheng hired a Malaysian chef, Aaron Lai Ye Siong, who had been working at Singapore's renowned Chatterbox restaurant at the Mandarin Oriental Hotel for 16 years. Hainan Shaoye, at the World Trade Centre in Causeway Bay, was an immediate success. A second branch opened in December, in Tsim Sha Tsui. Lai stayed with Hainan Shaoye for just two months before leaving to lay the groundwork for his own venture. He spent a few months sourcing suppliers in Singapore and taste-testing different chicken breeds in Hong Kong before opening his own restaurant, Asian Family, in Causeway Bay last month.

Police form a cordon to keep order as witnesses leave the High Court after attending the inquest into the Manila tour bus hijacking tragedy. A survivor of last year's hostage tragedy in Manila, who hid under her seat during the shootings on board a tour bus, yesterday gave a full account of the killings that claimed the lives of eight Hongkongers. Lee Ying-chuen, 36, told the third day of the Hong Kong inquest into the killings that she heard continuous gunshots as the gunman walked down the aisle of the bus. "I heard a steady `bang', `bang' `bang' ... [They were] not rushed ... sounded calm ... one after the other," she said, adding that it sounded as if the gunman took one step before firing each shot. Lee was giving evidence at the inquest into the tragedy on August 23, when sacked police officer Rolando Mendoza hijacked a Hong Thai Travel tour bus outside Manila's Fort Santiago and held 21 Hong Kong tourists hostage. "I heard Mr Leung scream `Don't! don't!' as he leaped forward ... then I heard a gunshot and I saw him lying on the ground," she said. Lee was referring to Leung Kam-wing, 58, who was killed along with his daughters Doris Leung Chung-see, 21, and Jessie Leung Song-yi, 14. His son, Jason Leung Song-xue, 18, suffered brain injuries and remains in hospital. Recalling the incident in a calm and articulate manner, Lee said the gunman then walked closer to her as she hid under her seat. Her mother, Lo Kam-fun, 66, who also survived the ordeal, was hiding under a seat across the aisle. Lee could not remember the number of gunshots heard but said that "there weren't too many". "I saw the gunman walk towards Jason's seat and I heard `bang!' Lee said. "Then he got to Chan Kwok-chu's seat ... [Chan] screamed out: `Don't!' and almost at the same time, there was a bang." Chan, 46, survived the siege. Mendoza turned around and headed to the front of the bus. Lee saw a body next to Leung Kam-wing's on the floor, but it was too dark and she could see only shadows. From under her seat, Lee noticed that Jessie Leung, who was sitting in front of her, was moving her legs. The gunshots stopped for a long time, Lee said. "The only thing I could hear was rain hitting the roof of the bus. It was loud." But then Jessie Leung climbed over to Jason's seat across the aisle to check on her brother, Lee said. "A gunshot was heard as soon as she poked her body out." Jessie Leung's body was jerking on the floor. Lee heard a second gunshot and saw a spark in the dark. After the earlier, orderly gunshots, a banging sound was heard and the gunshots were loud and "messy". Lee could not tell if the shooting came from inside or outside the bus. "We were all quiet [and] too scared. Then smoke and tear gas came in." The smoke made her and her mother cough. "I was thinking: `What exactly were the police doing? If we cough, the gunman will know that we're alive' ... I was very angry. "[When the smoke came in] the second time, I thought that even if the gunman didn't shoot me dead and stray bullets from outside didn't kill me, I would still suffocate," she said. "It felt like the shootout would never end." Before the shooting began, Mendoza had appeared calm and apologetic for holding the group hostage. Immediately after hijacking the bus in the morning, he released six hostages - three adults and three children. He also told the hostages they could leave at 3pm, the court heard. He wore a dark blue T-shirt with "POLICE" printed on the back under a camouflage jacket. He handcuffed driver Alberto Lubang to the wheel but they chatted and laughed as he instructed him to drive to Rizal Park. At first the atmosphere was not frightening, Lee said. Tour guide Masa Tse Ting-chunn, 31, who was later killed, told her that it was a simple matter that would probably be dealt with in an hour or two. Lee heard Mendoza speak broken English, using words like "pension", "dismiss", "seven months" and "co-operate". He also made his hostages change seats on two occasions. After the first swap, Li Tsui Kwan-fung, 66, complained of bowel problems and was released. The court heard in earlier testimony that she had been freed at around 10.30am. The hostages were given takeaway meals. Around lunchtime, Mendoza yelled "diabetic" twice. Li Yick-biu, 77, stood up. Lee said that she had wanted to take the opportunity to get her mother released. She yelled "two diabetic", but the gunman insisted on releasing only one hostage. Lee said Mendoza was firm but not angry. At 3pm, Lee overheard Mendoza say "action" on the phone and she became nervous. Mendoza started to raise his voice and his tone sounded more urgent. At 4.15pm, Lee heard him say "office hour" on the phone and she thought it was another deadline. Around sunset, and after a phone call, the gunman said: "I lose my life, you lose your lives." Lee later heard the first gunshot. But Leung Kam-wing told her Mendoza had fired to scare people and that no one had been killed. Lee and Leung Kam-wing chatted about subduing Mendoza. "It won't be okay if the situation continues this way," Lee said. The inquest continues today.

Stanley Ho files new lawsuit to reclaim casino stake - Lawyers for billionaire Stanley Ho Hung-sun today filed a new lawsuit seeking the return of his shares in Lanceford, the company that holds his stake. 

The Hospital Authority is planning to spend HK$100 million to stop a brain drain of doctors and nurses. It aims to create more senior posts and hire more trainees using extra money in this month's budget. Nursing turnover is at 5 per cent this year, a three-year high. The turnover of doctors is also expected to reach 5 per cent as a stream of professionals in public hospitals move to better-paid positions in the private sector. The authority's annual budget will increase from HK$34 billion to more than HK$36 billion in the coming financial year. To stop the outflow of staff, it intends to put more nurses in senior positions, hire 1,500 graduate nurses and 300 trainee doctors. The extra money will also be spent on buying new drugs and replacing old medical equipment. Booming private hospitals have become an especially powerful draw for public nurses in paediatrics. Some 100 paediatric nurses, about 8 per cent of the total, have quit the public system so far this year. They are in high demand at private hospitals, which are receiving a growing number of pregnant women from the mainland. The turnover of nurses from surgical units is about 5 per cent and rising. Some private hospitals are offering higher salaries and bonuses to lure them from the public sector. The nursing shortage has forced some public hospitals to delay making more beds available and initiate other cutbacks. Queen Mary Hospital has cut operating theatre hours by 10 per cent. Public hospitals are especially short of veteran nurses. Most advanced practice nurses (APN) have eight to 12 years' work experience. But registered nurses can be promoted to APN status after five years' of working in a speciality and with relevant training. Most departments now have just one APN for every six registered or enrolled nurses - a ratio considered too low. Only the neo-natal intensive care units have a minimum ratio of one APN to four. The authority wants to make that ratio the standard for departments by creating more APN posts. "We are reviewing the manpower situation and want to roll out a one-to-four, or at least one-to-five ratio on other skilled areas such as intensive care units and operating theatres," a person familiar with the matter said. The legislator representing the health-care sector, Joseph Lee Kok-long, said the authority had cut more than 200 APN posts in past years and it was time to replace them. Lee also called on the authority to raise salaries for nurses with less than two years' experience because their pay level lagged far behind the private sector. "The authority should stop opening new services in the coming year to avoid stretching the nursing manpower too much," Lee said. The authority also plans to create more senior posts for doctors. The South China Morning Post reported earlier that doctors specialising in internal medicine are angry about their poor career prospects. Some of the lowest-ranking doctors have to wait an average 16 years for promotion. A Hospital Authority panel formed by top physicians has urged the government to act at once. Dr Loletta So Kit-ying, president of the Public Doctors' Association, said the union would press the authority to promote physicians with 10 years' experience unless their performance was very poor. "Almost all acute public hospitals have a 10 to 15 per cent vacancy rate for internal medicine," So said. "Those who stay here are doing 1.5 jobs and they want to leave because of the increasing workloads. "Some are so frustrated with the poor morale and heavy workload that they quit even before they can secure a new job."

Giovanni Bisignani, chief executive of the International Airline Transport Association, said planning for a new runway should start now. HK needs third runway to keep its edge, IATA says - Don't delay on expansion, airline association chief warns - With passenger and airfreight volumes set to soar, Hong Kong needs to invest in a third airport runway to maintain its competitiveness and international connectivity, the head of the world's largest airline association said yesterday. Giovanni Bisignani, chief executive of the International Airline Transport Association (IATA), said it predicted passenger numbers at Chek Lap Kok would climb to 62.2 million by 2014, up from last year's 50.9 million. Hong Kong International Airport was expected to handle 5.3 million tonnes of cargo by 2014 against 4.1 million tonnes in 2010. "If Hong Kong wants to continue to gain the economic benefits of a growing aviation industry, a third runway will be needed," he told 90 government officials, airline and aviation industry representatives at an Aerospace Forum Asia lunch yesterday. Those attending included Civil Aviation Department director Norman Lo Shung-man, former permanent secretary for economic development Sandra Lee Suk-yee and Tony Tyler, chief executive of Cathay Pacific Airways (SEHK: 0293). Tyler leaves the airline next month to take over from Bisignani. The IATA chief said the aviation industry in Hong Kong employed 250,000 people and supported 8 per cent of its gross domestic product. While people had different ideas on the timing of the third runway, whether it was in 2015, 2020 or 2025, it would nevertheless be needed "and the time to start planning is now". He said the existing two runways were near saturation. Public consultation on the Airport Authority's master plan for the facility- which goes up to 2030 - is to start in April. When the plan was published in 1992 the airport was expected to handle 87 million passengers and nine million tonnes of cargo by 2040. But that was based on a premise the airport would see an increasing number of high-capacity, long-haul flights. It did not predict the huge growth in mainland air passenger traffic on 150-200 seat airliners taking the same runway space. Consequently, runway capacity is almost at a peak at much lower passenger volumes than forecast. Bisignani said: "Growth has been faster than anyone could have predicted. Even with raising runway movements to 68 per hour as proposed by the Civil Aviation Department, capacity will only be 55 million passengers." There are indications that instead of a third runway, the central government may prefer tighter integration between the five big airports in the Pearl River Delta and further development of airports in Shenzhen and Guangzhou. But Bisignani was confident a third runway would be built. "It's a question of timing." Tony Concil, IATA spokesman, said: "The number of people who want to come here is enormous." Bisignani warned the Hong Kong authorities not to repeat the mistakes made by Britain over London's Heathrow airport. He said Heathrow had lost 20 per cent of its destinations over the past 20 years to rivals including Frankfurt and Dubai and the airport was "on its way to becoming a secondary hub". The loss was due to a combination of high ticket taxes and lack of investment in facilities. In May airport operator BAA scrapped plans to build a third runway last May after elections that brought to power a coalition government opposed to the expansion. He also urged the mainland and Hong Kong governments to solve air traffic control issues in the Pearl River Delta caused by the close proximity of so many international airports. He said there had been some progress on mainland air traffic control matters, which had led to domestic, European and Southeast Asian routes being shortened. That in turn led to fuel savings and less air pollution. "But still, it should be in everybody's interest to make the Pearl River Delta the world's most efficient airspace," Bisignani said. He said the mainland's domestic and international passenger markets would be the fastest-growing between now and 2014. The number of domestic passengers would grow by 180.9 million, or an average of 13.9 per cent a year, while there would be 32.9 million international travellers, equivalent to annual growth of 10.8 per cent. He also said China was beginning to emerge as a key player in a greener aviation industry, with Air China (SEHK: 0753, announcements, news) set to operate the first Boeing 747-400 transpacific flight with a mix of biofuel made from jatropha, an algae, in the second half of this year.

 China*:  February 18 2011

China will introduce strict production and export quotas for rare earths as it seeks to tighten control over the raw materials crucial for the production of hi-tech goods from smart phones to weapons systems. Beijing said limits would be imposed on the mining and overseas shipments of the minerals to improve industry controls and environmental standards. Rare earths are a group of 17 elements, which are mined mostly in Inner Mongolia . They are sometimes referred to as "21st century gold", referring to their value-added applications. Up to 95 per cent of the world's rare-earth supply is controlled by China, which started cutting production last year because of concerns that prices for the non-renewable natural resources were too low to cover environmental damage caused by mining. The policy to limit production is seen as another step towards building a de facto cartel to regulate prices and standards of rare earths given their strategic importance to the mainland. A new industry body to control production of rare earths is expected to be established in May, headed by Wang Caifeng, a former official from the Ministry of Industry and Information Technology. The new organisation is expected to oversee government-arranged mergers and acquisitions, likely to lead to large monopolies in rare-earth mining, smelting and processing, and exporting. The State Council said the changes would allow the industry to "balance the domestic and international markets", ban illegal mining and limit damage to the environment. The future quota system will consider domestic resources and production, and the "situation of the international market." US manufactures including Apple and various Japanese companies have been scrambling to secure reliable supplies of the minerals outside China as Beijing steadily reduces export allocations. Rare earths are used in everything from hybrid car batteries to smart phones, iPads and sophisticated weapons systems. The State Council, while acknowledging rare earths' strategic importance, said the sector was plagued by problems such as illegal mining, environmental damage and waste, a lack of application research and uncontrolled exports. The General Administration of Customs says the mainland's total rare-earth exports last year were, as measured by weight, 39,813 tonnes, down 9.3 per cent from 2009. The nation in September 2009 decided to cut annual exports to 35,000 tonnes from 2010-15, saying the reduction was intended to protect the environment and prevent undue exploitation. However, on October 19 last year, China Daily reported that Beijing would further cut rare-earth quotas by around 30 per cent. This was followed by an announcement that 2011's first round of export quotas had been set at 14,446 tonnes, and that the full-year quotas were still "under discussion".

China will launch yuan options trading, the government said on Wednesday, a market that will help pave the way for a more flexible exchange rate but will be limited in scope at first. The move is Beijing’s boldest attempt yet to give firms more hedging tools to cope with steady yuan appreciation as well as uncertainties in global currency rates. “This marks an important step in the development of the yuan derivatives market,” said Zhao Xijun, senior economist at Renmin University in Beijing. “The exchange rate regime will become more market-oriented and the yuan will be more flexible.” The foreign exchange regulator said that onshore options trading will be restricted to firms and banks using it for hedging purposes rather than for speculation about currency fluctuations. Yuan options are currently tradable in the offshore market, primarily in Hong Kong. Within China, firms have been able to use forward contacts to hedge their foreign exchange exposure. The State Administration of Foreign Exchange said that the yuan was now sufficiently flexible to merit onshore options. It added that its launch on April 1 would just be the first step in developing an onshore market. “The key purpose for the options is to eventually hand over the function of setting the yuan’s exchange rate to the market, and in this sense, it is the biggest reform so far in China’s rigid currency regime,” said a senior trader at a European bank in Shanghai. The government keeps the yuan on a very tight leash and has allowed it to rise just 3.5 per cent against the dollar since it was de-pegged in mid-last year.

Public diplomacy will become a focus of China's foreign policy, Foreign Minister Yang Jiechi says. In an article in the latest edition of Qiushi (Seeking Truth), a Communist Party mouthpiece, Yang said China was aware of other countries' concerns about its growing economic and political clout on the world stage. In response, he said, China should seek to expand its soft power through public diplomacy - engaging foreigners - to help the international community have an "objective and comprehensive view on China". "The international community still has biases, misunderstandings and worries about China and there are all sorts of theories such as the China threat, China responsibility, tough China or proud China," Yang wrote. "Facing such complicated foreign public opinions, we should use public diplomacy to direct the international community to have an objective and comprehensive view on China ... we should keep increasing China's voice internationally to ensure the smooth implementation of the country's development strategies and foreign policies." Public diplomacy would also help build a sense of solidarity, Yang said. "Chinese nationals have unprecedented interest and participation in international and foreign affairs," he wrote. "They have more and more opportunities to shape China's national image and they have a strong will to protect national interests." Yang said China had hosted public events to coincide with the foreign visits of state leaders and had also made use of big events, such as the World Expo and the Asian Games, to engage other countries by inviting their diplomats. "Expo diplomacy was the highlight of China's public diplomacy after the Olympics," Yang said. The increasing importance given to public diplomacy was most conspicuous when China screened a 60-second image-building video on the giant screens of Times Square in New York during President Hu Jintao's visit to the United States last month.

One-third of foreign businesses on the mainland are expected to raise wages by more than 10 per cent this year as companies compete in the fast-growing market where highly skilled employees are in short supply. A survey by the UK recruitment agency Hays polled more than 5,000 employers and found 33 per cent plan to increase salaries by 10 per cent, while another 51 per cent intend to raise pay 6 to 10 per cent. "China's job market is now very active with healthy levels of movement, a strong economy and new projects coming on line," said Emma Charnock, regional director of Hays in Hong Kong and the mainland. "But a shallow pool of talent in many specialist areas is the biggest threat to growth, which is why the ability to overcome skill shortages, particularly in the banking and finance industry, will become the defining characteristic of the employment market in 2011." The annual survey said the mainland recorded the highest salary increases last year, with 68 per cent of respondents raising salaries between 3 and 10 per cent while 22 per cent gave pay rises of more than 10 per cent. Hays said employees with skills in finance, banking and construction were badly needed by multinational companies operating in China. An increasing number of foreigners in Hong Kong and other major economies across Asia will look at job opportunities in Beijing and Shanghai, though salaries are higher in the markets outside the mainland, said Nigel Heap, managing director of Hays Asia Pacific. "But it's still cheaper to live here," he said. "The opportunities are much greater than in Hong Kong and other markets simply because of the size" of Beijing and Shanghai. Shanghai in 2009 unveiled its plan to attract 1,000 talented professionals from abroad to help transform it into a global financial centre as the city was facing a severe shortage of experienced employees. Hays said there is also a shortage of bilingual candidates with a high level of English proficiency in China. "It's a big problem," said Heap. "But it is a problem that will be solved." China's new university graduates in the coming years will be able to fill the vacancies as they are developed and trained, he added. Hays said he expects its business in China to grow three times larger than the current 40 million yuan (HK$47.22 million) a year by 2015. "The local job market has been active since last year, driven by the fast expansion of foreign companies," said Li Minghui, a manager at China International Intellectual Shanghai, a state-owned recruitment company. "But the market is still badly in need of qualified candidates." The mainland's soaring inflation also prompted companies to raise salaries in order to retain employees. "Companies are expected to dig deep to retain their top talent," said Charnock. "A successful counter offer involves more than just money - employers need to make sure they address the underlying issue of why their employees decided to look for a new job in the first place."

Hong Kong*:  February 17 2011

The ornate Haw Par Mansion stands in the shadow of The Legend apartment block in Tai Hang. Property giant Cheung Kong (Holdings) (SEHK: 0001) says it will bid for the revitalisation project of historic Haw Par Mansion with the original owner. In a statement issued last night, the developer's chief corporate affairs officer Wendy Tong Barnes said the group had reached an agreement with former newspaper tycoon Sally Aw Sian to work on a joint bid. "Cheung Kong and Sally Aw Sian are glad to work together to bid for the lease of Haw Par Mansion for its revitalisation. [The project] means a lot to both parties," Barnes said. The developer is the first to indicate interest in the grade one building in Tai Hang, since the Development Bureau launched a tender last month. The lease will be for seven years, renewable for another three. The government estimates it will cost HK$120 million budget to renovate the 76-year-old mansion. There were fears among heritage watch groups that the mansion would be granted exclusive use or even become a private clubhouse for The Legend, a luxury apartment project of Cheung Kong's that stands just metres away from the historic site and overshadows it. It did not give details of its proposal, such as how the building would be used and the investment amount. The residence was built by Sally's father, businessman Aw Boon-haw along with Tiger Balm Garden, named after the ointment he developed. The garden was sold by Sally Aw, who was former chairperson of Sing Tao Group, to Cheung Kong. The developer cleared it in 2004 to build The Legend and surrendered the mansion to the government. Antiquities Advisory Board chairman Bernard Chan said he had met a representative of Aw several times in the past year. "Aw hoped that the government would keep the elements and settings of the mansion as much as possible," he said. Peter Lee Siu-man, campaign manager of the Conservancy Association, did not welcome the developer's plan, saying Cheung Kong did not have a good record in building on heritage sites.

Vowing to boost morale in what was once the most coveted, and is now the most troubled, of police units, Hong Kong's police chief yesterday announced a reform structure for police detectives to begin in April. Making good on a promise to look into detective staffing and workload issues that he made when he took the office last month, Commissioner of Police Andy Tsang Wai-hung (inset) said a new structure of the criminal investigation department (CID) would be put into place from April 1. "Rearranging the resources and manpower of the CID could help eliminate the chance of detectives needing to work overtime," Tsang said at the spring reception of the Junior Police Officers' Association yesterday. He had instructed regional commanders of six police regions to implement the restructuring of the CID. Under the new plan, each police district is to have eight criminal investigation units, in order to make sure that every shift will have at least two units on duty. In this way, "one unit could concentrate on ongoing crime case investigations and one could focus on new intake cases", Tsang said. "In recent years CID officers used to work overtime as they could not leave the work when the shift ended as suddenly a new case was received," Tsang said. He expected the new measure would help detectives achieve a better work-life balance. Hong Kong Police Inspectors' Association chairman Tony Liu Kit-ming yesterday applauded the reforms - up to a point. "This new CID structure can only improve the CID workloads marginally, and does not touch on the core problem of the shortfall of detectives: too much work and not enough detectives," Liu said. Increasing manpower was the ultimate solution to the problem, he said. Fresh concerns about the workload of detectives arose after the death of a senior inspector, Yip Hoi-wai, in January. Yip died of a stroke despite warnings that his health was not up to the job. Many officers have been reluctant to join the CID and embrace its culture of long hours. The city has about 5,500 CID officers out of a total police force of 28,000. CID teams are managed at the division level, a sub-level of police districts. Each division has three or four CID teams, with only one team on duty during each shift. Tsang said the force would see if additional resources were needed after trying out the new structure. Aside from the restructuring, the police team that studied the problems facing the CID also suggested providing more chances for promotion and professional development. More details will be released after the team finishes the report in April.

SMG in talks to air in Hong Kong - A booth of Shanghai Media Group (SMG) at a recent TV program fair held in Shanghai. SMG, China's second-biggest media company by revenue, is negotiating with two Hong Kong pay-TV service providers about cooperation. Documentary channel deal seen as start of expansion from mainland - Shanghai Media Group (SMG) is in talks with cable network operators to air its documentary channel in Hong Kong, part of its plan to expand outside the Chinese mainland. SMG, China's second-biggest media company by revenue, is negotiating with two Hong Kong pay-TV service providers - PCCW VOD Ltd's Now TV and i-CABLE Communications Ltd's Cable TV Hong Kong - to incorporate its documentary channel into their paid-channel packages, according to Ying Qiming, director-general of SMG's Dong Fang Documentary Channel. "The two operators have shown great interest in us bringing our channel to Hong Kong. Negotiations are continuing over some financial terms," said Ying, adding that the channel could be aired in Hong Kong as early as this year. "We are evaluating advertising and the costs involved in transmitting and content adjusting. We don't want to run at a loss in Hong Kong - the bottom line is to break even." Dong Fang Documentary Channel's potential foray into Hong Kong would be the start of the channel's expansion strategy from the mainland. The channel will expand into other Chinese-speaking regions, such as Taiwan, Singapore and Malaysia, if it has success in Hong Kong. "Putting our programs on more platforms will yield a better return on our self-made documentaries. That will help us to invest more in production to make our documentaries even better," Ying said. TV viewers in Hong Kong have access to a much broader range of channels than their mainland counterparts. And Dong Fang Documentary Channel's entry into Hong Kong market will put it in direct competition with international documentary giants such as Discovery Channel and the National Geographic Channel. Ying said his Dong Fang Documentary Channel will gain its footing in Hong Kong by focusing its programs more on the mainland. "We will compete by differentiating our content from our competitors', adding a mainland angle to most of our programs," Ying said. Dong Fang Documentary Channel now airs 150 minutes of self-produced programs a day in China. Ying said the channel will produce more programs and adjust its current ones to the taste of Hong Kong viewers. Zhang Yanan, a media analyst with Zero2IPO Research, said Chinese media companies will inevitably go abroad as they seek better returns on their productions. "Going into more internationalized markets can also help domestic media companies gain management and development experience through competition or cooperation with global media giants. That will also benefit their development in the domestic market," she said. Dong Fang Documentary Channel's revenue reached 124 million yuan ($18.8 million) in 2010 and Ying expected the figure to reach 500 million yuan over the next five years.

Hong Kong's Ocean Park welcomed around 380,000 visitors during the Chinese New Year holidays (from Feb. 3 to Feb. 13), an increase of 30 percent from a year ago, thanks to the new flagship theme zone "Aqua City" opened in late January. Chairman of the Ocean Park Allan Zeman said in a media luncheon Monday that visitors from Chinese mainland and overseas accounted for about 74 percent of the total tourists, while the number of local guests jumped over 70 percent from a year earlier. The Park has been maintaining the in-park capacity to about 10 percent below the maximum instantaneous in-park capacity of 36,300 to cope with the pressure of large groups of visitors during the busy festival holidays. Zeman said the Park expects to welcome the 100 millionth guest since inception within the next two weeks. In addition, the Park has witnessed its first-ever penguin birth on Dec. 31, 2010. It was the first penguin that was born in Hong Kong. The newly-fledged penguin will be living in the Park's planned Polar Adventure theme zone to help the public learn about the conservation messages related to the polar region.

HSBC (SEHK: 0005) and Bank of China (Hong Kong) have begun issuing yuan denominated cashier's orders in Hong Kong, in another step towards the development of a fully functioning offshore market for the Chinese currency. HSBC’s offshore yuan cashier’s orders were issued on behalf of Hong Kong-based herbal tea seller Hung Fook Tong, while BOC (SEHK: 3988) (HK) began selling its cashier’s orders at its branches on Monday, the two banks said. “The development of RMB investment products and increasing cross-border settlement in RMB in Hong Kong is gaining traction,” Albert Chan, HSBC’s head of commercial banking Hong Kong, said in a statement. Beijing is trying to promote Hong Kong as its offshore yuan trading hub, a move that has led to banks lining up to issue new structured products denominated in the Chinese currency. Billionaire Li Ka-shing’s Cheung Kong (SEHK: 0001) Holdings is expected to launch Hong Kong’s first offshore yuan product in the form of a reit this year, spinning off some of its Beijing properties to be listed in the city. Yuan deposits in Hong Kong more than quadrupled to 315 billion yuan (US$47.8 billion) at the end of December, amid strong investor interest in a currency that is widely expected to appreciate.

Li Ka-shing's conglomerate Hutchison Whampoa (SEHK: 0013) said it had won "conditional approval" to list its southern China port assets in Singapore. The new listing would include the firm’s assets in Hong Kong, Macau and Guangdong, but it has not revealed how much it plans to raise. Last month, a report said the IPO could raise between US$3 billion and US$6 billion, making it Singapore’s biggest-ever IPO. Hutchison said in a statement late on Monday that it had received a conditional green light from Singapore’s exchange for the offering. “[Hutchison] received an eligibility to list letter... which is a conditional approval for the listing,” it said in a statement posted to Hong Kong’s stock exchange, adding that final approval was subject to the “fulfilment of certain customary conditions.” The listing of Hutchison Port Holdings Trust, which is expected next month, would surpass Global Logistic Properties’ US$2.9 billion share sale in Singapore last year and be one of Asia’s largest this year. “There is significant potential for economic and trade growth in the southern China region, which is already the largest trading hub in the world,” the company said in a statement last month. “The new listing will enable the group to take full advantage of such opportunities by creating a new funding platform to attract new investors.” Money raised by the IPO would also help Hutchison expand its existing ports business, which spans about 25 countries around the world, it said. Hutchison’s Hong Kong-listed shares were 0.6 per cent higher at HK$91.8 (US$11.80) in Tuesday morning trade.

Hong Kong's first baby penguin looks to have plenty to shout about as it makes its first public appearance at Ocean Park yesterday. Ichiko, born just six weeks ago, was introduced at a press conference at the marine theme park to celebrate the arrival of the Year of the Rabbit. Maybe Ichiko thought it should have been the Year of the Penguin. Like proud parents, the staff of Ocean Park yesterday announced the birth of two penguins, the first bred in captivity in Hong Kong. The Gentoo penguins join the park's other 51 penguins, which are expected to meet the public next year. The first baby, which made its media debut yesterday, was born on December 31. "Its parents came from Japan, so we named it Ichiko, meaning `the first one' in Japanese," the senior curator of terrestrial life sciences, Howard Chuk Hau-chung, said. The park has not yet been able to determine the baby's gender. Ichiko weighed 70 grams when hatched and is being raised and fed by its parents, eating half-digested fish delivered mouth-to-mouth. Meanwhile, the second baby, born on January 25, does not have the good fortune to have a family. "Its parents just walked away," said Chuk, who said this was quite natural behaviour. "A baby penguin's survival rate in the wild is no more than 50 per cent," he said. The abandoned egg was hatched in an incubator and the baby is being fed fish via a syringe. It is being gradually introduced to lower temperatures and is expected to join the other penguins when it is three months old. It will then live at temperatures of five to eight degrees Celsius, similar to the temperatures in the species' native sub-Antarctic habitat. The little orphan still does not have a name and the park is considering letting the public name it. The park introduced one batch of penguins from Japan in 2009 and one from the US last year. They comprise three species, King, Gentoo and Rockhopper. Since they arrived, six eggs have been laid; three were fertilised and these are the first two to hatch. "We hope to double the population through an in-house breeding programme," Ocean Park chairman Allan Zeman said. Penguins lay one or two eggs each year in their native habitat. They can live up to 30 years in captivity. The penguins will go on parade for the public when the park's new Polar Adventure attraction opens in April or May next year. Zeman said two new attractions, one exhibiting rainforest animals and one with thrill rides, would open this year. During the Lunar New Year, the park saw 380,000 visitors from February 3 to 13, up 30 per cent on the same period last year. It had to stop selling tickets for three consecutive days, February 5 to 7. Zeman said the park had always limited visitor capacity to 33,000 at a time, 90 per cent of the maximum capacity. During the holiday period, 74 per cent of visitors were tourists, but the number of local visitors rose by 70 per cent in year-on-year comparisons.

Chinachem Group executive director Kung Yan-sum, the younger brother of Nina Wang, points to a banner which says "Justice in heaven and on earth", at a press conference following the Court of Appeal ruling against fung shui master Tony Chan. Tony Chan Chun-chuen yesterday lost a second round in his "totally dishonest case" to wrest the fortune of the late Nina Wang Kung Yu-sum from the Chinachem Charitable Foundation. While the judges spoke in decisive tones, Chan signalled his intention to take the case to the Court of Final Appeal. In a Valentine's Day verdict, the Court of Appeal dismissed an appeal by the fung shui practitioner, who claimed Wang gave him her fortune out of love. The court said it had "no hesitation" in tossing out the case. "[Chan] has persisted in pursuing a thoroughly dishonest case," vice-president Anthony Rogers said. "In doing so he has abused the process of the court." Chinachem Group executive director Dr Kung Yan-sum, Nina Wang's younger brother, surrounded by relatives, said he was "very, very happy". "There is justice in heaven and on earth," he said, gesturing towards calligraphy with the same inscription as he spoke at Nina Tower in Tseun Wan. Kung said he hoped the judgment would put an end to the case. Yet soon after the ruling, Chan made public his intention to appeal. "Although Mr Chan Chun-chuen is deeply disappointed by the court's ruling, he will respect the judgment," a public relations representative said on his behalf. "He has already decided to appeal to the Court of Final Appeal. Mr Chan reiterates that the 2006 will is absolutely authentic." Asked whether Chinachem would continue the court battle against Chan, Kung said: "If he does, would I not?" The Court of First Instance ruled against Chan last February. Chan claims Wang gave him her fortune in a 2006 will, while Chinachem Charitable Foundation claims she left it her wealth in a 2002 will. The lower court found that Chan's document was a forgery and police arrested him the next day. He was released on HK$5 million bail. Wang, once Asia's richest woman and Chinachem Group chairwoman, died of cancer in April 2007, aged 69. The judgment said there had been various estimates of the value of Chinachem Group's companies, with a figure in the region of HK$100 billion being mentioned. Chan was ordered to pay Chinachem's legal costs for the appeal. The court rejected an appeal by Chan against an order on costs from the proceedings in the lower court. Even without the appeal costs, Chan faced an estimated HK$340 million bill for both sides' fees after the earlier proceedings and a claim by the taxman for HK$350 million in profits tax. The Court of Appeal said the lower court judge had been correct in finding the signatures on the 2006 document were forgeries. The Inland Revenue Department says Chan owes the profits tax from last year. Chan filed a writ seeking a judicial review challenging the department's refusal to accept his objection notice to some tax assessments. That review is due to be heard in May. A spokeswoman for Inland Revenue said it would be inappropriate to comment on the tax-related court cases because they were in legal proceedings. She said the department would not comment on individual situations, citing a section on secrecy in the Inland Revenue Ordinance. Chan reported back to police in January and had his bail extended. He is to report again in early April. A police officer said: "The probate judgment is a civil case and our probe over the alleged forgery is a criminal investigation. They are separate." But the officer said police would study the results of the Court of Appeal ruling. Refusing to reveal whether handwriting, DNA and fingerprint examinations on the 2006 will were completed, the officer said tests would be conducted once any evidence surfaced. "We will seek legal advice from the Department of Justice after our probes are completed," the officer said. The appeal was heard before Rogers, along with Mrs Justice Doreen Le Pichon and Madam Justice Susan Kwan Shuk-hing.

None of the 116 Filipino witnesses called to testify in the Hong Kong inquest over the Manila hostage tragedy has agreed to give evidence in court, and only 18 of them have given a written statement. "At this stage we don't know if any of the Filipino witnesses are coming," coroner's officer Jat Sew-tong SC told a jury as an inquest into the deaths of eight Hong Kong people held hostage by former police officer Rolando Mendoza on a tour bus last August opened yesterday. The inquest is expected to last 25 days. Witness statements from the Philippines will include former police chief Rodolfo Magtibay, three police officers who shot Mendoza, reporters Michael Rogas and Erwin Tulfo who interviewed the gunman over the phone, and the driver of the tour bus, Alberto Lubang. More than 30 witnesses from Hong Kong will give evidence, including survivors of the siege, ballistic experts, a psychologist who will speak about Mendoza's state of mind and police officers who took part in the investigation. Those killed were Hong Thai Travel tour guide Masa Tse Ting-chunn, 31; Fu Cheuk-yan, 39; Doris Leung Chung-see, 20; Leung Kam-wing, 58; Jessie Leung Song-yi, 14; Wong Tsz-lam, 51; Yeung Yee-kam, 46, and Yeung Yee-wa, 44. Jat said Jason Leung Song-xue, 19, who suffered brain damage in the hostage tragedy, was recovering in hospital but was not well enough to testify. His mother, Amy Leung Ng Yau-woon, who lost her husband and two children in the tragedy, would not give evidence either. The court heard from a statement by Melencia Gonzales, who was a close friend of Mendoza, that the disgraced police officer went to her home at 6.10am on August 23 and they drove to Manila. She asked him why he was in uniform. "He told me: `I'm carrying a gun, that's why I am in uniform'." Before she dropped him off at Fort Santiago, they ate shark's fin, congee, beef broccoli and chicken feet at a restaurant. Philippine tour guide Diana Chan said in a statement that a group of 21 finished visiting Fort Santiago at 9.40am. She did not notice that Mendoza had boarded their bus as she was speaking to the Hongkongers. When Chan told the armed Mendoza that outsiders were not allowed on the bus, he seemed offended and shut the door. He told the driver to go to Rizal Park. "While the bus was moving, Captain Mendoza was narrating his sad story," Chan said. During the hostage drama, Chan was released along with Li Fung-kwan, 66, who was suffering from bowel problems. Lourdes Amansec, assistant manager of Direction Travel and Tours, said in a statement that Chan sent her a text message that read: " in mnl rizal park." Amansec then alerted the police. Describing the police reaction, she said: "[It was] as if they couldn't believe it so I offered to take them over there in our van ... I did not see anyone take control of the media or the people in the chaos. "After the gunshots finished, a police officer suddenly arrived, carrying a long gun and a short gun with magazines ... including Mendoza's two pairs of handcuffs and wallet, a bloody hunting knife and the hostages' cellphones," Amansec said. The inquest continues today before Coroner Michael Chan Pik-kiu.

Twelve shopping centres of Sun Hung Kai Properties (SEHK: 0016), including the flagship APM mall in East Kowloon, rang up more than HK$10.8 billion in sales last year. The figures were announced yesterday, along with a warning to shop owners to expect their rents to rise by up to 20 per cent. "The sales turnover has surged as much as 30 per cent from 2009," said Maureen Fung Sau-yim, the general manager of Sun Hung Kai Properties' leasing department. Fung is in charge of the company's 12 big retail properties, including APM in Kwun Tong, the Tai Po Mega Mall in Tai Po and Sun Arcade in Tsim Sha Tsui. SHKP owns 50 shopping centres in Hong Kong. This year, Fung expects total revenue at the 12 shopping centres to increase by 20 per cent to more than HK$13 billion. The APM mall was responsible for more than HK$3 billion of last year's sales, while Tai Po Mega Mall generated more than HK$2.2 billion. Last month, sales at both shopping centres set record highs, Fung added. Sales at APM reached HK$260 million, up 25 per cent from the same month last year. Tenants at APM were earning average sales of HK$1,500 per square foot of retail space last month, she said. She expected rents to be increased by up to 20 per cent for shops with leases up for renewal this year. APM generated rental income of HK$300 million last year at average rents of HK$90 to HK$300 per square foot. "Tenants selling jewellery and audio-visual equipment have outperformed other retailers at APM. They enjoyed an average increase of 15 per cent to 20 per cent in business," Fung said. The developer is about to start work on an 18-month make-over at APM and now plans to increase its works budget from HK$50 million to HK$80 million. SHKP would also invest HK$100 million to refurbish the Tai Po Mega Mall, Fung said.

 China*:  February 17 2011

A folk artist shapes a clay sculpture featuring a rabbit couple kissing and sitting on the moon on Valentine's Day in Shenyang, Liaoning province February 14, 2011. Valentine's Day falls on the twelfth day of the Chinese Lunar New Year, which began on February 3, marking the start of the Year of the Rabbit.

Preparing for upcoming Lantern Festival - This year's Lantern Festival, which is the 15th day of the first month of Chinese Lunar New Year, falls on Feb. 17.

An engaged couple pose for pictures riding a bicycle on a pedestrian bridge before tying the knot at a so-called "nude wedding" in Beijing. Finding the ideal partner is rarely easy but on the mainland - where an estimated 260 million are hunting for a spouse - the process is often more about economics and pragmatism than a desire for romance, a major survey finds. According to the "2010-2011 China Marriage and Relationships Survey", released on the eve of Valentine's Day, mainland lonely hearts are increasingly adopting a traditional approach to marriage - from the use of match-makers to the perceived importance of finding a good social match. The survey - which claims to be the largest of its kind within the United Nations - was organised by a nationwide consortium of media outlets and quizzed 21,694 single mainlanders aged 23 to 35 over the course of a month using both online and traditional questionnaires. Just under two thirds of the survey's respondents were female. Societal and economic factors in the mainland today - from the rising cost of housing and an increasingly materialistic culture to a significant gender imbalance - are ramping up traditional tensions over the need to marry. With the first generation of men born under the one-child policy now at marrying age, they are coming under immense parental pressure to find a bride - while facing a shortage of women of a similar age. At the same time, professional women, who are still single above the age of 27, have become a social phenomenon all of their own - dubbed "leftover women", they tend to have difficulty finding husbands due to their higher earnings and education. But the survey's results suggest attitudes towards marriage and the process of finding a partner are becoming increasingly conservative and governed by traditional values. More than 60 per cent of respondents said they believed a "harmonious social match" was an important factor for selecting a future spouse, citing similar life experiences and family backgrounds as being conducive to a successful marriage. The overwhelming majority of the singles said they were willing to be fixed up through match-making services, with 90 per cent saying dating agencies were a good idea and over half saying they had already attended blind-dating activities of some form. A potential partner's financial status was seen as the most important factor when sizing up matches offered. The survey also found that there was a big gender gap in terms of attitudes to having a "nude wedding" - tying the knot without first buying a house and car, and holding a minimal registry office ceremony that did not involve a banquet or wedding rings. While some 75 per cent of male respondents said they felt it would be acceptable, just 38 per cent of women were willing to consider doing so. The growing numbers of lonely hearts on the mainland desperate to tie the knot is reflected by the trend for dating shows, which have become some of the mainland's most popular television programmes in recent years. But the shifting social attitudes they portray have also been the source of controversy. A contestant on the hugely successful show If You Are the One - in which 24 female contestants get the chance to question a single wannabe Romeo - provoked an outcry last year when she used an overtly materialistic put-down on an unemployed suitor. "I would rather weep in a BMW than laugh on a bicycle," Ma Nuo told the man after he offered to take her for a romantic bicycle ride.

Diners and staff at a branch of McDonald's in Guangzhou. The company is planning to raise prices because of inflation on the mainland. Buying a Happy Meal at a mainland McDonald's outlet could get to be a more sobering experience this year. The world's largest restaurant company might raise prices to cope with surging inflation, an executive said yesterday. "As a rule, we look at raising prices anywhere from 50 per cent to 60 per cent of the inflation rate," said Tim Fenton, McDonald's president for Asia, the Middle East and Africa. Prices might be raised "towards the third or fourth quarter", Fenton told Bloomberg Television yesterday. In November last year, McDonald's China announced it was raising prices for its burgers, drinks and other snacks by 50 fen (59 HK cents) to one yuan. A spokeswoman for McDonald's did not comment directly on the possible price increases. She said the company would continue to monitor the macroeconomic environment in the country, especially commodity price fluctuations. "We will review our pricing when it's necessary," she said. Inflation on the mainland could have hit 4.9 per cent last month compared with January last year, according to economists' forecasts, up from 4.6 per cent in December. Mainland consumer prices rose 3.3 per cent last year, just above the government's target of 3 per cent. This year, the figure may climb to 4.55 per cent, according to the median forecast of 12 economists surveyed. Food products on the mainland, such as flour, sugar and edible oil, generally are most affected by high inflation, which could get even worse because of the drought in the north. "Our price increase will be modest. It will be lower than the inflationary index to maintain our competitive edge," Fenton said. McDonald's opened a record 165 stores on the mainland last year and plans 175 to 200 new outlets this year. Rival KFC of Yum! Brands also announced last month it would add 50 fen to one yuan on its products in its more than 3,000 stores on the mainland. McDonald's earlier said that more than 95 per cent of the food materials used in its stores were sourced domestically and it had more than 40 suppliers in the country. McDonald's has about 1,300 restaurants on the mainland and the company aims to have at least 2,000 by 2013. McDonald's stock rose 0.5 per cent to US$76.14 in New York last Friday. The stock has gained 20 per cent in the past year, lagging behind the Standard & Poor's 500 Index's 24 per cent increase.

The new party chief of the railways ministry, Sheng Guangzu , has pledged his new team will not become personally involved in the ministry's lucrative construction contracts, a hotbed for corruption that allegedly led to the downfall of his predecessor. peaking in a national teleconference on Sunday night with railway officials - his second meeting after Liu Zhijun's dismissal - Sheng said: "I, together with the ministry's party leadership, resolve not to get involved in rail projects, and I am asking all the ministry's members to hold my words to account." He said in the tendering of rail contracts and procurement of raw materials and components, railway officials must not exert illegal influence, exercise improper approvals or conduct illegal private transactions. Corruption was a severe problem in the massive railway expansion programme, he added. "The railway engineering and construction sector is a major battleground in the fight against corruption," Sheng said. Liu's downfall is partly due to a construction material tender for a high-speed railway project, according to mainland media reports. In the second half of last year, Liu was questioned several times by the authorities over the tender. Liu is also linked to Ding Shumiao , also called Ding Yuxin , a businesswoman from Shanxi province. In 2009, one of Ding's companies won three contracts to supply equipment for the high-speed rail lines from Wuhan to Shenzhen and from Zhengzhou to Xian , according to mainland reports. In a statement on the railway ministry's website, Sheng also said the government would continue with plans for a massive expansion of the country's already huge railway system, but that safety concerns would be paramount. "(We) must ensure railway construction is pushed forward to a high standard and with high quality and high efficiency," Sheng said. "Quality is the life of a construction project and safety is the highest priority of railway construction. (We) must place quality and safety at the centre of construction projects." Railways vice minister Lu Chunhua told the meeting: "Currently, the safety and quality problems in rail construction are extremely serious. "The management of safety and quality needs a lot of improvement." Zheng Tianxiang , a transport professor at Sun Yat-sen University in Guangzhou, said: "Liu is under suspicion for corruption over high-speed railways. "There are some high-speed rail contracts that were granted to some companies through bribery. "With corruption, the safety and quality of railways will suffer. People will cut costs and lower quality." Nonetheless, Sheng said the pace of high-speed rail construction must be accelerated and major high-speed railway projects must be completed on schedule. In December, Vice-Premier Zhang Dejiang said the central government placed top priority on high-speed rail development. China has built the world's longest high-speed rail network - more than 8,000 kilometres - under Liu. The government aims to have 13,000 kilometres of high-speed rail line by next year and will spend 3.5 trillion yuan (HK$4.1 trillion) on expansion of the network in the next five years.

The latest central government reshuffle has seen industry veterans with advanced degrees in economics appointed to top posts in the State Council's medical reform office, State Oceanic Administration and National Energy Bureau. The spate of transfers over the past two months could pave the way for further promotions at the party congress due to be held next autumn. Sun Zhigang , the 57-year-old deputy governor of Anhui province who made his name for his contribution to medical reform, was named a deputy director of the National Development and Reform Commission (NDRC) and the head of a State Council office responsible for nationwide medical reform. The deputy mayor of the southwestern municipality of Chongqing, 54-year-old Zhou Mubin , was made vice-chairman of the China Banking Regulatory Commission (CBRC). A financial affairs expert, Zhou worked at the Industrial and Commercial Bank of China (SEHK: 1398) for more than a decade before moving to Chongqing in 2000. Zhou could be a contender to replace 64-year-old Liu Mingkang as chairman of the CBRC as he nears 65, the retirement age for a ministerial-level official. Both Sun and Zhou hold PhDs in economics and were university academics before entering government. NDRC deputy director Liu Tienan , who holds a PhD in engineering and a master's degree in economics, was appointed head of the National Energy Bureau last month, succeeding 66-year-old Zhang Guobao. The Southern Metropolis Daily said Liu Tienan was widely considered as an official who was familiar with both the operation of macro-economy and energy affairs. Hong Kong-based veteran China observer Johnny Lau said yesterday that putting technocrats in charge of government agencies could improve management efficiency. "Such an arrangement can get rid of layman leadership and make things work more smoothly," Lau said, adding that age and education requirements had been stressed in promotions since the 16th Party Congress in 2002. Miao Wei , a 56-year-old with a master's degree in engineering, has been made Minister of Industry and Information Technology, succeeding Li Yizhong, 65. Miao was the general manager of Hong Kong-listed, state-owned car giant Dongfeng Motor (SEHK: 0489) before his promotion in late December. Meanwhile, the mayor of Xiamen, Fujian, Liu Cigui , 56, was named director of the State Oceanic Administration last week. A Fujian native, Liu has served as deputy secretary of the provincial Communist Youth League and as the top provincial official on marine matters.

