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Hong Kong*:  July 1 2011  Share

Chief Executive Donald Tsang Yam-kuen yesterday appointed Gregory So Kam-leung as the new secretary for commerce and economic development, saying he is both capable and suitable for the post. The 52-year-old So has been the bureau's acting secretary since Rita Lau Ng Wai-lan, 57, stepped down in April for health reasons. As So was not appointed until yesterday, there had been speculation he was not the government's first choice. Tsang declined to say how So was ranked among other possible candidates and whether the government is suffering from a brain drain. "Appointing a secretary is very important and serious task, so I had to deal with it cautiously ... Greg is familiar with the work of the Commerce and Economic Development Bureau and is very committed. I consider him a very suitable choice." Tsang said since So became an undersecretary in 2008, "he has gained a comprehensive understanding of the range of work of the bureau, serving the public diligently and with devotion. "He listens well and is receptive to different views." So, a former vice chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong, is the first undersecretary to be elevated to a ministerial post but will serve only until the end of next June. So, who was embroiled in an immigration row when his incomplete application for a domestic helper was approved, said his previous affiliation with the DAB would not affect his work. New People's Party chairwoman and former secretary for security Regina Ip Lau Suk-yee described the appointment of So as "a choice that you make when you have no other choices." Lawmaker Jeffrey Lam Kin-fung of Economic Synergy admitted they have difficulty in communicating with So and expressed the hope that the situation will improve.

A newly tweaked mechanism to replace by- elections will be able to withstand court challenges, constitutional affairs minister Stephen Lam Sui- lung said. Lam gave details of a revised proposal for filling vacancies in the legislature, as reported yesterday in The Standard. He is confident the government will win in court if the leave for a judicial review by registered voter Cheung Tak-wing, 54, is heard. Cheung has demanded that Lam, as the secretary for constitutional and mainland affairs, should consult the public before the second reading of the amendment bill. Cheung is also seeking a ban on the bill's implementation, which he considers unconstitutional. The Law Society said the government's revised mechanism announced yesterday still deprives voters of the right to vote. It echoed earlier protestations by the Bar Association. Lam announced the revised mechanism after meeting members of a bills committee who were scrutinizing the amendment bill. All pan-democrats from the panel had earlier withdrawn. Under the revised proposal, the next candidate on the same list as the lawmaker who resigns, dies or is disqualified during his four-year term will get the seat should a mid-term vacancy arise. If that person is not willing to take it or is no longer qualified, or if no one else is on the list, then the seat will go to the candidate next in line in terms of the number of ballots their slate received in the election. And if the vacancy still cannot be filled, then a by-election will be held. "It can preserve the proportion of ballots cast by voters in favor of different political factions and candidates to become lawmakers in a Legislative Council general election under the proportional representation system," Lam said. The government wants to scrap by-elections in geographical constituencies and the five newly added district council-sector seats in the Legislative Council next year after five pan- democrats quit last year to trigger what they dubbed a referendum on universal suffrage. Lam insisted a public consultation exercise is not necessary. He wants to put the amendment bill to the vote before Legco goes into recess in mid- July. Law Society president Junius Ho Kwan- yiu urged the government to withdraw the bill and launch a full consultation.

Swire Pacific (SEHK: 0019) says its wholly-owned subsidiary is in talks to sell a "significant" property asset that could lead to a disclosable transaction under listing rules. The announcement was released after Sing Tao Daily reported that Singapore's Mapletree Investments is in talks to buy Swire's Festival Walk centre in Kowloon Tong, involving HK$22 billion. Swire Pacific said yesterday that Swire Properties "is in discussions which could lead to the disposal of a significant investment property asset". If the talks lead to an agreement, it will be a disclosable transaction, it said. A spokeswoman for Swire Properties declined to identify the property and also declined to comment on the news report. Festival Walk, which opened in 1998, comprises 980,089 square feet of shopping space and 228,665 square feet of offices. An independent valuation of the retail arcade as of March 3, 2010 came in at HK$14.45 billion, while the office portion was valued at HK$1.45 billion, according to information Swire Properties provided to Hong Kong Exchanges and Clearing (SEHK: 0388) last April. Swire Pacific planned a HK$20.84 billion initial public offering for Swire Properties, but last May called it off because of a downturn in market sentiment. The Festival Walk development was jointly built by Swire and Citic Pacific (SEHK: 0267) at a cost of HK$5 billion. The two companies paid HK$2.85 billion for the site at a government land auction in 1993. Swire owns 100 per cent of the property since it bought the 50 per cent stake from Citic Pacific for HK$6.18 billion in January 2006. Swire Pacific, which also owns Pacific Place mall in Admiralty and Cityplaza mall in Taikoo Shing, had studied a spin-off of Festival Walk shopping mall into a real estate investment trust in 2007, but no plan was finalised. Charles Chan Chiu-kwok, managing director at Savills Valuation and Professional Services, said strong liquidity and low interest rates have encouraged foreign capital flowing into Hong Kong to buy hard assets. Mapletree Investments is a unit of Temasek Holdings, Singapore's state-owned investment company.

A former top leader of Hong Kong's biggest party, Greg So Kam-leung, yesterday became the first government minister with open political affiliation after he was formally appointed as secretary for commerce and economic development. So, who gave up his Canadian citizenship to secure a position in the political elite in 2008, remains a rank-and-file member of the pro-Beijing Democratic Alliance for the Betterment and Progress of Hong Kong, but said yesterday his affiliation would in no way affect his decisions as a minister. Senior civil servants and political analysts saw the appointment of So, who used to be a vice-chairman of the party, as a "compromise" and not a move towards party-led government. After heading the Commerce and Economic Development Bureau as acting secretary since March when his predecessor Rita Lau Ng Wai-lan stepped down for health reasons, So will lead the bureau until June 30 next year when the tenure of Chief Executive Donald Tsang Yam-kuen and his cabinet ends. Chinese University political scientist Ivan Choy Chi-keung said: "With only a year left for the government it is hard to find a replacement. Instead of thinking that a trend has been set for people with a political background taking up senior posts, I would say it is only a compromise." Since Lau quit after surgery for colon cancer, the government has approached a number of people to fill the post, including the bureau's permanent secretary, Andrew Wong Ho-yuen, and his predecessor, Yvonne Choi Ying-pik, who retired last November. "With such a short tenure, it is unfair to ask an administrative officer to give up a permanent post or ask a retiree to return to work," Choy said. Senior Government Officers Association chairman So Ping- chi did not believe the appointment meant more people with political backgrounds would become ministers. "Greg So was given the job because many people declined to take up the post as it will only last for a year," he said. "Since he was the undersecretary, it is normal that he was picked as he is familiar with what is going on in the bureau. He has been there for three years already," he said. At a press conference on the appointment yesterday, So was asked whether he would favour any political party given his relationship with the DAB. "My working philosophy has been practical and impartial. And during my tenure in the government, I've never been involved in the party's affairs," he replied. There are plenty of challenges ahead for So - the competition bill, development of the new cruise terminal and reform of RTHK. Ironically, So's party is threatening to block the proposed competition law unless it is substantially changed to meet its demands, including exempting smaller companies from being regulated and confining the power to initiate a lawsuit only to a future competition commission. Political parties had mixed views about his appointment. The DAB, Civic Party and Democratic Party all welcomed it and hoped that So would listen to community voices. But People Power lawmaker Wong Yuk-man said So should cut his ties with the DAB. "When Elsie Leung Oi-sie was appointed secretary for justice in 1997, she resigned from the DAB," he said. Leung was a founding member of the party. New People's Party legislator Regina Ip Lau Suk-yee did not have high hopes for the new secretary. "His tenure is only short - he's just a temporary replacement," she said.

Beijing's plan to cut import tax on luxury goods is expected to pour cold water on sizzling spending in Hong Kong's top tourist hot spot Causeway Bay. The Ministry of Commerce said yesterday that it had reached a consensus with other government departments on lowering import tariffs to spur domestic consumption and restore trade imbalances, key objectives of the nation's 12th five-year plan to 2015. Although the extent of the potential cut is unclear, some analysts estimate that tariffs on big-ticket items such as watches, jewellery, gold and silver ornaments could be reduced to as little as 2 per cent from 15 to 30 per cent. This effectively means mainland tourists, the darling of Hong Kong retailers, will no longer have to flock to tax-free shopping districts such as Causeway Bay and Tsim Sha Tsui for luxury goods. Stanley Lau Chin-ho, deputy chairman of the Federation of Hong Kong Industries, said the city's retail market, which relied on mainland visitors, was exposed to growing risks. The potential new tax regime may put a dent in the city's retail sales, which rose by 28 per cent in April - the sharpest growth since 1991 - and reshape the retail rental market as well as retailers' strategies, he said. But the pain expected to be inflicted on landlords is unlikely to win sympathy from many small businesses who have been pushed out of the district. "Rents in Causeway Bay have sky-rocketed to an extent that it is dominated by watch, jewellery and gourmet dried seafood shops. It is so difficult to find a place to have a bowl of wonton noodles," Lau said. "It is unhealthy to rely on such a narrow range of merchandise." High rents have claimed yet another victim in Causeway Bay, with the popular Gourmet Coffee shop in Hysan (SEHK: 0014) Avenue due to close tomorrow after the landlord raised the rent by 50 per cent. Gourmet Coffee co-owner Robert Chan, who opened the sandwich and coffee shop 13 years ago, said yesterday that demand for retail space was so strong that landlords preferred leaving properties unoccupied rather than accept lower rents. "How many cups of coffee will have to be sold to generate sufficient income to offset nearly HK$100,000 in rent a month?" Chan said of the new rental charge that has given him sleepless nights for the past two months. "On top of rents, coffee beans, bread rolls and wages have been inflated by at least 40 per cent in the past year." He is seeking to relocate the cafe in the area. Gourmet Coffee is among a number of restaurants in Hysan Avenue destined to relocate or fold as its biggest landlord, the Lee family, is raising rents and upgrading further the Lee Gardens shopping mall for luxury brands. Hong Kong emerged as the world's second-most expensive location after New York after recording a 46 per cent jump in retail rents to US$1,697 per square foot in the first quarter of this year over the previous quarter, according to a CB Richard Ellis survey this month. Helen Mak, a director of retail services at real estate brokerage Colliers International, said high rents in Causeway Bay showed no signs of abating as too many retailers were chasing too few spaces. However, she said the potential new tax regime could have an adverse impact on Hong Kong retail sales and rental growth, and that had prompted a rethink on the sustainability of Hong Kong landlords' rental strategies. In Causeway Bay, for example, there was growing realisation that a mix of shops, ranging from food to high-end goods should be provided so that local consumers had more choice. "It is an alarm siren," she said of the planned tax policy. "Hong Kong will have more competition and if landlords do not rethink their rental strategies, the sustainability of rent levels is in doubt."

Loans and relocation accommodation would be provided for villagers affected in a crackdown on illegal structures, the secretary for development said yesterday. But as Carrie Lam Cheng Yuet-ngor explained the new sweetener for the enforcement policy in the Legislative Council yesterday, thousands of villagers from the New Territories led by rural affairs body the Heung Yee Kuk staged an hour-long rally outside. Police said there were 1,700 protesters, but organisers claimed there were 5,000. Despite the opposition, the minister said the policy would be launched in a year and no more consultations would be held. "The government has all the power to enforce the law ... there's no such thing as a consultation to make everyone happy," Lam said. She said three measures would help villagers, especially those who built extra storeys on top of the standard three-level format. An existing building safety loan scheme would provide cash, capped at HK$1 million per house, to residents who have financial difficulty in demolishing illegal structures. The elderly and those who satisfy a means test will receive interest-free aid. The Housing Department will provide public rental housing to villagers if they are forced out of the storeys that must be demolished. For old houses that contain extra storeys that were topped up later, Lam said owners would be encouraged to rebuild them because of bad designs. Such applications would go through a streamlined procedure. Kuk chief Lau Wong-fat said the kuk would not accept a crackdown on homes on so-called old house lots since these leases did not contain a building height limit. There are up to 1,000 such houses that are built higher than three storeys, according to official estimates. "The kuk is studying a judicial review. When the Buildings Ordinance was applied to the New Territories 50 years ago, the law was only in English. Villagers did not understand it and the British did not consult us or publicise the law ... Villagers were not aware of the rule," he said. Lam said the government would leave the courts to make a decision. "This is a building safety issue, which I hope won't be interpreted as a measure targeting New Territories villagers ... In fact, many village houses have been sold and are occupied by urban people, she said. Leung Fuk-yuen, a kuk member that organised the protest yesterday, warned of further action. Villager and protester Man Ho-kan from Yuen Long doubted the need to pull down extra floors on top of the three-storey village house he inherited from his grandparents. Each floor is 110 square feet in area.

 China*:  July 1 2011  Share

Canada's tourism industry is seeking to attract more Chinese tourists by providing quality products, said Greg Klassen, senior vice president for Marketing Strategy and Communications at the Canadian Tourism Commission (CTC). Canada has launched a "Say Hello to Canada" campaign earlier this year to introduce Canada to Chinese, Klassen told Xinhua during an interview on the occasion of the first anniversary of the Approved Destination Status (ADS) agreement between China and Canada. "We hope that will attract a great number of Chinese travelers to learn about Canada, understand it, and want to take a trip here," Klassen said, adding that the campaign will be running into this autumn. Canada has seen a quick surge in the number of Chinese tourists since the agreement was signed on June 24 last year, compared with the results of the previous several years, when only a one-digit increase was recorded. According to figures released by the CTC, trips to Canada by Chinese travelers increased by 21.3 percent in 2010. According to information the China National Tourism Administration got from main travel agents for outbound trips in Beijing, Shanghai, as well as Guangdong and Zhejiang provinces, Chinese tourists are satisfied with the tourism products Canada provides as a whole, while some complaints exist in terms of airfare. Klassen admitted that the airfare is expensive, but he thinks that once more airlines offer flights to Canada, the prices will go down. "But we always focus on making sure regardless of some of our higher prices, relative to some other markets, that we earn that price by providing value to Chinese travelers," he added. Klassen said in order to provide better service to Chinese visitors, Canada still has a lot to do, such as making sure some services are provided in the Chinese language, providing more special foods in restaurants and hotels to accommodate Chinese people's eating habits, and Chinese-language television in hotel rooms. 

Prices for solar power equipment are likely to resume their decline later this year as production exceeds demand, according to energy executives at an industry conference in Xining. A major clear-out of excess inventory - from polysilicon to panels - by producers pushed prices down by 20 to 40 per cent across the supply chain in the past five months. "I believe solar component prices will stabilise in the next three to four months before they resume their downtrend," Liu Junfeng, deputy director general of the National Development and Reform Commission's Energy Research Institute, told the CBI China Solar Industry Leadership Summit. He said analysts were projecting this year's global demand for panels to reach 18 gigawatt to 20 GW, up from earlier estimate of 15 GW to 17 GW. Last year's installation was 16.6 GW. One GW of capacity is enough to meet the needs of around 800,000 mainland households for a year. Liu's optimism is shared by analysts at Fitch Ratings. Increasing demand for clean and safe energy, the improved efficiency of solar panels and lower equipment prices will spur demand in the medium term, the rating agency said. The silicon-based solar industry has a long supply chain that begins with the manufacture of polysilicon, followed by wafers, cells and panels. Polysilicon prices have fallen 21 per cent between the end of last year to June 8, according to a Macquarie Securities research report. Meanwhile, wafer prices slumped 39 per cent, cell prices slid 31 per cent and panel prices fell 19 per cent. Uncertainties around Italy's government subsidy for panel installation and possible cuts in German subsidies in July caused buyers to delay orders and producers to dump excess inventory in the past five months. Germany installed 7.4 GW of solar panels last year, accounting for 45 per cent of global demand. Italy was the second-biggest market with 2.3 GW of installations. Mainland solar power equipment makers are affected most by European subsidy policies, since they together supplied 48 per cent of the world's solar panels last year. Panel production capacity is expected to exceed demand by between 13 GW and 35 GW in 2015, based on the projections of 15 industry research organisations, said Lei Ting, vice-president of Jiangsu province-based Suntech Power Holdings, the world's biggest maker of solar panels. The oversupply explains continuous equipment price declines, which could mean solar power will be as cheap as coal-produced electricity in a few years in Europe. On the mainland, this may not happen until the end of the decade due to low state-set prices for coal-produced power. Germany earlier considered cutting subsidised prices for solar power by up to 15 per cent starting in July, but did not do so since demand fell short of a threshold for a reduction under a law passed in January. Such subsidised prices are higher than those of conventional pollution-prone energy, in order to allow developers to make a profit even though they bear the more costly investment costs of solar panels. The Macquarie report said that brisk demand from Germany following the steep price cuts in the past few months could stimulate installations, which could reach 7 GW in the 12 months to September this year. The projected large installation volume could trigger an 18 per cent to 21 per cent cut in German solar power prices in January next year, it said. In Italy, the government last month announced caps on subsidised panel installations, as well as gradual solar power price cuts for the next five years, to put a ceiling on the government's financial burden.

Volumes set to rise at Shanghai Port - Shanghai International Port (Group) Co expects the volume of business in the Port of Shanghai to rise by about 10 percent a year during the next five years. Shanghai port, the world's busiest for containers, expects business volumes to rise about 10 percent annually for the next five years. That will come as manufacturers open plants in western and inland China in search of lower-cost labor. Rising production in these regions has benefited Shanghai because of increasing cargo volumes along the Yangtze River, said Chen Xuyuan, president of the harbor operator Shanghai International Port (Group) Co, in a June 23 interview. The river, Asia's longest, stretches 6,397 kilometers across China before meeting the East China Sea at Shanghai. The Yangtze River Delta "will continue to be the main region driving China's economic expansion", Chen said. The river handled 1.34 billion tons of cargo in 2009, more than triple the volume in 2000, according to government data. Shanghai's container traffic may rise 12 percent this year, enough to retain its crown for cargo-box volumes over Singapore, Chen said. Volumes leapt 16 percent in 2010 as the end of the global recession triggered a surge in shipments of Chinese-made auto parts, furniture and toys to the United States and Europe. "Last year, we saw incredible growth," Chen said. "This year, traffic is growing at a more normal and healthy pace." Shanghai handled 12.7 million containers in the first five months of this year, compared with 12.1 million by Singapore. Apple Inc supplier Foxconn Technology Group and Lee & Man Paper Manufacturing Ltd. are among the companies to have opened factories in inland provinces because of lower wages and government incentives. The government has encouraged the trend to spread economic growth beyond coastal regions including the Pearl River Delta in Southern China. Shanghai last year surpassed Singapore as the world's busiest container port.

Chinese officials have denied adopting a looser national standard of milk quality and claim to be developing grading levels for raw milk to guide the production of differentiated products. In response to recent reports that China's dairy industry has the world's lowest standards, the Ministry of Health said the new standard for the maximum limit of bacteria in raw milk is stricter than before. According to a notice issued by the ministry, the original standards of bacteria counts consisted of four grades, from 500,000 per milliliter to 4 million per ml instead of the one standard of 500,000 per ml reported by media. "The new milk quality standards implemented in March 2010 adjusted the standard to 2 million, which is more stringent than before, and has raised the threshold for raw milk," Meng Jin, a member of the working group of experts on dairy safety standards, said in the notice. In response to the criticism that the minimum requirement for protein content had been lowered from 2.95 grams per 100 g of milk to 2.80 g, the notice attributed the change to the ministry's survey result that 90 percent of raw milk produced in North China in 2008 was below the standard of 2.95. "The survey data comes from 2008, when the melamine-tainted baby formula scandal broke. The proportion of qualified raw milk should have increased a lot by now," Wang Dingmian, chairman of the Guangzhou Dairy Association, told China Daily on Sunday. According to the notice, compared with the 2.80 standard for protein content in raw milk, the indicator in pasteurized milk and sterilized milk must be no lower than 2.90. Industry experts said the widely taken approach of manufacturing milk products of higher protein content with raw milk of lower protein content is done by artificial post-processing. "The country set a protein content standard for raw milk which is in contradiction with the standard in end products. It shows the country permits the adding of material and is forcing dairy firms to cheat," Wang said. "And the added material cannot be milk protein derived from other raw milk. In most cases, it is protein powder." Food safety experts said allowing the addition of material may pose dangers to milk security. "The 2008 melamine-contaminated baby milk scandal was precisely caused by dairy firms adding the chemical into watered-down milk powder to cause it to appear to have a higher protein content," said Sang Liwei, a food-safety lawyer and the China representative of the NGO Global Food Safety Forum. That year, nationwide outrage exploded over the dangerous milk that made 300,000 infants sick and killed six children, who died of kidney stones and other kidney damage. Wang Zhutian, deputy director of the Fortified Food Office under the Chinese Center for Disease Control and Prevention and the leader of the working group of experts on dairy safety standards, said in the notice of the ministry that they are tracking and evaluating the implementation of the national dairy safety standards and will make appropriate improvements. The ministry also encourages dairy firms to purchase raw milk with a flexible policy to pay high prices to farmers for high-quality milk and to set grading standards for bacteria counts when buying raw milk.

China placing priority on biotechnology - A company exhibits biodiesel fuel at an expo held in Beijing. From 2011 to 2015, the biotechnology industry is expected to generate 1 million jobs and reduce emissions of the most common pollutants by 10 percent, said Ma Hongjian, deputy director of China National Center for Biotechnology Development. China will spend 2 trillion yuan ($308.5 billion) on science and technology, making biotechnology a major priority, in the next five years, Chinese State Councilor Liu Yandong said at the ongoing 2011 International Conference for Bio-economy (Bio Eco 2011). The Chinese Government will work to further combine biotechnology with economic development and with improving ordinary people's livelihood, Liu said. "The development priorities of the 12th Five-Year Plan (2011-2015) - biopharmacy, bio-engineering, bio-agriculture and biomanufacturing - will bring benefits to Chinese people." In the next five years, China will further use biotechnology to prevent disasters or alleviate the harm caused by them, to protect the environment, to employ "green" construction methods and to control climate change. Meanwhile, the latest innovations in biotechnology should be relied on to guarantee domestic standards are met for nutrition, hygiene, healthcare, food and drug safety and disease diagnosis and prevention, Liu stressed. Liu's opinion was echoed by Percy W. Misika, a United Nations Food and Agriculture Organization (FAO) Representative in China. Misika contended that the energy shortage is getting increasingly severe in the world. Biotechnology should be employed in campaigns to make food safer and to combat climate change. During the 12th Five-Year Plan period, the Chinese Government will spend 20 billion yuan on innovative medicine, on the cultivation of new varieties of genetically modified organisms and on the prevention and control of viral hepatitis and other infectious diseases, according to Ma Hongjian, deputy director of the China National Center for Biotechnology Development. Biotechnology has become a strategic pillar industry for China. From 2011 to 2015, it is expected to generate 1 million jobs, extend people's life expectancies by one year and reduce the infant mortality rate to 12 percent, as well as reduce emissions of the most common pollutants by 10 percent, Ma elaborated. Huang Xingguo, mayor of Tianjin municipality, said the city has become a center for the production of biotechnology products in China. Bio Eco 2011 is being held in Tianjin from Sunday to Tuesday. Sponsored by both the Tianjin Municipal government and 14 state ministries, the conference has the motto: "Develop the bio-economy, improve people's livelihoods".

Proposal Floated to Lower Chinese Tariffs on Luxury Goods - China's government is considering a plan to lower tariffs on some luxury goods, an official said, a move that could bolster imports—if it's able to overcome political resistance in a society increasingly concerned about the gap between rich and poor. On Tuesday, the state-owned China Daily newspaper quoted a spokesman for China's Ministry of Commerce, Yao Jian, as saying that his and other key ministries plan to propose cuts in tariffs on imported luxury goods to China's cabinet. The reductions are just "a matter of time," the paper quoted Mr. Yao as saying, without adding details. His comments echoed remarks he made at news conference earlier this month. Other agencies, including the powerful Ministry of Finance, have yet to publicly confirm the planned cuts. The Commerce Ministry and the Finance Ministry didn't reply to requests for comment Tuesday. A cut in the tariffs could be a boon for luxury goods companies, though it's unclear by how much tariffs would fall and exactly which products might be included if a measure is adopted. China is the world's fastest-growing luxury market and is poised to become the world's largest by 2020, according to investment research group CLSA Asia-Pacific Markets. China's luxury tariffs tack on an extra 10% to 30% for imported products like handbags, wine, watches, and cosmetics. As a result, Chinese luxury consumers do much of their buying in Hong Kong and in foreign countries. More than 50% of luxury purchases made by Chinese shoppers in 2010 were made overseas, according to consulting firm Bain & Co. China's government has vowed to boost imports, in part by lowering tariffs, in response to heavy pressure from trading partners and as part of efforts to refocus its economy on domestic consumption instead of exports and investment. Trimming luxury tariffs would be politically fraught. Some government officials, particularly at the Finance Ministry, would likely oppose such a move, given concerns about already growing fiscal constraints. More important, tariff cuts that would benefit only a sliver of wealthy consumers would seem to clash with the Chinese leadership's emphasis in recent years on trying to narrow a widening wealth gap. By implementing the policy, "the government would attract criticism that it is serving the needs of the rich," said Mei Xinyu, a researcher at the Chinese Academy of International Trade and Economic Cooperation, which operates under the Commerce Ministry. Representatives of several companies selling luxury goods, such as L'Oréal SA, said they are not expecting lower tariffs any time soon. The European Union Chamber of Commerce in China, whose members include LVMH Moët Hennessey Louis Vuitton and Chanel, also doesn't expect imminent changes on taxes on high-end products, according to Dirk Moens, the chamber's secretary general. "We would welcome an initiative taken by the Chinese government, but are not advising our members to make any changes to their business strategies at this time," Mr. Moens said. Chloe Reuter, who runs ReuterPR, a Shanghai-based consulting company for luxury-brand communications said most luxury brands aren't reacting to rumor tariff changes because they've heard similar reports before over the years. If there were any tariff reduction, luxury companies expect it would be "phased in," starting with changes to pricing on cosmetics, alcohol and tobacco, said Torsten Stocker, an analyst at Cambridge, Mass., consulting firm Monitor Group.

Hong Kong*:  June 30 2011  Share

Greg So Kam-leung has been appointed secretary for commerce and economic development to succeed Rita Lau Ng Wai-lan, who resigned for health reasons, the government announced on Tuesday. So, the undersecretary for commerce and economic development, takes up the new position immediately. A government spokesman said the Central People’s Government had approved So’s appointment on the recommendation of Chief Executive Donald Tsang Yam-kuen. So, 52, has been acting secretary since Lau took sick leave in March and resigned in April. Lau said she had had an operation to remove a colon tumour and needed further treatment. Tsang praised So, saying he had a comprehensive understanding of the bureau’s role. “Greg is diligent, receptive and fully devoted to serving the public,” Tsang said. “I am confident he will do well in his new position.” So is a member and former vice-chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong. He was appointed undersecretary for commerce and economic development in 2008. Before joining the government in 2008, So practised law for more than 20 years in Canada and Hong Kong. He is married and has a son and two daughters.

Nearly 300 solo travellers from the mainland arrived in Taiwan on Tuesday, officials said, the first individual tourists in more than half a century after Taipei lifted a long-standing ban. The first mainland tourists travelling individually, and not as part of a supervised tour group, hold up gift bags as they arrive at Songshan airport in central Taipei on Tuesday. Travel between the island and the mainland stopped at the end of the civil war in 1949, and mainland tourists were previously only allowed to visit Taiwan in groups due to official concerns they might overstay their visas to work illegally. Individual mainland tourists are expected to generate up to NT$19.5 billion (US$673 million) in additional tourism income each year, according to authorities, providing a significant boost to the holiday industry in Taiwan. The tourists from Beijing, Shanghai and Xiamen were greeted with aboriginal dances, gifts and snacks when they landed in three Taiwanese cities in the late morning. “The opening of solo mainland tourists will give a new boost to Taipei city’s tourism development,” said municipal tourism chief Chao Hsin-ping at a welcoming ceremony at the Taipei airport. More than 170,000 mainlanders are expected to visit the capital city on solo trips each year, generating at least NT$2.4 billion in revenue, she said. Initially, Taiwan will allow 500 individual arrivals from the three cities per day, in the hopes that the visitors will help promote peace across the Strait. “This is my second trip to Taiwan and I want to visit the bookstores and see more of Taiwanese culture this time,” said Yan Ting, a 27-year-old woman from Xiamen, who was visiting the towering Taipei 101 skyscraper. Maa Shaw-chang, deputy secretary-general to Taiwan’s quasi-official Straits Exchange Foundation, told reporters last week: “The Chinese tourists will all be peace ambassadors.” Ma Zhiqiang, general manager of the Xiamen Chunhui International Travel Service, said young and middle-aged people would be most drawn to individual travel. “Young backpackers don’t like to be restricted to group tour schedules and they prefer to avoid crowded scenic spots and choose personalised itineraries,” Ma said. Taiwan’s United Daily News reported on Saturday that solo mainland tourists may be allowed to visit the island’s parliament. Travel between the two sides has boomed since Beijing-friendly President Ma Ying-jeou came to power in 2008 in Taiwan, pledging to boost trade links and tourism. A blanket ban on mainland travel to Taiwan was lifted by the two sides the same year. Last year, more than 1.63 million mainland tourists visited Taiwan – most of them on organised group tours – a rise of 67 per cent from a year before, making the country the biggest source of visitors to the island, according to Taipei.

Hollywood star Michelle Yeoh Choo Kheng, who plays pro-democracy champion Aung San Suu Kyi in an upcoming film, has been deported by army-dominated Myanmar and blacklisted, an official said on Tuesday. “She did not have the chance to enter Myanmar again. She was deported straight away on the first flight after arriving at Yangon International Airport,” a Myanmar official, who did not want to be named, said. “She’s on the blacklist now,” a second official said, declining to say why. The Malaysian-born former Bond girl met the Nobel Peace Prize winner at her Yangon home in December after shooting scenes with French director Luc Besson in Thailand for the production, which has been kept under close wraps. The film is expected to be released later this year. Suu Kyi was freed in November after seven straight years of house arrest, less than a week after an election that critics said was a charade aimed at preserving military rule behind a civilian facade in Myanmar. Suu Kyi, who turned 66 this month, has won international acclaim for her peaceful resistance in the face of oppression. In 1990 she led her National League for Democracy party to a landslide election win that was never recognised by Myanmar’s military rulers. She boycotted last year’s vote, saying the rules were unfair. Yeoh, 48, a former Miss Malaysia, shot to international fame when she co-starred with Pierce Brosnan in the 1997 James Bond film Tomorrow Never Dies as a tough but beautiful Chinese spy. She then starred in Ang Lee’s Crouching Tiger, Hidden Dragon – a Chinese-language martial arts epic that was an international hit – and Memoirs of a Geisha based on the best-selling novel by Arthur Golden.

Beijing's liaison office in the city has suggested the Hong Kong government's plan to scrap by-elections should undergo big changes. As a result, the Hong Kong administration, which has also come under pressure from its allies over the issue, looks set to make a U-turn on the controversial proposal. Under the proposal, no by-election would be held for any Legislative Council geographical constituency seat or any of the five so-called super-seats in the district council functional constituency to be filled next year. Instead, the candidate next in line in terms of the number of ballots his or her team received in the election would fill the vacancy. The Democratic Alliance for the Betterment and Progress of Hong Kong (DAB) - the biggest pro-Beijing and pro-government party - has staunchly defended the proposal but yesterday called for a rethink, as did Beijing loyalist and executive councillor Cheng Yiu-tong. A person close to the liaison office said it was floating alternatives in discussion with pro-Beijing figures "to avoid political tension". "Two options are being pondered, including allowing a midterm vacancy arising from death or serious illness to be filled by a by-election. Another option is to fill the vacancy with the next-in-line candidate on the same party's list," the person said. The second option would prevent by-elections such as those called when five pan-democrats quit in 2010 to trigger what they saw as a referendum on constitutional reform. The DAB said the suggestion of drawing the replacement lawmaker from the same team as the person who originally held the seat was worth studying. "There were some lawmakers raising the view at Legco bills committee meetings that a candidate from the same team should take over the vacancy," party chairman Tam Yiu-chung said. "Their argument was that the government proposal to have the next-best-placed candidate taking over might distort voters' will. My opinion is that this proposal is worth studying." Cheng urged the government to arrange by-elections for seats left vacant by the death of legislators. Two Hong Kong members of the Basic Law Committee agreed. Professor Albert Chen Hung-yee said the government should not ban by-elections called because a lawmaker dies or is seriously ill. Lau Nai-keung said the amendment was intended to prevent legislators resigning to trigger "de facto referendums". Independent lawmaker Regina Ip Lau Suk-yee said Secretary for Constitutional and Mainland Affairs Stephen Lam Sui-lung had suggested any amendment to the proposal would face legal problems. Secretary for Justice Wong Yan-lung defended the proposal for the first time after growing demands from pro-government lawmakers to do so. But Bar Association chairman Kumar Ramanathan reiterated that the proposal to replace by-elections was against the Basic Law.

Magazines warned over pictures of TVB actors - Vincent Wong, Yoyo Chen and Bosco Wong lodge complaints yesterday after being photographed by paparazzi at their homes. The Privacy Commissioner yesterday warned two entertainment magazines that they could face criminal liabilities if they took pictures of three TVB (SEHK: 0511) actors again. The warning came after the three actors lodged complaints to the watchdog after being photographed at their homes by paparazzi. Commissioner Allan Chiang Yam-wang said an initial study of the complaints made by TVB's Bosco Wong Chung-chak, Vincent Wong Ho-shun and Yoyo Chen Chi-yiu showed that two Next Media (SEHK: 0282) magazines might have breached a principle under the privacy ordinance which states that data collection should be done fairly and lawfully. The complaints involved Sudden Weekly, which published nude photos of Bosco Wong walking around his home, and Face, which ran intimate photos of Vincent Wong and Yoyo Chen at their home earlier this month. "If we confirm that it was a breach of law, we can issue an enforcement notice to the parties involved to [ask them to] rectify the situation," he said. "If they do not follow the enforcement notice ... that equates to a criminal offence." But Chiang acknowledged that the privacy law does not give him the power to impose fines on the magazines. He suggested the actors take civil action to seek compensation and said he would investigate and follow up the case. Hong Kong Performing Artistes Guild representative Astrid Chan Chi-ching accompanied the trio as they submitted their complaints with evidence to the commission's Wan Chai office and participated in a two-hour inquiry in the afternoon. The actors said they were considering further action. "Compensation is not what we want most," said Vincent Wong. "Our aim this time is to express our opinion on the unfair situation to the commissioner ... What we want most is a balance between press freedom and celebrities' privacy." TVB production resources controller Virginia Lok Yik-ling said that as tax-paying residents, the actors had a right to privacy. "Artists should enjoy respect for their privacy - as all taxpayers do," she said. The magazines did not respond to requests for comment. Chiang said it was worth reopening public discussion of two consultation reports by the Law Reform Commission - in 2000 and 2004 - which proposed legislation to protect people from media intrusion and stalking.

 China*:  June 30 2011  Share

Reducing import duty on luxury goods is only "a matter of time" as key ministries have reached general agreement on the issue, Yao Jian, Ministry of Commerce spokesman, told China Daily on Monday. The commerce and finance ministries are likely to submit a proposal on measures to promote imports to the State Council, the Cabinet, and this will include details on cutting duty on luxury items, Yao said. China has committed itself to doubling imports by 2015 to balance trade. Amid a decline in import growth over the past few months there were suggestions that the government was considering cutting duty on some luxury goods, such as cosmetics, cigarettes and alcohol. "The relevant authorities have, in principle, reached agreement on lowering import duty on some luxury goods to help boost imports, although there are differences of opinion on the specifics," Yao said, without elaborating. With rising disposable income and a growing brand awareness, China is expected to surpass Japan by 2012 as the world's largest luxury consumer market, with an estimated value of $14.6 billion, according to the World Luxury Association. But industry figures also reveal that Chinese consumers spend four times more on luxury goods abroad than at home, thanks to high import duty and taxes. "Cutting duty (on luxury goods) is a general trend," Liu Huan, an adviser to the State Council and deputy director of the School of Taxation at the Central University of Finance and Economics, said. "It should stimulate domestic consumption as consumers will spend more in the domestic market." Reducing duty will also mean that China honors commitments to the World Trade Organization (WTO), he added. Since China's WTO entry in 2001, import tariffs have dropped to 9.8 percent, on average, from 15.3 percent. But tariffs on luxury goods are 30 percent, on average, with import duty hitting 65 percent on wine. China vowed late last year to increase imports to balance trade and ease pressure on yuan appreciation resulting from its large surplus. The Ministry of Commerce said that imports of luxury goods, and other items such as high-tech products, will be expanded. Manufacturers of luxury goods welcomed the planned duty reduction. "The tax cut will definitely help and improve our business in China. We are looking forward to it," Lutz Bethge, chief executive officer of Montblanc, told China Daily. China has been the largest market, since 2007, for the German-based manufacturer of writing instruments, watches and accessories. Taken together, import duty, value-added tax and consumption tax on imported goods, including luxury items, reached more than 1.25 trillion yuan ($193 billion) last year, accounting for 30 percent of China's fiscal income. But some experts doubt the effect of cutting duty. "Not all people can afford luxury goods and the majority of consumers are unable to buy them," Yang Zhiqing, deputy director of the School of Taxation at the Central University of Finance and Economics, said. Zhou Shijian, a trade expert at Tsinghua University, agreed. "Not only luxury goods but also ordinary items, needed for everyday life, should be included in any import duty reduction."

China, U.K. Forge New Trade Deals - U.K. Prime Minister David Cameron and Chinese Premier Wen Jiabao announced business deals between the two countries valued at £1.4 billion ($2.2 billion), as the men discussed ways to increase bilateral trade to $100 billion by 2015. "To achieve that, both countries must continue to make the case for mutual commitment to market access," Mr. Cameron said at a news conference at Downing Street during a five-day European tour by Mr. Wen. "The U.K. is one of the most open economies in the world, one of the easiest places to invest, to raise capital, to expand, and to export from. We are the natural home for Chinese investment into Europe." China's ambassador to the U.K. last week said China-U.K. trade was $50.1 billion last year. Among the deals announced Monday, U.K. energy firm BG Group PLC reached a memorandum of understanding with Bank of China Ltd. for a $1.5 billion credit line that BG says will be used to support its global growth plans, including in China. Beverage maker Diageo PLC was given approval to increase its holding in Chinese spirit company Sichuan Chengdu Quanxing Group Company Ltd. to 53%, a rare majority stake by a foreign firm in a Chinese company and a sign of increasing openness by Beijing. Diageo said steps are being taken to complete a 4% transfer for about 140 million yuan ($22 million). A British-government spokeswoman said U.K.-based Seamwell International Ltd. had signed a deal with China Energy Conservation and Environmental Protection Group to build an underground coal gasification plant and that U.K. design house Priestmangoode will open an office in the Chinese city of Qingdao. The leaders also agreed to expand trade cooperation outside of the big cities of Beijing and Shanghai and to encourage bilateral trade in services, the U.K.'s most competitive sector. And they agreed to foster opportunities for British companies to invest in infrastructure and other projects in China, and to streamline trade taxation between Britain and China, the U.K. said. During their meeting, Mr. Wen spoke of the need to rebalance China's economy, Mr. Cameron said. Trade with China represents a major opportunity for U.K. companies as China aims to boost domestic consumption, he said. Exports have fueled much of the country's economic growth in past years. Mr. Cameron said he welcomes Chinese investment in U.K. infrastructure projects. Mr. Wen said China hopes to expand its cooperation with other countries in high-speed railway projects. The men treaded lightly regarding human rights. Mr. Cameron said there is no "trade-off" between discussing trade or human rights with China, but that "political and economic development should go hand-in-hand." Mr. Wen said China aims to build a society based on democracy and the rule of law.

ICBC Financial Leasing Co., a leasing company held by China's biggest lender Industrial & Commercial Bank of China Ltd., Tuesday ordered 62 Airbus A320 aircraft at a ceremony in Berlin. Tom Enders, the head of the Toulouse, France-based division of European Aeronautic Defence & Space Co. NV, and Li Xiaopeng, chairman of ICBC, signed the agreement in the presence of Chinese Premier Wen Jiabao and German Chancellor Angela Merkel. Airbus also signed a skeleton agreement on A320 aircraft with China Aviation Supplies Import and Export Group Corporation.

Sino-British ties were free of historical disputes and burdens after Britain recognised Tibet as part of China, Premier Wen Jiabao told former British prime minister Gordon Brown yesterday. Wen met Brown (pictured), his predecessor Tony Blair and Chinese people living in London on Sunday after visiting the MG car plant in Birmingham and the birthplace of playwright William Shakespeare - Stratford-upon-Avon, where he was treated to a short theatrical performance. Wen described Brown and Blair as old friends, and praised Brown for contributing to Sino-British ties. "The most unforgettable thing is that you tackled our last historical issue when you were in office, that is the UK admitting Tibet is an inalienable part of China," Wen said. "Since then, China and the UK have no historical issues and burdens to deal with, and the two sides can co-operate." Brown's decision to recognise Beijing's direct rule over Tibet, made in 2008, was described by Zhu Weiquan, a senior Chinese official who was leading talks with Tibetan exiles, as being "in line with the universal position in today's world". Wen said China and Britain had continued to co-operate on many major issues, such as climate change, after Brown left office. In his meeting with Blair, Wen praised the former prime minister for continuing to promote Sino-British ties after leaving office. "You are an old friend," Wen said. "The UK government co-operated comprehensively with the Chinese government when you were still in office. "Maybe those who left office know better about the importance of Sino-UK ties. I have read many of the commentaries you wrote after leaving office. You did not promote Sino-UK ties only when you were in office."

High-speed rail link still has problems - With just four days until the 90th anniversary of the Communist Party, speedy rectifications are needed - The sleek new Beijing-Shanghai high-speed train treated the media to a trial run yesterday. Named "harmony" after President Hu Jintao's "harmonious society" slogan, the train with, reclining, airline-style business class seats and a no-smoking policy, cuts travel time on the 1,318-kilometre journey to under five hours. However, there were some problems. Fancy having business-class airline amenities and service on a train? You can have them all on the much-hyped, high-speed rail service between Beijing and Shanghai. Expect comfortable airline-style seats, all-smiles customer service and on-board entertainment, railway officials boast. But although most of what is promised seems to have been delivered, a test run on the 1,318-kilometre link yesterday showed some glaring inadequacies and hassles that needed to be addressed, just days ahead of the official launch of the 220.9 billion yuan (HK$265.7 billion) rail line. Billed as a great engineering feat, the line - which will almost halve travel times between the mainland's two biggest cities to less than five hours when travelling at the top speed of 300km/h - is scheduled to open on the eve of the 90th anniversary of the July 1 founding of the ruling Communist Party. Apart from minor complaints about the quality of the food and service, the more than 300 reporters from 150 overseas media outlets who were invited onboard yesterday, found making phone calls almost impossible on a train that was running at 300km/h. While the mobile signal appeared normal, a telephone call was often cut off every 10 seconds and internet connection through a 3G USB modem was frequently disrupted. Poor mobile reception may become a turn-off for airline customers who are eager to change the way they travel between the two cities. Keen to showcase the longest and most expensive high-speed rail connection in the world, the authorities deployed more train attendants, and raised the meal standard in an apparent attempt to woo the media pack. But both food and service were best described as mediocre during the outbound trip, which left Beijing South Railway Station at 9am and arrived at Shanghai's Hongqiao Station at 1.48pm after a non-stop trip. Things improved markedly on the return trip, despite the fact that it was a lot more crowded, with the number of carriages halved to eight. It took 30 minutes longer to return to Beijing after making several brief stops at some of the 24 stations on the route. Nonetheless, the round-trip ride was completed rather smoothly and well on schedule. With smoking banned onboard and good air-conditioning, the nearly 11-hour journey was more pleasant than expected.

The top legislature has reviewed the first draft amendment to the country's military conscription law in 13 years in the hope of recruiting more tech-savvy graduates to master upgraded weapons and modern warfare techniques, Xinhua reported yesterday. In the draft amendment to the Military Service Law submitted to the National People's Congress Standing Committee yesterday, an article which stipulated that "full-time students can defer their military service" was replaced by "university graduate recruits with outstanding performance in the army may be directly promoted to active-duty officer posts", Xinhua reported. Citing a National Defence Ministry source, Xinhua said the country could use more university students as the armed forces were modernised because they could master the latest weapons and warfare techniques. It also said that university students who enlisted for active service could resume their studies within two years of leaving the military, which is pushing the maximum age for recruitment to 24. Xinhua said most People's Liberation Army recruits today were high school graduates. China's military began enlisting university graduates in 2001. By the end of 2009, there were 130,000 university-educated soldiers in the PLA. The change could see the PLA seek more recruits from among the country's booming population of university graduates. Meanwhile, the top legislature also heard national audit reports of 53 ministries and central government affiliates, including the Red Cross Society of China. National Audit Office head Liu Jiayi said it had established 139 leads on cases of serious embezzlement, the Procuratorate Daily reported on its website. Of those, 32 cases were found in the finance sector, with 19 involving 743 million yuan (HK$894 million) in cash and three others involving more than 50 billion yuan handled via internet banking. At the Red Cross Society of China, government auditors found almost 2.2 million yuan of spending and more than 4.2 million yuan of income failed to comply with internal financial disciplines, China News Service reported. It also reported that the Finance Ministry had approved about 292 million yuan of the society's 2010 budget.

Hong Kong*:  June 29 2011  Share

Flats at a new luxury project in West Kowloon have been priced lower than expected - setting the market abuzz with talk that a price ceiling is in sight. This follows new government measures to curb property prices earlier this month. Sun Hung Kai Properties (0016) will price the first 60 flats at Imperial Cullinan 15 percent lower than hinted last week. This is the first major luxury project to go on the market since cooling measures were announced. The first flats have been priced at an average HK$18,688 per square foot, as against HK$20,000 to HK$25,000 psf the developer hinted at a week ago. The flats range from 1,583 sq ft to 1,848 sq ft, and are priced between HK$26.07 million and HK$44.48 million. Last night SHKP put another 13 flats on the market. Twelve are between 1,848 sq ft and 1,860 sq ft, and are priced from HK$40.97 million to HK$46.68 million. Another specialty flat, measuring 2,523 sq ft, is priced at HK$108 million, or HK$42,806 psf. Sales of 73 flats will start on Wednesday and are expected to generate more than HK$2 billion for the developer. "We usually offer the first batch of buyers a lower price," said Victor Lui Ting, executive director of Sun Hung Kai Real Estate Agency. Imperial Cullinan comprises 650 flats above the Olympic MTR station. Neighboring flats on the secondary market, such as those at One Silver Sea, are priced around HK$14,500 psf. Flats at The Cullinan - one of several luxury developments above Kowloon MTR, which Sun Hung Kai said it would use as a reference for Imperial Cullinan - are selling for HK$24,398 psf on average. Ricky Poon Wai-ki, executive director of residential sales at Colliers International, said of the HK$18,688 psf average: "It is a rather conservative pricing. "With a price that is so close to the secondary flats in the neighborhoods, the developer could be switching from their initial targeted group of mainlanders to local homeowners who are seeking to upgrade." But Eddie Hui Chi-man, deputy director of the Research Centre for Construction and Real Estate Economics at Hong Kong Polytechnic University, said it is too early to tell whether it indicates a softening of prices. "Selling the flats lower than expected could be one of the tactics the developer uses to attract buyers," he said. "If the developer prices subsequent flats even lower, then that could be a sign." Hui believes the developer has taken steps to lure potential buyers with payment methods that could offset the impact on downpayments - the 50 percent limit on mortgages for flats priced over HK$10 million. Meanwhile, the secondary market remained sluggish at the weekend. According to Midland Realty, transactions at the 10 benchmark residential projects fell to 17 from 21 a week ago. Tai Koo Shing, Whampoa Garden and Discovery Park had zero sales.

More than 70 new cases of scarlet fever have been reported since Sunday – a sign that the potentially fatal disease was becoming increasingly active in Hong Kong, the controller of the Centre for Health Protection said on Monday. Dr Thomas Tsang Ho-fai said government departments were stepping up efforts to deal with the outbreak. They would now require hospitals to immediately report serious cases and deaths. “Health authorities are also collaborating with microbiologists at the University of Hong Kong to study the bacteria and ways to advance laboratory tests,” Tsang told a press conference. He said that between Sunday and noon on Monday, 71 new cases were reported in the city. That compared to 118 cases, or 17 cases per day on average, reported during the whole week between June 19 and June 25, Tsang said. The total number of scarlet fever cases reported in Hong Kong so far this year has risen to 617 – well above last year’s total of 128. The new cases involved 39 males and 32 females from 11 months to 24 years old. Two of the new patients attend Pui Ching Primary School Kindergarten in Kowloon City, Tsang said. Hong Kong has declared an outbreak as the number of scarlet fever cases has grown significantly in recent weeks. A seven-year-old girl died from the illness late last month while a five-year-old boy died last Tuesday from what health officials said was “very likely” a case of scarlet fever. They were the first two deaths caused by the disease in Hong Kong since 1997. Health experts say the bacterium causing the disease has mutated into a form more resistant to antibiotics. Tsang said the city could continue to see a large number of cases next month, as the summer holiday makes it easy for the disease to spread. Scarlet fever is caused by group A Streptococcus bacteria. It usually affects children, and common symptoms are fever, sore throat and rash. Streptococcal bacteria are transmitted through direct contact with respiratory secretions. Incubation ranges from one to three days.

Secretary for Security Ambrose Lee Siu-kwong said on Monday that police had not created any new restrictions for the planned July 1 march. Lee was responding to claims by march organisers, the Civil Human Rights Front, that the police restrictions on Friday’s rally were unreasonable. Police on Sunday imposed conditions on the march, saying Civil Human Rights Front may be held responsible if participants do not disperse immediately after reaching the planned destination – the Central Government Offices. They also banned musical instruments, selling flags or raising funds. Lee said these restrictions were not new. “Similar restrictions have been imposed on large-scale marches in the past. These conditions are not particularly harsh,” Lee said. Civil Human Rights Front, which expects up to 50,000 marchers at Friday’s parade, have protested against the conditions to the Appeal Board on Public Meetings and Processions. The board will discuss the issue on Tuesday. The July 1 rally is an annual event in support of democracy. The 2003 event drew 500,000 people into the streets, leading the government to withdraw a controversial anti-subversion bill and prompting two senior ministers to resign.