Hong Kong representatives on the mainland will be visiting secondary schools to increase teenagers' understanding of modern China. The 50 speakers include Li and Fung chairman Dr Victor Fung Kwok-king, Hopewell Holdings (SEHK: 0054) chairman Gordon Wu Ying-sheung, Executive Council convenor Leung Chun-ying and veteran artist Liza Wang Ming-chun. The speakers are Hong Kong delegates to the National People's Congress and Chinese People's Political Consultative Conference. Professor Arthur Li Kwok-cheung, former secretary for education and manpower and the convenor of a working group for the sessions, said the talks would help pupils better prepare for the new subject of liberal studies under the 3+3+4 school system (three years each of junior and senior secondary school and four years of university). "This is not patriotic education or brainwashing since it is voluntary in nature," Li said. "There will be a question and answer session after the talks where students can ask anything they want. They can ask about corruption, fake products and even about the June 4 incident." Topics for the talks, which will run from next month to July, will include the nation's 12th five-year plan, economic development, diplomacy and education, cultural and social issues. Schools can choose a topic but not the speaker, and they will decide whether a one-hour talk will be held behind closed doors. Rosanna Wong Yick-ming, a former Exco member who is helping organise the events, said: "This is not just a lecture but a face-to-face dialogue between the NPC and CPPCC delegates and young people. This will also be a very good experience for us to understand better how youngsters think nowadays." The talks are being organised by the Friends of Hong Kong Association. The delegates also plan to launch a website later this year that will list their information and describe their work. Nellie Fong Wong Kut-man, another former Exco member, said the new website would allow the public to understand the delegates' work better. "Many people don't know what we do and we hope this will enhance transparency," she said. Under the Basic Law, local delegates are not allowed to set up a joint office in the city and most of them keep a low profile. The latest move is a push to make their work more prominent in the city.

Last month's successful test flight of China's J-20 prototype stealth fighter jet surprised the world, with many asking how it could develop a sophisticated plane so secretly and efficiently. Photographs posted on the internet by mainland military enthusiasts show the J-20 prototype has a canard delta layout similar to its sister fighter jets, the J-10 and FC-1 Xiaolong, but with moving vertical stabilisers like Russia's new, fifth-generation T-50 fighter. With smaller, canted ventral fins, its stealth body shape is similar to the American F-22 and F-35 and there is a hint of the Russian Su-27 in its turbofan engines. Some Western media said China used Russian and US technologies on the J-20 prototype, with some saying China gleaned clues from the wreckage of an American F-117 Nighthawk shot down in 1999 during Nato's aerial bombing of Serbia in the Kosovo war. That speculation was immediately denied by Chinese state media, while Pentagon officials said they were not sure what China had learned from the F-117 debris. The special shape of the F-117, developed in great secrecy in the 1970s, and its radar-absorbent coating made detection difficult. Military experts say the J-20 prototype has a similar shape. Antony Wong Dong, president of the International Military Association in Macau, said the J-20's stealth capability would be more advanced than the F-117, which was retired in 2008. "There is no doubt that China studied technologies from the wreckage of the F-117, as did Russia. But the stealth coating and other related materials on the J-20 prototype are more advanced than the F-117's," he said. "The J-20 is capable of challenging the US's F-22 stealth fighter jet and could even compare with the new Russian fifth-generation T-50 fighter one day." Andrei Chang, editor-in-chief of the Canadian-based Kanwa Asian Defence Monthly, said he believed China spent a long time studying the wreckage of the F-117. "But I still insist that the J-20 is an indigenous, new-generation stealth fighter jet fully designed by China itself as its core technologies, such as its double engines, are home-made ones," Chang said, adding that satellite pictures showed China had produced an F-117 mock-up. "Of course, the appearance of the US F-117 mock-up in Luoyang [in Henan province] showed that China might achieve some technological breakthroughs in coatings and stealth materials after taking some references from the F117." Many state media reports indicate that China has studied the debris of US military aircraft closely since the early 1960s. From September 1962 to September 1967, the People's Liberation Army shot down five U-2 high-attitude spy planes, which the US had provided to Taiwan, according to the People's Daily. Four of the U-2 wrecks are parked at the Beijing Military Museum. On July 20, 1971, an American D-21 reconnaissance drone was shot down by the PLA Air Force. In 1999, during the Kosovo war, China sent agents to Serbia to buy F-117 wreckage from farmers after it was shot down, according to Serbian officials. Studying those aircraft helped China acquire cutting-edge technology for its new-generation fighter jets, which are expected to feature full stealth capabilities, a supersonic cruising speed and advanced manoeuvrability. Military observers said China had spent a long time boosting its military capabilities, with stealth fighter jets being one of the projects. But Western countries had never taken it seriously, or had underestimated China's capabilities and determination. Wong said: "Actually, even the J-10 has some trace of stealth capability, and now China is developing another more powerful fighter, the H-10 bomber, which will be more mobile and flexible than the J-20." Song Xiaojun , a Beijing-based military analyst, said Western countries' shock over the J-20 test flight reflected a long-history of "discrimination mentality". "They've never looked up to China and have refused to recognise Chinese successes," he said. "For example, in 1964, when China successfully tested our first atomic bomb, then-US president Lyndon Johnson made an announcement the next day saying our bomb was just an `inferior one' among the five nuclear powers. "However, their scientists later proved that our bomb was made with uranium, which meant our technology was as good as that of the US and other nuclear countries." Shanghai-based PLA expert Professor Ni Lexiong said it was unfair to accuse one side of copying or stealing military technology. "The J-20 is just a story about how a developing country has been pulling out all the stops to learn advanced military technologies from developed countries, which is very common in the world," Ni said. "Military technologies are very difficult to keep secret as war has been a good channel for countries to exchange technologies and culture since ancient times." Ni cited the example of gunpowder, one of the four great inventions of ancient China, which still plays a key role in today's military weapons.

FedEx is targeting business sectors that need reliable delivery of critical components. FedEx eyes growing mainland medical equipment market - China's fast growing medical equipment and supplies market is among the targets for FedEx as it grows its supply chain logistics business in Asia. Craig Simon, the president of FedEx Supply Chain Systems, said the company was also aiming its services at semiconductor, electronics, telecommunications and industrial equipment manufacturers. The supply chain systems business provides inventory storage and rapid delivery of high-value or critical components for manufacturers or businesses which need to guarantee delivery of replacement parts to their customers. Simon said while the opportunities for FedEx "are mimicking" those for businesses in all these sectors, "medical equipment and devices are growing faster than the other industries". Forecasts from the China Association for Medical Devices Industry said the mainland's medical equipment market was worth US$17.5 billion last year - the third largest in the world. Sales of high-end medical equipment in the country were growing at up to 30 per cent per year. By comparison, the global medical equipment sector was valued at US$280 billion in 2009 and forecast to grow 8 per cent a year to more than US$490 billion in 2016. Simon said the supply chain division offered time definite delivery ranging from less than two hours to four hours or next day depending on the service selected by FedEx customers, who could place orders and track inventory levels electronically. The five sectors targeted by FedEx with its supply chain division were industries where there was more of an urgent requirement to replace used and broken parts or consumables. The automotive sector had not been highlighted because time sensitivity was not so crucial. So while there could be an urgent need to deliver a replacement component to a factory to get an industrial robot back into production, the dispatch of car parts to a garage was not as critical. In China, Simon said the two and four-hour targets were met by having multiple distribution centres in key mainland cities such as Shanghai, Beijing and Guangzhou. Components or consumables sent from these centres could be replenished from larger stocks held elsewhere in Asia such as Singapore. Simon added that the sophistication of supply chain services in these major Chinese cities was equal to Europe or the United States.

A Chinese company has signed a contract to build a US$1.2 billion international airport in the capital of Sudan. A statement on the website of China’s state-owned companies administrator says the Hong Kong subsidiary of China Communications Construction (SEHK: 1800) will build a runway long enough to accommodate an Airbus 380. The statement posted on Tuesday says the airport will enhance Khartoum’s international ties. Those ties have suffered under US sanctions because of mass killings in the western Darfur region. But China has long supported Sudan’s leaders in the oil-rich region that feeds China’s energy appetite.

Hong Kong*:  February 16 2011

Johnny Chan Chung-leung, an expert on tropical cyclones and atmospheric science, has been elected a fellow of the American Meteorological Society (AMS), a spokesman for the society said. Chan, who is the chair professor of Atmospheric Science and Dean of the School of Energy and Environment at City University of Hong Kong, is the first person in Hong Kong to earn the honour. AMS has 14,000 members, but only a few people are ever elected fellows to the society. The award is in recognition of Chan's outstanding contribution to science, the AMS spokesman said. Chan said:“This is indeed recognition for my efforts in atmospheric research, but this is more an honour for the university than for me.”

Tony Chan Chun-chuen lost his appeal in the Court of Appeal on Monday – in a challenge to an earlier court ruling against him – in the "battle of the wills" for the multibillion-dollar fortune of late tycoon Nina Wang Kung Yu-sum. The fung shui master had claimed Nina Wang had given him her wealth out of love. Delivering the judgment on Monday, vice-president Anthony Rogers said the court had “no hesitation in dismissing this appeal”. “[Chan] has persisted in pursuing a thoroughly dishonest case. In doing so, he has abused the process of the court,” the judge said. Chan had claimed Wang left him her fortune in a 2006 will, while the Chinachem Charitable Foundation asserted she had given it her wealth in a 2002 will. In February last year, the Court of First Instance ruled in Chinachem’s favour, saying the 2006 will had been a forgery. Wang, once Asia’s richest woman and Chinachem Group chairwoman, died of cancer in April 2007 at 69. She was 23 years older than Chan. Speaking outside the court, Dr Kung Yan-sum, the brother of Nina Wang and chairman of the Chinachem Charitable Foundation, said he was very pleased with the decision. “The court’s ruling shows there is fairness and justice in society,” he said. He said that he had always believed Chan’s appeal was ridiculous and that the fung shui master had been too greedy.Kung said he hoped the saga could now end, so the foundation would not have to waste more time and resources on court cases. Tony Chan said in a press release said he was disappointed with the judgment. He said he had decided to take the case to the Court of Final Appeal. Dr Kung Yan-sum said he was not worried about this. Kung said he was confident the judgment would still be the same.

Flowers offered by mourners rest near the site in Manila where eight tourists from Hong Kong were killed after police stormed the coach in an attempt to free them from hostage-taker and disgraced ex-policeman Rolando Mendoza. Mendoza hijacked the coach in a bizarre bid to be reinstated after losing his job over corruption allegations. A Hong Kong inquest into the Manila bus hijacking in August that left eight tourists dead opened in on Monday, six months after a diplomatic row erupted over the Philippines' handling of the incident. The 25-day hearing before the Coroner’s Court is due to hear from witnesses including survivors and families of the Hong Kong hostages killed in a botched police rescue attempt aired on live television around the world. Officers eventually stormed the bus and shot dead the lone gunman Rolando Mendoza, a disgraced former Manila policeman who hijacked the coach in a bizarre bid to be reinstated after losing his job over corruption allegations. Soon after the bungled rescue, the Hong Kong government issued a travel alert for the Philippines, advising citizens not to visit the popular travel destination. In October, Philippine President Benigno Aquino called for minor criminal charges such as “neglect of duty” to be filed against four police officers for their role in the debacle and lesser administrative charges against the mayor of Manila, Alfredo Lim, and a deputy ombudsman. The move drew heavy criticism from officials locally, stoking calls for an inquiry to be held in Hong Kong. Staff from the trip’s tour operator were to testify at the inquest, but none of the 116 Philippine witnesses – including police officers, the bus driver, and a reporter who spoke to Mendoza – had confirmed their attendance. On Monday, families of the hostage victims hit out at the lack of clarity over who will give evidence, with one calling it “very disappointing.” “It will, to some degree, affect the inquest,” Wong Shing-sham, brother of one tourist killed during the ordeal, told reporters during a break in proceedings. Leung Kam-shing, whose brother was also killed, said: “I hope the truth will come out and that justice will be served.” Several victims’ family members testified briefly, with one calling the Philippines “backward”, while the hearing’s five-person jury was told it would be shown with a three-dimensional animated re-enactment of the shooting. On Saturday, a spokeswoman for Aquino said an investigator would attend the hearing but only to present the results of the Philippines’ own probe. Last month, Lim said he had declined an invitation to testify in Hong Kong over fears he could be arrested. Manila vice mayor Isko Moreno has also said he would not attend or testify through video conferencing. Justice Minister Leila de Lima earlier said she would testify if she was called, but Hong Kong authorities did not opt to ask her to appear. Hong Kong coroner’s inquests are generally limited to probing the cause of a person’s death. A Philippine government inquiry blamed Lim and the Manila police’s handling of the crisis for the hostages’ deaths. However Lim controversially escaped any criminal prosecution after Aquino overruled his justice minister’s recommendations.

The Marina Bay Sands resort lights up the Singapore waterfront. Visitor numbers to the city-state are up 1.3 million since the first casino resort opened in February last year. Singapore's casino bet pays off in extra visitors, revenue - City-state tipped to be Asia's No 2 gaming centre after Macau. One year after opening its first casino, Singapore has emerged as Asia's hottest new gambling capital with a revamped cityscape and billions of dollars pouring into the economy. "Singapore has made a dramatic entry to the casino gaming market," financial consultancy PricewaterhouseCoopers said in a report estimating the city-state's casino gaming market at US$2.8 billion in 2010. The first casino opened in Malaysian-controlled Resorts World Sentosa a year ago today, with Las Vegas Sands following two months later as the world economy was still clawing itself out of recession. Resorts World Sentosa also boasts Southeast Asia's first Universal Studios theme park, while Marina Bay Sands has become an architectural icon with its three curving towers topped off by a "SkyPark" shaped like a sleek ocean liner. Thanks in large measure to the casino complexes, tourist arrivals in Singapore last year hit 11.6 million, breaking by far the previous record of 10.3 million set in 2007. Most of the visitors came from the Asia-Pacific region, with mainland China, Australia, Indonesia and India together accounting for 53 per cent. Tourist spending helped fuel Singapore's 14.7 per cent gross domestic product growth in 2010, making it Asia's fastest-growing economy, after a 1.3 per cent contraction in 2009. PricewaterhouseCoopers predicted that Singapore would overtake South Korea and Australia this year to become the second-largest Asia-Pacific casino market behind traditional leader Macau. "In 2011, with a full year's operation for both resorts, we expect revenues to reach US$5.5 billion, growing to US$8.3 billion by 2014," it said. When the government lifted a ban on casinos, they were euphemistically called "integrated resorts" or "IRs" amid an outcry from civic and church groups worried about the social impact of large-scale gambling. "Definitely with the opening of the casinos, we have seen an increase in gambling addicts seeking help," said Tan Lye Keng, executive director of One Hope Centre, a Christian welfare organisation for gambling addicts. He said the S$100 (HK$606) entry levy imposed on Singaporean citizens and permanent residents failed to deter gamblers. Families can also apply for problem gamblers to be banned from entering the casino premises. But the resorts have also created thousands of new jobs for Singaporeans, and tourists rave over non-gambling attractions like Universal Studios. "Visitor arrivals have really come in stronger and I think that's a direct spin-off from having the IRs on shore," Barclays Capital senior regional economist Leong Wai Ho said. He said the resorts were contributing about 0.3 to 0.4 per cent of GDP, with the potential to increase to 0.7 per cent in the near future. "That's only when both casinos are up and running fully, so we're not there yet actually. Contributions to date have been significant, but I think the potential is for more to come," he said. In the latest financial statement issued by parent company Las Vegas Sands, Marina Bay Sands was shown to have raked in US$1.02 billion in revenues from its casino operations in 2010. Resorts World Sentosa declined to disclose specific casino revenue numbers, but its total revenue stood at US$1.53 billion for the nine-month period ending September. Las Vegas-based casino industry analyst Jonathan Galaviz estimated casino revenue constitutes "at least 60 per cent" of the total for Resorts World Sentosa. "Tourism is a critical economic component for Singapore's economy," Galaviz said. "The exercise of legalising casino gaming, in the context of integrated resort development, has turned out to be a successful endeavour." But Galaviz cautioned that Singapore should not get carried away by the success of the casino-powered resorts. "I believe from a public policy perspective, that Singapore should protect itself from gaining the perception by the outside world that it is a casino-centric country," he said. "For example, the financial sector in Singapore needs Singapore to be known as a stable, serious, and very ethical place for doing business," he added.

 China*:  February 16 2011

For Sabrina Chao, vice-chairman of Wah Kwong Maritime Transport Holdings, current market conditions has seen too many ships chasing too little cargo so far this year. For owners of large dry-bulk cargo ships and tankers, the first two months of this year have not been the best of times to be a shipping titan. Almost three years ago, shipowners toasted their luck as they saw the daily charter rate for an 180,000 deadweight tonne dry bulk capesize ship soar to close to US$300,000 as the mainland fuelled global demand for coal and iron ore. Now, with too many ships chasing too little cargo, the owner-charterer roles are reversed as capesize owners are in the invidious position of paying charterers to take their ships. For Sabrina Chao Sih-ming, daughter of shipping magnate George Chao Sze-kwong, the current market conditions are her first taste of the shipping sector in serious distress since entering the industry in 2001. But while she recognised the market was "very bad" and the "supply side is still a concern", the volatility in the dry bulk and tanker markets did offer opportunities to expand the business. Chao, vice-chairman of Wah Kwong Maritime Transport Holdings, said: "We have a very sound business model and good cash flow." It was also important to remember after six years of rising charter rates, new ship orders and commodities growth, how quickly the markets turned bad from about September 2008 and had remained volatile since then. "Wah Kwong has been around a long time and I'm quite sure we will weather the storm," she said, adding that the company last year had a "busy year" taking delivery and ordering "quite a few new buildings". These included a 319,000 deadweight tonne supertanker ordered at a cost of US$98 million last August and the delivery of two 180,000 deadweight tonne capesize ships. The company is also set to take delivery this year of a further five of the about 10 vessels it has on order. The deliveries will strengthen Wah Kwong's position as one of Hong Kong's largest privately owned shipowners with an existing fleet of 24 tankers, dry cargo ships and gas tankers. "We are always looking for new projects," she said. Chao said the current volatility in the shipping market would bring opportunities as financially stressed owners were unable to take delivery of the ships they might have ordered at the top of the commodities boom. Chao said there was room for the price of new ships, at about US$100 million for a supertanker and US$55 million for an 180,000 deadweight tonne capesize ship ordered from a reputable Chinese shipyard, to come down. Chao, who has taken stronger control of running and planning the future of the company since her father was admitted to hospital last autumn, said Wah Kwong was "constantly looking for new charterers". They had included Noble, the commodities group, which took the 180,000 deadweight tonne Aqua Venture on a five-year charter when the ship was delivered to Wah Kwong late last year. Chao said MUR Shipping in Australia would charter the last vessel, a 32,000 deadweight tonne handysize bulk carrier built by China's Chengxi Shipyard that was ordered by her father before he fell ill. Wah Kwong had also teamed up with New York-listed tanker company, Teekay Tankers, to jointly own the supertanker ordered last year. She said Wah Kwong would "always like to maintain a mixed fleet" of dry cargo, tankers and gas carriers as a "balance" or "hedge" against varying conditions in each of the markets. Chao said in the current market "tankers and bulkers are underperforming" but the liquefied petroleum gas carriers were seeing charter rates increasing. Wah Kwong could succeed in securing better rates for these gas carriers if plans to tie up with owners of other gas carriers in Asia came to fruition. Chao said talks to establish the pool of vessels were under way and an announcement could be made next month. The firm's existing 10 ships, which can carry between 3,500 and 5,000 cubic metres of gas, are operated in a joint venture with European outfit, Exmar. Chao said pools typically generated "better rates" for owners because there were fewer owners that charterers could negotiate with to charter ships, while there were also economies of scale by having a larger fleet. Chao, who joined Wah Kwong in 2002 after a financial career at Jardine Fleming and PricewaterhouseCoopers and gaining shipping experience from tanker, ship safety and insurance companies, is also keen to widen the firm's IT use. She said the move would improve efficiencies by helping to link the firm's various offices and making more operational data available online to more people. Asked how she thought Wah Kwong's computerisation compared with other shipping companies, Chao said: "We are definitely not a dinosaur, but we're definitely not advanced, so we have definite room for improvement." One move that Chao ruled out as the company geared up to celebrate its 60th anniversary in 2012 was a revival of the initial public offering initially planned in 2008. Chao said the proceeds of the listing planned three years ago were earmarked for new vessels that had already been ordered and which had now been financed by bank loans. The Bank of China had provided US$170 million to finance the cost of two supertankers that cost US$136 million each, while the Dalian branch of the China Construction Bank (SEHK: 0939) had also provided cash for the firm's vessel building. She said Wah Kwong chartered out its tankers and large dry bulk vessels for about five years which provided a steady income stream but little excitement or mystery for investors. Chao also felt that money raised from the offering put pressure on the company to spend it. "We do not want to feel that as soon as we have raised the money we have to spend it. We want to invest according to the shipping cycle."

Rail plan could falter amid graft probe - China's plans for vast railway expansion could slow after the minister in charge of the sector came under disciplinary investigation and successor warned against graft in bids.

Watchdog slams graft in airport boom - China's airport building boom over the past five years has caused a litany of graft and environmental problems, the government's spending watchdog said on Monday.

Japan eclipsed by China as No 2 economy - Japan lost its 42-year ranking as the world’s second-biggest economy to China last year, with data on Monday showing a contraction in the last quarter due to weak consumer spending and a strong yen. While Japan was expected to fall behind a surging China in the year, the data underlined the weak state of a Japanese economy burdened by deflation, soft domestic demand and pressured by the industrialised world’s biggest debt. “It is difficult for the deflation-plagued Japanese economy to achieve self-sustained growth,” said Naoki Murakami, chief economist at Monex Securities. While China’s leap forward reflects a shift in economic power as the country transforms itself from poverty-hit communist state to global heavyweight, it highlights the need for shrinking Japan to energise its economy, analysts said. Japan’s post-war “economic miracle” put it at number two behind the United States for more than four decades, but stagnation after the Japanese property bubble burst in the 1990s helped put China on course to supplant its neighbour. However, Japan remains around 10 times richer on a per-capita basis, noted top government spokesman Yukio Edano. GDP per head in Japan is around US$40,000, say economists. Predictions vary as to when China may overtake the United States as number one economy, but it should happen by 2025, according to estimates by the World Bank, Goldman Sachs and others. Japan’s real gross domestic product slipped by an annualised 1.1 per cent in the December quarter as the expiration of auto subsidies hit car sales, a new tobacco tax sapped cigarette demand and a strong yen hurt exports. In contrast, China grew nearly 10 per cent in the same period. While Japan’s first contraction in five quarters was not as severe as forecasts of a 2.4 per cent slide, the preliminary data is subject to revision. The economy grew 3.9 per cent last year, its first annual growth in three years. But this was not enough to keep it ahead of surging China. Nominal GDP of US$5.474 trillion last year put Japan behind China’s US$5.879 trillion, the data showed. China first eclipsed Japan in the second quarter. Despite Japan crawling out of a severe year-long recession in 2009, its recovery remains fragile with deflation, high public debt, an ageing population and a strong yen all concerns for policymakers. Pressure is on Prime Minister Naoto Kan, who has seen his approval ratings tumble as his government looks to boost the economy without deepening the debt amid a legislative impasse over a US$1.1 trillion budget for next fiscal year. Last month Standard & Poor’s cut Japan’s credit rating one notch to “AA-” from “AA”, saying the government lacked a “coherent strategy” to ease a debt running near 200 per cent of GDP, the highest of any developed nation. Nearly a third of government spending is being swallowed up by a social security system catering to a rapidly greying society, Standard & Poor’s warned, with that ratio set to rise without reforms as Japan continues to age. Private consumption, accounting for about 60 per cent of Japan’s GDP, slid by 0.7 per cent quarter-on-quarter in October-December as the car subsidies expired and cigarette sales were dented by Japan’s biggest ever tobacco tax hike. Exports slipped in the quarter as the yen surged to 15-year highs against the dollar, making Japanese goods more expensive overseas and eroding repatriated profits. But many analysts expect the economy to rebound in the March quarter as the rising tide of global recovery lifts Japan, amid a recent pick-up in corporate spending and exports. “The contraction will not last long,” said Murakami. “Companies’ manufacturing activities are recovering rapidly in January-March this year from their bottom in October last year.” The government played down Japan’s slide to third biggest economy and said it would benefit from having a booming neighbour. “We welcome, as a neighbouring nation, that China’s economy is advancing rapidly,” said Kaoru Yosano, minister for fiscal policy. The Bank of Japan is expected to leave its key rate near zero Tuesday in its ongoing battle with deflation.

China's trade surplus fell to its lowest in nine months in January after imports surged, supporting the government’s case ahead of a G20 meeting that it is doing enough to spur domestic demand without speeding up currency appreciation. The trade surplus shrank to US$6.5 billion from US$13.1 billion in December, well short of forecasts for a US$10.7 billion gap.

Beijing clamps down on costly conferences - New policy seeks to restrict number of international events - With the mainland becoming one of the world's top destinations for international conferences and forums, Beijing has taken aim at wasteful government spending in the sector and released a new set of rules. Local governments and all government departments will have to restrict the number of international meetings they host, according to a statement jointly issued on Saturday by the Ministry of Finance and the Ministry of Foreign Affairs. Those wishing to organise such events will have to apply in advance to the central government, provincial governments or related ministries. The new policy has been approved by the State Council. Local governments must consider carefully the themes of conferences they seek to host, avoiding duplications of meetings with similar topics at the same time, according to the statement. "All regions and government departments should control the number of participants and the scale of international meetings," it said. "[They] should correct their mistaken thinking that the bigger the conference the better it is." The number of international events hosted on the mainland grew rapidly in the decade to 2010, according to a report released by the International Congress and Convention Association (ICCA) in August. In 2009 China joined the ranks of the 10 countries hosting the most international events per year. In 2000, China hosted only 83 international events and ranked 19th on the ICCA's list, while Japan hosted 176 and ranked 9th. In 2009, the mainland hosted 245 events, moving to 9th on the ICCA, list one place behind Japan, at 257. Many of those events, however, relied on funding from various levels of government. Chen Zeyan, secretary general of the China Convention and Exhibition Society, said he believed the main purpose of the notice was to rein in local governments' wasteful spending on hosting big events. For example, he said, "Dalian and Tianjin have been taking turns to hold the Summer Davos economic meeting since 2007, but many other cities also wanted to be the hosts. They applied to the central government, promising to invest more for the forum," he said. "You know that the forum is costly to host, and Tianjin and Dalian have to spend several dozen million yuan each time," he said. Many such events use the term "international" as a gimmick, he said. Beijing's move was partly aimed at reducing the number of events with prestigious-sounding names but little solid content. As for events run by private companies or focusing on specific academic themes, Chen said it was hard to predict whether or not they would be affected, since the notice did not spell out how it would deal with them. But it does give specific rules on budget controls for government-backed international conferences. All events requiring government financial support must have advance approval from financial authorities, and all spending must be related to the conferences, not extraneous sideline services. To limit government spending and avoid the potential for corruption, event organisers will not be allowed to give participants souvenirs or gifts, use public funds to host sightseeing tours or provide what it calls "daily necessities" in guests' hotel rooms - "following international practices". "Without approval [from related government departments], no one is allowed to promise foreign participants that state leaders will attend events," the notice said, adding that no important foreign figures could be invited without authorisation.

Hong Kong*:  February 15 2011

A tour by well-known Japanese-American magician Cyril Takayama in Hong Kong last year has become the centre of a legal dispute, with one organiser suing the other over the division of profits. Sun Entertainment Group, a co-organiser of magic show Cyril "Believe" Tour in Hong Kong, filed a claim against G Music yesterday, accusing it of failing to refund its investment for the shows and refusing to disclose the accounting details of the programme, according to a writ Sun Entertainment submitted to the High Court. It demanded HK$1.4 million from G Music as compensation and asked for a court order to force G Music to disclose accounting records detailing the expenditure and profits for the shows. Cyril is an illusionist who made his name in Japan, thanks to his street performances in Tokyo that became hits on YouTube, earning him the tag "the Cyber Magician". He was chosen as the "Magician of the Year" at the 39th Annual Academy of Magical Arts Awards in Hollywood in 2007. According to the court filing, Sun Entertainment signed a contract with G Music last February to jointly bring the Cyril magic show to Hong Kong. Sun Entertainment agreed to chip in about HK$1.7 million, while G Music would invest around HK$4 million. Both agreed that they would share the profit and expenses in proportion to their investment. The shows took place between July 30 and August 1 last year. Sun Entertainment later accused G Music of failing to provide it with relevant accounting information within two weeks after the shows, as stipulated in the contract. After repeated demands from Sun Entertainment, G Music gave it only a "simple internal accountant's report". Sun Entertainment said it was "incomprehensible and inadequate" for them to verify the report. G Music ignored further requests for records, the writ said. Sun Entertainment said G Music failed to pay it HK$1.4 million - Sun's share of the profit based on the information supplied by G Music. It also suspected the actual share it was entitled to was more than HK$1.4 million. But it admitted that "it had no way to find out" because G Music ignored its requests for records.

A law that would see listed companies and their directors fined up to HK$8 million if they fail to disclose insider information likely to affect share prices will finally be submitted to the Legislative Council in July. It is hoped the law will come into effect in the second half of 2012. Under the law, non-disclosure of price-sensitive information would for the first time be treated as a breach of the law. Companies and directors would face civil action by the Market Misconduct Tribunal, which could impose a fine up to HK$8 million. Directors and other senior management may also face other penalties, including trading bans or serving as a director. The proposal is a watered down version of the government's first attempt to introduce the law in 2003, when it was proposed that directors breaching the disclosure rule could be jailed for 10 years and fined HK$10 million. And following a consultation, the government relaxed some of the planned reforms. They include allowing mainland or overseas firms a waiver on some disclosure if they are prohibited by their governments from doing so. "Hong Kong now has more listings from the mainland, Russia, Italy and Brazil and we needed to make this change as these overseas companies may need to follow their country's requirements," said Au King-chi, Permanent Secretary for Financial Services and the Treasury. The law also relaxes the time a company can release information to a "reasonable practicable" time frame instead of a "practicable time". The new regulation is aimed at matching international practices and covers information such as takeover and merger news, a substantial change in financial results, sudden loss of assets or other corporate movements. "This is to establish a continuous disclosure culture," Au said. "This will bring us into line with Britain, the EU and Australia." At present, companies that fail to tell investors about such information are only guilty of breaching the stock exchange's listing rules, resulting in just a reprimand. The government held a consultation on the issue last year, drawing 110 written submissions. Most of the listed companies supported the change but 20 per cent opposed it. The law change could face a rocky reception as Democratic Party legislators have criticised the fact it does not include criminal sanctions. Legislator Paul Chan Mo-po, who represents the accountancy sector, agreed making non-disclosure a civil penalty was the right approach. But he said the HK$8 million fine might be too low by today's standards. He also hoped the Securities and Futures Commission would consider carefully before giving mainland and overseas companies a waiver. Au said the government had decided on the HK$8 million fine as the market had diverse views on the issue. "Some people wanted it to be HK$3 million, which is too low, while some wanted an unlimited fine. As such, the HK$8 million seems to be the right balance," Au said. Hong Kong Institute of Directors chairman Kelvin Wong Tin-yau supports the reform, saying the fine would discourage non-disclosure as directors valued their reputation.

The Town Planning Board yesterday decided the existing temporary zoning allowing only agriculture is the best protection for defaced Sai Wan beach. After considering 350 viewpoints at a public hearing, the board upheld the zoning order issued by the Planning Department. The order will remain in effect for three years while the department comes up with a long-term plan. More than 300 of the public submissions considered supported the temporary zoning, which does not allow other kinds of development without the board's approval. Some green groups, while not objecting to the order, said the 17-hectare site in Sai Kung would be better served if incorporated into the surrounding country park or rezoned as a conservation area. "The board, turning down the suggestions, takes the Planning Department's view that these ideas would be considered when determining the long-term use," a spokeswoman for the board said. The emergency zoning was given to the scenic site last year after it was found that contractors were excavating land owned by Simon Lo Lin-shing, chairman of Mongolia Energy. Lo was said to have a plan for turning the scenic area into a private retreat. Six people, including drivers and contractors, were later prosecuted for environmental damage. Meanwhile, the Wong T. Lap Foundation, which this week announced a hostel and cultivation project for the site, said it got in touch with landlord Lo on Thursday. "Mr Lo called me and said he was willing to meet us and hear our ideas," said a man who gave his name as K. C. Wong and said he was in charge of the foundation. A public relations company representing Lo declined comment. Wong said the foundation had a HK$20 million donation, which it was ready to use to set up a conservation trust for Sai Wan. His proposal for the site included a hostel providing bed space for 200 people, a flea market, camping areas, rain shelters and a community area to attract tourists. A public forum would be organised on February 26 to discuss the project. "The area, surrounded by the Hong Kong Geopark, would be a good base for the eco-tourism project. We do not aim at making money, though," he said. Alan Leung Sze-lun, senior conservation officer of WWF Hong Kong, said: "There is no consensus that the public want to see the natural landscape become artificial. I am also concerned about the transparency of a private conservation trust, if there is to be one," he said. Conservation Association campaign manager Peter Lee Siu-man said he was sceptical of the Wong proposal. He said his group would not support a large-scale development on the beach.

Vivienne Tam wows NY fashion week goers with China lure - China-born designer Vivienne Tam dazzled this February's New York Fashion Week goers with a fascinating presentation of Chinese aesthetic charm.

Wynn Macau booked a record US$46 million in gambling revenue over a 24-hour period during the holiday - The Year of the Rabbit has begun with a big hop for Wynn Macau, which booked a record US$46 million in gambling revenue over a 24-hour period during the holiday. By comparison, average daily casino revenue during Wynn Macau's record fourth quarter was US$9.3 million. "In China we had a night that we'll all remember," Las Vegas-based chairman Steve Wynn said yesterday on a conference call. He partly credited a casino lucky streak on the tables for the windfall. "In my 40-odd-year history ... these kinds of things tend to stick with you." Traditionally, the Lunar New Year is not a high point for casino revenue in Macau. Mass-market gaming revenue generally outperforms because of the massive influx of day-tripping tourists from Hong Kong and Guangdong. VIP revenue often trails as high rollers tend to stay home with their families or use the long holiday to visit Las Vegas. But anecdotal evidence suggests Macau, Singapore and Las Vegas are dividing the spoils this year. Las Vegas Sands (LVS), which operates casinos in all three cities, said before the start of the holiday it was anticipating blockbuster business volumes. "Chinese New Year demand in Singapore has been a pleasant problem - we have too much demand," LVS executive vice-president Rob Goldstein said on a February 3 conference call. "It's the same here in Las Vegas. We will be dancing all weekend with the rabbits, and Macau continues to do amazing business." The comments suggest Macau continues to build on last year's winning streak, when casino revenue rose 57.8 per cent from 2009 levels to a record 188.34 billion patacas. Last month, casino revenue rose 33.2 per cent to 18.57 billion patacas. It was the city's third-best monthly haul, behind December's record 18.88 billion patacas and October's 18.87 billion. Wynn Macau said yesterday that profit in the final three months of last year rose 169 per cent from a year earlier and 83 per cent from the previous quarter to US$208.81 million. Fourth-quarter earnings before interest, tax, depreciation and amortisation rose 108.9 per cent from a year ago and 50 per cent from the third quarter to US$296.8 million. The better-than-expected results were driven by a surge in high-stakes betting volumes, with VIP chip sales rising 64 per cent from a year earlier to a record US$27.7 billion in the quarter. The casino won back a luckier-than-average 3.15 per cent of those chip sales. "Everything is up in Macau and Las Vegas," Wynn said of the year to date. "And we are also being lucky ... that's a gate that swings both ways."

 China*:  February 15 2011

Minister of Railways Liu Zhijun , in charge of the mainland's multitrillion-yuan high-speed rail program, is being investigated for "severe violation of discipline", Xinhua reported last night. Xinhua said Liu had been removed as the ministry's Communist Party secretary. However, it is not known whether he has also been stripped of his ministerial post. He may not be the only railways official under investigation. The section on the ministry's website about its leadership was deleted yesterday. And an official from the ministry, who refused to be named, said changes were looming there. "There will be some changes in personnel ... This will definitely have an impact on the ministry and China's railway development, but normal operations should not be affected," the official said. Liu, 58, is the first cabinet minister to be felled by disciplinary problems since the then minister of land and resources, Tian Fengshan , in 2003. Beijing-based news website said Liu's fall from grace was directly linked to a government investigation of high-profile businesswoman Ding Shumiao . Ding, from Shanxi , was taken away by investigators in Beijing last month. Her firm Broad Union Group won lucrative contracts for work on railways including the high-speed line from Hong Kong to Guangzhou, the website reported. Railway projects were the prime focus of the investigation of Ding, it said. The party's Central Commission for Discipline Inspection did not disclose details of Liu's case. A Hong Kong transport consultant familiar with mainland railway development said: "The railways ministry is very powerful. It controls a lot of resources ... There are plenty of opportunities for corruption." A US venture capital investor with extensive dealings on the mainland said: "The Ministry of Railways has grown too powerful. [It] controls all the property around the train stations. Railroad property prices are going up like crazy. "Many people in the central government want to remove Liu because he resists reforming the ministry." Liu has faced criticism for years for chaotic management of the ministry, which he has run since 2003. In 2006, his younger brother, Liu Zhixiang , received a suspended death sentence for hiring a hitman to kill someone who publicly accused him of being corrupt and embezzling public funds. The ministry is charged with realising the mainland's high-speed-railway ambitions. Beijing aims to expand the network to 25,000 kilometres by 2015 at a cost of 3.5 trillion yuan (HK$4.1 trillion). China already has the world's longest high-speed rail network, at over 8,000 kilometres. It is expected to spend 700 billion yuan on rail projects this year, the same as last year. Despite questions over the huge expense of the project, the central government has given it top priority. An international consultant based in Shanghai who specialises in infrastructure said: "Given that so much money has been spent, [Liu's case] is serious news that will send shockwaves around the world. It's detrimental for China's image internationally. The world is looking to China to develop and sell high-speed rail. Now the guy heading it has been sacked for corruption."

Research firm IDC says the global IT market outperformed expectations last year to top US$1.5 trillion, up from US$1.4 trillion in 2009. Mainland spending on information technology is forecast to rise about 16 per cent to US$112 billion this year, driven by continued investments in hardware, software and services, and new infrastructure deployments under the central government's 12th five-year plan. Technology investments in the country reached US$96.9 billion last year as worldwide spending in the sector grew the fastest since 2007, according to the market research firm International Data Corp (IDC). "While downside macroeconomic risks are still present, we entered 2011 on the back of a resounding rebound for the technology industry," said Stephen Minton, the vice-president of IDC's information technology markets and strategies group. IDC said the global IT market outperformed expectations last year as it reached more than US$1.5 trillion, up from US$1.4 trillion in 2009 when the financial crisis became widespread and technology spending declined by 4 per cent. Minton said there was also a very real surge of demand last year "as businesses around the world continue to deal with the issue of managing, storing, securing and analysing the increasing flood of digital information that is resulting from the proliferation of mobile devices and embedded computing platforms". IDC estimated global information technology spending this year would hit US$1.65 trillion. "As long as the economy remains stable, we look forward to another strong year of investment in 2011," said Minton, who attributed industry growth last year to healthy technology spending across emerging markets, led by the mainland and India. Information technology spending on the mainland has been helped over the past two years by the government's 4 trillion yuan (HK$4.7 trillion) economic stimulus package, its "Ten Industries Revitalisation Plan", mobile network expansion by the three major telecommunications carriers, and subsidy programmes for consumer electronics and appliance purchases. In a report, IDC said the central government's strategic development policy and the implementation of the latest five-year plan, coupled with the stable economy, would primarily drive "the rapid growth of the country's [overall] information and communication technology market this year". Some key areas that IDC said would help spark greater technology spending under the plan included the 3 trillion yuan national railway construction, development of more advanced 4G mobile networks and widespread adoption of so-called cloud computing.

Beijing's auto market to shrink 60 bln yuan in 2011: official - Sales revenue of Beijing's auto market in 2011 might shrink by 60 billion yuan (about 9.1 billion U.S. dollars) due to the city limiting the number of cars purchased each month, a commerce official said Saturday.

Hong Kong*:  February 14 2011

Hong Kong's first organic fish sure to catch on - Yuen Long fish farmers Lai Loi-chau (left) and Yeung Sui-leung present (from left) certified organic grass carp, bighead carp and grey mullet yesterday. Organic fish will be sold for the first time in Hong Kong next month. They come from two fish farms in Yuen Long where 18,000 fish have been bred organically in terms of their feed and breeding environment, says Jonathan Wong Woon-chung, director of the Hong Kong Organic Resource Centre. Three types of fish farmed organically - mullet, bighead carp and grass carp - have received certification from the centre established under Hong Kong Baptist University. They will be sold for HK$60 to HK$70 each, about double the price for non-organic fish of the same type on the market. Each fish will be labelled with a green sticker with a tick, the word "organic" and the centre's name to identify them as certified organic. From next month, one of the farms will sell fish at its own retail outlets. Wong expects that more fish will soon be available in selective supermarkets. "Organic fish are safer to eat as they are chemical-free," he said. "Eating them also benefits the environment." He said the two farms had to comply with many international standards to earn their organic certification. Apart from providing organic feed and unpolluted water, the farms had to ensure they had adequate space for the fish. "The fish need enough room to swim," Wong said. "If it gets too crowded, they can be injured." The fish were raised and killed humanely, Wong said. He explained that methods commonly used in wet markets were acceptable, such as knocking fish unconscious with a hard blow before gutting them. But drugging fish was prohibited as this would contaminate them. Wong is confident that organic fish farming has a future in Hong Kong. "We are now at the kick-off stage but hope more fish farmers will join the project," he said. The Organic Resources Centre was co-operating with the two farms, with technological support from the Agriculture, Fisheries and Conservation Department. When the fishing operation is more well established, the farms will breed more expensive species to raise profit margins and make it more attractive to fish farmers. "Farming organic fish should be more profitable than breeding non-organic fish," Wong said. For now, only freshwater fish can be cultivated organically in Hong Kong as there are no isolated bays suitable for organic mariculture. "We can't raise organic fish with non-organic types as they will be contaminated by chemicals and pollutants," Wong said. Organic fish provided a safer and more environmentally friendly choice for consumers, Wong said, as organic fish farms strive to minimise water pollution. Their carbon footprint was much lower as they did not use fertilisers and pesticides, which were petroleum by-products. More than 70 per cent of the farms' fish feed is organic, meaning it has been produced with no chemical fertilisers, additives and hormones. The fish are fed mainly residue from organically raised soya bean and fishmeal. Water quality at the farms is also strictly controlled. The pond water and mud must be free of pollution, and any waste water from the operation is treated before it is discharged. 

China's filthy rich splash their cash - China's new generation of big spenders are driving - think BMW and Ferrari - world sales of luxury goods to new highs. Dripping in gold, the average mainland millionaire is 39 years old, male and has three cars and 4.4 luxury watches. Findings from a revealing CLSA report show that the clamor for luxury goods by Chinese people will dominate the global market over the next decade. Demand for luxury goods in Greater China - the mainland, Hong Kong, Macau and Taiwan - will climb from the current 26 billion euros (HK$275 billion) to 169 billion euro in 2020, a surge from 15 percent of the global luxury market to 44 percent. Of the 169 billion euros, 160 billion euros is likely to be spent by mainlanders - 74 billion euros in the mainland and 86 billion when they travel to Hong Kong, Macau and Taiwan. And that's not counting spending on luxury goods as Chinese travel to Europe and elsewhere. CLSA expects the global luxury market to reach 385 billion euros in 2020, up from 168 billion last year. "The number of individuals with more than 1 billion yuan (HK$1.18 billion) has increased at an annual rate of 50 percent, from 24 in 2000 to 1,363 in 2010," said Aaron Fischer, regional head of consumer research at CLSA. CLSA surveyed 340 consumers and 31 luxury store managers in the largest cities. It found that on average millionaires in China are 39 years old, which is 15 years younger than their overseas peers, and 70 percent are men. They own three cars and 4.4 luxury watches on average. The results show that some of them spent an average of 10 to 12 percent of their household income on luxury items. Of those surveyed, 69 percent are willing to spend at least 10,000 yuan on a watch. The favorite brand is Rolex, while the tops in jewelry is Cartier. They favor Giorgio Armani the most as fashion brands, and BMW in automobile brand. European luxury brands dominate the China market, with Louis Vuitton taking the lead. They like foreign brands in particular, with large logos. Signature collections are particularly desirable, the survey found. "Louis Vuitton's biggest customers are already Chinese," said Fischer. "Greater China represents 28 percent of sales for Swatch, 22 percent for Richemont, 18 percent for Gucci, 14 percent for Bulgari and 11 percent for Hermes." Most purchases are still made domestically, with 45 percent buying in the mainland, 26 percent in Europe and only 10 percent in Hong Kong. The survey found 77 percent buy luxury brands because of superior product quality, 64 percent think luxury goods are a symbol of success and status, and 64 percent buy to reward themselves. About 20 percent of the Chinese consumers buy luxury goods as gifts, particularly during the Lunar New Year. Luxury handbags, clothing, watches and jewelry are popular items. Meanwhile, Hong Kong Resources Holdings (2882) is tapping the huge market for corporate gifts in the mainland, said chairman Kennedy Wong Ying-ho. One of the biggest orders the Hong Kong jeweler has received is from Toyota's mainland office, which ordered more than 2,000 gold accessories as corporate gifts.

Hong Kong's overall residential rents were 11.5 per cent higher last month than in February last year. Property agents said the jump was driven by strong demand as the economy continued to improve. The rent rise outpaced average salary growth, which was 2.4 per cent higher in September over the same month last year. Figures from Midland Realty, gathered from the rental data of 100 private housing estates across Hong Kong, found rents on average increased from HK$17.40 per sq ft last January to HK$19.50 per sq ft last month. Midland Realty's chief analyst Buggle Lau Ka-fai believed residential rents could go up a further 11 per cent this year, in line with the estimated increase in property prices. "Capital will continue to flow into the property market as people try to hedge against inflation. It will help boost the leasing business," he said. Rents at Galaxia in Diamond Hill rose 2.9 per cent last month to HK$21.60 per sq ft, the largest percentage rise among the 100 estates. Centaline Property Agency said flat rents rose 42.4 per cent from April 2009 to last December. Meanwhile, lawmakers criticised the government for a lack of progress with a probe into a remark by Cheung Kong (Holdings) (SEHK: 0001) real estate executive director William Kwok Tsz-wai. Kwok posted comments on his miniblog in November urging buyers to be quick to speculate in flats in one of its developments in Sha Tin that he said was not affected by measures to cool the property market. Lawmakers Lee Wing-tat, James To Kun-sun and Leung Kwok-hung questioned whether officials were afraid of talking to Cheung Kong and called on the government to talk to the developer. Permanent Secretary for Transport and Housing Duncan Pescod did not respond to the request but said the bureau would "follow the system".

Senior Counsel Jat Sew-tong has been appointed the new chairman of the Minimum Wage Commission, Secretary for Labour and Welfare Matthew Cheung Kin-chung said on Friday. Jat would replace Teresa Cheng Yeuk-wah and hold the position for two years – from March 1, he said. Twelve members have been appointed to the commission. They are from the labour sector, business community, academia and the government. Among the non-official members, four served on the Provisional Minimum Wage Commission. They include Kwong Chi-kin, Lau Chin-shek, Lee Kai-ming and Caroline Mak. Other non-official members are Professor Alfred Chan, Professor Stephen Cheung, Lau Ka-shi, Professor Suen Wing-chuen and Simon Wong. Café de Coral chairman Michael Chan Yue-kwong – who caused controversy last year when he said introducing a minimum wage would increase the company's wage bill by HK$120 million a year – would not be a member. The commission was established under the Minimum Wage Ordinance. The government decided last November that the monthly minimum wage would initially be set at HK$28 an hour.

Times Square is trying to halt a lawsuit by the Building Authority to claim some of the profit it made over more than 15 years by leasing its public piazza. Its lawyers argued yesterday in the Court of First Instance that the authority lacked legal status and only the government as a whole had the power to sue. But lawyers representing the government said the authority had struck the deal with the shopping mall operator and it would make little difference whether the government or the authority, as an agent of the administration, was suing. They accused Times Square of trying to "buy time". The lawsuit arose from a 2008 writ in which the Building Authority sought damages from Times Square - a key asset of the Wharf group - for making excessive profits by renting out its 3,017- square-metre ground-level piazza, a public open space, for exhibitions and commercial events. The authority alleges that for 15 years the company charged up to HK$124,000 a day for use of space reserved for the public. The court heard that the shopping mall had dedicated the piazza for public use as a pedestrian passage and for passive recreation and in return had been given a bonus plot ratio, or extra building area. The court also heard that Times Square was allowed to stage exhibitions and displays in the area on condition that it charge only for use of facilities such as electricity and water, which had not been the case. However, Ambrose Ho SC, representing Times Square, argued on a point of law that the Building Authority was not entitled to claim damages for its share of profits generated from leasing out the piazza. He said that damages were usually granted to an innocent party that suffered loss due to breach of contract by the other party, while in this case the authority had not suffered losses. However, Benjamin Yu SC, representing the authority, insisted that it was entitled to claim more than nominal damages - a small amount awarded to a plaintiff in a lawsuit to show they were right but suffered no substantial harm. Deputy High Court Judge Louis Chan Kong-yiu said there were conflicting opinions in Britain on the issue and the matter might have to be taken to the Court of Final Appeal for determination. Yu said the lawsuit should go ahead and should not be further delayed in light of public concern about the use of public open space. "It [would be] unfortunate to get a judgment or resolution five, six, seven years later," Yu said. "It doesn't matter who's going to win but what is determined." The court also heard the authority had repeatedly tried to obtain information about the rents the shopping mall charged, but received no response. The court was told that Times Square rented the piazza according to three categories. The place was free for government, community and charitable organisations. Tenants of the shopping mall could rent the space for a preferential rate. It usually did not rent out the open space to companies and organisations that did not have previous connections with it unless they put forward a good reason for using it. The judge reserved his judgment.

MGM Macau, the Macau joint venture of MGM Resorts International, is seeking approval for its proposed US$800 million initial public offering in Hong Kong at the end of this month, sources said. However, analysts cautioned the continuing family feud involving co-owner Pansy Ho Chiu-king, a daughter of gaming tycoon Stanley Ho Hung-sun, might cause hiccups for the listing, because of a highly public spat with her father over a controversial share transfer worth billions of dollars. The Macau venture, owned by MGM Mirage and Pansy Ho, was originally due in the second half of last year. Sources estimated it would raise about US$500 million, but analysts said the larger figure was still within range because of stellar gaming growth in the city. "The Macau gaming market has shown pretty good growth in the last year and for sure that would be one of the reasons why MGM could raise more during their IPO," said Victor Yip at UOB Kay Hian. MGM Macau's listing will make it the last of Macau's six gambling licensees to go public. Analysts said the casino operator had successfully boosted market share in the past two quarters, strengthening its ability to raise more capital. "I am still worried whether the dispute will affect the listing because let's say anybody really puts the case into court, it may affect Pansy's credibility so that may cause some near-term concerns for MGM's valuation as well," Yip said. Stanley Ho's SJM Holdings has borne the brunt of market worries about the 89-year-old's succession plans, losing about 9 per cent since the saga unfolded. But additional scrutiny has been focused on Pansy Ho and her agreement with MGM Mirage after an official report released by New Jersey gaming regulators in the United States in March last year cited the junket influence within her father's VIP rooms as a prime concern.

Wynn Resorts posted a better-than-expected fourth-quarter net profit, compared with a loss a year earlier, as revenue at its Wynn Macau unit climbed 79 per cent. But some of the Macau gain was attributed to luck and the company’s shares fell about 1 per cent after-hours. “I think they put up a very big Macau number, but if you look at the hold percentage it was up quite a bit,” said Hudson Securities analyst Robert LaFleur, referring to the amount of money the casinos won from gamblers. Gambling revenue has soared over the past several months in Macau, the only place in China where gambling is legal, while the Las Vegas Strip has just begun to emerge from the cycle of lackluster demand driven by the recession and a glut of new hotel rooms and casinos. Wynn operates two casino-resorts in Macau and two in Las Vegas. Chief Executive Officer Steve Wynn said the government of Macau has given verbal approval to plans for a third Wynn casino in the Chinese gambling enclave. “I am hoping that we can get started in March or April at the latest,” he told analysts on a conference call, adding that the new resort could open in late 2014 or early 2015. “But I have to wait for the government to give us a green light.” He put the cost of the new Macau property at US$2.5 billion. Wynn Resorts reported a fourth-quarter net profit US$114.2 million, or 91 cents per share, compared with a net loss of US$5.2 million, or a loss of 4 cents per share, a year earlier. Adjusting for one-time items, the company earned 91 cents a share, soundly beating the 66 cents a share forecast by analysts. Quarterly net revenue rose 53 per cent to US$1.24 billion. Analysts had expected US$1.13 billion. Wynn’s revenue in Las Vegas rose 8 per cent, while adjusted property earnings rose 25 per cent to US$68.3 million, due mainly to higher gambling revenue. Steve Wynn said trends in Las Vegas have continued to move upward in early this year. The company’s property earnings in Macau more than doubled to US$296.8 million. Wynn said it kept 3.15 per cent of the US$27.7 billion gambled by its VIP customers in Macau, compared with a normal hold range of 2.7 to 3 per cent. Shares of Wynn, which have more than doubled over the past 12 months to close at US$120.15 on Thursday, were trading at US$118.55 after-hours.

 China*:  February 14 2011

China has created a "state planning" zone covering the country's biggest rare earth mines in a move to cut production of the vital rare mineral elements used for numerous high-tech goods, Xinhua news agency reported on Thursday. Exploration and mining of rare earth resources in the zone, an area of 2,500 square kilometres of the southern province of Jiangxi that contains 760,000 tonnes of rare earth mineral deposits, will be subject to stricter state scrutiny and regulatory checks, Xinhua said, citing the Ministry of Land and Resources in Beijing. “China’s rare earth reserves only account for a third in the world but China supplies more than 90 per cent of rare earths globally — that’s obviously not sustainable,” a ministry official was quoted as saying. Rare earth minerals are used in smartphones and hybrid cars as well as in the aerospace industry among other high-technology products. China, which produces about 97 per cent of the global supply of the minerals, cut export quotas for the minerals by 40 per cent last year, a move that alarmed buyers and trading partners. The mainland’s actual rare earth exports last year fell about 10 per cent from 2009. Beijing has cut export quotas for the first half of this year by 35 per cent from the first half of last year, although total quotas for this year have not yet been announced. China says the export quota cuts and tightened control over production will prevent reckless exploitation of the deposits and will reduce pollution resulting from the mining process.

On land and in the skies, the mainland is in the grips of an unprecedented transport revolution that has potentially far-reaching economic ramifications. From Qiqihar in the far northeast to Dali in Yunnan province, from Urumqi in Xinjiang to Shenzhen, the entire nation will soon be interlinked with a vast network of high-speed trains. In a hangar on the outskirts of Shanghai, engineers are furiously working to build the mainland's newest and in many respects the first domestically designed-and-built large commercial jet, which state leaders hope may one day be able to compete on an even footing with aviation giants such as Boeing and Airbus. The seemingly unconnected transport projects are two prongs of a strategy central to the 12th five-year plan to 2015. The development of both high-speed rail and aerospace engineering is crucial to establishing China's image as a technological innovator rather than simply the world's factory, a monstrous assembly line crudely producing goods designed and perfected elsewhere. The central government is determined to push the mainland economy up the quality ladder, away from the mass manufacturing of low-end products towards high-value, high-technology products that provide a far greater return on investment - and these high-profile projects are integral to shifting the international perception of China's industries in that direction. Mark Williams, a senior China economist for Capital Economics, said the central government's aims were rooted in the desire to swiftly improve national living standards, but he questioned the feasibility of the ambitious timeframes. "The central government wants to be in sectors where productivity increases very rapidly, and that tends to be at the high end," Williams said. "The risk is whether China really can compete at that high level."

Japan and the United States appear to have thwarted a fresh push by China to end the European Union's long-standing embargo on arms sales to the PLA - for now at least. Speculation had mounted in Europe that an end to the embargo, which dates back to the 1989 Tiananmen Square crackdown, was possible early this year following a charm offensive by Beijing and a leaked EU report saying that the issue was a "major impediment" to ties. The document from EU High Representative for Foreign Affairs and Security Policy Catherine Ashton also called for the EU to "design a way forward", saying the lifting of the embargo on all lethal weapons "could happen very quickly". But EU officials and member states said the speculation was premature given fresh signs of internal reluctance - as well as a discreet but forceful lobbying drive by the EU's international partners, Japan and the US. Japan warned that regional security could be at risk if the ban was ended, despite both France and current EU president Spain pushing publicly for arms sales. Noriyuki Shikata, a spokesman for Japanese Prime Minister Naoto Kan, said Japan followed the European situation with "much interest", saying it carried "important possible implications for Japan and the East Asian security environment". "We expect the EU to take a cautious and responsible approach." One EU official said there were no concrete plans and acknowledged Japanese and US concern. "It is something that obviously is looked at and reviewed but it does need consensus among all 27-members of the EU, and it is becoming very clear that that consensus is just not there, nor is there a clear timetable." In Beijing, a Foreign Ministry spokesman said the embargo "severely affected political trust between the two sides". "China's position on the lifting of the embargo has been consistent. The EU's embargo was a product from 20 years ago; it has severely affected political trust between two sides, and is completely out of sync with the current comprehensive, strategic partnership between China and the EU," the spokesman said. "[We urge the] EU to lift the arms embargo to China immediately and unconditionally, and it will be benefiting [for] Sino-EU relations." The Chinese and EU officials' remarks come as some individual members have made their opposition clear in recent weeks. German Minister of State Cornelia Pieper said last month that Germany welcomed full EU-China normalisation but did not agree to end the embargo now. She gave two conditions - a lasting relaxation of cross-strait tension and sustained improvement in human rights. She noted big developments since 1989 but warned of "stagnation and even negative developments" in the past two years. A British Foreign Office spokesman said Britain did not think the time was right and noted a lack of consensus in the EU, but it should "rightly remain under review". But Song Xiaojun , a Beijing-based naval expert, said there were two key reasons the EU might scrap the arms ban this year. "First, China bought a lot of EU government debts, which would help them to deal with the current financial crisis as well as prevent the collapse of the euro," Song said. His comments follow a tour of Europe by Vice-Premier Li Keqiang last month that saw Beijing commit to buying a reported €6 billion (HK$63.53 billion) worth of bonds from a cash-strapped Spain and big contracts with car manufacturers Volkswagen and Daimler. "[President] Hu Jintao's state visit to the United States last month further stabilised Sino-US relations. It was because Hu affirmed Washington's leading role in the world, which might mean that the Obama administration would stop pressuring EU allies on this [embargo] issue," Song said. While some European reports noted a lack of strong public US comments on the issue, a State Department official confirmed that Washington remained opposed to ending the EU's embargo. "The US remains in close contact with the EU and other European officials on the issue of our respective arms embargoes on China," the official said. "The US continues to emphasise that the lifting of the arms embargoes is not warranted on either human rights or security grounds." Privately, EU officials said they were aware of a variety of Japanese concerns - including fears about dual-use technology helping to quieten China's rapidly expanding submarine fleet. They were also worried about existing moves to obtain technology even without the ban being lifted - putting imports through shelf companies in third countries, for example. "There is a sense that it is not just major arms deals that worry them, but a sudden flurry of hi-tech deals that could rapidly improve Chinese capabilities," one EU diplomat said. But Song noted the EU could provide matching rather than cutting edge technology, as no EU country could match the military-industrial might of the US or Russia. Retired PLA general Xu Guangyu said the embargo had helped China stand on its own feet in terms of military technology. "Our military research and development level would not be so efficient if there was not the arms embargo. We should say `thank you' to the EU and the US," he said. Zhang Xiaojing , director of Remin University's Centre for European Studies, said Beijing did not have high expectations that the ban would be lifted. "Beijing doesn't care about it now as the importance of the move is just like a political judgment or status," he said. "Actually, we have had some small-scale arms deals with some EU countries through other channels over the past 10 years."

Like tens of thousands of other young Chinese, Zhang Linlin is in demand. After graduating from Tokyo's prestigious Waseda University last year, she walked into a job at a Japanese firm with considerable responsibility and great potential for advancement. Like many others in the vanguard of this influx of Chinese talent into Japan, Zhang has her own long-term plans, but for the time being she is happy to earn a good wage and put money aside for when she sets up her own business. "China is a very important factor for Japanese companies, but at the same time it is often not easy for them to hire foreign staff," the 31-year-old from Dalian said. "We come from a different background and have different manners in business, while it may cost Japanese companies a lot of money and take a long time to train foreign staff." Nevertheless, there has been a sudden realisation among Japanese corporations that they need to recruit more non-Japanese if they want to remain internationally relevant. And they are doing so. According to a study released by the Ministry of Health, Labour and Welfare in February, there were 649,982 foreign workers in Japan at the end of October last year, up 15.5 per cent from the previous year. They were employed by 108,760 companies, an increase of 14.1 per cent. Chinese nationals accounted for the largest proportion, with 287,105 in employment, followed by 116,363 Brazilians and 61,710 Filipinos. Many of those people work in manufacturing, but an increasing number - such as Zhang - are being taken on to act as a bridge between Japan and the international markets that it needs to crack for the domestic economy to remain viable. "The Chinese market is huge. It is the second-largest economy in the world and it is now very important for Japanese firms to be there," said Zhang, who is part of the marketing team for Tokyo-based Tsugarukaikyo Ferry and spends much of her time meeting business partners in Shanghai. In January, Sony Corp announced it would double the share of foreigners in its new graduate recruitment plan from 2013 to 30 per cent of the total in order to step up its globalisation efforts. Non-Japanese account for about 70 per cent of all Sony employees worldwide, but there are only 200 at the parent company in Japan, less than 2 per cent of the total. "We believe that increasing the number of non-Japanese employees in our company is vital to developing and strengthening our business worldwide," Sony spokesman George Boyd said. The company holds recruiting fairs at several major universities in China, as well as hiring from Chinese studying in Japan. It is a similar story at other big companies in Japan, with Rakuten, the country's biggest online shopping mall operator, and internet research firm Cross Marketing among those announcing plans to hire more staff from overseas. Boyd would not be drawn on suggestions that the switch was in some way due to the decline in the abilities of Japanese graduates. "Our priority is to hire the most outstanding candidates, no matter what race or nationality they are." But there has been much debate in the Japanese media about a generation of youngsters who seem to have lost the work ethos of their parents and grandparents, the generations that rebuilt Japan after the war. Noriko Hama, a professor of economics at Kyoto's Doshisha University, said the recruitment of foreigners was making Japanese students even more timid and downcast about their careers and futures. "Young Japanese are becoming more introverted, and I see it in my classes all the time," she said. "There has been concern for some while about young people not wanting to travel overseas and not getting that international exposure that will stand them in good stead in later life. Now they're refusing to even travel from their hometowns to Tokyo and all they want to do is stay in their own little community and not risk anything. "From my experiences, I would say it's partly a case of Chinese students having more get-go, like Japanese workers of the past. But I think that primarily the fault lies with the tragi-comedy that is being played out at Japanese companies today. "They have very belatedly realised that they need to globalise. There is a slow awakening to the fact that they cannot go on as they have in the past, they cannot remain insular. So there is this mad dash in the opposite direction as employers clamour for foreign staff, which would have been unbelievable a couple of years ago." Zhang spent four years at Waseda University as well as two years studying Japanese before that and agrees that a sense of malaise hangs over her Japanese counterparts. She said they had lost the sense of urgency to succeed that was emerging in China and falling behind as a result. "They feel they have enough, so there is no need to change or try harder," she said. "Japan is a very beautiful, safe and wealthy country, but my parents always told me that I should work hard when I was young. "China is such a big country that the competition is very hard. And if you don't work hard, then you will always only have just enough money to get by on, just enough food to live. I don't want to have `just enough'." Zhang says that right now, her career is the most important thing for her. If she is offered a job at a bigger Japanese company or in another country, then she will seriously consider it. But in less than five years, her ambition is to return to China and set up her own company. "Now, lots of things are made in China and sold in Japan," she said. "I want to take a lot of good-quality products that are made in Japan and sell them in China, like cosmetics and fashion items. Consumers in China are changing and they want better services and products. That will be popular in the future."

Bright Dairy & Food Co, China's third-biggest dairy company by sales, denied that it is bidding for a stake in a French yogurt maker. Gong Yanqi, a spokeswoman for the Shanghai-listed company, told China Daily that Bright Dairy & Food is not discussing a bid for a 50 percent stake in Yoplait. Bright Dairy is a listed arm of the Bright Food Group. On Thursday, Bloomberg quoted Bright Food Group spokesman Chen Chunshan as saying that Bright Dairy & Food is participating in the bidding, but Gong said the report was incorrect. According to Bloomberg, Yoplait shareholders PAI Partners and Sodiaal said on Wednesday that they had received "indicative" offers from nine companies for PAI's 50 percent stake and will announce a shortlist of bidders in the coming days. Bloomberg's report claimed that Bright Dairy & Food was among the companies that made an offer and its bid valued Yoplait at 1.7 billion euros ($2.3 billion). Other bidders were said to include the US food company General Mills, the multi-national dairy products corporation Lactalis, the cheese producer Bel of France, and Switzerland's Nestl. Bright Food Group's Chairman Wang Zongnan said last month that the company would continue to seek domestic and international acquisitions in the dairy, sugar and liquor industries to gain global dominance, after it failed to acquire the US-based vitamin and supplement retail chain GNC Holdings Inc. Bright Food Group has been active in overseas mergers and acquisitions (M&A) activity since the beginning of 2010. The group paid $58 million for a 51 percent stake in New Zealand's Synlait Milk Ltd, its first overseas investment. Later it was unsuccessful in an attempt to buy the sugar unit of Australia's CSR Ltd in July. In December, the group teamed up with the private equity company Blackstone to acquire GNC but again failed due to differences on price. Dong Guangyang, a food and beverage industry analyst at China Merchants Securities, said if Bright Dairy & Food can succeed in winning the stake in Yoplait, the listed company's financial performance can be improved. Dong said overseas M&A activity in the dairy industry is not common in China because of a number of inherent risks. "Government policy and cultural differences should always be valued by Bright Dairy & Food and their group," said Dong. A food and beverage analyst at Xiangcai Securities, who declined to be named citing company policy, said the company should improve its domestic market share before expanding its overseas market. "Bright Dairy & Food has greatly lagged behind China's two largest dairy companies," the analyst said, "If they can't perform well in a familiar market, how can they compete abroad?"

Hong Kong*:  February 12 - 13 2011

Yuan IPO to trial before Cheung Kong reit - Hong Kong is pushing through yuan-denominated share trading with a trial run for the regulator, stock exchange and brokers, before the yuan reit IPO by Cheung Kong next month.

The Hong Kong stock exchange, the world’s biggest by market value, said it will consider international alliances after Deutsche Boerse and NYSE Euronext announced plans to form a global trading powerhouse. Deutsche and NYSE said they are in advanced talks to form a marketplace that would have annual trading volume exceeding US$20 trillion, the latest in a flurry of mergers pointing to a shake-up of an industry under intense cost pressure from upstart electronic rivals. “Due to changes in the financial market landscape, HKEx will consider international opportunities for alliances, partnerships and other relationships that present strategically compelling benefits consistent with its focus on markets in China,” Hong Kong Exchanges and Clearing (SEHK: 0388) said on Thursday. It had not identified any opportunities, it added. News Deutsche Boerse could be close to buying NYSE Euronext came shortly after the London Stock Exchange announced a bid for Canada’s TMX. The merger activity spurred a near 5 per cent rally in shares of Australia’s ASX , which is trying to overcome domestic opposition to a US$7.9 billion takeover bid from the Singapore Exchange. In contrast, HKEx shares slumped on worries a round of mergers would intensify competition for the exchange, whose markets generate US$1.5 trillion in trading volume. The shares closed down 4.9 per cent, the most since May 2009, on the highest trading volume since late 2008. HKEx, which has a market capitalisation of around US$24.4 billion, has so far felt no need to merge. Its position as a gateway to China for international investors and its strong pipeline of China-backed IPOs has kept business booming. Other exchanges in Asia have been reluctant to seek tie ups due to tight ownership, while regulations in some markets, such as India and China, prevent significant foreign involvement. “The competitive threat from alternative trading pools makes strategic sense for traditional exchanges to combine resources so they can compete better,” said Neo Chiu Yen, vice president for equity research at ABN AMRO Private Bank. The Tokyo Stock Exchange indicated no interest in seeking a merger. SGX’s bid for ASX faces major political and regulatory hurdles in Australia, but the Singapore exchange said the merger talks announced in recent days supported its case.

Hong Kong is pushing through yuan-denominated share trading with a trial run for the regulator, stock exchange and brokers, before the yuan reit initial public offering of Cheung Kong (Holdings) (SEHK: 0001), expected by the end of next month. Hong Kong Exchanges and Clearing (SEHK: 0388) (HKEx) would hold a simulation in March, mainly to test the readiness of market participants, said HKEx spokeswoman Lorraine Chan. “The test will include the IPO process, and a circular with details will be issued within days,” Chan told reporters on Thursday. The test will facilitate the listing of Cheung Kong’s planned US$1.5 billion yuan-denominated reit, the first yuan IPO in Hong Kong. The assets of the real estate investment trust (reit) mainly consisted of Oriental Plaza, a Beijing office, commercial and hotel complex with a valuation of up to 33 billion yuan (US$5 billion). Oriental Plaza is owned by billionaire Li Ka-shing’s twin-flagships Cheung Kong and Hutchison Whampoa (SEHK: 0013), Bank of China, China Life (SEHK: 2628) Insurance and Orient Overseas (International) (SEHK: 0316). BOC (SEHK: 3988) International, CITIC Securities and HSBC Holdings (SEHK: 0005) are leading the deal, which is aimed at raising up to 10 billion yuan. HKEx is eager to introduce more yuan products to expand its revenue base as Beijing moves to internationalise China’s currency. There are a small number of yuan bonds listed but very few are traded on the Hong Kong exchange.

Emperor International Holdings plans to invest about HK$3.2 billion in its property business in Hong Kong this year, which will be used mainly for enlarging its land bank and retail spaces. The developer's executive director Donald Cheung Ping-keung said yesterday the company would consider buying sites worth HK$2 billion or less that were sized 40,000 square feet or below. "We seek to increase our land reserve," Cheung said. "We're interested in developing projects mainly in urban areas ... and we will pay more attention to the government's land auctions and sites offered by the Urban Renewal Authority and MTR Corporation (SEHK: 0066)." He said the developer might put on sale two residential projects this year. They include the boutique residential project at Shing On Street in Sai Wan Ho, which is scheduled to launch in the second quarter of this year. Referring to new flat prices in the area, Cheung said asking prices for the 108 units sized between 350 sq ft and 1,100 sq ft could be around HK$15,000 per sq ft. The sales will help the company generate about HK$1 billion. The other 24-storey development, at 398 Prince Edward Road West, is expected go on sale in the final quarter of this year, but will generate less than HK$500 million. Andrew Yu Siu-yeung, Emperor Group's assistant general manager of property development and marketing, said the company pocketed HK$143 million after selling eight units at its Harbour One development in Sai Wan during the Lunar New Year. He said the apartments were sold at an average price of nearly HK$16,500 per sq ft. One of them was a 1,729-square-foot unit on the 33rd floor sold on Tuesday together with a car park space for over HK$29.79 million. Sixty-five out of 103 units at Harbour One have already been sold. Emperor will spend another HK$500 million to expand its retail property business in Macau this year, Cheung said. Optimistic that the casino industry would help boost the property market, he added that there was still room for growth in retail properties because prices of the prime retail spaces in Macau were still 20 per cent lower than those in Hong Kong.

Hong Kong's largest MPF provider HSBC Insurance is set to kick off another round of price wars by cutting management fees by 20 to 40 percent from next month. The insurer decided to slash fees in three lower-risk funds because of the expanding pool and because the funds - Conservative Fund, Global Bond Fund and Hang Seng Index Tracking Fund - have lower management costs, HSBC director and head of employee benefits business Alex Chu Wing-yiu said. The fee for the HSI Index Tracking Fund was trimmed the most - to 0.9 percent per annum from 1.5 percent - while that of the Conservative Fund was cut to 0.79 percent from 1.25 percent and the Global Bond Fund to 0.99 percent from 1.25 percent. An employee who chooses those MPF funds will save HK$5.20 to HK$12 a month after the fees are reduced, assuming this person and the employer both contribute HK$1,000 a month or HK$62.40 to HK$144 a year. The value of these funds accounts for 40 percent of HSBC Insurance's total MPF funds. As of November 30, the insurer's total MPF funds under management amounted to HK$115 billion, Chu said. However, HSBC will not lower fees for the more popular equity MPF funds, which charge 1.32 percent to 2.42 percent. Management fees for equity MPF funds of BOCI-Prudential are between 1.71 and 1.76 percent, while those of Manulife are between 2.05 and 2.31 percent, and BCT 1.2 and 2.1 percent. HSBC held 32.4 percent of the MPF market as at September 30 last year. Last month, MPF provider AXA also announced it would reduce management fees by 46 percent on average to a range of 0.99-1 percent, aiming to quadruple the assets under its MPF management to HK$40 billion by 2015. HSBC Insurance's peer BOCI- Prudential Asset Management also predicted a price war. Head of retirement and investment fund services Dick Lee Yui-leung said the management fees of the firm's new MPF fund series, which charges below 1 percent, are very competitive. It will continue to monitor the market situation. The economic affairs spokesman of the Democratic Alliance for the Betterment and Progress of Hong Kong, Chan Kam-lam, said management fees below 1 percent are reasonable. "There will be more room for fee reduction when the competition becomes more severe," he said. Chan said legislators projected management fees to continue to fall after the launch of the member choice scheme, which allows MPF members to choose providers for their contribution. The introduction of the scheme was postponed from January to next year at the earliest. "This is 'belated good news' for employees," Democratic Party legislator Fred Li Wah-ming said. "They should have cut the fees earlier." He said the government and the community have been complaining about management fees eating away employees' pension funds. As a holder of the conservative fund in his MPF portfolio, Li said: "The management fee of such funds should drop further. Otherwise, the fees would eat up the return as the funds have turned in a flat performance over the decade. "We hope this move will trigger other MPF providers to cut management fees."

An immigration consultant and a financial broker have forged a landmark partnership to try to tap billions of dollars in investments from the mainland. EK Immigration will refer customers who wish to come to Hong Kong through the Capital Investment Entrant Scheme to Sun Hung Kai Financial (0086). The tie-up is timely following a move by the government to discount property from its list of acceptable capital invesments under the scheme to cool the residential market. Sun Hung Kai brings to the alliance financial clout and a well-known brand to investment options previously shunned by mainlanders such as equities, debt securities and certificates of deposit. EK Immigration expects 7,000 applications this year, translating into HK$70 billion in potential capital inflows. Last year it received 6,760 applications. The scheme, launched in 2003 when the economy was in the doldrums, initially opened the door to permanent residency for those with HK$6.5 million or more to invest. It went up to HK$10 million last October after a property boom fueled by mainlanders who spurned just about every other investment. "The changes open up enormous opportunities for Hong Kong's financial services and wealth- management industry," said Lee Seng-huang, executive chairman of Sun Hung Kai Financial. The firm has stationed four teams in the mainland and is prepared to add more. "I don't think the money will create a bubble in the local equity market unless people borrow money for investments," said Ho Lok-sang, a professor of economics at Lingnan University. It would mean positive changes to the economy in general, Ho added. It could lift prices of stocks, making fundraising easier for companies and boost people's spending power. Turnover for the Hang Seng Index yesterday was HK$90.3 billion.

A Hong Kong fashion model arrested twice during her trip to a music festival in Nevada last summer likely will escape without any jail time after a prosecutor decided on Wednesday to reduce the final charge she faces to simple drug possession. Rosemary Vandenbroucke, 28, originally was charged in September with furnishing a controlled substance when a sheriff’s deputy said he saw her offer ecstasy to someone at the festival in the Black Rock Desert about 100 miles (160 kilometres) north of Reno. “I’m going to reduce the charge to just a simple possession because I think it’s what justice requires in this case,” Pershing County Deputy District Attorney Bryce Shields told reporters. In a separate but related case, Vandenbroucke agreed on January 31 to plead no contest to careless driving and pay more than US$1,400 (HK$10,900) in fines and damages after she drove a rented motorhome into the edge of Reno’s landmark arch on Labour Day.

The operators of four visiting mainland tour groups have been breaching a new guidelines recently introduced to stop the use of rogue tour guides, the Travel Industry Council (TIC) said on Thursday. TIC Chairman Michael Wu Siu-ieng said that during an inspection of 20 visiting mainland tour groups on Wednesday, four were found to be breaching the so-called “one tour, one guide” rule. The rule requires a guide escorting a mainland tour party during the shopping and sightseeing elements of an itinerary to remain with the group until it returns to the mainland. Wu said there were complaints made against another two tour group operators over itineraries. He said the council was now considering taking further action against these operators – although Wu did not elaborate. The new guidelines were implemented on February 1. They aim to crack down on rogue guides and forced shopping. They also intend to ensure that guides, who earn commissions from tourists’ spending, are held accountable for any complaints. Prior to the implementation, different guides had been handling the separate elements of an itinerary for a mainland tour group. This meant that, on the final day, tourists could not complain to the guides who were responsible for earlier shopping and sightseeing activities. Some were told nothing could be done to help them. This caused anger among mainland tourists and resulted in public complaints Michael Wu said the council had been conducting regular checks on mainland tour groups.

 China*:  February 12 - 13 2011

China defends yuan after Bernanke swipe - China defended its foreign exchange rate policy on Thursday, one day after US Federal Reserve Chairman Ben Bernanke urged Beijing to let the value of its yuan currency rise.

PetroChina buys up Canadian gas assets - Encana Corporation will sell half of a prolific Canadian shale gas project to PetroChina for US$5.4 billion, marking the largest Chinese investment in a foreign natural gas asset.

Never mind the year of the rabbit, it's shaping up to be the year of the worker. At a time of severe labor shortage, tens of thousands of Hong Kong manufacturers in the Pearl River Delta are trying everything to lure migrant workers to return to work after the Lunar New Year holiday. Perks and freebies are no longer enough to retain labourers; hard cash, year-end bonuses and annual pay rises are a must in the nationwide race for blue-collar workers. With costs soaring on all fronts, the labour problem has aggravated the plight of manufacturers already operating on thin profit margins. And the migrant workers are clearly relishing their new status. "They are the king," said Pauline Ngan Po-ling, deputy chairwoman of Mainland Headwear Holdings. "They want this and that. If their wishes are not granted, you could be in great trouble." About 30 migrant workers climbed on to the roof of the group's factory in Shenzhen last month and threatened to jump off collectively if they were not allowed to go home five days early for the holiday. A frustrated Ngan gave in to their demand but withheld their pay cheques until the end of this month so they would return to work. "I had no choice but to let them go. What if they had jumped? We will know if they will come back or not today or tomorrow." Mainland Headwear - which saw three out of four migrant workers at its Shenzhen factory heading home for the holidays - offered to raise the monthly pay of its labourers by up to 8 per cent this month after an average pay rise of 34 per cent last year. Even with such increases, the factory is short of 1,000 workers. Ngan said the average salary of its 3,000 migrant workers, at 2,600 yuan (HK$3,071), exceeded the minimum requirement of 1,100 yuan in Shenzhen. Shenzhen is expected to follow Guangdong's decision to raise the province's minimum wage by an average 18.6 per cent on March 1. The legacy of the nation's one-child policy, rapidly growing affluence, a more convenient transport network and the availability of jobs in the western and northern parts of the country have made the once-coveted blue-collar jobs in the delta region less attractive. Jimmy Kwok Chun-wah, Hong Kong owner of a petrochemicals processing plant, Rambo Chemicals, in Shenzhen, said modern recreational facilities, free internet access, better food, and comfortable living and working conditions were basic necessities to retain workers. "These are no longer sufficient to keep them," Kwok said. "They want both - money and freebies." Kwok offered to reimburse workers with transport costs including air tickets together with cash bonuses as incentives to get them back to work after the holiday break. For those workers who did not make the trip home for the holiday, he offered free excursions into nearby towns, dinners and various entertainment activities. Iris Lam, business promotion director at shoe exporter Onlen Fairyland (HK), said swelling costs had hurt manufacturers so much that there was virtually no leeway for labour-intensive manufacturing to survive on the coastal mainland and in the south. "I am pessimistic about the industry," said Lam, whose company outsources manufacturing to six factories to reduce costs and risks. "I overheard during the past week that some Hong Kong factory owners plan to abandon their factories in the Pearl River Delta to stop losses." Academics point out that the future of Hong Kong manufacturers hinges on whether they can succeed in upgrading their value chain and technology levels or relocate to regions where costs are lower, as stipulated in the nation's 12th five-year plan covering 2011 to 2015. Dr Fang Zhou, assistant chief research officer at the One Country Two Systems Research Institute, said Shenzhen's attitude towards cross-border co-operation had changed significantly since 2003, along with the economic zone's waning need for Hong Kong capital and know-how. "Shenzhen and other PRD cities in the past were very keen to attract Hong Kong business to set up factories there. [Hong Kong-run] factories were the pillar of the local economy, creating jobs and raising local living standards," he said. "But now cities like Shenzhen are no longer interested in those types of factories, which are labour-intensive, polluting and low-tech." Fang said that these cities were more interested in developing high-end, large-scale modern manufacturing, which "Hong Kong cannot provide". He said Shenzhen leaders trumpeted cross-border co-operation with Hong Kong, which provided a "good excuse" to persuade more policy support from the central government.

Visitors enjoy the snow in a park in Beijing on Thursday. The capital enjoyed its first downfall of the winter after the longest period without snow in 60 years. Snow across drought-hit parts of north and central China brought some relief from a drought threatening winter wheat crops that has raised speculation of higher global prices, state forecasters said on Thursday. The welcome, but so far limited, snowfalls came after the government said keeping up grain output was important to defeating inflationary expectations driven by rising food prices. Snow was recorded in Beijing, which enjoyed its first downfall of the winter after the longest period without snow in 60 years, and parts of Henan, Anhui and Jiangsu provinces, some of which have suffered from months without precipitation, Sun Jun, a senior forecaster for China’s meteorological service told state radio. “Because the precipitation will be concentrated in the middle and lower reaches of the Yangtze River, it will have a limited effect on mitigating the drought in northern areas,” said Sun. Those northern areas include Henan and Shandong provinces. Sun said the snowfalls could be as much as eight millimetres in some areas, but 10 millimetres was needed to have more than a limited effect. The capital’s chief forecaster said the same. “As the precipitation is small, it will have limited effect on easing drought,” Song Jisong, the Beijing meteorological bureau’s chief weather forecaster, was quoted Xinhua news agency as saying. The mainland weighs heavily in calculations of global grain demand, and traders believe an erosion of the nation’s self-sufficiency could ripple through the global wheat market, driving up prices. Premier Wen Jiabao reportedly is also worried that any fall in grain output could flow into higher inflationary expectations, a big headache for policy-makers. “Maintaining stable growth this year’s grain production is extremely important for properly managing inflationary expectations, stabilising the general level of consumer prices and achieving steady and relatively fast growth, as well as social harmony and stability,” said the official report of a central government meeting chaired by Wen on Wednesday. China harvested 115.1 million tonnes last year, 95 per cent of it winter wheat – the crop that is now at risk. Winter wheat is planted in October and harvested in May and June. US wheat futures have been near a 30-month high, buoyed by strong demand and worries about threats to output in both China and the United States. China wheat futures rose by the seven per cent daily limit on Wednesday after a week-long holiday. That rise came despite the latest hike in mainland interest rates late on Tuesday, a policy measure seen to be partly aimed at food inflation, which hit 9.6 per cent in December. More precipitation may be on the way, although not necessarily in the regions most in need. The national forecasting service predicted a cold front in coming days could bring small to moderate amounts of rain, snow and sleet to parts of north, north west and central China.

A luxury cruise liner from the largest Italian travel group Costa Crociere S.p.A stops at Tianjin International Cruise Home Port. In 2010, there were 95 cruises departing from Chinese coastal cities and 128 international cruise visits, a 19 percent increase from the number recalled in the previous year. Five years ago when Costa Crociere S.p.A first entered China, the cruise travel industry was an untapped market. Today, the Genoa-based cruise operator, which has a 70-percent market share in China's cruise travel sector, has to compete with other operators - all aiming for a slice of the strong momentum from Chinese tourism. In 2010, there were 95 cruises departing from the coastal cities of China and 128 international cruises visited those cities, demonstrating a 19-percent year-on-year increase, according to industry figures. The number of people from the Chinese mainland traveling abroad in 2011 is projected to experience a year-on-year increase of 4 to 5 percent, according to the World Tourism Organization. Needless to say, the Chinese consumers will emerge as winners. Already, they are spoiled for choice with a dizzying array of itineraries to choose from. First-timers can opt for a three-to-six night trip to places such as South Korea, Japan or Southeast Asia to experience a taste of cruise life. Meanwhile, the more seasoned traveler can undertake the flight and cruise package - which allows them to explore exotic, far-flung places and to depart from an overseas port. So far this year, Costa Cruise has seen strong cabin bookings from Chinese passengers. The number of domestic passengers who booked the Costa Arabian Sea itineraries, which depart from Dubai, grew 10 times from December 2010 to February 2011, compared with the whole of the 2010 fiscal year, according to Chenjun Leo Liu, China general manager of Costa Crociere. "We expect our Mediterranean Sea itineraries to become another key growth driver," he said. In 2010, Costa Cruise saw almost all of its cabins for short destinations in Asia fully booked. The Miami-based Royal Caribbean Cruises Ltd (RCCL), another operator, is touting the "travel slow" concept, whereby passengers travel to understand another culture, while having the luxury of time to arrange their own itineraries. The concept of slowness has been widely perceived and embraced among the Chinese, Liu Zinan, RCCL's managing director for China told China Daily. To illustrate this, he said: "Life can be easy and laid back on a cruise. Pick and choose what you want to do. You can start your day with a Bloody Mary; enjoy a book on the deck with the breeze and sun as companions; dress up for cocktail parties or balls; join the gym for a session of body-pumping; go on a shopping and beauty therapy trip; or try your luck in the casino." To capture the imagination of Chinese travelers, cruise operators such as Costa employ appealing themes during cruises such as The Night of Romance or The Night of Italy.

The mainland's retail sales for the Lunar New Year holiday surged 19 per cent year-on-year in one of the biggest rises in a decade, signalling a surge in domestic consumption according to state media. Shops and restaurants across the country rang up 404.5 billion yuan (US$61.3 billion) in sales, up nearly a fifth from the Chinese New Year period last year, the commerce ministry said in a statement. “Despite the high inflation rate last year, the increase is still remarkable,” Lu Zheng-wei, chief economist at the Industrial Bank was quoted as telling the China Daily. “It underscores the initial success of China’s transformation to develop its economy through domestic consumption.” The growth mainly reflected consumers’ rising incomes, Lu said. Growth in rural incomes last year outpaced urban areas for the first time in 13 years, according to official statistics. The Lunar New Year, also known as the Spring Festival, is the most important holiday in the Chinese calendar – families are reunited and people splash out on food, tobacco and liquor. The week-long holiday, which ended on Tuesday, is the only time that many of the country’s estimated 230 million migrant workers are able to visit home. Restaurants in the eastern province of Shandong, Shaanxi in the north and Heilongjiang in the northeast saw revenues jump by more than 20 per cent from last year, while Shanghai saw revenues rise fourfold, the ministry said. “Expanding domestic spending will top the ministry’s agenda this year,” Yao Jian, a commerce ministry spokesman was quoted as telling the newspaper.

Beijing has pledged more than 5 billion yuan (HK$5.9 billion) to battle a spreading drought which is threatening the harvest of winter crops and putting upward pressure on domestic and global wheat prices. The drought, affecting eight grain-producing provinces which provide more than 80 per cent of China's winter wheat, was described as "a very serious problem" in a special alert issued by the UN's Food and Agriculture Organisation (FAO). State media say Shandong is facing its worst drought in 200 years and that the other affected provinces in the north and east are facing their worst in six decades. More than 5.1 billion yuan in extra rescue funds was pledged to combat the drought at a State Council meeting chaired by Premier Wen Jiabao yesterday. The funding is to help farmers buy irrigation equipment and fertiliser and build emergency wells. In a bid to spur production and stabilise food prices, the State Council meeting also decided to raise the purchase price for 50 kilograms of medium-grain rice by 23 yuan to 128 yuan. Both globally and at home, the drought has been a factor pushing up wheat prices, which climbed to a record 3,006 yuan a tonne yesterday on the Zhengzhou Commodity Exchange and to their highest level in 27 months in Chicago on concern that supplies may not meet demand. The drought is a further challenge to the central government's efforts to cap soaring food prices. On Tuesday, the central bank announced the mainland's third interest rate rise in four months, one of a series of macroeconomic measures it has introduced to tame inflation. As the drought continues, the focus will be on whether China, which is largely self-sufficient in wheat, will reach out for imports and how that would affect global prices. Still worse is that the drought looks likely to persist. Little if any rain has been forecast for Shandong, the country's biggest wheat-producing province, in the next week. The director of emergency relief at Shandong's weather bureau said the agency had predicted the future trend of the drought, but he refused to give details. Like many mainland officials, he would not give his name. "We are now making full preparations to deal with a severe, long-lasting drought," he said. Tuesday's alert by the UN food agency said low amounts of precipitation meant there hasn't been enough snowfall to protect dormant plants from frost. It also meant the soil's moisture levels for the growing season had been affected. China's winter wheat is harvested in June, and the FAO said the situation could become critical if a spring drought follows the winter drought or if temperatures plunge this month. The FAO said the drought had affected 2.6 million people and 2.8 million livestock "due to the shortages of drinking water". The United Nations has sounded the alarm about rising commodity prices, particularly for wheat, warning that social unrest is likely. Rising food prices have been cited among the driving forces behind recent popular revolts in north Africa, including the ongoing uprising in Egypt and one in Tunisia that led to the ousting of president Zine El Abidine Ben Ali. But the consequence of the disaster is still hard to predict, according to Zhang Zhongjun, an FAO official based in Beijing, because things can still change between now and the harvest season. Right now, Zhang said, China's main task is to water the crop. "If the crop is watered well, the harvest can be rescued," he said. But there were difficulties in doing so, he said. One was that traditionally, farmers do not work during the Lunar New Year festival season, which will end next Thursday. Zhang said the central government still had ample strategic grain reserves covering 40 per cent of annual consumption. "It is a very important tool for the government to keep domestic grain prices stable," he said.

The energy sector will get the bulk of the mainland's science and technology investment, according to a draft of the Ministry of Science and Technology's five-year plan for 2011-2015. Although it is just a draft and subject to the approval of the National People's Congress meeting next month, Minister Dr Wan Gang has already inverted the hourglass of the plan by including more than a dozen research and development (R&D) deals with US partners that will require a total investment of more than US$10 billion. Most of the money will go to clean-energy sectors such as nuclear, wind and solar power. With that much money at his disposal, Wan hopes Chinese and American scientists and engineers, the world's two largest emitting countries, can achieve technological breakthroughs to lessen global dependency on oil. But Wan's interest in clean energy should not be overemphasised, because when he addressed more than 4,000 of the mainland's best scientific minds at the annual meeting of the China Association for Science and Technology in November in Fuzhou , Fujian , Wan promised the fossil fuel sector two-thirds of the R&D investment in energy for the next five years, whatever that allocation turns out to be. He said deep-sea and deep-earth exploration for fossil fuels and mineral resources would rival the clean-energy sector and see the biggest growth of R&D funds.