 China*:  June 29 2011  Share

HNA Property Holdings, the real estate arm of China's fourth-largest airline Hainan Airlines Group, is set to acquire its second prime asset in Manhattan, a month after spending US$265 million to rescue a prime office building from foreclosure. The company is in advance talks to purchase a four-star hotel in Times Square, Manhattan's busiest shopping area and tourist belt. The hotel's owner has defaulted on the mortgage. If the acquisition goes through, the deal will amount to more than US$120 million, according to people familiar with the talks. Last month, HNA Property paid US$265 million for a 90 per cent stake in a 23-storey office tower from real estate broker and property manager Murray Hill Properties and Carlyle Group. Murray Hill president and chief executive Norman Sturner confirmed that the group's prime office building at 1180 Sixth Avenue had been taken over by HNA Property. Following the deal, Murray Hill's stake in the building has been cut to 10 per cent from 15. Carlyle Group has sold its entire 85 per cent stake to HNA Property. The two had bought the prime office building for US$300 million at the market peak in 2007. HNA Property, founded in 2007, has invested in more than 100 projects, including residential, office, retail and luxury hotels, mostly in China. This is the first time it is investing in the US property market. As commercial property prices have tumbled by as much as 40 per cent and the yuan has strengthened against the US dollar, a cashed-up HNA Property is looking for good deals amid the credit crunch, the source said. HNA Property has also invested in the commercial real estate market in Europe and Australia as part of its global portfolio. Following the partnership with HNA Property, Murray Hill is also actively seeking opportunities in Manhattan's office market. "We expect the Chinese to play a great part in Manhattan's commercial office market," said Sturner. The company invests in underpriced or distressed Manhattan assets with potential for repositioning and value-addition. It does this by improving the building infrastructure and amenities.

After a decade's delay, Swire Properties' first project in Guangdong province, Taikoo Hui, is heading towards completion - Offices, shops and the Mandarin Oriental all feature in Taikoo Hui. Located in Guangdong's capital of Guangzhou, it is the company's first mixed-use project on the mainland to be developed by Swire itself and will be declared open by the end of September and fully operational next year. It comprises a hotel, offices, shopping mall and a cultural centre. A few shops are already trading, and all the retail space plus 60 per cent of the office space has been let. Michael Grimshaw, associate director of Arquitectonica, the US architecture firm that designed Taikoo Hui, likened it to Swire's Pacific Place and Festival Walk projects in Hong Kong. At a recent seminar in Guangzhou organised by Arquitectonica, he was asked by Richard Carswell, an American with 20 years construction experience: "Why did the project take 10 years? That will kill any American developer." Referring to Swire, one of Hong Kong's oldest British companies. Grimshaw replied: "We Brits got stamina." Taikoo Hui failed to meet its completion deadline of 2008 after the project was hit by a corruption scandal linked to Swire's former mainland partner, Guangzhou Daily Group. The two companies had signed an agreement in 2002 to develop Taikoo Hui with a total investment of four billion yuan (HK$4.8 billion). Later that same year, Guangzhou Daily chief editor He Xiangqin and the Guangzhou Daily Group's president Li Yuanjiang were detained in a corruption investigation. In 2003, Swire chairman James Hughes-Hallett told Hong Kong media that the project's completion was delayed till 2008 due to "partnership issues". In 2004, Swire increased its stake in Taikoo Hui from 55 per cent to 97 per cent as Guangzhou Daily Group exited the project. The central government owns the remaining three per cent. Arquitectonica, which the newspaper group had dropped suddenly as architects, also returned to the project. Alan Walker, portfolio management director for the development, said: "By the end of September, Taikoo Hui will be open. The whole retail sector is 100 per cent let. "The rents we're getting are as high as anything else in China, including Shanghai." The total retail space of Taikoo Hui is 120,000 square metres, and in the past few weeks, some shops have opened for business on two retail floors. It has two office towers with a gross floor area of 160,000 sq metres, and over 60 per cent of that office space has been let out. In March last year, HSBC (SEHK: 0005, announcements, news) agreed to take up 27 floors of one 28-floor tower and will move in next year, according to Taikoo Hui's website. The Mandarin Oriental Hotel will occupy a further 65,000 sq metres and will open in July 2012, said Peter Kok, Taikoo Hui's general manager. The cultural centre takes up 60,000 sq metres, and the total gross floor area of Taikoo Hui is 450,000 sq metres.

In Guangzhou, Guangdong's capital, existing office buildings and retail malls still lag behind Shanghai and Beijing in design sophistication, said Bryant Lu, vice-chairman of Ronald Lu & Partners, a Hong Kong architectural firm. But that is changing. "Shanghai and Beijing leapfrogged Guangzhou with stronger business and government service economies, while Guangzhou has yet to transform itself from a manufacturing economy to a service one," Lu said. However, the development of such a service economy in the Pearl River Delta was inevitable, he said. "So Guangdong will have to develop more world-class buildings," he said. "The new trend in architecture in Guangzhou will be influenced by the luxurious living standards of Hong Kong and the world." Guangzhou's gross domestic product hit 1.06 trillion yuan (HK$1.27 trillion) last year - up 13 per cent from the previous year, and double its 2005 level, according to official Chinese data. This put the city in the elite group of four Greater China cities with GDPs of over one trillion yuan, alongside Hong Kong, Beijing, and Shanghai, he said. One example of the strong buying power of Guangzhou residents is the Dragon Lake Golf Course in the city, designed by Lu's firm. The project was launched in April 2009 and the first batch of 85 villas was sold out in two days, raking in revenues of over one billion yuan, he said. "This was the time of the financial crisis. The Lake Dragon project showed that the people of Guangzhou want luxurious developments," Lu said, noting that several Hong Kong property developers have their headquarters in Guangdong. "Beijing and Shanghai are done. Guangzhou was behind, but that is changing," said Michael Grimshaw, associate director of Arquitectonica, a US architecture firm. "We now see lots of clients coming to do mixed-use development in the Pearl River Delta." Arquitectonica designed Taikoo Hui, Swire Properties' mixed-use retail, office, hotel and cultural centre in Guangzhou, as well as a mixed-use project in Foshan that is owned by Poly Real Estate Group, a Chinese state-owned firm. Over the last 10 years, Guangdong officials had become more sophisticated in their appreciation of architectural design, said Grimshaw. In the past, Hong Kong architects got the lion's share of the mainland architecture market because the market was not mature enough for international architecture firms, but that was changing, he said. "The expectation of multinationals coming into China is for their buildings to be designed to international standards." Peter Brannan, Arquitectonica's managing director for Asia and the Middle East, said that Asia accounted for half of his firm's revenue. Sales from China, which accounts for 70 per cent of the Asian revenue slice, have grown by roughly 25 per cent annually since 2007, Brannan said. Revenues from the Pearl River Delta have grown at roughly 30 per cent a year. But not everybody is enamoured of the dazzling new architecture in Guangdong. Richard Carswell, a US consultant with 20 years of construction experience, said that the insulation employed in the Taikoo Hui project was equivalent to that in the US 30 years ago. "It's old-fashioned. The energy consumption of this building is sucking too much power," Carswell said. "The architectural design is terrific, but it is just candy for the eyes." The criticism was countered by Peter Kok, general manager of Taikoo Hui (Guangzhou) Development, Swire's subsidiary that manages the project. He said Taikoo Hui had advanced environmental features, noting that the building's glass panels were tripled-glazed to block ultraviolet radiation, while one of its office towers won a Leadership in Energy and Environmental Design (LEED) award. "This is one of the best projects in China," he said. Arquitectonica's Grimshaw said that the internal planning of the firm's buildings "is highly efficient and optimised for end-users". However, he admitted there were problems affecting architecture and construction in Guangdong and the rest of China. For instance, it was difficult to get good workmanship and skilled labour for building projects in China. "Definitely, there are lots of white elephants in China," Grimshaw said. "A lot of developments in China built five to 10 years ago are under-used. There are some commercial developments built in the Pearl River Delta that have not taken into account the commercial long-term sustainability. In certain situations, there are still delays and obstacles in dealing with the bureaucracy."

Hangzhou authorities are considering limiting the number of tourists and vehicles allowed around West Lake, according to reports yesterday, a day after it was added to the Unesco World Heritage List. The lake, located at the centre of the capital of Zhejiang province and open to the public for free, is among the top tourist attractions in the country, drawing more than 30 million visitors a year. Hangzhou's Legislative Affairs Office said in an April document containing proposals to protect the lake that the city was considering scaling back the number of tourists, vehicles and boats allowed into the area, The Beijing News reported. Xinhua quoted a spokesman for the office as saying detailed measures to limit holidaymakers and traffic could emerge by February next year. West Lake is one of the few tourist spots on the mainland open to the public for free. Traffic in the area comes to a standstill on weekends and public holidays, when up to two million tourists visit the lake, partly because they have few other entertainment options. Unesco's World Heritage committee added West Lake's cultural landscape and the hills that surround its three sides to its list over the weekend after years of lobbying from the city. It is the mainland's 41st heritage site to make the Unesco list. Zheng Wei , a city planning expert at Zhejiang University in Hangzhou, told The Beijing News it would be very difficult for authorities to control the number of tourists allowed into the 6.5 square kilometre area, as it has neither an enclosing wall nor gates. He suggested authorities explore promoting new attractions to help spread out the visitors. If action is taken to better protect West Lake, it will be one of the few mainland sites that will have benefited in that way from being added to Unesco's list. Media reports say inclusion on it is often taken as a business opportunity, resulting in higher prices and more development. Admission fees for the Hakka walled village in Fujian increased threefold after it was designated a World Heritage site in 2008, and Zhangjiajie in Hunan ended up being warned by Unesco for excessive development in its Wulingyuan scenic area six years after it was added to the list in 1992. Zhangjiajie authorities were forced to demolish nearly 34,000 square metres of new construction, including luxury hotels, to keep the heritage designation for Wulingyuan.

"Hometown of relict gulls" - Around 10,000 relict gulls, or 90 percent of the endangered specie's population all around the world, inhabit in the Hongjianzhuo Lake from May to October every year.

Group buyers vie for biggest market share - An advertisement for on a public bus in Zhengzhou, the capital city of Central China's Henan province. The number of Chinese group-buying websites are sprouting like bamboo shoots after a spring rain, but industry experts doubt all will survive. While Groupon Inc, the biggest online coupon company, is busying heading for the stock market, Chinese clones, too, are busy chasing cash. US-based Groupon said earlier this month it hopes to raise at least $750 million by selling shares to the public. It is believed to be the first initial public offering (IPO) by a group-buying website in the world and has encouraged Chinese counterparts to follow suit., one of the major coupon websites in China, is "preparing for a listing", a source with knowledge of the matter said. The person, who didn't want to be named, said Lashou hopes to go public by the end of this year. Wu Bo, chief executive officer of Lashou, declined to comment. However, he told media earlier that the company planned to launch an IPO by 2012. Lashou, which has stashed away $166 million after three rounds of fundraising, is not the only business in the sector aiming for the stock market. said in late May after it closed a fundraising round that netted it $200 million that it plans a public listing before March 2012. Su Huiyan, an analyst with research company iResearch, said Groupon's IPO plan has accelerated the pace of Chinese clones going public. However, there are mixed views on the IPO prospects for Chinese group-buying websites amid concerns of dotcom bubbles and accounting irregularities surrounding overseas-listed Chinese companies. "If Groupon successfully goes to the stock market, Chinese clones may be affected and not be that favored by investors, especially when there are so many questions about overseas Chinese stocks," said Chen Shousong, an analyst with Analysys International, another research company specializing in the IT industry. Group-buying has been attracting venture capitalists who have put millions of dollars into the sector despite it having existed in China for less than two years. In 2010, there were 13 fundraising drives in the sector, related to nine websites, with total capital of about 700 million yuan ($108.3 million), said Analysys International. The number of group-buying websites, which began to appear in the country around March 2010, had jumped to 4,500 by the end of May, said group-buying navigation website Faced with intensifying competition, group-buying websites tend to "burn money", as they put it, to expand and improve services, and to invest in marketing to increase recognition. This has led to those without deep pockets falling behind. As with Groupon, which has seen the cost of its marketing exceed revenues, Chinese group-buying websites are not yet profitable., which is a subsidiary of the New York Stock Exchange-listed Renren Inc, for example, reported net revenues of $0.9 million in the first quarter, while its operating expenses were $4.6 million, according to Renren's financial report. Joe Chen, chairman and chief executive officer of Renren, said the company will invest all of its social networking site's net profits into to further boost development. "At present, companies are competing with the capital they have," said Feng Xiaohai, chief executive officer of The company said it is near to closing a second round of fundraising of about $50 million. "But the 'burning money' phase should be passing, and we aim to be profitable next year," Fend said. Manzuo is not planning for an IPO, but will spend the newly raised money on marketing, acquisitions and enlarging its workforce, amid ever-increasing competition. Wu Bo of Lashou agreed. He expects the group-buying market will eventually consolidate into five to 10 big companies from the existing thousands. "Market consolidation may be seen in the third or fourth quarter this year," said Su of iResearch. She added that as companies begin to provide differentiated group-buying services, they may be able to generate more revenue from each group-buying deal and increase profitability.

The business where inflation counts - Hu Xinying, owner of Balloon Queen in Beijing's Central Business District, surrounded by colorful balloons. She says she is very confident about her future. Confident, beautiful and romantically ambitious, balloon decorator Hu Xinying has much in common with her business. The sweet-smiling, mellow-voiced 27-year-old typical Beijing girl always dresses like the chic models that appear in the top fashion magazines. Using her talent in design and fashion, the young woman opened a balloon-decoration store, the first of its kind in the capital, in 2009, creating stunning balloon designs for weddings, birthday parties or other romantic occasions. "There was something in my childhood that suggested that I would be working with balloons when I took out my old albums and they were full of photos of balloons," said Hu. The girl still remembers that during her childhood her father frequently bought her balloons from gray-haired vendors who wheeled their bikes and trollies along streets, through residential communities and around parks. "These balloons were of very poor quality and they easily burst," she said. "I cried every time it happened and asked my father to buy me a new one." The seemingly ordinary graduate began work at an investment firm as a manager after taking a degree in international business and trade. She was not happy with this new chapter in her life, finding no pleasure in dry figures and charts. Like the majority of urban young Chinese women, she kept to the same daily routines from office to home, with the occasional party with friends thrown in. However, Hu possessed rebellious genes and didn't want her imagination left to waste away. "I was really tortured because I had a lot of ideas in my brain but no channel through which to release them," she said. Many young Chinese people were roused by the scenes drawn by Taiwan's best-known illustrator, Jimmy Liao, in his cartoon books depicting the sadness of a girl living in a dusty and dense urban city who was immediately cheered up after being given a bright red balloon by a nice young man. Once, on a whim, Hu decided to give a bunch of dazzling balloons to her best friend as a birthday gift, just as people do in the hit American soap operas Desperate Housewives and Sex and the City. "However, I couldn't find any in the city and online most of the balloons were cheap, unevenly colored and devoid of wit and inventiveness," she said. The moment changed Hu's life. "If nowhere in Beijing is selling quality balloons, why shouldn't I, because the market is there?" she said. Without any hesitation, Hu packed in her boring job and started conducting market research and building up contacts with balloon dealers in the US while setting up her own store with an investment of 500,000 yuan ($77,000) from her parents. "My parents asked me to return to my previous job if I lost all the money," she said. "But I started earning money in the first month thanks to my business acumen and also my popularity among my friends, who helped me a lot with deliveries, advertising and the acquisition of new clients." Walking into her store in Beijing's Central Business District feels like entering a boudoir: It is filled to the rafters with a variety of colorful balloons set to a background of trilling, silvery laughter. Calling herself the Balloon Queen, Hu's products are imported from the United States. There are two categories: emulsion balloons and aluminum foil balloons. She also offers a while-you-wait balloon decoration service. Balloons are part of the culture in the US and European countries, appearing at nearly every festive occasion from weddings and birthday parties to graduation ceremonies and baby showers. Whether it's the British princess Kate Middleton - officially known as Catherine, Duchess of Cambridge - or a young Chinese woman struggling to buy a decent apartment in Beijing, they both have romantic dreams, said Hu. "Balloons are indispensable guests at all romantic occasions." Disney-Pixar's blockbuster cartoon UP tells the story of 78-year-old Carl Fredricksen, who set out to fulfill his and his deceased wife's lifelong dream to see the wilds of South America by floating his house with thousands of balloons. "Just as in the movies, balloons are about love, dreams and wishes," Hu said. She added that she enjoys balloon decoration, which is one of the most effective, and specialized ways, of giving a room maximum impact. At weddings, most brides request archways and back drops. "It looks simple, but we have to rack our brains to satisfy fashion-savvy Chinese brides eager for something unique," said Hu. Archways with Roman columns are the most popular while heart-shaped balloon archways mixed with roses and ribbons are the latest craze, according to the young entrepreneur. The method for binding the balloons needs to be carried out carefully to ensure they don't come loose but can still be untied easily when necessary. Different gases such as nitrogen and helium, or just plain air, can be used to creative effect with balloons because of their different qualities. For example, helium causes a balloon to rise. Hu has been invited by Fortune 500 companies in China to carry out balloon decorations for their annual conferences, special meetings or other formal business events. "Business people always prefer the combination of white, black or grey," she said. She is also proud of the balloon decorations she carried out for shop windows featuring luxury brands as well as at the launch ceremonies of high-end automobiles. Big-name companies always have much higher requirements such as the right color combination to match their brand culture and values, she said. Hu's business has also expanded to the decoration of television studios as well as backdrops for fashion magazine photography. Her most memorable work with her colleagues was a 17-meter archway for an international energy company's conference. They fixed the balloons without using any framework. "You may feel nothing, but industry insiders were stunned by the height and form," she said. "It was really something great." Balloon design closely follows the catwalks of international fashion, said Hu. "Whether polka dots, bright colors or pastels are in vogue, the balloon industry takes its cue." The next step for Hu is to introduce her own branded and designed balloons. "I'm very interested in architecture, painting and ballet as well," she said. "I believe that my aesthetic appreciation and skills can help me in this area." Price might be the most controversial part of Hu's business, given that aluminum foil balloons can cost from 25 to 200 yuan, nearly 10 times as much as traditional balloons. Aluminum foil balloons can be atomically sealed and can be reused while. Also their decorations will last for several months. "We offer value for money, but I have to explain that hundreds of times a day to my customers." Decoration charges range from 2,000 yuan to more than 10,000 apiece. Hu has completed more than 60 deals so far. "Every project is a kind of art creation and it's an expression of my sentiments," she said.

Hong Kong*:  June 28 2011  Share

Ancient abacus still has place - Mastering the art of manipulating the beads on these old-school computers makes learning easier, researchers say - and not just in mathematics - A model displays an abacus at an exhibition in the Sun Arcade in Tsim Sha Tsui showcasing abacuses from different periods. In a celebration of traditional Chinese culture, 20 abacuses from the age of dynasties - worth HK$50million - have made their way from the mainland to Hong Kong in time to mark the 14th anniversary of the handover on July 1. There is much irony in the way their investment value has soared: the general disuse of abacuses has turned them into a rarity, with most schools no longer using them. Ng Pak-ming, president of Hong Kong's Association of Professional Abacus Education, laments the disappearance of the ancient calculator in modern life. He believes practising on the abacus improves learning, but says it has been neglected because gains are not instantaneous. "It's a pity," he says. "There are so many other more practical subjects now. So why would the government turn to the abacus, which shows no immediate benefit?" Ng's intuition is right. There are longer-term cognitive benefits, especially among children, as recent neurological and brain-imaging research has shown. In a 2001 Japanese study, the brain activity in abacus champions while they were using the device was found to be concentrated more in the right side - the part associated with visual and creative thinking - rather than the left side, used for logic, language and computation. Dr Kimiko Kawano - a researcher at Japan's Nippon Medical School, who led the study - wrote that, while stimulation of the right side of the brain might not be enough to improve learning capacity outright, "image thinking" could prove beneficial in a society filled with logic- and problem-based learning. Other studies of abacus users using fMRI (functional magnetic resonance imaging) - a kind of neuro-imaging that tracks blood flow, and therefore activity, in the brain - lend support to Kawano's claims. William Wang Shi-yuan, a linguist and cognitive scientist at Chinese University, believes the monosyllabic and highly regular - or systematic - number system for the low integers in the Chinese language gives an advantage to young children learning numerical skills. These advantages may be reinforced by learning to use the abacus. Aaron Seitz, an assistant psychology professor at the University of California in Riverside, agrees that the abacus is ideal for teaching maths to children. "If you have information coming in from multiple senses, that activates more of your brain and accelerates learning," he says. "[With the abacus], you have this combination of the tactile information, you have actually auditory information - because when you move the beads, there are sounds associated with that - and then you also have the visual-spatial. The key is that the entire experience is much richer in terms of the sensory information you're getting than if you're just doing a standard maths problem with just paper and pencil - or worse, the calculator. Maths is not strictly verbal, tactile, or a language; it is kind of an abstract representation - and so if that abstract representation is built upon information from multiple sensory modes, it's going to be more developed and more effective than coming from a single sense." In a Chai Wan classroom, a stream of clicking fills the air. The teacher is firing the maths problem - "68,375 plus 97,523 minus 28,560" - at the class. Upon the last digit, the students shout out the answer simultaneously. They are all correct. Such calculations are commonplace at abacus training centres such as this one, which drill children in handling enormous streams of numbers via deft finger movements. The abacus association runs a centre that trains about 1,000 students. Ng says intensive contact between fingertips and the beads during training stimulates the development of connections among neurons, which may be key to learning. In the association's classroom, amid the clatter of abacuses, one student sits in silence with no abacus on his desk. Yet Lee Chi-chun replies as fast as the others. For Lee, 15, who has studied the abacus for nine years, the device is not in his hands, but in his head. "When I hear the numbers I move the beads up and down on the abacus in my mind," he says. This sort of "mental abacus" is present in expert abacus users, who translate numbers immediately to pictures in their head. Studies have shown that, usually, we have to translate numbers to language in our heads before being able to comprehend them; people like Lee are able to skip this step, allowing him to be even quicker in mental calculations. In another Japanese study, in 2002, Sophia University researchers in Tokyo compared abacus experts with non-experts in digit recitation, and found advanced abacus users had better short-term memories. One of the first studies into the pedagogic value of the abacus was published in 1986. The US study of primary-school children in Taiwan found that students with abacus training earned better grades in both maths and reading. The researchers compared the reading and maths grades of 618 students from the end of the first grade, when no one had any abacus training, to the end of the fifth grade, when the children with abacus training did better. "Abacus skill has no direct effect on perceived cognitive competence, but abacus does have an indirect effect via its impact on reading and mathematics performance," wrote researcher James Stigler at the time in the American Journal of Education. The abacus is believed to have been invented by the Chinese in about 1200; it spread to Japan and Korea in about 1600. The abacus is still used around the globe today - but for a different purpose. Parents are sending children to abacus training centres and competitions to marvel at their progeny's speed at doing mathematical operations. Ng says that abacus training is gaining popularity in North America, where it was being touted as a way to improve overall achievement. In Japan, the study of the abacus - known as soroban - has been compulsory in elementary school education since 1945. Previously taught only in the third grade, from this year it is being taught in the third and fourth grades; normally it takes two to three years to master an abacus. On then mainland, the abacus has been missing from the compulsory curriculum since 2001, and in Hong Kong the subject has never been mandatory. Although some nations have recognised the benefits of the abacus, it has given way to more practical academic subjects. Perhaps cutting-edge neuroscience may help revive the ancient computational device.

Bruce Lee Museum bid dealt crushing blow - Hopes of tribute to kung fu legend at home where he spent the last year of his life are dashed after negotiations with billionaire owner collapse - The home at 41 Cumberland Road, where Bruce Lee spent the last year of his life, when he lived there in 1972. Hopes of turning it into a museum to the legendary action star have been dashed. A plan to turn Bruce Lee's former home into a museum honouring the kung fu star has been abandoned after negotiations with the building's billionaire owner broke down. The idea was quietly dropped even after the government staged an international competition to redesign the house at 41 Cumberland Road, Kowloon Tong, where the star spent the last year of his life. Philanthropist Yu Panglin, who owns the property - which operates as a short-time love hotel - offered to donate the house worth more than HK$100 million to the city in 2008, but failed to reach agreement on the scope of the development. His condition for the donation was that the property should be expanded to include a cinema, library and a martial arts training centre. But the government said this was not possible in a low-rise residential area. A spokeswoman for the Commerce and Economic Development Bureau said: "Over the past two years, the government has tried its best to restore Bruce Lee's former residence in Kowloon Tong for visitation by locals and visitors. "But, despite our efforts, we are unable to reach a consensus with the property owner over the scope of the restoration." Instead, said the spokeswoman, an exhibition would be staged at the Hong Kong Heritage Museum in Sha Tin "to showcase Mr Lee's life and his contributions to the development of film and kung fu culture". The exhibition is expected to open late next year, in time for the 40th anniversary of Lee's death the following July. Steve Kerridge, the British author of the Bruce Lee Chronicles, said the lack of a museum was crazy. He asked: "If Hollywood can honour the man with a star on the Hollywood Walk of Fame, why can't Hong Kong honour him with a substantial museum of some kind? "People in Hong Kong need to wake up and realise the impact Lee had on the world of action cinema and the martial arts genre in general." Philip Kenny, a Bruce Lee enthusiast who tracked down long-lost locations of Lee's fight scenes, said he heard the Cumberland Road house had already been sold to new owners. "It looks like the landlord might have regretted his decision to donate it and decided to play hardball. He imposed very restrictive criteria he knew couldn't be fulfilled," he said. Hayley Chan, 23, a member of the Bruce Lee Club who works in a shop in Nathan Road dedicated to the star, said the club hoped to work with the government to put plaques on buildings around Hong Kong associated with Lee, including his former schools and 41 Cumberland Road.

Mothers-to-be on their knees in quota protest - Mainland wives of local husbands block health secretary's car to demand the right to deliver in HK - Three pregnant mainland women with Hong Kong husbands yesterday knelt down in front of the health minister's car in a protest against the newly announced quotas for maternity beds for non-local mothers. The three were among 11 demonstrators who protested before and after Secretary for Food and Health Dr York Chow Yat-ngok attended an RTHK radio program, and were insisting on their right to deliver in Hong Kong without being subject to the new quotas. The women, whose babies are due in November and December, blocked the path of Chow's car as he was leaving, defying instructions by police. Chow did not accept a letter prepared by the protesters. The government announced on Friday that maternity beds for non-local mothers at public hospitals would be capped at 3,400, while 31,000 beds would be available in private hospitals. Mainland women married to Hong Kong men will not be given any preference, sparking concerns among the families with cross-border marriages. While Chow said the bureau was not empowered to allow the mainland mothers with Hong Kong husbands to be treated differently, Executive Council convenor Leung Chun-ying said on a different occasion that a separate set of quotas should be given to those mothers. "I sympathise with those families. If there are enough resources, those mothers should be taken care of, given that the baby will be a permanent resident in Hong Kong" he said after meeting Tuen Mun residents. Protest organiser Tsang Koon-wing of the Mainland-Hong Kong Families Rights Association said they hoped to explain to Chow the situation of the mainland mothers. "Many of them are living in Hong Kong with their husbands. They go back to the mainland only once in every 90 days to renew their permit. So they are not coming to Hong Kong from far away just to deliver the baby," he said. "The minister has missed this point." One protester said she would have no choice but to give birth in a Hong Kong hospital casualty ward if the policy was not changed. "Unlike what the government says, I do checks regularly. I have to think for my baby, too," she said.

 China*:  June 28 2011  Share

Chinese Premier Wen Jiabao (R, front) is welcomed by British Trade and Investment Minister Stephen Green upon his arrival at the airport of Birmingham, Britain, June 25, 2011. Wen arrived here on Saturday on an official visit to Britain. (Xinhua/Huang Jingwen) Chinese Premier Wen Jiabao here on Saturday kicked off an official visit to Britain with the purpose of further boosting bilateral relations and cooperation. In a written speech delivered at the airport of this British city, Wen said that 39 years after they established diplomatic relations, the two countries have now forged a comprehensive strategic partnership and an all-dimensional cooperation pattern. The past decades saw Beijing and London carry out frequent high-level contacts, harvest rich fruits in various cooperation fields, coordinate closely in global and regional affairs and bring tangible benefits to their peoples, he said. Under the current complex circumstances on the world stage, Wen added, further enhancing communication and cooperation between China and Britain is beneficial not only to the two countries themselves but to the whole world. The premier said that his current visit is aimed at promoting communication, cooperation and development and that he looks forward to exchanging views with British Prime Minister David Cameron on bilateral cooperation and other issues of common interest. Wen added that he is confident that his visit will be a great success and will inject new energy into the continuous, steady and healthy development of bilateral relations in the 2nd decade of the 21st century. Britain is the second leg of Wen's three-nation tour after Hungary. He will also visit Germany.

World heritage listing for picturesque West Lake - UN recognition should ensure protection for one of China's most beautiful natural attractions - Artist Zhu Renmin says West Lake "is not about the water, it's about the mountains, the art, the culture that is created around it". For centuries, the picturesque West Lake in Hangzhou has attracted scholars, artists, lovers and tourists and now, it has garnered worldwide attention as one of five sites newly added to Unesco's World Heritage List. Regarded by many mainlanders as one of the country's most beautiful natural attractions, the 3,322-hectare site in the capital of Zhejiang province features numerous temples, pagodas, pavilions, gardens and ornamental trees, as well as causeways and artificial islands. Unesco's World Heritage committee officially added the West Lake cultural landscape and the hills that surround its three sides to its list on Friday after years of lobbying from the local municipality. It is the 41st Unesco-listed heritage site on the mainland. Yesterday, despite heavy rain, hundreds of locals and tourists flocked to the site to either enjoy its beauty again or to see it for the first time. Couples, young and old, strolled along the promenade and sat by the lotus ponds that dot the lake while cyclists rode on the wide bike paths around the lake's edge. For one local family, the city would not be the same without West Lake, or Xi Hu in Putonghua. "It's like a psychological thing, we just love it," said Li Hui, 41, who was at the lake yesterday with her husband Shao Min, 43, and their teenage daughter. "If there wasn't a West Lake, Hangzhou could not call itself Hangzhou. It doesn't matter where along the lake we go. Every time we come here, we just feel calm and happy." She hoped the heritage listing would ensure the lake's protection. "I was worried about too much development, but the government has promised that after the listing there won't be any more commercial developments." Li said about six years ago the government leased some of the scenic spots to private clubs, upsetting locals who believed the lake should be free to the public. "Now, I hope they will reduce this and give the space back to the public." Every night, the lake plays host to a live one-hour performance called Impression West Lake, directed by Zhang Yimou , which features singing and dancing. Wu Huilan, marketing spokeswoman for Impression West Lake, said the listing was good but it would not change much for her. "We love West Lake, no matter if it's listed or not. But now it is listed, we will hopefully try to protect it more." For Hangzhou artist Zhu Renmin, the lake stirs up many childhood memories. The 62-year-old painter and sculptor grew up during the 1950s on one of the lake's islands, where his grandfather, famous artist Pan Tianshou, looked after him. As president of the West Lake culture association, Zhu is passionate about the lake's future and welcomed the heritage listing. "I'm very glad because there will be more limitations on the lake, not only domestically but internationally," he said. "Tourism is booming now around the lake but that is a burden and there are too many private businesses like hotels and restaurants. The skyline around the lake must be limited, especially skyscrapers on the eastern side of the lake. "West Lake is not about the water, it's about the mountains, the art, the culture that is created around it." While Zhu fears too many tourists may harm the area, a manager of one of the tourist shops, Luo Lijin, welcomes more visitors. "The more, the better," she said in her shop, which sells traditional Hangzhou foods such as hickory nuts, lotus root powder, dried bamboo shoots and West Lake leaves that can be made into a soup. The other sites added to the World Heritage List are the Ningaloo Coast in the state of Western Australia, Japan's Ogasawara Islands, the Saloum Delta in Senegal and Kenya's Rift Valley lake system. Five facts about West Lake. Formerly named Wulin Waters, Golden Buffalo Lake, Qiantang Lake and Xizi, it was later renamed because of its location west of Hangzhou. Its surface area covers 6.38 square kilometres at an average depth of 2.27 metres, with a maximum depth of 5.5 metres. The scenic area adjoining the lake covers almost 60 square kilometres, with more than 60 cultural relics. Scientists believe that the lake, within the area of the Yangtze River Delta, was originally a bay that was cut off from the ocean some 12,000 years ago by sedimentation and beach formation. The fundamental layout of West Lake occurred during the Wuyue kingdom (907-960) when Hangzhou served as the small coastal kingdom's capital.

An all-about-wedding exposition in Hainan - Visitors of a wedding products exposition get to know about the information about consumption for wedding and Models have a wedding show in traditional clothes on the exposition in Haikou, Hainan province, on June 24, 2011. 

Hong Kong*:  June 27 2011  Share

Shares in Cathay Pacific Airways (SEHK: 0293) and mainland airlines jumped yesterday after US oil prices dropped by US$4.36 to US$90.65 per barrel on Thursday following the decision by the International Energy Authority to boost supplies by 60 million barrels during the next month. Cathay's share price climbed 5.33 per cent to end the day at HK$17.80, down slightly from the intraday high of HK$17.94. But the biggest gain was by Air China (SEHK: 0753, announcements, news) with its stock up 7.78 per cent to close at HK$7.76. Shares in Shanghai-headquartered China Eastern Airlines (SEHK: 0670) rose 6.62 per cent to finish the afternoon session at HK$3.38, while Guangzhou's China Southern Airlines rose 6.41 per cent to end the week at HK$4.15. Analysts said the rise in stock prices was a knee-jerk reaction to the immediate drop in the price of crude but they added airlines would not see the benefit for several weeks because of the lead time to refine and deliver jet fuel. "The time lag will be anywhere from a couple of weeks to a month," one analyst said. "Generally, lower oil prices will be good for the airlines and the longer prices stay at low levels, the better for airlines." Cathay has been recovering between 50 per cent and 60 per cent of the oil price from surcharges on passengers and cargo, while a further 30 per cent of the carrier's fuel cost is hedged, according to analysts. As a result, the airline has been exposed to only 10 to 20 per cent of the fuel price that was not hedged or covered by surcharges. But analysts said there was evidence high surcharges, including for fuel, were deterring economy-class passengers from travelling. Based on the cheapest round-trip flight available on the Cathay website yesterday, surcharges and tax account for nearly a third of the HK$10,073 economy-class ticket from Hong Kong to Sydney. About 23 per cent of the HK$3,321 cost of a Hong Kong-Singapore economy-class return ticket goes in tax and surcharges. One analyst who attended a Cathay briefing on Thursday said the airline's management admitted that passenger demand in economy was "softer than projected and below expectations". "My guess is surcharges are putting people off travelling," an analyst said. He added that while demand on Japanese routes was adversely affected by the tsunami and radiation scares, "demand in general is a bit softer". Another analyst, who also attended the management gathering, said premium travel had been strong in the early part of this year. But he questioned if this trend would continue if banks and financial institutions, who contribute a large proportion of business and first-class travellers, cut back on business travel in the face of slimmer margins. Citi Investment Research & Analysis has already cut its earnings estimates for Cathay this year and in 2012. A research note published last Monday said it anticipated a "41 per cent decline in earnings this year" to HK$6.89 billion for the airline. The net profit forecast for 2012 was also slashed to HK$7.47 billion.

Station cuts hours off time to recharge electric cars - Makers of the government-backed design say it can put vehicles back on the road within 35 minutes - The first made-in-Hong Kong charging station for electric vehicles has been unveiled, with its makers claiming it can recharge a suitable car in as little as 35 minutes. That is much less than the six to eight hours required at stations already installed in the city. As well as being faster it will also be cheaper than the ones now in use, which cost up to HK$300,000, the maker says, although it did not give details on the amount saved. The charging station was developed by Hong Kong Automotive Parts and Accessory Systems (APAS), a subsidiary of the government's Innovation and Technology Commission. It says the product, which it calls the Electric Vehicle Fast Charging Station, will be able to fully charge a 16 kilowatt vehicle battery in 35 minutes on its highest setting. But engineering manager Daniel Siu Hang-chuen said the actual times would vary according to the vehicle model. For example, MyCar, the first Hong Kong-made electric car, would take about two hours, The project was launched in collaboration with ITE Smartcard Solutions which devised a payment system using the Octopus card. The development cost was about HK$1.4 million, of which 60 per cent came from the government's Innovation and Technology Fund and the rest from ITE Smartcard. The system offers fast charging, semi-fast charging, and charging with the typically slow 13A outlet, which is used by the 134 free-charging stations installed at 34 car parks. Fast charging permits a compatible electric car to be charged in about 35 minutes, while the semi-fast option takes about two hours at best. The charging system also features a simple user interface where owners swipe their Hong Kong Octopus card, Macau Pass or other customised e-payment card against the terminal. All owners have to do is plug the wire into the electric car and swipe the card against the terminal again at the end. Vincent Lau Hon-kong, executive director of ITES has big plans for the charging station. "The completion of the Hong Kong-Zhuhai-Macau Bridge will bring countless opportunities and we are looking to install our charging stations in Macau," he said. Siu was also optimistic. "Japan made-charging stations cost around HK$300,000. The price of our stations will definitely be lower. Several car parks have already sent us inquiries." A spokesman for Hongkong Electric (SEHK: 0006) said: "Our purchase of a suitable charging system ultimately depends on our evaluation of potential products. We may consider the local product if we find it attractive." However, Siu is unsure when the new charging stations will go on the market. They are expected to be used in a trial phase at government car parks first.

A packed Cathay Pacific (SEHK: 0293) jet and a Virgin Blue plane were within 19 kilometres of each other over Australia's Northern Territory when their pilots ignored faulty air traffic control instructions and took decisive actions to narrowly avoid a disaster, an official investigation revealed yesterday. The Australian Transport Safety Bureau's inquiry into the incident - involving a Melbourne-bound Airbus A330 carrying 309 passengers, and a Virgin Blue Boeing 737 with 120 passengers on board - singled out an "inadequately equipped" traffic controller for blame. The report said the controller first put the flights on a collision path and then failed to take corrective measures when the pilots alerted him to the danger. Recognising the dire situation, the pilots on both planes ignored air traffic control instructions and swerved to their right to avoid a head-on collision. Pilots are allowed to ignore instructions from ground control only when faced with an emergency. The report noted that the traffic controller was allowed to shorten a mandatory training course because of his previous experience with the Royal Australian Air Force, raising questions about whether such exemptions should have been given to former military servicemen.

Hong Kong Moves to Curb Births by Mainland Mothers - The Hong Kong government moved to limit the number of Hong Kong births by mothers from mainland China next year, as pregnant women flooding into the territory from the mainland to evade the one-child policy have strained the capacity of its health-care system. Public hospitals will set aside 3,400 spaces for mainland mothers, but are supposed to accept bookings from non-locals only when there is spare capacity. Ten private hospitals have agreed to provide a total of 31,000 additional spaces. The total number of spaces would represent a 7% decrease from the expected tally of mainland births for this year. Of the roughly 88,000 babies born in Hong Kong last year, about 45% were the children of mainland women. For the growing ranks of well-heeled mainland parents, the math and the logic of a Hong Kong delivery are simple. In China, violating the country's one-child policy can result in a fine equal to several times annual income. Because this former British colony operates under a separate legal system, the child-control policies don't apply. In addition, any baby born to a mainland Chinese mother in Hong Kong automatically gains local residency rights. Although women often bring their children back to mainland China after giving birth, those children are free at a later date to move to Hong Kong, where people enjoy legal and political protections unavailable to their countrymen in the mainland. But Hong Kong has now become so popular among pregnant women from across the border that some local residents say they have been squeezed out of hospital spaces. Doctors and nurses are also complaining about being overburdened by the extra demand. Loletta So, head of the Hong Kong Public Doctors Association, said the group believed the restricted number of mainland births was manageable, and supported the government's measures. Mei Ting, a 39-year-old advertising executive from Shanghai, came to Hong Kong last month to have her second child, a boy. She paid US$11,600 to an agency based in the border city of Shenzhen to secure a spot at Hong Kong's private Baptist Hospital. The 12-day package included two visits from Shenzhen to Hong Kong, for a check-up and the delivery. After a caesarean section, Ms. Mei spent three nights in the hospital, and divided the rest of her time resting in apartments rented by the agency in Hong Kong and Shenzhen. "I think the price is very reasonable," said Ms. Mei, "as you would end up getting fined that much money for having more than one child in China anyway." The fine varies across different localities in China. But many in Hong Kong are irate that local mothers are being marginalized from the health-care system. When Hong Kong resident Elaine Chan's water broke one night last October, she called Matilda International Hospital—where she had paid a deposit of about US$2,600, or around $20,000 Hong Kong dollars—to say she was on the way, but the response she received was simply: "Don't come." The day happened to be a numerically auspicious day for many Chinese—October 10, 2010, or "10-10-10." Ms. Chan secured a spot at another "really old, run-down hospital" where she gave birth to a baby girl, but said, "I just couldn't get over the fact that I was booted out after having paid for the deposit." Belinda Chun, a spokeswoman at Matilda Hospital, said the reason Ms. Chan wasn't admitted wasn't a flood of mainland Chinese patients. "None of our patients in our maternity ward at the time were from mainland China," she said. "The only time we do not admit patients is when this may compromise the level of care we can offer to any of our patients." She said, "Our guiding principle is to serve our local mothers first and foremost." She said the share of mainland mothers in the hospital is "quite constant, hovering around 5%" a year. While the new caps may reduce the number of mainland women who book hospital spots ahead of time, it doesn't address mainland women who show up at emergency rooms, where they may gain admission even if they haven't booked a hospital space. "In August, many women rush to the emergency room at any time of day and say they're experiencing pain and demand a C-section," placing a huge strain on the hospital, said Wendy Shu, a first-year obstetrics resident in a public hospital in Hong Kong. She is bracing herself for the peak month of August, as eight is an auspicious number in China. Ironically, for Hong Kong, babies born to mainland mothers could be the key to sustaining the city's future economic growth, because of Hong Kong's extremely low birth rate—in 2010, the fertility rate was 0.9, according to Hong Kong government data. The replacement rate is generally considered to be 2.1. According to Dr. Shu, the majority of births at her hospital this year have been from mainland women. "We can't rely on locals to give birth," she said. "They just don't have children."

 China*:  June 27 2011  Share

Inaccurate forecasting, poor infrastructure and bad co-ordination were blamed yesterday for the chaotic scenes on Thursday when the capital turned into a big swamp during the heaviest downpour since 2004. Though road and subway traffic in the city centre had mostly recovered thanks to the overnight repair efforts of thousands of workers, more than 200 flights were still delayed or cancelled yesterday. Qiao Lin , director of the Beijing Meteorological Bureau, said on its website that on Thursday it recorded 21.5cm of rainfall at a Shijingshan district residential compound in less than two hours, the biggest downpour since a storm in July 2004 that lasted more than four hours and caused similar chaos. "Such a strong precipitation event is rare," he said. But Qiao did not explain why the storm warning issued by the bureau on Thursday was blue, the least severe, with estimated rainfall less than a fourth of that recorded. An official at the bureau's observation and forecast department declined to comment yesterday. Wang Yi , director of the capital's municipal flood-control office, told the Beijing Times yesterday that most of the city's drainage system could only handle hourly rainfall of 4.5cm at most. Only a few important locations, such as Tiananmen Square, could take more. But Thursday's rain reached 12.8cm an hour, causing flooding up to 60cm deep at 20 locations, mostly overpasses on the Third and Fourth Ring Roads in western Beijing, Wang said. Wang said that the authorities were considering upgrading the drainage infrastructure and doubling its capacity. "The earliest underground drainage networks in downtown Beijing were built in the Ming dynasty [1368 to 1644] and are still in use nowadays. Drainage construction is the slowest of all urban construction. It is a national problem." Professor Lu Jian , an infrastructure expert at the Beijing University of Technology who is also a drainage network-design consultant for the municipal government, said yesterday that Thursday's downpour also revealed poor co-ordination among the different government agencies. After the chaos in 2004, the municipal government set up an emergency-response task force, equipped with powerful water pumps, to be on standby during flooding emergencies, Lu said. But Thursday's storm showed that there was little co-ordination between the task force and the weather authorities, he said. The task force was not mobilised and dispatched until the rain began pounding, and most of the force's teams were stuck in traffic jams and could not reach their destinations. Some private vehicles also occupied the emergency lanes of highways, refusing to let the water-pumping vehicles pass by. "It is not one person or one department's fault. It is everyone's fault," Lu said. Kong Yanhong , deputy director of the China Academy of Urban Planning and Design's Water Centre, said that the rainfall in some of the worst-flooded areas on Thursday was probably the heaviest in a century. "Beijing's drainage system is not designed to stand against low-probability events," Kong said, adding that the cost of being able to do so would be prohibitive. Xu Gang , an engineer at the Beijing Tsinghua Urban Planning and Design Institute, said that most of the mainland's investment in urbanisation was on the surface, resulting in inadequate supporting infrastructure underground. "It is never too late to learn from Paris, which solved the problem more than a century ago," Xu said. At Beijing's Capital International Airport, many domestic passengers were stranded, with 122 flights delayed and 103 cancelled yesterday. International flights were less affected, with six delays and 11 cancelled, all in Asia, with more than half to or from Hong Kong and Macau.

New York Asians unite as their numbers surpass 1m - Fastest-growing racial group in the Big Apple demands greater political representation, but its diversity makes forging united front a challenge - Elderly Chinese voters in Lower Manhattan look at a list of election candidates before voting. Asians are under-represented on elected bodies, but working as a bloc may change that. Not so long ago, the phrase "New York's Chinatown" meant one thing: a district in Lower Manhattan near Canal Street. Now it could refer to as many as six heavily Chinese enclaves around the city. Koreatown was a commercial zone in Midtown Manhattan, but now parts of Queens, where tens of thousands of Koreans have moved, feel like suburban Seoul. New York has also spawned neighborhoods with nicknames like Little Bangladesh, Little Pakistan, Little Manila and Little Tokyo. The number of Asians - a group more commonly associated with the US west coast - is surging in New York, where they have long been eclipsed in the city's kaleidoscopic racial and ethnic mix. For the first time, according to census figures released in April, their numbers top one million - nearly one in eight New Yorkers, and more than the Asian population in San Francisco and Los Angeles combined. That milestone, in turn, has become a rallying cry for Asian New Yorkers who have been working for years to win more political representation, government assistance and public recognition. Many leaders have seized on the one-million figure as a fresh reason for immigrants and their descendants from across the Asian continent to think of themselves as one people with a common cause - in the same way that many people from Spanish-speaking cultures have come to embrace the broad terms Latino and Hispanic. "We are 13 per cent of this city's population!" Steven Choi, 35, a son of Korean immigrants, yelled into a microphone as Asian activists gathered recently outside City Hall to protest against threatened cuts to social services. "We are one million strong, and we are not going away!" The census shows a 32 per cent increase in New York's Asian population since 2000, making it the city's fastest-growing racial group. The Hispanic population grew only 8 per cent in that time, while the ranks of non-Hispanic whites declined 3 per cent and blacks declined 5 per cent. As the number of Asians has soared, scores of groups that have long operated independently - and sometimes at odds - have begun pulling together into pan-Asian coalitions in recent years, particularly as younger generations and newer arrivals see the advantages of unifying. But making that happen is not easy, because the population that calls itself Asian is extremely diverse. Asian-Americans in New York trace their roots to dozens of countries, and speak more than 40 languages and dialects. Certain groups have fared much better than others: The poverty rate of Filipinos, for instance, is one-sixth that of Bangladeshis, according to 2009 data from the American Community Survey. Finding common ground among so many constituencies is "a constant tension that our coalition faces", said Choi, leader of the 12 Percent and Growing Coalition, a lobbying group formed in 2008 that unites more than 45 organisations either led by Asians or serving the Asian population. Asians in New York remain under-represented in elected office, community leaders say, with only one Asian-American in the state legislature, two on the city council and one in a citywide post, the comptroller, John Liu. Choi said that even though Asians are about 13 per cent of the city's population, social service organisations that focus on them receive only 1.4 per cent of the council's discretionary allocations, and less than 0.25 per cent of the money for the city's social-service contracts. Some community leaders said a "model minority" stereotype - the perception that Asians are universally high-achieving and self-sufficient - has blinded officials and others to the needs of those who are not. Median per capita income for Asians is well below the city's average, and Asians also have the highest rate of linguistic isolation, a classification in which nobody older than 13 in a household speaks English well. Asian-American leaders say they are already seeing the impact of their coalition-building on officials. "We joke that some of the folks know 12 Percent and Growing Coalition better than they know our individual organisations because of the collective power," said Sheebani Patel, of the Coalition for Asian-American Children and Families, gesturing towards City Hall.

Locomotives improve Qinghai-Tibet rail - A high-power electric locomotive on the Qinghai-Tibet Railway in Golmud, Northwest China's Qinghai province, June 23, 2011. With the high-power electric locomotives were equipped on the electrified railway from Xining to Golmud this year, railway transportation in Qinghai province and Tibet autonomous region was greatly improved.

China-Hungary friendship relies on youth: Wen Jiabao - Chinese Premier Wen Jiabao shakes hands with students of the Eotvos Lorand University in downtown Budapest, shortly after his arrival at the capital Friday. Chinese Premier Wen Jiabao said Friday that the China-Hungary friendship and cooperation rely, after all, on the younger generation. Wen made these impromptu remarks at a cultural exchange activity held in the Faculty of Humanities of the Eotvos Lorand University in downtown Budapest, shortly after his arrival at the capital. The university is the largest and oldest institution of higher learning in Hungary. It now serves as a key place for teaching Chinese language. Hungarian students from the university's Confucius Institute, a Chinese-Hungarian bilingual school and a martial art teaching center, performed Chinese folk songs and Tai Ji. "The students' excellent performances have demonstrated their love for the Chinese culture and their friendship with the Chinese people," said the premier, adding that different cultures could learn from each other as they all have their own advantages. He also presented Chinese books as gifts to the students. Hungarian students expressed their willingness to expand exchanges with China's youth to promote mutual understanding and friendship. Wen started his two-day official visit to Hungary earlier Friday, the first one to the central European nation by a Chinese premier in 24 years.

China Trips Up Major Airbus Deal - China's anger with the European Union's emissions-trading scheme for airlines has delayed the revealing of a major Airbus deal and could undermine upcoming deals, according to people familiar with the situation. Airbus, a unit of European Aeronautic Defence & Space Co., had expected to announce at the Paris Air Show this week that Hong Kong Airlines Ltd. ordered 10 of its A380 superjumbo jetliners, with a catalog value of almost $4 billion. The deal's unveiling was put on ice by officials in Beijing, who must give final approval, these people said. The Chinese government held off because it disapproves of the EU's intention to regulate greenhouse emissions of foreign airlines operating to and from the 27-country bloc, according to the people close to the talks. An Airbus spokesman said the company wanted to name the A380 buyer, "but the political environment would not allow us to do that." A Hong Kong Airlines spokeswoman earlier this month said the carrier planned to announce an A380 order at the trade event outside Paris. The A380 deal was completed before Beijing interceded and appears not to be in jeopardy, said one person close to the situation. But other planned orders for big Airbus planes have been frozen, this person said. "The Chinese have told us directly that their airlines are not allowed to get into deals with Europe," said a person close to the European side of the discussions. A spokesman for the Chinese mission to the EU recently said that the country is "opposed to the EU's inclusion of [Chinese] airlines" in its emissions-trading plan. The spokesman didn't immediately respond to questions about the situation with Airbus. For now, China's anger is unlikely to hurt the European plane maker, which has an order book of more than 3,500 planes for customers globally. But China is the biggest growth market world-wide for aviation. Airbus in 2009 opened an assembly plant in Tianjin, China, to tap the local market and curry favor with the government. Airbus had also hoped that a major Chinese order would be announced when German Chancellor Angela Merkel meets Chinese Premier Wen Jiabao in Berlin next week. That planned contract could now be significantly shrunken or delayed, said one of the people familiar. The EU's pollution-control plan, which is set to include aviation starting in January, forces any carrier departing or arriving at an EU airport to buy credits for greenhouse-gas emissions above specified levels, with large fines for noncompliance. China's move appears to be the first retaliation against the EU program. China, the U.S., Russia and other countries have strongly objected to the plan. They see it as unilateral and potentially illegal because it may assert extraterritorial jurisdiction on carriers from other countries. "A global issue needs a global solution," said the Airbus spokesman, who called the plan "a bureaucratic tiger." Airbus and the Association of European Airlines last month wrote to top EU officials to warn about potential retaliation from China. EU officials have repeatedly said they won't retreat on their program. Christoph Franz, chief executive of German giant Deutsche Lufthansa AG, said on a recent trip to China that threats of retaliation against the EU plan indicate it is not working as expected. The EU had hoped that its program would prompt countries around the world to adopt similar measures. Some European airlines have recently held back on asking for permission to increase capacity on Chinese routes because they expected applications to be rejected, said one person with knowledge of the situation. The U.S. government on Tuesday formally presented its opposition to the EU plan for the first time at a meeting with EU officials in Oslo. A group of U.S. airlines has separately filed suit against the EU plan. The first hearing on that case before the European Court of Justice is due on July 5. Concerns of countries outside the EU "must be taken seriously," said Ulrich Schulte-Strathaus, secretary general of the Association of European Airlines. The EU "needs to address these objections and come up with a solution which balances the priorities of the environment and international relations."