China hopes a change in strategy will attract some of the world's top scientific minds to study in the country and forster international collaboration on research and development. Rather than take the lead in international research program, China tends to send scientists and engineers overseas to learn from them. But as it focuses more on scientific breakthroughs in field such as stem-cell research, material sciences, supercomputers, genetic engineering, high-energy physics and space exploration, the government plans to lure the best scientific and engineering talent to work with Chinese scientists. In the next five years, China intends to compete with the US to hire top people from Russia, South Korea and India, according to Dr Sun Fuquan , director of the Chinese Academy of Science and Technology for Development's Institute of Comprehensive Development and a drafter of the Ministry of Science and Technology's five-year plan. The advantage officials perceive China has over its competitors is a thriving manufacturing industry that desperately needs R&D and the world's biggest consumer base with rapidly increasing wealth and a desire to buy high-quality products. Under the five-year plan, R&D zones would be set up in the most developed parts of the mainland, with state-of-the-art facilities, a flexible policy and attractive salaries to pool talent from around the world, Sun said. "China wants to be not only the world's factory, but also its laboratory," he said. Science blogger Dr Fang Shimin expressed doubts, saying the central government might be able to boost the applied science and engineering sectors with huge investment, but probably would not be able to sell China as an ideal place to do basic science. "The advancement of science does not follow the politicians' plans," Fang said. "Scientists need freedom to explore the unknown. In a country where the budget is mostly controlled by bureaucrats, you can have money but not freedom."

Hong Kong*:  February 11 2011

Greenpeace ship Rainbow Warrior sails into Victoria Harbour on Tuesday. The Rainbow Warrior II, the flagship of environmental group Greenpeace, arrived in the city on Tuesday as part of her global farewell voyage. The ship will be berthed in Victoria Harbour for the two-week visit to promote environmental protection in Hong Kong. An exhibition will be held on board with guides illustrating the vessel’s history and facilities, Greenpeace said. The three-masted schooner is scheduled to retire this year after 21 years of service on the high seas. It has sailed across the world to take part in the environmental group’s protest actions.

A land dispute which restricted Tsoi Yuen villagers from constructing homes on a nearby site, has been resolved, Heung Yee Kuk chairman Lau Wong-fat said on Wednesday. Some Tsoi Yuen villagers had been unable to start building new homes because they had to pay inhabitants of neighbouring Yuen Kong village an “access fee”  for a private road leading to their construction site. Tsoi Yuen village is to be demolished to make way for the HK$66.9 billion. Guangzhou-Shenzhen-Hong Kong rail link. Lau, an executive councillor and the chairman of Heung Yee Kuk, said on Wednesday an unnamed philanthropist had agreed to buy the road from its owner and then open it to the Tsoi Yuen villagers. Lau declined to name the person, or say how much he or she paid for the road. But he did say residents were grateful. “We hope that the villagers will be able to build their new homes,” Lau added. To obtain road access, the villagers were previously asked to either pay HK$5 million; or to provide 12,000 square feet of land in addition to paying HK$500,000. The land in question amounts to 8.3 per cent of the area of the villagers’ new homes. It is next to a site earmarked for small houses and a car park. Because of the dispute, villagers had remained in their old homes despite a government deadline requiring them to move out in October. The Heung Yee Kuk is the statutory advisory body for indigenous inhabitants of the New Territories.

Actor Nick Cheung announces the nominees for this year's Hong Kong Film Awards, at a press conference at the Cultural Centre in Tsim Sha Tsui yesterday. Actress Josie Ho Chiu-yee - the daughter of gambling magnate Stanley Ho Hung-sun and second wife Lucina Laam King-ying - has hit the headlines again. But this time it has nothing to do with her family's current high-profile squabble over the tycoon's fortune. The most recent news is far more positive in nature. The 36-year old has been nominated for the best actress award at this year's Hong Kong Film Awards, for her stirring performance in the thriller Dream Home. While her success has yet to take her to Hollywood, Ho has been approached by The Wall Street Journal for an interview. She joked about her freshly gained fame in her microblog on last week. "The Wall Street Journal is desperate to line up an interview with me this week ... I'm so surprised by my popularity ... I don't think it's my turn for an Oscar," she wrote. The winners will be announced on April 17, in a ceremony broadcast by ATV, Now TV and RTHK. In Dream House, Ho plays Cheng Li-sheung, who kills several strangers in a flat, so their spirits will haunt the place and drive down the market value, so that she can buy the next-door unit at an affordable price. The role has already won her the best actress award at the Sitges International Fantastic Film Festival in Spain. Also in the running for best actress are Fiona Sit Hoi-kei for her role in the romantic comedy Break Up Club; Tang Wei for Crossing Hennessy; and Miriam Yeung Chin-wah for Love in a Puff. Carina Lau Ka-ling, who played Empress Wu Zetian in Tsui Hark's martial-arts thriller Detective Dee and the Mystery of the Phantom Flame, is another nominee. Congratulations have flooded the nominees' microblog sites. Sit said she would have a good night's sleep although she misses her home while filming on the mainland. Yeung thanked Shawn Yue Man-lok, who played her lover in the movie, saying her nomination "means he gets a nomination for best actor too". Two stars from the same movie are in the race for best actor: Nick Cheung Ka-fai and Nicholas Tse Ting-fung in the action thriller The Stool Pigeon. Cheung says he can't decide whether he wants the award for himself or Tse. "I will be happy if any one of us wins: me, Lam [Dante Lam, nominated for best director] or Nicholas get the awards," he said. Director Lam was equally uneasy when asked who he would like to see win the award. "Can there be two best actors?" he joked. Chow Yun-fat (Confucius), Jacky Cheung Hok-yau (Crossing Hennessy) and Tong Leung Ka-fai (Bruce Lee, My Brother) - all frequenters of film awards, are also nominated for best actor. Detective Dee, centred on a detective who investigates mysterious deaths in the Tang dynasty, has picked up 13 nominations, the highest for any film. It is followed by Reign of Assassins with 11 nominations and Ip Man II with 10.

Health authorities have warned of the risk of flu outbreaks at schools when classes resume after the Lunar New Year holidays. As the SAR entered the peak flu season, the latest reported fatality was a 14-month-old boy who died in the Caritas Medical Centre in Sham Shui Po on Sunday. He was suffering from a cough and fever, although it was not known by late last night whether he had contracted human swine flu (H1N1). If swine flu is confirmed, it will take the number of deaths since January 24 to 10. Centre for Health Protection controller Thomas Tsang Ho-fai said from past experience most outbreaks in schools would involve several to more than a dozen students. Should a student die from flu, the center will suggest the school concerned suspend classes for a week. The rule will also apply should more than 100 pupils come down with flu. Latest Hospital Authority figures show 38 flu patients are in intensive care units at public hospitals. Four are newly confirmed cases, including a man, aged 56, at Queen Elizabeth Hospital, a woman, aged 19, at North District Hospital and two women, aged 45 and 72, at Tuen Mun Hospital. All are receiving antiviral drug Tamiflu. In the Hong Kong Sanatorium & Hospital, a man, 78, tested positive for influenza A and is in intensive care. University of Hong Kong clinical assistant professor of medicine Ivan Hung Fan-ngai said there are more severe cases this year partly because of the longer period of cold and dry weather, which enhances virus survival. HKU clinical assistant professor of microbiology Kelvin To Kai-wang said overseas studies found the main type of virus circulating in the community this year is quite different from in 2007 and 2008, but more similar to the strain of virus prevalent in 1918. Some of the elderly may already have the antibody against the virus while young people generally do not, To said. Last month, HKU researchers revealed that treatment using antibodies from the blood plasma of recovered swine flu patients may more than halve the mortality rate for those who suffer severe complications. The death rate among the 20 patients given the plasma treatment during a research project from September 2009 to last June was 20 percent, against 54.8 percent for the 73 patients not given it. Hung of HKU said clinical trials are under way in which hyperimmune immunoglobulin is used to treat patients. This is prepared from the plasma of recovered swine flu patients. Twelve patients were treated with hyperimmune immunoglobulin last year and 14 have been so far this year, Hung said.

Lovers pose for photo in a Valentine's Day promotional event held in Hong Kong, south China, Feb. 9, 2011. 

 China*:  February 11 2011

China is continuing to move strongly against inflation, raising interest rates yesterday for the second time in less than six weeks. The People's Bank of China lifted the one-year benchmark deposit and lending rates 25 basis points to 3 percent and 6.06 percent, respectively, effective today. The first hikes this year - and the third in the last four months - had been expected by economists. The rates move came as "no surprise as inflation remains stubborn," said CITIC Bank International economist Liao Qun. "The move suggests that macroeconomic data for January bothered the policymakers." Inflation may shoot up to 5.6 percent with new loans in January exceeding 1.2 trillion yuan (HK$1.4 trillion), Liao added. Despite the hikes, real interest rates remain negative. Three more rate hikes and two increases in banks' reserve requirement ratios are probably needed to curb inflation, according to BWC Capital chief economist Daniel Chan Po-ming. And the yuan will appreciate 5 percent this year, lowering the impact of rising import prices, he forecast. Economists Qu Hongbin and Sun Junwei of HSBC (0005) said in a note: "We still expect at least another 150 basis points in reserve ratio hikes before the end of June." The rate hikes will have a minor impact on mainland stock markets, said Credit Agricole CIB senior analyst Frances Cheung. The bourses reopen today after a week-long holiday. Cheung also expects the central bank will raise interest rates again in April. And Phillip Securities director Louis Wong Wai-kit believes more tightening measures will draw money from the property market into stocks. "A shares have risen for five straight sessions," Wong noted. "There will be some minor corrections, but the momentum is there." The downward movement in Hong Kong stocks indicated that the possible impact of the rate hike was pretty much factored in, said BWC's Chan. "Currencies like the Australian dollar declined right after the announcement," he noted, adding that Western markets would absorb the shock before the mainland bourses reopen. The Australian dollar took a major hit as it fell against its US counterpart. On the other hand, China shares could see more downward pressure as capital will be diluted by shares with trading restrictions lifted, said Linus Yip Sheung-chi, chief strategist at First Shanghai Securities. The total value of such shares could reach 28.2 billion yuan this week. Twenty-eight of the 38 listed companies have their restrictions lifted today.

A visitor looks at the first domestic 1 million kilowatt nuclear generator rotor at a recent international nuclear power equipment exhibition in Beijing. China is expected to attain a nuclear power generation capacity of 11.74 gigawatts by the end of 2011, says the National Energy Administration. An "over-aggressive" target for the nuclear power industry by 2020 may harm the sector's healthy development, an industry expert from the National Development and Reform Commission's (NDRC) think tank cautioned. Any target exceeding 80 gigawatts (gW) by 2020 may put excessive pressure on China's nuclear power industry due to inadequate domestic equipment manufacturing capacity and safety risks, said an industry expert from the Energy Research Institute, the think tank of the NDRC. China has 13 reactors currently in operation, with a total generating capacity of 10.8 gW, and an additional 28 units, with a total capacity of 30.97 gW, are under construction, according to the latest statistics from the National Energy Administration (NEA). China is expected to attain a nuclear power generation capacity of 11.74 gW by the end of 2011, the NEA said. Nuclear power development will maintain the current growth rate till 2013, said Xiao Xinjian, a researcher from the Energy Research Institute. This is partly because the industry needs time to digest the third-generation technology, Xiao said. China is also keen on increasing the localization rate of nuclear power equipment that accounts for 50 to 60 percent of the investment cost. The rate of the third-generation technology is only 30 percent. China's nuclear power system, including the equipment manufacturing capacity, nuclear power station construction and management, is already operating at full capacity, said Xiao. A shortage of uranium is considered another important factor hindering the industry's expansion. The demand for uranium in China is expected to touch 20,000 tons annually by 2020 but the country will only be able to produce 2,400 tons of uranium by 2020, according to the World Nuclear Association (WNA). China is estimated to have 2 million tons of natural uranium resources but the current production capacity is only 750 tons annually. China National Nuclear Corporation (CNNC), the country's largest nuclear power company, said they would increase annual capacity to 2,500 tons by 2015 and 4,000 to 5,000 tons by 2020, far more than the WNA estimates. CNNC also announced breakthrough in extracting uranium from spent fuel last month but experts said that it could take at least a decade to start widespread industrial application. Uranium accounts for 3 to 5 percent of the nuclear power investment. China could be self-sufficient in providing one third of the uranium required by 2020, according to the researcher with the Energy Research Institute. Therefore, industry experts warned that China should be cautious in accelerating the development of the nuclear power industry during the 12th Five-Year Plan (2011-2015). China hopes to get 15 percent of its power from clean-energy sources by 2020, of which nuclear power is expected to provide 5 percent. According to some experts, if China is to meet the target then the nuclear power sector has a larger role to play. Earlier reports said that China is likely to speed up its nuclear power sector with an ambitious target of 86 gW by 2020, said Zhang Guobao, the former head of NEA. China is expected to approve another 10 nuclear power projects over the next five years, Zhang said.

Measures to rein in soaring property prices appear to be working in Guangdong - no home changed hands at eight major residential projects in Guangzhou over the Lunar New Year holiday, according to the city government's website. Cities in the province including Foshan, Dongguan, Zhongshan and Zhuhai reported a drop in home sales. In some cities transactions plunged to single digits in the first week of February. Meanwhile, the Beijing municipal government will soon introduce new cooling measures including a ban on third-home purchases. Currently residents in the capital can buy as many homes as they can afford. The new rules will affect about 800,000 families, according to Xinhua News Agency, quoting Beijing government officials. Separately, the Chinese Academy of Social Sciences - the mainland's leading academic research organization - said it foresees property prices continuing to fall this year, unless the central government switches policy. Prices are likely to peak in the first or second quarter, before dipping in the final three months of the year, the academy said in its latest report. In late January, Shanghai and Chongqing became the first cities to introduce a property tax. The move led to a dramatic 30-40 percent plunge in home sales in Chongqing. But analysts believe it is too early to draw conclusions. "I think the real effects have yet to be seen," said Alfred Lau, property research analyst at MF Global Hong Kong. "Transactions are usually slow in the new year as fewer people view or buy flats." Annual property inflation ran at 6.4 percent in December, down from November's 7.7 percent, but momentum remained strong, with prices rising 0.3 percent on a month-on-month basis.

The US government is to impose massive new duties on oil industry drill pipes and drill collars bought from China after a knife-edge decision designed to win back American firms more than US$170million in lost sales. The International Trade Commission (ITC) decided to impose anti-dumping duties and a countervailing tax, designed respectively to raise the price on cheap imports and neutralise any subsidies, despite a split vote of 3-3. Even ITC chairman Deanna Tanner Okun voted against it. However, according to US law, in the event of a split vote the ITC will act in favour of US industry. It means that from February 24, most of the Chinese producers affected will be hit with an anti-dumping duty of 429.95 per cent plus a countervailing duty of 18.18 per cent, according to the US Department of Commerce. Although three of the Chinese companies will face a reduced anti-dumping tax of 69.32 per cent. The taxes are a reaction to a doubling of US imports of Chinese drill pipes - from US$80.42million in 2006 to US$170million in 2008 - as China's share of the US market went from 11.5 per cent to 20.9 per cent, according to the ITC. From 2006 to September 2009, American producers' share of the US market fell from 86.4 per cent to 74.4 per cent. At that time, they provided 1,204 jobs. "We invented these products a hundred years ago," said Roger Schagrin, a lawyer for the US producers. Without duties, "we would be dependent on imports from China for this critical industry", he told Bloomberg. Edmund Sim, a partner at international law firm Appleton Luff, warned: "This move can encourage US industries to file more cases against China. This can have a negative effect on US-China relations." He added: "There is still a reluctance by the US ITC to impose duties because you can't blame imports for injury to US industry caused by the global recession." Last year, there were only two anti-dumping petitions filed by US industry, both against China, a big drop from the normal yearly average of 25 to 30, said Sim. This was because trade suffered due to the global crisis, making it harder to prove that Chinese imports were responsible for hurting US firms. He said that in this case, too, the fall in imports due to the downturn would make it impossible to prove injury. He noted that the ITC report made the case instead that there was a high possibility of the US drill pipe industry being hurt in the future. In an ITC report on pipes and collars, three ITC members offered a dissenting opinion. "The record does not indicate a likelihood of a substantial increase in the volume or market share of Chinese imports into the US in the imminent future." The three dissenters added that China's share of the US market rose in 2008 and 2009 because the size of the US market declined. They pointed out that the Chinese products frequently sold at higher prices than US products and there had been no evidence of price depression.

China's Ministry of Commerce (MOC) announced Wednesday it will impose temporary anti-dumping measures on optical fiber imported from the United States and European Union. The preliminary ruling requires importers of dispersion unshifted single-mode optical fiber, a material used in high-speed and long-distance telecom transmission, to place deposits starting February 18, said a statement on the MOC website. The ministry has set deposit rates for the optical fiber imported from the U.S. at 4.7 percent to 18.6 percent and for that from the EU at 17.7 percent to 29.1 percent. The statement said companies from the U.S and EU had dumped dispersion unshifted single-mode optical fiber on the Chinese market, which had caused substantial damage to the domestic industry. The MOC launched an anti-dumping probe into optical fiber products imported from the U.S. and European Union on April 22, 2010.

Tourists enjoy the lantern festival in Nanjing, East China's Jiangsu province on Feb 8, 2011. The number of tourists across the country during the golden week of the Spring Festival from Feb 2 to 8 is expected to increase by over 15 percent year on year, according to official statistics.

A girl plays with a rabbit while sightseeing at the 420.5-meter-high Jinmao Tower in Shanghai on Feb 8. The number of tourists to Shanghai during the golden week of the Spring Festival from Feb 2 to 8 is expected to increase by over 16 percent to 3.04 million year on year, according to statistics from the city's holiday travel office.

Business and tourism bridge Taiwan Straits - An artist from Sichuan province performs “fire spraying” at a fair in Taipei on Sunday. Red jumbu, a tropical fruit from Taiwan, sells for about 100 yuan ($US 14.9) per kg at a supermarket in Xiamen, a mainland city located right across the Taiwan Straits. And sales are good during China's traditional Spring Festival. "The sales of all fruits imported from Taiwan has increased by at least 50 percent compared with normal days," said Wu Yanping, salesperson for Taiwan fruit supplier Demei, which is based in southeast China's Fujian Province. Other popular fruits from Taiwan include dragon fruit, star fruit, sugar apples, oranges and grapefruits. When visiting family members and friends during the Spring Festival, many Chinese would bring a basket of fruits as gifts. "Taiwan fruits have established a reputation for good quality, so our customers regard them as decent gifts that would earn them 'faces'," Wu said. "Because of the high price, Taiwan fruits may not be an everyday choice, but on special occasions like festivals, customers would like to pay. I am confident of good business this year," she said. The early harvest program under the Economic Cooperation Framework Agreement (ECFA) took effect last January 1. This meant that 539 commodities from Taiwan received tariff cuts in the mainland, including five popular Taiwan fruits. Another popular Taiwan product is a type of liquor made in Taiwan's Kinmen islands. Yuan Jie, a Xiamen native, bought several bottles of Kinmen Liquor as a gift for her father-in-law when visiting her husband's family in the northern part of Fujian Province during the Spring Festival. "We spent more than 500 yuan for the liquor and also brought traditional hand-made candies from Kinmen," Yuan said. Geographically and culturally close to Taiwan, Xiamen has been an important port for Taiwanese commodities. Local residents and tourists can easily shop for food and daily necessities from Taiwan at a duty-free market in Dadeng Island. "My husband and I often drive there to buy Taiwan specialties like cooking oil and snacks," Yuan said. "For people outside Xiamen in the mainland, things related to Taiwan have become one of Xiamen's specialties." According to the General Administration of Customs, the mainland's imports from Taiwan reached $115.69 billion in 2010. While Taiwanese products remain popular in the mainland market, more mainland residents are visiting the island. Wen Junji, who is from central China province of Henan, had seen mainland tourists everywhere during his eight-day vacation in Taiwan. "From major tourist sites like the Sun and Moon Lake to villages in south Taiwan, I have seen people from the mainland," he told Xinhua over the phone. Wen planned to tour the island during last year's Spring Festival. However, travel preparations were late and all tour packages were fully booked. This year, he booked the tour a month and a half in advance. No official figures have been released regarding how many mainland tourists went to Taiwan for the Spring Festival. However, an inter-ministerial coordination office for national holiday tourism said that tour packages to Taiwan were the most popular option during the Spring Festival. In fact, almost all tours had been booked by the end of last December. Taiwan's mainland affairs department announced on Sunday that 1.82 million mainland tourists had visited Taiwan in tour packages from July 2008 to December 2010, bringing in an estimated 91 billion New Taiwan dollars ($3.13 billion). The two sides had agreed to increase the daily quota of mainland tourists from 3,000 to 4,000 starting January 1. To facilitate tourists and Taiwan residents in the mainland, the two sides also added at least 176 cross-Straits direct flights from January 20 to February 17 from cities including Shanghai, Shenzhen, Beijing, Guangzhou and Nanjing. There are 370 regular flights across the Taiwan Strait every week. Authorities also opened an additional four mainland airports -- Xuzhou, Wuxi, Quanzhou and Sanya, for cross-Strait flights.

Farmers water a wheat field at Yangzhuang village in Linyi city, Shandong province, on Tuesday. Chinese officials said Wednesday they were preparing for "a severe, long-lasting drought" in the key wheat-producing eastern province of Shandong, with no rain in sight until mid-month and possibly beyond in the parched region. On Tuesday, the UN food agency warned that the months-long drought was putting pressure on wheat prices in China, the world’s largest wheat grower. Average flour prices rose more than 8 per cent in January from the previous two months. As the drought continues, the focus will be on whether China, which is largely self-sufficient in wheat, will reach out for imports and how that would affect global prices for the staple, which has already risen about 35 per cent since mid-November. China’s national weather bureau forecasts little if any rain for the Shandong region through February 17. State television broadcast images on Wednesday of withered crops in cracked earth. State media have said Shandong faces its worst drought in 200 years and that the other affected provinces across the country’s north and east are facing their worst in 60 years. The director of emergency relief at Shandong’s weather bureau said the agency had predicted the future trend of the drought, but he refused to give details. Like many Chinese officials, he would not give his name. “What we are doing now is making full preparations to deal with a severe, long-lasting drought,” he said. However, irrigation efforts are on hold because of a cold snap, and “we are advising farmers not to water their crops, because the temperature is too low,” he said. The cold snap is expected to end on Sunday. Only about half an inch (12 millimeters) of rain has fallen on Shandong since September, Xinhua news agency has reported. China has said the drought is mainly affecting the provinces of Shandong, Jiangsu, Henan, Hebei and Shanxi, which grow more than two-thirds of the country’s wheat. The government has already announced it was sending relief teams to eight affected provinces, and President Hu Jintao and Premier Wen Jiabao have made high-profile trips to drought-ridden areas. Tuesday’s alert by the UN Food and Agriculture Organisation (FAO) said low amounts of precipitation have meant there hasn’t been enough snowfall to protect dormant plants from frost, and have affected soil moisture needed for the growing season. China’s winter wheat is harvested in June, and the FAO said the situation could become critical if a spring drought follows the winter drought or if temperatures plunge this month. The FAO said the drought had affected 2.6 million people and 2.8 million livestock “due to the shortages of drinking water.” The United Nations has sounded the alarm about rising commodity prices, particularly for wheat, warning that social unrest was likely. In Beijing, consumers already grumpy about the country’s rising inflation were returning from the weeklong Lunar New Year holiday to find nothing had improved. “I normally don’t spend so much money for food during the holiday,” shopper Zhou Yuanji said. “I really feel the pressure this year. Everything is getting so expensive.” Looking to imports to help fight drought-fed inflation may not work, Carl Weinberg, chief economist for New York-based High Frequency Economics, wrote in a report. Grain crops in other major producer nations such as Australia have been reduced by bad weather and natural disasters. “Importing grains at lower prices than domestic prices may not be possible, if imports are available at all,” Weinberg said in the report, released Wednesday.

Hong Kong*:  February 10 2011

Facebook quietly launched its Hong Kong office yesterday, with a senior executive refusing to comment on the company's plans for the mainland. Facebook opened an office in India in March and one in Singapore in April. Jayne Leung will head the Hong Kong office as sales director and the branch will also serve the Taiwanese market. Leung will report to Facebook's commercial director for Asia, Stephen Dolan, who is based in Singapore. Speaking at the launch of Social Media week, a six-day conference on new trends in the industry, Facebook's vice-president and commercial director for Asia-Pacific, Latin America, and emerging markets, Blake Chandlee, said the Asian market was a critical part of Facebook's future. "It's exciting for us. Hong Kong is a tremendous market for us," Chandlee said. "We're growing all over the world and the Asian region is a big, big part of that." Facebook has more than 500 million users worldwide. Chandlee added: "Mobile is the future of our business, especially in markets like Asia and Latin America." However, Chandlee refused to answer questions about expansion plans into the mainland, deflecting attention to other markets. The social networking site is banned on the mainland, and speculation that it plans to enter that market was fuelled in December when Facebook chief executive Mark Zuckerberg visited Beijing and met top technology executives. "We have nothing to announce about what we're doing or not doing. There are a number of areas around the world where we have gaps," Chandlee said. "There are lots of reasons why I don't want to talk about China. Today, Facebook is available in Chinese in a number of different dialects. We always want all users around the world to have access to Facebook. In some places they do, some places they don't, whether it be temporarily or permanently." Chandlee listed India and Brazil as two countries Facebook had entered in the past 12 months and gained significant market share. Russia and Japan were two others targeted for growth. Revenue was increasing significantly, even though revenue growth was not the company's top priority, he said. "We don't have lots and lots of investors. We have four or five big investors and they believe in what we're doing."Chandlee described the connections that people have on Facebook as a "social graph" that kept people constantly up to date with what their friends were up to. A Facebook spokesman refused to release details on the number of staff in the Hong Kong office or its location. There are reportedly more than three million Facebook users in the city.

The Imperial Cullinan in West Kowloon is one of the projects to be launched soon. More new flats likely to hit market soon - HK developers expected to take advantage of rebound in wake of cooling measures - Developers are poised to accelerate releases of new projects in Hong Kong to take advantage of a strong rebound in prices, agents believe. Some believe developers will be prudent in their pricing strategies because new levies on quick resales have driven speculators from the market. But others expect growing demand from end-users will ensure strong support even if prices are raised significantly, since new supply remains limited. About 2,000 new flats are awaiting release this month. "The faster-than-expected rise in home prices last month indicated that end-users have returned to the market after seeing that prices have shown little sign of easing," said Patrick Chow, head of research at estate agency Ricacorp Properties. Developers were likely to be growing in confidence about market sentiment and could therefore be expected to release their new projects. On Friday Midland Realty released the results of a survey that showed overall home prices rose 2.1 per cent month on month in January despite the government's imposition in November of further cooling measures, including the resale levies, to curb speculation and rein in prices.

Hong Kong should introduce yuan fixed income products, such as real estate investment trusts (reits), before launching initial public offers (IPOs) denominated in the Chinese currency, the acting financial secretary said on Tuesday. The city is quickly developing as an offshore yuan trading hub with deposits in the Chinese currency rising sharply mainly due to an increase in yuan trade settlements. But the rapid expansion of the yuan deposit base has been in sharp contrast to the growth of investible assets, which is limited to only bonds and a few other money market instruments. Efforts to expand the offshore yuan asset menu have been hobbled by the lack of a vibrant secondary market. “We should first launch bonds with fixed income, reits or any fixed income products because they are relatively easier to introduce and don’t need to rely on market transactions,” Acting Financial Secretary K.C. Chan said in a statement. Reits invest in mainly commercial property and pay rent collected from their properties to shareholders as a dividend, usually offering returns that are higher than yields of government bonds. Tycoon Li Ka-shing has been pushing ahead with a US$1.5 billion yuan IPO, which would be the first in Hong Kong, with the issue’s bond-like reit structure likely to allow it to get around the limited liquidity pool. “In terms of what comes first and what comes after, I think we need to have a mature and stable secondary market mechanism before we can [launch yuan IPOs],” Chan said. Hong Kong’s yuan deposits quadrupled to 315 billion yuan (US$47 billion) at the end of December from a year ago and market watchers say the deposit pool must rise to at least 500 billion yuan before stock IPOs could be done on a sustainable basis. Still, demand for so-called “dim sum” bonds or bonds denominated in yuan has been brisk, with investors keenly awaiting the launch of yuan IPOs in the territory, a hotbed for listings last year.

Prudence Chan Bik-wah, the former chief executive of Octopus Cards who resigned over a breach-of-privacy controversy last year, has become a general manager with TVB (SEHK: 0511), the broadcaster said on Tuesday. TVB said in a statement it had appointed Chan general manager to oversee its international operations. “Ms Chan has an outstanding career as senior executives in various prominent companies. We believe that with her, TVB could move on to new heights,” the statement said. Chan resigned as Octopus Cards’ chief executive after a breach of its privacy rules became public last August. It was revealed that Octopus Cards had passed on cardholders’ personal data including names, telephone numbers and dates of birth to six companies for a return of some HK$44 million over the previous four and a half years. More than two million cardholders were involved. Chan denied selling the data when the scandal first became known, but was forced to step down following a public outcry. She admitted at the time the issue could have been better handled, but said no laws had been broken. Before joining Octopus, Chan held directorial posts with the then-Hong Kong Telecom and mobile phone service provider Smartone.

Hong Kong's government will increase land supply in the coming fiscal year in a bid to cool property prices, a local newspaper report said on Tuesday. Financial Secretary John Tsang Chun-wahwould announce a plan to make more residential land available for the list of sale in the coming fiscal year when he delivered his budget speech on February 23, the Ming Pao said, citing sources. The government would also announce plans for frequent auctions of residential sites and to increase the number of small apartment developments for tender to ensure a steady supply of small and medium-sized apartments, the report said. Since announcing a stamp duty late last year, the government did not intend to introduce further financial measures to curb property speculation, the sources said. Last November, Hong Kong announced a stamp duty of up to 15 per cent on apartments sold within six months of purchase and tighter mortgages restrictions. Housing prices have risen more than 50 per cent since the beginning of 2009, according to property agent Centaline. Hong Kong’s dominant developer Cheung Kong (Holdings) (SEHK: 0001) said residential property prices would likely rise 10 per cent this year because of a supply shortage, Apple Daily reported, citing Executive Director Justin Chiu.

Smartphone maker HTC Corporation will buy shares in a US online gaming company and acquire a British digital technology company as it seeks to bolster its offerings in the competitive market for hi-tech handsets. On Tuesday, HTC said it would buy 5.33 million preferred shares in US cloud video game service OnLive Inc for US$39 million, via a capital injection into an HTC subsidiary. OnLive, launched earlier this year, allows users to play video games stored remotely on servers. The service is accessed via a console connected to a TV. The previous day, HTC said it would buy British digital multimedia delivery technology company Saffron Digital via a capital injection of 30 million pounds (US$48 million) into a separate subsidiary. “Saffron Digital has developed an incredible expertise in mobile multimedia delivery. This ability to deliver optimized content in the future will be a key asset as content becomes more and more complex and localised,” said HTC Chief Executive Peter Chou in a statement.

Days of uncertainty now behind you, RTHK boss tells staff on his last day - Franklin Wong Wah-kay served his last day as broadcasting chief yesterday, leaving behind a beleaguered government-funded station whose editorial independence is seen as under threat. A 44-year veteran of RTHK, Wong said he did not want to renew his three-year contract as director of broadcasting for health reasons. Deputy Director of Broadcasting Gordon Leung Chung-tai will serve as acting director until a successor is identified. The staff union said it would be a challenge for Leung to safeguard RTHK's independence, given his background in government administration rather than public broadcasting. Leung was accused of interfering in the station's editorial independence last month for banning a live webcast of late democracy icon Szeto Wah's memorial service and funeral. RTHK yesterday rejected the accusation as groundless. The union wrote a letter to management and is waiting for a response. Wong, 67, said in November that he would not renew his contract. He expressed mixed feelings on his last day but said he was happy to see RTHK in a new phase of development. "I am entering another stage of my life," said Wong, who joined RTHK in 1966 as a programme officer. "I look forward to a more mature RTHK, with its own television channels, digital broadcasting and a new broadcasting house." In a final letter to staff, he said the days of uncertainty were now behind the broadcaster. "We were given resources to develop ... I am sure you [the staff] will embrace these great opportunities," he wrote. Janet Mak Lai-ching, chairwoman of the RTHK Programme Staff Union, expressed concern at Leung's role before a new chief is named. "The director of broadcasting is literally RTHK's editor-in-chief. But as an administrative officer and a deputy director - who mainly works for administrative management - he may lack knowledge of public service broadcasting," she said. The Commerce and Economic Development Bureau, which received 20 applications for the post, said the recruitment exercise would be carried out "as soon as possible".

Owner Kay Kwong-nam is proud of mainland delicacies his shop has sold for 29 years in Causeway Bay. High rent is forcing him to make way for a store selling European watches. A steep rent rise is squeezing out the last of the Causeway Bay old-timers. Kay Kwong-nam, 74, has sold traditional food and hairy crabs in the heart of the district for 29 years. His shop, Old San Yang, is on the corner of Lee Garden Road and Russell Street in the middle of the busy pedestrian link between Times Square and the Sogo department store. Th shop has been a tenant in the neighbourhood longer than any other. Sandwiched between a currency exchange and the skincare chain Origins, Old San Yang stands out: it is not a chain outlet and has no luxury goods in its windows. But it must make way for a store selling European watches in April and move to the quieter Pak Sha Road nearby. Between them, Old San Yang and two neighbours pay less than HK$800,000 in rent. But all three must leave; the watch seller has promised to pay HK$1.43 million a month. Kay's rent is HK$350,000; to stay, he would need to pay at least HK$500,000 - 42 per cent more. "The high rent is too much pressure for me," he said. "Even Li Ka-shing could not afford to run a loss-making business." The new tenant will pay the city's second-highest rent on a per square foot basis: HK$2,040. This is a world of commerce entirely removed from the one in which Kay, born in Zhejiang and brought to Hong Kong when he was six, was raised. His family pioneered the introduction of traditional food from southern China and Shanghai to Hong Kong. His father started a grocery shop and brought a preserved salty soya bean sauce - best known for its use in stewing pork hock - to the city. "I introduced Kam Wah dried ham to Chinese restaurants, and they love using it in shark's fin soup," Kay said. Better known to shoppers are the shop's hairy crabs. Kay has sold them for decades. It was always an expensive commodity because the crabs frequently died, Kay said. "We used to send them to Hong Kong by train ... when they reached here, only one or two in a whole basket of them survived. Or they could all have died," he said. The fatality rate dropped when he switched to air freight. Kay opened his first shop in Hung Hom 40 years ago and moved to Causeway Bay a decade later, paying HK$92,000 in rent. "A tram depot stood where Times Square is today," he said. "Many dai pai dong were in Russell Street, and it was so dirty that its nickname was `rat street'." His shop served well-off people from Mid-Levels as well as nearby residents, many of them born in Shanghai or other parts of the mainland. Gradually those groups were replaced by mainland tourists. "There were many Shanghainese along Paterson Street in Causeway Bay, and many in North Point too. North Point was nicknamed `Little Shanghai'... most have moved away, but they still come back to my shop," he said. Among the shoppers were officials and celebrities. "[Former chief executive] Tung Chee-hwa came here twice, and [chief secretary] Henry Tang Ying-yen came here once. When Anson Chan Fang On-sang served as chief secretary, bodyguards accompanied her when she shopped," he said. Yet reputation alone could not help Old San Yang stay on the street, not with record high rents displacing old shops in Causeway Bay. "I can do nothing but move," Kay said. "Only shops selling jewellery and watches can survive here, because they can earn enough to pay their bills with a few transactions a day."

The Kung Lee sugar cane juice shop in Hollywood Road, Central, and customers relaxing inside. The business faces closure if the building is sold. A shop in Central that has been selling sugar-cane juice for 63 years is facing closure as the historic building that houses it is to be sold for HK$100 million. The building will be preserved, but rent for the shop is expected to shoot up once the deal is closed. The Tsui family, who have been running the shop, fears its days are numbered as they will not be able to afford a steep rent rise. Tsui Chi-san, who took charge of the family business 20 years ago, helped by his wife and two sons, said: "Recently, estate agents kept coming and asking us about the sale of the building. We have no idea and the landlord won't tell us his plan." Kung Lee, on the corner of Hollywood Road and Peel Street, has been selling its signature sugar cane juice to white collar workers, residents and tourists since 1948. The ground-floor shop, as well as the three-storey tenement building, is a landmark in SoHo. But the building owner, named Kenny Kwong Kam-kin according to land records, is expected to close a deal soon to sell it. The tenement was built in the 1920s and is a grade-two historic building. Eric Ng Yim-ming, assistant sales director of Midland Realty, the agent in charge of the sale, confirmed yesterday a deal was expected. "Several low-profile, rich families are interested in this antique building. They don't plan to demolish the block but will look for character tenants such as galleries," he said. "Those buyers didn't say they want to kick out the herbal tea shop, but a rent rise is almost certain." He said the owner proposed a selling price of HK$100 million. The deal is likely to be completed this month. The owner raised the monthly rent from HK$40,000 to HK$70,000 last year, said Tsui's wife, who declined to give her name. "At that time, we almost wanted to give up the business. But our customers told us they would support us even if we raised the price of our juice and tea. That gave us confidence," she said. The price of a glass of sugar cane juice was raised from HK$7 to HK$9 this week. Tsui's wife said the price should have been increased sooner, but it was done only after the Lunar New Year to follow Chinese tradition. "It's very tough to meet the rent. We can't survive if the rent is raised further after the building is sold," she said. With the rent rise, the couple could not afford to recruit workers and now rely on their two sons. Opening from 11am to 11pm every day, the four take care of all the work - peeling, cutting, washing and steaming the canes. Over the years, the family added more products to meet changing times and tastes. On top of sugar cane juice and tea, Tsui's wife devised a recipe to make sugar cane pudding. The shop also brought in tortoise jelly and more varieties of herbal tea. "Sugar cane is a natural and healthy diet. It's affordable to everyone. I want to keep on in this business. I believe this is also part of the heritage here," she said. The family has been looking for a shop in Central. The owner of the building next door once indicated his willingness to let them move in at HK$40,000 a month, but later rented the space to a bar. "I want to make an appeal here. If any shop owner in Central is willing to charge us rent at HK$40,000, please let us know," Mrs Tsui said.

 China*:  February 10 2011

The Chinese yuan, rose 10 basis points from previous trading day to a fresh high of 6.585 against the U.S. dollar Wednesday, according to the China Foreign Exchange Trading System.

Yang visits Zimbabwe on trade mission - 1:15pm Chinese Foreign Minister Yang Jiechi visits Zimbabwe on Thursday to bolster ties after Beijing has continued to back the southern African nation battered by western isolation.

Mainlanders shun Japan amid simmering Diaoyus row - Tourism industry feels the impact of a collision at sea. Last August, Sapporo's Toyoko Inn proudly announced the introduction of 24-hour service of Putonghua-speaking front-desk employees for guests, and the introduction of Chinese signage throughout the hotel. It seemed a sensible move at the time, given the huge influx of mainland tourists to the largest city on Japan's northernmost island of Hokkaido. Sapporo's shopping centres were thronging with Chinese visitors, and the famed tourist spots of Lake Mashu and the Shiretoko Peninsula were attracting busloads from China. The Toyoko Inn, in the usually heaving Susukino entertainment district, has 195 rooms, receptionist Natsuko Azuma says. But now, there is not a single mainland guest. "We have four Chinese staff, and many of our other employees speak the language very well. We had expected when we started this service that many guests from China would choose our hotel to stay in," Azuma says. "But they have not come." Asked why she thinks there are far fewer Chinese tourists in Hokkaido at the moment, she pauses for a moment before saying she is not sure. It is not just the Toyoko Inn, either. In late August, the Japan National Tourism Organisation (JNTO) predicted that 1.8 million mainlanders would visit Japan in the 2010-11 financial year, up by a whopping 80 per cent from 1.01 million in 2008. The tourism organisation estimated that the 120 billion yen (HK$11.3 billion) that Chinese spent in Japanese shops in 2008 would increase to a mouthwatering 430 billion yen by next year. But the optimistic officials spoke too soon. Just days after their prediction, mainland fisherman Zhan Qixiong was involved in a collision with a Japanese coastguard vessel in waters close to the disputed Diaoyu Islands, which the Japanese call the Senkaku. "As you can imagine, now is not a good environment when it comes to Sino-Japanese relations, and the situation is very difficult," concedes Yoshi Koyasu, the head of media relations at the JNTO. According to the organisation's figures, 106,400 mainlanders travelled to Japan in October last year, down 1.8 per cent from the same month in the previous year. The slump in November - by which time the diplomatic row had escalated and attitudes on both sides of the East China Sea were becoming far more entrenched - was far more dramatic. Just 68,500 mainlanders arrived in Japan, down 15.9 per cent from a year earlier. In the same month, 27,400 tourists from Hong Kong arrived in Japan, a decline of 14.7 per cent year on year.

Private Chinese enterprises exported goods worth $481.3 billion in 2010, a jump of 223 percent compared with 2005, said a report by the All-China Federation of Industry & Commerce (ACFIC). The year-on-year increase on average has been 26 percent over the past five years, the association, which governs the nation's more than 40 million private and individual businesses, was quoted by Xinhua News Agency as saying on Tuesday. Textile workers make clothes for export to Southeast Asia at a factory in Huaibei, Anhui province. Chinese private enterprises exported goods worth $481.3 billion in 2010, a 223 percent increase compared with 2005. "China's private sector has become a major player in foreign-trade market. Since the global financial crisis, those enterprises have taken full advantage of the country's stimulus policies and made much headway in tapping the international market," said the ACFIC in the report. Overseas investment by China's private enterprises is no longer limited to economically underdeveloped regions, such as Africa and Latin America, but has been extended to many other, more mature markets, such as North America, Europe, Japan and South Korea, the ACFIC report said. "In addition, those enterprises tend to acquire overseas energy and mineral resources to meet growing domestic demand and purchase leading international brands to explore overseas markets," it said. Huang Mengfu, chairman of the ACFIC, told China Daily earlier that private businesses, which are mostly small- and medium-sized enterprises (SMEs), have grown rapidly in number in recent years and have started to extend their businesses into previously monopolized areas, such as energy and electronic communications. "The government has said it will make efforts to transform a group of competitive private enterprises into multinational companies," he said. China's private economy has doubled its scale and significantly improved its competitiveness over the past five years, Huang added. The number of private enterprises in China exceeds 8.4 million after a yearly increase of 14.3 percent on average over the past five years, Huang said earlier. They account for more than 74 percent of China's total enterprises. Their registered capital has surpassed 19 trillion yuan ($2.8 trillion) with an average growth rate of 20.1 percent annually, he said. Apart from private enterprises (traditionally employing eight or more workers), the country has seen a rapid increase in the number of individual business owners, according to the ACFIC report. The number exceeded 34 million by the end of 2010 after the government introduced policies to promote the development of the private economy. For example, the government exempted the private sector from fees of nearly 2.2 billion yuan from 2006 to 2010, according to the State Administration for Industry and Commerce. However, private industry will come under greater pressures in the next five years as inflation increases, labor cost rises, and trade protection measures from foreign countries increase, said Huang. Moreover, "financing difficulty will still be a crucial problem," he said. Zhou Mubing, vice-chairman of the China Banking Regulatory Commission, said the government will continue to enhance financial services for the private sector, especially SMEs, by facilitating their borrowing from the financial institutions. "Without the stable and healthy development of the private sector, China has no possibility of substantially achieving economic restructuring," said Huang. The momentum of private sector activity eased in December, with the rate of expansion slowing to a three-month low, said HSBC in a report released on Jan 5. "With services activity expanding at the same pace as in the previous month, job creation continued to improve in December and inflation in services remained well contained," said Qu Hongbin, chief China economist and co-head of Asian Economic Research at HSBC. "This, combined with strong manufacturing PMI (purchasing manager's index) readings, implies that growth momentum remains healthy."

Military going hi-tech on a leaner budget - PLA spending unlikely to keep rising more than 10pc a year, despite modernisation. If military planners have their way, a hi-tech future awaits members of China's army, navy and air force, like these men preparing for a state ceremony in Beijing. Beijing intends to push ahead with plans to transform its military into a modern fighting force by 2020, even though the defence budget will probably grow by less than 10 per cent a year in the next five-year plan. China's military made news last month by releasing photos of the first flight of its fifth-generation stealth fighter prototype, the J-20. Although it is considered a long way from production, it shows that the nation is setting its technology sights high, which will probably make developments in the next five years even more significant. Modernising the PLA by 2020 was a political mission set by the Central Military Commission (CMC) - the top decision-making body - in 2006. That includes increasing the defence industry's ability to produce innovative arms. Yet this goal will be reached with comparatively smaller budgets, officials say. Beijing said its defence budget increased by 7.5 per cent last year - the smallest increase in nearly two decades. That marked an end to a string of double-digit increases, with the average budget increase over the past decade nearly 15 per cent. Many foreign governments, however, believe Beijing spends more on the military than stated in its published figures. Xu Guangyu , a senior researcher at the China Arms Control and Disarmament Association in Beijing, said single-digit increases would be maintained in the next five-year plan. "I think our defence budget increase will be similar to GDP growth in the next five years, which I believe will not be more than 10 per cent," Xu said. "But our defence budget per capita will increase significantly because we will reduce our troop numbers from 2.3 million to 1.5 million in the next decade." Military spending per person in uniform would increase from US$30,000 today to US$100,000 by 2020, Xu said.

Hong Kong*:  February 9 2011

Hong Kong may trade its first-ever yuan denominated gold contracts in March or April, according to the Chinese Gold & Silver Exchange Society. "The yuan settlement agreement of the People's Bank of China provides us with an easier way for yuan-denominated gold trading, and also widens our investors' channel," said Haywood Cheung Tak-hay, president of the society. He added that around one-third of its members - 50 to 60 firms - are expected to trade in the new contracts. The clearing and the settlement of these contracts will require investors to have a yuan account. The one-kilogram and 3kg gold products are expected to be traded on a new platform. "We expect trade in yuan-denominated contracts to account for 20 to 30 percent of our total turnover," said vice president Steven Chan Sheung-chi. Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung said it is comparatively easier to launch yuan- denominated gold trading than yuan stocks, which require many retail investors. On the first day of trading in the Year of the Rabbit, 99-tael gold rose 0.62 percent to HK$1,2515 per tael. Cheung forecast international spot gold this year will be traded around US$1,250 (HK$9,750) to US$1,350 per ounce before reaching as high as US$1,650 per ounce. He believes gold prices will remain bullish until 2015. Spot gold was at US$1,347.20 an ounce in London afternoon trade. Sino Prosper State Gold Resources (0766) said it sees a long term in the international gold price. "Investors' confidence in the US and European economies hasn't fully recovered, which will lead to an increase in the gold price," chief executive Richard Sung Kin-man said. Meanwhile, gold production in the mainland rose 8.57 percent last year to 340.88 tonnes, according to the China Gold Association. Nearly 60 percent of the output came from Shandong, Henan, Jiangxi, Yunnan and Fujian.