Hong Kong*:  June 26 2011  Share

Developers are putting more luxury units on the market, ignoring government curbs, as they remain confident of strong support from mainland buyers. "The effect of government measures have already been seen. Mortgages have been tightened," said Victor Lui Ting, executive director of Sun Hung Kai Real Estate Agency. Sun Hung Kai Properties (0016) plans to sell more units at its Imperial Cullinan project above the Olympic MTR Station next week. The first batch of flats will be priced between HK$20,000 and HK$25,000 per square foot. At least five flats have already been reserved by mainlanders, a source said. One potential buyer reserved a 3,532-sq- ft flat with private swimming pool for HK$170 million, which translates into HK$48,00 psf - possibly a record for an apartment atop either Kowloon or Olympic MTR stations. Another potential buyer reserved a 2,523-sq-ft flat, also with a private swimming pool, for HK$120 million, or HK$47,000 psf. "There are a total of 10 specialty units in the project, sized between 2,600 sq ft. The psf price of four of them, sized between 3,000 to 3,600 sq ft could reach new highs in the district," said Allen Woo, senior sales and marketing manager of SHKP. Imperial Cullinan's sister project, Cullinan, located atop Kowloon MTR station is now priced at an average HK$25,566 psf. K Wah International (0173) also plans to put several flats at Chantilly, a residential project along Stubbs Road in East Mid- Levels, on the market today. One of the 3,650 sq ft flats on the list is priced at a minimum HK$76.65 million, or HK$21,000 psf, sources said. Neighboring flats that are at least 30 years old are priced at HK$14,000 psf on average. "Transactions in the secondary market in the area fell 40 percent from a month ago to around 50 after the measures were introduced," said Wilson Lau, a Centaline agent.

A magistrate's disgust at an underage pervert is pointing the way to a review of an outdated common law presumption that a boy under 14 is incapable of sexual intercourse. Eastern Juvenile Court magistrate Adriana Tse Ching yesterday said she had no option but to send a boy to a reformatory school - he was just 13 when he raped a five-year-old girl in a hospital children's ward. Tse said of the "disgusting case" - the second she has dealt with in 12 months - that the punishment for the crime committed last September was "wholly inadequate." The boy could only be charged with a lesser offense of indecent assault under current legislation. He pleaded guilty. If juveniles are sentenced for serious drug trafficking offenses, they can be given eight to 12 years by the High Court, but the boy's trial could only be handled in the juvenile court. A spokesman for the Security Bureau said it is studying a Law Reform Commission proposal that boys aged between 10 and 13 may be charged with rape. The magistrate also expressed shock that Pamela Youde Nethersole Eastern Hospital in Chai Wan has a mixed- gender pediatrics ward and believes the hospital should review the arrangement. The boy, a Korean, showed little remorse, as well as committing theft when on bail, Tse said. Reports called on his behalf were negative and ruled out probation. The boy smirked when he met a probation officer and initially denied he had penetrated the girl with his penis. "In mitigation, the defense said he is a newcomer and helpless in a new culture, yet no culture could accept such conduct," said Tse, adding that his age is not an excuse. The boy, who is about 1.7 meters tall, moved to Hong Kong with his parents about two years ago. He will enter a reformatory school with a minimum stay of one year and a maximum of three years, depending on his behavior. The court heard the offense was committed at about 3pm on September 26 last year but no details were released, except that police found the boy's sperm at the scene and the outer area of the victim's private parts had abrasions. The pediatric ward at Eastern hospital is still mixed gender, but it has enhanced security, a Hospital Authority spokesman said. Stephen Hung Wan-shun, council member of the Law Society of Hong Kong, said it is fully supportive of removing the presumption that a boy under 14 is incapable of sex. "The presumption has existed for 100 years so children might not have been as sexually active back then," he said. "Things have changed since." But Billy Wong Wai-yuk, executive secretary of the Hong Kong Committee on Children's Rights, said the entire juvenile justice system needs overhauling. "For the victim it will be fairer, and they will have more protection. But we don't believe that a child between 10 and 14 years really grasps the concept of severe crime and punishment."

McDonald's has second dim sum issue on menu - Fast-food giant last year sold US$30m worth of 3-year yuan-denominated bonds in Hong Kong, the first such offering by a non-financial foreign firm - Dim sums are on the menu at McDonald's, which said yesterday it planned a second helping of the yuan-denominated bonds in Hong Kong. And the new offering is likely to be bigger than the US$30 million that the fast food giant sold last year, and would also probably be for three years. "The dim sum bond market is the best financing tool for us," Dave Yang, McDonald's corporate controller in China, said on the sidelines of a financial forum in Shanghai, according to Dow Jones Newswires. The US group is seeking to further tap the so-called "dim sum bond market" as China tries to internationalise its currency. McDonald's sold US$30 million worth of three-year yuan-denominated bonds last year in Hong Kong, becoming the first yuan-bond offering by a non-financial foreign firm in the Asian financial hub. The move was followed by heavy equipment maker Caterpillar, while budget carrier Hong Kong Airlines reportedly said in May that it was also planning a dim sum issue. In 2009, China approved using the yuan to settle cross-border trade with Hong Kong, and last year it relaxed rules to allow non-financial foreign firms to issue yuan-denominated bonds. Bloomberg reported last week that the number of banks jostling for deals in Hong Kong's dim sum debt market almost doubled this year as arrangers sought to capitalise on record issuance. The 50.3 billion yuan (HK$59.9 billion) of debt sold in this quarter compares with 18.6 billion yuan in the first three months. Dim sum note sales may increase to 200 billion yuan this year as global investors bet on the yuan appreciating more than currencies of the other BRICS nations, according to estimates from Mizuho. Speculation on gains is fuelling demand for Chinese assets, driving average yields on dim sum debt to 2.44 per cent, half the 4.76 per cent for corporate issuers in China and a third less than the average 3.76 per cent yield for bonds globally, HSBC Holdings (SEHK: 0005, announcements, news) and Bank of America Merrill Lynch indexes show. "We really need to be involved in this market because it's growing fast and it could potentially be bigger than the G3 market in Asia," said Jeffrey Yap, head of Asian fixed-income trading in Hong Kong at Mizuho Securities, an arm of Japan's third-largest bank, referring to the market for debt denominated in US dollars, yen and euros. HSBC is the biggest arranger of yuan-denominated debt sales in Hong Kong this year with almost 27 per cent of the market, Bloomberg data show. Royal Bank of Scotland Group and Standard Chartered are the No2 and No3 underwriters. Among other new entrants are Chinese brokerages including Citic Securities and Haitong Securities. "Competition will be very, very severe," Augusto King, co-head of debt capital markets for Asia at RBS in Hong Kong, said earlier this month.

Canto-pop star Remus Choy Yat-kit was banned from driving for two-years in the Eastern Court on Friday after being convicted of drink driving. Choy, 44, of the pop group Grasshopper, was also sentenced to 160 hours of community service and fined HK$20,000. In sentencing, Acting Principal Magistrate David Dufton warned Choy that drink-driving was a serious offence that could lead to jail. He said Choy was lucky his crash did not cause any injuries because traffic was not busy at the time, local media reported. Choy earlier pleaded guilty to careless driving and drink-driving. He admitted he had been drink-driving when he crashed his luxury Bentley in Pok Fu Lam last month. The court heard that Choy crashed his Bentley after he drank four glasses of red wine and slept for four hours. The crash took place in Sassoon Road, near Queen Mary Hospital, about 7.40am on May 1. A breath test showed a reading of 66 micrograms of alcohol per 100 millilitres or air. Treble the legal limit of 22 micrograms. Wong Ching-yu SC, for Choy, said his client had the new car for only a week before the crash and he was not familiar with it. The court heard that the luxury car hit a metal railing before knocking down a mailbox and a fire hydrant. The vehicle continued to move uphill in Sassoon Road for about 200 metres, hitting a safety barrier before it eventually came to a halt.

The government would limit the number of women from the mainland giving birth in Hong Kong next year to ensure there were enough maternity beds for local mothers, Secretary for Food and Health York Chow Yat-ngok said on Friday. Chow announced that from next year, public hospitals would only admit non-local pregnant women when there were spare beds. The number for next year was estimated at 3,400, he said. “We will stop accepting new bookings once this quota is used up,” Chow said. Private hospitals would limit admissions to around 31,000, down by about 7 per cent from this year’s 33,000, he said. Chow said this number was agreed on after health officials consulted private hospitals in the city offering maternity care. The number mainland women giving birth in Hong Kong has steadily increased in recent years. In 2010, 40,000 of the 88,000 deliveries in maternity wards were to non-local mothers. Doctors and nurses have complained the influx has pushed the city’s medical resources the limit. In April, the Hospital Authority, which manages public hospitals, announced that the number of deliveries by mainland mothers would be limited to about 9,000 this year, 11,000 fewer than the number reported last year. Chow said the cap could help relieve the strained conditions. “We expect this reduction would certainly help ease pressure on our medical resources and hospital staff,” Chow said. The health secretary also said mainland mothers intending to marry to Hongkongers would not be given priority over when making bookings at maternity wards. “I understand some mainland women want to give birth here because their husbands are Hong Kong men. But they always have the option of giving birth in the mainland,” he said. “I hope people can understand; Hong Kong’ services are mainly for Hong Kong people,” Chow added.

Asia’s Millionaires Outnumber Europe’s - Asia’s growing millionaire class is rising through the global ranks, with Hong Kong’s new wealthy leading the way. Asia boasted 3.3 million high net-worth individuals last year according to the World Wealth Report 2011, released Thursday by Merrill Lynch Global Wealth Management and Capgemini. Hong Kong’s population of millionaires swelled by 33%, more than any other place in the world. The report defines high net-worth individuals as those with at least $1 million in financial assets, excluding collectibles, consumer goods and primary residences. Asia ranks second in the world in terms of largest millionaire population—ahead of Europe’s 3.1 million such individuals, but behind North America’s 3.4 million. Asia is quickly closing even that gap: The millionaire class grew 9.7% in Asia last year, outpacing the 8.6% and 6.3% growth in North America and Europe, respectively. Six of the top 10 places with the greatest growth were in Asia. “I think it’s entirely conceivable Asia will overtake North America in the near future,” said Wilson Lo, head of North Asia advisory for Merrill Lynch Global Wealth Management at a news conference in Hong Kong. Mr. Lo said Hong Kong’s wealthy class will continue to grow, but not at last year’s rate. “That growth rate will slow down,” he said, calling it “unsustainable.” The reasons behind the growing population of Asia’s rich are hardly surprising: Asia’s strong economies have rebounded swiftly from the financial crisis of 2008, while Europe and the U.S. continue to muddle through a period of slow growth. Moreover, stock markets and real-estate markets in the East have outpaced those in the West. In Hong Kong, for example, the Hang Seng index rose 60% during the two-year period of 2009-2011, while its real-estate market surged 61% over the same period. Given the booming real-estate market, rich people in Asia (excluding Japan) are investing more of their portfolios in property. The global average among high net-worth individuals in 2010 were 19% weighted in property, whereas Asians outside of Japan had 31% invested in the sector. Meanwhile, Japanese investors remained very conservative in 2010, holding the most amount of cash. In Japan, high net-worth individuals had 29% of their assets in cash, more than double the 14% global average. Just what do these millionaires spend their money on? According to the report, Asia’s wealthy buy more jewelry, gems and watches than the global average—25% of their overall “investments of passion” are spent on these items, compared with the 22% global average. However, they spend less on art: Asian millionaires allocated only 16% of their discretionary spending to art, below the 22% global average. “Those of you interested in starting a business, an art gallery might be interesting,” quipped Mr. Lo.

Hong Kong Cabs Go Cashless - About 100 taxis in Hong Kong have opted into a system that allows customers to pay with a credit card, as part of an effort to get the city’s cabs outfitted with cash-free systems – but it’s unclear whether the companies offering the system can persuade drivers to swallow the extra costs. Autotoll, the company that operates the electronic toll systems in Hong Kong, in partnership with Dah Sing Bank, is rolling out a voluntary program to equip Hong Kong’s taxis with GPS navigation systems, video surveillance, traffic broadcasts, a supposedly more-efficient dispatch system and credit-card payment machines. The company hopes its new dispatch system, which uses GPS to connect a driver with a customer, will entice drivers to eventually pay about 100 Hong Kong dollars (US$12.84) a month to use the system. (The company is waiving monthly fees for at least the first three months.) So far, taxi drivers have been reluctant to sign on. James, who manages 40 cabs in Hong Kong and declined to give his surname, says few drivers are inclined to buy into the system, as most are afraid the credit-card transactions will take up too much time and will eliminate tips and the rounding up of a fare to a whole dollar. Just five of his drivers have installed the system. “Hong Kong is a fast-paced society, and using a card slows things down,” he said. The Hong Kong Taxi and Public Light Bus Association, which represents taxi and minibus owners, declined to comment. There are more than 18,000 registered taxis in Hong Kong with more than 50 taxi cab groups and associations. On top of the expected HK$100 monthly usage fee, taxi drivers will also likely have to pay a maintenance fee, as well as a cut of each fare, to Dah Sing Bank, as is typical of most credit-card transactions. Visa, the sole credit-card company offered with this system, also takes a portion of each transaction. These fees have been waived until at least the end of the year, but maintenance fees for having a credit-card machine generally run around HK$165 a month. John Lam, executive director of Dah Sing Bank, said the monthly fee and percentage the bank takes varies industry to industry and will be determined at a later date. Eric Tam, a transport officer in Hong Kong’s Transport Department, says the government is remaining neutral on the issue of credit card payment, and there are no plans to make them compulsory for drivers. “It is their business,” Mr. Tam says, “but if taxi owners have some innovative idea like credit card payment that improves service, our department welcomes it.” In New York, many cab drivers bitterly complained when the government first forced them to take credit cards in 2007, as they had to pay similar fees out of pocket. But two years later, the New York City Taxi and Limousine Commission said tips on credit card transactions were more than double what they were before cabs accepted plastic. Autotoll hopes some of the system’s other perks will win over drivers. Their system, which they call AutoTAXI, includes a television screen on the seatback facing the passengers, which will feature short entertainment programs. Autotoll plans to sell advertising on the screens and give 20% of ad returns to the drivers, keeping the other 80%. This will generate “more than enough profit to cover the drivers’ fees,” for the AutoTAXI system says Owen Leung, senior business development manager of Autotoll. He says he expects the new system to be more popular among younger drivers and that many of the older drivers may be reluctant to adopt the new technology. “It’s not easy to change their habits,” he says. There are currently about 240 taxis using Autotoll’s navigation and communication system on the roads, but only about 100 of them have the payment system installed. To advertise which taxis have the Visa option, the cabs have been given illuminated wings to place on their rooftops. James, however, says the wings weigh so much that they cause drivers to lose about five cents per kilometer in fuel efficiency, costing drivers about HK$20 a month. Autotoll and Dah Sing aren’t not the only ones trying to update the taxi payment systems in Hong Kong. Octopus Cards Limited, the company running the ubiquitous electronic payment cards used in Hong Kong’s public transportation system, has been trying implement its own system. In March, the company quietly started installing card readers in a few taxis. Right now, 30 cabs accept Octopus, and a spokesman said the company is working to expand.

Fast food giant McDonald’s said on Thursday it is planning a second yuan-denominated bond offering in Hong Kong that is likely to be bigger than the US$30 million sold last year. The US group is seeking to further tap the so-called “dim sum bond market” as China tries to internationalise its currency. “The dim sum bond market is the best financing tool for us,” Dave Yang, McDonald’s corporate controller in China said on the sidelines of a financial forum in Shanghai, according to Dow Jones Newswires. Yang said the size of the new bond is expected to surpass the first one last year, but did not elabourate. He said the new bond will likely to have a three-year maturity. The fast-food chain sold US$30 million worth of three-year yuan-denominated bonds last year in Hong Kong, becoming the first yuan-bond offering by a non-financial foreign firm in the Asian financial hub. The move was followed by heavy equipment maker Caterpillar while budget carrier Hong Kong Airlines reportedly said in May that it was also planning a “dim sum” issue. Yuan-related financial products have been booming in Hong Kong, which has been acting as a test bed for Beijing’s ambitious goal to turn the unit into a global currency. In 2009, China approved using the yuan to settle cross-border trade with Hong Kong, and last year it relaxed rules to allow non-financial foreign firms to issue yuan-denominated bonds.

Hong Kong’s long march towards clamping down on insider trading is taking another small step forward. In a long drawn-out process, the government will finally gazette the Securities and Futures (Amendment) Bill , which would force companies to disclose price-sensitive information and make nondisclosure a punishable offence. The bill will be gazetted by the Legislative Council on 29 June. “Implementation of a statutory obligation to disclose price sensitive information is strongly supported by the Listing Committee. Gazettal of the Bill is a further step towards implementation,” said Mark Dickens, the Hong Kong Exchanges and Clearing Ltd.’s Head of Listing in a statement. According to an earlier statement from the government, the SFC would be the enforcement authority and the Market Misconduct Tribunal, a civil body established in 2003, would hear the case. Writing on his website, shareholder activist David Webb, who has been pushing for statutory backing for all the stock exchange’s Listing Rules, says narrowing the legislation to only disclosing price sensitive information is a “watered down” alternative. Furthermore, nondisclosure is only punishable as a civil rather than criminal offence. In Australia, company directors can be jailed for nondisclosure of price-sensitive information, said Mr. Webb. “The tycoons have got what they wanted,” he told the WSJ in a previous interview. In addition, the MMT has been severely underused since it was set-up. Questions have also been raised over whether proposed fines can be enforced, after a landmark case in 2008 in the Supreme Court ruled that fines imposed by a civil tribunal would violate Hong Kong’s bill of rights. The government subsequently said that it has taken that case into consideration and that it has legal backing for the fines. If that all sounds as if Hong Kong is still some way behind other major financial centers of the world, it’s worth bearing in mind that insider trading wasn’t even made a criminal offence here until 2003.

Cathay to Overhaul Economy Class - Cathay Pacific Airways Ltd. said Wednesday it planned to offer new economy class seats on its aircraft in the third quarter at the earliest, in the Hong Kong-based carrier’s latest effort to compete with other top airline brands even as demand and revenue continue to soar. “We’ve been looking at all aspects of the economy class cabin over the past 12 months. We’ve got some plan but we’re not ready to talk yet,” Cathay Pacific Chief Executive John Slosar said at a company event. He said the airline was considering many possibilities in the revamp, but declined to elaborate. The planned overhaul of its economy cabin comes just six months after Cathay Pacific announced a more than 1 billion Hong Kong dollar (US$128 million) plan to replace business class seats on long-haul aircraft. Some travelers complained about the limited space on the business class cabins, which have tall partitions separating each seat. Cathay Pacific’s long-haul economy class cabins last underwent a retrofit in 2006, with the installation of seats that move forward when a passenger reclines to give them more space. However, some travelers complained the hard-back seats were uncomfortable. The airline is reinvesting in its products and services, which in Asia continue to play a big role in differentiating one airline from another. Mr. Slosar also said the airline continues to look at further expanding its fleet of freighters.

Shares of Giordano International (SEHK: 0709) rose as much as 5.7 per cent on Thursday after a media report cited a rumour that Madrid-listed Inditex SA is planning to make an offer for the Hong Kong-based clothing retailer. Fashion retailer Giordano’s shares hit a session high of HK$7.00 but later pared gains to 1.7 per cent to HK$6.73 by 11.59am, beating a 0.79 per cent fall by the blue chip Hang Seng Index. ET News, a website run by the Hong Kong Economic Times, reported market talk that the Spanish parent of fashion chain Zara had approached Giordano for a takeover deal. But a Giordano spokesman said he was unaware of any approach by Inditex. “We have not been in contact with Zara’s parent currently,” he told reporters. Inditex is the world’s largest clothing retailer and has been expanding aggressively in development markets including China and India. Giordano shares have surged 45 per cent this quarter, partly fuelled by New World Development Chairman Cheng Yu Tung’s moves to increase his stake in the company over the past two months. He has become the largest single shareholder, with 18.07 per cent of Giordano. Cheng told local reporters earlier this month that he had no intention of taking over Giordano, but viewed the stock as a good investment. Analysts said Giordano shares, with an 18 times this year price earnings ratio, were no longer cheap compared with peers. “Until these rumours are confirmed, this remains a speculative trade,” said Jackson Wong, vice-president at Tanrich Securities. “I think it has jumped a little too much for people to get in at this point, although I get a sense it still has some upside room.”

 China*:  June 26 2011  Share

Ikea aims for 15 stores in China by 2015 - An 18-month-old child and his mother arrive at the newly opened Ikea store in the Pudong New Area, Shanghai. The Swedish retail giant has been operating in the Chinese market for more than a decade. Eyeing increasing demand in the home products sector, Sweden-based retailing giant Ikea is accelerating its expansion in China and plans to have 15 stores in the country by the end of 2015. Currently it operates nine outlets, including new premises opened on June 23 in the Shanghai Pudong New Area. The company will have 11 stores in China by June next year. The Pudong store is the largest in Asia with a floor area of 49,400 square meters. Shanghai has become the only city in China with two Ikea stores. The company revealed it will have three stores each in Beijing and Shanghai to meet increasing demand. A new store in the Baoshan district of Shanghai will be opened in 2014. Gillian Drakeford, Ikea China retail president, said the company plans to open two to three stores in China annually in the coming years. As well as expanding in large cities such as Beijing and Shanghai, Ikea will also develop its presence in second-tier cities such as Wuxi, Jiangsu province. Ikea has been in the Chinese market for more than 10 years. It has been criticized for being too conservative in developing the home products sector, opening new stores at a slower rate than some locally developed companies such as RedStar Macalline. The latter has good penetration in the high-end furniture sector and has opened 76 stores in China since 1996. The Swedish company defended its market strategy, saying it was good for the company to establish a solid customer base and broad brand recognition. It said it is not too late to expand in China even though the property policy has been tightened. "We need to understand the market in China and understand what people like. We need to know the factors that can make us successful. We cannot just come in and suddenly go big," said Drakeford. "We are not here for the short term. We are here to build local leadership." Ikea said its business in China is entering into a new phrase, which will allow the company to develop at a faster pace. "We tested the business model in Beijing and Shanghai. We recognized the business model worked for Chinese consumers," said Drakeford. Drakeford said Ikea reported double-digit growth in China over last 10 years. More than 5 million consumers visited the company's store in the Xuhui district in Shanghai annually. She expected the growth rate would be maintained over the next five years but did not give precise figures. Some overseas companies have complained expansion is difficult in China because their business models do not fit the Chinese market. The closure of home appliance Best Buy-branded stores in 2011 has become a classic case study for retail market players and new entrants. The fact that the Chinese remain price-sensitive is an issue that foreign retailers need to consider, say observers. To better fit Chinese consumers' spending habits, Ikea adjusted its pricing strategy in China in recent years. It lowered prices of more than 500 products in 2009 by 20 to 30 percent. Drakeford said the strategy will be continued. Although Ikea believes it has done a lot to attract Chinese consumers on prices, it is still not that well recognized by Chinese consumers, say observers. "I think the design and idea promoted in Ikea is good, but I can get similar products from a Chinese store or online at much cheaper prices. Why should I go to Ikea? " said Cai Xun, a white-collar worker from Shanghai.

China Illustrates Challenges for ‘Global’ FDA - Faced with a chronic shortage of staff around the world and a lack of enforcement authority in foreign countries, the FDA has come up with a plan to transform itself into a “truly global agency,” according to a report (pdf) on product safety and quality it released on Monday. But there isn’t more funding to put boots on the ground. Nor is it clear how the agency will acquire sharper teeth. The FDA has asked repeatedly for additional funding from Congress to help it take on these expanded duties, but it’s funding for fiscal year 2012 was actually cut by $284 million compared to 2011. Nowhere are the global challenges of the FDA more apparent than China — the agency’s first international outpost — where it has just 13 staff spread across three cities in a country that sent $4.9 billion in agricultural and seafood exports to the U.S. in 2007. The agents on the ground aren’t just poking around factories to spot problems. They’ve also got to establish relationships with local government counterparts and work with industry that want to export products to the U.S. to make sure they understand and to help navigate the FDA approval process. In a recent interview, Christopher Hickey, the FDA’s Country Director in China, says that when it comes to inspections, merely getting access to foreign facilities for inspection can be difficult, since the FDA has no authority to compel overseas manufacturers to let them in. And while the agency can slap a so-called import alert on a company that refuses FDA inspection, which results in the inspection of products at the U.S. border, the FDA doesn’t have the authority to destroy products at the border without a lengthy court battle. Instead, it generally can only turn products away at port. With drug makers, of the 6000 or so companies in China that produce drugs or active pharmaceutical ingredients, 33% to 50% aren’t operating in compliance of good manufacturing practices, according to Mr. Hickey. Conveying the processes and requirements necessary to produce a safe product by U.S. standards is “a clear challenge,” he says. The office has been holding seminars to educate companies about these practices, as well as training sessions and mock inspections for Chinese regulatory authorities to understand how the FDA conducts its inspections, with more planned for later this year. Several times a week, staff members “troll” Chinese news outlets, talk with industry sources, local regulatory authorities, academics to track events, trends and news that could affect the safety of FDA-regulated products, says Mr. Hickey. Such monitoring has led to some small early success: Last year, it learned from Chinese press that black-eye peas grown in a province in southern China were being sprayed with toxic pesticides that could cause cancer, says Mr. Hickey. Though the issue was reported as a domestic one, the staff in Guangzhou reported the concern to Beijing, who passed it on to their FDA colleagues in Washington. Additional research found that the pesticide was considered illegal in China but readily available. Ultimately the FDA alerted its screening agents so they could look for these products at the U.S. border and conduct testing on them. Though that specific product wasn’t being shipped to the U.S., the staff identified other similar ones and processed foods that might contain the peas as one of its ingredients as ones that might be risky. “Before we had an office here, there were not individuals at the FDA for closely following, for instance, the Chinese press,” said Mr. Hickey. “I think we have helped to strengthen the safety of food coming from China.” But some government officials and watchdog groups have been critical of the FDA’s efforts. A September U.S. Government Accountability Office report (pdf) on the FDA’s overseas offices identified several challenges to establishing effective overseas offices, including staffing difficulties, communication issues between the field offices and agency headquarters about what information needs to be gathered and an overall greater need for long-term planning. Key among their concerns is the FDA’s ability to conduct an adequate number of inspections of food and drug manufacturing facilities. While the FDA inspects domestic drug manufacturers an average of every 2.5 years, most drug facilities in China are inspected by FDA inspectors only every nine years or so, according to Allan Coukell of the Pew Charitable Trusts, who has been researching the safety of the U.S. drug-supply chain. Some in Congress and the FDA itself says that more fundamental issues involve funding and the agency’s lack of enforcement authority when it comes to goods produced abroad. In April, eight Democratic House representatives introduced a bill, called the Drug Safety Enhancement Act, which would enhance the FDA’s enforcement powers regarding imported drugs in the way that the FDA Food Safety Modernization Act, signed into law in January, strengthens its enforcement abilities over food. “It’s slow-going,” said Marcia Crosse, a director of health care at the GAO who co-authored the report, of the FDA’s efforts to set up the international offices and better monitor imported products. “I do understand it takes a long time and yet my concern is it not take another decade.”

Volvo, owned by China's Zhejiang Geely Holding Group, plans to invest 4.58 billion yuan (US$709 million) to build a second plant in China and bolster its profile in the world's largest automotive market. The facility in the northeastern city of Daqing is scheduled to start operations in 2013, making Volvo 113K sedans, XC60 sport utility vehicles and multi-purpose vehicles, according a statement on the website of China’s Ministry of Environmental Protection. Major manufacturing and construction projects in China need the approval of various regulators. The initial capacity of the plant would be 80,000 units, it said. Volvo unveiled an up to US$11 billion investment plan in February to speed up new product development and expand its global footprint, especially in China where the Swedish marque lags far behind BMW and other German premier brands. Volvo also plans to build a greenfield plant in the southwestern Chinese city of Chengdu, a major regional market for upscale cars. The parent of Geely Automobile Holdings (SEHK: 0175), took over Volvo from Ford in August last year, China’s largest overseas auto acquisition.

Bayer plans to double China sales - The logo of Bayer AG shines from a high-rise building Meteorology Plaza in the Xuhui district of Shanghai. China is the company's largest market in the Asia-Pacific region. The German pharmaceutical and chemical producer Bayer AG has unveiled plans to double its sales in the Chinese market to 6 billion euros ($8.64 billion) by 2015, a top executive told China Daily on Wednesday in Shanghai. "We have very ambitious growth targets for China. Overall, Bayer aims to double its sales in the country from less than 3 billion euros to 6 billion by 2015," said Bayer AG's Management Board Chairman Marijn Dekkers. China is Bayer's largest market in the Asia-Pacific region, and its third-largest single market globally. China contributes almost 8.3 percent of global sales. In 2010, Bayer generated sales of 2.9 billion euros in China, an increase of almost 40 percent from 2009. China's urbanization means enormous commercial opportunities in many industries. It's estimated that in 2025 there will be 13 cities with population of 10 million or more people. "Bayer specializes in healthcare, high-tech materials and innovative crop-protection solutions. We are ready to help provide solutions to these issues," said Dekkers. As part of the company's efforts to respond quickly to clients' requirements in the rapidly changing business environment, Bayer MaterialScience (BMS), a subgroup of Bayer AG, started the third phase of expansion at its polymer research and development (R&D) center in Shanghai on Wednesday. The center will develop into a global innovation hub for the company and is scheduled to become operational by the second half of 2012. "Research is really part of our DNA. It is in our blood and it is a key factor of Bayer's success," said Dekkers, who added that the group expects Bayer's research and development expenditure this year to match 2010's record level of around 3 billion euros. As part of Bayer's 1 billion euro investment plan in China announced at the end of last year, the expansion of the polymer research and development center is another step forward in a global strategy to get closer to customers in high-growth emerging markets, or China and Asia, to be more specific. Bayer MaterialScience is projected to invest more than 3 billion euros in China by 2016. "China and Asia are central to our global strategy," said Dekkers. He said the expansion of the R&D facility underscores Bayer's strong commitment to innovation as a foundation for future growth. "Central to this strategy is creating a closer proximity with our customers, ensuring that we are positioned to quickly respond to their needs," he added. After the expansion, the polymer research and development center will play a full range of roles including solutions-focused offerings for customers in specific industries such as mobility, renewable energy and construction. Its R&D activities will be restructured to focus on specific industries, enabling the center to provide industry-specific solutions. Bayer's history in China goes back to 1882, when the company first began marketing dyes during China's Qing Dynasty (1644-1911). Currently, Bayer has all its three subgroups in China - Bayer CropScience, Bayer HealthCare and Bayer MaterialScience.

China will invest 400 billion yuan ($62 billion) in the construction of four hydroelectric dams, to help the government boost the share of non-fossil fuels in national energy consumption. The country will increase the share of non-fossil sources to 20 percent of national energy consumption by 2030 and to one-third by 2050, said Han Wenke, director of the Energy Research Center at the National Development and Reform Commission on Wednesday. "There is no doubt that the country is able to increase non-fossil sources to 15 percent of the energy mix by 2020," he said. China Three Gorges Corp will be in charge of the four hydroelectric dams, named Xiluodu, Xiangjiaba, Wudongde, and Baihetan, on the Jinsha River, a tributary of the Yangtze River, the longest river in Asia and the third-longest in the world. Part of the investment will be provided by equity trading, said Li Jing, deputy director of the company's planning and development department. He declined to disclose further details of the financing plan. The total installed capacity of the four dams will be 43 million kilowatts (kW), and is expected to be double that of the Three Gorges Dam, the world's largest power station in terms of installed or production capacity, according to the company. The four hydroelectric stations will be able to supply 190 billion kilowatt hours annually when the project is completed. The production efficiency and environmental and geological impact of the Three Gorges Dam have been the focus of intense discussion recently. Some experts said the plant has severely polluted the local environment. However, industry insiders argued that it is necessary for the country to continue the development of hydroelectric stations. "To increase water-power generation is still the priority for the power industry," said Ouyang Changyu, deputy secretary-general of the China Electric Council. "As long as the government can balance the contradiction between the construction of hydropower stations and the environment, it can develop hydropower production at a reasonable pace." "It is impossible for the country to increase the non-fossil energy share to 15 percent in the energy mix by the end of 2020 if it slows the construction speed of hydroelectric stations," said Li. "In fact, the unit cost of hydroelectricity is lower than coal-fired electricity if we add the environmental cost into the calculation." According to the company, the Xiangjiaba and Xiluodu hydropower stations are likely to be operational within the next two years. The Xiangjiaba hydropower station is scheduled to start running in 2012 with an installed capacity of 6.4 million kW, followed by the Xiluodu station in 2013 with 13.68 million kW of installed capacity.

China will increase US soybean imports - Workers unload imported soybeans at a harbor in China. The country imported a record 54.8 million tons of soybeans in 2010, compared with 15.2 million tons of domestic production, General Administration of Customs data showed. China's soybean imports are expected to rise by 5 percent more than last year, increasing the attraction of the country to US soybean farmers, said Alan Kemper, president of the American Soybean Association. The increase in the soybean trade may help promote China-US relationships, indicating a way to balance bilateral trade, Chinese experts said. "China is the most important market for US soybeans, and the soybean trade will play a large role in improving the balance of China-US trade," Kemper said. China is the largest importer of US soybeans. It imported a quarter of the country's domestic production last year, according to the association. Zhang Monan, a researcher at the Economic Forecast Department of the State Information Center, said soybean trade between the two countries will help maintain a stable development in bilateral relations. The US has heavily subsidized its agricultural sector, so it is important for the country to ensure profit margins in the global food market, Zhang said. Given constraints over land and water resources, it is difficult for China to meet growing demand for agricultural products such as soybeans domestically. It can buy agricultural products with its bulky foreign reserves, she added. If imports are to increase, it is not because of a decline in domestic production but because of growing demand, said Liu Denggao, vice-president of the China Soybean Industry Association. "The size of the area where China's soybeans are grown remains largely unchanged from last year," Liu said. Even with the fresh demand in China's market, the competition is growing fiercer in the international market, as imports from South American countries such as Brazil and Argentina have also increased in recent years. To consolidate its position, the US soybean industry will invest more than $2 million this year in China's market, Kemper said. The investment will finance programs teaching Chinese farmers efficient ways of using soybeans to improve the production of swine, poultry, dairy and other agricultural sectors, according to the association. "These programs have been carried out for the last 30 years since we arrived in China," said Marc Curtis, chairman of the United Soybean Board. "We will continue our efforts to serve China's market." China imported a historic 54.8 million tons of soybeans in 2010, compared with 15.2 million tons of domestic production, General Administration of Customs data showed. The country's self-sufficiency rate currently stands at 22 percent. The imported soybeans are all genetically modified and mainly used as animal feed or for oil crushing. Imports of soybeans to China declined by 1 percent year-on-year to 4.56 million tons in May. China's soybean imports during the first five months of this year remain largely the same compared with the same period last year. 

The Beijing-Shanghai high-speed railway will open to traffic on July 1, the Ministry of Railways (MOR) announced on Thursday. A ceremony will be held on June 30 to mark the opening of the railway, according to the MOR. Tickets will go on sale later this week, Yangtze Evening Post reported on Thursday. According to the report, the first trains from Nanjing South Station, Shanghai Hongqiao Station and Jinan Railway Station will head for Beijing at the same time as the first train from Beijing South Railway Station speeds its way to Shanghai. Detailed information on high-speed tickets will also be released and online ticket sales will also be introduced on Beijing to Tianjin trains. Passengers can log onto the China railway customer service website to check and book train tickets after registering with an ID card. Instead of queuing to buy a "paper" ticket, ID cards can be used to board trains. The tickets for the journey between Beijing and Shanghai will range from 410 yuan to 1,750 yuan ($63 to $279) depending on the speed and seat category. Trains will travel between 250 and 300 km/h with the fastest time of four hours and 48 minutes for the 1,318-km line.

Hong Kong*:  June 25 2011  Share

High-end goods will remain cheaper in Hong Kong than across the border, even if Beijing cuts tariffs on luxury imports, Dickson Concepts (0113) chairman Dickson Poon Dik-sang said. The boss of the upscale retailer also urged shops not to rely too heavily on mainland consumers. "The tariff cuts will narrow the price differences," Poon said. "But there are still other taxes in the mainland that will allow us to retain our competitive edge." In addition, the SAR offers better selections, while counterfeit products are rare, he said. Mainland authorities are expected to reduce tariffs on cosmetics, cigarettes and liquor by up to 15 percentage points just before the start of the Golden Week holiday on National Day. Duties on jewelry, clothes, handbags and watches are then likely to follow suit. Poon said rising rents are threatening to undermine the local retail boom. Dickson Concepts, however, has been able to tackle rising rentals by boosting sales, with its rent to sales ratio hovering around 17.7 percent for the past two years. Poon confirmed the group will close its Seibu department store outlets in Pacific Place and Tsim Sha Tsui this month and in September, respectively. It will open a Harvey Nichols flagship store in October in Pacific Place. The Seibu outlet in Langham Place will remain open. Poon expects the changes to result in a temporary loss of turnover and profit. Since April, the firm has opened 20 stores in Hong Kong and the mainland, and plans to open another 41 shops by next March. For the fiscal year ended March 31, the retailer reported a net profit of HK$346.8 million - or 93.2 HK cents per share - up 14.01 percent from the previous year. But turnover fell 7 percent to HK$3.4 billion, partly due to the expiry of a contract with Polo Ralph Lauren in December 2009. A final dividend of 20 HK cents was declared. Dickson Concepts shares closed 1.3 percent higher at HK$6.26.

William Morrison Supermarkets, Britain's fourth-largest supermarket chain, has opened a regional office in Hong Kong. It will source non-food products from mainland China to offset rising prices in its home market. The group's chief executive, Dalton Philips, said direct sourcing would boost the group's competitiveness in the British retail market, where consumers favoured non-food products manufactured in China, both for quality and value for money. British grocery customers were faced with rising shopping bills, partly reflecting the weakness of the British pound, the group said in its latest annual report. It also said consumers continued to face a difficult economic environment, with unemployment and taxes both rising and banks cutting back on credit. It said non-food categories to be sourced from Asia included home and leisure products such as toys, stationery, homewares, electric appliances and clothes. The group also sourced not-for-resale categories like plastic bags, packaging materials, uniforms and shop materials, which amounted to US$1.5 billion of its operating costs. Richard Hodgson, group commercial director of Morrisons, said mainland Chinese manufacturing costs were still "significantly lower" than Europe and Chinese quality and technology were "world class". Morrisons' Hong Kong office, which has 22 staff members, struck a deal with a mainland Chinese microwave oven manufacturer this week. The manufacturer can produce one million microwave ovens per week. Hodgson said the direct sourcing strategy should also reduce buying costs by cutting out the middleman. The company was aiming at mid-single-digit savings on buying costs over the next few years, possibly rising to double-digit savings when it could eliminate both the middleman and the subcontractor. Hodgson also said the direct sourcing strategy should improve sales revenue by giving the group a better lead time in introducing products to the retail market. However, the group had no immediate plans to open a store or launch its online supermarket business in Hong Kong or mainland China, Philips said. It had no plans either to source food products from Asia, preferring to sell products from its own farms and processing plants to cut middleman costs and ensure quality.

New dual option for yuan IPOs - Hong Kong Exchanges and Clearing proposes listing model to foster more initial public offerings in yuan by giving issuers a choice in their fund-raising - At a briefing on the new yuan IPO dual model are, from left, HKEx's Bryan Chan, Charles Li and Eric Landheer. To encourage more initial public offerings in yuan, listing candidates in Hong Kong will be allowed to sell their shares solely in yuan, as well as in both yuan and Hong Kong dollars. The dual option is part of a new listing model contained in Hong Kong Exchanges and Clearing (SEHK: 0388) guideline issued yesterday. As well as new companies coming to market, listed companies that have already issued shares in Hong Kong dollars will be able to issue new shares denominated in yuan. "This would allow issuers a choice of currency for their fund-raising," HKEx chief executive Charles Li Xiaojia said. "Some companies have expressed interest in yuan IPO but we have not received any formal application yet. However, this [new] yuan IPO model would provide a [suitable] framework for companies and sponsors to consider yuan IPOs." The first yuan IPO in Hong Kong, Hui Xian Real Estate Investment Trust, a spin-off of Li Ka-shing's Beijing Oriental Plaza, had a less-than-stellar market debut, dropping 9.35 per cent on its debut in April. Hui Xian is a real estate investment trust (reit), not a company. The new listing model announced by the exchange is aimed at encouraging companies to issue shares in yuan. The exchange's Li said the dual option would suit companies that wanted to raise funds only in yuan to finance mainland development because they could choose the single-tranche model, in which only yuan-denominated shares would be issued. Investors who do not have yuan on hand but want to subscribe to yuan shares can subscribe in Hong Kong dollars but when they are allotted the shares, they will be given yuan-denominated shares. Under the second model, listing candidates can issue two sets of shares - one denominated in yuan and the other in Hong Kong dollars. The two sets of shares would carry different stock codes but carry the same shareholders' rights. "This dual-tranche model would be suitable for companies that want to raise only a part of their IPOs in yuan and the rest in the Hong Kong dollar," Li said. Existing listed companies can issue new, yuan-denominated shares through placements, giving them two sets of shares - denominated in yuan and the Hong Kong dollar - trading at the same time. Joseph Tong Tang, executive director of Sun Hung Kai Financial, welcomed the yuan IPO guideline. "The proposals should encourage more companies to consider issuing yuan shares," Tong said. "However, many overseas funds do not yet have enough yuan on hand so it might be difficult to involve them in these yuan IPOs or yuan share placements." Louis Tse Ming-kwong, director of VC CEF Brokerage, said issuing shares in both yuan and the Hong Kong dollar would increase the paperwork for brokers. "There may be confusion, but as long as the exchange and the brokerage firms can sort the technical issues, the dual-currency IPOs should be able to work smoothly," Tse said. The exchange earlier proposed introducing a "yuan trading support facility" as a back-up to enable investors buy yuan-denominated shares in the secondary market if they had problems obtaining yuan. Investors cannot exchange more than 20,000 yuan (HK$24,000) a day. Under the facility, which will be introduced in September, the exchange would get yuan from one or more banks in Hong Kong and provide the currency to brokers. Brokers, in turn, could offer yuan to investors who only had Hong Kong dollars. Margin-trading clients could borrow Hong Kong dollars from brokers, then swap them for yuan at the market exchange rate via the facility.

Private hospital unhappy with birth cap - Precious Blood says placing limits on mainland mothers will cause serious loss of income - The babies' feeding room at Precious Blood hospital may not be quite as full next year under the government's proposal to cap the number of mainland mothers. Only one of the 10 private hospitals that provide maternity services has yet to agree to the government's proposed cut in the number of mainland women giving birth in Hong Kong. Precious Blood Hospital in Sham Shui Po says the cut proposed for its obstetric services is too harsh and will seriously affect its income. Run by the Catholic Caritas group, the hospital once faced being wound up before its finances were revived by the influx of mainland mothers, who now make up more than 90 per cent of its maternity patients. "Our market among local mothers is still underdeveloped and we worry that a cut in the number of mainland mothers will affect our income," administration manager Cleve Wong Hin-chai said. The hospital and the government were in last-minute negotiations yesterday ahead of the expected announcement by health minister Dr York Chow Yat-ngok detailing the proposed cap on the intake of mainland mothers. Under the proposal, this will be cut by 70 per cent at public hospitals, with the aim of capping total births in the city at about 80,000. The government had no legal power to impose a mandatory cap on private hospitals, so it was trying to introduce the system through "negotiation", a medical source said. The quota for public hospitals would be cut to 3,000 from 11,000, while private hospitals would be asked to cut the number of births handled by between 3,000 and 4,000. Although Precious Blood Hospital is confident of handling 4,000 deliveries next year, the government wants it to cut the number of mainland mothers delivering from 3,600 too just over 3,000 amid concerns about its ability to handle emergencies. The 74-year-old hospital, which was struggling in the 1990s, resumed maternity services in 2009 and now has 41 obstetric beds. Wong said the hospital used the income from its obstetric services to develop other areas of medicine. Asked if the hospital would ignore the cap, Wong said: "We have not decided what to do next, we are still talking to the government." A medical source said the government considered the lack of resident obstetricians at the hospital might mean newborns could have a higher risk of requiring intensive care. Strain on neonatal intensive care units is one reason for the planned cap. But Wong said the hospital had eight honorary consultants who could respond to emergencies in a very short time although they did not work at the hospital. "Some hospitals have medical incidents even though they have resident doctors ... we want to know what justifies the cap," he said. Baptist Hospital, which delivers the largest number of babies among the private hospitals, has been given a cap of 10,300 mainland mothers, only slightly down from this year's figures. The source said Baptist Hospital's risk of referring newborns to intensive care was considered smaller, as it had more resident obstetricians and had introduced other measures for responding to emergencies. Meanwhile, a Census and Statistics Department survey found that among the babies born to mainland parents in Hong Kong, 5 per cent would stay here after birth. The remaining 95 per cent would leave Hong Kong before the age of one and among them some 50 per cent would return to live here before reaching 21.

First impressions count - and for Cathay Pacific (SEHK: 0293) that means new outfits for its flight attendants have to be just right. It also meant a return trip to Hong Kong designer Eddie Lau. It was the third time running Cathay had picked him to style its uniforms, even though he has officially retired. Continuing on the elegant-yet-practical theme Lau began in 1999, the new, "refreshed" look took three years' work. Some 8,000 crew and 4,000 staff in airports worldwide will start wearing the new outfits from July 8. "They have nothing that is not functional," Lau said at yesterday's launch. A survey of 100 frequent flyers and consultations with 1,000 staff identified the red colour, the brushstroke-wing logo, the standing collar and long skirts as stand-out features. "The uniform is probably the most important part of the brand," said John Slosar, chief executive of Cathay. "We wanted to keep our signature elements." Quince Chong, director of corporate affairs, said: "We tried a lot of different burgundy reds." They eventually settled with a new, rosier tone for the jackets, which contrasts with the champagne collar. Flight attendants will sport a red skirt, while airport or inflight-service managers will wear a black one. Inflight-services manager Becky Kwan Siu-wa, who used to be chairwoman of the Cathay Pacific Flight Attendants Union, took part in trials of the new uniforms. The material and comfort won top marks from her, while she said that the general feeling of crew was that people did not see a "huge difference in the look". Lau, who also "refreshed" the uniforms in 2004, said: "I think it is interesting to look back at something you did in the past and recreate something new." In the past, Cathay brought in famous French designers. Pierre Balmain designed a wave-patterned blouse and black hats in the 1970s. In 1983, Hermes introduced the first collection without a hat. In 1990, Nina Ricci gave a stricter look by designing longer jackets and straight skirts. Asked about Cathay's decision to stick with Lau, Iris Lim, assistant manager of the uniform project, replied: "He knew Cathay the best."

TVB knew that its general manager Stephen Chan Chi-wan was acting beyond his usual duties when the station gave him the green light to appear at a commercial event, the District Court was told. Chan, 51, looked calm on the second day of the trial in which the Independent Commission Against Corruption has alleged he and two co-defendants deceived TVB out of HK$960,000, with Chan's alleged involvement totaling HK$412,000. Television actor and stalwart Chan supporter Wong Hei was in court to hear the evidence. Au Kwok-hang, a manager at Sino Estates Management, which oversees Olympian City, accepted a suggestion by the defense that TVB arranged a program producer and scriptwriter for meetings with Sino for Chan's performance during a sideshow in the runup to a New Year's Eve countdown event at the end of 2009. The mall did not contact TVB as it knew that neither Chan nor Wayne Lai Yiu-cheung - a freelance artist - were under management contract as were the other TVB artists. A contract to ensure Chan and Lai's performance in a live Be my Guest sideshow was signed between Sino and Idea Empire Advertising and Production - run by co-defendant Edthancy Tseng Pei- kun, 28, who the industry knew represented Chan. Another co-defendant, Wilson Chan Wing-shuen, is facing one charge. Irene So Kit-lin, Au's superior as manager of retail marketing and promotions, agreed with a suggestion made by senior counsel Joseph Tse, acting for Chan, that TVB knew Chan and Lai were not part of the original deal valued at HK$1.3 million. "Did the mall have to notify TVB what guests it found, as TVB had the final say in the countdown?" asked Wong Ching-yue, senior counsel for Tseng. "Yes," So answered. On another alleged offense, which involved a book signing event on February 7, 2010, Au said the idea was initiated by IEAP, which guaranteed five leading artists would appear. In return, the mall exempted venue fees, administration costs and relevant facilities, which could amount to HK$64,300, and agreed to pay TVB HK$30,000 for airtime and other expenditure. Shida Yeung Mei-po, communications director of Ma Belle Jewellery, the February event sponsor, said it paid IEAP HK$300,000 for the appearance of five artists and for a promotional Chan video that would mention several name brands. Staff from IEAP are expected to testify today.