The stock exchange will make it mandatory for all listed companies to have at least a third of the board made up of independent directors by the end of next year, a move that will see Hong Kong catch up with the mainland. And in the biggest corporate governance reforms in six years, companies will have to ensure that all directors - including 103-year old TVB (SEHK: 0511) chairman Run Run Shaw and Li Ka-shing, chairman of Cheung Kong (Holdings) (SEHK: 0001) - will have to undergo eight hours of training every year. Companies must currently hire at least three independent directors, but there is no set ratio, which means the city also lags behind Singapore, the United States and Australia, where a majority of board members must be independent, and Britain which requires at least half. As of last August, eight out of 10 locally listed companies had already voluntarily ensured that one third of their directors were independent. Of the remaining 284 companies that will be affected by the rule, there are some notable blue chips, such as Sino Land, which has three independent directors out of a total of 10, a ratio of 30 per cent; Sun Hung Kai Properties (SEHK: 0016) (21 per cent); Cathay Pacific Airways (SEHK: 0293) (23 per cent); and New World Development (23 per cent). Other initiatives proposed by the exchange include limiting the number of directorships to ensure directors do not spread themselves too thinly. The proposals, which are up for public consultation until the middle of March, are bound to prove controversial because they will increase company costs and raise the burden on directors. Independent directors play a key role in corporate governance because they do not work for the company and do not have a relationship with the management or major shareholders. They sit on the board to ensure that business decisions are in the interests of smaller shareholders. According to a report by accounting firm BDO, 73 per cent of Hang Seng Index constituent stocks last year voluntarily ensured that one third of their directors were independent in nature, compared with 69 per cent in 2009 and 64 per cent in 2006.

The government has ordered a landlord to stop all work on a beach site inside the protected Hong Kong Geopark. Officials said they had found signs of unauthorised excavation at the private site on Tai Long Sai Wan beach. The Planning Department announced last night that an enforcement notice had been served but did not say who the recipients were. It did not name the site owner but it is believed to be Simon Lo Lin-shing, the chairman of Mongolia Energy Corp. "The department inspected the site on February 1 and found signs of dredging near a pond," a department spokesman said. "Any excavation of land at the site has to obtain Town Planning Board approval in advance. Otherwise, it would amount to unauthorised development." Since August last year, a temporary emergency zoning order covering the private site in Sai Kung has been in force, banning all kinds of land use except agriculture. The diversion of streams, filling of land, ponds and excavation are also not allowed. But it emerged last week that the zoning order, designating the site for "unspecified use", could not stop Lo's workers from growing flowers, trees and grass on the site. Two man-made lakes have been kept. Lo could not be reached for comment last night. He had planned to build a private retreat at Sai Wan and escaped prosecution over illegal works and excavation last year. However, six people, including drivers and contractors, and a company were fined more than HK$80,000 for landscape and environmental damage on the 2.2-hectare site, comprising government and private land. His workers later confined work on the garden to private land. Peter Li Siu-man, a campaign manager of the Conservancy Association, welcomed officials taking action but said it was not enough. The damaged Sai Wan beach is surrounded by the ecologically sensitive geopark, which has been nominated by the Agricultural, Fisheries and Conservation Department for listing in the Unesco Global Geoparks network. It includes Tai Long Sai Wan but excludes Lo's land. Cheung Man-chun, a spokesman of Friends of Tai Long Sai Wan, said the damaged site owned by Lo was next to the park and could have a detrimental effect on its ecology. "Any human activities would destroy the park ecology there," he said. Cheung said his group would send information about Lo's site to Unesco this month. Professor Chan Lung-sang, of the department of earth sciences at the University of Hong Kong, said he did not know if the development of private land would affect the result of the government's application but noted that it was not the only private land located in the fringe of the geopark. "We demand the government acquire all the private land before lodging the application and set up some buffer zones," Chan said. "Or there would be some skyscrapers and resorts immediately next to a world geopark."

Study maps show concepts including “Cultural Villages”, “Low-Carbon Communities” and a “Green Transport System”. An ambitious joint study by Hong Kong, Guangdong and Macau has proposed building a new town in North Lantau, a cross-border checkpoint in the West Kowloon arts hub and new cultural villages in Tai O and Fanling to attract tourists. And crowded Central, Wan Chai and Causeway Bay will transform into low-carbon areas with priority given to pedestrians over vehicles. The study is titled "The Action Plan for the Bay Area of the Pearl River Estuary" and was jointly produced by authorities in Hong Kong, Macau, Shenzhen, Dongguan , Guangzhou, Zhuhai and Zhongshan , with the aim of upgrading the region's quality of life. However, the 18-page public consultation digest - and the 45-page Powerpoint document that goes with it - aims high but is short on detail. The document has gone unnoticed - at least until recently - with the Planning Department only making a brief statement about it in mid-January before launching a one-month public consultation. But now, more than 7,000 people have expressed concerns about it and joined a Facebook petition urging the government to extend its public consultation, which is to close on Thursday. Lawmakers have complained they were not consulted on the plan. The Legislative Council has not received information about it. "We do not accept our future being decided without us having a fair say," Chan Kim-ching, who started the Facebook campaign, said. "We are also uncertain about whether it is a genuine consultation. The Northern Link is still under study. But they have included it in the action plan. Does it mean the government will build it for sure?" The action plan is one of several attempts at better integrating Hong Kong, Macau and the mainland. The State Council has outlined a plan for the Pearl River Delta region between 2008 and 2020. Guangdong, Hong Kong and Macau jointly commissioned Peking University and Guangdong Urban and Regional Planning and Design Institute to report on the issues between March and April last year. Under the action plan, the region will become a "bay for quality living", building on an advanced public transport network, residential communities with diversified housing types and adequate infrastructure and facilities. It also wants the region to excel in scientific research and development, boost its service sector and expand as a financial and transport hub. Details of the plan relating to Hong Kong were not included in the text, but low-resolution maps included in the document show a new town in northern Lantau, a cross-border checkpoint in West Kowloon, cultural villages at Tai O and Fanling, and a low-carbon emission plan for Central, Wan Chai and Causeway Bay. The Northern Link and the express rail connecting Hong Kong and Shenzhen airports, though still under study, are also included. Authorities in Macau and Guangdong will co-ordinate land use and development of 500 hectares of Macau land - whose reclamation was approved by Beijing in December 2009 - and the business district in Henqin, Zhuhai. The new plan envisages a Zhuhai-Macau industrial zone as a logistics and exhibition centre. Lawmaker Cyd Ho Sau-lan has demanded an explanation from the Planning Department as to why the Legislative Council was excluded from the exercise. Paul Zimmerman of Designing Hong Kong urged the government to publish the full report, in English, and criticised the Planning Department's lack of attempt to engage the non-Chinese speaking community in Hong Kong. "The information available is not the full report," he said. "It doesn't even have the population of each city involved in the study. I understand the study was conducted in Chinese. But the Planning Department should translate the materials into English so everyone in Hong Kong can participate in the discussion." A Planning Department spokeswoman said the government would continue to listen to public responses to the plan.

HK's PMI hits 9-month high in January - The index rose to 55.2 in January, the highest since April 2010, showing a marked improvement of business conditions in Hong Kong. The rate of growth was largely in line with that reported in December, despite a slight easing of new order and output growth. Companies raised staffing levels for the first time in three months to boost operating capacity as backlogs of work continued to rise. New business orders rose markedly in January at a rate above the long-run trend because of ongoing improvements in global economic conditions, but the expansion eased slightly from the previous month. Overall input costs increased substantially in January on higher purchase prices and staff costs, although the rate of growth slowed from the series high recorded in December. Hong Kong companies raised product prices in January, mainly as a result of higher input costs, leading to a fifteenth successive month of output price inflation. “Solid economic growth has led to inevitable inflationary pressure in Hong Kong,” Mark McCombe, Chief Executive of HSBC (SEHK: 0005, announcements, news) , Hong Kong, said in a statement. “We anticipate that inflation in Hong Kong will grow at a faster pace this year than last year, stoked by rising wages and commodity prices.” “While this issue will remain a reality for Hong Kong this year, the territory’s economy continues to gather momentum in the first few weeks of the year, fuelled by robust domestic and global demand,” he added.

Shares of Wynn Macau, subsidiary of Las Vegas Casino operator Wynn Resorts, slumped 5.5 per cent in early trade on Monday, with worse-than-expected revenue from rival Las Vegas Sands prompting investors to cash in on recent stellar gains. Las Vegas Sands Corporation, run by billionaire Sheldon Adelson, posted sharply higher quarterly revenue but the total was short of estimates. Its locally listed unit is Sands China. Analysts said investors may scale back their expectations for Wynn’s earnings later this month, focusing on high roller VIP liquidity after being disappointed by Sands. Wynn is due to report its earnings on February 24. Shares of Hong Kong-listed Wynn Macau, which has more exposure to the VIP market, have gained about 116 per cent over the past 12 months.

The renewed global job hunt for a chief executive for the West Kowloon Cultural District Authority has produced more than 35 candidates so far, at least 16 fewer than the previous exercise, according to board member Sin Chung-kai. They include 25 direct applicants - 13 from abroad and 12 local - and more than 10 identified by the headhunter, including two previous candidates. Sin, chairman of the board's remuneration committee, said the list was expected to grow to 40 names by the end of tomorrow when applications close and screening starts. Art critics said despite the decrease in the number, it was the quality of the candidates that counted. The hunt for a chief executive for the HK$21.6 billion arts hub began on January 21 to replace Briton Graham Sheffield, who quit abruptly early last month for health reasons. The previous search yielded 51 applications. Art gallery owner and cultural commentator John Batten said the next CEO needed project management skills. "The arts hub in the next five years is about building facilities, not running a cultural centre. But he or she must love arts as well." Batten said Sheffield's departure also allowed for the decision-making process of the 21-member board to be streamlined. "There are too many board members to talk with." Sin said the first and second runners-up in the previous headhunting exercise had been approached and agreed to join in. "Some of the finalists in the last search were up to standard but faced other hurdles, while some were unavailable at that time," he said. Sin acknowledged it would be difficult to find a replacement for Sheffield. "Local candidates have an inherent advantage given they are more familiar with local culture. Other than a proven profile in arts, the public reaction is very important. Sheffield got a good reaction, even from the harshest critics," he said. "The first runner-up in Sheffield's round also has a proven record in the arts, but he faced some other problems." He refused to say who the second choice was or explain the "problems". But the South China Morning Post (SEHK: 0583, announcements, news) earlier reported that former Swire executive Stephan Spurr was on the shortlist six months ago. It is believed Spurr lost out to Sheffield because he requested more autonomy to run the cultural district. Now, Spurr is being tipped as a top choice to succeed Sheffield, 58, after he left his job as general manager of Swire Properties at the end of December. Spurr, who is in his 50s, was involved in a number of arts projects during his more than two decades with Swire, including the ArtisTree project, which turned some of the office space in Island East into a multipurpose venue for exhibitions and performances by arts groups. Sin said the recruitment process would take six to nine months. Fifteen people - about a quarter of the 58-member team - have left since the authority was set up in April 2009. Sin said training would be held in Guangzhou in March. One of the three architectural plans for the 42-hectare arts project would be recommended by March 31, he said.

 China*:  February 9 2011

Tang Yongxue waves a placard as she looks for a fake boyfriend for Spring Festival in Chengdu, Sichuan province. She offered 10,000 yuan for five days's work. For young, single city professionals, the Spring Festival holidays present many reasons to be fearful: standing in line for hours to get a train ticket, exhausting long journeys, stuffing red envelopes with cash. Arguably the No 1 reason is the prospect of turning up at home alone. Not only does it give parents the opportunity to nag - "Your classmates and cousins are married and have children. What's wrong with you?" - but it is also likely to result in a holiday spent on blind dates. To ease the pressure, Chinese singletons are simply paying people to pose as partners for their holiday homecoming.

Japan's first budget airline, being formed by Hong Kong's First Eastern Investment Group and All Nippon Airways, will fly routes to China next year, cashing in on a rapidly growing demand for travel between the two countries. The low-cost carrier, which is yet to be named, will launch domestic services from Kansai Airport in November, followed by regional destinations next year. "The mainland market is a top priority because Japan is a compelling destination for the mainland people," said Victor Chu, the chairman of First Eastern, which has invested US$7 billion in 35 mainland cities over the past two decades. The number of Chinese travellers to Japan grew 50 per cent last year and was expected to increase further because of the recent relaxation of visa requirements, Chu said. He estimated the number of Chinese visitors to Japan would reach four million next year from 1.35 million last year. Chu said the joint venture had adopted a business model that would differentiate the airline from Hong Kong Oasis Airlines, a budget carrier that went bankrupt in 2008 amid staggering oil prices. He said the airline would rely on low fares, low costs and short hauls. Air fares will be 50 per cent lower than those charged by carriers on Japanese domestic routes. Fares to destinations in China will be competitive with Chinese carriers since they will only fly to airports that offer lower landing fees and other charges. "Low-cost carriers will emerge as mainstream air traffic carriers in Asia," Chu said. "The major mainland airports should encourage budget carriers or they will lose out to the neighbouring airports." Chu said he would like the airline to fly to destinations in northern China, such as Dalian, Tianjin and Beijing, to eastern China, including Shanghai and Hangzhou, and to southern China, including Shenzhen, Guangzhou and Macau. The budget airline will have a cost advantage over rival Japan Airlines by getting rid of the tight regulations on the number of cabin crew, which are strictly applied to the two existing Japanese airlines - ANA and JAL. With longer and more flexible flying hours allowed for pilots and flight attendants, the company could cut its operating costs, Chu said. Moreover, Kansai has offered lower landing fees and airport charges in the hope that the budget carrier can bring in more Chinese visitors and help revitalise the local economy. The airline, which will apply for an air operator's certificate from Japanese regulators, has committed to lease 10 new narrow-body aircraft, with the first to be delivered in September. Chu said they would acquire 10 advanced single-aisle aircraft, either the Boeing 737-900 or the Airbus A320 NEO (new engine offering). First Eastern agreed to take a 33 per cent stake in the budget carrier while ANA will hold 39 per cent. A Japanese investor, who will be named next month, will own the rest.

Taiwanese authorities on Sunday defended their policy of allowing more mainland tourists to visit the island, saying it has generated more than US$3 billion worth of business since mid-2008. As of December, tourists from the mainland had made 1.82 million visits to the island and spent NT$91 billion (US$3.1 billion) after the government lifted its decades-old travel ban in July 2008, the Mainland Affairs Council, Taiwan’s China policy decision-making body, said in a statement. Last year mainland tour groups accounted for 1.17 million visits, up 98 per cent from 2009, and Taipei now plans to allow individual tourist trips from the mainland in another sign of fast-warming ties across the Taiwan Strait. Currently mainland visitors are only allowed to travel to the island in groups as Taiwanese authorities are concerned they might otherwise overstay their visas and work illegally.

More couples get divorced than wed - 4:04pm Nearly two million couples divorced last year in the mainland – far more than the number who got married in the world's most populous nation, state media reported.

Euro recovering its strength, thanks to Chinese debt support - The euro has defied predictions of its demise by rising almost 8 per cent against the dollar since mid-January, in large part owing to Chinese confidence in the debt-ridden euro zone, analysts say. However the single currency's fragile state was exposed on Thursday as it tumbled on receding expectations of a rate rise any time soon for the euro zone. "The price action in euro/dollar has largely been one way since January 10," Neil Mellor, an economist at financial group BNY Mellon, said. "It was around this time that China began to express its very clear support for euro zone debt. A lot of the market's concerns about funding have been eased, thanks to China." The European Financial Stability Facility (EFSF) - established in June to help heavily-indebted euro-zone members - last month sold five-year bonds worth €5 billion (HK$52.88 billion) to help raise funds for Ireland. China is reported to have taken part after the world's second-biggest economy signalled its intention to do so last month. Asian bidders snapped up more than one third of the total, in what EFSF head Klaus Regling said demonstrated market confidence in the 17-nation euro zone after the turmoil of massive bailouts for Greece and Ireland last year. The government of Japan alone bought more than 20 per cent. The single European currency reached a three-month high of US$1.3862 on Wednesday on increased expectations of a rate rise. However, such forecasts were shattered on Thursday after the European Central Bank kept interest rates on hold and ECB president Jean-Claude Trichet eased fears over high inflation. In the space of 24 hours, the euro was back to just above US$1.36, and fell further after US jobs data was announced. "Although the recent rally in the euro was mostly fuelled by expectations of rate rises by the ECB, sentiment was also boosted by the markets giving European Union officials the benefit of the doubt that they could come up with a credible long-term solution to the sovereign debt crisis," Kathleen Brooks, an analyst at traders, said. "If EU leaders fail to deliver the goods there could be another leg lower for the single currency," she said. A higher interest rate would meanwhile boost the euro against other major currencies because euro-denominated investments would generate higher returns. But on Thursday, remarks by Trichet suggested the ECB was less concerned about inflation than earlier thought, and that any rate rise would come later in the year. "Inflation expectations over the medium to longer term continue to be firmly anchored in line with the governing council's aim of keeping inflation rates below, but close to, 2 per cent," Trichet said.

A girl of Chinese origin performs lion dance at a party hosted by Gladney Center for Adoption in New York to celebrate the Chinese New Year. For families that have adopted children from China, the Chinese New Year is more than a chance to enjoy good food and great company. It's also about maintaining a connection with a culture that is not entirely their own. Organizations like Families with Children from China (FCC) and Gladney Center for Adoption are hosting annual New Year's parties, giving families with adopted Chinese children the opportunity to learn about Chinese traditions and spend time with similar families. "Chinese New Year is about family and returning to roots," said Wendy Stanley, the director of Gladney's China adoption program in New York. "After adoption, we all get busy with our personal lives, but Chinese New Year is when families make it a priority to come back and see the staff that helped bring their family together, and also to come together with other families like their own." Gladney's celebration features a local dragon troupe workshop for the adopted children, performances by adopted children who take traditional dance classes, and an opportunity to make dumplings on site, Stanley said. The party is not only organized by the agency, but also by parents who stay involved in Gladney's Parent Associations, Stanley said. Often, families who were grouped together on their original adoption trips will maintain friendships over the years. New Year's Day is an opportunity for those families to meet again, and many will request assigned seating together at the celebrations, Stanley said. As their adopted children get older, some of these families even choose to make return trips to China together. FCC's annual "Lunar New Year Celebration" features lion dance, Chinese fan dance instruction, crafts, and bubble wrap fireworks. The event is popular among the young. But when the children become teenagers, it's harder to persuade them to attend, according to Theresa Levine, organizer of the event. "(My daughter) Lucy's schedule is very full from violin, soccer and other activities outside FCC," she said. "When I try to organize an FCC event, I hear these sorts of excuses."

Photo taken on Feb 6, 2011 shows lanterns at the Daguan Park in Kunming, Southwest China's Yunnan province.

Hong Kong*:  February 8 2011

Two of Hong Kong's most colourful areas could soon become more orderly - and probably much greyer. Zoning officials want to end the mixing of shops and homes in the same buildings in Wan Chai and Causeway Bay. The Planning Department says this will make life healthier and safer for residents. But many prominent urban planners and consultants are up in arms, saying it will drain the vitality from the two areas. The powerful Real Estate Developers Association shares their concerns. "Mixed use generates round-the-clock activities," said architect Vincent Ng Wing-shun, vice-president of the Institute of Urban Design. "Without it, Causeway Bay and Wan Chai, upon redevelopment, could become as sterilised and homogenous as commercial Central or residential Tseung Kwan O. I don't want to see the two areas become so boring." According to the latest revised zoning plans of the two areas, about 15 hectares of Causeway Bay and 25 hectares of Wan Chai, now zoned as "commercial or residential", will be turned into single use for either businesses or homes. In Wan Chai, all streets north of Johnston and Hennessy roads will turn from mixed use to purely commercial zones. The area south of Wan Chai Road will switch to residential land. In Causeway Bay, the shopping and residential cluster around Sogo department store and a cluster covering Jardine's Bazaar and Percival Street will become commercial. Only a small area around Paterson Street will remain a mixed-use zone. The proposed change would not affect existing home and shop owners, but the new zoning rule would kick in upon redevelopment. Planning officials said mixed usage had allowed greater flexibility in the use of land. But it had created many problems such as difficulties in infrastructure planning, and made the environment unpleasant for people living in buildings full of shops. "A wide range of commercial uses intermixing randomly among flats in the same building creates a nuisance for residents, possibly infringing on their privacy, and creating noise, air pollution, security and fire safety problems," a department spokesman said. Alison Chong, who runs a cafe on the second floor of Po Foo Building in Lee Garden Road, which lies in one of the proposed new zones, said she feared the new rules would make the neighbourhood too commercial. The 47-year-old building is a typical composite block, with the first four floors occupied by cafes, boutiques, a wool shop, a tailor, a hair salon, dance studios and small company offices. There are mostly homes on the higher floors. "If the area is redeveloped just for offices and malls, small businesses like us cannot afford the rent," Chong said. The rent on her 700 sq ft cafe is HK$20,000 a month. "You don't have such leisurely ambience in a commercial building. I don't want to see Causeway Bay become Mong Kok, where cafes concentrate in a few tall narrow blocks and people are crammed in the lift lobby waiting to go upstairs. It is hectic and crowded." Another resident, Leung King-fu, who lives with his family upstairs, said more businesses had come into the building in recent years. "It is rather disturbing because you have more unfamiliar faces around. But I do not want to leave because the shops in the streets around are all old friends," he said. Hundreds of public submissions have been sent to the Town Planning Board since the amendments were released in September. In the next few months the board will hold a hearing to consider the comments. The proposed zoning changes also come with various height restrictions on buildings. This also worries residents because they say it will affect the value of their properties. Many urban design advocates and developers say the new proposal is a mistake. "Everywhere else in the world, people are talking about the beauty of mixed-use zoning, how it creates interesting streetscapes," said Kenneth To Lap-kee, an urban planner and consultant. Paul Zimmerman, chief executive of Designing Hong Kong, said the rezoning would be "an absolute disaster". He said the current system cut traffic by reducing distances between services, jobs and homes. It also provides demand for transport services outside peak hours, making public transport more sustainable. The Real Estate Developers Association has submitted objections to the rezoning plan. Secretary general Louis Loong Hon-biu said mixed use provided flexibility for the market to decide on the use of land. "Cities around the world are moving towards mixed use. If officials say mixed use will make it difficult to plan for transport, they should plan for the worst-case scenario," he said. Architect Ng cited Paterson Street as strong proof that the traditional mixed use worked well, saying there were ways to solve transport planning problems, such as better traffic control and restricting streets for pedestrians only.

Hong Kong may be given an expanded bridging role to play as part of China's ongoing quest to reach out into international financial markets when the nation's 12th five-year plan is unveiled next month. The secretary for financial services and the treasury, Professor Chan Ka-keung, said the city was ideally placed to help firms in poorer provinces expand by offering capital-raising opportunities via local listings. "If we play such an expanded role, the gap between the economic scale and capitalisation of Hong Kong's market and that of the other two global leading major financial centres - London and New York - could be closed within five years," Chan told the South China Morning Post (SEHK: 0583). He is among a group of senior Hong Kong financial officials that has spent the past year in close contact with various mainland regulatory bodies and departments exchanging views on the role the city can play in the 12th five-year plan, which will provide a route map for the nation's development until 2015. The 12th five-year plan is scheduled to be finalised and approved at the annual meeting of the National People's Congress in March. "We expressed our views of what contribution Hong Kong financial markets may make under the new five-year plan. We do not know if the mainland officials will accept all our ideas, but they understand our position and our concerns," Chan said. What is beyond doubt, however, is that Hong Kong could continue to act as a springboard for mainland companies to invest or conduct mergers and acquisitions overseas, Chan said.

96,053. The number of race-goers who watched yesterday's Lunar New Year meeting at the Sha Tin racecourse (6,422 of them via giant video screens at the Happy Valley track). The crowds were the biggest for any day's racing since the Lunar New Year meeting in 2002.

A Hong Kong charity has reversed a decision to use more than half the money it received from a recent fund-raising activity for administrative expenses, after coming under fire from participants and donors. The controversy is likely to give fresh weight to the already widespread calls for charities to be better regulated so donations are well spent. Sowers' Action, a charity dedicated since 1992 to helping poor students on the mainland, staged the event, "Cycling for Education", last year and said it expected to raise HK$1.5 million. It initially said HK$1 million of the money would go to help poor mainland pupils and the remaining HK$500,000 would be used to cover administrative costs. In fact, the event raised HK$2.2 million, prompting a member of the charity's executive committee to propose that it keep the extra HK$700,000 for administrative costs. That would have meant more than half the sum raised being used for that purpose. The idea was endorsed by the rest of the members, including its chairman, Choi Siu-ming - a civil servant. But it triggered an outcry from donors and some of the 180 participants in the fund-raiser. Many said they would not have taken part had they known more than half the money raised would go into the group's own pocket. "I worked hard to raise money for this event because I thought at least HK$1 million [the bulk of the money] would be used to help mainland children's schooling," said a long-serving volunteer. Another participant said he would not have joined the event had he known so much of the money would be used for non-charitable purposes. Faced with such opposition, Sowers' Action backed down yesterday. "The decision isn't final at all. The executive committee agreed to set [the extra HK$700,000] aside as administrative expenses. But the board of directors still has not approved it," Choi said. "Given that the public is so concerned, I think all the directors will agree with me that the money should go to charity," he said. Choi admitted the charity could have handled the matter better but denied misleading participants and donors. He said it had spelled out in the event's promotional leaflets and on application forms how the money it expected to raise would be spent. "One thing we could have done was to state clearly how we would use extra money raised from the event. Unfortunately, we didn't. And it has caused a big debate," he said. Ken Chan Kam-ming, chief officer for child and youth services of the Hong Kong Council of Social Service, said it was unusual for a charity to allocate so much money to administrative expenses. "Very few charities do that. Donors always want to see their money going to charitable causes, not to cover administrative costs," he said. But Chan said there was nothing in Hong Kong law to say how donations should be spent or how much of the money received in fund-raising should be spent on charity. The city's laws regulating charities are badly in need of updating. They do not even define what constitutes a charity, leaving room for abuses. While the laws have lagged, the number of charities has mushroomed. The number of groups registered as tax-free charities went up from 3,819 in 2003 to 5,898 in 2009. Tax-deductible donations from individuals and companies increased from HK$2.99 billion in 2003 to HK$7.03 billion in 2008. Yet there is no single agency or official body scrutinising the finances of charities. The job is split between the Social Welfare Department, the Television and Entertainment Licensing Authority, the Food and Environmental Hygiene Department and the Home Affairs Department - depending on a charity's activities. Critics say the work of supervising charities often falls between two stools as a result or gets tangled in bureaucracy. The Law Reform Commission reviewed the legal and regulatory framework for charities in 2007. It was to have issued proposals for a charities law last year, but a person close to the situation said the commission's report had been held up.

Philip Tsai, president of the Hong Kong Institute of Certified Public Accountants, says local accounting firms may need to diversify. Hong Kong accounting firms will need to diversify out of their dependence on auditing revenues after a rule change that relieves mainland companies from an obligation to use their services. Auditing now represents more than 60 per cent of all accounting firms' business, a dominant contribution due in part to a stock- exchange regulation that required mainland companies seeking initial public offerings on the local market to appoint Hong Kong-based accounting firms to act as listing auditors as well as conduct annual audits after their listings. But effective last month, the rule was changed, and the 164 Hong Kong-listed H-share companies no longer need to hire Hong Kong firms to do their annual audits, if their books are audited by a mainland firm. The mainland auditor must be among a list of 12 firms approved by the Ministry of Finance. So far only Tsingtao Brewery (SEHK: 0168) has decided to use only a mainland auditor to audit its books. Other big players, such as the Industrial and Commercial Bank of China (SEHK: 1398), the Bank of Communications (SEHK: 3328) and China Life, have not yet announced whether they plan to use only a mainland auditor. "I do not think all 164 mainland firms will change to mainland auditors immediately, as some would like to take a wait-and-see approach to see how international investors respond to the new rule," said Hong Kong Institute of Certified Public Accountants president Philip Tsai Wing-chung. HKICPA is the regulator responsible for licensing the 32,000 accountancy firms in the city. Even after the rule change, mainland firms may choose to continue using Hong Kong auditors, Tsai said, since Hong Kong accounting standards and audit practices are familiar to international investors. "But it would be inevitable that some mainland firms may choose to hire mainland auditors later on. As a result, we are going to see some loss of auditing business. "But while the auditing pie is going to be eroded, this should not be a problem," Tsai said. "Now is the time for accounting firms to diversify to more sophisticated services such as company business restructuring, insolvency, risk management and compliance, and consultancy services on acquisitions, mergers and taxation." In the United States, Tsai said, auditing contributed only about 30 per cent of accounting firms' revenue, while such consultancy services contributed the rest. "Judging by the experience in the US, which is the largest accounting market worldwide, firms can do well by doing a diverse range of business. This is the direction that the Hong Kong accounting firms would go for," Tsai said. As a result of the rule change, the 64 H-share companies now dually listed in Hong Kong and Shanghai - including major players such as the Industrial and Commercial Bank of China and China Life Insurance (SEHK: 2628, announcements, news) - can choose to issue only one set of financial statements according to the mainland accounting standards, for both Hong Kong and mainland investors. This replaces a requirement for two sets of statements, one based on Hong Kong accounting rules, which follow international standards, and a second set based on mainland accounting standards. A further 100 H-share companies that are listed in Hong Kong but not on the mainland can also switch to mainland accounting standards instead of Hong Kong standards if they choose to do so. They may also choose to hire mainland auditors. Tsai said that since the 12 firms listed by the Ministry of Finance included joint ventures of the Big Four international accounting firms, the result might be that the accounting firms will simply shift responsibilities for the audits from their Hong Kong offices to their mainland joint ventures. Hong Kong accounting firms will also benefit from the new rule because it will be reciprocal, allowing Hong Kong companies that choose to list on the mainland in future to opt for Hong Kong accounting standards and auditors. "Although there are no Hong Kong firms listed on the mainland at present, this will change in future when the mainland introduces an international board for foreign firms to list," Tsai said. The changed rule has not led to accounting firms reducing their hires, and according to Tsai most firms hired 10 to 20 per cent more new staff this year. Deloitte Touche Tohmatsu, where Tsai is a partner, plans to hire 300 new graduates this year, up from 250 last year. "The economic recovery has led to more IPOs and mergers and acquisitions. Some companies are setting up new businesses. This has prompted accounting firms to increase their hires," Tsai said.

What do you do with HK$1.5 million in your savings account when the interest rate is almost zero? Many people would buy property or shares, but in the past year more and more investors have been going off the beaten track and buying a taxi licence - HK$1.5 million roughly covers the down payment. Last month, the cost of a taxi licence broke through the HK$5 million level, up more than 36 per cent from a year earlier, easily surpassing the 20 per cent rise in the property market and 9 per cent increase in the stock market over the same period. But as the gap between taxi rental income and the investment capital needed continues to widen, experts warn of a possible bubble in the trade - especially when more licence buyers are investors who are unfamiliar with the industry.

Ocean Park's admission tickets were sold out early yesterday for a second consecutive day in a vote of confidence for its latest attraction, Aqua City. The crowd was so solid that people had to wait for up to 90 minutes for cable cars, for about an hour outside Aqua City, and for some 30 to 40 minutes for mechanical rides, a spokeswoman noted. Ticket counters at the Citybus terminal near Admiralty MTR shut at 10am yesterday while the entire same-day admission ticket sales system was closed at 11am - 90 minutes after opening. "The decision was made according to our normal practice," the spokeswoman said. "That is, we close the ticket counters when the in-park attendance reaches 32,000 - or 90 percent of the maximum in-park capacity 36,000." That avoids overcrowding and is meant to ensure people already inside the park can enjoy their experiences, she added. It was a similar story on Saturday, when the ticket facility at the Citybus terminal closed at 11am and all sales stopped at 1pm. The last time the park closed its ticket counters early was at Lunar New Year 2006. Attendance levels have increased by at least 15-20 percent since the opening of the giant aquarium complex on January 27. "The opening of three retail outlets and also Neptune's Restaurant and Aqua City Bakery have also drawn in more visitors," the spokeswoman said. But the closure of ticket counters does not affect group packages and those who have booked in advance, she noted. "We anticipate attendance will continue to be high over the next few days," she added. "Visitors who have not booked tickets in advance are advised to check on the park's website for updated news and are also encouraged to select another day to visit Ocean Park." Attendances on the first three days of the Lunar New Year increased by 30 to 50 percent compared to the corresponding period last year. The increase also boosted overall retail sales from Thursday to Saturday by 50 percent on last year, while food and beverage sales were up more than 80 percent.

 China*:  February 8 2011

China wants to bid for the contract to build the next US presidential helicopter, and build a brand for its defence industry in the process. State-run aviation giant the Aviation Industry Corporation of China (AVIC), is teaming up with a small, struggling American defence contractor to prepare bids for two US military contracts, including one to replace the ageing presidential helicopter fleet Marine One, a person familiar with the deal said. No final decision has been made yet, and AVIC and its partner, US Aerospace, still have to iron out their co-operation agreements before they can go ahead with the plan. Even if they decide to proceed with the bidding, Chinese observers say they are highly unlikely to win the contracts. They suspect the move is more about burnishing the image of China's defence industry in the international arms market. State media outlets have already begun touting its significance as a symbol of China's emergence as a global player in the high-end military arms industry. In an interview in the state-run Global Times, Chen Hu, editor-in-chief of the Beijing-based World Military Affairs magazine, said AVIC's potential bid was an indication of Chinese military industrial enterprises' "great strides in technology and production capacity". And, speaking in terms that will no doubt feed directly into America's fears about military outsourcing, Chen said: "AVIC will benefit from the co-operation if they win the bid, since the company has to update its original technologies to produce helicopters that meet US civil aviation technology standards." In an interview on China National Radio, Xia Qunlin, vice-president of Avicopter, AVIC's helicopter manufacturer, declined to confirm or deny the report of a possible bid. But Xia said his company's successful test flight of the AC313 - the helicopter that would be offered for the Marine One contract - meant China had fully mastered large helicopter technology and could compete on the international market. "Only very few countries in the world can produce 13-tonne helicopters. The Russian one has a smaller payload than ours. The French one is also smaller than ours - at only 11 tonnes. We are confident that our helicopters can compete with the world's best. We are proud of that." If AVIC won the bid, it would be the first Chinese arms sales to the US. The idea of China being ready to bid for US military contracts itself is highly symbolic and is a clear indication of the Chinese defence industry's surging ambition and confidence. Likely competitors for the Marine One contract include the Agusta Westland AW101 and the Sikorsky S-92 medium-lift helicopters.

Heilongjiang native Liu Yang with one of the handmade cheeses at his Le Fromager de Pekin workshop in the north of Beijing. When Heilongjiang native Liu Yang, 37, decided to leave his technical support job for a change of scene in France 10 years ago, he did not expect to come back as a cheesemaker. Now, his four-man workshop Le Fromager de Pekin, located in a northern suburb of Beijing, is turning out authentic French cheeses that line the shelves of the capital's expatriate supermarkets and are sent to cities further afield, from Shenyang to Shanghai. I grew up on a farm in Heilongjiang and have always had milk in my diet. My granny had two goats when I was a child, and she later bought a cow for milk. So although people say goat's milk tastes strong, I'm actually quite used to it. But I had never tried cheese until I went to France. A few days after I arrived at my university in Clermont-Ferrand, we had a cold buffet where local cheeses were served with wine and ham. I remember not being very used to the texture of the cheeses, although I found them aromatic.

Zhang Jianping (left) and Yi Xiaoguang (right) Two of the PLA's rising stars have been named regional air force commanders - a sign that technocrats are coming to the fore as the military's modernisation continues. A third regional air command has gone to the son of one of communist China's founding fathers who overcame punishment five years ago for the worst plane crash in recent PLA air force history. Major General Zhang Jianping , 54, won promotion to air force commander of the Jinan military region, while Major General Yi Xiaoguang , 52, is the new air force commander in the Nanjing military region, the semi-official China News Service reported. The promotions make them the youngest of the seven regional air force commanders. Both joined the air force while still in their teens, and both have outstanding merits and achievements. They took part in Sino-Russia anti-terrorism exercises in 2005 and 2009. Zhang became, at 27, the youngest People's Liberation Army regimental commander and, at 36, the youngest aviation teacher in the air force. Yi was a command pilot and an all-weather flight instructor with flying capability in the Yunnan plateau. In his time off, he compiled an English-Chinese dictionary for Chinese pilots, which was released nationwide. Military analyst Anthony Wong Dong, president of the International Military Association in Macau, said Zhang and Yi's promotions showed that outstanding professional and technically skilled officers now had more chance of promotion. "The PLA air force has many talented men like Zhang and Yi, but it was rare for them to get a chance at promotion in the past," Wong said. "Since both men took part in anti-terrorism drills with Russia, their promotions will help the air force improve its international image and become a modern military force." The website of People's Daily meanwhile said Lieutenant General Jiang Jianzeng , formerly air force commander in the Nanjing military region, would succeed Jia Yongsheng as air force chief in Beijing, with Jia having reached the retirement age of 63. As air force commander, Jia had the rank of second-in-command overall of the Beijing military region. Officers of that rank must retire at 63; those in overall command of a military region may delay retirement until 65. Jiang, 61, is the son of General Jiang Bo , one of the People's Republic's founding fathers. Commanders of the Beijing military region are considered to have the highest seniority among the regional commands. Jiang's promotion was a surprise because he was one of 11 senior officials punished for the crash of an air force plane in the eastern province of Anhui in June 2006 which left 40 people dead. Jiang was given a demerit by the army's top decision-maker - the Central Military Commission - after the disaster. However, just a month later he was promoted from major general to lieutenant general. Zeng Zhiping , an expert in military law at the Nanchang Institute of Technology in Jiangxi , said disciplinary action had never been a big factor in whether or not military officers won promotion. "A military leader's morality and loyalty to the party are top priorities when assessing their promotion. The others are just references," Zeng said. "In the 2006 crash, Jiang was given demerits because of his leadership responsibility as Nanjing air force commander. But he was not the commander on the front line."

Beijing wants to preserve the cultural heritage around Gu Enguang's home ... but it means he is not welcome to stay. It is all part of a broader plan to manage the sprawling capital's population. A narrow, rugged concrete path leads to Gu's home at Liulisi hutong in Beijing's Dongcheng district. Facing south is the main building, a room measuring about 20 square metres that serves as bedroom, living room and dining room. In front of it is a small yard, with most of the space occupied by a self-built brick kitchen and many odds and ends. Gu, 55, lives in the yard house with his mother and wife. Despite cramped conditions, he cherishes it as a great possession. "We're used to it. It's an inheritance left by my forefathers," Gu said. Asked if he ever wished to move to a bigger place, he opened a drawer and took out a page of January 7's Beijing Times. The headline read: "Dongcheng district to evacuate 200,000 people in 20 years." It said the district government had picked three areas on the capital's outskirts and would build new homes there to relocate 215,000 people from 2011 to 2030 in an effort to control the population. According to Dongcheng district party secretary Yang Liuyin , the plan will see 200,000 people moved out of central Beijing, and the demolition of courtyards in the area "without much value", another capital-based paper, The Beijing News, said in a report late last month. It said the mass relocation plan was also "part of the city's efforts to apply for Unesco World Heritage status for Beijing's central axis", which stretches 7.8 kilometres from the Yongding Gate to the Drum and Bell Tower, including the Forbidden City, the Temple of Heaven and Zhongnanhai among other cultural sites. The report quoted Yang as saying the relocation should be carried out because "there should be no residential houses around the cultural sites". "The conditions of the overpopulated hutong houses are not good. It would be better for [the residents] to move out of the district," Yang was quoted as saying by The Beijing News. His words kicked up quite an online outcry because the removal would constitute the destruction of some of the last hutong neighbourhoods in central Beijing. Also, many Beijing locals think their courtyards and hutongs are part of the cultural sites that make Beijing unique. Many of the residences that would be affected are home to low-income families. Although the details of the relocation plan will not be unveiled until later this year, Yang said residents who consented to relocation would be "properly" compensated. Though he did not call the news good or bad, Gu was apparently looking forward to improving the family's living conditions, as he has followed government plans closely. But on the other hand, "it feels as if we're making room for migrants", he said. Although Beijing planners had set a population target of 18 million for 2020, there were already 19.72 million people in the municipality at the end of 2009. Migrants are the biggest contributor to the boom. "Every year the number of migrants grows by 400,000 to 600,000," said Duan Chengrong , a professor at Renmin University's population institute. Population control was among the most discussed issues at the annual plenary meeting of the municipality's people's congress, which ended on January 21. In its five-year plan released last week, "evacuating the inner-city population in an orderly fashion" was the first measure to tackle a series of problems brought by high population density. "The population issue in Beijing is rather a problem of spatial distribution than the number of people," Zhang Qiang , a professor and political adviser, said at the annual plenary meeting of Beijing's advisory body, which concluded last month. He said 62 per cent of the permanent population lived inside the Fifth Ring Road, which accounts for only 8.4 per cent of Beijing municipality's total size. To Gu, relocating to the suburbs means not only loss of heritage, but also a lot of inconvenience. "The other day, laotaitai [his mother, using a respectful form of address for an elderly woman in the family] broke her arm. We sent her to Gulou Hospital, which is the nearest one. But doctors there simply said they were not capable enough and asked us to go to Jishuitan [Hospital]," he said. "Even inner-city hospitals are incapable, let alone those in the suburbs. "And even though people move out of the inner city, they still work here. It just creates more traffic." Duan said Tongzhou, an eastern suburban district, was a good example of why guiding people to live on the outskirts did not ease population pressure. "There are just too few job opportunities there. People live there, but their jobs remain downtown." He added that with government agencies remaining in the city centre, moving people could only make traffic worse. He believes that fundamentally, the city has to reduce its functions to remedy congestion, population and pollution, among other problems. "As a colleague of mine once said, Beijing can't be Washington, New York, Los Angeles, Chicago and Pittsburgh at the same time." In a meeting during the municipal People's Congress, vice-mayor Ding Xiangyang said the government was shifting its efforts for economic development from the inner city to suburban districts. He said it was now endeavouring to create suburban districts with a gross production of more than 100 billion yuan (HK$118 billion) so that the population would be attracted to these areas for both working and living. Currently each of the four central districts - Dongcheng, Xicheng, Chaoyang and Haidian - has that much gross production. Nearly all central districts have mapped out population-shift plans for the next few years or decades. Xicheng district is sending 75,000 people out to five communities on the outskirts in two years. Chaoyang has cut its quota for residential projects by 10 square kilometres, thus hoping to accommodate at least 370,000 fewer people. However, some experts have warned that as more and more residents are being relocated to the suburbs, Beijing's culture and tradition may gradually disappear. Zou Jingzhi , a playwright and political adviser, said Five Stories about Lao She, a drama depicting Beijing locals' daily lives, was staged at the National Centre for the Performing Arts a few weeks ago, but it failed to draw a big audience. "Why was this? Beijing locals are most interested in life in the drama, but now they all live in Huilongguan," Zou said, referring to a large community outside North Fifth Ring Road. "Why would they bother going all the way to the National Grand Theatre [the centre's nickname]?"

Huadian's new energy unit seeks public listing in 2011 - China Huadian Corp., one of China's five major power utilities, said Sunday it would speed up the public listing of its new energy unit this year.

Giant rabbit lanterns with other lantern decorations are seen at Xinlei Park of Puyang City, Central China's Henan province, Feb 4, 2011 during the Chinese Lunar New Year. The Lunar New Year began on February 3 and marks the start of the Year of the Rabbit, according to the Chinese zodiac. 

Local residents visit the Songjiacheng Heritage Park in Yangzhou city, East China's Jiangsu province, Feb 5, 2011 during the Chinese Lunar New Year.

Hong Kong*:  February 7 2011

All ports in Shenzhen, a south China city neighboring Hong Kong, reported a peak as mainland holidaymakers flocked to Hong Kong on Friday, the second day of the Chinese Lunar New Year. More than 180,000 people from China's mainland crossed the ports in Shenzhen for shopping and sightseeing in Hong Kong as of 6 p.m. on Friday, according to a report released by the Shengzhen border control department. Travelers from Heilongjiang, Henan, Jiangsu, Sichuan, Hunan and other provinces joined about 5,000 tourist groups to cross the border. In the week-long New Year holiday, residents from Hong Kong and Macao also rush to the mainland to visit relatives and friends. By 6 p.m. on Friday, about 220,000 people passed through the ports in Shenzhen to enter the mainland. Saturday will see an even bigger flow of two-way travelers at the ports in Shenzhen, according to the city's border control department.

Members of Wynners pop group Antony, Bennett Pang, Alan Tam, Kenny Bee and Danny Yip (L to R) are seen during a concert in Hong Kong, south China, Feb. 4, 2011. The concert of the pop group will be staged from Feb. 4 to 9. 

Flowery fashion show staged at Int'l Flora Expo in Taipei - A total of 24 creations, designed with the inspiration from Chinese traditional ink painting and watercolour, were presented during the fashion show in Taipei.

 China*:  February 7 2011

Bilateral economic relations between Singapore and China are strong, and as the world continues to recover from the global economic crisis, the bilateral trade has risen more than 25 percent to 95.3 billion Singapore dollars (about 74.5 billion U.S. dollars) in 2010, Singapore minister for trade and industry Lim Hng Kiang said here on Saturday. China is currently Singapore's third largest trading partner, second largest source of tourist arrivals and top investment destination. Delivering a speech at a Chinese New Year reception, Lim said: "looking ahead, we expect both the China-Singapore Free Trade Agreement and the ASEAN-China Free Trade Agreement to continue to spur even stronger economic cooperation in this region." Despite the recent global economic downturn, China remains one of the world's fastest growing economies. Its GDP grew 8.7 percent in 2009. Last month, China announced GDP growth of 10.3 percent for 2010. "Many Singapore firms are well aware of China's immense potential as the world's largest consumer market. Over the years, many have made inroads into the Chinese market. Our early investments were mainly in the coastal cities, such as those in Jiangsu, Shandong and Guangdong. Since then, other Western and Central China regions have emerged as new growth areas and Singapore is strengthening our economic engagement in these regions too," he said. The Singapore Chamber of Commerce & Industry (SingCham) and the Singapore Business Federation (SBF) are important conduits for Singapore businesses seeking to operate in China. SingCham, for example, helps to promote and develop a cohesive group of Singapore communities based in China and helps them stay connected to Singapore, Lim said at the reception hosted by SingCham and SBF. "As China's development gathers pace, new opportunities will continue to emerge. I look forward to seeing more Singapore companies tap on organizations such as SingCham and SBF to venture further into the Chinese markets," he said.

Fireworks illuminate night sky to greet Lunar New Year - Fireworks illuminate the sky over China's Hong Kong and Dalian, Feb. 4, 2011, to celebrate the traditional Spring Festival.

Sanya, a tropical resort in China's southernmost island province of Hainan, will see its tourist numbers peak in the coming weekend as Spring Festival holidaymakers flock to enjoy sunshine and beaches. More than 36,000 visitors traveled to Sanya on Wednesday, the first day of the week-long Spring Festival (Lunar New Year) break, and the number has picked up over the past two days, according to Hainan's provincial tourism administration on Friday. Sanya's top tourist attraction "End of the Earth" attracted about 16,000 visitors each day over the past three days, and the figure is expected to rise to 26,000 on Monday. Often dubbed as "China's Hawaii", Sanya attracts holidaymakers from as far as northeast China and Russia during the winter season with its sandy beaches and pleasant weather. A recent survey by China's leading online travel service provider ranked Sanya the top destination of Chinese travellers during the Lunar New Year holiday this year, with votes from 30 percent of respondents in the survey for clean air, warm sunshine, soft beaches and delicious seafood. The Chinese government has revealed plans to build the tropical island of Hainan into a top international tourism destination by 2020.

Hong Kong*:  February 6 2011

HK home prices tipped to rise 11pc this year - After blip because of curbs, flat buyers return to market as sales sentiment improves. Home prices in Hong Kong resumed their upward course last month after a dip in December, rising an average of 2.1 per cent month on month. The average home cost 19.6 per cent more than a year earlier. Property agent Midland Realty said buyers had begun returning to the market following the government's imposition in November of cooling measures to rein in price growth and curb speculation on homes. Another agent, Centaline Property Agency, said home seekers had decided to buy sooner rather than later as they were concerned prices would rise at an even faster pace after the Lunar New Year holiday. Midland Realty's chief analyst, Buggle Lau Ka-fai, expects the government to introduce more cooling measures to slow the growth in prices. Still, he expects the average home to cost 11 per cent more by the end of the year than it did last month, when the average price per square foot was HK$5,345. Midland Realty, one of the two biggest property agents in the city, noted that the average price is still 14 per cent below the HK$6,208 per square foot at the market's peak in June 1997. Lau said the price increase reflected buyers' positive expectations for the property market despite the cooling measures. Sales were barely affected when the government announced policies to cool the housing sector in November. Average home prices fell 0.4 per cent month on month in December, Lau said. The government announced additional stamp duty would be levied on homes resold within two years. The additional duty was set as high as 15 per cent if a home was resold within six months. The Hong Kong Monetary Authority also reduced the amount that banks could lend to buyers of homes worth HK$12 million or more from 60 per cent of the property's value to 50 per cent. The maximum mortgage ratio for properties worth between HK$8 million and HK$12 million was cut from 70 per cent to 60 per cent. "Sales volume has been picking up and prices are increasing as home seekers are gradually digesting the impact of the measures," said Lau. "The continuing low interest rates, pay rises and bonus payments contributed to the improved buying sentiment last month." Centaline painted a similarly positive picture. Sales of second-hand homes at the 10 largest housing estates last month rose 6.58 per cent to 729, compared with the 684 deals achieved in December. Sales totalled HK$2.91 billion, against December's HK$2.54 billion. Sales at several big housing estates jumped last month compared to December. At Taikoo Shing, sales were up 60.3 per cent at 93. However, Centaline said that citywide, the number of confirmor sales of second-hand flats - resales before transactions are completed - fell 54.84 per cent last month to 70 from 155 in December. This was the lowest figure in 22 months, it said. The value of confirmor sales amounted to HK$334 million in the secondary market, against HK$489 million in December. Centaline said the drop was the result of the government's anti-speculation measures. Many speculators had stayed away from the market since the special stamp duty was introduced.

Incense smoke wafts over a crowd of people praying for good fortune at Wong Tai Sin Temple on the second day of the Year of the Rabbit. Sik Sik Yuen – the Taoist, Buddhist and Confucian charity that runs the temple – expects a million visitors during the holiday period. Worshippers flocked to Wong Tai Sin Temple on the second day of the Lunar New Year, but few were drawn to a new underground hall with a HK$100 entrance fee. The hall welcomed believers yesterday after it was closed for a day on Lunar New Year's Day. The hall opened in January after the temple's operators - the Sik Sik Yuen, a Taoist, Buddhist and Confucian charity - spent three years and more than HK$100 million from donations to build it. In Taoism, worshippers whose Chinese astrological sign "offends the Grand Duke", or fan tai sui, this year are advised to take part in a prayer session in order to stave off misfortune. But not everyone is convinced they need to pay another HK$300 for the special ritual, which includes a blessing from the gods, to be conducted in the underground hall. Only around 1,000 people visited the hall during the day, and one third of them paid for the ritual. A 51-year-old housewife said: "I don't need to pay for the same ritual service as in Tsuen Wan's Yuen Yuen Institute. I can afford it but I won't waste the money." Others felt it was too expensive. Annie Chung said: "Paying HK$100 is acceptable to see those beautiful statues of gods and generals inside the hall, but another HK$300 seems a bit too much." A 46-year-old mainland visitor, who was waiting outside while his wife went into the new hall, said he did not see the need to pay the extra money, especially if his zodiac sign did not offend the tai sui. Meanwhile, yesterday's warmer weather drew 320,000 people to Victoria Harbour, where 31,888 fireworks shot into the sky in a 23-minute display costing HK$6.8 million. Highlights of the display were fireworks in the shape of a rabbit's face and a giant smiley-face which lit up the night sky. But when a display which was supposed to say "I love HK" - love was in the shape of a heart - was fired, few people could read the letters. Ashley Cheung, 31, said before the show he was looking forward to seeing the rabbit face. Another resident who arrived at the Wan Chai pier 45 minutes before the show said: "Today's not cold at all, so it's all right to wait outside." Cheung Yun-chu, a 55-year-old also eager to see the rabbit-themed fireworks, said: "It's going to be amazing. It will be the first time for me to see animal patterns in fireworks. It would be better if the sky was clearer."

The biggest group of specialists in Hong Kong's public hospitals are angry at their poor career prospects, with Hospital Authority figures showing the lowest-ranking doctors have to wait an average of 16 years for promotion. The doctors - specialists in internal medicine, also known as physicians or internists - say their morale is at an all-time low and complain that the authority has done nothing to retain talent in the public hospital system. A panel under the authority formed by top physicians has urged the government to act at once to restore confidence. Otherwise, they say, there could be "a collapse in public services". An authority committee overseeing the training of physicians - doctors who diagnose and treat illnesses in patients, as opposed to surgeons - recently completed an analysis of promotion prospects. It shows that some specialists take 16 years to rise to the rank of associate consultant. Doctors in other specialities, such as radiology and obstetrics, can become consultants within 10 to 15 years. The authority says doctors in the departments of medicine and clinical oncology wait the longest for promotion because of low staff turnover. The four specialities with the fastest promotion tracks are obstetrics and gynaecology, psychiatry, radiology and anaesthesia. Turnover among obstetricians was 9 per cent in the first 10 months of the financial year, to the end of January, but less than 5 per cent in departments of medicine. The poor prospects have not only affected the morale of physicians at public hospitals but may mean fewer medical students choose this speciality. That could have long-term ramifications for hospital services.

The government says its new rules on immigration will help tens of thousands of adults on the mainland to be reunited with their parents in Hong Kong. But Tsoi Tanmei, 39, won't be one of them, even though for years she has wanted to move to Hong Kong to rejoin her parents, two brothers and a sister who left her in Fujian province. Her problem is that she was born two weeks too early. Under a new rule announced on January 14, children of Hongkongers born on the mainland who were under 14 when their natural father or mother obtained a Hong Kong identity card before November 1, 2001, are eligible to apply for right of abode. Tsoi turned 14 two weeks before her father obtained a Hong Kong identity card in 1985 so she doesn't qualify. Her case showed that the new immigration arrangement solved only part of the problem of split families, said Jackie Hung Ling-yu, who has helped right-of-abode claimants for a decade. "We have heard of a case of three sons of a father in Hong Kong who are all not eligible to apply under the new arrangement," Hung said. And the application procedures were still not clear as details had not been announced by mainland authorities, Hung said. "We really hope the mainland and Hong Kong government use their discretion for some abode seekers who still do not qualify under the new scheme and have been fighting for their rights over the last decade," she said. Tsoi's 62-year-old mother, Kwok Sau-kaap, said: "I am really worried about my daughter left on the mainland. We are missing someone in our family and we won't give up fighting for this." Kwok said her daughter, born on October 18, 1971, had not reached 14 when her husband arrived in Hong Kong from Fujian on October 7, 1985. He obtained an identity card in November 1985, Kwok said. Kwok came to Hong Kong in 1994 and another two sons and one daughter came between 1994 and 2000. Only Tsoi is left in Fujian because of the issue of her age. Tsoi came to Hong Kong in 1997 on a two-way permit to fight for right of abode. She overstayed for six years while her case was presented in court as a test case on the law, Kwok said. Kwok remembers the day in 2002 when police came to her home and arrested Tsoi, then deported her to the mainland. "In recent years, we have communicated by phone and cry when talking about the prospect of a family reunion," Kwok said. Her daughter made short visits to Hong Kong in the last year, "but my husband and I really want her to come to live in Hong Kong and stay with us". The new arrangement brought in last month is meant to end a decade-long right of abode saga. In 1999, the Court of Final Appeal in Hong Kong granted mainland children born to Hong Kong parents the right of residency. The government estimated that 1.67 million migrants could flood the city and sought a reinterpretation of the Basic Law by Beijing to overrule the court judgment. Last month, the government sharply lowered the estimate of probable immigrants, saying tens of thousands would apply and that 80 per cent of claimants would now be eligible. Although some advocates criticise the new rules as falling short, Father Franco Mella, a supporter of those seeking right of abode, sees it as progress. The new arrangement shows "efforts were not wasted in the last 12 years of fighting". "We will persist in fighting for those left out under the new [right-of-abode] arrangement."

What the watch on your wrist says about who your are - An expert in Hong Kong appraises a 1958 Rolex Submariner. A measure of any Chinese businessman is the time he keeps - and, far more importantly, the watch he wears to mark it. A heavy slab of gold could be a marker that the person is from an inland city. A more expensive, understated watch could be a sign that they're from the coastal cities of Shanghai, Shenzhen or Beijing. New money, in Chinese terms, versus old. Around 10 or 15 years ago, the coastal cities would also just go for gold, a chunky watch with a meaty gold strap, says collector Harry Qin. "In Asia, a watch is something that can hint at status," the Shanghai private equity investor, who has a US$250,000 collection of 18 timepieces, said. "But many businessmen just wear a gold Rolex. Especially in less developed cities inland, a gold Rolex is still a very easy way to show other people that you've got money." Taste for fine watches has developed over time, says Qin, one of the many collectors in Asia that helped make last year the second best in the Swiss watchmaking industry's history. Not bad, in the middle of a severe global downturn. "For the first 11 months of 2010, 52 per cent of our Swiss watch exports in value went to Asia," Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry, said. Sales were up almost 55 per cent in the mainland and almost 46 per cent in Hong Kong. The proof will be there to see at auctioneer Antiquorum's Hong Kong offices, where 452 rare and expensive watches will be sold for an estimated US$4 million. Top of the range is a Patek Philippe "Celestial", expected to sell for US$200,000. "It's one of the very few investments you can appreciate every day," Louisa Lo, Antiquorum Asia's marketing director, said. "You can wear it on your wrist, you can show off to your friends, you can appreciate the ... intricate details. These are not the kind of enjoyments you can get from ... a yacht or luxury properties." Qin, the Shanghai watch enthusiast, said: "There is something very special about a good watch."

 China*:  February 6 2011

HNA Group, the mainland's fourth-largest airline group, plans to expand its corporate jet services to Asian cities through its newly set up subsidiary, Hong Kong Jet. The expansion is set to tap growth in demand for business jets in the region, said Jackie Wu Wing-sze, chief operating officer of Hong Kong Jet. Hong Kong Jet plans to start charter flights and ancillary services, including aircraft management and acquisition, financing, delivery, refurbishing and registration. It has submitted an application for an air operator certificate to the Civil Aviation Department and expects to get approval by August, said Wu. Before its charter service is running, the company will roll out a crew placement, training and acquisition consultancy. The first of the company's four new Gulfstream 550s, priced at US$50 million each, will arrive by May, with more to be delivered by the end of the year. The jet can fly up to 12,500 kilometres non-stop with 19 passengers, and has the longest range of all business jets. The launch of Hong Kong Jet and the choice of the long-range jet has brought HNA one step closer to its goal of expanding its services to the international market. HNA has dominated the business jet market on the mainland through Deer Jet, a Beijing-based private jet operator founded in 1995. By the end of last December, Deer Jet owned more than 40 corporate jets. However, Deer Jet has limitations in expanding internationally. As a mainland private jet operator, it has to comply with mainland regulations, which allow it to operate only mainland-registered business jets and hire cabin crew accredited with the Civil Aviation Administration of China (CAAC). Mainland-registered private jets are also subject to a 27 per cent import tax on average, depending on how the owner finances the aircraft, said Wu. It means the owner has to pay US$2.7 million to US$15 million extra for a private jet. Each aircraft costs between US$10 million and US$60 million. CAAC also requires all charter flights by private jet to be manned with two to three pilots and one engineer. Hong Kong and many other jurisdictions allow two pilots, with no engineer required. However, parking and navigation fees for mainland-registered jets are lower than for foreign-based aircraft. "HNA Group has long been contemplating setting up a Hong Kong-based business jet company to avoid the limitations on the mainland," said Wu. "We are confident that we can take up to 50 per cent of the market in Hong Kong over the next two to three years." She predicted that the number of business jets operated in the city would increase to 80 in that period, compared to fewer than 60 now. The company plans to open a second office in the next three years, with Singapore, Japan and Russia possible expansion options. Over the past 14 months, the price of pre-owned jets has risen 26 per cent on average due to buoyant demand in the region, said Wu. "The luxury and hospitality offered by a private jet is irresistible to wealthy people in the region and many consider it as a treat for their business partners." The rise in the price of second-hand private jets has also prompted individuals to consider the aircraft as an investment. "Just like buying a house, the jet owner will charter their aircraft out for recurrent income until they realise a profit by selling it," Wu said. The Business Aviation Centre, the ground handler and service provider for private jet operators at Chek Lap Kok, is running out of space and that may curb growth, said Wu. Hangars and parking spaces at the centre have failed to meet the needs of the growing private jet fleet in Hong Kong. "When a typhoon or some adverse weather arrives, I will be very busy finding shelter [for the jets] or diverting the plane somewhere else," Wu said. She urged the Airport Authority, which is about to unveil its master plan for development of the airport, to provide more space for private jets.

Shanghai's Bund is sinking. Of itself, this is hardly news. The city's most famous street has been slowly settling into its foundations since the row of colonial architecture was first built. Shanghai sits, after all, on a plain of ancient river sludge with the consistency of cold porridge. In recent weeks, however, the issue has been in focus following local newspaper reports about major cracks appearing on three "historic buildings" on the Bund, the structures in need of emergency repairs due to subsidence. At first, the headlines appeared alarming, and threw up images of the city's most recognisable landmark crumbling and being swallowed up by the sludge. Last March, the city completed a massive three-year renovation of the riverfront, including a major expansion of the pedestrian promenade and a 3.3-kilometre double-deck road tunnel running underneath the length of the street. Engineers working on the tunnel project spoke about the technical difficulties involved in digging under a stretch of old and in some cases unstable buildings on a soil structure prone to subsidence even when left undisturbed. Rotting wooden foundation piles were known to extend beneath the buildings, but to unknown depths. Disturbing these, the worry was, could bring the entire house of cards down. It was quite a gamble to take with the city's most marketable tourist attraction. Talk of Bund buildings cracking up so soon after the project's completion was ominous to say the least. In fact, the three endangered buildings are not part of the iconic strip that features on postcards and promotional materials. Instead, they sit further to the south, bordering a huge swathe of ground flattened as part of the city's seemingly endless urban redevelopment drive. The largest of the three "historic" structures is an office building that dates back to the 1920s. Externally, it may look immaculate, but cracks big enough to slide a hand into have opened in its basement parking lot. The other two buildings, hidden in alleys behind the main road, are even older, red-brick apartment blocks. Residents, many of whom had lived there for decades, have been moved out while a two-year effort gets under way to stop the structures falling apart. The contrast couldn't be more stark between the tumbledown look of these old apartments - grimy, dishevelled rabbit warrens crammed full with generations of possessions and detritus - and the chic fashion stores and stylish restaurants a stone's throw away. But it perfectly embodies the myth that is the Bund, and by extension Shanghai itself. Tourists and new arrivals to the city naturally assume the Bund to be the cultural and social hub of Shanghai. Majestic colonial stone pillars stand next to chic art deco masterpieces all overlooking the bustling Huangpu River and the towering skyscrapers of Pudong's financial zone - what's not to love? The buildings are certainly grand, and in recent years renovation projects have breathed new life into the once-forgotten structures. If so inclined, one can buy a watch for the price of a small apartment, savour a dinner at the cost of an average mortgage payment or perhaps just sip on a supremely pricey cocktail. The only problem is that no one really bothers. What should be one of the city's most vibrant nightspots barely features on locals' radar. The municipal government when announcing the Bund's facelift last year proudly boasted it would be "as charming as the Champs Elysees in Paris" once finished. It is debatable whether the author of that statement had ever visited the French capital, but despite rows of white and purple ornamental cabbages, the new-look Bund has little in the way of joie de vivre. There is a strange empty, unreal feel to the place - even when the waterfront promenade is swimming with summer tourists. Step away from the imposing facade and the picture is even more surreal. Barely half a block behind the Bund, there is little evidence of the city's supposedly booming economy. Instantly, the designer labels are replaced by tawdry knick-knacks and garish bargain-basement clothes on show in tiny, grimy shops interspersed with a handful of cheap eateries and the odd boarded-up unit. It's like being trapped in the land that economics forgot - nothing looks to have been renovated or repaired in decades. Forget subsidence: that is where the real cracks appear in the Bund's opulent veneer.

New property taxes for Shanghai and Chongqing seem likely to have little impact. The mainland's latest manoeuvre in its war on inflation - new property taxes for two of its biggest cities - looks likely to have little impact on wider price pressures or on the flood of investment that some in Shanghai fear is feeding a potentially destabilising bubble. "For those who already own a few apartments and have made a big fortune from trading property in Shanghai, the new rules mean nothing at all," said Liang Chenkui, a 28-year-old legal assistant in Shanghai who used all his savings and much of his parents' to buy an apartment in a northern Shanghai suburb last year. News of the new taxes caused barely a ripple in local financial markets, and as the lack of any serious implications for property developers has hit home, real estate shares have rebounded. Shanghai and Chongqing, each home to more than 20 million people, are among many Chinese cities that have seen housing prices soar in recent years, burdening families already strained by surging costs for food, utilities and other necessities.

Hong Kong*:  February 5 2011

With more than 200,000 people expected in Victoria Park on Wednesday evening to celebrate the coming of the Lunar New Year – special traffic arrangements and road closures would be implemented in Causeway Bay, a government spokesman said. He said roads near Victoria Park – including sections of Lockhart Road east of Cannon Street, Great George Street West, Pak Sha Road and Lee Garden Road – would close from noon on Wednesday until 8am on Thursday. In Kowloon, thousands of worshippers were expected to visit the Wong Tai Sin Temple on Wednesday night. Consequently, Shatin Pass Road between Lung Cheung Road and Fung Tak Road would be closed temporarily to traffic – except for mini bus services from 6pm on Wednesday to 7pm on Thursday, the spokesman said. The operation of most bus routes and trams would be extended on Wednesday. Most MTR Corporation (SEHK: 0066) trains and light rail services will also run overnight, he added.

Tourists as well as residents are taking a growing interest in our culture and the Heritage Office has produced a guidebook suggesting various tours. My favorite is the Scary Journey. The tour starts at Stanley Military Cemetery. Some people claim to have captured the ghosts of Japanese soldiers in photographs there, but even without the supernatural it is an impressive and thought-provoking place to visit. Next stop is the Hong Kong University Hall at Pok Fu Lam. It is a fine old building - somewhat like a castle - built in the 1860s. As well as spooky tales, the place is the cause of an old superstition: any student who touches the statue of a mythical animal outside the hall will fail to graduate. Next are two old buildings in Sheung Wan and Sai Ying Pun: Kwong Fuk Tsz in Tai Ping Shan, and the Sai Ying Pun community center. The former, dating from 1856, houses ancestral tablets and was once used to store coffins. The latter is the famous "haunted" old mental hospital, built in 1892. (The ghosts, like most in Hong Kong it seems, date from the war.) Finally, we visit Nam Koo Terrace in Ship Street, Wan Chai. It is a large (and dilapidated) two-story house completed for a wealthy Shanghainese in 1921 and has a strange combination of Western and Chinese features. Among the scary goings on: green fireballs and screaming women at night. You have been warned! Bernard Charnwut Chan, chairman of the Antiquities Advisory Board, sees culture from all perspectives.

Chinese New Year celebrated all over world - The Chinese New Year is a good opportunity for China and the world to get closer and enhance their friendship.

 China*:  February 5 2011

New Sino-Russian pipeline delivers 1.3 mln tonnes of crude oil in 1st month - Some 1.318 million tonnes of crude oil had flowed through an oil pipeline from Russia's far-east to China by Jan. 31, a month after the pipeline began operating, an officer of the Chinese operator of the pipeline said.

Fireworks explode near the Drum Tower in Beijing as residents mark the start of the Year of the Rabbit on Thursday. Asia rang in the Year of the Rabbit on Thursday with fireworks, lion dances and prayers that the bunny will live up to its reputation for happiness and good fortune next year. From Sydney to Pyongyang, the Lunar New Year was marked by a thundering barrage of firecrackers, family feasts – and rabbits galore. In Beijing, as in cities across China, fireworks lit up the sky at midnight as millions of revellers celebrated the arrival of the Year of the Rabbit. The salvo rumbled on through the early hours of Thursday. Fire authorities in the capital were on high alert against possible deadly fires sparked by the festivities with the city tinder-dry because of a three-month drought across northern China. Fireworks are set off to ring in the year and ward off evil spirits but each year hundreds are reported hurt or killed in accidents across the nation of 1.3 billion people. “We let off firecrackers to chase away the ‘nian’, a bad animal in Chinese legend. That way, it will not come and disturb you... It’s tradition,” said Wang Kuang, one of many visiting the huge temple fair in Beijing’s Ditan Park.

A girl displays "bunny dolls" at the Spring Festival cultural temple fair held in Ditan Park, Beijing, capital of China, Feb. 2, 2011. Variety of goods related to bunny are well received by visitors at temple fairs kicked off in Beijing on Wednesday, the Chinese Lunar New Year's Eve. 

The authorities evacuated 64,500 people in a remote region of the country's southwest following a quake that damaged hundreds of houses, state media reported on Wednesday.

President Hu visits N China's Hebei to extend New Year greetings - Chinese President Hu Jintao made a tour in Baoding from Feb. 1 to 2 to welcome the Spring Festival with local officials and residents.

Premier Wen spends Spring Festival holiday with villagers - Chinese Premier Wen Jiabao made a tour Tuesday in Jinzhai County in the Dabie Mountains area to spend the Spring Festival holiday with local residents.

Beijingers will be able to buy Belgian Conference pears from local supermarkets in one month, heralding the start of what is likely to be an influx of imported fresh fruits and meats. The first batch of the pears - weighing more than 17,000 kilograms - arrived at the port of Shanghai on Jan 24 and will be transported to the shelves of the capital's stores after the Spring Festival. The popular pears will initially only be available through supermarkets, including Carrefour and Wal-Mart, but will eventually be rolled out to be sold through local wholesale markets, said Marc Evrard, the market development manager with Belgische Fruitveiling (BFV), which is the supplier. The Conference pear will be the first non-native variety of pear available in the capital. Evrard said the pear is hardy and can easily survive the five-week journey to China. Negotiations about the importation of the pear took three and a half years to complete but the successful end of the process could open the door to other fresh products from Europe. Belgium is understood to want to export other products to China including bees, horses and pork. "We plan to export seven types of product to China eventually and I hope that process will begin this year," said Michel Gerebtzoff, first secretary of the embassy of Belgium. According to Belgium Unlimited China, the website of the Belgian embassy in Beijing, Chinese people eat 15 billion kilograms of pears a year, leaving plenty of room in the juicy market for a new product. The Conference pear will sell for around 4 yuan each, which is more than double the price of domestic pears. Meanwhile, the price of native fruits in Beijing's markets has been rising considerably and is now much higher than this time last year. At Xinfadi market, the largest wholesale fruit and vegetable market in Beijing, native pears are now selling for up to half a yuan more per kilogram than they were at the end of November. A director from the China Fruit Marketing Association told Beijing News on Monday that the coming Spring Festival, when gifts of fresh fruit are popular, is likely to drive up the price even more. The Beijing Mirror Evening News reported that recent rises in the cost of fruit have mainly been down to falls in the temperature in the south, which have impacted picking and transportation costs.

Japan is expecting a surge in Chinese visitors during the lunar New Year holiday period, with tourists eager to snap up electronics and other goods in a welcome boost for retailers. A record 9.44 million foreigners visited Japan last year, with inbound mainland tourists rising over 34 per cent to about 1.6 million, surpassing Taiwan to become No 2 after South Korea, the nation with the most visitors to Japan. Even before the start of the holiday on February 3, Chinese shoppers were piling off buses in Tokyo’s Akihabara electronics shopping mecca, which some 40 per cent of inbound Chinese are believed to visit. “The number of Chinese customers in our store has increased a lot compared to last month because of the Chinese New Year holiday,” said Chen Rui, a sales clerk at the Laox electronics shopping centre, who is originally from the Chinese city of Xian. “Most of them buy electronics such as watches, rice cookers, cameras and camcorders.” To deal with the influx of Chinese shoppers, who surged after visa restrictions were eased last year, the shopping centre has Mandarin-speaking staff, uses signs written in Chinese, and accepts mainland credit card without additional processing fees. Many customers said they were attracted by the high reputation of Japanese goods as well as a sense that better quality products might be found within Japan itself. “Japanese products have good quality, and we don’t have to worry about buying imitations because they are all genuine,” said 50-year-old Li Tienan, who works for a Shanghai-based electronics company. Mainland tourists spend an average of US$1,300 per person, according to estimates by Japan’s tourism agency, and are not put off even by the strength of the yen, which last year hit a record high against the yuan. “I don’t care. I would definitely buy some ‘Made in Japan’ goods since I’m in Japan now,” said Liu Hailing, a 39-year-old visitor from Qingdao. Though the number of Chinese visitors to Japan fell off in the last quarter of last year as a long-term territorial dispute between the two nations flared up, Japan’s foreign ministry expects that inbound Chinese visitors will eventually reach 10 million a year. To make visiting still easier, Japan plans to offer multiple-entry visas for frequent Chinese visitors from this summer. Retail industry experts say inflation risks and a stronger yuan mean that Tokyo and other shopping hot spots, such as Hong Kong and Seoul, could all benefit more than last year.

A humble dish of stir-fried noodles and a cup of coffee is likely to set you back more in Beijing than Hong Kong as vigorous inflation hits home in the capital. Rising prices have made daily necessities in big mainland cities even more costly than in Hong Kong, which consistently rates as one of the most expensive cities in the world. Hongkonger William Wong knows full well how prices rises are hitting the pocketbook. Wong, who started work in Beijing for a Hong Kong-based trading company last year, is finding he needs to pay more in Beijing if he wants to maintain a similar quality of life to his home city. Wong likes to shop in supermarkets near home for basic items like apples but also regularly dines at, or orders takeaways from, Cantonese-style tea restaurants. He is also a regular taker of taxis to his office and back home. "Apart from the taxi expenses, almost all other things are more expensive in Beijing than in Hong Kong," said Wong, who is in his 50s. One example is stir-fried noodles with beef from a tea restaurant he often visits. In Beijing it costs 35 yuan (HK$41) while the same dish costs only HK$30 to HK$35 in Hong Kong. A box of fresh pork chops sells for over 30 yuan in the Hualian supermarket near his apartment, at least 10 per cent higher than in Wellcome or ParknShop. A pack of 10 imported Gala apples costs as much as 70 to 80 yuan in Hualian, yet are no more than HK$20 in Hong Kong. "I have compared my living expenses with that of a friend in Hong Kong. I spend more money than him on food and fruit, yet the quality of what I purchase is lower than his," he said. The National Bureau of Statistics announced earlier this month that the mainland's consumer price index rose 3.3 per cent last year. The government's target is to hold inflation below 3 per cent. Food prices, the major driver of inflation for the year, rose 9.6 per cent in December compared to 11.7 per cent in November. Many economists believe real inflation could be higher than the official figure as the government calculation does not include rent and mortgage payments. The mainland is likely to report even higher CPI increases for last month and this month, pushed up by food price rises ahead of the Lunar New Year. The South China Morning Post (SEHK: 0583, announcements, news) surveyed a Wal-Mart supermarket in Beijing's Dawanglu district and a Wellcome store in Causeway Bay last week. Around one-third of the food products and groceries we selected randomly were more expensive in Beijing. For example, bananas imported from the Philippines sell for HK$5.32 per 500 grams in Beijing compared to HK$4.18 in Hong Kong. It is not only in supermarkets that Beijing consumers are having to dig deeper into their pockets. A Big Mac at McDonald's costs HK$16.50 in the city compared to HK$15.10 in Hong Kong, while a tall cappuccino or caffe latte in Starbucks is HK$33 in Beijing compared to HK$28 in Hong Kong. Yi Xianrong , a researcher at the Chinese Academy of Social Sciences' Finance Research Centre, said the majority of customers shopping at big supermarkets like Wal-Mart are from middle-class families while lower-income people purchase their daily necessities at farm markets or small shops on the street. "Besides inflation, taxes and retailers' manipulation of prices are part of the reason some products are more expensive on the mainland than in Hong Kong," said Yi.

Hong Kong*:  February 4 2011

From left: designs by Armani Privé; Christian Dior; Givenchy; Valentino; Elie Saab. Asian persuasion - Paris haute couture designers woo wealthy Chinese to boost the market - Liu Wen models a voluminous black silk and blue tulle dress at Christian Dior, and Lee Hye-jung is in a nude coloured cocktail dress swathed with tulle. Lili Ji and So Young-kang wear raspberry chiffon dresses at Elie Saab, and a complete line-up of Asian models, including Du Juan and Shu Pei Qin, are in the Japanese-inspired collection at Givenchy. The message from Paris Fashion Week, which ended last week, is clear: this year the haute couture designers are wooing Asian women. Now that Givenchy has more stores in China than in the whole of Europe, the next task is to court wealthy Chinese clientele to help secure the future of French haute couture. With its price tags ranging from US$15,000 for simpler pieces to 10 times that for elaborate evening wear, there has long been speculation over whether fashion's anachronistic loss-leader can continue to survive. Although the US, France and the Middle East are still the top markets for the French houses, the Chinese appetite for luxury may well hold the key to their future. If China is the answer, then there were plenty of beautiful clothes on the catwalk to draw potential customers into this rarefied world, where everything is crafted to fit like a glove, and every piece of embroidery is the very best that artisans can create. Givenchy's dresses, inspired by the legendary butoh dancer Kazuo Ohno, featured some of the most delicate, intricate embroidery and applique to emerge from an atelier. Strips of tissue-thin leather were stitched onto tulle to create samurai jackets, while long dresses were embroidered with ostrich feathers. Designer Riccardo Tisci's light touch extended to tulle dresses appliqued with chiffon and embroideries in the shape of a crane or Japanese flowers. This lightness and delicacy threaded its way through many collections, including Chanel, Valentino and Elie Saab. Karl Lagerfeld's silhouettes for Chanel had the ease and comfort of casual fashion although they were illuminated with twinkling crystalline beading and layered over skinny fitted jeans. Coco Chanel did not like jeans, but Lagerfeld realises they are a fact of modern life, even for an haute couture customer. His Chanel jeans were washed in soft colour and decorated with gilded buttons. The collection was lyrical, light-handed and modern. Many of the pieces were diaphanous and illuminated with crystal beads, yet light as a feather to wear. Even the graceful dresses in a palette of tender pink tones, constructed in tiers of chiffon and sometimes covered in sequins, looked and felt weightless. The Valentino collection shared the lightness and transparency of Chanel in its tulle and chiffon dresses and delicate colours. There was the same sense of fresh-faced demureness in the way models wore shirts primly buttoned up and tucked into long skirts. However, among the sheer fabrics there was a little tailoring to anchor the collection, such as pleated dresses and a coat, trimmed with millefeuille collars for a graceful look. The designers, Maria Grazia Chiuri and Pier Paolo Piccioli, have captured the spirit of the house, at the same time modernising it. Elie Saab specialises in fragile embroidery and delicate lace and organza evening gowns, which he handles with a light touch, using subtle shades of tea-rose pink, mauve and stone and aniseed green with a shot of raspberry. Sweetness and romance are essential elements of haute couture, but so are glamour and sophistication. The graphic outlines at Christian Dior - from the feathered toque to the black brushstrokes that swept across the red coats and jackets and the long watercolour gowns of the spring collection - were inspired by the illustrations of early Dior by the artist Rene Gruau. John Galliano originally studied as an illustrator, as did Christian Dior and his close friend Gruau. So he tapped the signature Dior silhouettes from the New Look to the Bar jacket with pencil skirts and voluminous silk coats. He then drew on them, adding embroidered scribbles, brushstrokes of ink and cloudy veils of tulle to produce a lovely watercolour effect. Galliano frequently refers back to early Dior; Giorgio Armani, meanwhile, feels no obligation to rework his key signatures, which is why he surprised his audience with a futuristic collection of tailoring in shiny bright colours. There were echoes of Cardin's sci-fi vision of the 1960s, but Armani has modernised it for the 21st century with liquid metal tailoring and a series of Philip Treacy's metallic flying saucer hats. Perhaps we shouldn't be surprised to see glossy tunics and leggings in metallic fabrics, and dresses sliced in half to show shiny inserts given that Armani now works with Lady Gaga. Jean Paul Gaultier closed the haute couture shows with one of his best collections in years. Perhaps his split with Hermes has fired him up. Certainly, his punk couture theme, not new for him, was a tour de force as he imaginatively blended punk with references to can-can dancers and the Moulin Rouge. The mohawk hairdos, for example, could so easily be the feathered headdresses of can-can dancers. Outfits named "Anarchy in the UK", "Joy Division" and "London Calling" featured a twinkling black shredded knit dress with a silk fringe skirt, little silk bomber jackets decorated with studs and chains, shrugged over a black crepe fishtail dress or beautifully tailored high-waist pants. Gaultier may play the renegade card, but he is one of haute couture's finest tailors.

A consortium led by local businessman Charles Chan Kwok-keung bought control of dominant free-to-air broadcaster Television Broadcasts (SEHK: 0511) Ltd (TVB) for about HK$6.26 billion (US$806 million). According to a disclosure on the website of the Hong Kong bourse, Chan bought about 113.89 million shares, representing 26 per cent of the issued share capital of the broadcaster at HK$55 each on January 26. The price represented a 19.8 per cent premium to the closing price of HK$45.90 on January 26. Last week, TVB said shareholders of substantial shareholder, Shaw Brothers (Hong Kong) had signed an agreement to sell their entire stake in Shaw Brothers to an investment group controlled by Charles Chan, and Taiwanese entrepreneur Wang Cher and Providence Equity Partners. It did not give price tag. Shaw Brothers, controlled by Chairman Sir Run Run Shaw, has a 26 per cent stake in TVB.

Sales of traditional themed goods are not as popular at this year's Lunar New Year fair in Victoria Park, with people eager to buy inflatable versions of the characters on an iPhone game titled Angry Birds (top), Facebook's "Like" icon cushion, and unusual cases for iPhones. It is more like the Year of the iPhone and Facebook, than the Year of the Rabbit at the Lunar New Year fair. Stalls selling items relating to the smartphone and social networking site are enjoying better sales than traditional products at the Victoria Park fair, with some expecting big profits. The owner of a stall selling cushions of the "Like" icon on Facebook, Herbert Law Chung-hunt, 28, expects to rake in about HK$200,000, double his costs. He said he had sold half of the cushions by yesterday. And on the last day of the fair today, when many others were thinking of cutting prices to attract customers, he was considering raising the price from HK$80 to HK$98. "`Like' is a very positive thing, and we want to bring it to reality," Law said. "It is a lot warmer having it as a cushion than as a button on the computer screen." At another stall, Joey Wong Cho-yee, 23, was trying to bring the iPhone game Angry Birds to reality. The game consists of players launching birds in a slingshot at pigs in a house of sticks, scoring points for every swine they destroy. For HK$98, fans get an an elastic band and an inflatable bird and pig. Wong said they were attracting adults and children and were confident the money they brought in would cover their costs. Cases for iPhones are also hot items at the fair. Billy Law Wai-fat, 19, who is selling the cases designed by a friend, said they were doing well especially at night, when more people visited. He and his friend did a survey on Facebook and found there were more than 400,000 iPhone users in Hong Kong, so they decided they could be onto a winner. Meanwhile, mouse pads featuring female stars' breasts and inflatable toy breasts are selling like hot cakes at the stall for the sex film 3-D Sex and Zen: Extreme Ecstasy. Stallkeeper Oi Ming said they had had to bring in 5,000 more of the mouse pads after the original 6,500 flew off the shelves and she expected to sell more than 6,000 of the fake mammaries.

Three baby milk formula manufacturers have pledged to home-deliver up to three cans of milk formula to parents of babies who cannot find it in Hong Kong stores. Mead Johnson, Nestle and Pfizer also said they would set up customer hotlines so parents could locate stores that had stocks of baby formula. The promises came at a meeting between company representatives and Democratic Party lawmaker Fred Li Wah-ming yesterday. It followed a claim from angry parents they have not been able to buy enough milk formula for their babies in recent months because mainlanders, known as parallel traders, buy up stocks in Hong Kong and take them across the border to sell on the mainland. Li said companies promised to provide sufficient milk powder supplies for local parents. When placing orders, the parents would need to provide information, such as their identity card number and the name of the baby. Li said this was to ensure the customers were local residents. Kit Ng, a North Point dispensary worker, said more than half of his customers were mainlanders. He said the Lunar New Year would add pressure on already-tight supplies. "Some locals will buy quite a few cans of powder to take when they visit their relatives on the mainland," he said. Lau Oi-kwok, chairman of the Hong Kong General Chamber of Pharmacy, said some parallel traders offered HK$50 above the retail price for cans of milk formula. This had encouraged some retailers to stock up and only sell the milk powder to customers who offered a higher price, he said "This situation is quite common in Fanling, Sheung Shui and Mong Kok," Lau said. Some retailers said they did not have stock until customers offered to pay higher prices. The normal price for a can of milk formula is HK$150 to HK$190, but Lau said parallel traders could resell it for HK$250 on the mainland. "They can still make a big profit even if they pay a higher price for the formula here," he said. It was difficult to stop retailers from stocking up on milk formula as Hong Kong was a free market. Earlier, parents and lawmakers called for people taking unopened supplies of milk formula out of Hong Kong to be taxed at the border. The melamine milk contamination scandal three years ago - in which hundreds of thousands of babies fell ill on the mainland - has destroyed mainlanders' confidence in the quality of baby milk formula produced on the mainland. Lau said that explained the strong demand for imported formula and price rises in recent years. Li said the suppliers might consider creating a blacklist and suspending supplies to retailers stockpiling milk powder. A spokesman for Mead Johnson said on Monday it would get 420,000 cans of formula to the market in the next two weeks to meet demand over the Lunar New Year period. A spokeswoman for Friso said yesterday it would double February supplies from a year earlier and would monitor market demand closely. A Parkn'Shop spokeswoman said the company would ensure there was a stable supply of milk powder at its stores and limit customers to buying three cans at a time. The Mead Johnson hotline number is 2510 6321.

Mainland tourists shopping and sightseeing in To Kwa Wan reported no hassles from tour leaders. The new guidelines for mainland tour guides appear to have had an auspicious start yesterday. On the first day of the new rule coming into effect, no tourists complained of being forced to buy items, and all guides appeared to be professional and polite. Mainland tourists said there was a big improvement in terms of service after the introduction of the new measures. Wu Chun Lei, from Harbin , who came to Hong Kong with her daughter and husband, said they were not forced to buy anything during their two-day trip, which cost them HK$800 each. "When we came two years ago, the guide used strong tactics to force us to shop," she said. "Even though we paid HK$3,000 each for a trip covering Hong Kong, Macau and Hainan, we were told we had to spend at least HK$2,000 at each stop. If we didn't, they refused to take us to the next scenic spot. The effects of the measures are obvious. The guides are courteous and helpful now." Helen Li, from Jiangsu , who came with her husband for two days, paid HK$600 each for the trip. "We were treated fine, even though we didn't buy anything in the chocolate shop or the jewellery shop they took us to," Li said in front of the Deluxe jewellery shop in Hung Hom. Local tour guide Chung Wing-hung, who works with BCTS Travel Service, was the guide for the one-day shopping trip. "The `one tour, one guide' rule means I have to work for up to 15 hours a day," he said. The rule means the guide who escorts mainland tour groups during the shopping and sightseeing parts of an itinerary must stay on until the group returns to the mainland. Previously, the same tour might be led by different guides specialising in various parts of a trip, such as picking up or seeing off the tourists or escorting them to shops. The rule aims to ensure a guide who benefits from commissions derived from tourist spending is also accountable for any complaints that may arise. It was introduced by the Travel Industry Council in a bid to stamp out rogue guides. Other measures include a demerit-points scheme for tour guides, which could lead to revoking of licences in cases of serious misconduct, and a basic salary to reduce guides' reliance on commissions. Simon Hau Suk-kei, chairman of the Inbound Tour Operators Association, said the changes meant more than 100 people had lost their jobs. "They were the ones who specialised in picking up and seeing off the tourists," he said. "The `one tour, one guide' rule forbids us from sending more people to help out throughout the trip. It will affect service quality of the tours." Wong Ka-ngai, president of the Tour Guides General Union, which has 1,450 members, said the guidelines were useless as they did nothing to solve the underlying problems. "The root cause of compulsory shopping is that guides don't have a basic salary and have to rely on commissions for their livelihood," he said. "The new guidelines failed to stipulate an amount for a basic salary and did not outlaw zero-fee tours."

Before the Macau handover in 1999, Stanley Ho was often referred to as the enclave's "underground governor". His gaming empire accounted for half of its economy. As Macau legislator Au Kam-san said, Macau people used to think there were two governors. "One was the governor appointed by the Portuguese government and the other was Stanley Ho." Even since his four-decade Macau gambling monopoly was broken in 2001, Ho has had a finger in almost every business pie in the special administrative region and his commercial interests dominate its economy. Ho's Sociedade de Turismo e Diversoes de Macau (STDM) is still the city's biggest commercial employer, hiring more than 10,000 people. It accounts for about 5 per cent of Macau's workforce. Ho's blessing was virtually a necessity for anyone seeking the post of Macau chief executive. He gave his support to the first chief executive, Edmund Ho Hau-wah, and his successor, Fernando Chui Sai-on. The ageing mogul's ties with Beijing date back to the early 1950s, when he and late Hong Kong tycoon Henry Fok Ying-tung shipped machinery, medicine and other vital supplies to the mainland while an international trade embargo was imposed on China during the Korean war. Ho has served as a member of the Standing Committee of the Chinese People's Political Consultative Conference (CPPCC) since 1998, enjoying easy access to many state leaders. Given its huge political clout and economic power, it is unlikely that Beijing and the Macau government will sit idly by while his family fights over a vast fortune. Veteran China-watcher Johnny Lau Yui-siu said the central and Macau governments were concerned about the possible impact of the Ho feud on the city's economy. "Beijing is particularly concerned about whether the infighting will result in casino investors [backed by US capital] wielding greater influence in Macau," Lau said. In August, SJM Holdings appointed Timothy Fok Tsun-ting, eldest son of Henry Fok Ying-tung, as an executive director. Lanceford, Ho's main holding company, owns a controlling 31.6 per cent of STDM and STDM holds a 56 per cent interest in casino operator SJM Holdings - a stake worth around HK$40 billion. The Fok Ying Tung Foundation holds a 27 per cent stake in STDM. Timothy Fok, also a Hong Kong lawmaker, has not previously held any position in SJM Holdings. Lau said: "Fok's family, which has close ties with Beijing, seldom joins SJM Holdings' board of directors. Timothy Fok's appointment speaks volumes about Beijing's intention of having a say in the company." Some members of Ho's family have also formed a web of connections with the central and Macau governments. Pansy Ho Chiu-king is a member of the standing committee of the Beijing chapter of the CPPCC and vice-chairwoman of the Macao Chamber of Commerce. Lawrence Ho Yau-lung, Stanley Ho's son, is a delegate to the Shanghai panels of the CPPCC, while daughter Daisy Ho Chiu-fung serves as a delegate to the Tianjin chapter of the CPPCC. Ho's third wife, Ina Chan Un Chan, was appointed a delegate to the Guangdong sector of the CPPCC last year. Angela Leong On-kei, Ho's fourth wife, is a delegate to the Jiangxi chapter of the CPPCC and a member of the standing committee of the Zhuhai CPPCC. Leong, also a Macau legislator, accompanied her husband at meetings of the CPPCC in Beijing, which provided her with a platform to cultivate ties with mainland leaders.

Hongkongers hitching a ride out of Egypt aboard special flights put on by Beijing for mainlanders must expect to pay for it. That warning yesterday from Undersecretary for Security Lai Tung-kwok came as a deal was struck with mainland authorities for a special flight to bring around 160 Hongkongers from Luxor directly back to Hong Kong. Previously, Hong Kong tourists were flown to the mainland, from where they made their own way back to the SAR. The 160 represents the bulk of the 213 Hongkongers stuck in Luxor, a city rich in history that lies 700 kilometers south of Cairo, with Lai saying 52 opted to make their own way back. China Southern Airlines is putting on an A330 jet for the special flight, which took off from Luxor after midnight. The aircraft, also carrying about 40 mainlanders, will arrive in Hong Kong this afternoon, before flying to Guangzhou. Lai said the arrangement was made after negotiations with the Ministry of Foreign Affairs but those being evacuated should pay for the rides based on the user-pays principle. "We understand public concern over the cost of the flights. But we do not agree that public money should be used to settle the bill," he said. "As the arrangement for a charter flight for the Hong Kong travelers was made based on a request by the Tourism Industry Council, we will liaise directly with the council to follow up on the payment." Chartering a medium-sized private plane for such a flight can cost from US$190,000 to US$380,000 (HK$1.48 million to HK$2.96 million), according to US Skylink, an agency that partners with several hundred charter operators around the world. As of yesterday, Beijing has arranged for six special flights to evacuate Chinese nationals from strife-torn Egypt. Among the many stranded in Cairo were 61 Hongkongers, Lai said. It is believed about six travelers of them were aboard two special flights that landed yesterday in Beijing and Guangzhou. One of the travelers who arrived in Beijing yesterday afternoon said: "The situation in Cairo airport was chaotic. We were worried that we would not be able to fly out of the country before Lunar New Year." Staff at the Chinese embassy in Cairo said 44 Hong Kong residents, who had registered for the special flights, eventually made their own arrangements and arrived last night via Bangkok.