 China*:  June 25 2011  Share

Huntsman enters stage left - Obama's former envoy to Beijing declares his bid for Republican nomination to run against his old boss, but must win over party's conservative mainstream - Jon Huntsman is joined by his wife, Mary Kaye Cooper, and their seven children at Liberty State Park, where he formally announced his bid. Jon Huntsman ceremonially launched his presidential campaign with the Statue of Liberty as his iconic backdrop. But more telling was what figuratively stood to the right: the rest of the Republican party's 2012 field. Huntsman's long-shot candidacy rests, in large part, on a gamble about positioning. Utah's former governor and President Barack Obama's former China ambassador has staked out the turf to the left of the other Republican candidates, a move that could help him were he to win his party's nomination but may well prevent him from getting it. "Today, I'm a candidate for the office of president of the United States of America," he said from a stage overlooking New York harbour in Liberty State Park. "My kids can't believe I just said that," he added, repeating the lines four hours later in New Hampshire. Huntsman, 51, is waging what he says will be a different sort of campaign. An expensively produced campaign video, used to introduce him to a small invited crowd of friends and supporters, borrowed Obama-style imagery by describing Huntsman as a "no drama" politician - in contrast to his often-combative and partisan competitors. "I don't think you need to run down someone's reputation in order to run for the office of president," Huntsman told a small crowd. But his three-minute commercial took clear aim at Republican front runner Mitt Romney, casting Huntsman as a former businessman and elected official who didn't flip-flop, created jobs instead of buying them (as private-equity executives like Romney are accused of doing) and pushed a free-market health-care plan without a mandate like that backed by the former Massachusetts governor. In an e-mail sent just prior to the ceremony, Huntsman told supporters: "You'll hear things you won't be hearing from any other campaign." On Tuesday that included dreamy theme music, slow-paced and heavy with strings, played over loudspeakers as the candidate and his photogenic family strolled across a grassy field to the event site and cameras rolled. Huntsman drew mostly tonal contrasts with his rivals in a 13-minute speech that touched briefly on reforming taxes and government regulation and ending US combat deployments overseas "without repeating past mistakes" that lengthened military engagements. Huntsman didn't mention emotionally charged social issues, including his support for civil unions, a position that puts him at odds with his party's socially conservative base. Nor, in the backyard of Ellis Island, did he mention immigration; that issue, too, could cause problems for Huntsman, who signed a law creating a special Utah driver's licence for illegal immigrants. A more significant hurdle is likely to be his service to Obama, a clear liability in a party whose primary voters have a visceral distaste for the Democratic incumbent. "I respect the president," Huntsman said. "He and I have a difference of opinion on how to help the country we both love. But the question each of us wants the voters to answer is who will be the better president, not who is the better American." His presidential run, which informally began last month, is taken seriously by other politicians, despite his late start. Huntsman earned good marks as governor of Utah, has service in three Republican administrations on his resume and more foreign-policy experience than the other candidates. The California native is the son of a billionaire industrialist from Salt Lake City. Huntsman, fluent in Mandarin as a result of a Mormon missionary tour in Taiwan, served as ambassador to Singapore under the first President Bush and, under the second, as deputy US trade representative. His first test as a national candidate will be financial. He's hoping to tap a lucrative network of Mormon donors - in competition with Romney - as well as past supporters of John McCain and the Bush family who have yet to commit, said Tom Loeffler, who was national finance chairman of McCain's presidential campaign and has a leading role in Huntsman's drive.

You've got to flash the cash for solo visits to Taiwan - Only mainlanders with the equivalent of HK$54,200 in the bank qualify for individual stays under scheme - Taiwanese authorities are telling mainland residents to show them the money if they want to visit individually, rather than as part of a tourist group. Qualifying citizens who can prove they have the equivalent of NT$200,000 (HK$54,200) in the bank can start applying to visit the island for up to 15 days as individual tourists, starting now. Also welcome to apply are holders of gold credit cards or people making at least NT$500,000 a year. For students, no such financial proof is required, but they must present a letter from their parents consenting to the trip, according to the new requirements unveiled by Taiwanese authorities yesterday for individual visits by mainland tourists. The move marks the lifting of a decades-old ban by Taipei on solo visits by mainland tourists. Successful individual applicants are expected to start visiting on Tuesday. Dr Lai Shin-yuan, chairwoman of the Mainland Affairs Council, said the island's government was willing to open the island for individual visits by mainland tourists because of its intention to further expand cross-strait ties and exchanges. "The latest measure will not only widen the current scale of cross-strait tourism exchanges, but will also further increase the business opportunities for a wide range of local operators, including taxi drivers," she said. Unlike Western tourists, who preferred to spend an average of 80 per cent of their travel budgets on hotel accommodation, mainland tourists were known to spend that money on shopping, Lai said, helping to foster the local economy. The lifting of the ban on individual tourists was made possible after Taipei and Beijing announced an agreement earlier this month - more than three years after Taiwan began to permit group visits by mainland tourists. Since Taiwan's mainland-friendly president, Ma Ying-jeou, took office in May 2008, he has implemented a policy of engaging the mainland, resulting in the signing of a series of tourism, economic and other non-political agreements. Since July 2008, mainland tourists have made more than 2.35 million group visits, creating NT$120 billion in tourism revenue for the island as of last month. Lai said that with the lucrative intake and the negligible overstay record - 0.003 per cent, or three people out of 100,000 - the island's government had agreed to widen the cross-strait travel scope by permitting mainland tourists to visit individually. Initially, 500 individual mainland tourists will be allowed in each day, as opposed to the 4,000 who can come in groups. Lai estimated that each solo visitor who stayed from seven to 15 days would inject US$245 daily into the economy, creating NT$9.1 to NT$19.5 billion in tourism profits for the island annually. Mainland tourists caught overstaying on the island would be deported and banned from returning for three years, Lai said, while the related travel agencies would be fined or their business in this area could be suspended for a month.

Hong Kong*:  June 24 2011  Share

The University of Hong Kong is refurbishing pre-war colonial buildings such as Old Alberose (top) and Felix Villas (below), injecting modernity but retaining much period charm. Looking out over Victoria Road to the East Lamma Channel, Felix Villas are stately in their pre-war glory, a glimpse of a past now all but gone in Hong Kong. The eight townhouses, built in 1922, have large balconies and 5.2-metre ceilings that root them firmly in a time when shade and ceiling fans, not air conditioning, kept residents cool. A private developer would probably demolish the buildings to erect towers of glass and steel, mirroring the development behind: there were originally another 10 townhouses in a row just up the hill but they were deemed a risk after landslides in the 1960s. Eventually, they were replaced by the Villas Sorrento. But Felix Villas are owned by the University of Hong Kong, whose portfolio includes 10 major properties just off Victoria and Pokfulam roads alone, including Old Alberose, on the slopes that lead past Pok Fu Lam Reservoir and up to The Peak. Though originally intended as staff quarters for senior faculty members, many of the homes within are now leased to the public. As they fall vacant, the university is renovating the homes at Felix Villas and Old Alberose, retaining their colonial charm while giving them a much-needed interior facelift. "There are so few of these buildings left," says Deborah von Eldik, whose Compass Worldwide (telephone: 28692277; e-mail:, a brokerage and interior design company, has been behind some of the renovations. "The university should get some kudos for doing this because they could easily have torn them down and put something else here." No5 Felix Villas, which has been refurbished by von Eldik, will be let for HK$220,000 a month - which the university's finance department deems is the market rate. To attract tenants, Compass has updated the interiors and provided modern conveniences where necessary: the kitchen has been fitted with aluminium splashbacks, a Baumatic oven and countertops flecked in brown to pick up the colour of the wood floor. Elsewhere, in the living room, stairwells and hallways, von Eldik has added mouldings to the walls and doors to break up their "flat" look. She has also reworked the mantelpiece above the working fireplace in the first-floor living room, adding decorative columns and a floral motif. And ceiling fans have been fitted with new electric wiring - though the old switches, with wood toggles, were kept as a non-working legacy. While some may baulk at the addition of faux period pieces to old buildings, von Eldik hopes her touches capture something of the past: in the bathrooms, for example, she installed taps with white ceramic features that give them a Victorian look and feel. "I wanted to do a mix of renovation and restoration," von Eldik says. "There are some people who would come in here and paint it all orange. It's like putting a miniskirt on your grandmother. It doesn't work." Felix Villas are named after the English speculator who built them, Felix Alexander Joseph. They are believed to be the oldest residential buildings on Mount Davis, and some of the homes are infamous for being haunted. The buildings - first occupied by British forces during the second world war, then by the Japanese, who used them as a base for senior staff - were bought by the university as staff quarters in 1957.

The Court of Final Appeal handed a major victory to Hongkong Electric (SEHK: 0006) yesterday. The top judges unanimously ruled that government rates did not have to be paid on properties under construction. The court overturned a Court of Appeal decision that Hongkong Electric had to pay rates for the year 2004 on 22 hectares of land intended for a power plant on Lamma Island, as well as on its frequently shifting infrastructure, including 5,000 kilometres of cables around Hong Kong. The rates will be recalculated by the Lands Tribunal. Rates are government taxes on properties, calculated as a percentage of its hypothetical rental value - even if the property is not intended for rent. That calculation is a property's "rateable value", which also affects how much government rent can be charged for buildings on a government lease. The issue of "assets under construction" formed part of a judgment on how Hongkong Electric's rateable value could be calculated, with the court restoring an earlier Lands Tribunal judgment. Determining a property's potential rent means considering a hypothetical landlord and hypothetical tenant, and their bargaining power. "Some ... judgment must ultimately be made as to what rent these hypothetical parties would agree," said Mr Justice Henry Litton, giving the court's judgment. Each side used different measures to determine the cut of the company's profits to which a hypothetical tenant was entitled, with the remainder to be paid in hypothetical rent. Hongkong Electric used "average net fixed assets" - a measure of the company's assets under the scheme of control used to regulate it as a public utility monopoly. The Commissioner of Rating and Valuation used the "weighted average cost of capital" - a measure of the return on investment that an individual would find acceptable. The Commissioner said Hongkong Electric's rateable value was HK$5.68 billion whereas the Lands Tribunal decided it was HK$3.95 billion. The case was heard by Mr Justice Geoffrey Ma Tao-li, Mr Justice Kemal Bokhary, Mr Justice Roberto Ribeiro, Mr Justice Litton and Lord Justice Millett. A Hongkong Electric spokeswoman said the company welcomed the ruling.

Publishers have agreed to separate sales of school textbooks from teaching materials in three key subjects, starting next year. Their union announced the concession yesterday after education chief Michael Suen Ming-yeung warned that the government could publish school textbooks itself to break their monopoly. From the 2012/13 academic year, primary and junior secondary textbooks in Chinese, English and maths will be priced separately from teaching aids such as CD-Roms, study notes and guides - not all of which are used by students. Officials hope the "debundling" will lower costs for parents. Publishers say details of the debundling exercise will be published in September. But the Education Bureau said yesterday it was not satisfied. A spokeswoman said the bureau wanted publishers to debundle all main textbooks, including question samples and teachers' textbooks, regardless of subject, within one year. "Our demand has been clear," the spokeswoman said. She refused to rule out the possibility of the government publishing textbooks. "We should wait until details are released in September." Previously, publishers had claimed they would need three more years to complete the transition due to issues such as copyright. Speaking at the Legislative Council yesterday, the chairman of the Anglo-Chinese Textbook Publishers Organisation, Edward Wong Sing, said textbooks for subjects such as Chinese, English and maths would be debundled first. But he reiterated that it would take two more years to debundle textbooks in other subjects, such as those used for the senior secondary curriculum. He did not indicate by how much prices might drop. Hong Kong Educational Publishers Association representative Wong Han said at the meeting that prices could drop by 10 to 25 per cent, using primary school Chinese books as an example. Parents' groups welcomed the move, saying it was the first step towards further negotiations between different stakeholders. Christopher Yu Wing-fai, director of the Hong Kong Institute of Family Education, a parents' concern group, said publishers must ensure prices dropped after debundling. Raymond Jao, a parent and member of a government taskforce set up to tackle the issue of debundling, said the publishers' pledge was a step that could open the way for further discussions between publishers and the government.

Kuk vows Legco protest over illegal structures - Rural leaders bridle at their chairman's deal with the government to remove extra storeys from homes - Rural chieftains the Heung Yee Kuk say they will muster 1,500 villagers to surround the Legislative Council next week in protest at government moves to remove illegal building structures. Leung Fuk-yuen, convenor of a special kuk action group set up to deal with the issue, says many in the organisation are unhappy with an agreement that kuk chairman Lau Wong-fat brokered with the government last week. After the group's executive committee met yesterday, Leung, who is chairman of the Sap Pat Heung Rural Committee, said safe existing structures should be allowed to remain. At least one representative from each of the 1,400 villages he represents is expected to take part in the protest when Legco's development affairs panel discusses the plan to enforce the rules on illegal structures. If the protest goes ahead on the scale Leung predicts, it would be the biggest outside Legco since January last year, when 1,000 young people ringed the building to oppose the high-speed railway to Guangzhou. Kuk deputy chairman Lam Wai-keung, who is organising the protest, said many villagers would lose their homes if the fourth floors of their properties were demolished. "The government should try to understand our needs better. People are living on the fourth floor because of tight space. It's not comfy or fun living on the roof." Under the small-house policy enacted in 1972, indigenous villagers may apply to build a three-storey house on a 700 sq ft plot, Leung said kuk chiefs explained the government's decision to villagers and it was not well received. "Many don't know what to do," he said. The kuk and Secretary for Development Carrie Lam Cheng Yuet-ngor agreed last week that immediate enforcement would be taken against village houses in serious breach of the rules, such as those with extra storeys. Structures that do not pose an immediate danger will be tolerated until the others are demolished. Development Bureau officials and the kuk could not agree on what to do about pre-1972 village houses built when there was no limit on building height. The kuk said it would seek more legal advice and discuss the situation with the government before taking legal action. Lau said last night that it was not common for village houses to have extra storeys, but if such structures were illegal the owners should remove them. "While there are some grey areas for those built before 1972, the government should act only after clarification is sought [through the legal process]," he said.

Top TVB (SEHK: 0511) executive Stephen Chan Chi-wan, who went on trial on corruption charges yesterday, has denied fleecing Hong Kong's biggest television station, cheating a string of actors or taking bribes. Former talk show host Chan, 51, who has worked for the station for 16 years, denied conspiring with his personal assistant, Tseng Pei-kun, 28, to receive HK$112,000 in bribes and defraud the TV station. The pair also deny cheating five actors out of HK$300,000 in commission through a firm owned by Tseng. Tseng and Wilson Chan Wing-shuen, 63, head of business development for TVB's marketing and sales division, are also accused of defrauding TVB out of HK$550,000. All three pleaded not guilty in the District Court to a total of five charges relating to alleged crimes which took place between December 2009 and February last year. The high-profile trial, which is expected to last 20 days, will hear evidence from a string of actresses including Charmaine Sheh Sze-man, Tavia Yeung Yi, Sharon Chan Man-chi, Skye Chan Sin-yeung and Shirley Yeung Sze-ki and actor Lai Yiu-cheung. TVB's managing director Mona Fong Yat-wah - the wife of 103-year-old media mogul and TVB founder Run Run Shaw - will appear as a prosecution witness. The judiciary announced on Monday that it would hand out tickets for seats at 8.45am, leading the media to wait outside the court as early as 5am. Almost 100 reporters and members of the public attended the opening day hearing. Prosecutor Eric Kwok SC said the first set of charges against Stephen Chan and Tseng arose from a live talk show, Be My Guest, which was part of a New Year's Eve countdown organised by the Olympian City II shopping mall in 2009. The court heard that the mall paid TVB HK$1.3 million to produce and broadcast the event as a public relations exercise. Prosecutors said while Stephen Chan, TVB's general manager, had been asked by his employer to perform in the show Chan, behind his station's back, received an additional HK$112,000 from the shopping mall through a company owned by Tseng. Au Kwok-hang, a manager at Sino Estates Management which oversaw the Olympian City II, told the court that they entered into a HK$160,000 contract with Idea Empire Advertising & Production Company, run by Tseng, for it to arrange for Stephen Chan and actor Lai Yiu-cheung to be guests at the countdown. The prosecution says Stephen Chan and Tseng concealed the agreement from TVB. Stephen Chan and Tseng were also alleged to have conspired to defraud TVB by arranging for two female artistes managed by the TVB, Charmaine Sheh Sze-man and Tavia Yeung Yi, to attend Stephen Chan's book-signing ceremony on February 7, 2010 free of charge. Stephen Chan and Tseng falsely claimed that the actresses were invited to attend the event for the "sole purpose" of showing support to Chan, prosecutors allege. In fact, the actresses' attendance was secured under a HK$300,000 commercial agreement between Idea Empire and Ma Belle Jewellery, a sponsor of the event. Prosecutors argue the money should have gone to the actresses, not to Idea Empire. During the hearing Stephen Chan yawned from time to time, but when asked if he had had a sleepless night, replied by saying only: "[This trial] won't be boring." The trial continues today before Chief District Judge Poon Siu-tung. The accused were released on bail.

Global sourcing company Li & Fung (SEHK: 0494) said on Wednesday that it will buy five sourcing and trading companies as it strives to boost growth in the face of weakening demand from its dominant US and European markets and rising costs in China, its major sourcing destination. Hong Kong-based Li & Fung, which supplies consumer goods such as garments and toys to household names such as Wal-Mart Stores, Timberland and L’Oreal, did not disclose the value of the transactions, but said the acquisitions in the United States, Europe and Thailand would complement its trading and distribution networks. Turnover and profit before tax for the five companies, which are in the clothing, cosmetics and furniture sectors, were US$660 million and US$80 million respectively, said the company, which has also been facing rising raw materials and labour costs in China. Li & Fung’ recorded last year turnover of HK$124.1 billion (US$16.5 billion). “We will continue to pursue acquisitions to complement our organic business growth during this new three-year plan, this year-2013,” Vice-Chairman William Fung said in a statement. “We have relied on sustained organic growth over the last 20 years and have complemented that with an acquisition strategy which could be especially relevant during times of uncertain economic conditions when excellent deals are available at attractive prices.” Earlier in the day, Li & Fung executives told an analyst briefing that the company planned to expand its sourcing business in fast-growing emerging markets, such as China, South America and Eastern Europe. The company was also banking on higher-margin business such as beauty products for growth. Li & Fung aimed for a larger presence in markets such as Turkey, India and China for its beauty business, which included products from cosmetics to clothing, company executives said on Wednesday. “As far as growth, higher margin businesses are growing the fastest because they are smaller,” Chief Executive Bruce Rockowitz told analysts. “There is no doubt that there is opportunity to grow much faster as the large business is there.” Li & Fung, which derives 65 per cent of its sales from the United States, said rising costs had a limited impact on its key trading business so far. In May, Rockowitz said wages in China would continue to rise over the next five years, although he said on Wednesday that the company would continue to expand in the world’s second-largest economy. Rockowitz did not elaborate on the company’s strategy in China on Wednesday. Some analysts have said the it should further diversify sourcing away from China. Rising costs in China and a firming yuan have prompted some companies, such as Caterpillar and ATM maker NCR, to shift manufacturing back to the United States. Li & Fung shares rose 11 per cent in early afternoon trading, outperforming the Hang Seng Index’s 0.64 per cent rise. “It’s a rebound from recent weakness as the stock has been oversold on concern over its growth prospects,” said Alfred Chan, chief dealer at Cheer Pearl Investment. “Investors will choose Li & Fung as defensive buy on concern over the quality of other Chinese companies.” Li & Fung in May announced a new management arrangement and said it would focus on internal growth in the coming three years, but would look for acquisition opportunities in Japan.

The Development Bureau on Wednesday unveiled a plan to deal with illegal structures in the New Territories. In a proposal submitted to the Legislative Council, the bureau said immediate enforcement would be taken against village house owners who were in serious breach of the law. Structures posing a public danger would require immediate demolition, but safe additions would be tolerated in the short term, local media reported. The bureau said its top priority was to remove structures posing an “obvious threat to lives and properties” and to stop work on those currently under construction. Rural houses with four storeys or more built without government permission, and those with a structure covering more than half of the roof area, would be categorised as posing a high risk and would be the second batch to require action. Other illegal structures posing lower risks, such as shelters those occupying less than half the roof area and balconies enclosed with non-concrete material, would require registration with the Building Department within a specified period. The bureau said it would assess the danger of structures in this category before deciding whether to order demolition. But it said officers would take immediate action if owners failed to register within the given time period. The government is under pressure to step-up efforts against illegal structures in the New Territories after it was criticised by the Office of the Ombudsman for not taking action. The issue has drawn public attention recently because several senior government officials have been found to have illegal additions to their homes.

 China*:  June 24 2011  Share

China's rail titans bid for U.S. high-speed project - A consortium of Chinese companies hopes to win contract to design, build, supply and operate major line in California - After 150 years, the Chinese are again looking to play a major role in building American railroads, with a consortium of state-owned companies bidding for the first high-speed rail project in the United States. The consortium comprising the Shanghai Railway Bureau, China Railway Construction Corporation (SEHK: 1186) (Hong Kong- and Shanghai-listed CRCC), CSR Corporation (also listed in Hong Kong and Shanghai) and the Third Railway Survey and Design Institute (majority-owned by the Railways Ministry) submitted an expression of interest in March to bid for California's high-speed rail project. This move was revealed at the High Speed Rail Asia conference in Hong Kong yesterday by Qian Guifeng, deputy director of the US Railway Project Working Group, the Ministry of Railways' unit promoting Chinese railway firms in the US. If the consortium won the tender, the bureau would operate the line, CRCC would build the track, CSR would supply the rolling stock and the institute would design the high-speed project, Qian said. Consortia from Japan, France, Spain and South Korea had also submitted expressions of interest to bid for the project, she said. Alstom of France, Britain's Virgin Rail Group and Amtrak of the US have expressed interest in the project, according to the California High-Speed Rail Authority's website. The 1,290-kilometre line from north to south California will cost US$45 billion, of which US$12 billion is expected to come from private-public partnerships. The railway has received US$3.4 billion in US federal government funding, the biggest allocation for a high-speed rail project. Trains on the line will run at 354 kilometres per hour. Rod Diridon, a former board member of the California High-Speed Rail Authority, said that by September next year, one of the consortia was expected to be chosen and construction would begin. The line's main section is expected to be completed by 2020, according to Diridon, who is also executive director of the Mineta Transportation Institute, a US government-funded think-tank. The dismissal of former Railways Minister Liu Zhijun in February would not affect China's ability to win contracts on the project, Diridon said. "The Chinese Ministry of Railways people are working on US-China railway (SEHK: 0390) partnerships in potential US high-speed rail projects - they are still there and they are working hard," he said. Qian said CRCC, China Development Bank and a joint venture between CSR and US giant GE were interested in bidding for another US high-speed rail project, DesertXpress, between Los Angeles and Las Vegas. China Development Bank hopes to finance the project, with CRCC laying the track and the joint venture supplying the trains. The timetable for the DesertXpress had yet to be determined because the project was trying to secure funding, she said. In addition, Qian said, the Railways Ministry was in talks with US authorities over the Chicago airport high-speed rail project. The Spanish government plans to expand its existing high-speed rail network as well, and given the dire state of the Spanish economy, is interested in attracting private-public partnerships, according to Juan Matias Archilla Pintidura, international project director of Renfe, the Spanish state-owned railway company. Pintidura said a Chinese rolling stock manufacturer was interested in bidding for the Spanish high-speed projects. China has two dominant rolling stock makers: CSR and China CNR Corporation.

Mainland electrical appliance giant Gome has launched a lawsuit against its ex-chairman for allegedly damaging the firm’s reputation in a media interview, in the latest controversy to hit the company. Hong Kong-listed Gome said it has filed the suit in a Beijing court against Chen Xiao over comments he made in an article published in the 21st Century Business Herald, a mainland publication, on May 10. Gome claimed the article, in which Chen described the events leading up to his departure from the firm in March, imposed “financial damages to the company’s reputation and operations”, Gome said in a statement late on Tuesday. “Gome has taken this legal action against Chen for breaching an agreement with Gome to prevent irreparable damage to the company’s reputation and protect the company’s and all shareholders’ interests,” the statement said. Gome, China’s second largest electrical appliance chain by revenue and which has about 1,100 retail stores across China, had been embroiled in a power struggle between its board members and founder Huang Guangyu. Huang, once China’s richest man, was jailed in May last year for 14 years on bribery and insider-trading charges. Chen resigned as chairman of Gome in March, citing “family reasons”, just months after he survived a bid to oust him in a bitter feud with Huang, who has sought to increase his family’s influence in the company. The ex-chairman told Dow Jones Newswires on Wednesday that he has not received any official word of the lawsuit and that he stood by a statement he made in May. Chen however said his comments were part of a private conversation with the reporter, and that he did not agree to the interview with the magazine. He declined to comment further. Despite the fresh controversy, shares in Gome closed up 1.7 per cent at HK$2.99 in Hong Kong on Wednesday.

China's first aircraft carrier - a remodelled Soviet-era vessel - will go on sea trials next week, a report said yesterday, amid escalating tensions in the South China Sea. A high-ranking military official reportedly confirmed this month that Beijing was building the huge aircraft carrier, the first acknowledgement of the ship's existence by the central government's secretive defence program. The Chinese-language Hong Kong Commercial Daily, which broke the story of the vessel's confirmation, quoted unnamed military sources as saying the carrier would go on sea trials on July 1 but will not be officially launched until October 2012. The sources said the test had been expedited in view of rising tensions in the sea - home to the potentially oil-rich Paracel and Spratly island groups - in recent weeks. The military hopes the move "will show the strength of the Chinese maritime forces to deter other nations which are eyeing the South China Sea in order to calm tensions", they said. They added that the sea trial date was also picked to help celebrate the 90th anniversary of the Chinese Communist Party, but noted that factors such as weather could affect the planned test run. The military did not immediately respond to a request for comment. The Varyag was originally built for the Soviet navy, but construction was interrupted by the collapse of the Soviet Union in 1991.

China-Vietnam naval exercises ease tensions - Two days of joint patrols in the Gulf of Tonkin are being hailed as a breakthrough while tensions over the South China Sea and US involvement continue - A structure built by China in the Spratly Islands. Vietnam and China have ended two days of joint naval patrols in the Gulf of Tonkin, including a port call to China, as the two continue to argue over disputed territory in the South China Sea. Two vessels from each country were involved in the patrols on Sunday and Monday, sailing more than 300 nautical miles in Gulf of Tonkin waters bordering Vietnam and China, Vietnam's People's Army newspaper said. Earlier it reported the Vietnamese ships would pay a port call to China before returning home. "Respecting the signed agreements is one of the factors that will promote the friendly and neighbourly relations between two countries and ensure sustainable stability and security at sea," Colonel Nguyen Van Kiem, deputy chief of staff of Vietnam's navy and commander of its naval patrol, was quoted as saying. It marked the 11th joint patrol since 2005 between the two, but it was unclear how long the exercise had been planned or whether it signalled any cooling of tempers. Relations between the two countries have plummeted in recent weeks as the two continue to trade diplomatic punches over disputes involving territory in the South China Sea claimed by both sides. On Tuesday, a newspaper published by China's Communist Party ran a scathing editorial, warning Vietnam to back off. "If Vietnam wishes to create a war in the South China Sea, China will resolutely keep them company," the Global Times said. "China has the absolute might to crush the naval fleets sent from Vietnam. China will show no mercy to its rival due to `global impact' concerns." Beijing has been upset with Vietnam's welcoming of US involvement to help resolve disputes in the South China Sea that Beijing believes should be settled bilaterally. The editorial said any attack on Vietnam would not be likely to create a direct conflict with the US Navy. However, it said: "Even if some friction occurs, that is no reason for China to put up with Vietnam's unlimited vice in the South China Sea." The US has said the South China Sea, home to key shipping lanes, is of strategic interest to it. On Monday, US Senator John McCain called for the US to step up military and political support for Southeast Asian nations to stand up against China in increasing disputes in the South China Sea. "China seeks to exploit the divisions among Asean members to play them off against each other to press its own agenda," McCain said. Hundreds of Vietnamese protested at the weekend for the third straight week, yelling "Down with China!" as they marched in Hanoi. Vietnam and China have a long history of incidents on the contested seas, typically resulting in tit-for-tat diplomatic rhetoric. The recent blow-up has sparked a feverish response from Hanoi, which accuses Chinese boats of hindering its oil exploration activities within 200 nautical miles of its coast, claimed as its exclusive economic zone. China claims the clashes occurred near the disputed Spratly islands and that Vietnamese vessels endangered Chinese fishermen.

China has formalised rules allowing foreign firms to use yuan raised overseas to make investments in the country, a report said Wednesday, as part of moves to internationalise its currency. A trial scheme will permit overseas companies to use Chinese currency raised offshore to set up companies, make acquisitions, increase stakes in subsidiaries and provide loans, the China Business News said, citing a central bank statement. They will be banned from investing in certain industries, the report said, without providing details. The statement appeared to have been removed from the central bank’s website on Wednesday. The statement marks the first time China has issued specific rules on yuan -denominated foreign direct investment in the country and analysts said it would encourage wider use of the currency overseas. “This policy on yuan-denominated foreign direct investment is a significant stride towards making the yuan an international currency,” Deutsche Bank economist Ma Jun was quoted saying. The rules are expected to accelerate the issue of yuan-denominated bonds and other forms of yuan financing in Hong Kong, a semi-autonomous Chinese territory, Ma added. A growing pool of investors have piled into yuan in a bid to capitalise on the currency’s expected appreciation, but there are limited investment outlets for the cash. The People’s Bank of China will review yuan-denominated foreign investment projects on a case-by-case basis, the report said. Beijing in recent years has relaxed limits on the convertibility of the yuan in its push for greater use of the currency abroad. The country has signed currency swap arrangements with several nations and launched trials for yuan trade settlement with a number of mainly Southeast Asian countries. Yuan-related financial products have also boomed in Hong Kong, which has been acting as a test bed for Beijing’s ambitious goal to turn the unit into a global currency. In 2009, China approved using the yuan to settle cross-border trade with Hong Kong and last year it relaxed rules to allow non-financial foreign firms to issue yuan-denominated bonds.

Beijing urged the United States on Wednesday to leave the South China Sea dispute to the claimant states, saying that US involvement may make the situation worse, its most direct warning to Washington in recent weeks. Tensions in the South China Sea have risen in the past month on concerns that the mainland is becoming more assertive in its claim to waters believed to be rich in oil and gas. Part of the waters are also claimed by Brunei, Malaysia, the Philippines, Taiwan and Vietnam. China’s Vice Foreign Minister Cui Tiankai urged the United States to keep out of the dispute and said the mainland was greatly concerned by frequent provocations by other parties in the South China Sea. China’s claim is by far the largest, forming a large U-shape over most of the sea’s 1.7 million square kilometres, including the Spratly and Paracel archipelagos. Navy ships from Vietnam and China held a two-day joint patrol in the Gulf of Tonkin, Vietnamese state media reported on Tuesday, in a sign that tension over the disputed maritime border may be easing.

Former US ambassador to China Jon Huntsman on Tuesday entered the race to unseat his ex-boss, President Barack Obama, starting behind his Republican competitors in the polls but holding the potential to blossom into a strong contender. Pledging to make hard decisions to prevent America sinking into a debt disaster, the former governor of Utah formally announced his candidacy at the same site in front of the Statue of Liberty where Ronald Reagan launched his successful first bid for the White House in 1980. Huntsman, 51, lacks national name recognition and many polls put his support at less than 2 per cent. Still, his entry into the race worries the Democratic Obama administration because of his possible cross-party appeal. Huntsman upset the White House in April by quitting his job in Beijing to prepare to run against Obama, who appointed him in 2009. Speaking at Liberty State Park in New Jersey as the wind whipped US flags arrayed behind him, Huntsman pledged to turn America around as president. “For the first time in our history, we are passing down to the next generation a country that is less powerful, less compassionate, less competitive and less confident than the one we got,” Huntsman said. “This, ladies and gentlemen, is totally unacceptable and totally un-American,” he told the small crowd of supporters, campaign aides and media. Obama’s re-election campaign said that despite Huntsman’s call for a more competitive and compassionate country, the former ambassador has endorsed a budget plan that would have the opposite effect. “Like the other Republican candidates, instead of proposing a plan that will allow middle-class families to reclaim their economic security, Governor Huntsman is proposing a return to the failed economic policies that led us into the recession,” the Obama campaign said in a statement. Huntsman left his governorship in August 2009 with sky-high approval ratings and a reputation for fiscal conservatism but his more moderate views on social issues could make it difficult for him to win the Republican nomination. If Huntsman gains traction, he could rival former Massachusetts Governor Mitt Romney, another Mormon, for the role of the moderate Republican candidate in a field populated by harder-line conservatives. “We must make hard decisions that are necessary to avert disaster,” Huntsman said, painting a bleak picture of the debt problem and the huge US budget deficit, due to hit US$1.4 trillion this fiscal year. “If we don’t, in less than a decade, every dollar of federal revenue will go to covering the costs of Medicare, Social Security and interest payments on our debt. Meanwhile, we’ll sink deeper into debt for everything else – from national security to disaster relief.” Huntsman says his knowledge of China, America’s main global commercial rival and foreign lender, is a strength but some conservative voters see his working for Obama as a liability. After the New Jersey announcement, several hundred people gathered at a Huntsman rally in Exeter in New Hampshire, an early primary state where he needs to do well. His campaign strategy, which includes setting up campaign headquarters in the key swing state of Florida, has won him praise from campaign watchers. “Huntsman has a very narrow window to the nomination but it’s not insurmountable,” said Ford O’Connell, a Republican strategist. “He has made the sell to some big donors and high powered operatives. Now he needs to make a pitch to rank-and-file Republican voters. The rank and file is where the rubber meets the road.” Huntsman promised on Tuesday to conduct his campaign “on the high road” and respect Republican rivals as well as Obama, who leads most opinion polls of the next year presidential race. Among the other leading Republican candidates are former Minnesota Governor Tim Pawlenty, former House of Representatives Speaker Newt Gingrich and US Representative Michele Bachmann. Huntsman learned to speak Mandarin Chinese while on a Mormon mission to Taiwan during his college years. He and his wife have seven children – five biological and two adopted from Asia.

China takes a positive attitude toward establishing a system for government officials to declare their personal assets and work in this regard is progressing steadily, a senior discipline inspection official said Wednesday. Wu Yuliang, deputy secretary of the Central Commission for Discipline Inspection (CCDI) of the Communist Party of China (CPC), made the remarks at a press conference. Wu said assets declaration has been a common practice in fighting corruption in many countries and it has proved to be effective. "We have been positive in setting up such a system," Wu said. Wu, however, did not offer a timetable of the establishment of assets declaration system for officials. According to the Communist Party of China Central Committee's anti-corruption guidelines for 2008-2012, the Party will accelerate research and evaluation on the system. A revised regulation that was issued last year also requires officials to report their personal income, and their children's and spouses' employment status, homes and investment, Wu said. The public generally supports the idea to introduce such a system and the Party's push to upgrade supervision of officials. The CPC Central Committee and the State Council promulgated a regulation in April 1995 which requires high-ranking officials to declare their incomes. But some corrupt officials are found to have transferred their illegal gains overseas, to their spouses or children to avoid punishment.

Hong Kong*:  June 23 2011  Share

The owner of a country park enclave in Sai Kung has been asked to restore an unlawfully excavated area where an outdoor environmental education centre is set to open next month. But the centre's manager says the illegal work was a mistake by an "overenthusiastic" contractor. The excavation at Pak Lap - dubbed "Hong Kong's Maldives" by some environmentalists for its pristine beach - created a 50-metre-long trench now filled with water on one side of an abandoned paddy field. Pak Lap is one of 54 pockets of land within or adjacent to country parks that were found last year to lack planning controls to protect them from development. The work is being considered a breach of an interim zoning plan introduced for Pak Lap and some of the other pockets in September after an outcry over damage to another picturesque piece of Sai Kung coast. The Planning Department said it had already issued enforcement and reinstatement notices to private company Master Mind Development to rectify the unauthorised development. But some green activists are worried the zoning plan lacks the teeth to stop further degradation of the site. They said there had been many previous instances of damage to the site - mostly privately owned - over the past few years, little of which appeared to have been corrected. "We cannot tolerate that someone can just walk away after causing such damage. Otherwise there will be more copycats," James Wong-ming, from Friends of Sai Kung, said. The green group has been working with Green Power and Eco-Education and Resources to assess the development threats to the 28 country park enclaves in Sai Kung. They said Pak Lap's ecology could be even richer if it had not been damaged. The groups made a video on a Sunday in April showing a truck and a bulldozer driving across the protected beach onto a barge anchored there. The Agriculture, Fisheries and Conservation Department said it had not issued a permit for movement across the beach. Dave Wilson, general manager of the Environment and Outdoor Centre at the site, said yesterday the excavation was a mistake by workers who ignored his instructions just to remove the weeds and clear overgrown areas of the stream. "If I had a gun, I would have shot the person who did this," he said. Wilson said the work was done while he was travelling in Nepal a few months ago and he could not fill it in now due to the enforcement action. Wilson said he had nothing to do with the previous works at the site and he only learned about the disputes between the green activists and his employer after he entered into a three-year employment contract with Master Mind Development director Dorothy Wong Sung-king. Wong wanted to build a boarding school at Pak Lap but changed her plan last year to organising outdoor education programmes. Wilson said he started last year to create a wetland and minimise flooding risk by breaking up part of a reservoir to divert rainwater to a stream and nearby green field. Wilson still plans to plant a bamboo forest and establish an organic farm, paddy field and woodland of local species, even though the centre's first students are due in just over a month. Two houses near the beach are being turned into a changing room, a kitchen and a meeting room. All visitors will have to camp on the beach. His employer, who owns more than 200 lots in the area, has budgeted of HK$4 million for the business that he says could bring in up to HK$15 million a year by charging students 4,000 yuan (HK$4,800) for five-day courses on the environment, Hakka culture and survival skills. Meanwhile, the Buildings Department said it would take no further enforcement action on new building work at Sai Wan - the Sai Kung enclave that sparked last year's row - after its contractor concluded that the work was not unauthorised. This follows an investigation after it received information from the Lands Department, which said last week that enforcement action was being taken.

More than 200,000 new immigrants were expected to receive HK$6,000 cash handouts from the Community Care Fund, the chairman of the committee overseeing the fund said on Tuesday.

Sun Art Seeking $1 Billion - Retailer Shrugs Off Poor Performance of Other Recent Hong Kong Stock Debuts - Chinese hypermarket operator Sun Art Retail Group Ltd. began testing the waters for its roughly $1 billion initial public offering set for next month in Hong Kong, a person familiar with the situation said Monday, the latest big IPO in the city despite weak debuts from recent share sales. Meanwhile, Hosa International Ltd., a Chinese sportswear maker, began taking orders Monday from investors for a Hong Kong IPO that could raise up to $242 million, according to a term sheet seen by Dow Jones Newswires. The company has set a price range of 2.88 to 4.10 Hong Kong dollars ($0.37 to $0.53) for its sale of shares. Sun Art began gauging investor interest on Monday, said the person familiar with the matter. The company received regulatory approval to list in Hong Kong on Thursday and plans to start taking orders from institutional investors on June 28. It will kick off its retail offering on July 4. Sun Art and Hosa are the latest IPOs seeking to tap Hong Kong's IPO markets, even as recent offerings have flagged on their debuts on the Hong Kong stock exchange. Hui Xian REIT, which raised $1.61 billion from its IPO, fell 9.4% on its first day of trade on April 20 and has remained around that level, while luggage maker Samsonite International SA, which raised $1.3 billion, fell 7.7% on its debut on June 9, and has recovered only slightly. Hong Kong's benchmark Hang Seng Index is down 6% in the past month, underperforming the Dow Jones Industrial Average, which has fallen 4%. Adding to the weak sentiment, Italian fashion house Prada SpA raised $2.14 billion in its Hong Kong IPO after pricing its shares on Friday at the bottom of its guidance. Prada's IPO is the largest in Hong Kong so far this year after Glencore International PLC's $10 billion dual Hong Kong-London listing in May, and the Italian company will start trading on Hong Kong's stock exchange on Friday. At least six firms are seeking to raise more than $7.7 billion in the coming weeks from IPOs ahead of Hong Kong listings, including Shanghai-listed China Everbright Bank, which aims to raise around $6 billion, and Chinese iron ore miner China Hangking Holdings Ltd., which plans to raise up to $300 million. Sun Art Retail, which was previously known as Sun Holdings Greater China Ltd., is a joint venture between Taiwanese supermarkets-to-cement conglomerate Ruentex Group and France's Groupe Auchan SA. HSBC Holdings PLC, UBS AG and Citigroup Inc. are among the banks handling Sun Art's issue., the person said. Bank of America Merrill Lynch is in charge of the Hosa deal.

 China*:  June 23 2011  Share

Post-quake town re-brands itself with romance - A view of Bailu town, which is under reconstruction, in Southwest China's Sichuan province, April 17, 2011. Deep in Sichuan Province, a mountain town which relied on mining as a major growth stimulus, strives to re-brand itself as a romantic tourist destination. With French-style cobblestone streets, an eclectic mix of buildings and architecture, and the overall relaxing atmosphere, it's easy to get swept away by the fairy-tale-like experience of Bailu Town in Sichuan Province. The town, two hours away from the provincial capital Chengdu, is a cultural gem rarely seen in China's hinterland. Architectural marvels aside, Bailu uses its natural environs to its advantage. Tucked away in the rugged Longmen Mountains and straddling nearby waterways, it has a rich cultural heritage, with a long history of Buddhist and Taoist tradition. The town has also been influenced by French culture, after French missionaries built bridges, churches and schools there in the late Qing Dynasty (1644-1911). The 8.0-magnitude quake that struck Sichuan Province on May 12, 2008 killed 68 people in Bailu. Almost 20,000 houses were leveled or severely damaged.

Chinese Olympic silver-medal figure skater Tong Jian proposes to his girlfriend and partner of 18 years Pang Qing in front of thousands of fans at the end of a skating exhibition in Shanghai. Tong and Pang, who professed their love for each other after the Vancouver Games last year, made it official at the weekend when Tong got down on bended knee to ask for Pang's hand in marriage, offering her red roses and a ring engraved with a snowflake. China's Olympic silver medal figure skating duo Tong Jian and Pang Qing, who professed their love for each other after the Vancouver Games last year, made it official with a weekend proposal on ice. Tong got down on bended knee in front of thousands of fans in Shanghai to ask for his partner Pang's hand in marriage, offering her red roses and a ring engraved with a snowflake. "Before the Vancouver Winter Games, claiming an Olympic medal was my dream, but now my dream is to have you with me forever," Tong said at the skating exhibition, prompting Pang - his skating partner of 18 years - to break down in tears. "I didn't expect this until I saw the roses," Pang said. "My mind went blank at that moment, but after that I felt extremely happy. Thanks Tong, you gave me such a wonderful proposal." In Vancouver, husband-and-wife team Shen Xue and Zhao Hongbo won gold, coming out of retirement to give China its first Olympic figure skating title and break 50 years of Russian domination in the pairs. Tong and Pang, now both 31, won the free skate with a world record points total to catapult themselves into second place for a 1-2 Chinese finish. The pair first skated together in 1993, and have made steady progress since their debut in the 2000 world championships, clinching bronze at the worlds just four years later. They narrowly missed a medal at the 2006 Games in Turin, finishing fourth. Tong said he first thought of proposing at the Four Continents Championship earlier this year, but a mistake in the free skate - even though the pair won gold - doused his enthusiasm. Then at the world championships in Moscow in April, the pair finished third, again dampening Tong's resolve. But at the "Art on Ice" show in Shanghai, Tong felt the conditions were perfect. "I thought this show was a perfect chance for a romantic proposal. I hope to make her feel extremely happy. I think I achieved it today," he said. Wedding bells are not in the couple's immediate plans. They will head to the United States to work on their routine for next season. "For the marriage, please allow us more time. We still want to focus on training and competing on ice," Tong said.

Renren Inc. said Tuesday its first-quarter net loss narrowed because of a leap in revenue and relief from warrant write-downs in the year-earlier period, as the Chinese social-networking company reported its first results as a U.S.-listed company. May's initial public offering by Renren, often called China's Facebook Inc., was one of a series by Chinese Internet companies in recent months. Many of those IPOs drew strong investor demand, but concerns about a possible bubble in the stocks have pulled down share prices in recent weeks, as shares of U.S.-listed Chinese companies have also slumped due to concerns about possible accounting issues. "We have achieved solid revenue growth in the first quarter," Renren Chairman and Chief Executive Joseph Chen said on a teleconference about the results. Renren is likely to exceed its initial target for the year of reaching 34 million monthly active users, as its number hit about 33 million in May, he said. Mr. Chen, speaking in a separate interview, also said Renren will pursue investments and acquisitions more aggressively in one to two years, focusing on internal growth in the closer term. Possible acquisition targets in China include other social-networking services or makers of online or mobile applications with strong growth potential, he said. Renren has no plans for aggressive expansion overseas in the near term, Mr. Chen said. Renren said its net loss in the three months ended March 31 was $2.6 million, or 4 cents per American depositary share, compared with a year-earlier loss of $12.1 million, or 14 cents per ADS. Excluding share-based compensation and impairments in both periods, and a large negative adjustment on the fair value of its warrants in the year-earlier period, Renren swung to a $1.1 million net loss from a $645,000 net profit. First-quarter revenue jumped 47% to $20.6 million from $14 million, as online advertising revenue doubled to $8.1 million from $4.1 million. Revenue from online value-added services such as games and Renren's group-based deal site grew 25% to $12.4 million from $10 million. For the second quarter, Renren projected revenue of $29 million to $30 million, which at the top end represents a 51% jump from a year earlier, it said without giving a year-earlier figure. Renren's American depositary shares jumped 29% on their debut in May but sank back below their IPO price of $14 the next week. On Monday, they were down 1.3% at $7.50 in after-hours trading. Renren will announce this week strategic partnerships for its Nuomi service, including closer cooperation with online travel agent eLong Inc. on services such as hotel bookings for Renren users, Renren Chief Operating Officer James Liu said. Renren is similar to Facebook, but it has several major rivals in China and doesn't share Facebook's dominance. One of its main rivals,, is also preparing to list in the U.S. Many newly public Chinese companies, like Renren, have seen their shares sink in recent weeks. Investors have grown more wary of Chinese companies as several are marred by questions over accounting and disclosure investigations. Investors have also begun to realize some Chinese companies, especially Internet-focused companies like Renren, face more competition and may not generate as much revenue growth as previously thought. Just before listing in the U.S. in May, Renren reduced the user-base growth rate it gave in its IPO prospectus after observers questioned the figures, and the head of its audit committee resigned to spare Renren association with fraud allegations at another company of his.

Change in China Hits U.S. Purse - For more than a decade starting in the early 1990s, U.S. inflation declined as low-wage workers in China and other developing nations joined the global economy and produced a tide of cheap goods that washed onto U.S. shores. The trend made American consumers feel better off and, by restraining the upward crawl of consumer prices, helped enable the Federal Reserve to fuel the U.S. economy with low interest rates. That epoch appears to be over. Prices of imported goods are climbing, becoming a source of inflationary pressure. A wide variety of common products made abroad, from shoes to auto parts to jewelry, are landing on U.S. docks with higher price tags. U.S. import prices, excluding oil, rose 8% over the past two years, a historic shift from their downward drift for two decades. The increase is bigger still when including oil, which is up on global demand and Mideast turmoil. Though the pressures eased a bit in recent weeks as commodity prices retreated, they show signs of becoming a nagging presence as Chinese workers and others in emerging markets win higher wages and also become eager domestic consumers. The shift is part of a broader change that is reshaping the U.S. economy and its place in the world, with attendant pain as well as benefits. For years, U.S. consumers feasted on cheap imported goods—cheap partly because the Chinese currency was kept undervalued. This bred large U.S. trade deficits. Most economists agree the U.S. needs to consume fewer goods from abroad and ship out more American-made goods and services. The upward drift in the prices of imported goods is a mechanism that makes that happen. Currencies play a role. Washington has long pushed China to let its yuan appreciate and to encourage domestic consumption, both of which it has done to varying extents. The yuan is up 28% against the dollar in six years. The weaker dollar helps U.S. exporters, but the stronger yuan and the higher costs within China from domestic demand press upward on the costs of things U.S. shoppers want. These changes are particularly apparent in apparel and footwear. U.S. consumer prices for apparel fell for 13 of the past 17 years, according to Labor Department data. Now, retailers and manufacturers warn of plans to push up prices on Nike sneakers, Hanes underwear, Abercrombie & Fitch and Polo apparel, Ugg boots and other products when fall lines hit the racks. The key factor is that cotton prices have surged, driven in part by demand from developing economies. Higher labor costs in Chinese factories, rising transportation costs and the more expensive yuan also are pressuring makers and retailers to push up their prices. U.S. apparel prices rose 1% in the 12 months through May. The American Apparel and Footwear Association estimates prices for its goods will be up 4% to 6% in the fall from a year earlier. "The days of watching our product drop in price relative to other retail products have ended," said the association's president, Kevin Burke. 

Hong Kong*:  June 22 2011  Share

Heavy workload taking its toll on pharmacists - Staff shortages have pharmacies at some public hospitals working around the clock - Pharmacists in public hospitals are being spread thinner - and patients may feel the strain. Pharmacies in three smaller public hospitals are operating around the clock. And at the same time, the Department of Health is taking on 94 recruits for a new drug safety office. But only several dozen new pharmacists graduate each year from the city's universities. Only 35 graduates are produced each year by Chinese University. Another 25, from the University of Hong Kong's new pharmacy programme, will graduate next year. So with limited new recruits - and many of them swiftly snapped up by the health department - pharmacists already working in public hospitals are being asked to put in longer hours. The situation is worse in smaller hospitals, where the number of pharmacists was low to begin with. The Hospital Authority is planning to introduce 24-hour pharmacy services in the wards of Kwong Wah Hospital this year, while Yan Chai Hospital and Caritas Medical Centre are set to go round-the-clock next year. As these hospitals extend their opening hours, one senior pharmacist estimates that they are having to work at least one overnight shift - from 9pm to 9am the next morning - every week. "Pharmacy work requires close attention and it would be exhausting to work overnight," said William Chui Chun-ming, vice-president of the Society of Hospital Pharmacists. "If we are tired, it can really affect patient safety as we are the final gatekeeper of drugs." Seven larger acute hospitals - such as Queen Mary, Prince of Wales and United Christian - already operate overnight pharmacies. Chui said the authority was planning to extend the service to all acute hospitals, or those with emergency rooms, in two years. But manpower is tight, especially after a spate of drug-related blunders in 2009 prompted the government to promise reforms. The health department's new drug safety office, which will be boosted by 94 pharmacists in monitoring roles, is a response to that. The Chinese medicine section is also hiring at least five pharmacists to oversee safety and quality. As an employer, the Hospital Authority is also facing competition from community pharmacies, which will soon need to have a pharmacist present during all opening hours. About 300 of the city's 1,800 pharmacists work for the authority. They don't all work in pharmacies. According to Chui, about 60 to 70 people are assigned to clinical programmes that help cancer and paediatric patients. The news of overnight shifts is taking a toll. A junior pharmacist said he feared that his colleagues might leave the authority. "In a normal day, we have four pharmacists in charge of the medication of 1,500 patients," he said. "It is the busiest right before the Lunar New Year holiday - we once handled 1,700 prescriptions in a day." He added that when pharmacists are busy, it is possible for a senior dispenser to be in charge of all steps of processing a prescription. Chui said dim promotion prospects are another issue facing hospital pharmacists. Chinese University plans to double its student intake to 60 next year. It hopes to train 130 pharmacists in the next five years. The University of Hong Kong expects 65 pharmacists to graduate in the next five years. Pharmacist registration examinations are held every six months for overseas graduates, but only half of them pass. Hong Kong has fewer pharmacists per capita than some overseas countries: 24 per 100,000 people. This compares with 78 in Britain, 25 in Taiwan and 179 in Japan.

Secretary for Development Carrie Lam Cheng Yuet-ngor conceded on Monday that enforcement action against illegal building structures had been unsatisfactory – with many owners ignoring removal orders. Lam was speaking at a Legislative Council panel meeting to discuss illegal structures in urban areas. Figures from the Building Department submitted to Legco showed about 50,000 of more than 300,000 orders to remove illegal structures issued over the past 10 years had not been complied with. Of the 40,000 warning letters issued between 2005 and this year, only 7,000 led to action being taken. “That the removal orders have sufficient deterrent effect is questionable when you look at the figures … The present compliance rate of removal orders is indisputably unsatisfactory,” Lam said. One reason was that fines for erecting illegal structures were too lenient, she said. Further, department investigators were not given warrants allowing them access to inspect buildings. Lam said the government was considering imposing tougher penalties and planned to present its proposals next year. The government has been under pressure to increase efforts after a fire killed four people last week in a Ma Tau Wai building that contained many subdivided flats. In addition, a number of senior government officials were recently found to have illegal additions to their homes.

 China*:  June 22 2011  Share

Chinese actress Zhang Ziyi (left) stands next to basketball star Yao Ming as they pose for photographs after attending a departure ceremony for Chinese athletes with disabilities at the China Administration of Sports for Person with Disabilities (CASPD) in Beijing yesterday. Yao and Zhang, Special Olympics global ambassadors, will travel to Athens to cheer on China's athletes at the Special Olympics World Summer Games which begin on June 25.

A city in northeast Heilongjiang Province and Russia's Province of Amur are planning to build a large cross-border tourism center, said an authority with Amur on Friday in Harbin, capital of Heilongjiang. "We should provide better tourism products to serve for the booming tourism need in Chinese market and surging tourists," said Igor Gorevoi, an official who is supervising the economic relations between China and the Russian province. Gorevoi made the remarks while attending the China Harbin International Economic and Trade Fair (HTF), a five-day event which kicked off on Tuesday. Heilongjiang's Heihe City and Amur's capital Blagoveshchensk are referred to as the "twin cities" in the region, and they have reached an agreement to attract tourists in both countries by building facilities such as hotels, shopping malls and entertainment parks, he said. Moreover, the two cities will also exhibit tourism products with local characteristics, such as rare dinosaur fossils, aviation models and aerospace facilities. "We have excavated dinosaurs fossils over a 25-year period, but few envisioned it as a tourism project, yet with the mutual effort of both cities, we will explore more tourism attractions with unique features," Gorevoi added. In his view, the "twin cities" are not competitors but a community with common interests. Based on the development plan, Heihe will also improve its tourism facilities and projects in volcanic scene, hot spring convalescent and luxury cruise ship travel, said Liu Qinghai, director of the tourism bureau of Heihe. Heihe and Blagoveshchensk are the two closest cities on the border separated by the Amur River (Heilong River in Chinese).

Jacky Cheung holds tour concert in NE China - Singer Jacky Cheung performs during his "1/2 Century" tour concert in Shenyang, capital of northeast China's Liaoning Province, June 19, 2011. Jacky Cheung embarked on the Shenyang stop of his tour concert here on June 19.

China's C919 passenger plane makes overseas debut at Paris Air Show - A real-size mock-up of C919 trunkliner was unveiled at the 49th Paris Air Show Monday, a debut for the first China-made large passenger aircraft outside China.

Mainland hypermarket operator Sun Art Retail plans to use 50 per cent of the proceeds from its Hong Kong initial public offering, of about HK$7.8 billion, to open new stores in mainland China, a source with direct knowledge of the plans said on Monday. Sun Art, a joint venture between Taiwanese conglomerate Ruentex Group and privately held French retailer Groupe Auchan, was to start pre-marketing for the IPO on Monday. Pricing of the offering is set for July 7, with listing on the Hong Kong stock exchange slated for July 15, said the source, declining to be named because the information was not yet public.

Hong Kong*:  June 21 2011  Share

Dads would be a welcome Facebook "friend," a survey of children has found. Nearly 60 percent of 228 youngsters aged six to 12 polled by Neighbourhood Advice-Action Council want their fathers to communicate with them using social networking sites like Facebook. Fathers need to be part of this cyberworld to network with their children, said Faye Chan Fei, supervisor of the group's family and outreaching and networking service. "Spending face-to-face time with your children is far from enough," she said. "As technology continues to speedily advance, connecting with kids through online platforms they use routinely can help to keep family communication lines open." Chan stressed social media should not be the only way out for parents, who are also encouraged to get familiar with whatever their children like. Meanwhile, about 30 local dads, some of them carrying dolls, marked Father's Day with separate marches to the Central Government Offices, demanding paid paternity leave. The protest groups from the Confederation of Trade Unions, Federation of Trade Unions, and Hong Kong Men's Association marched to government headquarters at separate times and from different assembly points. The Men's Association said 98 percent of 250 fathers surveyed hope to get at least seven days of paid paternity leave, while 87 percent suggest it is necessary for the government to legislate it. Association member Wong Chak- guang, a father of two, said a dad's role should gain more recognition in society. "I was not allowed to take time off for taking care of my newborn child," he recalled. "It was very exhausting to take care of [the baby], as I had to rush back home after work." The association said a member was sacked after requesting a few days of paternity leave from his boss. Poon Man- hon, a policy researcher with the Hong Kong Confederation of Trade Unions, said legislation is crucial to protect men from losing their jobs due to paternity leave absence. He urged the administration to do more to promote the concept of allowing men to take a holiday after a new birth. "There is no legal guarantee of paid leave from work for dads when a child is born, even in many public bodies," he said, citing Labour Department figures showing only 16 percent of companies give paternity leave.

Hong Kong's posh shops are bracing for a blow to business when Beijing cuts import tariffs on high-end goods to boost sales and consumption in the mainland. Worst hit could be shops selling luxury goods, as well as landlords and the tourism industry. The fears were voiced after mainland media were told by a source that tariffs on items such as cosmetics, cigarettes and liquor will be among the first to be slashed by up to 15 percentage points. Other goods like jewelry, clothes, bags and watches will follow. Reports cited the mainland's chief representative of the World Luxury Association, Ou Yangkun, as saying he hopes the good news can be announced before October 1 so more mainlanders will opt to shop in the country during the "Golden Week" holiday instead of abroad. "We must come to the understanding that it's inevitable for China to lower its tariffs on imported goods, especially some mid to high-end products," Ministry of Commerce spokesman Yao Jian said in Beijing on Wednesday. According to Commerce Minister Chen Deming, China has brought its average tariffs on imported goods down from 15.3 percent to 9.8 percent since its entry into the World Trade Organization. The ministry said in March that prices of 20 luxury products sold in the mainland were, on average, 45 percent higher than in Hong Kong and 51 percent higher than in the United States. Mainland consumers spent four times more on branded luxury goods in overseas markets than in the domestic market last year, due primarily to the large price differences, a World Luxury Association survey found. In Hong Kong, Baptist University economics associate professor Mo Pak- hung said the SAR's economy, and the retail sector in particular, will be affected if the level of tariff cuts is substantial. "One of the city's main attractions for mainland travelers is cheaper goods," he said. "Hong Kong will become less appealing if the tariff rates drop." Mo said retailers of luxury goods will be among the hardest hit. The impact on the tourism sector will depend on whether Hong Kong can lure more tourists to compensate for the loss of shoppers. But Champlus Asset Management director Ricky Tam Siu-hing said the tariff cut will have minimal impact on local high-end retailers. "Those who are willing to pay big money for top brand names will not mind paying the tax," he said. BWC Capital chief economist Daniel Chan Po-ming said customers across the border have lost confidence in products sold in the mainland. "Local tourism will not be much affected and retail rents will remain on the upward track," Chan said. Rents in Russell Street were HK$979 per square foot on average at the end of March - the second highest in the world behind 5th Avenue in New York City - up 25.6 percent from a year ago, according to a report by Colliers International.

Unfazed by Hang Seng downturn, 2 launch IPOs - China Outfitters, Modern Education seek to raise a total of HK$2.5b amid depressed sentiment - Peter Lo, chairman of China Outfitters Holdings, at the IPO press conference. Despite the soured stock market, two listing candidates kick off initial public offerings in Hong Kong today, attempting to raise about HK$2.5 billion between them. China Outfitters Holdings, which manufactures menswear under licensed labels such as JEEP, Santa Barbara Polo and Racquet Club, is offering 931.8 million new shares priced between HK$1.90 and HK$2.50 apeice for as much as HK$2.32 billion in gross proceeds. It is competing for funds with Modern Education Group, a tutorial service provider that is offering 116 million new shares at HK$1.30 apiece for HK$150.8 million. Some brokers said the "new kids on the board" came at a challenging time. "The response to the subscription is not totally about their corporate fundamentals," VC CEF Brokerage director Louis Tse Ming-kwong said yesterday. "The market sentiment is so depressed that retail investors may not have much to gain out of the subscription." Tse said the benchmark Hang Seng Index was likely to be in see-saw trading near the 22,000 level this week after it slipped 257.85 points or 1.17 per cent to a 10-month low of 21,695 points last Friday on worries of worsened debt crisis in Europe. Of the net proceeds of HK$1.6 billion, China Outfitters plans to spend 30 per cent buying fashion brands, 20 per cent developing new products and 15 per cent expanding its logistics system. Modern Education earmarks most of the listing proceeds for acquiring rivals in Hong Kong, even though it has yet to identify any targets, and repaying debts. The group warned of a sharp drop in revenue and profit in the fiscal year ending this month as a result of a change in the education system on the certificate and A-level examinations, which in turn reduces the number of students enrolling in its tutorial classes. Tutorials for secondary students accounted for 80.5 per cent of its revenue of HK$123.72 million in the six months to December 31. As of the end of last month, the group had 4,336 students.

Bosses use social media to narrow the field - Survey finds 71pc of Hong Kong managers use Facebook and LinkedIn to screen job candidates - Is Facebook killing your career? A new survey by finance and accounting recruiter Robert Half has found that up to 71 per cent of managers in Hong Kong take a peek at job applicants' online profiles to help them decide who to hire. Hong Kong managers are more likely to check profiles on Facebook and LinkedIn, compared with those in Singapore (50 per cent) and Australia (36 per cent). This was because the city was more obsessed with reputation, said Andrew Morris, Greater China managing director for Robert Half. "Stature and image is very important in Hong Kong," he said. "People play a big bearing from a social aspect of standing and status, so those sorts of things when they are being hired are very important." Morris said the trend for checking online profiles was growing as sites such as Facebook and LinkedIn become more popular. "People have their game face on during the interview process so part of the [hiring] technique is to have as much background information as possible before you hire them," Morris said. "What [managers] are trying to do is find out what types of things someone will put up there, what they would disclose about themselves that their potential employer does not know." His advice to jobseekers was to keep two Facebook accounts - one for work and one for play. "It's important to manage your online reputation and be aware of the image you project. You never know who might be reviewing your profile," he said. "If you're putting something out there in the public domain and it's searchable, then you've got to be happy and satisfied that it's information that you want out there. If not, put privacy settings on." More than 1,600 professionals in the human resources, finance and accounting industries were included in the survey, including 410 professionals in Hong Kong. HOW TO MANAGE YOUR PROFILE: Profile picture: include one because it adds legitimacy to your page, but keep it professional; Respect the wall: self-censor your posts. Otherwise, use e-mail or private messaging; Take "no" for an answer: if someone does not accept your friend request, don't ask again; Keep it focused: don't post trivial updates. Do your friends need to know when you've added a sheep to FarmVille? Avoid venting: this is not the place for negative comments or office gossip. Chances are someone who shouldn’t see it, will.

Scarlet fever bacteria may have become drug resistant, expert says - The bacteria that causes scarlet fever might have mutated into a more infectious and drug-resistant form, the head of the Centre for Health Protection ventured on Monday. Dr Thomas Tsang Ho-fai said this was probably why Hong Kong had experienced an “abnormally” high number of cases of the potentially fatal disease recently. There have been 419 cases this year so far – compared to 128 cases for the whole of last year. That figure represents the highest rate of infection since scarlet fever was made a notifiable disease in 1997. The previous high was 235 cases in 2008, health statistics show. In May, a seven-year-old schoolgirl died after contracting the disease – the only scarlet fever fatality recorded over the past 10 years in Hong Kong. Scarlet fever is an infection caused by bacteria and can spread through sneezing, coughing, or physical contact with respiratory secretions such as mucus and saliva. It normally affects young children. aged two to eight, causing a fever, a sore throat and a rash. Tsang told a press conference that tests conducted by microbiologists at the University of Hong Kong found the bacterium, classified as group A Streptococcus, had developed a new gene segment that might have made it more infectious. “They detected a gene segment that may give the bacteria an increased ability to spread among humans,” he said. “If that really is a confirmed finding, it would explain why we have a higher number of cases and increased circulation of scarlet fever in the community this year.” Dr Tse Hung-hing, former president of the Hong Kong Medical Association, said the bacterium had become more resistant to drugs in recent cases. Some antibiotics previously used to treat the disease had proven ineffective in those cases, and patients have had to take the more-powerful penicillin, he added. Tsang said the bacteria were transmitted either via a respiratory route – sneezing and coughing – or through direct contact with infected respiratory secretions. Preventive measures include: maintaining good hygiene, good ventilation, and avoiding contact with the respiratory secretions of others. Patients with a confirmed diagnosis should be treated with a full course of antibiotics. They should not go to schools or to child-care centres until they have fully recovered, he said.

An organic grocer in Discovery Bay which helps rehabilitate those recovering from mental illness will close at the end of the month, forced out by high rent and competition from the city's supermarket duopoly. The New Life Organic Shop has, for three years, sold fresh fruit and vegetables in competition with the local Wellcome and ParknShop supermarkets. But it is also part of a programme to get people recovering from mental illness back into society. They are given hands-on experience at the shop to learn skills and interact with others. The store employs two staff and three trainees, all of whom are recovering from mental illnesses. A spokeswoman for the shop said its three-year lease was coming to an end this month and since it was unable to meet the rental payments it would have to close on June 30. "Business is hard, especially since there's a ParknShop next door," the spokeswoman said. There has been no rental increase. The shop asked for a reduction in rent but did not hear back from Hong Kong Resort International, which rents out spaces at the Discovery Bay Plaza where the shop is located. The social enterprise is run by the New Life Psychiatric Rehabilitation Association, a non-profit, non-governmental group that aims to provide "comprehensive recovery services" for people with mental illnesses, to facilitate integration and help them become financially independent. "It's a shame that the store is closing and moving away because of rent problems," said Jill Walgren, a regular customer who lives in Discovery Bay. Walgren works with special-needs children and adults and said the shop was a great place for people trying to re-enter society. She said Hong Kong Resort International could set a good corporate example by renting the shop to the group for free. Walgren also noted, in an e-mail to the South China Morning Post (SEHK: 0583, announcements, news) , that there were a number of stores in the premises that were lying vacant so rental space in the plaza did not appear to be at a premium. "Social enterprises like this should be encouraged," she said. New Life has opened a new store under the name FarmFresh 330 in the Tai Hang area near Causeway Bay. The five employees from the Discovery Bay shop will be transferred to the new store.

Hong Kong Subsidized Housing Could Resume - Hong Kong Chief Executive Donald Tsang is considering resuming a controversial subsidized housing program, people familiar with the matter said Saturday, as pressure from local and Beijing officials to tame soaring property prices in the city mounts. Home prices in the Chinese territory have surpassed the peak hit in the last asset bubble in 1997 as abundant liquidity, record-low interest rates and a flood of investors from the mainland have buoyed the market–and created a conundrum for policy makers who have been struggling to implement measures to temper prices. A resumption of the Home Ownership Scheme, a program abandoned in 2003 after developers complained about government interference in the property market amid a sharp correction in private residential prices, would represent the government’s boldest attempt yet to quell sizzling prices. Home prices in Hong Kong have risen around 14% so far this year on top of a 24% jump in 2010. Mr. Tsang, who had earlier resisted calls to resume the program that had allowed eligible residents to buy homes at a discount of as much as 40% to market levels, appears to be warming to the idea. “The chief executive may address the issue of subsidized home ownership in the upcoming policy address but the issue has to be considered together with ways to increase land supply in Hong Kong,” a representative from Mr. Tsang’s office said Saturday. The comments follow a recent visit to the territory from the top Chinese government official in charge of Hong Kong affairs Wang Guangya, during which he said the local government needs to pay particular attention to addressing the housing problems of low-income people. “As a government, more efforts should be spent on housing issues of the general public, particularly the underprivileged. Housing is both a social and economic issue, and if it’s not handled well, it becomes a political issue,” Mr. Wang said. They also follow a decision last week by Hong Kong’s de-facto central bank to tighten mortgage lending again and for the first time toughen lending standards for nonlocals–just one day after the government sold a luxury residential site for 11.65 billion Hong Kong dollars (US$1.49 billion), the city’s second-highest price for land sold at an auction.

Flying into turbulence - Airlines gathering in Hong Kong 11 years ago thought freight surcharges would solve their fuel-cost woes, but the move turned out to be a disaster - As representatives from seven airlines gathered in Hong Kong on January 14, 2000, to discuss how they could protect their balance sheets from rising jet-fuel prices, their fortunes appeared as grim as the wintry wind and showers outside. The carriers, including Cathay Pacific Airways (SEHK: 0293), Korean Airlines, Asiana Airlines, Thai Airways International and Polar Air Cargo, had already seen an increase of more than 50 per cent in the cost of fuel over the previous six months. And by the end of that year average jet-fuel prices had more than doubled compared with the start of the year. The strategy they adopted that day was to fix a surcharge on air-cargo shipments between Hong Kong and South Korea. Similar meetings over the following several years were held in Hong Kong and other cities in Asia and Europe where executives from the world's biggest air-cargo carriers fixed surcharges on cargo to a raft of international destinations. At first, this was effective in shifting costs to air-cargo customers. Longer-term, some of these agreements have been disastrous. "What seemed like a simple - albeit illegal - solution has made criminals of airlines and airline executives in several jurisdictions. They have been fined billions of dollars and they face compensation claims for billions of dollars more," said Anthony Maton, a partner in London law firm Hausfeld LLP. Maton is representing cargo owners who are seeking compensation from 37 airlines, including Cathay Pacific, through London's High Court. In the 11 years since that first January meeting, international airlines have so far been fined about US$3 billion for collusion, four airline executives have been jailed, criminal investigations are still under way in six jurisdictions and civil claims for compensation potentially worth billions of US dollars are continuing in five countries. To add to the pain for airlines, some of these agreements were orchestrated with the assistance and approval of aviation authorities in Hong Kong, where there is no anti-competition law although the government plans to legislate one soon. While the surcharges rose and fell in line with the prevailing jet-fuel price, wholesalers and consumers were invariably left picking up the final bill. Maton said small companies as well as big business suffered. He said that while some firms were able to pass the surcharges on down the supply chain, others including one of the biggest suppliers of flowers to British supermarkets could not because they were in a cutthroat business. He is representing more than 300 companies, including two flower importers, tyre maker Michelin, clothes chain H&M and carmaker Volvo, who are seeking compensation from 37 airlines, including Cathay Pacific, for alleged overpayment of surcharges. Cargo owners and freight forwarders are estimated to have overpaid on surcharges that equate to between 10 and 18 per cent of their total air-cargo bill. But nobody yet knows the actual amount of money involved or how many companies may have been overcharged. This is because while companies seeking compensation in Europe have to register to secure their claims, in other jurisdictions such as the US and Australia companies are assumed to be part of a class action unless they opt out to pursue their own claims. As a result, companies do not have to register until there has been a settlement with one or more airlines. Surcharges continue to be imposed by airlines on air-freight shipments, feeding through the supply chain in the form of higher prices. Airlines have already been fined by justice and anti-cartel regulators in the United States, Europe and South Korea, while carriers have lodged a raft of appeals in Europe and South Korea against these penalties. In Australia, six airlines have so far paid A$41 million (HK$339 million) in fines in prosecutions brought by the Australian Competition and Consumer Commission, while the commission is taking action against a further nine carriers, including Cathay Pacific. Airlines are also facing a class action being handled by Australian law firm Maurice Blackburn on behalf of cargo owners who claim they were overcharged. In Canada, six carriers have been fined more than C$17 million (HK$135 million) after actions brought by the country's Competition Bureau, which is also pursuing moves against other airlines. People involved in the criminal and civil investigations say it will take several more years before all the global investigations, including subsequent appeals, are concluded. While fair trade authorities in the United States, Canada, Europe, South Korea, Australia and New Zealand have accused airlines of cartel behaviour, airlines involved in fixing surcharges in Hong Kong believe they did nothing wrong. In Hong Kong, approval is required from the Civil Aviation Department before airlines can impose fuel surcharges on cargo owners and freight forwarders. From 2000 to 2006, the department allowed the Board of Airline Representatives, an advocacy group that acts on behalf of 76 airlines operating at the city's international airport, to submit joint applications for these surcharges. This collective action, coupled with the way the surcharges were fixed, led some airlines to fall foul of foreign regulators. "BAR started to submit filings on behalf of its member airlines for cargo fuel surcharges in early 2000," said Civil Aviation Department spokeswoman Cherrie Cheung Wai. "This was done to ease the administrative burden on the Civil Aviation Department because it was easier to receive applications from one organisation representing carriers rather than carriers individually." Cheung said airlines used an aviation-fuel index compiled from a basket of fuel oil prices. She said this index was "based on average weekly spot prices of aviation fuel from published oil industry sources". The index had built-in triggers that corresponded with changes in surcharge levels that were "established after consultation with representatives of the industry and shippers". "When the fuel price reached a trigger index level due to a price rise or price drop for two consecutive weeks, airlines may levy the applicable surcharge after giving two weeks advance notice to users," Cheung said. Crucially, because changes in the level of surcharges were based on fluctuations in the index level - rather than actual jet fuel prices - there was not an anti-competitive element to them, airline experts contend. In other words, there was no collusive behaviour because there was no rigging of the index used to calculate changes in the surcharges. The situation would have been different if airlines had got together to fix the surcharge level using all the different prices they were paying for jet fuel, they added. This was among the eight grounds cited by lawyers for Cathay Pacific on January 21 in an appeal against the €57.12 million (HK$637 million) fine imposed by the European Commission for alleged price-fixing last November. Cathay Pacific was among 11 airlines fined €799 million by the commission, while Lufthansa and Swiss International Air Lines escaped because their employees blew the whistle on the alleged price fixing, and received full immunity from fines, the EC said. Despite receiving immunity from criminal fines from the EC and US Department Justice, Lufthansa and Swiss face, and in some cases have settled, civil claims. Similar reasons were given by Cathay Pacific when it lodged its appeal by the December 29 deadline against the 4.1 billion won (HK$29.3 million) penalty by South Korea's Fair Trade Commission for cartel-like behaviour in fixing surcharges. Cheung of the Civil Aviation Department said the practice of airlines submitting applications through the Board of Airline Representatives stopped in mid-2007. "Airlines now submit their filings to CAD individually," she said. Cheung gave no explanation for the change. But in August that year British Airways and Korean Airlines were each fined US$300 million by the US Department of Justice for fixing fuel surcharges. The two airlines were the first of 22 carriers that have so far been charged by the Justice Department, according to spokeswoman Gina Talamona. The latest airline to be charged was Taiwan's EVA Airways, which agreed to plead guilty and pay a US$13.2 million fine for price fixing on air-cargo shipments, the department said on May 27. The department said the carrier fixed rates "from at least as early as January 2003 until at least February 14, 2006". Talamona added that 21 executives "have been charged in the department's ongoing investigation into price fixing in the air transportation industry", while four of these have been jailed. Those most recently charged were Marc Boudier, former executive vice-president, and Jean Charles Foucault, former vice-president for cargo sales and marketing at Air France Cargo, who were indicted for conspiracy at the end of April. Talamona said: "More than US$1.8 billion in criminal fines have been imposed" on airlines since the fuel-surcharge-fixing investigation started in 2007. Cathay Pacific was fined US$60 million by the US Justice Department in July 2008 under a plea-bargain agreement. The carrier and Sheldon Krantz, one of the lawyers at law firm DLA Piper US who signed the plea bargain, declined to comment. But one person close to the airline said that "from a competition point of view" the various actions taken by cartel busters globally "reflects the very worst abuse of an authority's powers". He added: "The Justice Department in the US was the most blatant: `Pay us a sum in settlement and we will go away. Otherwise we will drag you through the courts.' Cathay Pacific calculated it would cost US$250 million, minimum, to defend the case, so a settlement was a lesser of two evils." Critics of the airlines' conduct reject the carriers' argument that their actions were justified because the Hong Kong government had approved the surcharges. "I'm not sure whether government approval of cartelist behaviour is sufficient grounds for exoneration," said Peter Koutsoukis, managing director of Claims Funding International. Claims Funding International is one of at least four companies worldwide that are fighting on behalf of cargo owners and freight forwarders for compensation from airlines over the level and way fuel surcharges were imposed. In Europe alone, these civil claims allege collusion in setting fuel and security surcharges on air-freight shipments costing US$10 billion. Hausfeld in London is representing more than 300 companies that paid more than US$3 billion in air-freight charges. Claims Funding International is taking action through the Dutch courts on behalf of a different group involving at least 330 companies that spent about €4.7 billion on air freight. About 10 of the airlines fined by the European Commission are appealing against their conviction and financial penalties on various grounds, including that the commission acted out of its jurisdiction. Consequently, Maton, the Hausfeld lawyer, expects some of the airlines to fight the civil claims in court. "If they run to trial I expect it to take 12-18 months get to full trial," he said, adding that the trial could start early next year. Asked about the impact from the appeals by airlines against the European Commission fines, Maton said they should not impede progress of Hausfeld's action, "certainly not at this stage". Meanwhile, in the United States, 14 airlines and associated companies have agreed to pay US$433.9 million to settle civil claims stemming from the Justice Department's criminal investigation.

 China*:  June 21 2011  Share

Shutdown fears for textile factories - Businesses will be forced to close if Beijing goes ahead with tax rebate cuts, warn Hong Kong garment makers with bases on the mainland - Hong Kong garment makers with factories across the border have warned of a tidal wave of shutdowns if the central government slashes value-added tax rebates on exports. This alarming prediction is contained in a joint survey conducted last month by the Textile Council of Hong Kong and Hong Kong General Chamber of Textiles, two key business bodies which cover almost the entire textile and garment industry in the city. There is speculation that Beijing is preparing to cut rebates to as low as 11 per cent from the existing 16 per cent. Any reduction would stifle exporters' cash-flow and eat into profits. Textile Council chairman Willy Lin Sun-mo said a tax rebate reduction of that magnitude would cripple the backbone of the industry already weakened by sky-rocketing cotton prices, wages, a fresh record high by the yuan against the US dollar, labour shortages and continuing economic uncertainty in Europe and the United States. "An 11 per cent rebate would be unviable for any garment manufacturer," he said. "We are not against the state policy of upgrading the industry, but a sewing job is a sewing job, it can only be upgraded to a certain technology level." At present, garment and textile exporters pay an average 17 per cent value-added tax on exports, and the Ministry of Finance rebates 16 per cent, which means a 1 per cent tax levy. If the rebates are lowered to 11 per cent, it means exporters will be punished with a 6 per cent tax rate. However, cutting tax rebates on exports is seen as a tool by Beijing to rebalance trade and upgrade industrial activities as the nation seeks to become the world's strongest exporter, not just the largest. A Ministry of Commerce spokesman declined to comment on the possible cut in rebates. Lin said the survey findings had been given to the Ministry of Commerce and the central government's liaison office in Hong Kong. Polling hundreds of industry players, the survey found that about 40 per cent of them employed a minimum of 2,000 workers in each factory. It also found that three in every four manufacturers had faced an overall increase in operating costs of between 10 and 30 per cent in the past year. If the cut materialises, about 70 per cent of those questioned would seek to pass on the additional costs to customers and lay off workers. However, the majority of them were prepared to swallow some costs for fear of losing orders to other countries if factory-gate prices rose too much. The most worrying finding for Lin was that 30 per cent of the largely small- and medium-sized enterprises would choose to fold. "Costs are rising by so much and so quickly that it is about 10 per cent more expensive to produce a garment in China than in Romania," Lin said. "When factories are in trouble, they may shrink operations by laying off workers. How can the central government boost domestic consumption if workers break their rice bowls? I don't know how many factories will die, but it will be a lot." Tommy Lam Chin-ming, who runs a factory making Burberry's children's wear and Armani Exchange clothes in Dongguan, said a lower tax rebate would worsen profit margins. To reduce the reliance on increasingly expensive Guangdong, Lam last year opened two smaller factories in Sichuan and Fujian.

The price of new homes rose last month in 67 of the 70 mainland cities monitored as developers held off on cutting charges while studying the effects of policies aimed at controlling the property market. May new-home prices increased by more than 6 per cent from a year earlier in 19 cities, compared with 21 cities in April, according to the National Bureau of Statistics. Prices in Dandong in the northeast rose 9.7 per cent in May, the most among the 70 cities monitored. Prices for existing homes fell in May from April in 23 cities. The price data show Beijing's tightening steps, including home purchase restrictions and higher down payments and mortgage rates, have been biting. But it is still too early to declare victory. The government has relied heavily on administrative measures to curb demand and there is still plenty of easy money sloshing around the economy, analysts say. "Developers are still watching to see how strict the government's property measures will be before cutting prices," Mizuho Securities Asia economist Shen Jianguang said. "The slowdown of existing home prices is showing the government's home purchase restrictions are having some effect." New home prices rose 2.1 per cent in Beijing in May from a year earlier, 1.4 per cent in Shanghai and 3.7 per cent in Shenzhen, compared with April's annual increase of 2.8 per cent, 1.3 per cent and 3.1 per cent. Annual prices picked up more quickly in secondary cities in May. The authorities have curbed speculative home purchases in first-tier cities while implementation was lax in other cities. Prices rose 7.8 per cent in Mudanjiang and 7.7 per cent in Changsha , Lanzhou and Qinghuangdao. May home sales transaction value rose 17 per cent from April as developers marketed more residential projects during the Labor Day long weekend, even as the government maintained its housing curbs. Most analysts now expect a steady fall in home prices in the second half of this year.

Chinese investment is flooding into Argentina as the Asian giant expands its global commodity hunt from the raw materials used in industry to the foodstuffs needed to feed its 1.3 billion citizens. China's investment in Latin America hit $15.6 billion during the 12-month period through the end of May, nearly three times greater than the year-ago period, consulting firm Deloitte said in a report. Of that amount, Brazil received about 60% and Argentina close to 40%. During the last three years, more than 70% of China's investment in the region went to energy and minerals, but farming is attracting more attention as the country seeks to fill its bowls from foreign fields. China already buys the bulk of Argentina's soybean exports, its top crop and largest source of export revenue. Soybeans are mainly used as livestock feed in China, where meat consumption is rising along with personal incomes. At the same time, urbanization is shrinking the amount of arable land available in China. Last week, China's largest farming company, Heilongjiang Beidahuang Nongken Group, signed a joint venture with Argentina's Cresud SA to buy land and farm soybeans. Cresud is one of Argentina's top agriculture firms with control over more than one million hectares (2.47 million acres) of farmland that produce grain, cattle and milk. Cresud didn't respond to requests for comment. Heilongjiang Beidahuang Chairman Sui Fengfu told Dow Jones Newswires in March that the company plans to buy 200,000 hectares of overseas farmland this year, and that Latin America is a target area. The company is already farming two million hectares of land outside China. Heilongjiang Beidahuang is also spending $1.5 billion to lease and develop farms on 300,000 hectares in Argentina's Rio Negro Province. Over a five- to 10-year period, the company plans to grow wheat, corn, soybeans, fruit, vegetables and wine grapes for export to China. The deals with local partners such as Cresud and the province of Rio Negro appear aimed at avoiding a backlash against foreign ownership of farmland in Argentina, since Heilongjiang Beidahuang won't be buying the land outright. President Cristina Fernandez has introduced legislation limiting land purchases by foreign individuals and companies to 1,000 hectares in rural areas, a move with popular support after a number of foreigners bought large holdings in recent years. Heilongjiang Beidahuang's incursion in agriculture comes hot on the heels of heavy Chinese investment in Argentina's oil sector. In February, Occidental Petroleum Corp. sold its local assets to China Petroleum & Chemical Corp. for $2.5 billion. Last year, China's Cnooc Ltd., in partnership with Argentina's Bridas Corp., agreed to buy a 60% stake in Pan American Energy from BP PLC for $7.1 billion. Deloitte predicts that Chinese investment will continue pouring into Latin America but expects a diversification in the future into other industries such as manufacturing, infrastructure and finance.

Hong Kong*:  June 20 2011  Share

Sunset for our buffalo herds? The future of Hong Kong's beleaguered buffaloes seems increasingly limited, as their habitat dwindles and public complaints about them grow louder - The future seems bleak for Hong Kong's water buffaloes, such as these on Lantau. Water buffaloes have hit the local headlines more often recently than in their entire history. Their habitat - encroached on by roads, development and increased contact with humans - has led to neglect and conflict and, in one case, human injury. Now Hong Kong's rural communities face a dilemma: whether to keep a sustainable number of the animals as valuable eco-engineers or exterminate them as potentially dangerous animals. Together with feral cattle, water buffaloes have been a part of the rural landscape in Lantau and the New Territories since rice was first cultivated. But when Hong Kong was industrialised in the 1960s, farmers forsook fields for factory work and left their buffaloes to fend for themselves. The descendants of those working animals became feral. Today about 100 buffaloes remain on Lantau, with perhaps as many near Kam Tin in the western New Territories, the Society for the Prevention of Cruelty to Animals (SPCA) estimates. Wild water buffaloes are on the Red List of threatened species of the International Union for Conservation of Nature and Natural Resources, with fewer than 4,000 remaining across Asia. Unlike many introduced species, they fill a unique niche in the wetland ecosystem. Hongkongers' attitudes are divided towards these friendly and normally placid beasts, whose existence is under threat. Things came to a head when a visitor was injured by a buffalo on Mui Wo beach recently. Spooked by weekend crowds and disoriented by temporary fencing that blocked its usual path to the beach, the animal gored a tourist in its haste to escape. It was killed, along with two other animals, by Agriculture Fisheries and Conservation Department (AFCD) officers. Three now remain in the 40 hectares of wetland behind Mui Wo, and it is their fate - and that of some 30 to 40 others at Pu O, Shap Long and Cheung Sha - that is exercising the AFCD, SPCA and local residents. The rural villagers who once owned the buffaloes have distanced themselves from the animals. "They don't really care any more. The people who come to live on Lantau in recent years care more," say Ho Loy, director of the Lantau Buffalo Association. "Although some of the older generation used to own them, they have given up farming and so, in a way, given up the relationship with the animals." The younger generation are landowners and don't care about the buffaloes, she adds. "They want to build on the buffaloes' wetland. They are trying everything, big and small scale - scraping the landscape, putting land on the market, making development proposals to government." Meanwhile, complaints are common - about buffalo dung and buffaloes blocking car parks - along with demands for compensation for alleged damage. Many people complain about buffaloes and cattle damaging vegetable gardens, although these are often unfenced and occupy government land illegally. So far, Lantau South district councillor Rainbow Wong Fuk-kan has not said whether he favours or opposes allowing the animals to remain. But if many locals want to get rid of the buffaloes, other residents vigorously support them staying. About 400 supporters have signed a petition to that effect on the community website  One man's dangerous pest is another's tourist attraction. At the Mai Po Wetland Reserve, two buffaloes are a popular visitor draw. The female was introduced in 2006 and the male in 2009, to graze on vegetation in the wetland. "They add great ecological value," explains reserve officer Katherine Leung Kar-sin. Their weight crushes vegetation, creating more habitat for amphibians and making it easier for visitors to see the birds. "The insects on their backs attract white egrets. They make a very positive contribution to the eco-system," she said. And it costs far less to have animals eating the coarse grasses and weeds than paying people to cut them. "There's been great media interest, and the public has helped give them names: it's very good publicity for us," Leung said. "People love looking at animals, especially if they are happy and kept in good conditions." She is conducting a study into the benefits associated with buffaloes. "I hope we will get more [animals] soon. We have been approached by the government about the three at Mui Wo." In short, buffaloes help keep wetlands wet, as David Dudgeon, professor of ecology and biodiversity at Hong Kong University, explains. "They are endangered - and to think we are basically killing them off in Hong Kong. They are not doing any harm," he said. "They have value: they are culturally part of the countryside. Wouldn't it be nice if children could see them? They graze in a heterogeneous pattern. They are bioengineers because, by creating hollows which fill up with water and by wallowing, they keep the wetlands wet." When buffaloes disappear, as in Shui Hau on Lantau, the wetlands can be seen drying up. "Buffalo pools create habitats for other species, such as birds, insects and amphibians. They enhance biodiversity," he said. It is ironic that the AFCD says it wants to conserve freshwater wetlands but seems set on eliminating the buffalo, he said. The department's policy takes a threefold approach to the buffaloes - relocation, desexing and education - says chief AFCD veterinarian Dr Howard Wong. Relocation refers to moving the three Mui Wo animals to Mai Po. As for desexing, "approximately 22 have been desexed since 2007 by the SPCA and AFCD, to control populations, especially in areas like Sai Kung", Wong said. As for educating people about the animals, the AFCD will conduct a campaign by mailing out pamphlets. But the AFCD has a dismal record with regard to Hong Kong's hapless buffaloes. In 2007, government vets attempted a buffalo cull in Mui Wo. Seventeen animals were rounded up, tranquillised and loaded into trucks. "There were adults and small calves. They were somehow loaded on top of each other and the ones on top crushed the ones beneath," said a Mui Wo resident who asked not to be named. "The anaesthetic dose has to be just right, or they bloat and die", he added. "It was a combination of bloating and squashing, and by the time the trucks reached the New Territories, only one was still alive. It was horrible - 16 of the 17 were died." The department has since improved its methods, Rupert Griffiths, the SPCA's welfare research and development manager, says. In Sai Kung, the AFCD is supporting a herdsmen's scheme in which 20 uniform-clad, trained volunteers are on call to deal with problem bovines. What future lies in store for the beleaguered buffaloes? Mui Wo residents have approached Hongkong Land, the owners of a sizeable part of the Mui Wo wetland, about establishing a wetland reserve for the animals. But the AFCD opposes any such plan, saying it would be unworkable under existing frameworks. Mui Wo's three bachelor buffaloes are destined for de-sexing, says Griffiths. The AFCD is waiting for further word from the Lantau Buffalo Association before deciding whether to relocate or cull them. If they are to be relocated, their new home at Mai Po is not ready, so they would first go to an interim site - one without water, which is clearly unsuitable, says Ho. Mui Wo resident Diane Stormont argues there is no need to move the animals in the first place: "There are only three buffaloes left and more than 40 hectares of scrubland and wetland. There is plenty of room for buffaloes and humans to co-exist peacefully." The SPCA's Griffiths says whatever happens, "we will be there to take care of the animals' welfare". Ho thinks the buffaloes should be given protection as "distinguished species". "Three parties - the AFCD, SPCA and local residents' groups such as the buffalo association - should decide what's best for the animals, the humans and the environment."

The government is under growing pressure to resume building Home Ownership Scheme flats after Beijing's Hong Kong affairs chief warned openly that the shortage of housing for people in need could turn into a political problem. Wang Guangya , director of the State Council's Hong Kong and Macau Affairs Office (HKMAO), singled out housing as an urgent issue on which the government should take action during his duty visit to the city last week. Since then, local officials have been sending out signals of forthcoming measures, with the revival of the HOS an option. Under the old scheme, the government built flats for sale at subsidised prices to families priced out of the private market. Yesterday, two Chinese-language newspapers, Hong Kong Economic Times and Apple Daily, cited unnamed government officials as telling them that Chief Executive Donald Tsang Yam-kuen was seriously considering resuming the scheme - a proposal that major political parties and even some Executive Council members have been pushing for. The reports were in line with Tsang's remarks at a Legislative Council question-and-answer session last month, in which he said the government would study the proposal and lay out initiatives to help people acquire homes in his final policy address in October. Asked whether the government would resume construction of HOS flats, Financial Secretary John Tsang Chun-wah said: "I believe Mr Tsang will give an answer later." Donald Tsang, who is on a nine-day duty visit in Australia that ends on Thursday, said on television there last Friday that home prices in Hong Kong were "quite frightening" and pledged his administration would do more to slow the market down. A government spokesman noted that the chief executive had promised to deal with the housing issue in his upcoming policy address, but said: "This must be considered along with problems with land supply." Kennedy Wong Ying-ho, a member of the Housing Society who supports the revival of the HOS, said the idea had not been put onto the society's agenda. "Don't expect too much," he said. "It can well be Donald Tsang's gesture to boost his popularity before his term ends. We haven't even found all the sites for the My Home Purchase Plan since its announcement last year. How can the present government relaunch the HOS in a year's time? It takes years and you don't know if the next chief executive will support the HOS." The Democratic Party threatened to move a motion of no confidence in Tsang if he did not announce in the policy address a resumption in building HOS flats. "This will be one of our major demands in the July 1 march," said Lee Wing-tat, chairman of the Legco housing panel. "If the administration continues to ignore people's voices, public anger will grow. It is Donald Tsang's last chance." The panel's deputy chairman, Wong Kwok-hing, said he hoped the government would announce the revival of the HOS as soon as possible. He referred to Wang's comment that Macau was moving faster in building affordable housing. "Wang's remarks have certainly given the chief executive some pressure. It is very rare for the HKMAO to compare Hong Kong openly with Macau." The 26-year scheme ended in 2002 to reverse a property slump.

City's race fans feel the need for some F1 speed - Formula One's youngest driver, Spaniard Jaime Alguersuari, steers the Red Bull car down along the harbourside route. If Hong Kong harbours any Grand Prix pretentions, they were given a shot in the arm yesterday as the public got a taste of Formula One excitement in the heart of the city. With the IFC tower as an imposing backdrop, team Red Bull rolled out their F1 supercar to wow thousands of fans who lined the harbourside route in search of speed thrills. For the organisers, getting the show on the road was no easy task. More than six months of planning and the nod of seven government departments were required to make it happen. In the end, Formula One's youngest driver Jaime Alguersuari delivered, roaring up and down Lung Wo Road to the delight of racing fans. "It would be great to actually see a Formula One race take place here in Hong Kong,'' spectator Simon Chung said.

16 hot dogs gobbled down in 10 minutes - Chris Lam, from Hong Kong, takes part in the 2011 Hot Dog Eating Contest China National Championship in Beijing, June 18, 2011. Lam wins the contest by taking 16 hot dogs within 10 minutes.

Prada SpA raised US$2.14 billion in its initial public offering in Hong Kong, by pricing its shares at the bottom of its guidance, two people familiar with the situation said Friday, in a reflection of deteriorating stock market conditions and concerns about the Italian luxury retailer's valuation and a potential tax charge. The Prada deal, which was initially targeted to raise as much as $3 billion, found few fans among retail investors—the 10% retail tranche was just half covered, prompting only 5% of the IPO to be set aside for Hong Kong public investors, a person familiar with the deal said Friday. The institutional tranche, initially accounting for 90% of the 423.3 million shares sold, was two times oversubscribed and will account for 95% of the offer. The IPO price was set at 39.50 Hong Kong dollars (US$5.06) each, at the bottom of the guidance of HK39.50-HK42.25 a share bankers gave investors Thursday. Prada's IPO is the largest IPO in Hong Kong far this year, if excluding Glencore International PLC's US$10 billion Hong Kong-London listing in May, according to data provider Dealogic. The weak pricing comes as investors are more selective about their IPO investments because of volatility in global markets. Australian mining company Resourcehouse Ltd. scrapped a US$3.6 billion IPO in Hong Kong this month. Luggage maker Samsonite International SA tumbled 7.7% on its Hong Kong listing debut Thursday amid weak markets. Hong Kong's benchmark Hang Seng Index, which fell for a fourth consecutive session Friday, is down 4.5% over the past month, while the Dow Jones Industrial Average is down more than 4% during the same period. Prada's IPO is a test of how much investors are willing to pay to tap into the booming demand for consumer goods in Asia. Like many luxury-goods companies, Prada's strongest growth now comes from countries such as China, where millions of newly-rich splash out on branded bags, clothes and jewelry. But Prada's rich valuation also worked against it, observers say. Prada rival Salvatore Ferragamo SpA's upcoming IPO got a bounce from investors who decided to shift their money to the cobbler-to-the-stars at the last minute, people close to the matter say. Ferragamo is due to raise as much as €440 million in its June 29 debut on the Milan bourse. Prada was priced at a price/earnings ratio of 22.8 based on forecast 2011 earnings, indicating how valuations in Hong Kong—considered the gateway to China's luxury market—tend to be higher than Europe for high-end retailers. Prada's PE is on par with Hong Kong-listed French cosmetics group L'Occitane International SA, which trades at 22 times forecast earnings, but at a significant premium to European-listed luxury goods groups, which trade on an average 20 times forecast earnings. The world's largest luxury-goods group, LVMH Moet Hennessy Louis Vuitton trades at 19 times. The IPO values Prada at US$13 billion, putting it behind LVMH Moet Hennessy Louis Vuitton, which has a market capitalization of US$77 billion; Hermes International S.C.A. with US$28 billion; and Coach Inc. at US$17 billion. But it's higher than Polo Ralph Lauren Corp. at US$11.6 services and the treasury. The possibility of a tax puts the Prada IPO on a different footing than several other foreign listings in Hong Kong. A number of foreign companies based outside China and Hong Kong have listed in Hong Kong since UC Rusal, the aluminum producer controlled by Russian oligarch Oleg Deripaska, raised US$2.3 billion in January 2010, to take advantage of the city's position as a gateway to China, as well as the active trading of listed shares on the Hong Kong exchange. Since Rusal, other foreign companies that listed in Hong Kong include Luxembourg-incorporated L'Occitane, Cayman Islands-incorporated Macau gambling company Sands China Ltd., and Jersey-incorporated Swiss commodities giant Glencore International PLC, according to the Hong Kong stock exchange's website. Intesa Sanpaolo unit Banca Imi, CLSA Asia-Pacific Markets, Goldman Sachs Group Inc. and Unicredit SpA are joint global coordinators for Prada's IPO according to the company's prospectus. Still, Prada's weak pricing hasn't deterred the flow of IPOs, and especially retail peers, into the city's stock market. Chinese hypermarket operator Sun Art Retail Group Ltd. received regulatory approval Thursday for its plan to launch an approximately US$1 billion IPO, while Chinese shoe retailer Hongguo International Holdings Ltd. plans to raise as much as US$300 million in an IPO ahead of its listing in Hong Kong in the third quarter, people familiar with the deals said Friday. At least six companies are seeking to raise more than US$7.7 billion in the coming weeks from IPOs including China Everbright Bank, which aims to raise around US$6 billion, and Chinese iron ore miner China Hangking Holdings Ltd., which plans to raise as much as US$300 million. Both are still gauging investor interest for their deals. But analysts said that in this kind of market, investors prefer to buy listed companies that have a track record of trading, or well-priced deals. "Investors generally are not interested in IPOs amid weak market sentiment, unless the companies offer a very attractive valuation," said Ben Kwong, associate director of KGI Asia Ltd.

 China*:  June 20 2011  Share

US, Europe firms 'first likely listers in Shanghai' - KPMG predicts interest in the port city's proposed international board will come from further afield - KPMG expects the first wave of international companies seeking to list in the planned Shanghai Stock Exchange International Board to come from the United States and Europe rather than from closer to home. "I suspect there will be less demand for Asian companies at the moment - maybe we will see this later," Simon Gleave, KPMG China regional head of financial services, said. Speaking at a briefing on a China capital market report jointly published by KPMG, FTSE and Dagong Global Credit Ratings yesterday, Gleave said: "I do think we are [also] likely to see some of the red chips as early movers to the international board." Working closely with regulators in Hong Kong and mainland China, Gleave said the Shanghai bourse had yet to resolve regulatory issues like accounting standards, disclosure requirements, and the role of non-Chinese auditing firms in auditing non-Chinese companies listing on a mainland stock exchange. Noting that the Hong Kong Stock Exchange was also seeking to increase international listings, Gleave said the Shanghai bourse should remain a "very big domestic market with [an] international flavour", while Hong Kong would remain an internationalised capital market. This was because the yuan had yet to internationalise and facilitate capital flows into and out of the mainland. The report also anticipated that mainland bond markets would expand as Beijing sought to contain the growth of bank loans and fight inflation. The exchange bond market has lagged the inter-bank bond market. At the end of 2010, the total bond depository balance was 20.17 trillion yuan, a 63 per cent increase compared to 2007. Of this, the interbank bond market accounted for 94 per cent of the depository balance. Appetite for corporate bonds has remained lacklustre despite the China Securities Regulatory Commission's attempts in April to persuade companies to raise cash through issuing corporate bonds instead of bank loans. China Development Bank scrapped its bond sale earlier this week because investors found the low-yield bonds unattractive given the level of inflation, which rose 5.5 per cent in May. Gleave said there could be less liquidity in the market at the moment to buy bonds since the government was pushing down money supply growth to control inflation. He remained optimistic about the long-term growth in the bond market, saying he expected the government to relax regulations on bond pricing and issuance in the future.

More than 15 Chinese companies whose shares trade in the United States, many of them favoured by short-sellers, have yet to file required year-end forms with US regulators and the shares could face more downward pressure as deadlines approach. Many of those names were included on lists issued by brokerages that prevented their clients from borrowing money to buy those stocks on margin. A rise in short activity indicates more people see the stocks falling amid a flurry of accounting scandals that have damaged the sector. Short-sellers, who borrow stocks in anticipation they can sell them and then buy them back at a lower price, have been champing at the bit waiting for bad news from those that have not filed reports. They got some on Wednesday with one company, China-Biotics, saying it would not file its annual report on time, citing "serious issues" raised by its auditors. Trading in the shares of China-Biotics, the latest in a string of Chinese companies to disclose accounting issues in recent months, was halted after stocks tumbled on Wednesday and has not traded since. Bets against Chinese names have grown recently, with average short interest in about 80 Chinese companies traded on US exchanges rising to 3.99 per cent on January 3, the first trading day of the year, and climbing to 5.92 per cent as of June 13, according to the figures provided by Data Explorers.