 China*:  February 4 2011

Andres Kiger of Coca-Cola in China praises the emerging market as important for its new brands such as Minute Maid Pulpy. Minute Maid Pulpy, launched in China, joins 13 other brands in the billion-dollar sales club. Coca-Cola, the world's largest soft-drink company, has made its first "billion-dollar brand" from an emerging market, it said yesterday, highlighting a strategy for growth with sales flattening in developed markets. Minute Maid Pulpy, a juice drink dense with pulp, joins Coke's line-up of 13 other brands that have achieved sales of at least US$1 billion, which include Coke Zero and Diet Coke. It was the first time that a Coca-Cola brand, developed and launched in an emerging market, reached the billion-dollar mark, said Andres Kiger, senior director of integrated marketing communications for Coca-Cola in China. "What makes this one important for us is that this was started here, in an emerging market, China, and that's a testament to China," he said. It is also testament to the company's commitment to a market with 1.3 billion consumers, after Beijing blocked its US$2.4 billion bid for Huiyuan in March 2009, citing competition concerns. That deal would have been the largest foreign takeover of a Chinese company and its rejection in the depths of the global financial crisis spawned fears China was raising barriers to overseas companies. Minute Maid Pulpy, developed in China and released in 2005, is now sold in 18 markets including Algeria, Mexico, Malaysia and Vietnam. Analysts said this trend of developing products for China and later exporting them to other countries was likely to continue. "China is going to be used as a test base for new food and beverage products, because of its huge and diverse population. If it can succeed in China, chances are it will overseas," said Marie Jiang, a retail analyst with Pacific Epoch. China's soft-drinks industry is growing at a compounded annual growth rate of 12.8 per cent, last year's data from Euromonitor International shows. Its juice-drink segment is growing 16.2 per cent annually, one of the fastest-growing segments. China's juice market is expected to more than double to US$23.9 billion by 2015 from current figures, data from Euromonitor shows. Coke sees huge potential for its beverages in China, where per capita consumption is only 32 bottles of Coke products a year, compared with 150 in Hong Kong and more than 500 in the United States. Coke's sales in developed markets have been slowing for years. To reach its targeted 5 to 6 per cent annual earnings growth, it will need to focus increasing efforts in emerging markets that generate annual economic growth in that range, including China, India and Africa. It is increasing investments in developing countries as part of its strategy to double by 2020 its US$100 billion of total global revenue in 2009. Coke said it would commit US$2 billion in investment into China and last October opened three new plants in Inner Mongolia. Coca-Cola has three "billion-dollar" juice brands, including Minute Maid Pulpy, and says juice is its number-two priority behind sparkling beverages. "There is now definitely a trend in China towards health. More and more consumers are willing to drink the juice beverages not the carbonated drinks," Jiang said.

China should increase its gold and silver reserves, the Economic Information Daily reported on Monday, citing an interview with China's central bank adviser Xia Bin. Increasing gold reserves at the "appropriate time" is in line with the strategy of internationalizing the yuan, the report cited Xia as saying. "Related departments" should employ a "buy in the dip" strategy over a very long period of time, Xia said. Bullion soared nearly 30 percent in 2010, advancing for the 10th year, as the dollar dropped and investors sought a store of value amid currency debasement. China is allowing greater use of its currency for cross-border transactions, seeking to reduce reliance on the dollar. The report is "a positive factor for gold prices in the mid-and-long term," Hwang II Doo, a senior trader at Seoul-based Korea Exchange Bank Futures Co, said on Monday. Still "it didn't have immediate impact on prices as gold's gain has more to do with the unrest in Egypt at the moment." Total gold consumption in China, the second-largest buyer, may gain 15 percent in the first-half, fueled by growing demand for alternative investments and a hedge against inflation, the China Gold Association said last week. Imports of gold by China jumped almost five-fold in the first 10 months of last year from the entire amount shipped in 2009, the Shanghai Gold Exchange has said. Shipments were 209 metric tons compared with 45 tons for all of 2009, said exchange Chairman Shen Xiangrong. The country increased gold reserves by 454 tons to 1,054 tons since 2003, the State Administration of Foreign Exchange said in April 2009. The metal only accounts for 1.6 percent of the nation's reserves held by the People's Bank of China, according to the World Gold Council. China doesn't regularly publish gold-trade figures and rarely comments on its reserves. Bullion for immediate delivery gained as much as 0.7 percent to $1,346.27 an ounce, and was at $1,339.25 at 12:53 pm in Seoul. The price rose 2.5 percent on Jan 28, the biggest intra-day increase since Nov 4 as escalating tensions in Egypt fanned concern that unrest may spread to other parts of the Middle East, increasing demand for an investment haven.

Hong Kong*:  February 3 2011

The central government will send a chartered flight to Luxor in Egypt on Tuesday to bring Hong Kong travellers stranded there home, Travel Industry Council executive director Joseph Tung Yao-chung said on Tuesday. Tung said the Security Bureau had told him that mainland authorities had arranged the chartered flight to be carried out by Air China (SEHK: 0753, announcements, news) . It would return about 210 people to Hong Kong. He said the flight was expected to arrive in Luxor at 6pm on Tuesday (local time) and return on Wednesday afternoon. Some 40 citizens travelling with two tour groups in Cairo are now in Bangkok after taking an Egyptair flight to the Thai capital. They are staying in a Bangkok hotel and will return to Hong Kong before Lunar New Year. The mainland would send at least four more planes to evacuate up to 2,000 travellers from China and Hong Kong in Egypt, aviation authorities said on Tuesday. China’s Civil Aviation Administration said two planes were expected to leave the mainland on Tuesday. This follows an initiative on Monday when two Air China airliners flew to Egypt to pick up 480 citizens stranded at Cairo airport. The administration said another two planes would fly to Egypt on Wednesday. One of them would go to Luxor to pick up about 200 Hong Kong tourists. It said more planes would be dispatched if needed. The administration said it was trying to bring as many Chinese nationals home as possible before the Lunar New Year, which begins on Thursday. Countries around the globe have stepped up evacuations of foreign tourists and workers from Egypt, as anti-government protesters called for further pressure to force beleaguered President Hosni Mubarak to step down. Meanwhile in Cairo on Tuesday, the international airport was a scene of chaos as thousands of foreigners sought to flee the unrest. Incidents of looting continued. In Cairo, soldiers detained about 50 men trying to break into the Egyptian National Museum in a fresh attempt to steal the country’s archaeological treasures, the military said. An attempt to break into an antiquities storehouse at the famed Pharaonic Karnak Temple in the ancient southern city of Luxor was also foiled. The official death toll from the crisis stands at 97, with thousands injured, but reports from witnesses across the country indicated the actual toll was far higher. Thousands of people were gathering in Cairo's Tahrir Square, which has become the epicentre of a week of protests demanding an end to Mubarak’s three decades in power.

Macau casino revenue up 33pc on year - Casino revenue in Macau jumped 33 per cent in January from a year earlier to 18.57 billion patacas (US$2.3 billion), the Macau government said on Tuesday, bolstered by hordes of mainland gamblers that flock to play there. Surging demand from the high-roller VIP segment and solid mass-market appetite has sustained double-digit growth in the world’s largest gambling market, with Macau revenue streams continuing to dwarf those of neon rival Las Vegas. Casino operators including United States-based Wynn Resorts and Las Vegas Sands have been key beneficiaries of China’s buoyant economy, with unabated demand from affluent mainlanders lifting Macau gaming revenue 58 per cent last year. Analysts caution that growth may moderate this year from record levels seen last year, but remain bullish on the outlook for Macau, citing the low penetration of the mainland market. January’s figure was slightly lower than the 18.88 billion patacas recorded for December. “It is within my expectations. Chinese New Year is always a low season ... 33 per cent growth is quite decent indeed so that is why I am still confident with my full-year 29 per cent growth outlook,” said Credit Suisse analyst Gabriel Chan in Hong Kong. Kenneth Fong, gaming analyst at J.P. Morgan in Hong Kong, also forecast 29 per cent gaming revenue growth this year. He said market concerns from the potential impact of credit tightening in China were overdone and unlikely to significantly impact the growth outlook. “Without an abrupt broad-based credit tightening by the Chinese government, we see little risk of a substantial drop in Macau gaming revenue,” he wrote. Instead, Fong predicted the opening of Galaxy Entertainment Group (SEHK: 0027)’s monolithic resort-casino, the newest glitzy edifice to hit the developing Cotai strip, would likely boost traffic into Macau when it opens later this year.

A Hong Kong fashion model pleaded no contest on Monday to careless driving and agreed to pay damages after crashing a rented motorhome into Reno, Nevada's landmark downtown arch. Rosemary Vandenbroucke, 28, of Hong Kong agreed to pay US$385 (HK$3,000) in fines and US$985 (HK$7,675) for damage to the “Biggest Little City in the World” arch and a fire hydrant, said Dan Wong, criminal division chief for the city attorney’s office. Tammy Riggs, a lawyer for Vandenbroucke, didn’t return a phone call from reporters seeking comment on the plea deal. Municipal Court Judge Jay Dilworth accepted the plea with no other penalties, Wong said. Nobody was injured in the crash, but authorities said the 40-foot (12-metre) motorhome was substantially damaged. Vandenbroucke was originally charged with three misdemeanours – hit-and-run, failure to maintain insurance, and making an improper right turn. The Labour Day crash occurred a day after the model was arrested at the Burning Man counterculture festival north of Reno and charged with possession of a controlled substance. A preliminary hearing on the drug case is set for February 9. Vandenbroucke maintains her innocence, Riggs has said. She will not have to appear at the upcoming hearing. A conviction could result in up to four years of probation. Authorities said the model was arrested with a small amount of ecstasy at a music festival that attracts about 50,000 people a year to the Black Rock desert.

Norman Lo, director general of Civil Aviation, briefs the media yesterday on the new Civil Aviation Department headquarters. Hong Kong's top aviation official estimates the city's airport will reach its full flight capacity by 2020, but will not say whether or when a third runway might be built. The 2020 prediction is three years later than an estimate given by former government officials, including the former aviation chief. The Hong Kong Ideas Centre released a report of their conclusions last month, saying that the two existing runways were now at 93 per cent capacity and would reach 100 per cent by 2017, based on annual growth of 6.5 per cent. But Director General of Civil Aviation Norman Lo Shung-man said yesterday his prediction was based on annual growth of 5 per cent. He said changes in the economic situation might affect the growth rate. "If the industry has higher flight demand, our current situation might not meet the increasing requirement," he said. Lo said Chek Lap Kok could now handle 60 flights taking off or landing per hour. The pace will gradually increase to 61 in March and 62 by the end of this year by streamlining flight control procedures. He said the Civil Aviation Department's new headquarters would be completed in 2013. The HK$3.6 billion complex will include a centre to hold a new air traffic control system that will double the current 28 workstations. The new system could handle 68 flights an hour by 2015 with two runways, and would allow more than 100 flights an hour if operating with a third runway. But Lo refused to say whether the Airport Authority had decided a third runway was needed, saying the authority would release a report by mid-year. He said the upgrading of the air traffic control system had nothing to do with the third runway. "If the Airport Authority hasn't made a decision, we will still have to improve our existing air traffic control system in order to reach the future demand within the next 10 years or so. The existing system is actually quite old, it is ageing ... we have to replace it anyway," he said. Lo estimated that Chek Lap Kok would handle 15,508 flights during the Lunar New Year this year, up 9 per cent compared with last year. He said there would be 986 flights taking off or landing at the airport on Friday, the second day of the holiday, breaking the record of most flights handled per day - 973 flights on December 17 last year.

Yuan deposits soared 402 per cent to 314.9 billion yuan (HK$373.43 billion) last year, boosted by trade settlement and currency exchange, the Hong Kong Monetary Authority said. Although it did not break down the sources of yuan deposits, data from the HKMA showed cross-border trade settlement was a strong driver for yuan deposits in the city. Yuan remittance for cross-border trade settlement shot up 236 per cent to 100.9 billion yuan in the last four months of last year. An increase in Hong Kong's yuan deposits is part of the city's ambition to become an offshore yuan centre, which includes creating more yuan investment products. Norman Chan Tak-lam, the chief executive of the HKMA, said last month at the Asia Financial Forum a two-way flow of the currency was important for the long term and for the sustainable development of yuan business in Hong Kong. Yuan deposit rates remain relatively low compared with the mainland but they may rise this year. The mainland launched a trial for the qualified foreign institutional investor, or mini-QFII, scheme last month. "If the mini-QFII scheme shifts a large proportion of yuan back to the mainland, then this may help raise interest rates [here]," said Wang Tong, a deputy general manager at Bank of China (Hong Kong). But Wang said it was still hard to tell what the actual size of the mini-QFII scheme would be. The scheme allows mainland brokerages and fund houses to raise offshore yuan to invest in mainland bonds and stocks. Z-Ben Advisors said the size of the scheme could reach 50 billion yuan by the end of this year. Wang said he expected the amount of yuan bonds in Hong Kong to increase next year, which would also pressure banks to raise interest rates as more bonds absorbed the yuan deposits. Gina Tang, HSBC (SEHK: 0005)'s head of debt capital markets, Hong Kong and China global capital financing, said she expected the amount of bonds issued to reach about 80 billion yuan, double the amount last year. Tang said about 70 per cent of the money raised might be shifted back to the mainland, based on experience from last year. About 50 per cent of the bonds were issued by the Ministry of Finance, Bank of China, China Development Bank and Export-Import Bank of China and were backed by the central government. Tang said she expected a similar amount of bonds from the four issuers this year. A further 20 per cent would be from multinationals coming to Hong Kong.

NTT Communications and its Hong Kong subsidiary, NTT Com Asia, plan to launch a US$430 million submarine-cable system next year that will bolster the city's telecommunications links to the mainland, Japan and countries in Southeast Asia. Initial operations of the new Asia Submarine-cable Express (ASE) are expected to start in June next year and cover Japan, Malaysia, Singapore and the Philippines. The Hong Kong leg of the fibre-optic line will open six months later in December. The ASE is the second major Hong Kong-related undertaking by NTT Communications - a unit of Japanese carrier Nippon Telegraph and Telephone - after investing HK$3 billion to develop a site in Tseung Kwan O as the largest and most advanced enterprise-data centre in the city. Akira Arima, the president and chief executive at NTT Communications, said the company expected to tap new business opportunities "by bridging Tokyo and other Asian economic hubs with our high-speed, high-capacity ASE cable network". The new cable network will stretch about 7,200 kilometres and have up to 15 terabits-per-second carrying capacity. It will also incorporate so-called 40-gigabit-per-second optical-transmission technology to handle the higher data traffic created by applications such as cloud computing and video streaming. According to NTT Communications, the ASE is specially designed to withstand earthquakes and typhoons, particularly in areas such as the Bashi Channel south of Taiwan. That is where undersea earthquakes have disrupted international communications in the past few years. Routes between Japan, Hong Kong and Singapore will also cover the shortest possible distances to maximise reliability and minimise network latency. Construction of the ASE is being led by NTT Communications with carrier partners Telekom Malaysia, Philippine Long Distance Telephone and Singapore-based StarHub.

Hong Kong posted a surplus of HK$58.9 billion for the nine months to December, compared with a HK$1.2 billion deficit for the same period a year earlier, the government said yesterday. The surplus in December alone was HK$41.8 billion, thanks to returns from investments. The nine-month total is more than double the HK$25.9 billion surplus for the whole of the last fiscal year. In February, Financial Secretary John Tsang Chun-wah forecast a deficit of HK$25.2 billion for current fiscal year ending March 31. Economists have urged the government to use the surplus to help people cope with escalating inflation. "Prices, especially for food, have grown faster than the incomes of many people," said Bank of East Asia (0023) economist Paul Tang Sai-on. The government is more than capable of helping the less well off, said HSBC (0005) economist George Leung Siu-kay, who expects the surplus to top HK$80 billion this year. "We will probably see more relief measures in the next budget, as the government has expressed concern about inflation." Tsang will present the budget for the next financial year on February 23. Lawmakers also urged the government to set up a safety net for the low-income group and the elderly. "With the huge surplus, the government should look to set up a long-term scheme for retirement amid the [rise] in the aging population," said Audrey Eu Yuet-mee of the Civic Party. "The surplus in December was mainly due to the receipt of HK$33.8 billion investment income of fiscal reserves," the government said. Expenditure for the first nine months of the fiscal year amounted to HK$220.2 billion, with revenue coming in at HK$279.2 billion. Accounting firms have predicted a surplus of between HK$69 billion and HK$73 billion. Ernst & Young urged the government to distribute HK$17 billion to "the disadvantaged," while PricewaterhouseCoopers and Deloitte Touche Tohmatsu suggested providing more tax relief.

Taiwan's economy grew by 10.47 per cent last year, a 23-year high, but it will slow to half that figure this year, the government said in a preliminary estimate. The growth rate last year was the highest since 1987, the Directorate General of Budget, Accounting and Statistics said in a statement posted on its website late on Monday. For this year, the directorate general predicted growth of 5.03 per cent, stating that uncertain factors in the year ahead included slow progress in improving the employment situation in developed countries. Taiwan’s economy expanded by 6.48 per cent in the fourth quarter of last year, the directorate general said. Although Taiwan is highly dependent on overseas markets, domestic demand accounted for a bigger share of growth than exports in the fourth quarter, it said, citing a rebound in consumer confidence. In 2009, under the influence of the global economic crisis, the island’s economy shrank by 1.93 per cent. The government called the data an advance estimate, with the official growth figure for last year due to be announced at a press conference later this month. Taiwan’s economy was the world’s 20th largest last year, according to US government data based on purchasing power parity, which takes into account the cost of living in different countries.

 China*:  February 3 2011

Plane carrying Chinese nationals returns to Beijing from Cairo - A plane carrying Chinese nationals who were stranded in Egypt arrived at Beijing Capital International Airport Tuesday afternoon.

A girl plays a piano at Deji Square in Nanjing, East China’s Jiangsu province, Jan 31, 2011. The piano, with the same paint style and a design mirroring that of a Ferrari, is worth 2 million yuan ($302,984). It is being dubbed a piano version of the Rolls-Royce.

Thirteen-year-old Li Qiang and his mother Yang Fengyu, 34, make their way home to Yatou after shopping for the lunar new year at the market in the county seat of Zhouqu, Gansu province. Life has gradually returned to normal in the county since a catastrophic mudslide hit on Aug 8, 2010, leaving 1,501 dead, 264 missing and more than 15,000 homeless.

CNOOC pays $570m to buy into US oil shale operation - Visitors at China National Offshore Oil Corp's booth at a new-energy exhibition held in Beijing. Shares of the Hong Kong-listed explorer have risen 52 percent in the past 12 months, outpacing the 15 percent gain in the benchmark Hang Seng Index. China National Offshore Oil Corp (CNOOC) Ltd, China's largest offshore energy producer, agreed to pay $570 million in cash for a one-third stake in Chesapeake Energy Corp's Niobrara shale project, adding to its US holdings in crude oil production. The Chinese explorer also agreed to pay 66.7 percent of Chesapeake's costs up to $697 million to drill and complete wells in the area, the companies said in a statement on Sunday. The deal follows President Hu Jintao's state visit to the United States in January to expand economic ties, and will give CNOOC its second US energy asset. The Hong Kong-listed explorer will pay about $866 a hectare for the one-third stake in Chesapeake's 323,887 Niobrara hectares and has the right to a 33.3 percent stake in future acquisitions in the formation in Colorado and Wyoming. "If you look at President Hu's recent trip to Washington, there seems to be a greater willingness in the US to encourage Chinese investment," said Wang Aochao, head of China energy research at UOB-Kay Hian Ltd in Shanghai. "We don't have all the details at hand, but it appears to be a fair price for these assets. The Chinese oil majors still think valuations generally for oil and gas assets are reasonable." Niobrara covers 821,756 square kilometers and may contain 103.6 million barrels of oil, the US Geological Survey estimated in 2006 before Chesapeake, EOG Resources Inc and other producers began drilling the formation. "The project will not only strengthen our solid resource and production base overseas but create value to the shareholders in the long term," CNOOC's Chief Executive Officer Yang Hua said in the statement. CNOOC has risen 52 percent in Hong Kong trading in the past 12 months, outpacing the 15 percent gain in the benchmark Hang Seng Index. The shares closed at HK$17.20 ($2.00) on Monday, falling 0.69 percent. The Chinese energy explorer forecast a 12 percent increase in oil and gas production in 2011 after spending about $8.4 billion in the past year acquiring assets in the US, Africa and Argentina. By contrast, output rose 44 percent in 2010. CNOOC, based in Beijing, completed its $1.08 billion purchase for a one-third interest in Chesapeake's Eagle Ford project in South Texas in November. The Niobrara deal may be completed in the first quarter of this year, according to Sunday's statement. "The win-win deal valuation is fair, based on our estimates, and CNOOC's strategy to further expand into the oil-rich shale deposits in the US," said Gordon Kwan, head of regional energy search at Mirae Asset Securities in Hong Kong. "The total investment of $1.27 billion in the deal through 2014 is manageable and equates to about 14 percent of CNOOC's budgeted $9 billion for 2011." The Niobrara deal will lead to a reduction in US oil imports over time and the creation of thousands of jobs, Chesapeake's Chief Executive Officer Aubrey McClendon said in the statement. "This transaction will provide the capital necessary to accelerate drilling of this large domestic oil and natural gas resource," McClendon added. Chesapeake expects to double its drilling rigs to 10 by the end of the year from the five currently operating in Wyoming's Powder River and Colorado's Denver-Julesburg basins. It plans to have 20 rigs working by the end of 2012. Chesapeake, the most active US gas and oil driller, has 16 wells producing in those basins with initial output as high as 1,000 barrels of oil and 3 million cubic feet of natural gas a day, according to the company. The companies plan to eventually produce the equivalent of as much as 5 billion barrels of oil from the basins.

US ambassador to China Jon Huntsman resigned on Monday, amid reports that he may seek the Republican nomination next year and try to deprive his boss, President Barack Obama, of a second term. Huntsman, a former Utah governor, wrote to Obama to announce he would resign effective from April 30, after the White House noted he had told several officials he planned to leave in the first part of this year. But White House spokesman Robert Gibbs avoided questions about Huntsman’s political intentions, as anticipation builds for Obama’s re-election bid and several prominent Republicans take soundings over their chances. “I have talked to several people in the building, I have not heard anybody say that they know what the future holds for Ambassador Huntsman,” Gibbs said. Obama’s 2009 pick of Huntsman to serve in the crucial Beijing post was seen as a political masterstroke, potentially taking one possible rival out of the game in the upcoming presidential election. But Huntsman created a stir with a Newsweek interview late last year in which he suggested he had one political run left in him, and after buying a new home in Washington. Huntsman, the son of a chemical billionaire, could inject his own cash into an effort to explore his prospects in the crowded field of presumed Republican contenders for the presidential nomination. He would bring solid foreign policy and economic credentials to the table, after two years steering perhaps the most important, and often troubled, US diplomatic relationship. But many commentators believe his service as a member of Obama’s government will prove a huge liability in wooing the conservative voters who dominate the Republican Party nominating process. And some of his more centrist positions on issues like climate change and immigration may also prove problematic in the Republican primary. Other commentators say his Mormon faith could irk evangelical Christian voters who comprise a key part of the Republican party base vote. Obama made a tongue-in-cheek reference to Huntsman’s prospects when he was asked about his envoy’s political intentions during a White House press conference with President Hu Jintao earlier this month. He said Huntsman had done an “outstanding job” as ambassador to China and shown enormous skill, dedication and talent. “I’m sure he will be very successful in whatever endeavours he chooses in the future, and I’m sure that him having worked so well with me will be a great asset in any Republican primary,” Obama added. Huntsman was well regarded in China, partly due to his fluent Putonghua and his adopted Chinese daughter. His experience as a former deputy US trade representative overseeing Asia was also frequently mentioned in Beijing, as was his time as US ambassador to Singapore. Huntsman learned Putonghua when he served on a Mormon mission in Taiwan. He was seen as a moderate voice in the Republican Party and was a popular governor – he gained 70 per cent of the vote in November 2008 for a second term as Utah’s top official. He and his wife Mary Kaye have seven children, including the daughter adopted from China along with another from India.

A shepherd walks his flock near cropland in Shandong province, where more than half of the wheat fields have been affected by drought. The Ministry of Agriculture is urging local governments to work harder to battle the dry spell that has crippled the country's main wheat production areas, with weather forecasters warning the drought might extend from winter to spring. In an emergency circular issued yesterday, the ministry asked local authorities to "pay much attention to the current drought and ... let mechanical equipment play the leading role in agriculture production and fighting the drought". It urged local governments to grant permission for equipment purchases and quickly dispense subsidies from the central government for irrigation. The circular coincided with a similar directive from the State Council, which ordered more aggressive measures to fight the drought. The directive said that provincial and lower-level agricultural departments should strengthen guidance and implement concrete measures to ensure a good harvest for the winter wheat, which is planted in October and harvested in May. This accounts for more than 90 per cent of the mainland's total wheat harvest. The State Council asked local authorities to make reasonable use of water resources in rivers and reservoirs for irrigation. Beijing has offered to allocate subsidies for drought-relief work and to farmers. An additional 2.2 billion yuan (HK$2.6 billion) was earmarked to alleviate the drought in the northern and southern parts of the country, which left millions of people and livestock short of drinking water. The cabinet also pledged to allocate 4 billion yuan to improve water conservation and irrigation facilities. Since October, little rain has fallen in nine provinces and municipalities including Shandong and Henan - the country's top two wheat production areas - along with Hebei , Anhui , Shanxi , Jiangsu and Beijing. As of Friday, 5.16 million hectares of crops were affected by the drought, and 2.57 million people faced drinking water shortages. The National Meteorological Centre is predicting that the drought will worsen in the next two months, with the north and regions along the Yellow and Huai rivers receiving little rain or snow this month or the next. Yu Jiaping , a farmer in Dongshan village in Junan county, Shandong, has to walk more than one kilometre on a mountainous road every day to fetch water. His village has seen no rain since September. Three wells dried up three months ago and tap water stopped, leaving villagers no option but to fetch water from the mountain spring, which appeared muddy, according to Xinhua. "There is not much water left in the spring," Yu said. "Villagers have to start queuing early in the morning. Some families delegate one member specially to fetch water." Yu said the local government had sent technical staff to fix the well, but the water was limited. "It was enough for people, but not for cattle and pigs." Shandong authorities said the drought was the worst the province had seen in 60 years with only an average of 12mm of rain since September last year, 85 per cent less than in past years. In some areas such as Linyi and Zaozhuang , the drought is the worst in a century. In Zhangzhuang village in Zaozhuang, Shandong, more than 900 people relied on a water cellar to provide water for themselves and their livestock, but the cellar has been dry for three months. Qin Huali told Xinhua he had to fetch water from three nearby villages and the family had to use it very economically. "We do not use it for baths or washing clothes," he said. "We wash our faces by wiping them with a wet towel." The village is installing a water pump in the hope it can supply water in three weeks' time. Today marks the 99th day since Beijing last had rain. It's the driest winter since 1971, according to the National Meteorological Centre.

In stews, as pets or adorning shop windows, rabbits are ubiquitous as millions of Chinese mark the Lunar New Year, hoping for a more tranquil time ahead as the old Year of the Tiger roars its last. The nation's 1.3 billion inhabitants will welcome the Year of the Rabbit tomorrow night in a hugely important family event marked by feasts and a blaze of fireworks. Occupying the fourth position in the Chinese zodiac, the rabbit is closely linked to the moon and symbolises happiness and good fortune. Many - including brokerages - are banking on the calm and sensitive rabbit to usher in a quiet 12 months after the tiger brought a spate of deadly natural disasters to the country such as earthquakes and mudslides. CLSA, a brokerage and investment group, predicted in its latest "Feng Shui Index" that the rabbit would have a positive influence on stock markets. "A reputedly placid, personable and prescient white rabbit will wrest the reins from the decidedly unpleasant and erratic tiger that's been tossing and turning the markets over the past 12 months," it said. However, the bunnies in a video cartoon that went viral recently on the internet were anything but tranquil. Their revolt against brutal tiger overlords - a thinly veiled swipe at the country's rulers - was a huge hit before the video was yanked by online censors. And while some attribute calming qualities to the rabbit, it may not be such a good year for the animal itself on the mainland. Restaurants around the country are offering rabbit delicacies as part of their lavish New Year banquets, and animal rights group Peta has urged actress Gong Li to stop wearing rabbit fur. People are also rushing to buy bunnies as pets, sparking concern among animal rights activists that the cuddly creatures could suffer from neglect or be abandoned once the novelty has worn off. But for people like Zhao Jizhang, who sells tiny caged bunnies near an outdoor market in Beijing, this New Year is a boon. "People are buying them thanks to the Year of the Rabbit," said Zhao, who charges 30 yuan (HK$35.49) per bunny, compared to 150 yuan in regular pet shops for larger specimens. Still, pet or no pet, on New Year's Eve people will wish their loved ones success and happiness. But this time, those in the know will lift their thumbs up to imitate rabbit ears. This is described as very "geili" - a new expression which literally translates as "to give power" and more loosely means "cool". And on Apple's iTunes website, a variety of festive iPhone applications are available - virtual firecrackers that go off when the phone is shaken, a kit to customise photos with rabbit ears, or horoscopes for the new lunar year. Even the mainland's postal system has jumped on the rabbit bandwagon, releasing a series of special stamps in early January that sold out in the space of just a few hours. Stamps with rabbit illustrations released in 1987 and 1999, the last two years of the rabbit, go for up to 125 times more than their original value.

The central government would spend around 30 billion yuan (HK$35.4 billion) over the next five years on new airport projects in the restless western region of Xinjiang , state media reported. The government will build four new airports, in Tazhong, Shache, Loulan and Tumshuq, and expand or relocate six others, so that by 2015 Xinjiang will have 22 airports handling civil flights, Xinhua said. The number of passengers using Xinjiang's airports was expected to almost double by 2015 compared with last year, to around 20 million people, it added. Energy-rich Xinjiang is strategically located at the crossroads of Central Asia, and Beijing has shown its determination to keep a tight grip on the region, which has been wracked by ethnic unrest in recent years. The government has invested billions in developing Xinjiang, which has been accompanied by an influx of majority Han Chinese. Many Uyghurs, a Muslim Turkic people native to Xinjiang, resent the growing Han presence in the region. Beijing has likewise spent generously on transport infrastructure in another sensitive part of the country, Tibet , opening a fourth civil airport there last year. Beijing says the new airports, roads and a railway to Tibet will promote development and help raise living standards. Tibet activists say it will speed up the pace of Chinese migration there and dilute Tibetan Buddhist culture. Air travel is developing rapidly on the mainland on the back of a booming economy. The mainland has big plans for its airport network, especially in poorer and more remote regions in the far west. But many of these stylish new airports have struggled to attract customers and languish with just a few flights a week, or none at all.

Baidu breezed past Wall Street financial targets in the fourth quarter as the No 1 internet search engine in China benefited from a sharp increase in advertising spending. Shares of Baidu, a favourite pick of hedge funds, rose 7.5 per cent to US$116.90 following the earnings report on Monday. Options traders predicted before the results that the stock might break out of its recent five-month trading range. Baidu, which has increased its focus on e-commerce and online video, grabbed more market share last year after rival Google curtailed its operations following a high-profile fallout with Beijing over censorship. Despite highlighting new investments, Baidu said growth should continue, forecasting revenue for the first quarter between US$360.6 million and US$371.2 million, ahead of the average analyst forecast of US$354.2 million. Baidu cited continued improvement in “monetisation” for nearly doubling fourth-quarter revenue from the year-ago period. “Baidu still benefits from the lack of competition from Google,” said Auriga USA analyst Tian Hou. Baidu said its revenue per online marketing customer increased roughly 56 per cent in the fourth quarter, while the company’s number of online marketing customers grew nearly 24 per cent year-over-year to about 276,000 customers. Auriga’s Hou noted that the competitive landscape will become more challenging this year as Google revises its China strategy and as Alibaba (SEHK: 1688) Group’s Taobao increasingly competes with Baidu for certain customers. In December, a top Baidu executive told Reuters that he saw growth moderating this year due to a higher comparison base and a lack of unique catalysts. China is the world’s largest internet market with more than 450 million web surfers. In the fourth quarter, its search market grew 66.8 per cent over the previous year to 3.3 billion yuan (US$500 million). Baidu had 73 per cent of the market while Google had 24 per cent, according to technology research firm iResearch. Beijing-based Baidu’s fourth-quarter net income rose to US$175.9 million, or 50 cents a share, from US$62.7 million, or US$1.80 a share, a year ago, before a 10-for-1 stock split. That beat analysts’ average forecast of EPS of 45 cents. Baidu said its revenue per online marketing customer increased roughly 56 per cent in the fourth quarter, while the company’s number of online marketing customers grew nearly 24 per cent year-over-year to about 276,000 customers. Total revenue in the fourth quarter totalled US$371.3 million compared with US$184.7 million a year ago. Analysts, on average, had expected revenue of US$360.3 million. Shares in Baidu ended regular trading up 2 per cent at US$108.63 on Nasdaq.

Celebrate Valentine's Day with romantic movies (China) - This Valentine’s Day, how about celebrating it with movies?

Hong Kong*:  February 2 2011

Stanley Ho Hung-sun has withdrawn his lawsuit - three days after it was filed - against family members accused of "improperly and/or illegally" seizing control of his empire. "Dr Stanley Ho has informed the defendants that he does not see any point in continuing the legal action in the High Court," public relations firm Brunswick Group said last night in a statement on behalf of Ho's third wife and his five children via his second wife, all of whom had been named as defendants in the suit. The "notice of discontinuance" was filed to the High Court on Saturday by Ho, who was acting on his own behalf without other legal representation. The four-page document carried the signature of Stanley Ho, who appears to have dated it January 27. Lawyer Gordon Oldham of Oldham, Li and Nie, acting on behalf of the 89-year-old casino magnate, had initiated the suit on January 26. Oldham could not be reached to comment on the latest development.

Regina Ip Lau Suk-yee gave a strong hint yesterday that she is interested in running for chief executive. Speaking on a Commercial Radio talk show, the lawmaker and former secretary for security listed the qualities she believed were needed to make a good chief executive - and suggested she had them. "I just want to contribute something to Hong Kong ... At the end of the day, I just want to do something for Hong Kong people," she said. Ip said the top job required someone who was "healthy and energetic; accountable and willing to sacrifice; and having experience in handling crises". When asked if she had those qualities, she implied that she did. She said the job of chief executive was tough and she could not resist a challenge. "I don't need to concern myself about family life as I only have a daughter to take care of," Ip said. But, like Executive Council convenor Leung Chun-ying - who has hinted but never confirmed he will run for the top post - Ip was coy about her ultimate plan. Chief Secretary Henry Tang Ying-yen is also widely tipped as a chief executive candidate. "Who knows what will happen in the future?" Ip said. "I don't know how much I can do eventually, just do it step by step."

City says a fond farewell to 'Uncle Wah' - They came in their thousands. Leaders of the mainland's democracy movement in the 1980s, human rights activists, students, teachers, politicians from all camps, government officials, and ordinary members of the public. They were a wide range of people of various backgrounds but united in one goal - to bid a final farewell to Szeto Wah, Hong Kong's democracy icon, who died of lung cancer on January 2 at the age of 79. Many brought white lilies to the funeral at St Andrew's Church in Tsim Sha Tsui, signed memorial books and bowed in front of a photograph of a smiling Szeto, the veteran Democrat and educator who for years led the Hong Kong Alliance in Support of Patriotic Democratic Movements in China. Pong Yuk-hing, in her eighties, knelt and kowtowed in front of the portrait. Then she recalled the affinity she felt with the man affectionately known as "Uncle Wah". "Every time I attended the June 4 candlelight vigil or the July 1 march for democracy, I would find Uncle Wah and shake hands with him. I very much respected his dedication in the fight for democracy," she said. Not everyone at the church had met Szeto in person. But that didn't matter. Tony Ling Siu-chi, 26, who turned up with friends from university, said: "I felt very sad when I heard the news that he had passed away. Although I never saw him in person, I always admired him for his perseverance in defending his values." The Reverend Chu Yiu-ming, convenor of the funeral committee, estimated that more than 5,000 people joined the four-hour public memorial service, which was followed by another memorial service for organisations to attend, and the funeral which accommodated 320 designated guests. Szeto was a tireless supporter of the 1989 democracy movement on the mainland and helped many wanted activists flee via Hong Kong. Human rights activists from various provinces, parents who lost their children in the clampdown, as well as former leaders of the movement - many still deprived of their freedom on the mainland or barred from returning to their homeland - showed their respect by sending wreaths. The government was embroiled in a controversy ahead of the funeral, as two former student leaders in the movement, Wang Dan and Wuer Kaixi, were not allowed into Hong Kong to attend the services. But one 1989 labour leader, Lu Jinghua, managed to arrive and pay tribute in person. Wanted by Beijing after the crackdown, she fled to the United States with Szeto's help. She now holds a US passport and landed from New York City on Thursday. Speaking ahead of the funeral, Lu said her entry to Hong Kong was unexpectedly smooth. "Perhaps they overlooked my name because I am not as famous as Wang Dan ... No question was asked," she said. "I feel very sorry that Wang Dan could not come. The chief executive should be very clear of the reason. If Beijing suppressed Hong Kong's chief executive, this is very unwise." Nancy Law Luk Wai-ying, a former student of Szeto who became a university professor, recalled his close relationships with students. "Forty-odd years on since we graduated, we still kept contact with the headmaster." Chief Executive Donald Tsang Yam-kuen, with six other senior government officials, spent a few minutes at the group memorial service. After bowing before the Democrat's picture inside the church and shaking hands with members of Szeto's family, he laid a flower in front of the portrait. "Shameless!" several people yelled at Tsang when he left the church. Szeto's body was cremated at Cape Collinson. Half of his ashes will be scattered over Hong Kong waters so they will return to the mainland, which he had been barred from visiting since 1989. The rest will be scattered in a memorial garden at the crematorium. His family will make the arrangements after the Lunar New Year.

Parallel traders cross the border into Hong Kong to buy products, including baby formula, to resell on the mainland for a profit, resulting in shortages in the city. Angry parents struggling to buy milk formula for their babies have joined calls for a departure tax to be imposed on people taking unused supplies of infant formula out of Hong Kong. They also want the government to set a limit on how many cans of baby formula people can carry across the border. Two years after the shocking melamine milk contamination scandal, in which hundreds of thousands of babies were sickened on the mainland, people's faith in locally produced formula has not yet been restored. So much so that, according to lawmaker Wong Sing-chi, more and more people are coming to Hong Kong to stock up on supplies, resulting in an acute shortage in the city. Many Hong Kong parents are complaining they cannot buy baby formula and that strong mainland demand is also driving up prices. Wong said that in the past two days more than 600 residents in the northern New Territories, most of them parents and newlyweds, had signed his petition for a tax on infant formula leaving Hong Kong. Among them is a Fanling mother of a two-year-old child who scoured her area for supplies. "I went to shops in Fanling, Sheung Shui, Lok Fu, Kowloon Tong and Yuen Long this month. [But] I only got one can of milk powder in Yuen Long," she said. Manufacturers assured the government that there was an adequate supply of milk powder, Secretary for Food and Health Dr York Chow Yat-ngok said on Friday. But the mothers say otherwise. "The shop owner in Lok Fu told me there would be no stock coming throughout the Lunar New Year," the Fanling mother, who refused to give her name, said. Other mothers told district councillors they had to feed their children soy milk and bananas. Some said that even soy milk had sold out. Wong said the prices of some milk powder had surged about 20 per cent while the cost of other lines had doubled. While tourists did snap up some formula, it was the parallel traders - who carry the powder in luggage across the border to sell on the mainland - who were taking most of the stock. Wong said: "I saw cartons of milk powder being loaded on a truck in Sheung Shui's industrial zone. The truck unloaded the cartons near Cambridge Plaza [in Sheung Shui] and they were distributed to parallel traders." He said parallel traders could make a 30 per cent profit by selling the stock on the mainland. The Democratic Party has proposed a 50 per cent tax on milk products taken out of Hong Kong to discourage parallel trading. If that does not work, they want the government to limit the amount of formula that a person can take across the border. Wang said the police should also crack down on traders working in Hong Kong illegally. While Chow said that such a tax would go against World Trade Organisation free trade agreements, parents have come up with other ideas to ensure milk powder is supplied to local children. On popular online forum Baby Kingdom, one internet user suggested that buyers should have to show their child's birth certificate in a shop before they could purchase formula. Others directed their anger at Chief Executive Donald Tsang Yam-kuen, who once encouraged Hong Kong people to have "at least three children". "Officials complained about the low birth rate in Hong Kong. But mothers these days can't even buy a can of milk powder for their baby. How anyone would want to more babies?" one wrote.

The new police chief has promised more resources to help criminal investigators cope with their heavy workload as he tries to revive hard-hit morale. Andy Tsang Wai-hung (pictured) said he understood that a shortage of manpower had increased workloads and affected morale, particularly for inspectors who often had to work overtime to finish investigations. "We can't keep asking our colleagues to do us favours by working overtime," he said. "Such a practice is not sustainable." The new police commissioner promised a slew of measures to improve the situation. Before taking the top post this month, Tsang acknowledged the tremendous pressures facing frontline criminal investigators. But he dismissed union claims that many police officers were unwilling to become detectives because of the heavy workload. The death of a 39-year-old detective inspector from a stroke early this month triggered a debate as many believed it was caused by excessive work pressure. The incident badly affected morale. Unions used the incident to point to a shortage of officers in the Criminal Investigation Department. The dead inspector was being transferred to CID in spite of warnings that his health was not up to the job. On a radio show yesterday, Tsang also spoke of a rise in the abuse of the 999 emergency call services by the public, saying this caused more work for the police. He said the workload of police had risen by 7 per cent from 2009 even though crime figures had decreased by 2 per cent, from more than 776,000 cases in 2009 to about 759,000 last year. "The problem of abuse draws our concern, as this has imposed extra work on our colleagues," he said. Tsang said police received more than 2 million 999 calls last year - half were abuses of the service or even pranks. Of the rest, which needed follow-up action, half were trivial matters such as complaints of noise problems or illegal parking. Tsang also said he wanted to tackle a rise in attacks on police. Last year there were 462 cases, which means more than one police officer was attacked a day. This compared with about 400 in previous years. "When police are carrying out their duties, they should also be protected under the law and deserve respect from the community," he said. "Our police officers are fully equipped with different weapons and they are well trained to protect themselves, only they will not resort to force lightly." Tsang identified six major areas of work for the force this year: to combat violence, triad and organised crime, drug problems and get-rich-quick crimes, to improve public safety and to step up anti-terrorist operations.

A growing number of Hong Kong people are turning to surrogacy as a last resort to fulfil their dreams of parenthood. The US-based Surrogacy Centre Hong Kong - which specialises in matching Hongkongers with surrogates in the US who are willing to be reimbursed for their expenses and not paid for their services - says it gets about five inquiries a week from people in the city. Five years ago, it was only getting half that number. Last year the centre helped 80 couples and individuals through surrogacy, of whom about 30 per cent were from Hong Kong and the mainland. In contrast, the agency had a total of just 10 cases when it was set up six years ago. Surrogacy is tightly controlled in the city by the Council on Human Reproductive Technology, and commercial surrogacy is illegal. "We believe surrogacy is becoming more popular because people are becoming more aware of it," said Li Lan, the centre's practice manager. "They are talking about it more and becoming more open about their experiences. The issue was hardly written or spoken about six to 10 years ago so not many people knew it was an option." But Professor Alfred Chan Cheung-ming, of Lingnan University, who chairs the Human Reproductive Technology Council's ethics committee, said: "We don't feel the public is ready for this kind of conception. We are concerned it could arouse a lot of public anxiety if it was commercially legalised," Finding a volunteer to act as surrogate is the only option for women in Hong Kong. They must prove themselves incapable of carrying their own child following the recommendations of doctors and seek final approval from the council. No case, however, had ever met the requirements set by the council, Chan said. With infertility on the rise, roughly one in six couples find themselves unable to conceive due to a range of social and environmental factors, according to Dr Patrick Chan, an obstetrics and gynaecology specialist at Matilda International Hospital on The Peak. So more are becoming interested in surrogacy as an alternative to childlessness. High-profile cases, including the births of surrogate children to Elton John, Nicole Kidman and, locally, Peter Lee Ka-kit - unmarried son of Henderson Land Development (SEHK: 0012)'s Lee Shau-kee, who is being investigated by police over the birth of triplets via surrogacy in the US last year - have heightened the discussion. Critics of commercial surrogacy say the renting of a womb takes advantage of poor women, widens the gap between rich and poor, blurs family boundaries, and can have a profound impact on all involved. Professor Edwin Hui, founding director of the University of Hong Kong's medical ethics unit, said: "A person could end up with three mothers: the biological, the gestational and the social, and two fathers: the biological and social. It becomes a zoo. Just because something can be done does not necessarily mean it should be done." Priscilla Lui Tsang Sun-kai, director of Against Child Abuse, a concern group on children's welfare, says that in order for surrogacy to work, it must garner community support. "People are so swept up in their desire to have a child they don't always think from the perspective of a child or the long-term impact. The best interest of a child does not depend solely on being in the care of a loving home because we don't only live under the roof of family." However, as new reproductive technologies make headway, Professor Chan believes there is a case for tightly controlled surrogacy to become more available, though ethical issues would have to be resolved first.

Worldwide celebration of Chinese Lunar New Year - The upcoming Chinese Lunar New Year is celebrated home and abroad.