Yuan see-saws to record high against dollar - Despite a volatile market, the currency is on target for annual appreciation of 5.5 per cent, say analysts - The yuan reached yet another record high against the US dollar yesterday before weakening slightly amid the intense market volatility of the past two days. On Thursday, the US dollar strengthened on the back of the Greek debt crisis. At its height, it was trading at 6.4873 yuan per dollar in early afternoon trade but fell back later in the day and continued to fall yesterday morning, reaching a low of 6.4635 yuan per dollar. It rallied again to 6.4774 in yesterday's late trading session. Robert Minikin, senior currency analyst at Standard Chartered Bank, said the rebound could be the result of oil importers piling back into the dollar. The volatility in the past two days is an interesting development, said Minikin. It "might be a signal that the People's Bank of China is taking a more hands-off approach" towards dollar-yuan trading. The dollar-yuan trading band - a formal exchange rate range which the central bank is required to maintain - is allowed to expand or shrink by 0.5 per cent from the central parity rate set each day. The PBoC fixed the central parity rate at a record of 6.4716 yesterday, the biggest advance since January 14. Traders were upbeat about the yuan, saying the currency traded mostly on the strong side of the central parity rate yesterday. The PBoC may have a targeted yearly yuan appreciation rate of about 5.5 per cent against the dollar, and increasing the central parity rate "brings the appreciation since June 2010 right on to the spot", Minikin said. The PBoC did not comment. Given the rather slow appreciation in the past two weeks, yesterday was a "catch-up", RBS chief China economist Li Cui said, and it was not surprising that the yuan hit a record high against the dollar, "given that the yuan has been following a gradual appreciation path". Despite the volatility, the pressure for the yuan to appreciate had weakened, Li said. China's current account surplus had become a lot smaller and real appreciation had been high because of inflation and rising labour costs on the mainland, she added. Last year, the yuan strengthened 9 per cent, after adjusting for inflation, against the dollar. Analysts have been expecting the central bank to carry out important currency policy changes around the anniversary on Sunday of its breaking of a two-year peg with the dollar. Standard Chartered said in a report last week that the central bank could expand the dollar-yuan trading band to as much as 1 per cent on either side of the daily central parity rate, up from 0.5 per cent at present. China first ended its decade-old peg to the dollar in July 2005 and allowed the yuan to advance 19 per cent in the following three years. But when the global financial crisis erupted, it resumed the peg at 6.83 for two years starting from July 2008. The peg was broken last year on June 19.

All aboard for 10 hours of speed and surprises - A train attendant delivers food to media delegates who are aboard a Beijing-Shanghai high-speed train for a personal experience on Friday. When I was thinking of what dateline to use for this story, I hesitated, because I left Beijing for Shanghai and returned to Beijing in a day. Solution: no dateline. Before the completion of the Beijing-Shanghai high-speed railway, that could happen only on an airplane and only when the weather cooperated. Now, 10 hours is the travel time for a round-trip by railroad between China's two biggest cities. On Friday, some 100 media delegates made the trip aboard a bullet train that ran at 300 km/h all along the way. The journey started from Beijing South Railway Station, where all of us gathered to board the G1 train that leaves for Shanghai at 9:10 am. When we descended to the platform on an escalator, I saw several white tube-like trains waiting side by side for passengers. This is totally different from what I saw on my first visit to Beijing South when it opened in 2008. Then, the platform looked spacious and empty, with only one or two bullet trains in sight, because only trains running on the Beijing-Tianjin intercity railway used that station. From the outside, our train seemed no different from others, except that it was coded as CRH380AL, indicating its top designed speed is 380 km/h. But inside, it had many surprises. The new train contains a cabin for business-class passengers with 24 seats that resemble those in a plane's business class, although these can revolve. A passenger can lie flat to rest on the leather-covered seat, or can watch entertainment on a small screen, choosing a program by touching the screen. It is said that each seat in the business cabin costs more than 100,000 yuan ($15,000). No wonder the Ministry of Railways sets the price for a business seat at 1,750 yuan. A second-class seat on the same train costs only 555 yuan. There also are two business-class seats at each end of the train, next to the driver's room. Passengers there can look through a glass wall and see what the driver sees. If the passengers want to, however, they can press a button that turns the glass wall opaque. A reporter who knows cars told me that a similar device is available in a luxury automobile made by Rolls-Royce. Because there is no business class in the previous bullet trains, almost all of the reporters' eyes - and their bodies - were attracted to them. The buzzing of seats changing positions lasted all the way. Many of my fellow passengers had not noticed that the train had sped from zero to 300 km/h in just four minutes. We raced past monotonous views of green and golden patches of farmland. "The Beijing-Shanghai high-speed railway is laid upon a large plain on the eastern part of the country, which is a major crop production base," said Ma Yunshuang, deputy president and technology director of CSR Qingdao Sifang Co Ltd, which designs and manufactures the train. "In comparison, the view along the Wuhan-Guangzhou high-speed railway is much better with those mountains and rivers." The view provided a small surprise near the end of the trip after the train passed Nanjing around 12:50 pm and entered Jiangsu province. A typical panorama of the area south to the Yangtze River scrolled out in front of me. Two-story buildings with white walls and gray roofs stood between green farmland and trees, with ponds dotted here and there - all gauzed in a foggy drizzle. I felt that I was wandering through a traditional Chinese painting. It is something available only by riding in the high-speed train, a "land flight". One thing may disappoint frequent air travelers, especially those who fly business class. The food is served in a single-use plastic container with a plastic seal that is hard to tear open. And it comes with a paper cup of instant soup and a pair of bamboo chopsticks, instead of a fork-knife-spoon set. If the railway authority wants to grab more travelers from airlines, it needs to work on that.

Chinese, Ukrainian presidents meet on ties - Chinese President Hu Jintao (L) meets with Ukrainian President Viktor Yanukovych in Yalta, Ukraine, June 18, 2011. Chinese President Hu Jintao and his Ukrainian counterpart Viktor Yanukovich met here Saturday evening to further deepen bilateral cooperation. "China is ready to work with Ukraine to promote bilateral cooperation and exchanges in a comprehensive and extensive way," Hu said during the meeting, adding the two countries should work hard to carry on the friendship between the two peoples from generation to generation. Hu expressed appreciation with the Ukrainian side for viewing its relations with China as the priority in its foreign policy. Hu said over the past nearly two decades, China-Ukrainian relations have seen healthy and smooth growth. He said the two sides have carried out fruitful cooperation in the areas of politics, trade, economy, science, technology, culture and international affairs. Yanukovich said Hu's visit is of great significance to the government and people of Ukraine. He said this visit will add fresh impetus to the development of bilateral relations and lift the links to a new height. After the meeting, Hu attended a dinner party hosted by Yanukovich. Hu arrived in Simferopol for a visit to Ukraine Saturday morning. He is the first Chinese head of state who visited Ukraine in the past decade. Hu will fly to Kiev on Sunday to continue his visit.

Zhou Xun on the cover Harper's BAZAAR - Chinese actress Zhou Xun on the cover of the July issue of Harper's BAZAAR.

New breed: China's stylish new winners - Chinese star power on the courts, pool and track is making the world sit up and applaud. These modern-day sports celebrities are not afraid to show off their individuality compared to their determinedly anonymous predecessors of a couple of decades ago. Sun Xiaochen and Yu Yilei put this new phenomenon under the microscope. When Li Na took the microphone from Jean Gachassin, president of the French Open, during the award ceremony, the packed audience at Court Philippe Chatrier held its breath. They were waiting for the newly crowned French Open winner and China's first Grand Slam champion to speak, expecting one of her colorful and sometimes unexpected spiels. Fresh from her epic victory over defending champion Francesca Schiavone of Italy, Li Na delivered. She thanked sponsors, tournament director, linemen, chair umpire and her team in English and even added a birthday greeting in the Wuhan dialect for a friend sitting in the stands with her husband. She wrapped it up by thanking her growing legion of fans, which drew the loudest applause from the international crowd. It seemed like a flawless victory speech, but it was what she did not say that caused an unexpected stir back in China. "She did not thank the Chinese Tennis Association (CTA)," a fan fumed on an Internet forum while reminding everyone that CTA chief Sun Jinfang had been sitting right beside the Chinese ambassador to Paris, Kong Quan, at the stands. "She did not even thank China and the Chinese people!" the fan ranted. It was a decided departure from what Chinese supporters expected in the past. It would have been unimaginable for an athlete from China on the winner's podium not to start a speech with a litany of gratitude for coaches, club and country. If indeed they spoke at all. Chinese sportsmen, previously, were as much known for their reticence in facing the media and the public as their athletic prowess. They were individually colorless, looked the same, dressed the same and blended into a background of collective solidarity. "I cannot visualize what would have happened if Li gave the same speech back in the 1980s," says Yang Xinwei, a veteran sport reporter with China Daily who has been following the scene for the past 27 years. "At that time, Chinese athletes were kept aloof. They did not want to talk to the media and public and avoided every opportunity to do so." Yang recalled his first overseas assignment in 1987 to cover the World Gymnastics Championship in the Netherlands where China ranked third in the medal tally with two golds and two silvers. "Even I did not get a chance to talk with the Chinese athletes apart from at the press conference," he remembers. In probably the most extreme example, four-time Olympic winner and diving diva Fu Mingxia answered all media questions with an "I don't know" in Chinese - even when she was asked: "How old are you?" The then 10-year-old had just won the women's platform title at the 1990 World Goodwill Games in Seattle and had been primed by team leaders worried she was too young to handle media queries. Li Na, once known as a maverick because of her outspoken ways and frequents bust-ups with the CTA, has effectively broken the stereotype of the strong but silent Chinese athlete, emphasizing a phenomenon she did not start but probably best represents. She has tattoos on her chest and lower back that boldly declare her affection for her husband. She dyes her hair different shades and she's not afraid to speak out - like when she directed a furious "Shut up!" to the crowds when they became too noisy in-between points at the Beijing Olympics tournament. But it was during her court performance at the Australian Open this year that she charmed the world with her humor and her wit. While fielding questions after her games, she showed off her unflappable sportsmanship when she joked about her husband on court, in English. "I will always admire her tennis first. But it was her charming personality that made us want to sign her," says Max Eisenbud, vice president of sports marketing giant International Management Group (IMG). The company sealed the deal with Li Na in 2009. "She is now experienced with media interviews. She is funny, open and very smart. She really captured the hearts of everyone watching her. She is now more comfortable and relaxed and able to handle the spotlight. And for sure, this will lift her popularity and commercial value worldwide," says Eisenbud, who also nurtured Maria Sharapova from novice to tennis great.

Hong Kong*:  June 19 2011  Share

Hong Kong starts to appreciate the past - A love of the new has long pervaded the city, but a small number of shops is helping the public see the beauty in old - and old-style - home furnishings - Clockwise, from far left: vintage books at Picture This; a photo of Hong Kong's harbourfront taken in about 1875, on sale for HK$15,000; a tourism ad; a poster for a famed 1960 film. Such second-hand collectables have grown in popularity. Everything old might be new again in chic design circles, but how does this fly in a city notoriously dismissive of anything second-hand? Hong Kong purveyors of pre-loved homewares agree they had to battle against a certain mindset to begin with, but they suggest this could be changing. At least, a handful of stores selling recycled goods hope so. When lawyer-turned-designer Nicole Wakley opened Tree, Hong Kong's "first eco-chic furniture boutique", in 2005, the buying public didn't immediately share her passion. Whereas Wakley saw treasures waiting to be "rescued" from the past, they just saw old furniture. "I'm a hopeless romantic," she says. "This gave me the idea of `re-loving' wood that had been used before, whether from a house, a railway or a boat." Tree's furniture is, in fact, newly made, although the timber used is old. The brand's innovative aesthetic brought in customers, who Wakley admits "didn't get it" initially. "They bought from us because they liked the design." Now, however, customers "are making more conscious choices". Erika Chan Siu-king and Chien Min-fu - a former advertising executive and writer of lifestyle and travel books, respectively - took a leap of faith when they opened Mooi Shop, selling "all things retro", in Tai Hang (since relocated to Causeway Bay) in 2008. If you're after a groovy tea set, some vintage fabric or even a hippy shag-pile rug, chances are Mooi will have it. "These pieces are the records of life, an encounter of a journey," says Chan, referring to her eclectic collection of European furniture from the 1950s, '60s and '70s. "From a make-up table to a dining table, from a sofa to a coffee table, or even a glass, an ashtray or wallpaper, everything you see here is a piece of history." They recognised the risk. "When we began, we didn't expect much in return," Chan says. "We opened a shop more to satisfy our passion for and love of vintage European furniture. And seeing that Hong Kong lacks these sorts of furniture shops, we wanted to be one shop that could change people's mindset to one that embraces the elegance and history of vintage pieces." Mooi now has "a loyal following", Chan says. "Since 2008 we have seen gradual growth every year." Chris Bailey set up antiquarian gallery Picture This with wife Pamela in 2001. The British-born former banker agrees that the notion of second-hand is not fashionable in Hong Kong, but stresses: "We don't sell second-hand - we sell nostalgia." Nevertheless, much of his stock has been owned by someone else at some time. His biggest seller, books, are 99 per cent pre-owned, followed by old travel posters advertising Hong Kong, which people now love to hang on their living-room walls. In the early days, most customers were expatriates. Now, Bailey says, it's a 50-50 balance of Chinese and Westerners. Opening in Prince's Building (in 2006) increased their exposure, but Bailey believes there's more of a mindset shift happening. "Things have changed since we set up 10 years ago," he says. "There's an awareness of things being torn down and lost - the Star Ferry [pier], for example. People feel nostalgia for the old Hong Kong, and a spin-off is evident in their home furnishings." Even shoppers from the mainland - whose heritage was lost not through development, but the Cultural Revolution - are feeling it, and increasingly getting their nostalgia fix from the goods and chattels at Picture This, Bailey says. Not one to miss a trend, department store Lane Crawford, a Hong Kong retail institution, is also getting in on the vintage act. Ross Urwin, creative director for Home & Lifestyle, introduced the "pre-loved" concept when the Lane Crawford Pacific Place Home Store opened at the end of 2007. "The idea was to mix vintage with contemporary items and to create a unique edit that speaks to the consumer," Urwin says. "I occasionally find a designer name from the '60s but generally choose products that are appealing to the eye as opposed to being a collectable piece," he says. Urwin concedes that acceptance was slow at first. But now customers seek out pieces "that are unique and no one else sells". "People like a story behind a product and many of the pieces I find come with history and charm from the past," Urwin says. But are we getting carried away? Can all sins be forgiven - even scratches, stains or tears - in the name of vintage appeal? Urwin, who feels that "imperfections add character", says: "I have seen a distinct difference in what is acceptable here compared to what European customers accept." For those ready to take the plunge, Urwin says adding one or two pieces to a contemporary environment is the best way to start collecting. "The key is that the item bought is admired and loved." But buyer beware, he adds. "Quite often with today's modern designs it is not always easy to distinguish a real vintage piece from a piece inspired by "vintage trend". So if you're sure of its history and age, Urwin says that pairing a few genuine vintage pieces with 20th-century design "creates a perfect match".

First the good news - you'll get a HK$200 bonus on top of your HK$6,000 budget handout if you can afford to hold off for a few months before pocketing it. The bad news - the first payouts won't start until early November. The government gave details yesterday of how it will handle the giveaway to all permanent residents. It took more than three months to map out the plan after Financial Secretary John Tsang Chun-wah announced the handouts in March. The HK$200 cash incentive will be given to those who choose to register from April next year until the end of 2012 instead of August this year. However, officials admit they expect only about 20 percent of eligible residents will wait for the extra cash amid soaring inflation. "Because of inflation, if I wait until next year the HK$6,200 will not have the same value as HK$6,000 now," said a 20-year-old student surnamed Chan. "I won't wait because it will then be another financial year. It's too late already," said personal assistant Cindy Law, 35. Though people will still have to wait at least another five months before getting their hands on the cash, many have already planned how to spend it. "I will use most of the HK$6,000 for yum cha," said a 65-year-old woman surnamed Fung, adding she is also planning a short trip. Stephen Ng Lui-nam, secretary and elderly services coordinator for the Islington Chinese Association in Britain, said that some Chinese families in the UK may use the windfall as an opportunity to travel to Hong Kong for a vacation or to see relatives. "The HK$6,000 translates to about 500," he said. "That doesn't go very far in London." Eligible residents must register in phases according to five age groups starting from 28 August. Those aged 65 and above will be the first to get the money from the scheme in their local bank accounts in early November. On the first day of registration - a Sunday - all banks will be open to handle forms submitted by the elderly, a government spokesman said. Each person has to submit or mail a registration form to one of the 21 local banks or register via e-banking. Joint bank accounts will not be accepted to minimize disputes or scams. Those who do not have an individual bank account must register through Hongkong Post. They will later have to collect their checks at specified post offices. It will take about 10 weeks after registration for the payment to be made. "It takes a relatively longer administrative process than places like Macau and Singapore because Hong Kong has more stringent rules on personal data privacy," said the spokesman. He stressed a new registration mechanism is needed because no single existing system captures the data of all identity card holders necessary for establishing eligibility. Young people who reach 18 before March 31 next year will be eligible. Should a person die after registration but before receiving the cash, the money will be treated as part of his or her estate. Overseas residents may register through e-banking, while people with physical or mental constraints may appoint legal guardians. The administration is discussing with the Correctional Services how to pay out prisoners. It is estimated that 6.1 million people will benefit, costing the government HK$38 billion, of which HK$91 million will go to banks and post offices as service charges. The government will start registering permanent residents for its HK$6,000 cash handout in late August. The first of 6.1 million recipients are expected to receive their windfall before district council elections in November. Announcing the proposal to start the controversial HK$37.9 billion giveaway, a government spokesman said yesterday that registration would start on August 28 with permanent residents aged 65 or above. The cut-off date for them to qualify is March 31. Other age groups will be invited to register in four subsequent phases. Those registering after March 31 will get a HK$200 bonus. The registration process will end on December 31 next year. The government expects to start distributing the first cheques or cash payments 10 weeks after registration. The first payments are expected in early November. The district council elections will be held on November 6 and subsector elections for the Election Committee, which will select the next chief executive in March, will be held on December 11. "We didn't account for the district council elections when we worked out the plan. We are just doing our best to distribute the cash as soon as possible to meet public expectations," the spokesman said. That distribution will cost HK$207 million, including HK$81 million in bank fees and HK$75.8 million going towards hiring staff. The windfall for the more than six million adult permanent residents was announced after a budget reversal in March by Financial Secretary John Tsang Chun-wah, who had initially proposed that the money be paid into pension accounts. Permanent residents with a personal bank account in Hong Kong can submit their registration forms to their bank, or through e-banking if the service is provided. Those without a Hong Kong bank (SEHK: 0005) account can leave forms in drop boxes at post offices or send them by post; cheques can be collected at specified post offices. Permanent residents who have emigrated must have an account opened at a Hong Kong-based bank or collect cheques in person after submitting forms to post offices.

Sa Sa profit fails to live up to high expectations - Beauty chain's shares take a battering despite the company posting a 33pc increase in earnings - Sa Sa International (SEHK: 0178) reported a 33 per cent rise in full-year profit to HK$509 million but its shares took a pounding from investors who expected better things of Hong Kong's biggest cosmetics retailer. The stock plunged as much as 7.5 per cent to HK$4.66 in afternoon trading before closing down 5.56 per cent at HK$4.76. Analysts said the company's growth missed market expectations and its mainland business showed no sign of picking up. Sa Sa reported a rise of 19 per cent in turnover to HK$4.9 billion for the year to March. The Hong Kong and Macau markets, the company's largest profit contributors, posted a turnover of HK$3.9 billion, up 19.3 per cent, powered by robust economies, significant growth in tourist arrivals and improving consumer sentiment. Turnover on the mainland increased by nearly half, thanks to 12 new shops and counters. But same-store sales, a measure of shop profitability, dropped 1.7 per cent year on year, and the loss from the mainland business widened to HK$22.5 million from HK$18.6 million in the previous year. The Singapore and Malaysia market recorded 26 per cent rise in turnover to HK$427 million for the period. "A less than 20 per cent increase in turnover is not good enough in the fast-growing retail industry," Core Pacific-Yamaichi Securities analyst Lawrence You said. He said the cosmetics retailer might be under pressure to maintain profit growth because it planned to double its mainland outlets in the year to March 2012. "It will take at least two to three years to see the company's efforts to boost mainland business bear fruit," he said. Sa Sa, which operates a total of 205 stores and counters, said it would speed up store openings this year. It plans to set up at least 14 shops in Hong Kong and Macau and 40 to 50 shops on the mainland. It said it would secure more major international and exclusive brands. The capital expenditure for this year is estimated at HK$220 million. The company proposed a final dividend of 2.5 HK cents and a special dividend of 7 HK cents per share for the period.

Mainland mothers booking early - Competition for maternity beds since the imposition of a quota for births is spurring mothers to make plans even before they know their pregnancy is viable - Cutthroat competition for maternity beds in Hong Kong has pushed mainland mothers to make bookings even before they know if they have a viable pregnancy. An increasing number also now rely on a quick blood test that can give a confirmation of pregnancy at four weeks, a week earlier than the usual urine test. Some mothers have lost the HK$10,000 deposits they paid to secure a place at private hospitals because of miscarriages, which carry a 10 to 15 per cent risk in the first three months of pregnancy. Dr Ares Leung Kwok-ling, deputy medical director of the Union Hospital, said the "super-early birds" had emerged since April, when the government set a quota for mainlanders giving birth, then said this year's quota had been filled. The cap was brought in to relieve the stress on obstetric and neonatal services. "Those mothers come to us even before they can produce an ultrasound scan showing a viable foetus," Leung said. "This is something we have never seen in the past." He said the hospital would reserve a bed for the mothers and ask them to return in a month to produce ultrasound proof of a live fetus. "We don't ask mothers to pay until we make sure it is a live pregnancy," he added. Leung said doctors also had to rule out the possibility of an ectopic pregnancy, where the fetus forms outside the womb. A similar trend has been seen at Baptist Hospital. Obstetrician Dr Grace Wong Ying said more mainland women were coming to Hong Kong for bookings after undergoing a blood test immediately after missing their period. "This is a new phenomenon. In the past, most come to us at six or seven weeks but now they come once they miss a period and get a blood test done here," she said. The blood test is widely available in clinics and takes only a few hours. At Baptist Hospital, mothers must pay a HK$40,000 deposit for booking a maternity package but get HK$30,000 back if they have a miscarriage. The deposit will increase to HK$55,000 on July 1, with a HK$40,000 refund if the booking is cancelled. Baptist Hospital's chief executive, Dr Raymond Chen Chung-I, says the deposit policy aims to prevent abuse. The hospital gives out a full refund to some mothers on compassionate grounds. "We will soon discuss if we will refund more to mothers who have a miscarriage, because it is very unfortunate," Chen said. The Food and Health Bureau will this month announce the cap on mainlanders giving birth next year.

August start for budget handout - Permanent residents aged 65 or above will get the registration ball rolling for HK$6,000 windfall - The government will start registering permanent residents for its HK$6,000 cash handout in late August. The first of 6.1 million recipients are expected to receive their windfall before district council elections in November. Announcing the proposal to start the controversial HK$37.9 billion giveaway, a government spokesman said yesterday that registration would start on August 28 with permanent residents aged 65 or above. The cut-off date for them to qualify is March 31. Other age groups will be invited to register in four subsequent phases. Those registering after March 31 will get a HK$200 bonus. The registration process will end on December 31 next year. The government expects to start distributing the first cheques or cash payments 10 weeks after registration. The first payments are expected in early November. The district council elections will be held on November 6 and subsector elections for the Election Committee, which will select the next chief executive in March, will be held on December 11. "We didn't account for the district council elections when we worked out the plan. We are just doing our best to distribute the cash as soon as possible to meet public expectations," the spokesman said. That distribution will cost HK$207 million, including HK$81 million in bank fees and HK$75.8 million going towards hiring staff. The windfall for the more than six million adult permanent residents was announced after a budget reversal in March by Financial Secretary John Tsang Chun-wah, who had initially proposed that the money be paid into pension accounts. Permanent residents with a personal bank account in Hong Kong can submit their registration forms to their bank, or through e-banking if the service is provided. Those without a Hong Kong bank (SEHK: 0005) account can leave forms in drop boxes at post offices or send them by post; cheques can be collected at specified post offices. Permanent residents who have emigrated must have an account opened at a Hong Kong-based bank or collect cheques in person after submitting forms to post offices.

Six-hour fight to quell Wan Chai fire - 150 firefighters tackle blaze at hotel building site after construction materials burst into flames on roof - Nearly 150 firefighters took six hours to put out a blaze at a Henderson Land (SEHK: 0012) construction site in Wan Chai yesterday. It was the most serious fire in the city so far this year. There were no casualties. Emergency crews were sent to the site at the junction of Jaffe Road and Marsh Road at 3.20am when construction materials burst into flames on the roof of the 31-storey building. No employees were working at the time. Burning construction material on the roof spewed dense smoke and lit up the pre-dawn sky. The Fire Services Department said burning debris also ignited safety netting and scaffolding around the building and the fire spread to the lower floors. Firefighters had to find their way up the building in darkness as there was no electricity. A water pump at the fire scene was damaged by the flames so firemen had to lay and connect hoses up to the building from water sources on the ground. The deputy chief fire officer for Hong Kong Island, Robert Lau, said: "There are no handrails in the staircase and no illumination in the building. It was an exhausting task for our colleagues." He said firemen took about an hour to carry equipment and connecting hoses up the building. The fire was upgraded to a third-alarm blaze at 4.06am and then to a No 4 alarm fire at 5.34am. Fires in the city are rated on a scale of one to five according to seriousness. A department spokesman said more manpower and resources were needed because the fire covered a large area. A newspaper vendor said: "There were sounds of explosions. I heard loud bangs during the blaze." Police cordoned off the area around the site as burning debris fell. Firemen on three hydraulic platforms sprayed water on safety netting and scaffolding to prevent them from catching alight. Thirty-four fire engines were put into action after the blaze was upgraded to a third-alarm fire about half an hour after their arrival. Firemen used nine water jets to put out the flames. The spokesman said initial investigation found nothing suspicious and the cause was still being investigated. Henderson Land said there was no damage to the structure and only construction material, safety netting and scaffolding had been destroyed. A spokeswoman said the boutique hotel which, when complete, will have 32 floors with 92 rooms, was expected to open in the fourth quarter of next year.

Hong Kong's exports volume fell 4.3 percent in April from a year ago, while the imports volume decreased 0.3 percent from a year earlier, the city's statistics department said Thursday. The exports volume of the first four months this year rose 11.6 percent, and the volume of imports increased 9.3 percent, according to the department. The exports volume to the Chinese mainland in April lost 9.1 percent from a year ago, followed by that to the United States down 9.0 percent and Japan down 6.3 percent, while the exports volume to Taiwan and Germany increased 15.4 percent and 23.7 percent, respectively. Over the same period, the imports volume from Japan and Singapore dropped 17.3 percent and 12.3 percent, respectively, followed by that from Taiwan down 1.4 percent and the United States down 0.3 percent. The imports volume from the Chinese mainland rose 0.9 percent. 

 China*:  June 19 2011  Share

Wen congratulates first tuition-free teachers - Chinese Premier Wen Jiabao shakes hands with graduates at Beijing Normal University in Beijing, June 17, 2011. China's Ministry of Education waved tuition fees for students who majored in education at six universities, which have been under direct administration of the ministry since the autumn semester in 2007. Wen attended the students’ graduation ceremony and encouraged them to focus on promoting students’ innovation.

Hongqiao High-Speed Railway Center serve as maintenance hub for China's CRH high-speed trains - CRH380A high-speed train waiting for maintenance at the Hongqiao High-Speed Railway Center in east China's Shanghai. The Hongqiao High-Speed Railway Center will serve as a major maintenance hub for China's CRH high-speed trains ready to operate on the Beijing-Shanghai High-Speed Railway in late June, 2011.

New era for Sino-Russian ties - Chinese President Hu Jintao meets Russian President Dmitry Medvedev at Kremlin in Moscow, capital of Russia, June 16, 2011. China and Russia deepened their strategic relationship on Thursday by vowing to support each other on core security issues. In a joint declaration, signed by President Hu Jintao and his Russian counterpart Dmitry Medvedev, the two countries pledged support for each other on a wide range of issues, including Russia's security challenges from the United States and Europe. The declaration also stresses the common principles of "non-interference" and "less military action" in solving situations in global hotspots, including the Korean Peninsula and the Middle East and North Africa. It also addresses the competition in the Asia-Pacifi region, and calls for building a regional security and cooperation landscape characterized by openness, transparency and equality. Speculation has been increasing in some quarters that the US wants to counterbalance the rising regional clout of China. US interference in bilateral disputes between China and some Southeast Asian countries has fueled the speculation. China and Russia said in the declaration that their "strategic partnership has been a key factor in the peace and stability of the Asia-Pacific region". The declaration backs Russia against US-led missile defense plans in East Europe and stresses that priority be given to political and diplomatic solutions. It also highlighted the importance of ensuring the peaceful exploration of outer space. On the Korean Peninsula nuclear issue, the two countries reaffirmed the importance of a political and diplomatic solution under the framework of the Six-Party Talks and called for a resumption of the talks as soon as possible. Targeting the frequent military exercises staged by the Republic of Korea and the US, China and Russia voiced their firm belief that "lowering military intensity in the region will be conducive to the resumption of the Six-Party Talks". Both China and Russia are committed to building a multilateral mechanism to guarantee peace and security in Northeast Asia. The two leaders also talked about Iran's right to a civilian nuclear program, saying that they will strive to restore the confidence of the international community in the peaceful nature of Iran's nuclear program. Russia and China oppose outside interference in the unrest in the Arab world, the declaration said. "Outside forces should not interfere in internal processes in the countries of the region." The two presidents also expressed concern over the situation in Libya, calling for an end to hostilities. Russia said earlier that it opposes the UN Security Council adopting any resolution on Syria, risking a major dispute with the West. As two veto-wielding members of the United Nations Security Council, it is rare for China and Russia to issue joint declarations on major world issues. Ji Zhiye, a scholar with the China Institutes of Contemporary International Relations, said the declaration was issued at a "critical time" because of the Middle East situation. The declaration will serve as a basic guideline for Sino-Russian cooperation, Ji said. Feng Yujun, a colleague of Ji, said China and Russia share common concerns over how to maintain regional stability and peaceful development. "It's important for China and Russia, two major nations in Eurasia, to enhance cooperation in promoting peace and stability in the region, especially now when the crisis in the Middle East and North Africa may spread." Hu is currently on a state visit to Russia to celebrate the 10th anniversary of the signing of the China-Russia Treaty of Good-Neighborliness, Friendship and Cooperation. The two countries have staged a series of events to mark the event. In another declaration issued on Thursday by the two leaders, both countries vowed to step up military cooperation. Wang Haiyun, vice-president of the Chinese Society for the Study of the History of Sino-Russian Relations, said the establishment and development of a strategic cooperative partnership between China and Russia is based on, and supported by, their common strategic interests. Over the next few decades, the two countries will be embarking on a period of rapid development. There is a pressing need, for both countries, for a stable regional and international environment, Wang said.

First female pilot flies NE China skies - Li Ying prepares for a flight in the cockpit of a plane in Shenyang, the capital of Northeast China’s Liaoning province, May 30, 2011. The 25-year-old is the first female civil aviation pilot in the northeastern region of China. 

Foreign banks OK'd to underwrite corporate debt - HSBC Holdings' building in the financial district of Hong Kong. The China units of HSBC Holdings and Citigroup Inc have won initial approval to underwrite corporate debt in the country. The China units of HSBC Holdings and Citigroup Inc have won initial approval to underwrite corporate debt in China, paving the way for them to be the first foreign banks to win the coveted licenses, sources told Reuters on Thursday. China's National Association of Financial Market Institutional Investors (NAFMII), an industry association under the central bank that supervises the country's debt market, has given the two banks the green light to underwrite corporate debt, two sources with direct knowledge of the approvals said. The two banks will still have to register with the People's Bank of China, the central bank, before they can start operations, the sources said, adding that the banks may obtain final approval within the next two weeks. HSBC was not immediately available for comment. A spokesman for Citigroup in China declined to comment. Analysts said the move marks a significant breakthrough for foreign banks in China. "The corporate debt market is one of the fastest-growing in China's financial industry. It offers huge growth potential," said Sheng Nan, a banking analyst at UOB Kay Hian in Shanghai. Currently, only domestic banks in China are allowed to underwrite corporate debt such as short-term bills and medium-term notes on the interbank market. Foreign banks have been hoping to get in on the rapidly growing market for corporate debt, as China encourages companies to raise funds in the bond market rather than relying primarily on bank lending. China is aiming to make Shanghai into an international money hub, such as New York or London, by 2020. One of the biggest hurdles it faces in this task is the lack of depth in its corporate debt market. Regulators had previously allowed some foreign banks to underwrite government bonds as well as those issued by policy lenders, but the corporate debt market is potentially much more lucrative. However, foreign banks are likely to face tough competition from local players such as Industrial and Commercial Bank of China Ltd and Bank of China Ltd at the initial stage, given the Chinese banks' strong local client network, Sheng said. "Over the longer term, the foreign banks will definitely be very strong competitors to the local players. But for now, it's unlikely they can threaten the market position of the local commercial banks," he added. The outstanding issuance of short-term bills and medium-term notes totaled 2.29 trillion yuan ($353.28 billion) as of the end of May, official data showed.

Ford opens new factory - An automobile assembly line at a Ford Motor Co factory in Nanjing. The company aims to boost its presence in the Chinese market and increase global sales by 50 percent in four years. Ford Motor Co broke ground on Thursday on a $500 million engine factory in Southwest China as the automaker seeks to expand in the world's largest market and boost global sales by 50 percent in four years. The plant in the Southwestern Chinese city of Chongqing will more than double engine capacity for joint venture Changan Ford Mazda Automobile Co to 750,000 units when output starts in 2013, according to its statement. Ford forecast last week that growth in Asia will help boost global sales by 50 percent to 8 million vehicles a year by 2015. Chief Executive Officer Alan Mulally expects 55 percent of vehicle sales will be small cars and a third will be in Asia by 2020. Ford, which still gets most of its sales and profit from the United States and Europe, holds a 2.4 percent share of the passenger-vehicle market in China, trailing General Motors Co's 10 percent, JD Power & Associates said in April. The engines built in Chongqing will be used in Ford-branded vehicles built and sold in China, the statement said. The automaker, based in Dearborn, Michigan, plans to triple its lineup in China by offering 15 models, including the Kuga small sport-utility vehicle, by the middle of the decade, Chief Financial Officer Lewis Booth said last week. Ford plans to double its number of dealerships in China to 680 by 2015 and is spending $1.6 billion building four factories there. By next year, the company will have the capacity to build 1.1 million vehicles in China, Jim Farley, Ford's marketing chief, said last week. Ford also said its pretax profit will be lower in the second half than in the first six months as the company faces rising structural and commodities costs. Second-quarter profit will equal or be "slightly lower" than in the first quarter, when Ford earned $2.78 billion before taxes, Controller Bob Shanks said on Thursday at the Deutsche Bank Global Industrials and Basic Materials Conference in Chicago. The housing recession is hurting commercial-truck sales and Ford is constrained in output of fuel-efficient cars, he said. "Our commodity costs and our structural costs will each be up about $2 billion," Shanks said. "We expected first-quarter earnings would be potentially the best of the year. As we look at the second quarter, it could be very close to the first quarter and maybe a little lower." New models such as the redesigned Focus compact car and Explorer sport-utility vehicle are commanding higher prices, which helped boost first-quarter net income 22 percent to $2.55 billion, the most for the period since 1998. The second-largest US automaker has earned $9.28 billion in the past two years after $30.1 billion in losses from 2006 through 2008. On Wednesday, Ford fell 28 cents, or 2.1 percent, to $13.15 at 4:15 pm in New York Stock Exchange composite trading. It has declined 22 percent this year. The automaker has said it will face $4 billion in higher expenses for commodities, new-product development, engineering, manufacturing and advertising this year. The company also said earnings from its Ford Credit finance unit will be $1.1 billion less because of changes in lease depreciation and credit-loss reserves. Shanks said concerns about the economy are damping US auto sales. Ford expects industrywide sales to "snap back" in the year's second half and reach the automaker's forecast of 13 million to 13.5 million deliveries, he said. "Consumer confidence isn't as strong as you'd like," Shanks said. "There's just a lot of nervousness across the board on the global economy."

New ship opens doors for car exports - A Chery Automobile Co Ltd vehicle being loaded on to the new MV COSCO Tengfei car carrier, which can hold up to 5,000 cars and trucks. China's domestic carmakers now have a new option to ship their vehicles to overseas markets, after a cargo vessel capable of carrying 5,000 cars began operations. The carrier will significantly cut shipping costs and reduce carmakers' heavy reliance on foreign logistics companies, according to senior executives of China Ocean Shipping (Group) Co (COSCO). The MV COSCO Tengfei car carrier, which can hold up to 5,000 cars and trucks, departed from Shanghai's Waigaoqiao port in the Pudong New Area on Saturday. This is the second delivery by this type of vessel following a successful shipment by MV COSCO Shengshi in February. Designed by the Shanghai Design Institute and manufactured at COSCO's Zhoushan shipyard south of Shanghai, COSCO Tengfei and COSCO Shengshi will deliver Chinese-made cars to South American countries and carry European cars on the return trip, Han Guomin, chief executive officer and director of COSCO Shipping Co Ltd, told China Daily. The carrier, 182.8 meters in length, 32.2 meters in width and 14.95 meters in depth, has a deadweight tonnage (DWT) of 14,500. Equipped with three adjustable decks, it can hold cars of different heights. According to Han, it will take COSCO Tengfei 28 days to reach its destination, Santos in Brazil. More than 4,400 cars made by Chery Automobile Co Ltd, Anhui Jianghuai Automobile Co Ltd (JAC), Sany Heavy Industry Co Ltd, and Lonking Holdings Ltd will be shipped in this journey. Labor and material costs in the Chinese shipbuilding industry are lower than those in Japan, South Korea and European countries, where COSCO previously rented car carriers, so the shipping costs will fall once the company manages its own fleet, according to Han. "In the following years, China is entering a peak season of exporting cars, and the car carriers are built to serve such demand," said Han. Each of the two ships costs $53 million. According to Xu Lirong, vice-president of COSCO Group, the company started to develop its own carriers after signing a 15-year car shipping strategic cooperation agreement with 17 domestic carmakers, including Chery, JAC and Chang'an in 2006. "Even during the most difficult period of the global economic crisis, COSCO never gave up the development plan," said Xu. Chinese car companies exported 72,100 units in May, a rise of 6.79 percent month-on-month and 53 percent year-on-year. That's a record high, according to figures released by the China Association of Automotive Manufacturers on June 9. During the first five months of 2011, China exported 225,400 cars, an increase of 56.7 percent over the same period in 2010. Among them, the top five brands are Chery with 55,200 units, Chang'an Auto with 35,100 units, JAC with 28,100, Great Wall Motor Co Ltd with 26,800, and Dongfeng Motor Group Co Ltd with 24,600. Chinese cars are becoming more popular in many countries, and the new car carriers will secure delivery schedules and lower shipping costs. Meanwhile, the positive elements will lead to more solid cooperation with our foreign clients and more mature marketing strategies, said She Cairong, vice-general manager of JAC. According to JAC, South America has become the company's most important export destination, and currently accounts for more than half of the Anhui-based company's total export volume. "There are two things every Brazilian man dreams of: One is football and the other is cars. They know cars well and have high quality demands. In this sense, Chinese cars can serve their demands well," JAC's She said. As the world's biggest car market, China consumes the overwhelming majority of the cars made in the nation. "Only about 5 percent of the cars are exported to the Middle East, Southeast Asia, Africa and South America," said Xu Xiaofeng, an industrial analyst from Central China Securities. However, cars made in China are also becoming popular in many developing economies and emerging nations, and this will provide good opportunities for both car carrier construction and domestic carmakers, added Xu.

Hong Kong*:  June 18 2011  Share

Haesl's jet engine centre has plenty of room to spare - Overhaul facility in Tseung Kwan O to seek more business from airlines, and sees rising demand - Maintenance work at Haesl's Tseung Kwan O facility. The firm's biggest client is Cathay Pacific. Hong Kong Aero Engine Services (Haesl) is targeting Asian and Middle East operators of Rolls-Royce-powered aircraft after opening the US$50 million fifth phase of its jet-engine repair and overhaul facility in Tseung Kwan O yesterday. Stephen Chu, Haesl general manager for commercial and materials management, said the 13,500 square metre building "was just the beginning - [now] we have to generate the business". He said about 40 per cent of the firm's business came from Cathay Pacific Airways (SEHK: 0293) through its fleet of Rolls-Royce-powered Airbus and Boeing aircraft. The remaining 60 per cent came from close to 30 other airlines, including Air China (SEHK: 0753, announcements, news) , China Airlines, China Eastern Airlines (SEHK: 0670) and Emirates. Haesl is jointly owned by Swire Pacific (SEHK: 0019), Hong Kong Aircraft Engineering, Rolls-Royce and SIA Engineering. Haesl chairman Tony Wood, who is also president of Rolls-Royce gas turbine services, said "Asia, and China specifically, accounted for 50 per cent of the forward order book" for Rolls-Royce jet engines. These included a deal with Cathay Pacific for Trent 700 engines to power 15 Airbus A330 aircraft that was signed in March. Rolls-Royce also signed a US$150 million contracts package last month with Taiwanese airline TransAsia Airways for Trent 700 engines for two A330s due to be be delivered in 2012-13. The pact included long-term maintenance support of the engines. Overall, Rolls-Royce forecast there would be 3,370 twin-aisle passenger aircraft, such as the A330 or Boeing 777, delivered to Asia-Pacific airlines between 2009 and 2028 with another 5,663 single-aisle aircraft deliveries in Asia in the same period. The engine maker forecast that, globally, 137,000 engines worth more than US$800 billion would be required for more than 63,000 commercial aircraft and business aircraft over the next 20 years. Christopher Pratt, chairman of both Swire Pacific and Cathay Pacific Airways, indicated that Haesl, which was created in 1997, would be responsible for maintaining the Rolls-Royce engines on the airline's Airbus 350-900 aircraft which will be delivered from 2015. Pratt said Haesl would recruit 250 trades people, technicians and graduates over the next two years to meet the planned expansion of its engine overhaul business. Wood said about 100 of those would be employed directly as a result of the completion of the fifth phase of the complex. Wood added there were not yet any firm plans to expand into China on the same basis as the Haesl venture.

Lily Chiang jailed 3-1/2 years for share, options fraud - Businesswoman's contribution to society and young family help her secure a 30 per cent discount on prison term for HK$3m scam - Lily Chiang begins her three-and-a-half-year sentence at Tai Lam Correctional Institution after her sentencing yesterday. High-profile businesswoman Lily Chiang Lai-lei was jailed for three- and- a-half years yesterday for her leading role in a HK$3 million share fraud that a judge said had shaken confidence in Hong Kong's financial system. Describing Chiang as a member of a "renowned family", District Court Judge Albert Wong Sung-hau gave her a 30 per cent discount on her sentence for reasons including her previous contribution to society and the fact that she had four children, aged two to 11. Chiang's sister, Ann Chiang Lai-wan, a vice-chairwoman of the Democratic Alliance for the Betterment and Progress of Hong Kong, said the family was heartbroken. The daughter of industrialist Chiang Chen and the first woman to chair the General Chamber of Commerce, Chiang showed no emotion as she heard the sentence. She said earlier she would appeal, but family members said they had not decided whether to appeal and would consult lawyers first. Wong said the dishonest actions of the businesswoman and her two co-accused had tarnished Hong Kong's image as a financial centre of integrity and had shaken investors' confidence in the financial system. Earlier, he had described Chiang as an "author of dishonesty". Chiang, 50, had been found guilty of fraud, conspiracy to defraud and authorising a prospectus that included an untrue statement. Tahir Hussain Shah, 45, was jailed for two years for conspiracy to defraud. Pau Kwok-ping, 54, was jailed for 19 months for fraud and issuing a prospectus that included an untrue statement. The court heard earlier that Chiang had designed a scam in which others held options or shares in two listed companies on her behalf. The options were said to have been rewards for senior officers at Chiang's companies but the recipients were low-ranking staff, including Chiang's driver and personal assistant. Ann Chiang said: "There are ups and downs in life. Lily faced many difficulties in the past 10 years. We believe that she will stay strong during the times of adversity." Lily Chiang's husband, Gino Yu, an associate professor at Hong Kong Polytechnic University, hoped his family would be reunited soon. "My wife is now in prison. And we will all learn to adjust to this new reality," he said. "I am confident that Lily, myself and our children will grow from this experience." "We are a family full of love, trust, support and understanding," he said. "We all eagerly await the day that we are once again reunited as a family." Ann Chiang would not comment on the possibility of an appeal. "We will talk to our lawyers," she said. In sentencing, Judge Wong ruled out community service or a suspended prison sentence, saying the alternatives would not reflect the gravity of Chiang's crime. "This kind of offence is so serious in nature and degree that an immediate custodial sentence is the only appropriate sentencing option," the judge said. "The dishonest act of the defendants not only affects financial interests of [others], more importantly it shakes investors' confidence in the system." The judge gave a 15 per cent reduction to Chiang for her contribution to society, 10 per cent for the six years elapsed between the crime in 2001 and Chiang's arrest in 2007 and 5 per cent out of consideration of the effect on her family. Shah and Pau received 20 per cent reductions in their sentences. Chiang's father was absent from the packed courtroom because of business commitments.

Wang Guangya says no rush on Article 23 law - Beijing's head of Hong Kong and Macau affairs signals security legislation should not be seen as urgent task - Hong Kong and Macau Affairs Office director Wang Guangya samples some fare at an outdoor market in Macau's San Kio district yesterday, the fourth day of his high-profile tour. Beijing's head of Hong Kong affairs said yesterday a national security law under Article 23 of the Basic Law should only be introduced when the city had reached a consensus on the issue. It is the first time such a high-ranking official has stated publicly that the central government is in no rush for the law to be enacted. Wang Guangya , director of the Hong Kong and Macau Affairs Office, made the remarks as he visited an outdoor market in Macau on the fourth day of a high-profile tour of Hong Kong and Macau. When asked about Article 23, Wang said: "Hong Kong should introduce a national security law under Article 23 of the Basic Law. It will be introduced when everyone reaches a consensus." He said he would leave it up to the next administration to decide whether it wants to take up this duty. Democratic Party chairman Albert Ho Chun-yan said Wang's remarks indicated Beijing did not see an urgent need for Hong Kong to enact the legislation, and that the absence of such a law so far did not constitute a breach of the Basic Law. "I believe Wang's message is that enacting the national security law is not an urgent task for the next special administrative region government," Ho said. Political commentator Ching Cheong said: "Wang's remarks amount to a slap in the face for some Hong Kong people who have called for early enactment of the national security legislation in an attempt to win the central government's blessing for their political ambition." Rita Fan Hsu Lai-tai, a member of the National People's Congress Standing Committee who is tipped as a dark horse to run for the chief executive post, last month described the thorny issue of Article 23 as an "unavoidable challenge" for the next government. Senior mainland officials briefly toyed with reintroducing the national security bill after the government's success in passing the political reform package in the legislature last year, according to a central government-affiliated researcher who has been canvassing political sentiment in Hong Kong. Public anger over Article 23 reached a climax in 2003, when half a million Hongkongers took to the streets to protest against the law, eventually leading to the replacement of then chief executive Tung Chee-hwa. Meanwhile, following his debut visit to a wet market in Hong Kong, Wang visited several street markets in Macau yesterday, as well as a public housing estate construction site and three community centres. Wang began his visit on Tuesday evening by visiting three major casinos, including having dinner at the MGM Grand. He spent about five minutes in the lobby and ballroom of the Grand Lisboa after dinner and then took a tour of the hotel and leisure facilities at the newly opened Galaxy resort complex. But he did not visit any of the casinos' gaming sections. Asked whether he would visit casinos, he said: "I don't know how to gamble, nor do I have money. Macau needs to develop the convention and tourism industry. Casinos are a major characteristic of Macau. The development in Macau should be all round." Wang will leave Macau today.

'Agony' over policeman's death - Chicken transporter pleads for forgiveness after rooftop protest for bird flu compensation draws veteran officer to his death in fall from Central footbridge - Disgruntled chicken transporter Lau Yuk-tong, whose rush-hour protest in Central yesterday ended in the death of police officer Lau Chi-kin, apologised yesterday afternoon as the realisation sunk in that he would have to live with the tragic consequences of his actions for the rest of his life. Shortly after being released on bail by the police, in a show of remorse to the dead officer's family, 62-year-old Lau knelt with his head bowed in front of a phalanx of news photographers, and said: "The police officer died as a result of my protest. I'm in agony. I feel guilty and apologetic towards his family." Lau's protest on the roof of a covered footbridge in Central was the latest of his stunts in protest over the loss of his business due to curbs on the poultry trade following the 2008 bird flu outbreak. Detective Sergeant Lau Chi-kin, 49, died after falling from the roof of the walkway as he tried to reach Lau. "From today onwards, I won't do anything harmful to the public. I hope people can understand my pain," he said, adding: "I didn't want to hurt anybody." His words are likely to be of little solace to the family, friends and colleagues of Detective Sergeant Lau, described by colleagues - who massed at the hospital as he battled in vain for his life - as a "cop's cop". Lau Chi-kin, a 30-year force veteran, was working out of Central Police Station when he responded to the call to help yesterday morning. Officials also rejected as "nonsense" suggestions by a lawmaker helping Lau with his case that health officials were responsible for the officer's death. When asked to what extent he was responsible for the officer's death, Lau said he would let the court decide. Lau was arrested for "behaviour causing public disorder" and released on HK$500 bail as investigations into the tragedy continue. Lau bought chickens from the mainland and sold them to Hong Kong farms from 1984 until his business folded during the avian flu scare of 2008, when many chicken retailers in Hong Kong gave up their licences, according to former chairman of the Poultry Wholesalers and Retailers Association, Steven Wong Wai-chuen. That year the government granted a buyout package for people in the live poultry trade, offering payments to farmers, wholesalers, retailers and transporters who chose to opt out of the trade permanently. But not all related industries were covered, such as transporters of day-old chickens, which was Lau's business. "He knew he couldn't get the compensation, he just wouldn't let it go," Wong said. Lau had been demanding compensation of HK$150,000. He said he had been trying to voice his opinions peacefully but his efforts were in vain. "For three years I have sent letters to express myself, but I was repeatedly rejected," he said. In 1997 and 2004 avian flu outbreaks he received HK$24,000 in compensation, he said. Lawmaker Albert Chan Wai-yip, who has helped Lau with his claim for over four years, denied that he had a role in Lau's radical action. "I didn't know anything about his action before this morning," he said. "He has been an agitated person and became increasingly unstable since last year," he said, adding that Lau would see a doctor today. Secretary for Food and Health Dr York Chow Yat-ngok said Lau could have gone through proper channels to solve the problem. "Colleagues from the Food and Health Bureau and the Agriculture, Fisheries and Conservation Department have met Mr Lau many times since 2008, and as recently as May 20 this year, to explain the coverage of the buyout package and what kind of assistance he could seek ... We will continue to communicate with him," Chow said. Chief Executive Donald Tsang Yam-kuen, police commissioner Tsang Wai-hung, acting Secretary for Security Lai Tung-kwok and Secretary for the Civil Service Denise Yue Chung-yee offered condolences to Lau Chi-kin's family yesterday. "Sergeant Lau will probably be buried in Gallant Garden in Wo Hop Shek," said Junior Police Officers' Association chairman Gary Wong Ching.

Financial secretary denies interfering in computer contract tender - Financial Secretary John Tsang Chun-wah on Thursday refuted accusations he had interfered in the tender of a computer contract, which was awarded to a company linked to the territory’s largest pro-government party. Tsang was speaking at a Legislative Council’s panel meeting in response to allegations he and other officials pressured a board to award a HK$220-million internet learning scheme contract to the Internet Professional Association (iProA). Jeremy Godfrey, the government’s former chief information officer who oversaw the selection process, earlier alleged that his previous boss, Permanent Secretary for Commerce and Economic Development Elizabeth Tse Man-yee, told him the choice of contractor was a “political assignment” and to ensure that it went to iProA. Godfrey said this directive came from the financial secretary. Speaking to Legco, Tsang said he did mention iProA was a possible candidate at the time, but said Godfrey had misinterpreted his comments. “Before the selection began, I did mention iProA possessed the planning and operating-experience qualities needed for the project. But I also mentioned that it was not the only candidate with these qualities,” he said. “I did not mention it was a must to award the project to iProA,” Tsang said. The financial secretary hit back at the former chief information officer by saying his misinterpretation stemmed from an unfamiliarity with government procedures. “I would suggest Godfrey might not fully grasp public administration procedures and that led to this unnecessary misunderstanding … a storm in the tea cup,” Tsang said.

Global fretting about Greece landed on Asia’s shores this morning after a dismal day in U.S. markets, sending stocks broadly lower and Chinese indexes toward their lowest points this year. Hong Kong’s Hang Seng Index traded at 22023 late in the morning Thursday, leaving the benchmark down 4.4% for the year so far and below the 22300 close it had on March 18, just days after the Japanese earthquake and nuclear disaster. The euro bug is also plaguing mainland Chinese markets, where the Shanghai Composite is down 0.64% Thursday morning, at 2687, just 10 points above its 2011 low close on January 25 when it traded at 2677.43. Other dreary performers Thursday: Korea’s Kospi Composite is 1.6% lower at 2053 and Singapore’s FTSE Straits Times Index is down a tad less than 1% at 3028.

 China*:  June 18 2011  Share

China sends ship 'to protect sovereignty' - The helicopter-equipped Haixun-31 patrol boat sets off for Singapore from Zhuhai on Wednesday. China has dispatched one of its largest maritime patrol ships on a first-ever visit to the Southeast Asian city-state amid a spike in tensions over disputed territory in the South China Sea. The mainland sent one of its biggest civilian maritime patrol ships into the South China Sea to protect its “rights and sovereignty”, official media said on Thursday, in a move likely to raise tensions with neighbours staking rival claims to waters believed to hold rich reserves of oil and gas. The Chinese Maritime Safety Administration’s Haixun 31 left south China on Wednesday and will head for Singapore, passing near the Paracel and Spratly island groups at the heart of disputes with Vietnam, the Philippines and several other governments. News reports on the mainland were plain about the intent of the trip and the news drew concern from the Philippines. “Our country’s biggest maritime patrol ship patrols the South China Sea,” said a headline in the official Beijing Daily. The Haixun 31 would monitor shipping, carry out surveying, inspect oil wells and “protect maritime security”, the paper said – steps that could lead to confrontation with other countries pressing claims in the area. It also said it would carry out inspections of foreign vessels anchored or operating in waters claimed by China. The Haixun 31 is one of two civilian ships of the same size which lack the heavy firepower of naval vessels. But it is one of PLA’s most advanced maritime patrol vessels, weighing in with a displacement of 3,000 tonnes. It has a helicopter pad and can stay at sea for 40 days travelling at 18 knots, the Beijing Daily said. Beijing’s move comes after weeks of trading accusations with Vietnam and the Philippines over what each government sees as intrusions and illegitimate claims over their territorial waters. The Philippines would be concerned if China placed markers in disputed areas of the South China Sea, Philippine Foreign Secretary Albert del Rosario said on Thursday after talks with his Australian counterpart in Canberra. “We are very concerned about these markers being placed in waters and areas and features that are clearly ours,” del Rosario told reporters. China’s Foreign Ministry spokesman Hong Lei told reporters in Beijing that the Haixun 31 was on a “normal” visit, and his government remained willing to solve the territorial disputes through one-on-one negotiations with other countries making claims. But official media reports made plain the patrol was also meant to show Beijing’s resolve. “Throughout its journey, it will carry out patrolling of the marine areas being developed by China in the South China Sea,” said the Takung Pao, a Chinese-language Hong Kong newspaper under mainland control. “It will protect national maritime rights and sovereignty.” The South China Sea tensions have been magnified by region-wide nervousness about China’s naval modernisation, which has included modernising its civilian maritime administration ships. China, the Philippines, Malaysia, Brunei and Taiwan all claim territory in the South China Sea. The patrol also appeared intended to mollify nationalist feeling among China’s people, many of whom feel the country’s growing economic and military might should be used to protect and assert territorial claims. “Obviously, China cannot again sit back and watch and allow other countries to treat their seizure of the South China Sea’s oil and gas resources as an established fact,” said the International Herald Leader, a weekly newspaper. China has accused Vietnam of violating its claim to the Spratly archipelago and nearby seas, which Vietnam also deems its own. China calls the islands the Nansha group. China’s claim is by far the largest, forming a vast U-shape over most of the sea’s 1.7 million square kilometres, including the Spratly and Paracel archipelagos. Beijing said last week it would hold naval drills in June in the western Pacific Ocean and the navy has done little to disguise plans to launch its first aircraft carrier. This week, Beijing warned outside countries not to step into the dispute, after Vietnam said other countries, including the United States, could help defuse the tension. The Haixun 31 is due to reach Singapore next Thursday after a journey of 2,600 kilometres and will go back to China after a six-day stay, said the Beijing Daily.

Warner Bros Entertainment will begin offering its new releases and catalog films to Chinese consumers this summer in a tieup with its Chinese partner, marking its advance into one of the world's most populous markets, the company announced on Tuesday. The Chinese consumers will be able to access Warner Bros' classic films including the latest releases like "Harry Potter and the Deathly Hallows -- Part 1," as the Hollywood mogul launches a partnership through a distribution agreement with YOU On Demand Media, affiliated with YOU On Demand Holdings Inc in China. YOU On Demand will operate under an exclusive 20-year joint venture with CCTV-6's pay TV arm China Home Cinema (CHC), to become the first national Pay-Per-View and Video On Demand platform in China, Warner Bros. said in a press release seen in Los Angeles. Warner Bros Entertainment will leverage YOU On Demand' s platform to provide a potential 200 million cable households access to the studio' s films on their television sets, the Hollywood firm said. YOU On Demand anticipates their service will be available in three million cable TV homes in China by the end of this summer, which is comparable to the subscriber base of top cable operators in the United States. "China is developing methods for consumers to view movies outside the cinema in a legitimate fashion," said Jim Wuthrich, President, International Home Video and Digital Distribution, Warner Bros Home Entertainment Group. "Through YOU On Demand's platform, millions of potential consumers will be able to view our films." "Our distribution agreement with Warner Bros. marks a historic milestone for our company," said Shane McMahon, YOU On Demand's Chairman and CEO. "I'm excited for the millions of Chinese consumers that will be able to experience and enjoy the very best content that Hollywood has to offer through the YOU On Demand platform."

Balsam pears, a type of bitter cucumber, are thrown away in Genghe town in Foshan, South China’s Guangdong province, June 13, 2011. More than 1,000 mu (about 67 hectares) of vegetables were harvested in the town this year, but sluggish sales mean many have ended up as trash.

PBOC issues commemorative coins for CPC's 90th anniversary - China's central bank on Wednesday released commemorative coins for the coming 90th founding anniversary of the Communist Party of China (CPC). The coin, made of brass alloy and 30 mm in diameter, has a face value of five yuan ($0.77). A total of 60 million coins have been issued this time by the People's Bank of China, or the central bank. The fore face of the coin carries the country's name and the year of 2011. On the other side are images of the CPC emblem and flag, as well as a peony, pigeon, five stars, and the words "the CPC 90th founding anniversary" and "1921-2011." The coins can be circulated as normal currency. The anniversary will fall on July 1. The two sides of the commemorative coins for the 90th anniversary of the Communist Party of China (CPC) in Hangzhou, Zhejiang province, on June 16, 2011. China's central bank on Wednesday released commemorative coins for the coming 90th founding anniversary of the CPC. The coin, made of brass alloy and 30 mm in diameter, has a face value of five yuan ($0.77).

For China’s Rich, Paris Is Calling - The Eiffel Tower and the roof of the Grand Palais in Paris, France - The richest Chinese travelers take an average of 15 vacation days a year, they prefer the Shangri-La Hotels brand above others and for a holiday they would rather visit France than the U.S. One reason they’re traveling overseas is to sort out their kid’s education. Four out of five millionaires are going abroad to find a suitable school for their children, according to a recent Hurun Report study on the travel and vacation patterns of China’s wealthy. The firm, which also compiles the closely watched annual China Rich List, surveyed 463 millionares with more than 10 million yuan in assets (US$1.5 million); 45 of those interviewed had more than 100 million yuan in assets. U.S. schools topped the list for places to send their kids, but schools in the U.K. and Canada followed as second and third picks. And those decisions are driving overseas real-estate purchases: In Vancouver, where mainland Chinese buyers have driven up property values to record highs, access to quality schools is often mentioned as a reason for their decision to buy.

Report: Corrupt Chinese Officials Take $123 Billion Overseas - A priest in traditional costume conducts a religious ritual to honour patriotic Chinese poet Qu Yuan, who drowned himself in 277 B.C. to protest against the corrupt government of his time, during the Dragon Boat Festival in Beijing, June 16, 2010. China Government say corrupt cadres are the nation’s worst enemy. Now, according to a report that was given widespread coverage this week in local media, Beijing says that enemy resides overseas, particularly in the U.S. The 67-page report from China’s central bank looks at where corrupt officials go and how they get their money out. A favored method is to squirrel cash away with the help of loved ones emigrating abroad, schemes that often depend on fake documents. News of the study got prominent notice this week in Chinese media. A sample headline from page one of the Shanghai Daily on Thursday: “Destination America For China’s Corrupt Officials.” The reports said the study was posted to the website of China’s central bank. While the PDF document remains widely available in Chinese cyberspace, the report – dated June 2008 and identified as “confidential” – no longer appears on the People’s Bank of China website. The central bank didn’t respond to requests for comment. Though the report reads like an academic study, it doesn’t cite a clear conclusion. Instead, it is broken into two main sections, the first starting with estimates that up to 18,000 corrupt officials and employees of state-owned enterprises have fled abroad or gone into hiding since the mid-1990s. They are suspected of pilfering coffers to the tune of 800 billion yuan, or $123 billion — a sum that works out to 2% of last year’s gross domestic product. The higher ranking they were, the report says, the more likely they were to go to Western nations. Top destinations for high-level thieves included the U.S., Canada, Australia and the Netherlands. Lower ranking officials taking less substantial sums went to the West indirectly, such as through Hong Kong, or sought safe haven in nearby countries like Thailand, Malaysia, Mongolia and Russia. The somewhat juicier second section of the report deals with how they got money out. Here the report names names, but primarily only in the cases of those who were caught. In one case, Xu Fangming, a former Ministry of Finance official allegedly deposited roughly 1 million yuan into the bank account of a son studying abroad. In another, Cheng Kejie, a top politician got his mistress settled in Hong Kong and funneled money to her. Some of the stories are well known. Among the most notable is the tale of Zhang Jian, a former Communist Party chief of Haimen in Jiangsu province, who famously dumped his ill-gotten 18 million yuan into Macao casinos. According to the report, he funded his 48 visits over two years with credit cards. Though China’s appetite for U.S. bonds is more attention-getting, talks with Beijing on cross border money laundering already figure prominently into the Sino-U.S. economic relationship. After the latest Strategic and Economic Dialogue in May, for instance, the U.S. said China agreed to strengthen its money-laundering controls. China’s central bank said in the report that it plans to cooperate with foreign governments to plug the holes that allow corrupt officials to escape with their takings from the public till. The central bank has become increasingly involved in international anti-money laundering organizations, including the inter-governmental Financial Action Task Force. The U.S. Embassy declined to comment on the report’s citation of the U.S. as the favored destination for China’s official theives. The report also neglects to explain why the pilferers seem to prefer the U.S., but the country’s lack an extradition agreement with China is almost certainly a factor.

A Chinese court sentenced three people to prison terms for collaborating to steal information from a key supplier regarding Apple Inc.'s iPad 2 several months before its release, the latest outcome from leaks about products made by the technology giant. The Shenzhen Bao'an People's Court, in announcing its decision, said the head of a Chinese electronics-accessories manufacturer allegedly paid a former employee and a then-active employee of Taiwan's Hon Hai Precision Industry Co. for information about the iPad 2 in order to produce protective cases for the device. Hon Hai, known by its trade name Foxconn, makes the iPad 2 and other gadgets for Apple in its factories in China. The court announced the decision Tuesday in statements on its official account at Sina Weibo, a Twitter-like microblogging service in China. It said that Xiao Chengsong, general manager of Shenzhen MacTop Electronics Co., had offered 20,000 yuan, or about $3,000, plus discounts on MacTop products to a former Hon Hai employee named Hou Pengna, for information about the iPad 2. The court said Ms. Hou then paid Lin Kecheng, a Hon Hai research-and-development employee, to get digital images of the device's back cover from last September, six months before the iPad 2 was publicly announced. The court said Mr. Xiao was sentenced to 18 months in prison, and fined 150,000 yuan. Mr. Lin was sentenced to 14 months and fined 100,000 yuan, and Ms. Hou was sentenced to a year in prison and fined 30,000 yuan. A court official declined to elaborate on the decision. The three defendants couldn't be reached for comment, and the identities of their lawyers couldn't be determined. Apple declined to comment. Hon Hai didn't comment directly on the court's decision. "We cannot comment on matters of internal security, but Foxconn takes its commitment to protecting its intellectual property as well as that of its customers very seriously and undertakes all appropriate actions to safeguard against any violations," Hon Hai said in a written statement. A woman who answered the phone at MacTop declined to comment or to transfer the call to anyone else at the company. Apple is known for strictly guarding product-development secrets. Hon Hai has become the world's biggest contract manufacturer of electronics in part because of its ability to protect the secrets and technology of its clients, which also include Hewlett-Packard Co., Sony Corp., Dell Inc. and Nintendo Co. In July 2009, a 25-year-old Hon Hai worker in the southern Chinese city of Shenzhen committed suicide after being questioned by a Hon Hai security official. Local-media reports, which weren't confirmed, said the questioning involved the disappearance of a prototype iPhone. Hon Hai expressed regret over the worker's death and agreed to compensate his family. Apple also said it was saddened by the worker's death. "We require that our suppliers treat all workers with dignity and respect," a spokesman for Apple said at the time. The Shenzhen court said that MacTop had begun manufacturing cases for the iPad 2 and promoting them online, including on Alibaba Group Holding Ltd.'s online trade platform, before the iPad 2 was released. Alibaba said that listings for iPad 2 cases appeared on its site in December, and were removed after Alibaba received a "legitimate" request to have the listings taken down. The listings were posted by several companies, but Alibaba didn't say if any of them came from MacTop. Mr. Lin "has violated the privacy policy of the company and provided trade secrets to others," the court said in a statement. Mr. Xiao and Ms. Hou obtained that information "by illegal means," which "caused huge losses" to Hon Hai, the court said. "All three people have infringed trade secrets."

Hong Kong*:  June 17 2011  Share

Ocean Park Hong Kong Unveils Latest Attraction - Allan Zeman (center), chairman of Ocean Park, makes his entrance during the unveiling of the park’s newest attraction, the Rainforest. Hong Kong theme parks are locked in a race to build attractions as they compete for visitors amid rising competition in the region. The latest splash: A 500-square-meter Amazon exhibit, unveiled by Ocean Park on Tuesday, that features a jungle raft ride, an aviary and live animals, including a now-pregnant anaconda and two capybaras, the world’s largest rodent. In perhaps a gesture meant for competing theme parks, Allan Zeman, chairman of Ocean Park, opened the new attraction, called the Rainforest, wearing Amazon war paint along with a blue headdress and a grass skirt. The Rainforest, part of a 5.6 billion Hong Kong dollar (US$719.3 million) redevelopment plan by Ocean Park, is just the latest move in the battle for Asia’s fun seekers, especially the growing number of mainland Chinese tourists. Last year, the number of mainland Chinese visitors to Hong Kong jumped more than 26% to nearly 23 million, according to Hong Kong government statistics. Hong Kong Disneyland, which has yet to earn a profit since it opened in 2005 but had record attendance last year, is in the middle of its own HK$3.6 billion expansion, which includes a Toy Story Land attraction slated to open this year. In Sentosa, Singapore, the world’s largest saltwater aquarium is set to open in 2012 with some 700,000 fish, blowing Ocean Park’s Aqua City aquarium, which opened in January and houses about 5,000 fish, out of the water. Another massive theme park called Ocean Kingdom, part of a 200 billion yuan (US$30.85 billion) project in Zhuhai, China, just across the border from Macau, is set to open in 2013. Its operators expect to attract 20 million visitors a year with eight different theme areas. Ocean Park, a 34-year-old Hong Kong government-owned amusement park, saw record attendance last year with more than five million visitors. Mr. Zeman said that the park is expected to set another attendance record this year. He said Aqua City fueled a 20% rise in attendance and he predicts it will jump another 10-15% with the Rainforest. Later this year, as part of the same redevelopment plan, a ride called Thrill Mountain will begin operation. Next year, a re-creation of an old Hong Kong street and a polar-themed attraction are scheduled to open. Ocean Park’s redevelopment plan is funded by loans, including a HK$1.4 billion one from the Hong Kong government. Mr. Zeman said there are no immediate plans to raise ticket prices to pay for the construction of the new attractions. The park has earned a profit the past seven years. “As long as we keep coming up with attractions like the Rainforest, I feel very confident we’ll continue to set records,” Mr. Zeman said. But that doesn’t mean the chairman should remove his war paint just yet. He said that in recent months representatives from Disneyland in Shanghai, which is set to open in 2015, have visited Ocean Park three times. “The competition is getting better and better,” he said.

Cathay Pacific (SEHK: 0293) is planning to order about 15 freighter aircraft to meet cargo demand beyond 2013 and the first multibillion-dollar contract could be confirmed as early as next month. Nick Rhodes, Cathay Pacific Cargo general manager, said the airline was in negotiations with Airbus and Boeing along with engine manufacturers for its freighter requirements between 2013 and 2018. He said three types of freighter, the Airbus A330, Boeing 777 and Boeing 747-8, were being considered, with the A330s and 777s for the airline's medium-haul cargo network. Rhodes said it would be up to the aircraft manufacturers to see "what they can do" in terms of delivery, price and their ability to fit into the airline's needs. "All things are on the table," he said. Rhodes said that based on the projected global growth in cargo volume of around six to seven per cent a year for the next few years, the airline would need to raise capacity by between two and three freighters a year. This growth, coupled with the delivery of 10 new Boeing 747-8s and the retirement of its older Boeing 747-400 freighters, meant Cathay Pacific "had plenty of lift to 2012; beyond that we are looking for additional aircraft", Rhodes said. Overall, there would be an estimated need for 12 to 15 freighters, including possible additional 747-8s to strengthen long-haul routes to North America and Central and South America and European services. The smaller aircraft could be used on medium-haul routes, including those between India and Europe, as cargo growth from the Indian subcontinent exceeds the global average. The 747-8s can carry up to 130 tonnes, while the 777s have a 100-tonne capacity and the A330s can carry about 65 tonnes. All the aircraft could be ordered at one time with firm orders for a certain number of aircraft and options "locked in at a fixed price" for additional aircraft. Alternatively, orders could be placed in "two digestible chunks" to give Cathay flexibility in financing and its prevailing assessment of the air cargo market, Rhodes said.

Haeco has three maintenance hangars and, due to growing demand, is considering adding a fourth at least half of the size of the 15,750 square metre third facility. Hong Kong Aircraft Engineering Co is "actively considering" the development of a fourth maintenance hangar at Chek Lap Kok airport following a raft of orders for new aircraft by Hong Kong airlines and increases in repair and upgrading work. Augustus Tang Kin-wing, Haeco (SEHK: 0044) chief executive, said there was no firm timeline for the development of the extra hangar, but he pointed out that design and construction would require a minimum of two-and-a-half to three years. Considering the growth in the aircraft maintenance business, he said the facility could be needed "sooner rather than later, although management had not come to any firm conclusion". Tang said the facility would be at least half of the size of Haeco's 15,750 square metre third hangar. Other expansion options were also being assessed. Hong Kong Aero Engine Services, a joint venture involving Haeco and Rolls-Royce, will open the fifth phase of its jet-engine repair facility at Tseung Kwan O today. Pointing to the anticipated growth in demand, Tang said Cathay Pacific Airways (SEHK: 0293) and Hong Kong Airlines had placed combined orders for 140 aircraft for delivery by 2020. With the Cathay Pacific fleet growing from around 120 to 200 aircraft, he said these planes would increase the volume of heavy and line maintenance the firm performs. Tang said foreign airlines were also upgrading their fleets, some by making structural alterations, including wing extensions to increase the fuel efficiency of aircraft, and overhauling cabin interiors. "To cope with the demand from Cathay Pacific and overseas customers, we have to look at aircraft requirements and the number of hangars," Tang said. Around a third of heavy maintenance at Chek Lap Kok last year was done for Hong Kong carriers, including major customer Cathay Pacific, while the remainder was done for foreign, mainly US, airlines.

Hong Kong is set to accelerate efforts to sign a double-taxation treaty with Italy, after seven years of talks. The news coincides with criticism of a planned initial public offering by Italian fashion house Prada over double taxation, although the government has not said whether this is a factor in its negotiations. Prada aims to raise up to HK$20.3 billion in its IPO. A spokeswoman for the Treasury Bureau yesterday confirmed that the government was discussing double-taxation prevention with Italy, but declined to comment on when an agreement would be made. A deal would allow individuals or companies to offset tax paid in one country against tax payable in the other. The sale of shares in Prada, which is set to be the first Italian company to list on the Hong Kong stock exchange, has been marred by investor concerns over a capital gains tax and withholding tax on dividends that Hong Kong shareholders must pay under Italian law. Italy and Hong Kong have not yet signed a double-taxation treaty. That means Hong Kong residents who buy Prada shares will be liable under Italian law to 12.5 per cent tax on gains earned by selling their holdings and a withholding tax of 27 per cent on dividends. Brokers said the reception for Prada had been weaker than expected, partly due to investors' concerns about their potential tax liability. Tim Lui, a partner with accounting firm PricewaterhouseCoopers, said the Hong Kong government had initiated double-tax negotiations with Italy in October 2004. The most recent talks were held last October but he expected that they would resume shortly. "If Italy and Hong Kong could sign the double-taxation treaty, it would eliminate or at least reduce the tax burden faced by Hong Kong investors when buying Prada shares or other Italian companies listed in Hong Kong," Lui said. Hong Kong has signed similar treaties with the mainland, Britain, Australia, Thailand, Belgium and Luxembourg. Under these treaties, investors buying shares from companies based in these countries but listed in Hong Kong are liable to pay a smaller amount of dividends tax or capital gains tax, or none at all. "Hong Kong and Italy have been negotiating the double-taxation treaty for some time. With the Prada listing and other Italian firms that choose to float in Hong Kong, the two governments may speed up the negotiation," Lui said. But he warned: "Sometimes even after the treaty is signed, there's a lot of paperwork to follow. This means investors may need to wait for months or even a year before they can enjoy tax benefits after the treaty is signed." Taiwan and Italy are said to be in the final stages of double-taxation talks, and are expected to reach agreement on the issue soon. China has had a double-taxation agreement with Italy since 1990, according to the website for the Chinese embassy and consulate in Italy.

Legco's new base is taking shape - First look inside chamber reveals more space, for members of the public as well as lawmakers - The Legco chamber is no more than a shell, but secretary general Pauline Ng shows how it will look when it opens for debate in September. Conference rooms under construction (left and right) as the Tamar site, new home of the Legislative Council, takes shape (centre). You might not be able to vote for all of the people who sit in it, but it will have more seats for you to watch them debate the issues that matter. Opened to the media for the first time yesterday, the new Legislative Council chamber on the Tamar site in Admiralty remains largely a shell. But the city's new crucible of political debate is taking shape. Legco secretary general Pauline Ng Man-wah says the chamber will be finished by late next month and be a fully functioning theatre of debate by September. "The whole moving exercise is on schedule," she said, standing in what will be a press conference room but which, for now, has just a concrete floor and no wallpaper. The 40,000 square metre building - four times the size of the present Legco building - is designed to engage the public more, said Ng. There will be space for 134 members of the public to watch the weekly meeting of lawmakers, three times more than in the current chamber. Four demonstration zones surrounding the building will accommodate up to 2,000 protesters. And if you are at a loose end, public tours around the new facility will be increased six-fold to 81 each week. "We hope to let Hongkongers better understand the city's legislature," said Ng. As Legco will be expanded from 60 to 70 members in October next year after electoral reforms agreed last year - and could be further expanded - the larger chamber can accommodate a maximum of 120 lawmakers. The bigger home and enhanced services come at a cost - Legco will triple its security force from 30 to 90 and hire another 11 full-time tour guides. On July 18, 137 incumbent and former lawmakers will join officials, Legco staff and journalists to say goodbye to its home since 1985, the former supreme court building in Statue Square, Central. They will unearth a time capsule which lawmakers buried under the car park before the handover in 1997.

It's years since Patten's day but egg tarts are still a treat - HKMAO chief evokes memories of the last colonial governor with a sweet-toothed trip to Tin Shui Wai - Wang Guangya tastes an egg tart during his visit to a wet market on an estate in Tin Shui Wai. They say a week is a long time in politics, in which case 18 years must be an eternity. That is the time that has elapsed between the arrival in the city of two senior political figures who could not be more different. In Hong Kong politics though, some things never change - egg tarts. Yesterday, Beijing's top man on Hong Kong affairs, Wang Guangya , went on a walkabout at a Tin Shui Wai market, immediately evoking memories of Hong Kong's last colonial governor, Chris Patten. During his tenure, Patten was affectionately known as fei pang or "fatty Patten", largely due to his love of Hong Kong's famed artery-choking tarts. The man who occupied Wang's position as director of the State Council's Hong Kong and Macau Affairs Office at that time took a slightly less charitable view of London's last man in Hong Kong. Depending which version of history you believe, Patten's nemesis at the time, Lu Ping , egged on by state media, variously tagged the governor a "prostitute", "a sinner of 1,000 years" and a "tango dancer" for what they saw as his controversial democratic reforms. This time round, Beijing's man had no such niceties to deal with. Democratic reforms were the last thing on his public agenda. Indeed, accompanied by Secretary for Transport and Housing, Eva Cheng, his visit was welcomed by Wong Loi Hei, a resident on Tin Yan Estate, who said: "I'm really excited. I woke up at six this morning just to make myself ready." Wang also made a lasting impression on Siu Ping, the owner of a food stall. Siu said: "He seems like a very nice guy. It was a pleasure to meet him." Others were less impressed. One meat stall owner said: "If he really cared, he should have asked whether we were leading hard lives, instead of asking where my meat was from" After leaving the market, Wang looked at an empty 400 square foot flat on Ching Hoi Estate before arriving in Sha Tin to see the new headquarters building of rural affairs body the Heung Yee Kuk. He was greeted and shown around by kuk chairman Lau Wong-fat.

Nine Dragons Shares Hit as S&P Pulls Rating - Shares of a Hong Kong-listed packaging manufacturer controlled by one of China's richest entrepreneurs plunged after Standard & Poor's made the unusual decision to withdraw its long-term corporate credit rating for the company's debt, citing "insufficient access" to management. S&P's decision, which pushed shares of Nine Dragons Paper (Holdings) Ltd. 17.4% lower before trading was halted midafternoon, came amid heightened concerns over transparency and governance issues at some overseas-listed Chinese firms. In a statement, S&P referred to the company's "aggressive debt-funded growth appetite." Without sufficient access to management, the ratings firm "cannot fully understand the company's strategy and financial management or assess its future credit risks," it added. Nine Dragons Deputy General Manager Benjamin Ng disputed S&P's comments, and said the company was given no prior notice before the withdrawal. He added the Chinese company, which has production facilities in the cities of Dongguan, Tianjin and Chongqing, has a sound financial position, asserting that the S&P decision won't have any impact on its relationship with banks and its refinancing capabilities. Nine Dragon has only one corporate bond maturing, in April 2013, with just US$50 million outstanding after the company bought back most of the issue, Mr. Ng noted. "They could at least have sent us questions via email," he said, adding many of the company's staff travel frequently and aren't always at their offices. Nine Dragons is controlled by Zhang Yin, China's richest woman and the nation's third-wealthiest person with assets worth US$5.6 billion in 2010, according to HuRun Report, a Shanghai-based publication that compiles wealth rankings. Ms. Zhang, also known as Cheung Yan in Hong Kong, control a stake of around 67% in the Chinese packaging-products company, which as of Tuesday had a market capitalization of about $3.4 billion. Ms. Zhang couldn't be reached for comment Tuesday. The U.S. Securities and Exchange Commission recently said it is investigating accounting and disclosure issues at a number of Chinese companies listed on U.S. exchanges. Trading has been halted in more than a dozen U.S.-listed stocks of Chinese companies. Nine Dragons isn't listed in the U.S. Hong Kong's Securities and Futures Commission late Tuesday said it declined to comment on individual cases. The S&P ratings withdrawal "does come at a time when investors are worried about corporate governance, and it could make investors worry still more about this issue," said Guy Stear, head of research for Asia at Société Générale Corporate & Investment Banking. Fund managers believe that yields on corporate bonds from Chinese industrial firms will continue to rise in coming weeks as investors demand higher returns to account for the risks linked to the concerns over transparency. Yields already have been rising on a mix of concerns about accounting and governance as well as Chinese growth and Europe's debt problems. Nine Dragon's bond price didn't move on Tuesday. Earlier this month, shares of Sino-Forest Corp., a Hong Kong-based tree-plantation company listed in Toronto, plummeted after a short seller published research alleging problems with the company's accounts. The company has called the research "inaccurate" and says it is investigating the allegations. S&P, which had a double-B, or speculative-grade, corporate rating on Nine Dragons, also withdrew its weaker double-B-minus issue rating on Nine Dragons' outstanding senior unsecured notes. Some analysts questioned the S&P decision. "Nine Dragons is nowhere near a distressed level," said Charlene Gu, an analyst at Yuanta Securities, who called the stock drop an overreaction. Fitch Ratings, which rates Nine Dragons double-B-minus, hasn't encountered any problems in getting access to company management, said Su Aik Lim, the firm's director of Asia Pacific Corporates. Nonetheless, Nine Dragons remains highly geared, due in part to its large investment plans. The company's gearing ratio, a key measure of a company's debts, stood at nearly 90% at the end of December 2010. According to an earlier report from Citigroup, the containerboard maker has doubled its capital expenditure to 9.2 billion yuan ($1.42 billion) for the fiscal year ending June 30 to help fund the construction of new plants and the acquisition of a paper mill in Hebei province, which surrounds Beijing. "S&P's withdrawal could increase the difficulty for Nine Dragons to refinance its debts, consequently leading to higher borrowing costs," said William Lo, an analyst at brokerage Ample Capital Ltd. For its part, S&P says it doesn't make ratings withdrawal decisions lightly, though it cited several examples of such decisions made on companies in the region over the past year. "In serving investors, our policy is to withdraw ratings at our discretion and to provide transparency by updating the market about our views at the time of any withdrawal," the ratings firm said. It noted that Nine Dragons had been paying for S&P's ratings services.

 China*:  June 17 2011  Share

China's central bank surprised the world yesterday by raising the reserve requirement ratio for lenders - just hours after the country announced the inflation rate hit its highest level in 34 months. The People's Bank of China raised the ratio by 50 basis points to a new high of 21.5 percent for major banks. The ratio has gone up every month since January after six hikes last year. But the timing was noteworthy this time. Previously, announcements came overnight or during holidays, but this was right in the wake of the announcement that the consumer price index rose 5.5 percent in May, mainly on surging food prices. Another surprise was the bank opting to raise the RRR instead of interest rates. That would also suggest interest rate hikes may be held back for some time. Food prices in May rose 11.7 percent year-on- year, National Bureau of Statistics spokesman Sheng Yunlai said. But analysts point to liquidity as the major problem for the economy. Yang Ruilong, a professor at Beijing's Renmin University, said excess money supply was the primary reason for the high CPI reading, and the ratio lift will work to prevent further price increases. "The ratio requirement aims to soak up liquidity from central bank bills worth up to 601 billion yuan (HK$721.82 billion) and due this month," said Peng Wensheng, chief economist of China International Capital. The move is expected to remove up to 380 billion yuan from the interbank market. That will mean more than 2 trillion yuan will have been frozen for required reserves so far this year. However, Wang Tao of UBS Securities said an interest rate hike before the end of the month remains a real possibility, while Li Daokui, an adviser to the PBOC, argued that the fiscal policy focus should be firmly on raising the deposit rate to ease inflationary pressure. But Lu Ting, an economist at Bank of America Merrill Lynch, said that "the RRR hike itself says that the PBOC has no plan to ease its monetary policy stance any time soon despite some noises about a hard landing." Lu also looked at industrial production. Growth slowed in May to 13.3 percent from 12 months earlier. That was also down 0.1 percent from April but still higher than a consensus forecast for 13.1 percent. Power shortages, moderate growth in steel output and a slowdown in exports dragged output down, Lu said. Other important data revealed included: May's producer price index rose a higher-than-estimated 6.8 percent year- on-year. That matched 12-month growth figures in April but was short of the 7.3 percent gain in March. Fixed-asset investment totaled 9.03 trillion yuan for the first five months, up a stronger-than-expected 25.8 percent from 12 months ago. Investment in property development for January-May amounted to 1.87 trillion yuan, a 34.6 percent increase from the same five months last year. Retail sales rose 16.9 percent year on year in May versus 17.1 percent in April. Aside from the RRR action, the PBOC was looking to other challenges in a report it released yesterday. China's macroeconomic management faces "many challenges, including asset bubble risks and accelerated inflation pressures" this year, it warned.

Google has applied for a licence to operate its Google Maps product on the mainland, China Business News reported yesterday, quoting an unnamed official. Google needs a licence from the State Bureau of Surveying and Mapping to continue operating Google Maps on the mainland. Recently, requirements for a mapping licence were relaxed to allow for foreign online mapping providers, such as Google, to engage in joint ventures to provide the service. Google has applied for the licence with Beijing Guxiang Information Technology. "Right now we are examining their application," the official said. "We can't comment on the final outcome." A Google spokeswoman declined to comment and officials at the bureau could not be reached for comment. Google has had a testy relationship with Beijing after the company partially withdrew from the mainland last year saying it was no longer willing to censor search results in the country and after a serious hacking incident. Access to Gmail is spotty while YouTube is banned. The firm said earlier this month that Chinese hackers tried to steal the passwords of hundreds of Google e-mail account holders, including those of senior US government officials, Chinese activists and journalists.

China and Kazakhstan agreed to co-operate on nuclear and alternative energy including solar and wind power as the countries deepened bilateral ties and pledged to co-ordinate on global and regional issues. Both countries will also ensure "smooth" construction of a proposed expansion of cross-border oil and natural gas pipelines, according to a joint statement posted on the website of the Ministry of Foreign Affairs yesterday. Kazakhstan holds about 3 per cent of the world's oil reserves, according to BP. The two sides agreed to co-operate in areas including energy, resources, technology and healthcare following President Hu Jintao's state visit yesterday to Kazakhstan's capital, Astana. China and Kazakhstan also agreed to swap about US$1 billion of yuan for tenge as the countries reduce the use of dollars in bilateral trade over the next three years. Kazakhstan will start supplying uranium tablets to China this year, its president, Nursultan Nazarbayev, said. China Guangdong Nuclear Power Group will expand nuclear co-operation with Kazakhstan, according to agreements signed in February. China National Petroleum Corp, the country's biggest energy company, has investments in the Central Asian nation. Hu, on an official tour of three nations including Russia and Ukraine, agreed with Nazarbayev to double bilateral trade to US$40 billion by 2015, Xinhua reported. The president is to arrive in Russia, whose biggest trading partner is China, today, Assistant Foreign Minister Cheng Guoping said. The two countries are in talks to supply 68 billion cubic meters a year of natural gas to China. Pricing differences have held up plans to build pipelines that have been discussed for more than a decade. Energy co-operation between China and Russia is "unique," Xinhua said, citing Russian Energy Minister Sergei Shmatko. There is room for further partnership in electricity, energy-equipment manufacturing, coal, and renewable and clean energy, he said.

Hong Kong*:  June 16 2011  Share

China Everbright (SEHK: 0165) Bank plans to raise about US$6 billion in a Hong Kong initial public offering, pushing ahead with the biggest IPO in Asia so far this year despite volatility in equity markets that has eased demand for new issuance. The lender, which raised US$3.2 billion with an offering in Shanghai nearly 10 months ago, plans to issue 10.5 billion new shares, according to a term sheet seen by Reuters on Tuesday. The stock sale would be equivalent to 23.6 per cent of Everbright’s enlarged capital. The IPO would top the US$5.5 billion raised by Hutchison (SEHK: 0013) Port Holdings Trust in Singapore in March. Everbright Bank planned to use the proceeds to replenish its capital base and boost lending in coming months, the term sheet said. The bank started pre-marketing for the deal on Tuesday, with a roadshow to gauge investor demand slated for June 27. Pricing is set for July 8. Everbright Securities, China International Capital Corporation, Morgan Stanley, JP Morgan Chase & Company, UBS, BNP Paribas, BOC (SEHK: 3988) International, HSBC Holdings (SEHK: 0005) and Shenyin Wanguo were hired to manage the offering, the term sheet said.

More products made in Taiwan have been banned from sale in Hong Kong. A brand of biscuits, some instant noodles and a sports drink were banned on Tuesday after they were found to contain excessive levels of toxic plasticisers, a spokesman for the Centre for Food Safety (CFS) said. Tests showed eight samples of Chuang’s Square Cookies contained up to 14 parts per million of plasticiser Di(2-ethylhexyl) phthalate (DEHP) and up to 6.3ppm of Diisononyl phthalate (DINP). This exceeds international safety limits, the spokesman said. DEHP content in a sachet of sesame oil included in a sample of Wei Lih “hand-made noodle” (roast chicken flavour) instant noodles was also found to be high, at levels of 8.7ppm, the spokesman said. Another product, DrinkaZine Energy Watt Sports Drink, was also banned from sale. Tests showed it contained 0.97ppm of Dibutyl phthalate (DBP), another plasticiser. This exceeds the European safety limit of 0.3ppm, the spokesman said. The spokesman said the centre had instructed suppliers to stop imports of all batches of these products from Taiwan and have ordered a recall. “The CFS has notified the trade of this new arrangement and urged them to take the initiative to stop the sale of any food or drink that might be affected,” he said. “Retailers should also take the affected products off shop shelves.” The ban comes after a consumer fears were triggered by the discovery of toxic industrial plasticisers in products from Taiwan recently. Unscrupulous manufacturers use toxic industrial plasticisers as clouding agents and to improve taste and appearance in food and drinks. Health experts say excessive consumption of these compounds may affect human reproduction and cause cancer.

Prada's IPO oversubscribed - Italian fashion house Prada SpA, which is seeking to raise up to $2.6 billion through a Hong Kong initial public offering, has generated five times demand for its offer, a source familiar with the matter told Reuters. The source declined to say which institutions have committed funds to the IPO or at what price. The information was based on road shows up to last Thursday, the source added. The Milan fashion house, known for its leather handbags, brightly-colored shoes and long boots, launched the retail portion of the IPO on Sunday. It set an indicative price range of HK$36.5 ($4.69) to HK$48 ($6.17) a share for the IPO, confirming a Reuters story issued last week. That values the company at between $11.4 billion and $14.6 billion. The source declined to be indentified because the information is not public. A Prada spokesman declined to comment. Strong demand for Prada's initial public offering comes at a time when investors have balked at some recent Hong Kong offers amid choppy stock markets. "Despite recent market volatility, the Prada team is very optimistic (about the IPO)," Chief Executive Patrizio Bertelli told reporters via a video conference link from Milan. A successful IPO will make Prada the first Italian company to float in Hong Kong, adding to the growing list of consumer brands seeking to list there. However, fragile market sentiment has weighed down on some recent offerings, with luggage maker Samsonite International SA pricing its $1.25 billion IPO at the bottom of a revised price range and startup Australian miner Resourcehouse Ltd pulling its $3.6 billion sale. "We are not worried at all, just a little tired from the road show," said Carlo Mazzi, deputy chairman of Prada. "We are not worried or stressed about the offering." After scrapping several attempts to list its shares in the past, Prada is offering 16.5 percent of its enlarged capital, or 423.3 million shares. At the top end of the range, the IPO is being priced at 27 times projected 2011 earnings, higher than the average of European top luxury groups such as Tod's Group, Burberry Group, and LVMH SA. Some investors expect the IPO to be priced at the middle of the indicative range due to skittish sentiment. The Prada management said the IPO price range was reasonable and represents the value in the company. It did not share the view that the offer was expensive. A successful IPO - designed to cut Prada's debt of around 1 billion euros and fund further expansion in Asia - would make Prada one of the most valuable luxury goods groups, but some fund managers balked at the price range. Prada, 95 percent owned by the families of Chief Executive Bertelli and his fashion designer wife Miuccia Prada, is betting on a boom in the consumption of luxury items in China, the world's second-largest economy, to lure investors to the IPO. China will account for 20 percent of the global luxury market by 2015, consulting firm McKinsey & Co says. The IPO is slated to be priced on June 17 and the shares will start trading in Hong Kong on June 24 under the symbol "1913," the year the company was founded in Milan. The 423.3 million shares are being sold by Prada and shareholders Prada Holding BV and Intesa Sanpaolo SpA. Prada started its business in 1913, when Mario Prada began selling leather bags, trunks and silverware to the European elite from his store in Milan's Galleria Vittorio Emanuele. The company has since expanded throughout Europe, the United States and Asia to include mobile phones, perfumes and eyewear. Profit more than doubled in the year ending January 2011 to 235.6 million euros. Prada said in a Hong Kong filing on Friday it expected half-year profit to rise 46 percent. Goldman Sachs, Credit Agricole's CLSA brokerage and Italian banks UniCredit SpA and Intesa Sanpaolo's Banca IMI unit, both on Prada's board, are joint bookrunners and global coordinators of the IPO.

Differences between the government and rural body the Heung Yee Kuk on the handling of illegal structures have narrowed. The kuk, for the first time, expressed support for government action against dangerous extensions among the 36,000 village houses built after 1972. Speaking after a two- hour meeting with more than 30 representatives from the kuk, Secretary for Development Carrie Lam Cheng Yuet-ngor said the atmosphere was "better than had been expected" and that agreement had been reached on four principles: safety, compliance with the law, pragmatic approach and dealing with the problems in an orderly manner. "I am happy that Heung Yee Kuk chairman Lau Wong-fat has agreed to the four principles and I have heard for the first time that the Heung Yee Kuk agrees with law enforcement on buildings that pose danger," she said. "In other words, the government will, in an orderly manner, request those four-, five- or six-story village houses or those that cover far more than 700 square feet per floor, to remove the extra structures." When asked if glasshouses built on rooftops will be exempted, Lam said: "The most important thing is whether the additional floor is enclosed, and the government will not allow houses of four, five or six floors." The New Territories Small House Policy launched in December 1972 allows each indigenous villager to build a small house within the village area according to government's restrictions on size and height. These must not be more than three stories and each floor should not exceed 700 square feet, or 2,100 sq ft for the house. She said three types of small-scale works such as a small canopy at the door, solar-power water heaters on rooftops and burglar bars on terraces, all of which were considered unauthorized work in the past, will be allowed from now on. Lam also reiterated there will be no amnesty for illegal structures. "Property owners will not be allowed to pay a fine for unauthorized alterations to their buildings. But we are open to the suggestion of fining those violating owners until they remove the illegal structures." Kuk chairman Lau welcomed the four principles and said that consensus had been reached. "We do not oppose law enforcement in principle," he said. "But village houses built before 1972 involve different laws and historical factors. I hope the government will not ... force these to comply as this will result in a big shock to society with regard to politics, economy and livelihoods."

City's smallest carrier to fly world's biggest jet - Airbus 380s will enable Hong Kong Airlines to challenge Cathay Pacific on long-haul routes and overcome a looming shortage of airport slots - Hong Kong Airlines expects to double passenger numbers to four million this year as it buys more planes and taps the mainland's rising demand for travel. Hong Kong Airlines, the city's smallest carrier, will order Airbus A380s - the world's biggest airliner - as it challenges Cathay Pacific Airways (SEHK: 0293) and adds flights in China, the world's fastest-growing air-travel market. The airline, controlled by the investment arm of the Hainan provincial government, will announce the deal at next week's Paris Air Show, it said in a text-message reply to questions yesterday. It did not say how many superjumbos it would buy. The A380s may help Hong Kong Airlines compete with Cathay on long-haul routes and let it overcome a looming shortage of slots at the city's airport caused by delays in building a new runway. The full-service carrier earlier this year agreed to order 32 Boeing 787s and six 777 freighters as it bolsters its network in a bid to lure business travellers. According to the Airbus website, the airline also had 30 Airbus A320s, 12 A330s and 15 A350s on order as of the end of May. Hong Kong Airlines and affiliate Hong Kong Express operate 13 passenger jets and five freighters, according to their website. The carrier expects to double passenger numbers to four million this year as it adds planes and taps the mainland's rising demand for travel, president Yang Jianhong said in March. The airline has a less than 10 per cent share of Hong Kong's outbound travel market, Royal Bank of Scotland Group Plc said at the time. The airline will be the second in China to order the A380 following China Southern Airlines. Airbus is due to deliver the first superjumbo to China Southern later this year. The planemaker has sold 234 A380s, of which 49 have been delivered, as of the end of May, its website said. Orders for the A380 have been dominated by Middle East and Asia-Pacific carriers. Emirates Airline has placed orders for 90, making it the largest customer. Singapore Airlines was the first carrier to fly the superjumbo on commercial services. Cathay Pacific has so far ruled out ordering A380s and is instead building its long-haul fleet with smaller planes. It ordered 15 Airbus A330-300s and 10 Boeing 777-300ERs in March, following an agreement for 30 A350s in August. "We'll probably have another good look at big aircraft in the next one or two years," chief executive officer John Slosar said last week in Singapore at the International Air Transport Association's annual general meeting. Hong Kong Air is seeking to raise funds by selling a stake to private-equity investors ahead of an initial public offering that may raise as much as US$1 billion, Yang said in March. The carrier had a net income of about HK$110 million last year, its first annual profit, and it may double that this year, he said. Chek Lap Kok airport is likely to reach full capacity by about 2020 because of growing demand for flights to the mainland, the Airport Authority said this month as public consultation began on plans to build a third runway. Passenger numbers at the airport may grow as much as 3.6 per cent a year, reaching 105 million by 2030, according to estimates on its website. International passenger traffic to and from the mainland may rise 11 per cent a year up to 2014, about double the pace of the global market, according to the International Air Transport Association.

Two-thirds of obstetricians in public hospitals are trainees, a situation one leading doctor says is "unhealthy and unsustainable". Of 220 obstetricians in the public system only 80 are fully registered, Dr Cheung Tak-hong said. "In a team of five doctors, only two are specialists and the other three are still learning." In a healthy system, Cheung said, at least 55 per cent of doctors should be specialists. Cheung - head of Prince of Wales Hospital's obstetrics department and a spokesman of the Hong Kong Obstetrics Concern Group - was speaking yesterday at a meeting of the Legislative Council's health services panel at which lawmakers and district representatives discussed the Hospital Authority's plan to postpone the opening of an obstetrics department at Tseung Kwan O Hospital. He said the public system needed at least 240 obstetricians, and so at least 130 needed to be specialists. "If we train 13 specialists a year, it will take at least three years to fill the positions, given that no one retires and no one moves to the private sector." He said a new obstetrics department would need 20 doctors and 80 nurses, and a good time to launch such services in Tseung Kwan O would be when the percentage of trainees fell below 50 per cent. The new department at Tseung Kwan O Hospital was part of a HK$1.95 billion expansion plan and was to have opened by the end of 2013 to serve 3,000 women. But the government said last week that the plan had been delayed due to the lack of manpower. It also said while an obstetrics department needed 3,000 births a year to be sustainable, demand in Tseung Kwan O by 2013 would still fall short of that. Democratic Party lawmaker Cheung Man-kwong said that was not true. According to figures he got from the government, 3,270 Tseung Kwan O and Sai Kung residents gave birth last year - 2,030 in public hospitals and 1,240 in private hospitals. "Perhaps these women chose private hospitals because there aren't services in Tseung Kwan O," he said. Undersecretary for Food and Health Professor Gabriel Leung said the plan had not been entirely stalled. "We are still upgrading the hardware. When we have the necessary software, we will be able to launch the service," he said. Tseung Kwan O women now travel to the United Christian Hospital in Kwun Tong if they want to give birth in a public hospital. The hospital handled 1,500 births by women from the town last year. Cheung said it would be better to introduce a fleet of ambulances to have on standby in the area than to "launch an obstetrics department that does not have enough demand".

Beijing's point man ducks the iron triangle - An off-the-cuff answer to a media question nearly made Wang Guangya's first visit one to remember - Beijing's Hong Kong and Macau affairs chief, Wang Guangya (left) with HKEx chief Charles Li Xiaojia. Wang Guangya appeared for a brief moment yesterday to have handed the media the story of the year. Alas, it was not to be. While going into a youth forum in Chai Wan, a reporter asked the Hong Kong and Macau affairs chief what he thought about the so-called iron triangle. "Quite good," Wang replied. The question was a reference to a proposal by veteran Beijing loyalist Ng Hong-mun. Under it, Rita Fan Hsu Lai-tai, now a member of the National People's Congress Standing Committee, would be the next chief executive, Henry Tang Ying-yen would be chief secretary for another five years and Leung Chun-ying, the current Executive Council convenor, would become financial secretary. But lest people thought Beijing was finally laying down its preference for the next chief executive, Wang caught himself. "Which one is best?" the reporter asked again. Wang, now alert to the danger, replied with a joke. "Iron triangle? It is too early to talk about this," he said. "It still isn't clear who the `iron triangle' consists of. There are different iron triangles," he said, laughing as he walked away. There ended one fleeting moment of an unscripted Wang, who was in the second of a three-day official visit, the first he made since taking up his job in October. Wang visited the Monetary Authority in the morning, held a top-level luncheon with the city's luminaries and gave young people a seminar in the afternoon. The talk about an "iron triangle" gained attention after Ng, a former deputy to the National People's Congress, made the proposal, but it was unclear how serious he was. He has stressed that it was one of his "weird opinions" aimed at facilitating debate, as Beijing had yet to make up its mind on who should get the top job. At a luncheon hosted by the Hong Kong government with about 150 guests, all three unofficial candidates were at the head table with Wang. Influential figures from the political arena, many sitting on the Election Committee, were on the guest list. Among them were the Legislative Council's president, Tsang Yok-sing, and chairmen and deputy chairmen of its panels and standing committees. Democratic Party vice-chairwoman Emily Lau Wai-hing seized the opportunity when Wang made a toast at her table to hand him a letter from her party, urging the central government to legislate on a roadmap for Hong Kong to introduce universal suffrage. A number of property tycoons also appeared at the luncheon.