 China*:  February 2 2011

KFC's spectacular success in China comes with caveats - Yum! Brands' one-market dependency brings risks. Staff serve customers at a KFC restaurant in Beijing. KFC has achieved such market penetration that Colonel Sanders' image is more common in many cities than that of Mao. On the edge of Tiananmen Square, just across the street from Mao Zedong's tomb, He Yingying munches on a piece of chicken and gazes at the benign-looking figure beaming down at her. We love him," she says. The 21-year-old student from Beijing's Capital University of Economics and Business is not referring to Mao, whose iconic official portrait dominates the square. She is talking about a long-dead, white-bearded Kentucky colonel on the logo of the KFC restaurant where she is feasting on her favourite fast food. In its home market, the US, KFC is struggling, an also-ran to McDonald's, the world's biggest restaurant company, and feuding with some of its own franchisees over how to halt declining profits. In China, KFC has achieved such dominance over McDonald's and local rivals that Colonel Harland Sanders's image is a far more common sight in many Chinese cities than that of Mao. That accomplishment is striking in a country where foreign companies often stumbled and ran into roadblocks in the past. The secret to the success of KFC's parent company, Yum! Brands can be traced to its use of local ingredients - both in its management team and on its menus. In the 24 years it has operated in China, Yum has hired Chinese managers to build partnerships with local companies in its expansion and used their expertise to offer an array of regional dishes that appeal to domestic tastes. Today, KFC customers can purchase a bowl of congee, a rice porridge that can feature pork, pickles, mushrooms and preserved egg, as well as buy a bucket of its famous fried chicken. In 2010, Yum expected to make 36 per cent of an estimated US$2 billion operating profit from 3,700 restaurants in China - eclipsing for the first time its total earnings from the 19,000 Taco Bell, Pizza Hut, KFC, Long John Silver's and A&W restaurants it owns in America. Yum announced on January 18 that it would sell its Long John Silver's and A&W chains in part to focus on China. In the third quarter, Yum's China profits soared 23 per cent compared with a 2 per cent decline in the United States. Yum said in December it expected its US business to return to profit over the whole of 2010. The company will announce fourth-quarter results on Wednesday. In a country that Western companies ranging from Dunkin' Brands to EBay have struggled to penetrate, Yum has opened one new restaurant every 18 hours. It now has a 40 per cent market share among fast-food chains compared with 16 per cent for McDonald's, according to Euromonitor International, a London-based market research firm. Starting with one restaurant in 1987, Yum now operates 3,200 KFCs and 500 Pizza Huts in 650 Chinese cities - stretching from Hainan in the south to the North Korean border and the desert oases of the ancient Silk Road. KFC's target: to lift that number fivefold to 20,000. "Yum has become the most successful foreign company in China," says James McGregor, a former chairman of the American Chamber of Commerce in China and author of One Billion Customers: Lessons From the Front Lines of Doing Business in China (Free Press, 2005). "They got in early, they adapted the product, they expanded aggressively and they gave their Chinese managers real decision-making power." Yum's success also brings risks. Bearish investors such as hedge-fund managers Hugh Hendry and Jim Chanos are predicting that the world's second-biggest economy, which has surged an average of 10 per cent a year for more than three decades, could slow to a halt if asset bubbles burst and rising labour and food costs bite businesses. Within four years, Yum will be dependent on China for more than half its global revenue and profit margin, according to Warren Liu, a former Yum vice president who is now China chairman of Investindustrial Advisors, a US$2.7 billion European private equity firm. "I worry about too much reliance on a single market no matter how financially attractive that market is," says Liu, who wrote the unauthorised KFC in China: Secret Recipe for Success (Wiley, 2008). "If Yum's China business went south, it would kill the stock," McGregor says. David Novak, Yum's Louisville-based chairman and chief executive, says that is not going to happen. He cites estimates from Morgan Stanley and Euromonitor that China's economy will triple in size over the next decade, creating another 200 million fast-food-consumers. "China is the best restaurant opportunity in the 21st century," Novak, 58, said. And to put his money where his mouth is, in 2004, he launched a new chain, East Dawning, which serves only Chinese fast food. Then, in 2009, he acquired a 27 per cent stake in Little Sheep Group, a Hong Kong-listed company that operates 480 restaurants specialising in Mongolian hot pot dishes. Investors are betting that Novak is right. In 2010, Yum shares jumped 40 per cent on the New York Stock Exchange compared with a 23 per cent rise in McDonald's shares and a 13 per cent increase in the Standard & Poor's 500 Index. Earnings in the third quarter rose 6.9 per cent to US$357 million thanks to the surge in China profits. Since Yum! Brands was spun off from PepsiCo in 1997, the stock has risen more than sixfold, compared with the 37 per cent rise in the S&P 500 to January 25. "If you want an easy way to get a piece of the China consumer story, Yum is a good stock to buy into," says Shaun Rein, Shanghai-based managing director of China Market Research Group. Yet Liu Yang, chairman and chief investment officer of the Chinese unit of Atlantis Investment Management, says she would not buy the stock because higher regional minimum wages have pushed up labour costs by as much as 21 per cent in major cities and food inflation that hit 9.6 per cent in December will increase the price of raw materials. "Yum used to be a good China consumer play, but they will face a squeeze on their margins," says Hong Kong-based Liu, who helps manage US$4 billion. Yum executives said in December that the growing importance of the China business could lead to more volatility in the bottom line. "We want to become less China dependent," Novak told investors. "I don't know if there's another China, but I think India, Russia - you combine a few of these opportunities, and you'll create another China over time."

The central government will spend four trillion yuan (HK$4.7 trillion) in the next 10 years to rebuild outdated water conservancy projects and improve water-use efficiency on the mainland as natural disasters further threaten agricultural output. Investment in irrigation and water conservancy each year in the next decade will be at least twice the 200 billion yuan spent in 2010, according to the central authorities' first document of the year, issued on Saturday. The government's "No1 document", its annual manifesto on agricultural development for the past eight years, also pledged to adopt the strictest water protection measures ever and set a cap on annual water consumption at 670 billion cubic metres. Calling it "the first comprehensive document on water resources since the founding of the People's Republic", Water Resources Minister Chen Lei said yesterday that development in conservancy was lagging. "Compared with what's required by our economic and social progress, investment in water conservancy has been far from adequate. Accelerating the development in this area demands immediate action." The document requires local governments to set aside 10 per cent of their revenue from sale of land for water projects in rural areas. "According to total revenue from land transactions last year, [this means] an amount ranging from 60-80 billion yuan for building rural irrigation," Chen said. But he said the need for finance varied. "There is a gap in land income between the western and eastern regions. "In the east, land is more expensive and, hence, a higher income from land sales, but in fact, water projects there require less money [since they are better developed]. In the west, development in water conservancy is poorer, and there's less revenue from land [sales]." Shen Dajun , an academic at the China Institute of Water Resources and Hydropower Research (IWHR), said the introduction of a consumption cap meant the government had attached the same importance to water as to land. The government's 11th five-year plan, for 2006-10, set a minimum size for China's farmland at 120 million hectares. "Water now becomes the next quantity control target of the government," Shen said. Measures to protect water include standards for pollution and efficiency of use. The document says that by 2015, at least 55 per cent of the water meant for rural irrigation should be used effectively. The official efficiency rate for rural irrigation is 48 per cent. However, Qiu Weiduo , a retired senior engineer for IWHR, said it had declined to 30 per cent if waste in fields was considered. According to the blueprint, 2.7 million hectares of farmland will be turned into efficiently irrigated land. Qiu said that currently, of the 120 million hectares of arable land, less than half had irrigation systems. The government also vowed to solve drinking water problems in rural areas in two years. A severe drought that hit south China last spring left millions of rural people lacking clean water. In Minqin county, Gansu - dubbed the driest place in China - people have half an hour of water supply every week, said Lam Li, a backpacker who visited in May.

Russian companies seeking to list shares in Hong Kong stand a better chance of luring investors if the firms' core assets are close to China, according to Fawzi Kyriakos-Saad, of Credit Suisse Group. "If it's an industry on the Chinese border, east of the Urals, if it's energy or mining, the Chinese will recognise it and feel comfortable with it," Kyriakos-Saad, the bank's chief executive for Europe, the Middle East and Africa, said. "They may even want to invest in it before the IPO." After Rusal's US$2.2 billion initial public offering in Hong Kong last year, the first by a Russian company in Asia, the Hong Kong bourse predicted it would be the venue of choice for a further US$2 billion in shares sales by Russian firms in 2010. Only one, iron ore miner IRC, followed Rusal's lead, raising US$241 million. Rusal has gained 14 per cent since its listing last January, after initially falling more than 30 per cent. IRC exceeded its IPO price for the first time two weeks ago, almost four months after the listing. Russian companies without a clear business connection to Asia, such as sales or manufacturing in the region, would fare better by offering shares in London, which had become the go-to market for corporate Russia to sell stock, Kyriakos-Saad said. "If it's an industry that's really more geared towards the European markets, the Chinese will evaluate it purely as an investment opportunity and only buy it if they consider it cheap enough, whether it is listed in London or Hong Kong," he said. The Hong Kong listing of Russian oligarch Oleg Deripaska's hydropower utility EuroSibEnergo is back on track after a delay last year. Its flotation was postponed pending approval from Beijing, for a joint venture with Shanghai-listed hydropower producer China Yangtze Power, to develop hydro and coal-fired power plants in Siberia and Russia's far east.

One of the chief producers of baby milk powder in the Netherlands has had to restrict sales to China after bulk buying by mainland traders left Dutch customers in short supply. Nutricia is one of the Netherlands' biggest medical-nutrition companies and its Nutrilon milk powder has been in great demand on the mainland after the melamine-tainted milk scandal. In 2008, on the mainland, at least six children died and about 300,000 developed kidney problems because of baby formula laced with melamine, an industrial additive used illegally to help milk pass protein tests by raising nitrogen levels. Mainland authorities ordered the destruction of all confiscated tainted milk powder that year, but stocks have repeatedly surfaced, especially in remote regions. Last July, authorities seized 76 tonnes of contaminated milk powder on its way to Gansu province to be made into dairy products. Because of this, mainland traders have been looking overseas for safe sources of milk powder. Since last year, Nutrilon has been imported in bulk and repackaged for the local market, resulting in Dutch shops and supermarkets running low on milk powder. A Nutricia spokesman said that while the company had boosted production of Nutrilon in the Netherlands to rectify the shortfall, it was also "in the process of limiting all exports of Nutrilon to China". Nutricia exports its products around the world, including to China. However, despite the fact that bulk Nutrilon milk powder is exactly the same as that packaged in the Netherlands, mainland parents are and would rather use the imported version. Using imported milk powder brings different risks, however. For example, on the imported products the instructions on how much Nutrilon milk powder to use for each age group are printed in Dutch - it's the same for all imported milk powder. This means that mainland parents may have to guess how much they can give their child. Despite this, mainland families are happy to take this chance as recent developments have further aroused their suspicions about any milk powder made in China. A fortnight ago, police detained almost 100 people for recycling melamine-tainted milk powder that was supposed to have been destroyed two years ago, according to state media. The Food Safety Commission Office of the State Council said authorities investigated 40 cases involving tainted milk and seized 2,132 tonnes of milk powder, either contaminated milk powder left over from two years ago or mixtures of the contaminated powder and other milk powder. This exposure of tainted milk products in poor and remote parts of the northwest shows that food-safety problems persist. Authorities announced this month that since the melamine tragedy in 2008, 55 people had been charged and 17 of them convicted, two receiving life imprisonment. The rest were still under investigation. Nine officials had been sacked.

Mainland cinemas' box office takings rose 64 per cent last year to 10.2 billion yuan (HK$12 billion) - but that might not be such good news for mainland filmmakers. American sci-fi epic Avatar accounted for more than a tenth of receipts, grossing 1.4 billion yuan, according to the State Administration of Radio Film and Television. Aftershock, a melodrama released in July depicting the effects of the 1976 Tangshan earthquake on one family, was the highest-grossing domestic film, with 673 million yuan. "Most Chinese movies are total trash," said one 30-year-old filmgoer, whose girlfriend dragged him to a Beijing cineplex for a 70-yuan, late-night showing of Shaolin, a kung fu blockbuster with a star-studded mainland and Hong Kong cast. Almost all the five or so movies he sees in cinemas each year are foreign. He buys pirated copies of their domestic counterparts for 10 yuan each. The mainland is the third largest producer of films in the world, but Joseph Graves, artistic director at Peking University's Institute of World Theatre and Film, says only about a third of the roughly 500 films made each year make any money, with an even smaller percentage making "significant money". In October, only one of the 29 locally produced films screened made any money, according to Manner Movie, a Hong Kong-based company that produces and distributes films on the mainland. Domestic films - 526 of them - generated two-thirds of mainland ticket sales last year. The 20 international movies shown accounted for the other third. Keen observers of the mainland film industry say competition with Hollywood blockbusters not only threatens ticket sales, but also the overall quality of mainland films. Professor Emilie Yeh Yueh-yu, director of the Centre for Media and Communication Research at Hong Kong Baptist University, said the mainland was suffering from "blockbuster syndrome". She said mainland filmmakers believed that the only way they could combat Hollywood imports was to produce "big budget, event films" like Shaolin, featuring costly hi-tech special effects and with credits crammed with big names like Hong Kong pop star Andy Lau Tak-wah and mainland beauty Fan Bingbing. Movie experts like Yeh say the obsession with star power means that mainland films lack depth. She said smaller movies, sometimes more worthy than their mainstream counterparts, were pushed to the margins by bigger budget films attempting to compete with Hollywood. Graves said there seemed to be a trend to make films to make money and he feared that "filmmaking [on the mainland] would become, as it so often is in the West, a business with few artistic considerations". But some people point to the steady growth as a sign of huge opportunities to come. "Bigger investment, inspiration from Western films, technological breakthroughs and more [international] co-production in China have more and more local films showing quality," said Manner Movie president Frank Lee Chi-kong. The domestic film industry's market share grew 9 per cent last year and Lee said such growth was an indication of the mainland's potential. Last year 313 new cinemas opened on the mainland, adding 1,533 new screens. There are now 6,200 across the mainland and Lee said it could use 4,000 more. "To reach 20 billion yuan [in box office takings], I believe the country's screen numbers must grow to 10,000, one-third that of the US," Lee said. Yeh said content would play a paramount role in the future of the industry, adding that producing an innovative script was difficult for mainland filmmakers, who walked a tight line between creating provocative films that attracted a broad public and appeasing government censors. "As long as they work with the party authorities, the market will be open to them," she said. "But to be successful, they must carefully tailor their content for the audience on the mainland." Yeh estimates only 10 per cent of mainland films are well received by audiences. Lee agrees that mainland filmmakers must cater better to domestic audiences, saying they should "study more what the market wants to see and make new attempts to introduce new genres and stories that have never been told". Karie Bible, a box office analyst for media research firm Exhibitor Relations, said Chinese films were still an acquired taste in the US. Bible said China needed to cultivate the international notoriety of its stars if it was ever to compete with Hollywood. "Jackie Chan is an excellent example of how this crossover can be accomplished," she said. "His films and appeal have crossed the globe to a reach a very diverse audience."

Tour guide Chen Libin is waiting for General Motors and Honda to launch their new mainland-only brands before replacing his Xiali A+ car. Chen will spend up to 80,000 yuan (HK$94,500) on a car he will drive 300 kilometres a day around the Inner Mongolia grasslands. Models by domestic carmakers such as Tianjin FAW Xiali Automobile started breaking down after two years, while foreign cars went at least five years without major problems, he said. "These brands are definitely something I will consider," Chen said of GM's Baojun and Honda's Li Nian marques. "Foreign technology offers drivers more comfort, fuel efficiency and a lower maintenance cost." GM, Honda and Nissan are creating unique brands for the world's biggest car market as they try to boost sales in China's interior, where incomes rose almost 11 per cent last year. The cheaper nameplates would help them compete on price against local manufacturers without diluting their cache among mainland buyers, said John Zeng, an analyst at JD Power & Associates in Shanghai. "It's a win-win situation," Zeng said. "Consumers pay a lower price for foreign-brand technology, and the foreign makers benefit from an increase in sales volume without hurting their brand image." Leah Jiang, from Macquarie Research in Shanghai, said these "low-budget cars" would use older model platforms and had few extra features. Anti-lock brakes, automatic air conditioning and reclining seats might be excluded to keep prices as low as 50,000 yuan, according to Koji Endo, an analyst at Advanced Research Japan in Tokyo. That market segment is dominated by domestic carmakers BYD, Geely and Chery. Local brands sold three of every four cars priced below 50,000 yuan, and more than half of those costing between 50,000 and 80,000 yuan, according to Jiang. "I'm not worried about these new brands at all," said Jin Yibo, an assistant general manager for Wuhu-based Chery, whose sales increased 36 per cent last year. "Chinese cars offer better value for money, and we understand the local market and consumer very well." Vehicle sales grew more than 32 per cent to almost 18.1 million units last year. Sales are expected to grow about 15 per cent this year. Consumer buying power was boosted by economic growth of 10.3 per cent last year, the government said. Per capita net income in rural areas rose 10.9 per cent - the biggest gain since 1984. GM, the largest foreign carmaker on the mainland, will start selling the four-door Baojun 630 compact sedan early this year through its SAIC-GM-Wuling Automotive joint venture. GM is targeting 15 per cent growth next year after sales increased 29 per cent last year to 2.35 million vehicles. "There is tremendous potential in tier-two and tier-three cities," Kevin Wale, GM's China president, said last month after unveiling the Baojun, which means "Treasured Horse". Honda, Japan's second-largest car maker, and local partner Guangzhou Automobile Group expect to start selling the Li Nian S1 sedan early this year. The brand, which means "Ideal", used the City platform and targeted entry-level consumers with 1.3-litre and 1.5-litre engines, the Tokyo-based company said. Honda said its mainland sales rose 12 per cent last year and were expected to grow 10 per cent this year.

Yellow Mountain presents Winter scenery - The Yellow Mountain (Huang Shan Mountain) is a place of interest famed for its versatile scenery in east China's Anhui Province.

A woman picks out a fragrant wintersweet plant sold by Zhou Rong (L) in Southwest China's Chongqing municipality on Jan 29, 2011. Zhou is a resident of Dianjiang county in Chongqing. She makes a living and pays for her two children's education by selling the seasonal flowering shrubs every day. She said she will spend the Spring Festival holiday selling wintersweet in Chongqing this year.

Hong Kong*:  February 1 2011

A 3-D preview of a sex film being screened at the Lunar New Year Fair in Victoria Park has been branded inappropriate by officials. The five-minute promotion for the pornographic 3-D Sex and Zen: Extreme Ecstasy is being shown privately to over-18s in an area enclosed by wooden boards and set up by the online forum Hong Kong People Reporter. Visitors can watch the preview after making purchases at a stall selling inflatable toy breasts at HK$68 and HK$98-mouse pads featuring the breasts of the film's female stars. But officials from the Food and Environmental Hygiene Department said showing pornography at the fair was inappropriate. It sent the stall-keepers letters and faxes ordering them to stop showing the preview. "The fair attracts hundreds of thousands of people every year. Space there is limited and showing the film would attract a big crowd at the stall and affect some shoppers," the department said in a statement. The department said it would claim the stall back if necessary. But just two hours after the stall opened on the first day of the fair yesterday, it had sold HK$10,000 of products related to the film. And Oi Ming, a keeper at the stall, said they intended to continue showing the film clip. Oi said customers included people from all walks of life. "Both guys and girls like our products. A girl bought four mouse pads and said she was going to give them to her friends," she said. And she said the inflatable toy breasts had several uses. "For guys, it could prevent you from bumping into others in the crowded fair. For girls, it could keep you from molestation. For children, it could be a swimming aid," she joked. But not all shoppers appreciated the humour. Student Wong Wai-ching, 18, said the products were obscene and it was not appropriate to sell them at the fair as many children would walk by and see them. Meanwhile, many more stalls sold rabbit-shaped cushions and inflatable toys to welcome the new year. Although the cost of the products had increased because of inflation and the higher exchange rate of the yuan, many stall-holders said they would not charge shoppers more than last year. Orchid seller Horky Kwok Pak-yat said the cost of the flowers had risen 20 to 30 per cent. He expected to lose money but would not raise prices because "it's happy time of the year". He is selling a new kind of orchid with pointed petals that resemble rabbit ears. The Food and Environmental Hygiene Department issued a total of 55 verbal warnings at the fair last night, 52 involving obstruction of public places and three related to the use of speakers. The department is also prosecuting six people who tried to do business at the fair without authorisation.

Hundreds of friends of Szeto Wah, family members and government officials paid respects to the democracy stalwart at mourning sessions at a church in Tsim Sha Tsui last night. Szeto Wai-kon, Szeto Wah's younger brother, recited a piece written by the poet Ai Qing, Szeto Wah's favourite. "Why are my eyes always full of tears? It is because my love for this land is too deep." A five-minute video of Szeto's life was screened during the sessions. Szeto, chairman of the Hong Kong Alliance in Support of Patriotic Democratic Movements in China, died of lung cancer on January 2 at the age of 79. Three memorial sessions were arranged for Szeto's family, pan-democrat friends and educators at the Tsim Sha Tsui Baptist Church. About a dozen officials from the Education Bureau, including Secretary for Education Michael Suen Ming-yeung and Permanent Secretary for Education Cherry Tse Ling Kit-ching, attended as well as Executive Councillors Anthony Cheung Bing-leung and Leong Che-hung. Wong Fook-yau, who was at the GCEPSA Kwun Tong Primary School in the 1960s when Szeto was headmaster, recalled Szeto's spirit of never giving up on a student. Chief Executive Donald Tsang Yam-kuen will attend the 1pm public mourning session today. Six other government officials, including the director of the Chief Executive's Office, Raymond Tam Chi-yuen, Permanent Secretary for Home Affairs Raymond Young Lap-moon, Undersecretary for Home Affairs Florence Hui Hiu-fai and Undersecretary for Constitutional and Mainland Affairs Adeline Wong Ching-man, will also attend. But Tsang and those officials will not attend the funeral. The government line-up has fuelled criticism that Tsang and other high-ranking officials are avoiding Szeto's funeral, during which the church bell will ring in memory of the June 4 crackdown. The Reverend Chu Yiu-ming, chairman of Szeto's funeral committee, said: "It would be regrettable if some people chose not to pay respects to Szeto, who made a tremendous contribution to the pursuit of social justice, simply because of political reasons." Dr Fung Wai-wah, president of the Professional Teachers' Union and a member of the funeral committee, said 20 seats were initially offered to government representatives to attend the funeral at St Andrew's Church on Nathan Road today. "Late last week, the government said it would take only 10. But on Thursday, it said officials would not attend the funeral," Fung said. He said the government might have political considerations in making the U-turn. "It's just an occasion to pay respect to Mr Szeto. I think the arrangements should not be taken too sensitively." When asked about the change yesterday, Tsang had no comment.

Heritage officials have contacted the owner of Ho Tung Gardens after declaring the Peak Road mansion a "proposed historic monument" this week. They made contact with Ho Min-kwan, who walked out of negotiations last July after disagreeing that the 83-year-old villa deserved a grade-one historic rating and subsequently submitted a HK$3 billion redevelopment plan. A government official said Ho, a granddaughter of late tycoon Robert Ho Tung, lived in the US and only came back to Hong Kong occasionally. "She is currently in the city," the official said. "The Development Bureau explained to the owner of Ho Tung Gardens the legal effect of the declaration. The Antiquities and Monuments Office wrote to the owner today to formally notify her of the declaration of the proposed monument in accordance with the established procedures," the bureau said. Janette Chan Wan-ming, director of P&T Group, the architecture firm that submitted the redevelopment plan on behalf of Ho, declined to comment. The firm, formerly known as Palmer and Turner, was the original designer of the villa's gardens. Ho Tung Gardens' monument status, which will last 12 months, took effect yesterday. Secretary for Development Carrie Lam Cheng Yuet-ngor will now negotiate with Ho Min-kwan - offering economic incentives, such as a land swap or a transfer of development potential to another site - to preserve the heritage site. The owner cannot deface or demolish any structure on the site while the monument status is in effect. The minister announced the emergency measure on Tuesday because the owner secured a plan to build 11 blocks of houses, yielding 60,000 sq ft of residential floor area. The Buildings Department, confined to vetting only structural safety issues, approved the plan, but alerted heritage officials. Ho Tung Gardens was built in 1927 for the second wife of Ho Tung, Clara. Called by locals "the grand old man of Hong Kong", he was a prominent business and community leader in the early 20th century. Of Dutch and Chinese ancestry, he was the first non-European to receive permission to live on The Peak. The garden is not the only heritage site held in the hands of the rich that the bureau is trying to rescue. An 1887 European-style mansion at 23 Coombe Road on The Peak is also under threat as owner Hutchison Whampoa (SEHK: 0013) secured a redevelopment plan in October. The Antiquities and Monuments Office decided to extend a one-month public consultation on a grade-three rating on the site, which ended on January 21. The grading was proposed after the rebuilding plan came to light. The public can write to the office until end of April. Officials are also negotiating with the owners of a pair of Chinese-style residential blocks in Kennedy Road in Mid-Levels, which were built by the late philanthropist Li Koon-chun, founder of the Bank of East Asia (SEHK: 0023), between 1927 and 1935. The Antiquities Advisory Board rejected a proposed downgrade of its historic rating from two to three last year. The Conservancy Association's campaign manager Peter Lee Siu-man said the government should be consistent in heritage preservation.

Hong Kong is the most expensive city in the world to buy a home for everyone from billionaires to white collar staff. Not just that, prices soared so much last year that luxury flats are now at least 112 per cent more expensive than in London, Moscow and New York. Research by international property consultant Savills compared different income groups buying homes in the four major cities - billionaires, chief executives, local company directors and locally employed white collar workers. In the Savills survey, Hong Kong came out on top by a large margin in all four categories. Overall, property prices in Hong Kong were 55 per cent higher than London in 2010 with Moscow's a further 7.4 per cent lower and New York at the ranking bottom of the four with housing 15 per cent cheaper than London. This survey comes five days after a report by the US-based consulting firm Demographia, which examined housing affordability in six countries and Hong Kong for the third quarter of 2010. It found Hong Kong homes are "severely unaffordable". Driven by negative real interest rates and an influx of mainland buyers, surging home prices are squeezing many middle class families out of the market. White collar staff in Hong Kong pay HK$8,154 per sq ft for a flat, 50 and 67 per cent higher than in New York and Moscow respectively. London is the cheapest location for local employees to buy a flat. A clerk and her husband have been hoping to buy a home for three years but cannot find anything to meet their limited budget. Married for more than two years, they earn about HK$30,000 a month and want a two-bedroom flat of 500 to 700 sq ft in Tuen Mun or Tin Shui Wai. They have a budget of less than HK$2 million. The properties they have found are either too old or exceed their budget. "Flats in Hong Kong are too expensive," the 32-year-old clerk said, adding that prices are rising too rapidly for them to keep up. "Property prices are so high that they are beyond the affordability of the working family." In Hong Kong, a billionaire has to pay an average of HK$78,610 per sq ft for a residence, 112 per cent higher than the HK$36,997 per sq ft in London, which was ranked the second most expensive city for billionaires. Property prices for chief executives in Hong Kong has surged 148 per cent over the past five years, while prices in Moscow and London increase 110 and 47 per cent. Prices in New York dropped 7 per cent. Savills expects property prices and rents in Hong Kong will continue to increase between 10 and 15 per cent this year. Economist Kwan Cheuk-chiu, a former professor at the Chinese University of Hong Kong, warns the market is heading for disaster. "If you compare the prices of flats occupied by lower income groups, you will find the flats in Hong Kong are more expensive than the other cities," he said. "The economy will suffer if the bubble in the market bursts." He suggested the government release more residential sites for sale to increase the future housing supply. The market has so far shrugged off most of the government's cooling measures and recorded a strong rebound in property sales and prices this month.

Despite being close friends for decades, casino mogul Stanley Ho Hung-sun and tycoon Cheng Yu-tung apparently still have at least one thing they do not share - how big their fortunes are. Cheng, a longtime business partner and friend of Ho's, was bombarded with questions from reporters on the family wrangle over Ho's gambling empire when he appeared at the annual general meeting of Melbourne Enterprises, a company he chairs. Asked how the New World Development chairman would distribute his wealth after seeing Ho's family battle, Cheng replied: "I am not as wealthy as him. I do not know how to comment." But either Cheng was trying to be humble or the two friends, who have been seen together on many public occasions, especially at the race tracks in Hong Kong, keep their own wealth secret from each other. The latest Forbes Asia's Hong Kong Rich List 2011 ranked Ho 13th with US$3.1 billion in net worth, while Cheng was fourth with US$9 billion. Cheng, whose family controls a 10 per cent stake in Sociedade de Turismo e Diversoes de Macau (STDM), added that there was one other reason why he did not know how to answer the question. "I do not have four wives. I do not have as many wives as him," said Cheng, who only has one wife and has been married for more than 60 years. The two friends last met a month ago, and Cheng said Ho looked good then. Cheng said Ho had never mentioned how he would allocate his estate, and added that he would not take sides in his friend's family disputes. Cheng said he had not met any of Ho's wives recently. And, like Ambrose So Shu-fai, chief executive of SJM Holdings, he did not think the family disputes would have a negative impact on the gambling empire or share prices. Ho's fourth wife, Angela Leong On-kei, did not make any comment about her family while attending a Macau government awards ceremony. "What is the day today? Today is the big day for the SAR government's honours and awards presentation ceremony. I hope you can all respect this occasion," she said. "Don't ask me anything about Ho's family. I have no comment." Throngs of reporters continued camping outside the homes of Stanley Ho and his wives. Throughout the day, family vehicles came and went. As Angela Leong's Lexus left shortly before 3pm, it ran over yet another photographer from Next Magazine. As the car cruised out of the gate, more than 20 reporters rushed toward it, trying to take pictures of Leong. The car slowed down, but did not stop and ran over the left foot of the 46-year-old photographer. A day ago, Leong's car ran over the left foot of a 44-year-old photographer from the same magazine. Both photographers suffered slight injuries. Police classified the two cases as traffic accidents and said they would investigate further.

Citybus passengers will have more cash in their pockets during a three-month ticket discount period because the company must share excessive profits with patrons, who are entitled to HK$42 million worth of fare concessions. From February 3 to May 2, passengers can get a 20 per cent discount on the second leg of a journey on 24 routes, including cross-harbour trips. A HK$2 discount will also be offered on the second leg of a trip on all Citybus' 64 franchised routes, except cross-harbour services jointly operated with other bus firms, and the airport and Disneyland routes. Only Octopus card users can get discounts. The discount is offered under the passenger reward arrangement in a franchised agreement signed between the government and Citybus in 2006. It forces Citybus to share equally with passengers excessive revenue - any amount above the 9.7 per cent rate of return based on the net value of fixed assets. In the agreement, when the excess is more than 1 per cent of total revenue, Citybus is required to give rebates within a year. Citybus' total revenue last year reached HK$1.2 billion, of which HK$84 million is excessive revenue. Half will go on discounts.

Miuccia Prada and her family control European fashion firm Prada, which will be the first Italian company to be listed in Hong Kong. Hong Kong is expected to become a favoured fund-raising destination for more European fashion companies following Italian luxury brand Prada's decision to list in the city, analysts say. Prada, which has said it wants to raise up to €1.5 billion (HK$16.04 billion), confirmed on Thursday it would go ahead with a share offering in Hong Kong as rising incomes on the mainland spurred demand for luxury goods. However, it did not say how much it is raising or whether shares will be sold to the public. A spokeswoman for Prada Hong Kong said details of the offering would be released later. The Milan-based company, which also owns the Miu Miu, Car Shoe and Church's brands, said funds raised from the share offering would be used to expand its retail network, increase production lines and reduce debt. Prada will be the first global luxury brand to list in Hong Kong and analysts expect more to follow. Kenny Tang Sing-hing, the head of research at Redford Securities, said investors in Hong Kong were prepared to pay a higher premium for big fashion companies such as Prada as they were generally positive about the luxury goods market in Asia, particularly China. "There's no doubt that Prada's listing will be well received," Tang said. "This will also show other European brands that Hong Kong is a good option [for fund-raising] with its strong liquidity and high stock valuation." Helena Liu, an analyst with Bocom (SEHK: 3328) International Securities, said Prada's decision would influence other players in the industry. "If Prada, the world's leading luxury brand, can make it, it will prove to other European brands that an initial public offering in a remote city like Hong Kong can work," Liu said. Italian fashion retailer Sixty Group, which owns the high-end casual wear brand Miss Sixty, is also one of those interested in a listing. It is seeking about US$75 million to expand its presence on the mainland. Paolo Bodo, the chief executive of Sixty Far East, said a number of fashion companies in Italy were similarly interested in listing in Hong Kong. A recent report by Goldman Sachs said the sales proceeds of China's luxury goods market reached US$6.5 billion last year, amounting to 15 per cent of the global market. The number of luxury goods shoppers would rise from 40 million now to 160 million in five years and China would replace Japan as the biggest luxury goods consumer in three years, it said. Prada has said it expects global sales of about €2 billion for last year, with about 40 per cent coming from Asia. A family business founded by Mario Prada in 1913, Prada is now controlled by chief executive Patrizio Bertelli, his wife Miuccia Prada and her family. It has tried to go public three times over the past decade but had to scrap the plan every time because of adverse market conditions.

China WindPower secures ADB funding - China WindPower Group, a Hong Kong-listed wind farms developer on the mainland, has been granted US$120 million in credit facilities from the Asian Development Bank. The financing would help fund up to 800 megawatts of wind-power plants to be built by China WindPower by 2013, mainly in Jilin province, the company said in a statement after signing a loan contract with ADB. The loan will be repaid in instalments and fully repaid by 2023. "This represents ADB's first multi-project financing facility for wind power," the statement said, adding it would be part-financed by proceeds from its 1.2 billion yuan (HK$1.42 billion) yuan-denominated bonds issued in Hong Kong in October last year. China WindPower's projects are mainly in northeast China and Inner Mongolia. The company said in August last year that it planned to add 360 MW of owned wind-power capacity this year and the same amount next year. It owned 258 MW of capacity in mid-2010, which rose to 657 MW by the end of the year. The company received central government approval to build 900 MW of wind farms in 13 projects last year. Its total power generation surged 217 per cent last year to 510.83 million kWh from 2009. Beijing planned to more than triple the mainland's installed wind-power capacity to more than 150,000 MW by 2020 from 41,800 MW at the end of last year. China last year dethroned the United States as the nation with the world's largest wind-power installed capacity. However, due to lagging power grid investment, about 30 per cent of that capacity is estimated to be idle. Still, some analysts are more bullish than the official forecast on wind-power installation. According to Samsung Securities, the nation could have 115,000 MW of wind-power capacity by 2015, or 8 per cent of its total power generation capacity, rising to 225,000 MW in 2020, or 11 per cent of the total.

 China*:  February 1 2011

Beijing halved the tariff on imported information technology products after a public outcry arose over people being charged 1,000 yuan (HK$1,180) for iPads they bought in Hong Kong or abroad. The State Council had approved cutting the tariff from 20 to 10 per cent for computers, camcorders and other information technology products, mainland customs announced on Wednesday. The new tariff was effective yesterday. Customs stepped up enforcement last October against inbound travellers and classified iPads they carried as computers for tax purpose. Based on the benchmark customs value of 5,000 yuan for computers and a tariff rate of 20 per cent, all iPads were subjected to 1,000 yuan tariffs - even though cheaper models cost less than HK$4,000 in Hong Kong. The customs notice did not say whether the tariff would still be based on the controversial benchmark value or on the actual sales price. Some small traders who buy tax-free electronic goods in Hong Kong and resell them on the mainland welcomed the tariff cut. Beijing electronics merchant Sun Xuanzi said she had been planning a leisure trip to Hong Kong next month, but Beijing's tariff cut meant it would now be a business trip. "This definitely means a remarkable benefit for us sellers," she said. "I think I'll make a nice bit of pocket cash." The owner of a small stall at an electronics market, Sun won't be making a big purchase. She plans to buy 18 to 20 iPads for resale on the mainland, if she can find a good price and a retailer willing to sell that many to her. Some retailers, however, doubt the tariff cut will mean a big increase in business. "Maybe some people travel to Hong Kong for leisure and pick up some Apple products to sell here on the mainland," said Chui Fengming , an electronics retailer based in Shenyang . "But it's just not practical" - because the cost of repeated plane tickets outweighed the tariff cut, Chui said.

The Lenovo Group (SEHK: 0992, announcements, news) , the mainland's biggest maker of personal computers, says it will put an extreme focus on its LePad tablet computer and LePhone smartphone to meet a rising threat at home from Apple. "We have an extreme focus on the innovation of LePad and LePhone because these products will dominate the future market," chairman Liu Chuanzhi said at the World Economic Forum in Davos yesterday. "Anyone who loses this battle will be phased out from the history of this industry." Lenovo, which makes half of its sales on the mainland, faces competition after Apple opened three stores last year in a market that chief operating officer Tim Cook calls a top priority. The iPhone is the mainland's top-selling smartphone, with first-half shipments of more than 900,000 last year, industry consultant BDA China says. Apple would start selling the iPad 3G model on the mainland this quarter, the Shanghai Daily said this week, citing a China Unicom (SEHK: 0762, announcements, news) officer. Consumers may shun the LePad because it will adopt a modified version of the Android system, which will not be compatible with programmes on Google's online app store, according to analysts such as Vincent Chen, a Taipei-based analyst with Yuanta Securities. "Lenovo will have to convince vendors they can grow big, otherwise consumers will not be interested because there will be very limited choice of software," Chen said. "Lenovo is the PC king in China, so they think they can differentiate and attract enough interest. In my view that's a challenge." Lenovo, the maker of ThinkPad laptops, is diversifying to boost revenue and seeking to expand outside the mainland. It said yesterday it agreed to invest US$175 million to form a venture with NEC and expand in the Japanese PC market. Lenovo and NEC would transfer their Japanese PC assets to the venture - named Lenovo NEC Holdings - in which Lenovo would hold a 51 per cent stake, it said. The venture will help Lenovo gain on Dell, the third-ranked PC maker with 12.7 per cent of the global share, data from industry researcher IDC shows. "History has proved we are good at catching up with the market's leaders," Liu said. "Though Apple is winning a significant share in the Chinese market, it has not gained a clearly leading position yet. Our advantage is we know this market better." Apple's four stores in Beijing and Shanghai generated, on average, the company's highest traffic and highest revenue, chief financial officer Peter Oppenheimer said last week. Lenovo received 98 per cent of its 2009 sales from personal computers and less than 1 per cent from mobile phones. The company had 10 per cent of the world PC market in unit terms during the first nine months of last year, ranking it behind Hewlett Packard, Acer and Dell, according to IDC data.

A worshipper touches a relief of a rabbit at the Bai Yun Guan (White Cloud Temple), ahead of the Chinese Lunar New Year, in Beijing Juanuary 28, 2011. The Lunar New Year begins on February 3 and marks the start of the Year of the Rabbit, according to the Chinese zodiac. The Chinese characters read, "Holy rabbit flying to the moon, symbols auspiciousness and happiness".

China to double imports by 2015 to balance trade - Workers unloading cargo at the Lianyungang port, Jiangsu province. The Minister of Commerce Chen Deming said China would double its imports by 2015. Ten years ago when China laboriously won membership of the World Trade Organization (WTO), many were doubtful. Who would be the biggest losers, they asked, China, or the rest of the world? Looking back and reflecting on the debates on China's WTO entry during that time, the organization's chief Pascal Lamy disappointed the doubters. Admitting that China joined under terms much tougher than those imposed on any other developing country - a "bitter pill" which turned out to be "an insurance policy against protectionism" - he concluded during an interview with China Daily. "It seems that nobody has been a loser it is win-win." At a panel discussion with Lamy on the tenth anniversary of China joining the WTO, the country's Minister of Commerce Chen Deming offered a list of figures to support Lamy's conclusion. Describing the entry as a "courageous and tough" but the "right" choice, Chen said that in the past decade, China's average duty rate has dropped from 15.3 percent to the current level of 9.8 percent. Meanwhile exports have increased 4.9 times and imports by 4.7, with a two-fold increase in economic output. Meanwhile, Chinese consumption grew at an average rate of 15 percent between 2001 and 2010 and the nation ended up as the world's second-largest importer in 2010, with a total import value of over $1.4 trillion, accounting for 10 percent of the global total. Chen pledged that the country will further open its economy, forecasting another decade of prosperity for it and the rest of the world. This will be done by encouraging Chinese companies to invest overseas, increasing foreign purchases and boosting domestic consumption. The US is still experiencing difficulties with toxic assets, Europe is in a public debt crisis, and the emerging economies are facing inflationary pressures. That being the case, Chen said China will cooperate to help promote global economic recovery, even though the world's second-largest economy also faces severe challenges itself, not least rising inflation. Chen also said China's imports will double during the coming five years. "This (the doubling of imports) highlights China's commitment to balancing its foreign trade, and the nation's aim of shifting its economic growth mode to one driven by demand," said Li Yong, assistant to the chairman of the China Association of International Trade. Chen Deming said the major task facing the commerce ministry in the next five years will be that of balancing trade by stimulating imports and stabilizing exports. "Such a task (the doubling of imports) is not difficult to implement. A more optimistic estimation is that China's imports will more than double by the end of 2015," said He Weiwen, a standing council member of the China Society for WTO Studies. According to data from the customs service, China's imports for 2010 surged to $1.4 trillion, a rise of 38.7 percent from a year earlier. He Weiwen suggested that China reduce her reliance on imports of energy products and spend more on technology-related goods, in the sectors of agriculture, information, energy, infrastructure, aerospace, materials and autos. During the recent annual Commerce Work Conference, the commerce ministry said it will launch guidelines on promoting imports of mechanical and electrical products this year. Imports related specifically to new energy, new materials, energy saving, high-end equipment manufacturing, low-carbon technology, aerospace, shipbuilding and rail transportation will also be a focus. On Thursday, China announced it will cut import tariffs on some electronic goods, including laptops and digital cameras, to 10 percent from 20 percent. Chen also said he has consulted with his US counterpart to seek a doubling of US exports to China, amounting to $200 billion by 2015. Chen told China Daily that "we will encourage Chinese companies to invest overseas", without giving a specific investment plan. China's overseas investment soared to $60 billion in 2010 from around $1 billion 10 years ago.

Chinese naval observers could soon join European Union naval escorts of World Food Programme shipments to Somalia in preparation for the PLA's own escort operations. PLA naval officials responded to EU requests for international assistance a year ago, but operational details for the escorts are still being worked out - a reflection of the fact that such a move would be unprecedented for the Chinese navy. EU naval forces spokesman Wing Commander Paddy O'Kennedy said the dates for Chinese observers to join EU escorts were being finalised. "We will do our best - and will of course be hugely grateful - to enable them to escort a WFP vessel as and when they can," he said. The escorts require ships to travel inside dangerous Somali territorial waters and berth on the lawless coast of the failed state. An earlier PLA offer to share the chairmanship of regular co-ordination meetings of the international anti-piracy effort - another unprecedented move - is moving even more slowly. A number of naval insiders said that while PLA navy officials involved in the anti-piracy fight were keen to do so, there was still no clear sign when they would be ready to place ships in the international transit corridor in the Gulf of Aden. Such a move, agreed by Nato, the EU and the US-led Combined Maritime Forces (CMF), is a prerequisite to chairing the "shared awareness and deconfliction" meetings known as Shade. China, along with other independent navies including Russia and Japan, currently escorts convoys for mostly its own ships close to the corridor. Russia, whose offer followed China's, successfully escorted WFP food aid shipments in July. The EU sought help with the escorts in 2009 in a bid to free up ships for the widening fight against the pirates, whose range has expanded across the Indian Ocean. Since joining the fight two years ago, Beijing has kept three ships off the Horn of Africa in a revolving three-month deployment - the first time in centuries that its navy has entered a conflict zone beyond its home waters. A range of foreign naval officials said they believed Beijing was troubled by having to co-operate even more closely with foreign, particularly Western, navies. "They have made clear that right now they are comfortable with the level of co-operation," one Asian naval officer said. "But the leadership is worried about a closer role forcing them to accept the commands of other navies, or backing them into difficult corners in terms of having to take strong action in a potential conflict situation. We suspect there is an operational secrecy element as well ... right now they don't want to get any closer." Last September, a well-connected scholar and retired PLA navy major general said Beijing had given internal approval for a wider Chinese role, and China's involvement as chair of the Shade meetings was "certain". At the same time, however, Tang Yinchu , a senior consultant at the China Institute of International Strategic Studies, outlined lingering differences and mistrust with Western forces, particularly Nato. News of China's drawn-out attempts to expand its historic and strategic role in the fight against Indian Ocean piracy comes as industry pressure builds on navies to take a tougher line. South Korean and Malaysian special forces both mounted actions last week to storm seized ships and rescue fellow countrymen held hostage by Somali pirates. The South Koreans killed seven pirates in its raid, capturing another five. Arthur Bowring, managing director of the Hong Kong Shipowners' Association, told a conference in Singapore this week that such resolute action could "change the game". Many of his members supported such moves, he said, although no one wanted to see an escalation of violence from the pirates in return. Many navies are exceptionally reluctant to stage such moves, however, fearing the deaths of hostages and the legal minefield of international shipping. PLA officials involved in the fight against piracy have said that the use of lethal force involved strict rules of engagement, acknowledging that it would require political decisions in Beijing. The EU naval force also takes a relatively conservative approach. PLA special forces units have fired warning shots from ships and helicopters to successfully break up attacks on vessels inside their convoys around the Horn of Africa. They also routinely station themselves on board slower moving ships of their convoys. A senior CMF official, US naval Captain Chris Chambers, told the Marseq Combating Piracy Asia conference that he did not believe the South Korean and Malaysian examples would become "everyday occurrences" even though he acknowledged growing industry frustration. "I would be very reluctant to say that this is the way of the future, because there is a lot of factors to consider," he said.

Chinese Minister of Commerce Chen Deming (R, front) and Swiss Economy Minister Johann Schneider-Ammann (L, front) attend a signing ceremony to mark the official launch of negotiations between Switzerland and China for a comprehensive Free Trade Agreement, in Davos, Switzerland, on Jan. 28, 2011. 

A staff member of a pet shop takes care of the entrusted dogs in Qionghai, south China's Hainan Province, Jan. 28, 2011. As more and more people who worked in Hainan left for their hometowns, they began to entrust their pets to the care of local pet stores during the Spring Festival holidays.


Belgian Clijsters wins her first-ever Australian Open singles title - Belgian Kim Clijsters claimed her first-ever Australian Open singles title here on Saturday, beating China's Li Na 3-6, 6-3, 6-3 in the final. Belgian tennis star Kim Clijsters, triple U.S. Open champion, claimed her first-ever Australian Open singles title here on Saturday, beating China's Li Na 3-6, 6-3, 6-3 in the final. Third-seeded Clijsters, 27, rallied to upset ninth-seeded Li Na, who made history for China and Asia to enter a Grand Slam final, in two hours and 15 minutes. Throughout the match, Li hit four double faults and 40 unforced errors, while Clijsters had three double faults and 26 unforced errors. Clijsters burst into tears right after she sealed the victory for her fourth Grand Slam title. Two weeks ago, Li defeated Clijsters in straight sets 7-6 (7-3), 6-3 in the final of Sydney International. In Thursday's semifinal, Li showed her courage by beating world No. 1 Caroline Wozniacki of Denmark 3-6, 7-5, 6-3. Clijsters, who boasts 40 career titles, played her first Grand Slam final a decade ago, and has won the U.S. Open three times on a surface similar to the new center court at Rod Laver Arena in Melbourne of Australia. Clijsters is projected to return to No. 2 in WTA singles rankings next week. Despite Saturday's loss, Li is supposed to return to Top 10 when the new WTA rankings are published on Monday.

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.

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

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