They've all got to come down - Development secretary Carrie Lam meets the Heung Yee Kuk and says that extra storeys added illegally to village houses will have to be demolished - Glasshouses added to roofs in Tin Sam Tsuen, Kam Sheung Road, Pak Heung in Yuen Long. The government has been accused by the Ombudsman of enforcing the law more vigorously in urban areas than in rural ones. Extra storeys added illegally to village houses in the New Territories must come down, the government said yesterday. After a meeting with powerful rural affairs body the Heung Yee Kuk, Carrie Lam Cheng Yuet-ngor, the secretary for development, said immediate enforecement action would be taken against serious breaches. She announced the decision following negotiations with more than 30 kuk representatives. The meeting came weeks after the Ombudsman criticised the government for enforcing the law more vigorously in urban areas than in rural ones. "We will take immediate enforcement action on village houses with serious breaches, such as those with one, two or even three extra storeys ... This means the extra storeys will have to be demolished," the minister said. The kuk said that glasshouses covering more than half a rooftop would fall into this category. "Our proposal is in no way an amnesty, or allowing cash payment in place of law enforcement," she said — a direct response to previous suggestions by some kuk members. Kuk chairman Lau Wong-fat, for the first time, agreed to a crackdown on extra storeys, which are commonplace across the New Territories. But he was quick to raise a condition: that only the 36,000 so-called small houses built after 1972 should be covered. "Village houses built on land under the Block Government Leases involve complicated legal and personal considerations and needs a further study," Lau said. He was referring to plots of land surveyed by the British government in 1905 after it occupied the New Territories. Officials mapped all the lots and reflected the land use at that time, such as for housing or for agriculture. The findings were attached to a Block Government Lease. House lots of such leases apply to 10 to 20 per cent of village houses, according to Raymond Chan Yuk-ming, a spokesman for the Institute of Surveyors. Lau argued that the century-old lease of "house lots" had stipulated no height limits for buildings, and that neither the small-house law nor the urban building regulation should apply. However, the small-house policy, enacted in 1972 to compensate villagers who gave up their land to new-town development, has required all village houses to be limited to three storeys built on a plot no larger than 700 square feet in order to be exempt from urban building regulations, which require work and occupation permits. "We don't expect an across-the-board prosecution," Lau said, "and we hope there will be a legal clarification." But Lam said the government disagreed with the kuk. "Before the clarification, we stand firm that [all village houses] are subject to control." Barrister and Civic Party lawmaker Ronny Tong Ka-wah said he saw no grounds for a particular category of village houses to escape control, noting that the small-house law had been tailor-made to respect villagers' lifestyles. The government said less serious violations would be set aside for a later date because there were so many of them. Lam did not give details, but the kuk expected that glasshouses occupying less than half the rooftop area should fall into this category. It said enforcement should be deferred for 10 years and come with a registration system. Both sides agreed that environmentally friendly additions and amenities, such as a solar-powered water heater, a rooftop security gate and a small canopy over the main door, would be allowed in existing and future houses. Top government officials - including Chief Executive Donald Tsang Yam-kuen - have been accused of having illegal extensions at their properties.

 China*:  June 16 2011  Share

Mainland inflation hits 34-month high - A vendor sells spices at a food market in Hefei in Anhui province on Monday. China's inflation rate hit its highest level in nearly three years in May, despite persistent efforts to tame prices. China's inflation accelerated in May to a 34-month high of 5.5 per cent, slightly above expectations, supporting the case for tighter monetary policy even as there are signs that economic growth is slowing down. Bringing inflation under control is a top priority for China’s leaders, who see little chance of the current slowdown from last year growth of more than 10 per cent turning into a hard landing. Industrial output in May rose 13.3 per cent from a year earlier, just above expectations for an increase of 13.2 per cent. But the pace was the slowest since November and underlined other data suggesting the world’s second-biggest economy is slowing down. “CPI reached a new record, increasing concerns of another interest rate rise,” said Xianfang Ren, an economist at IHS Global Insight in Beijing. Analysts expect inflation to pick up again in June, some say to around 6 per cent, prompting the central bank to raise interest rates as soon as this month for the fifth time since October. “We expect the central bank to raise interest rates next week,” Ren said. Before the data was released, both Wei Yao, China economist at Societe Generale in Hong Kong and Mingchun Sun, economist at Daiwa Capital Market, forecast a rate rise this month. Analysts had expected inflation to be 5.4 per cent in May, a Reuters poll showed. Consumer prices rose 5.3 per cent in April from a year earlier. Inflation has largely been fuelled by a rise in food prices, exacerbated of late by a severe drought in farming heartlands. Some economists say inflation is also the result of China’s massive stimulus during the global financial crisis. Like elsewhere, China is coping with a rise in global commodity prices, which are adding to inflationary concerns for policymakers. China’s central bank has already raised banks’ required reserves eight times and lifted interest rates four times since October to quell inflation. China’s one-year lending rate is currently 6.31 per cent and its one-year deposit rate is 3.25 per cent. Zhang Zhuoyuan, an economist at the Chinese Academy of Social Sciences, a top government think-tank, expects inflation to top 6 per cent in June and in remarks reported at the weekend he called for faster steps to push real interest rates into positive territory. China’s economy expanded last year by 10.3 per cent, a pace that slowed in the first quarter to 9.7 per cent. But data has suggested a further slowdown in the economy since then. Purchasing managers’ surveys showed the factory sector expanded in May at it slowest pace in at least nine months. Worryingly for financial markets, China’s slowdown has occurred alongside a weakening of global growth as Europe struggles with its debt crisis and the United States contends with stubbornly high unemployment. An earthquake has knocked Japan into recession. A raft of Chinese data released on Tuesday was broadly in line with expectations. May retail sales rose 16.9 per cent from a year earlier, compared with expectations for an increase of 17.0 per cent. Fixed-asset investment between January and May rose 25.8 per cent from a year earlier, against expectations for a rise of 25.2 per cent. China’s money growth slowed to a 30-month low in May and banks extended fewer new loans than expected, data on Monday showed. “Overall, China’s economic growth is easing gradually, while consumer inflation is still within control. The central bank will raise interest rates again this month, but there will be no further rate rises for the rest of this year,” said Xu Gao, an economist at China Everbright (SEHK: 0165) Securities in Beijing. Analysts believe that inflation in China will peak around the middle of the year, so policymakers are close to the end of a tightening cycle. “China's monetary policy setters know it takes time for policy to have an effect,” said Xu Biao, an economist at China Merchants Bank (SEHK: 3968) in Shenzhen. “So, we believe that the central bank will not raise interest rates in June. In other words, it will change its practice of raising interest rates every two months. In coming months, the central bank may even relax its monetary policy stance.”

Costa Rican President Laura Chinchilla on Monday endorsed the free trade agreement (FTA) between Costa Rica China after signing on the document. The FTA was approved by the Costa Rican parliament on May 31 and Chinchilla's approval was the last step required by Costa Rican law for the agreement to take effect. Under the agreement, over 90 percent of products from both sides will be exempted from taxes step by step. The signing ceremony took place with the presence of China's Vice Minister for the General Administration of Quality, Supervision, Inspection and Quarantine Wei Chuanzhong, China's Ambassador to Costa Rica Li Changhua, and Costa Rica's Foreign Trade Minister Anabel Gonzalez. During the ceremony, Chinchilla said it is important that Costa Rica strengthens its relations with China. "Considering that the global reality involves constant changes and that we cannot be behind, Costa Rica is convinced that we can achieve growth that end in development and improvement of the quality of life for all Costa Ricans," Chinchilla said. Ambassador Li said the agreement will mark "a new milestone" in the relations between China and Costa Rica. Noting the positive bilateral trade between both countries in recent years, Li said the economies of both countries are highly complementary and that the FTA is expected to bring many tangible benefits to the two peoples. Minister Gonzalez said the FTA is important to Costa Rica as it will open up for more options to enter the Chinese market. "To consolidate relations through a tool like this, with a country which is the second largest economy in the world, clearly represents a great opportunity to which we should make our best effort, and it's a great advantage ahead of many other countries that we cannot and should not waste," Gonzalez said. Costa Rica is China's largest trading partner in Central America. According to official figures from China, bilateral trade between Costa Rica and China reached $3.79 billion last year.

More than 130 loved-up couples commit in Hainan - Couples express their love in the Haikou Volcano Crater Park, Haikou city, South China’s Hainan province, June 13, 2011. On Monday, 133 couples from across China visited the Haikou Volcano Crater Park and Western Beach to solemnly make a pledge of love before the mountain and sea, as part of the 2011 Second Haikou Tourism Wedding Festival. These couples also promoted the local culture and low-carbon life of the area by taking part in activities including the bamboo pole dance of the Li ethnic group and a cycle riding tour.

Full steam ahead for rail projects - China's railway development will not slow down in the 12th Five-Year Plan period (2011-2015), Vice-Minister of Railways Hu Yadong said on Monday. Railway planning for the five years aims to put 30,000 kilometers of new lines into operation, which is 87.5 percent more than for the 2006-2010 period, Hu said. By 2015, the country's total length of railways will be more than 120,000 km, up from the current 91,000 km, he said. The total investment in railways during the five years will be 2.8 trillion yuan ($432 billion), an increase of 41.4 percent from 2006-2010, according to Hu. Yu Bangli, chief economist with the ministry, said that although financing for railways, like that for other industries, is subject to the impact of the macro-economic environment, "funds for railways can be guaranteed". Based on these facts and figures, Hu said: "China's railway development will maintain a fast pace. Our pace will not slow down, and the investment will not be reduced." But he did not mention any changes to previous plans for China's high-speed railways. The ministry said in January that China's high-speed rail network had reached 8,358 km at the end of 2010 and is expected to exceed 13,000 km by 2012 and 16,000 km by 2020. High-speed railways are incorporated as part of the country's "express railway network", which is expected to reach 45,000 km in length by 2015. The express railway network includes railways of three speeds - arterial rail lines at a speed of 300 km/h, intercity and extension and linking lines at 200-250 km/h, and railways in western China with speeds of 160-200 km/h. But the ministry could not yet provide any figures for the length of such a network. However, it is clear that the previous pattern of high-speed railway development has been changed following the fall of former minister Liu Zhijun, who was investigated for "serious disciplinary violations". Railways Minister Sheng Guangzu, who replaced Liu in February, made it clear in April that railway development should not outpace demand too much. He stressed in an interview with the People's Daily in April that the future work arrangement will give priority to ongoing projects to ensure they have enough funds for construction to be completed and will emphasize projects that are in urgent demand. Since those comments, construction schedules for some railway projects have been altered. Wang Yongping, the ministry spokesman, said in May that a few railway projects under construction, which were slated to be completed this year, will not be finished until next year. This caused this year's investment in railway construction to be slashed by 100 billion yuan to 600 billion yuan. Adjustments to some projects that had shortened construction time too much are reasonable, Wang said.

Rules hamper use of yuan for overseas investment - Evidence suggests Beijing and Hong Kong need to do more to boost trade since mainland companies were cleared to use yuan for offshore acquisitions - The yuan is still not widely used by mainland companies for overseas acquisitions despite them being cleared by regulators to make greater use of the currency offshore, suggesting more reforms are needed. Beijing's moves to relax its currency regime since mid-2009 and turn Hong Kong into an offshore yuan- trading centre have had mixed results. Yuan bond issuance in Hong Kong, yuan trade settlements and deposits have all ballooned over the past year, but in the five months since getting permission to use the yuan instead of US dollars, mainland firms have hung back from using yuan to go shopping overseas. "So far, we have not heard of much overseas direct investment in yuan," Jun Ma, chief economist for Greater China of Deutsche Bank, told a conference yesterday. Last month, Hong Kong Exchanges and Clearing (SEHK: 0388) chairman Ronald Arculli said Hong Kong was not doing enough with the scheme that allows mainland enterprises to settle some deals in yuan. Hong Kong has been a gateway for mainland companies making overseas direct investments. Of the US$59 billion in such trade last year, 57 per cent went through Hong Kong. One reason for the reluctance of mainland firms to use yuan to buy overseas companies, was the lengthy approval procedures involved, according to a banker who did not want to be named. As a result, they preferred to use dollars. Ma said the policy was one-sided. While the People's Bank of China may have allowed mainland firms to invest overseas in yuan via Hong Kong, companies wanting to invest in the mainland with the currency are handled on a case-by-case basis. Bankers and brokers said this discouraged companies from issuing yuan bonds or yuan shares in Hong Kong because they had no assurance the proceeds could be used in China. At the conference, Hong Kong Monetary Authority chief executive Norman Chan Tak-lam said 7 per cent of China's trade was settled in yuan in the first quarter, against 0.7 per cent in the first half of last year. Yuan trade settlements reached 360 billion yuan (HK$431.5 billion) in the first quarter, with 86 per cent or 310.8 billion yuan, conducted in Hong Kong. This compares with 506 billon yuan in trades settled in yuan last year as a whole in China, of which 73 per cent, or 369.2 billion yuan, was conducted in Hong Kong. Companies raised 28 billion yuan by issuing yuan bonds in the first five months in Hong Kong, compared with the 35.8 billion yuan they raised all last year, according to the HKMA. Yuan deposits in Hong Kong totalled 510 billon yuan on April 30, up 750 per cent from 60 billion yuan a year earlier.

The mainland public's lack of confidence in the authorities' inefficient anti-graft system has led internet users to set up their own grass-roots online platforms for reporting bribery. At least three independent websites that allow people to detail how they have bribed others have been established in less than four days. They appear to have been inspired by mainland media reports that more than 20 officials were sacked by the Indian government in the past year based on clues exposed by the users of an Indian grass-roots website, One of the Chinese websites,, says on its front page that nearly 1,800 members have registered since Friday, providing 266 clues about various bribery cases. Many people putting posts on the websites admit that they have paid bribes to teachers, school principals and doctors in exchange for better treatment of family members in schools or hospitals. "My daughter was to give birth to her baby recently so I gave the doctor 1,200 yuan (HK$1,440) and hoped that they could take really good care of my daughter and the baby," one internet user said. "Did I commit the crime of bribery? But I think many people are doing the same thing in China, aren't they?" Another user, claiming to be a salesman at a Shanghai-based wine wholesaler, said on the woxinghui website that an executive with the China branch of a US beer giant had received more than 10 million yuan in bribes between 2003 and last year from different companies. But few posts on the three sites were related to senior officials and none of the internet users reporting the clues used their real names. Many mainland internet users welcomed the new method of targeting worsening corruption but also expressed concern that it might prompt the authorities to shut down all grass-roots websites very soon. Others said that the websites faced a big challenge because they might lack sufficient manpower to check all the clues reported by tens of thousands of internet users. The Sina Weibo microblogging account of one site, woxinghui, had been deleted by yesterday morning, while the administrator of admitted that his site had been under attack from unknown hackers since Sunday. "It seems the site could be either shut down by the authorities or taken down in such an attack," the administrator said on his account.

Trains slowed 'to boost efficiency' - Deputy railways minister says safety was not a factor in the decision to cut speeds on the new Beijing-Shanghai line from 350km/h to 300km/h - The decision to reduce the operating speed of the fastest bullet trains between Beijing and Shanghai from 350km/h to 300km/h upon the line's likely launch later this month was not made because of safety concerns, according to the Ministry of Railways. Deputy Railways Minister Hu Yadong said in Beijing yesterday that running the trains below their top speed would improve operating efficiency, reduce energy consumption and prolong the life span of passenger trains and tracks. Hu noted that the construction, test runs, safety reviews, quality inspections and preliminary certification of the Beijing-Shanghai high-speed rail had been carried out to meet the standards required for 350km/h speeds. The reduced speed, he said, was not a result of a "failure to meet quality standards in construction or a lack of safety". Wang Mengshu , an expert on high-speed railways and a professor at the Chinese Academy of Engineering, said the ministry was trying to clarify a misunderstanding caused by an interview with Rail Minister Sheng Guangzu in People's Daily last month. In the interview, Sheng said that one benefit of running Beijing-Shanghai trains at 300km/h was increased "safety redundancy". Wang said that Sheng's remark was incorrectly interpreted by opponents of high-speed trains as the ministry's first official admittance of safety problems involving the track, and it triggered concern and an outcry throughout the country. "`Safety redundancy' means [ensuring that] the trains are operating at safety level higher than the design standard," Wang said. "So you can understand the ministry's desire to stop it from being interpreted as a safety concern." Hu said running trains at different speeds on the same line would reduce operating efficiency, and the greater the difference, the less efficient the operation. Having trains run at 350km/h and 250km/h would be 20 per cent less efficient than a 300/250 combination, Hu said. Like cars, high-speed trains operating at maximum speed encounter enormous drag that significantly increases energy consumption. Running at 300km/h would not only cut electricity bills but also reduce wear on tracks and other facilities, he said, adding: "We have done many calculations and experiments." But speed aside, construction and operation of the world's largest high-speed railway network hasn't come without problems that have shaken the public's faith in its safety. They include the exposure of the use of low-quality fly ash in the concrete base of tracks. And a recent official safety assessment also exposed some alarming issues. Deputy State Work Safety Administrator Wang Dexue told China News Service during a safety-assessment conference on Thursday that, to terrorists, a high-speed train looks like a jumbo jet on rails: it's a potential target. Wang said there was room to improve safety along the line, and that people didn't fully realise its risks. Hu, also speaking at the conference on Thursday, admitted that there were potential safety problems. They include ground-shaking explosions caused by mining activities near the line and potential damage to fences along the route.

Hong Kong*:  June 15 2011  Share

Hongkonger sheds light on mystery pyramid numbers - Suspected measurements would have been used to guide workers, says international team leader - Mysterious red hieroglyphs painted in a shaft in the Great Pyramid of Giza are likely to be engineering measurements for the building of a secret chamber, according to the Hong Kong founder of an international team exploring the shaft. Ng Tze-chuen, 58, said the suspected measurements - not seen for thousands of years - would have been used to guide workers to build the shaft to precise measurements and pointed to the existence of something important in a secret chamber behind a door at the end of the shaft his 10-strong team aimed to probe. "The workers needed the signs because they didn't want to just stop the shaft at a random length. They measured the length precisely so that something could be put behind the second door. Must be something intriguing," the Causeway Bay dentist said. Ng's view came after a researcher explained the markings. The secret chamber has been described by Zahi Hawass, Egypt's minister of state for antiquities affairs, as the last great mystery of the pyramid. Independent researcher Luca Miatello, an expert on ancient Egyptian mathematics, said the markings were numerical signs meaning 1, 20 and 100 from left to right that add up to 121 cubits, or 63.4 metres, the length of the shaft to the first door. The royal cubit, the ancient Egyptian unit of measurement used to build the pyramid, was 52.4cm long, equal to seven human palms of four digits. Miatello based his interpretations on rare images from a snake camera sent into the shaft by Ng's team - named Djedi after an ancient magician who, legend says, was asked to play a part in designing the pyramid. The images of signs unseen by human eyes since the construction of the mausoleum 4,500 years ago were published in the first report of Djedi's exploration in the Annales du Service Des Antiquities de l'Egypte in May. Hawass has said something might be hidden in the pyramid, based on a story that the emperor Khufu, also known as Cheops, sought out the magician when he was designing the pyramid that many archaeologists believe became his burial place. Kufu wanted to know about the secret chambers of the god Thoth, on which Djedi was an expert but the magician refused to help, the story goes. Egyptology professor Dr Poo Mu-chou, of the Chinese University's history department, said he agreed with the experts that the three red signs could be numbers. "The first sign to the left is the easiest to recognise: it is a simple short vertical stroke representing "one," Poo, who made a television programme for the National Geographic channel on the secret chamber in 2005, said. The one in the middle could be loosely interpreted as the composite sign for "20" because "we can allow slipperiness in handwriting". But the sign for "100" was difficult to recognise as it was not very clear, he said. It should be a coil of rope with the tail extending to the left but there was little sign of any extension to the left. "The vertical stroke to the right of the sign ends with a sharp bend to the left, which could be the outer circle of the coiled rope, yet the puzzling thing is, why was it not written with a round stroke but an angular shape? Was this only the style of individual writing?" Workers often painted numbers and graffiti around Giza, for example in the upper roof of the gallery dubbed the King's Chamber but they were mostly names of the work gangs. "Assuming that the reading of 121 is correct, and assuming it is the length of 121 cubits, approximately the length of the shaft, we are still in the dark as to the function of the shaft and what, if anything, could have been hidden behind the second block," he said. Djedi's next task, scheduled for September, is to check whether the second door is a solid block of stone by bouncing balls off the wall. Its thickness will be calculated from the frequencies of sound given off by the impacts, which will help gauge how long the drill has to be to penetrate the door. The Great Pyramid is the largest of three pyramids on the Giza plateau on the outskirts of Cairo and has long been rumoured to have hidden passageways leading to secret chambers.

Hong Kong’s index of industrial production rose 3.5 per cent in the first quarter of this year compared with the same period last year, the Census and Statistics department said on Monday. Textiles output was down 11.2 per cent and the output of metal, computer, electronic and optical products, machinery and equipment rose 5.3 per cent. Food, beverages and tobacco output increased 6.8 per cent while paper products, printing and reproduction of recorded media output was up 2.9 per cent. Production of wearing apparel was down 5.3 per cent.

The central government’s Hong Kong affairs chief on Monday urged different factions in Hong Kong to put aside their differences and show more support for Chief Executive Donald Tsang Yam-kuen. Wang Guangya, director of the Hong Kong and Macau Affairs Office (HKMAO), made the remarks during the second day of his three-day visit to the city. Speaking at a lunch with government officials and legislators, Wang said more co-operation was needed in the city. “The key to improving Hong Kong’s competitiveness depends on all sectors. They should reach a consensus with the HKSAR government and focus their efforts on economic developments so that Hong Kong can firmly grasp the opportunities ahead,” he said. Wang acknowledged Hong Kong’s economy faced a number of challenges. These included rising inflation, the threat of a property bubble and increased competition from mainland cities with lower labour costs. He stressed that the central government would continue to support the city. The HKMAO director’s comments come as Tsang’s government is embroiled in controversy. Several ministers have been found with illegal structures added to their homes and Financial Secretary John Tsang Chun-wah has been accused by a former government information chief of meddling in the selection for a multimillion-dollar computer contract. Recent opinion polls show Tsang’s popularity has hit its lowest levels since he took the job in 2005. On Monday, about 40 demonstrators from the League of Social Democrats and People Power protested outside Grand Hyatt Hotel in Wan Chai, where Wang was staying. They demanded the central government to be more transparent about the 1989 Tiananmen Square crackdown. Before Monday’s lunch, pro-democracy legislators expressed disappointment at not having met the HKMAO director. They said they would like to discuss Hong Kong’s constitutional development, the likelihood of future Article 23 legislation, and the economy. On Monday, Wang visited the Hong Kong stock exchange. He is scheduled to talk to about 100 young people at a closed door meeting in Chai Wan later on Monday. The HKMAO director will leave the territory for Macau on Tuesday.

Shares of mainland dairy company Inner Mongolia Yili Industrial Group dropped 10 per cent to a near 10-month low on Monday after media reported a former employee had accused the company’s chairman of illegal activity. The Shanghai-listed shares fell to 16.28 yuan, the lowest since August 27, compared with a 0.4 per cent fall on the Shanghai Composite Index. Chinese media, including the National Business Daily, reported that a former assistant of Yili Chairman Pan Gang had accused Pan of illegally obtaining assets and amassing wealth for himself. “We think this is the main reason for this share drop, that’s really hurt investor sentiment,” said Zhang Qi, analyst at Haitong Securities in Shanghai. Yili said in a statement that the comments were fabricated and made to disrupt its operations. Neither Pan or Yili officials were immediately available for comment. China’s dairy sector has been tainted with a number of scandals over recent years. Last year, the authorities seized more than 100 tonnes of melamine-tainted milk powder, the latest case after contaminated milk powder was blamed for causing the deaths of at least six children in 2008 and poisoning some 300,000. The incidents hurt the dairy industry and major players including China Mengniu Dairy (SEHK: 2319), Bright Dairy & Food and Yili. Hong Kong-listed shares of Mengniu fell 1.8 per cent, while Bright Dairy slid 2.4 per cent in Shanghai.

 China*:  June 15 2011  Share

Discovering a taste for upmarket food - Consumers taste zongzi (rice dumpling) and Champagne at the first Bazaar by Lotus in Shanghai. The retailer provides more than 7,000 products, of which 70 percent are imported, at its 3,200-square-meter venue. Mercedes-Benz, BMW and Rolls Royce cars are frequent sights on Shanghai streets. Opulent shopping malls in the city's center are home to many exclusive fashion brands, such as LV, Prada and Ferragamo. Now the latest addition to these symbols of prosperity are high-end supermarkets that specialize in imported and organic food - the craze among the urban elite. These new stores, all owned and operated by foreign retail chains, have rapidly gained popularity not only among expatriates in Shanghai, but also among locals, especially the young and rich, who have been worried by a spate of food scandals. Chia Tai, the business arm of Thailand's Charoen Pokphand Group (CP) in China, is the latest entry into the market. Recently, the owner of CP Lotus and Super Brand Mall announced the launch of its first upmarket food retail brand, Bazaar by Lotus, in Shanghai's Xintiandi, the fashion hub and one of the most famous locations in the city. The retailer provides more than 7,000 products, of which 70 percent are imported, at its 3,200-square-meter venue decorated in the style of the lively and colorful open markets found in the Middle East. Here, customers are invited to take a sip of a cocktail, sake or beer served by a bartender in the alcoholic beverages section or book a bespoke birthday party in the central lobby. "We are always looking for a new opportunity and a new concept to enrich our business structure," said Kunioka Michio, senior vice-president, marketing, at CP. "Bazaar by Lotus does not only offer a complete range of international gourmet foods but is also an ideal destination for urban dwellers to meet and play." What Thailand's biggest conglomerate calls "new" is, however, the latest trend in the industry, especially for retail giants from Hong Kong, where the high-end supermarket industry has been flourishing for decades. Last August, China Resources Vanguard, one of the largest supermarket chains in China, opened its first upmarket store, Ole, in Shanghai. It is planning to increase the number of its stores in the city to four or even six over the next five years. City Super, one of the most famous high-end supermarket brands from Hong Kong, also unveiled its first store on the Chinese mainland in Shanghai in June 2010. Unlike most ordinary supermarkets on the mainland, these new stores all boast a hip and subdued style. The lighting is soft and the background music is decidedly classical. The goods are neatly arranged on the shelves and the wooden floors are clean and well polished. Customers are spared from intrusive sales people who push everything from processed milk to vacuum cleaners. Most of the products are comparatively expensive and not easily found in other stores.

The world's private-sector economy expanded at a slightly faster pace in May, with companies in the emerging powers of China, Brazil and Russia leading the way, a recent business survey showed. JPMorgan's Global All-Industry Output Index, which is based on the results of purchasing managers' surveys of thousands of companies worldwide, rose to 52.6 in May, up from April's 21-month low of 51.8. May was the 22nd month that the index has been above the 50 mark that signifies growth. "The growth of the global economy showed a slight improvement in May, although this mainly reflected a slight bounce in the service sector following March's sharp easing," said David Hensley from the survey's compiler. "The underlying trend remains consistent with the recovery entering a softer growth phase, especially as manufacturing slowed further." The global services PMI also picked up slightly, to 52.5 in May from April's 51.0, which was also a 21-month low. JPMorgan said the acceleration was mainly the result of stronger growth in China. "Job creation was sustained for the eleventh month running, but cost inflation failed to show as substantial an easing as that seen at manufacturers," said Hensley. Purchasing managers' indexes from individual countries showed mixed performances. While growth picked up among service-sector companies in the United States, it sagged in the eurozone for the second month in a row. In China, the index dropped to 52 in May from 52.9 in April, the second consecutive month of decline. By the end of 2010, China's private sector included more than 8.4 million enterprises, accounting for 74 percent of all the country's businesses. The number of private enterprises is rising at an annual 14.3 percent, according to the All-China Federation of Industry and Commerce. The State issued two major rules, in 2005 and 2010, to encourage faster development of the private sector. In China's latest move to encourage the growth of the private sector, the banking regulator on Tuesday announced a number of favorable policies for lenders to offer more loans to small-scale enterprises, mostly privately-owned. The regulator said that the move is designed to reduce the financial pressure on smaller businesses as the nation tightens its monetary stance in its fight against inflation. Many private companies have found it difficult to secure bank loans. A lower risk-weighting will be applied when calculating the capital-adequacy ratio for loans of less than 5 million yuan ($772,000) to each individual small enterprise, according to the new rule. 

$108 (US$16.6) million green jade pieces displayed - Green jade bracelets are displayed in Hefei, Anhui province, on June 11, 2011. Less than a score of green jade pieces, worth a total of 700 million yuan ($108 million), were displayed at Swan Lake Hotel, a five star hotel in Hefei. Only high-end visitors were invited to this exclusive exhibition. 

Chinese Men Get Their Lux Due, Too - A shopper checks out the goods at a Gieves & Hawkes store in Hong Kong. While women are getting the attention of luxury brands in China — Chinese men shouldn’t feel like they’re getting ignored. Consider this: Gucci and Bottega Veneta are testing men’s-only store concepts in China. The reason, according to François-Henri Pinault, head of the French apparel group PPR SA, which owns both brands: In China, “the decision of buying for women is still made by men.” That’s not unusual for an emerging market. “Men are typically the first luxury spenders in emerging markets, as they buy watches and branded accessories as status symbols before they start spending on the women in their lives,” writes Ms. Passariello in her article, noting that after Japan caught the luxury bug in the 1980s it took many years for a young generation of working women to surpass men in spending. According to Coach, the leather-goods retailer, men buy 45% of all luxury handbags and accessories sold in mainland China, compared with 15% world-wide. The man bag is a revered status symbol there. Also, men buy most high-end watches, which rank second only to cosmetics and perfume among luxury purchases in China. (The average Chinese millionaire owns four watches, according to a study by the Hurun Report.) And though Chinese women have caught up in big-ticket purchases overall — according to McKinsey, their spending made up more than 50% of China’s estimated US$15 billion luxury market last year, up from 45% in 2008 — they still lag in some key categories, including luxury clothing. Last year Chinese men forked over 7 billion yuan (US$1.1 billion) for high-end apparel, according to consultants at Bain & Company, while women spent a comparatively piddling 2.8 billion yuan.

In China, Women Begin Splurging - Chloé says that in two years China will become its biggest market because of female shoppers. Pictured, customers at a Chloe boutique in Shanghai. Italian jeweler Bulgari SpA and sports-car maker Maserati SpA have succeeded in China largely by portraying themselves as the ultimate male status symbols. But the two recently joined a growing number of luxury brands in China that have revamped their marketing tactics to also appeal to self-made female entrepreneurs, a rapidly emerging market segment that also wants high-end baubles and toys. Maserati has been hosting private cocktail parties with Giorgio Armani's cosmetics line and the Italian lingerie company La Perla to court newly rich female drivers in China. Thirty percent of the 400 cars Maserati sold in China last year were bought by women, compared with just 7% in 2005, according to the company. Maserati says the proportion of its Chinese drivers who are women dwarfs the ratio in the European and U.S. markets, where only 2% to 5% are women. "Many people are inclined to believe that gentlemen are generously purchasing luxury gifts for women in China, but our observation is that the great majority [of the buyers] are women who have achieved great success in their business and are now rewarding themselves with the finer things in life," says Christian Gobber, managing director of Maserati China. Women accounted for more than half of China's estimated $15 billion in luxury sales in 2010, according to a survey by consultancy McKinsey & Co. That compares with 45% in 2008, when McKinsey conducted its previous survey. The average female luxury consumer in China also spent 22% more in 2010 than in 2008, while men spent only 10% more. Rome-based Bulgari boosted its advertising in female-targeted magazines to 22 million yuan, or $3.3 million, in 2010, from a mere 106,000 yuan a year earlier, according to Beijing-based ad agency Charm Communications. Bulgari was recently acquired by LVMH Moët Hennessy Louis Vuitton SA. China's luxury market—expected to become the world's largest by 2020—has been driven by men for the past decade. As they bought gifts for business associates, men spurred the growth in China of Swiss watchmakers, jewelry stores like Cartier and other luxury-goods purveyors like Louis Vuitton and Gucci, a unit of PPR SA. And while they often bought gifts for women, they were the ones making the luxury purchases. Now that women have emerged as a growing force, brands that traditionally appeal to women are making a bigger push. The British company Burberry Group PLC and the French brand Chloé, owned by the Swiss luxury group Cie. Financier Richemont SA, are hosting more private sneak-peak viewings of their new fashion collections to give Chinese women an early glimpse of coming trends. Women feel more pressure than men to stay up to date with fashion, says Yuval Atsmon, a principal at McKinsey, adding that Chinese shoppers are increasing their spending on ready-to-wear clothing, and the majority of those shoppers are women. In two years, China will become Chloé's biggest market because of the rise of female shoppers, says president and chief executive Geoffroy de-la-Bourdonnaye. "Women in this country are becoming more independent, more career-oriented, and more powerful in the market," he says. Many retailers are experimenting with new tactics online, where women are more likely to shop than men and where they often influence purchases by others via comments on blogs and social-networking sites, according to McKinsey. Chanel invited Chinese artist Zhou Yi to attend its Paris fashion show in March, hoping she would plug the brand to her following of nearly 3,000 fashion types on Sina Weibo, a Chinese Twitter-like microblogging service. (She did.) Givenchy, part of the LVMH empire, launched its own Weibo account in January and is using it to connect with female followers and announce the arrival of new products, such as Nightingale leather bags, which sell for 16,000 to 32,000 yuan. "Women want more ways to experience the brand—to touch and feel and interact," says Wilfred Koo, Givenchy's president of China, Asia Pacific. The rapid growth in the world's No. 2 economy has fueled job opportunities and earnings potential for both sexes. Each year, 76% of China's female college graduates aspire to management positions, compared with 52% of their U.S. counterparts, according to the New York-based Center for Work-Life Policy. China is home to 11 of the world's 20 richest self-made women, and it boasts 153 female yuan billionaires (around $150 million), according to the Hurun Report, a Shanghai-based firm. Consumers like Sun Ningning, a sales manager at GlaxoSmithKline PLC, are the bull's-eye. The 32-year-old Beijing native recently bought a 12,600 yuan leather handbag as a gift for herself. The tan Chloé purse cost her around 15% more than her monthly salary. "There's just something about buying luxury that makes me feel happy," says Miss Sun. "I can't really explain it."

China Bests Japan in Americans’ Eyes - A man in an American flag outfit watched the ceremony of lowering the flag in Tiananmen Square, Beijing, in May. It’s official, at least as far as a Japanese government survey is concerned: Americans see China, rather than Japan, as their most important partner in Asia. According to results from the 2011 edition of an annual opinion poll commissioned by the Ministry of Foreign Affairs, some 39% of “general public” respondents selected China as “the most important partner of the U.S. in Asia,” while 31% chose Japan. While the 2010 version of the poll showed the Asian rivals tied with a 44% rating, the 2011 numbers, compiled from interviews with 1,200 citizens from February to March, represent a stark change compared with just three years ago. In 2008, 43% of the general public selected Japan as the most important partner for the U.S., while 34% plumped for China. The result of the poll, which the ministry commissioned the Gallup Organization to conduct, is part of a broader consultation on what the public, and opinion leaders, in the U.S. make of Japan. As well as the general public segment, pollsters also interviewed 200 opinion leaders for a separate set of results.

Hong Kong*:  June 14 2011  Share

Prada Sees Future in Asia - For Head Designer, the Firm's Hong Kong IPO Is Latest Example of Rebellious Streak - Miuccia Prada, shown after a fashion show in Hong Kong last week, faced Italian opposition to her IPO plan. Miuccia Prada has often stirred up the fashion scene. Now, on the verge of bringing the first Italian company to the Hong Kong stock exchange, she is making waves in the world of business. "I always wanted to be different. I always wanted to be first," said the president and head designer of the eponymous Italian fashion house, which is set to list in Hong Kong on June 24 in an initial public offering that could raise as much as $3 billion. Ms. Prada, 63 years old, said in an interview that she strongly promoted the choice of Hong Kong over Milan for the IPO. In the process, the fashion icon overcame opposition within the Italian business community, including from some banks. Still, she fears that many in the Italian business elite are disappointed by her decision. Ms. Prada has always been independent. The ex-communist bridled when, in the 1970s, she joined the sleepy Milanese luggage maker that had been started by her grandfather in 1913. She lashed out by creating high-end fashion from mundane materials like nylon, and eschewing overt sexiness in her clothes. Over the next two decades she turned the company into a global fashion leader, helped by some cult items such as a black nylon backpack and a bowling bag. The Ph.D in political science and feminist has long had an ambivalent relationship with fashion, but finally says she feels more at peace with her role. "Intellectuals, artists, architects really respect our job and that made me change opinion … but it was always for me until recently a huge problem," she said. Ms. Prada believes an IPO in Hong Kong will help the family-owned company draw upon the dynamism of Asia and expose some members of her management team to a different culture. "The whole idea of doing this here, for me, was exciting because it is where things are happening. It's where the future is," she said. As a designer she is increasingly drawing on Chinese influences. She noted that Chinese designers in her 60-strong team seem more curious and more excited. "This fresh mind is very relevant for me," she said. By comparison, she said, "in Europe the world of fashion is too conservative, very eighties." Ms. Prada also said she finds Chinese women's body shapes inspiring. Ms. Prada's husband, Chief Executive Patrizio Bertelli, echoed her feeling. "Asian markets are far more contemporary," he said, speaking via video link at a news conference Sunday, ahead of the launch of the share offering to Hong Kong retail investors on Monday. Prada is opening a design center in Hong Kong, and it plans to open 10 to 12 stores a year in China, a market in which it has low penetration compared with some of its peers. It currently has 14 Prada stores on the mainland. Investors at the IPO presentations have expressed concern about the execution risk of this expansion plan, according to people familiar with the matter. Ms. Prada also acknowledges growth may create problems. "If there is too much freedom at a local level, then it can dilute your concept; if you're too central, maybe you don't listen." She said she is trying hard to create a working dialogue within the company. Ms. Prada said she had embraced the idea of a public listing after years of deliberation. "A few people that I trust convinced me that, in any case, a company that is in the stock market is more protected, more important in a way," she said. "Also, for the future generations, everything is clear." Succession is always a thorny issue for fashion houses, which can struggle after the chief designer departs. The Prada family, including the husband and wife team, owns 95% of Prada. But the family believes the global brand and team has become bigger than Ms. Prada and Mr. Bertelli, and is prepared for succession, according to a person familiar with the matter. Ms. Prada herself says she has a core group of about ten 10 designers who are really integral to the company. The protection of a public listing is important to Ms. Prada, whose company had a difficult start to the decade and had to sell a 5% stake to an Italian bank. After a splurge in the nineties buying brands that turned the company into a fashion conglomerate and saddled it with debt, Prada tried to launch IPOs several times in Milan, getting close in the months after the Sept. 11, 2001, terrorist attacks and in 2008. But both times the market tanked. Ms. Prada says she is confident that this time the IPO will be a success, although she cautioned based on past experience, "We never know until it happens." Investor demand already exceeds the number of shares being offered, according to people familiar with the matter, even though the sale comes at a time of renewed turbulence in financial markets. "Despite recent market volatility, the Prada team is very optimistic [about the IPO]," Mr. Bertelli said at the news conference.

Prada (1913) said Hong Kong investors will be subject to a 27 percent dividend tax imposed by Italian authorities. As well, investors also face a 12.5 percent capital gains tax. The first Italian company to list in Hong Kong will open its retail book today. It plans to spend 75 percent of the proceeds -HK$1.83 billion - on expanding its network and 15 percent on repaying bank loans. "We will add 80 directly-operated stores annually in the next three years, of which 10 to 12 will be in China,"said deputy chairman Carlo Mazzi. Currently, Prada has 319 directly-operated stores. Mazzi described the share price as "reasonable." According to sponsor Goldman Sachs, the price-to-earning ratio for Prada may reach 28 times this year, higher than the 20-21 times range commanded by its peers - LVMH, Richemont Swatch and Burberry. Fund managers expect Prada to price its shares in the middle of its HK$36.50-to- HK$48 range, which they say would be "fair." Prada declined to comment on reports that its international tranche was five times covered. The fashion house is due to price its shares on Friday and start trading on June 24. Separately, China Everbright Bank has received approval to issue shares in a step forward to a HK$7 billion IPO. Premarketing is likely to start this week and a roadshow could be launched on June 27. But a final listing timetable has yet to be decided amid negative market sentiment. In other action, mainland diesel generator maker Xing Yuan Power (1156) will start its roadshow today and open its retail book on June 17. US luggage maker Samsonite (1910) may price its IPO at the lowest end of the pricing range - HK$14.50 per share. Despite the subdued mood, at least six firms will start their roadshow this week aiming to raise a total HK$13.47 billion.

Voting in the second round of "Love Ideas, Love HK" has begun. The Li Ka Shing Foundation, the organizer of the funding program, is inviting the public to select from the charity's website,, community projects that have been submitted by individuals and organizations, which they believe will make a positive difference to their community. Voting ends on July 3. Hong Kong Council of Social Service sector development and partnership business director Cliff Choi Kim-wah said "the simple application procedures, diverse funding categories and flexible execution period of `Love Ideas, Love HK' best suit small-scale institutions or the district branches of large charitable organizations in implementing their respective district plans." A total of 1,070 applications were received, 70 percent of which had not taken part in the first round held last year. Of these, 915 were deemed eligible for the public voting process, which will be conducted online and through the charity's 3699-8800 hotline. Last year more than 74,000 people voted, the foundation said. The program will also randomly select 10 percent of the projects to be voted through Metro Radio and Commercial Radio stations starting Wednesday. Grants of up to HK$25,000 for individuals, HK$200,000 for educational institutions and HK$300,000 for charity groups will be given to the top 25 percent of the projects selected by voters in each category. The winners will be announced on July 7. This year's projects are mostly in education (34 percent) and the community (37 percent), with 58 percent of the proposals coming from charity organizations. Other projects include cultural development, music, animal care and environmental protection. Beneficiaries include senior citizens, the handicapped, new immigrants, low-income families and prisoners.

The government should earmark 12,000 out of the 20,000 new private units targeted to be built each year as 500-square-foot units solely for local first-time home buyers, Liberal Party honorary chairman James Tien Pei-chun said. The aim of the proposal is similar to that of the Home Ownership Scheme - to help first- time home buyers, he said. Speaking at the City Forum, Tien expressed doubt the mortgage restrictions announced by the Hong Kong Monetary Authority on Friday will discourage mainland buyers. "Quite a number of mainland investors do not live in Hong Kong after buying the units, and some don't have to take out mortgage loans," Tien said. "Some of them may even speculate in smaller units, making it even harder for young locals to buy homes. I am worried the instability in the property market will get worse if the government does not help locals." Tien said his proposal to set aside 12,000 private newbuilts of 500 square feet each for purchase by permanent residents who are first-time buyers allows young people to plan realistically for home purchases now and over the next four or five years. Housing Authority member Michael Choi Ngai-min said the new policies that aim to discourage speculation by mainlanders may "help a little bit," with some of them hesitating to make purchases now that mortgage lending has been tightened. But Choi said the move alone cannot solve the problem since Hong Kong suffers from a situation in which supply exceeds demand. "Apart from increasing land supply over the longer term, [the government should] strive to stabilize property prices in order to discourage mainland buyers," he said. The government should also start resuming construction of HOS units at between 4,000 and 5,000 flats a year, and increase the number gradually, depending on the market conditions, Choi suggested. "A HOS resumption may not affect the private property market, and can help the lower- income group, including some youngsters, to buy their flats," he said.

Beijing's top man on Hong Kong affairs Wang Guangya began an historic three- day trip to the city with a welcome banquet at Government House last night. Wang arrived in Hong Kong from Shenzhen Bay Port in the afternoon and was met by Financial Secretary John Tsang Chun-wah and central government liaison office deputy director Li Gang. After a short rest at the Grand Hyatt Hotel, where he is staying, he had a meeting with Chief Executive Donald Tsang Yam-kuen followed by the banquet. Quick action by the police and organizers kept protesters - mainly from the League of Social Democrats and People Power - at bay both at his hotel and later at Government House. At the hotel, vehicles ferrying Wang and accompanying officials arrived through the exit gate as about 40 protesters waited outside the hotel entrance on Harbour Road. League lawmaker Leung Kwok- hung's second attempt to protest before Wang was frustrated as he was taken away by officers outside Government House just before Wang arrived. Leung said later his group will continue to find a way to make Wang hear their call for the release of all jailed and detained dissidents. Wang met Tsang at Government House with Peng Qinghua, director of the central government liaison office. Also at the meeting were Chief Secretary for Administration Henry Tang Ying-yen, John Tsang and Secretary for Justice Wong Yan-lung, as well as the director of the Chief Executive Office Raymond Tam Chi-yuen. After the banquet Wang met other top officials and undersecretaries. This is Wang's first trip to Hong Kong since he took office in October. His predecessor, Liao Hui, did not visit Hong Kong during his 13 years in office. Today Wang will meet about 150 people from various sectors, including civil service associations, and 40 lawmakers who chair Legislative Council panels and their assistants after he visits the stock exchange in the morning. Civic Party leader and lawmaker Alan Leong Kah-kit said he will not boycott a luncheon, as some pan- democrats plan to do because of the selective invitations. Leong said he will tell Wang - if possible - that only the election of a chief executive by universal suffrage will solve the deep-rooted conflicts in the city. Commentators say Wang wants to get a better understanding of sentiment on the next chief executive. Legco president Jasper Tsang Yok- sing said he had called for a meeting for all lawmakers. "A luncheon of such a nature is not intended to be an official dialogue with lawmakers. Perhaps Wang's agenda was too tight this time," he said. Wang will complete his visit tomorrow before beginning a three-day visit to Macau.

Extended controls on fishing urged - Ban on bottom trawling needs to be followed up with more legislation, say marine experts - The ban on bottom trawling in Hong Kong waters due to take effect at the end of next year will need to be supported by other controls if it is to be fully effective in restoring the region's once-abundant marine life, fisheries experts say. They are worried that many trawler operators, who now account for 80 per cent of fishing, may switch to smaller-scale operations that the government is still working out ways to control. Bottom trawling - one of the most destructive fishing methods - destroys coral, sea pens, sponges and other organisms, destroying marine ecosystems. "If all the trawler operators switch to small-scale fishing, then it will be the same situation," Stanley Shea, project co-ordinator of the marine conservation group Bloom Association, said. "There need to be other regulations to help. You can't just do some things and not others." Yvonne Sadovy, fisheries expert and professor at the University of Hong Kong's School of Biological Sciences, said that controls on recreational fishing, for which the government has no plans, would also be needed. "That will have to be controlled just like commercial fishing is controlled. In other words, with licensing and a cap on the number of recreational fishermen," she said. Under legislation passed last month after a seven-year campaign by conservationists, the ban on bottom trawling will take effect on December 31, 2012 after distribution of a HK$1.73 billion package to buy back boats and compensate affected fishermen that was approved by legislators on Friday. But it is likely to be at least a decade before the waters around the mouth of the Pearl River Delta begin to display the impressive array of marine life that once helped make Hong Kong an important fishing port. Experts expect that the ban will have a big impact but more data about current catches needed to be collected to assess what the outcome would be. "Hong Kong will have to be patient. Smaller fish will come back quickly, but in terms of the ones we want to eat, the bigger ones ... they're more like elephants. They take a longer time to recover," Sadovy said. "So I think at least 10 years, maybe 20, before we get something that's really going to make a difference here." Andy Cornish, director of conservation at the World Wide Fund for Nature (WWF) in Hong Kong, said most of the marine life had been wiped out and trawling had played a big part. "It's quite rare that you go so drastically from total overfishing to removing 80 per cent of your catchers," Cornish said, describing the ban as an "amazing experiment". "I can promise you the situation in Hong Kong is going to become a really, really interesting case study for fisheries scientists who want to know what happens when you do these kinds of things." Sadovy said Hong Kong's marine life had once been very diverse. "We had spawning grounds. We had the coral reef-associated fish. Very productive and very diverse, this particular area," she said. But today, fish caught by trawlers average only 10 grams, or about the length of a finger. Shea said a licensing system should be established, and the mesh size for nets should be regulated to prevent the unsustainable practice of catching small fish. Scientists such as Sadovy predict the recovery of Hong Kong's marine ecosystem will have a spill-over effect into neighbouring waters, as fish populations spread out from areas where trawling has been banned. Conservationists faced little opposition in the final push to have the law passed and most controversy is now centred on the division of the compensation money. There are around 1,100 trawlers registered in Hong Kong, 400 of which fish primarily in Hong Kong waters, while the remainder fish further afield. Some 700 offshore trawlers will receive only about HK$150,000 but the inshore trawlers can get up to HK$5.5 million each. Officials said that offshore trawlers were less affected by the ban.

Lawsuit over buffalo attack - Tourist gored on Lantau beach files a suit against the government for not capturing feral beast before incident - A feral buffalo roams Mui Wo on Lantau. A tourist was gored by one of the herd on Silvermine Beach this year. A tourist who was gored by a feral buffalo on a popular Lantau beach is suing the government for not catching the animal before the attack. The man's identity has not been disclosed, but officials acknowledged the lawsuit was filed. He is taking legal action against the Agriculture, Fisheries and Conservation Department over the incident on Silvermine Beach on March 26 in which his leg was injured. "There are some legal proceedings against the department that have been passed on to the Department of Justice," principal veterinary officer Dr Howard Wong Kai-hay said. "The legal proceedings against us are [allegedly] because the buffalos could have been caught by us but were not." The man was gored by a bull from the Mui Wo village herd which at the time numbered six. Three were killed by government officers on March 31 but the department could not say whether the attacker was among them. Plans to remove the remaining three have met fierce opposition from some parts of the Lantau community. Residents said the attacking bull was harassed earlier by beachgoers, although not by the victim. Wong said the original plan was for all six to be killed but "we left three behind because we could not catch them". After initially deciding to leave the three remaining buffalos alone the department received complaints that the animals were being harassed and, fearing another attack, decided to move them. With the agreement of the Lantau Buffalo Association, which cares for the island's feral herd, it decided to move the animals from Mui Wo to an abandoned government farm near the border before finally housing them at the Mai Po animal sanctuary, which is run by the WWF on behalf of the department. Wong says it will take about three months to prepare the wetland area at Mai Po, including fencing. Meanwhile, a group of residents has started a petition to keep the beasts in Mui Wo. On May 26, operators of the Lantau Link - a website about Lantau issues - sent Wong a letter outlining their opposition to the move and calling his attention to the petition, but have not received a reply. Wong said he had received the letter and was aware of the petition, but: "At the moment our policy is to move them to Mai Po and I have yet to see any reason why they shouldn't be moved there." One of the main objections to moving the animals is the department's history in transporting them. In 2007, 16 buffalo and cattle died during relocation. Since then the department's vets have been trained in handling large animals. Despite this, the department and the SPCA were unable to load two sedated buffalo on to a truck to take them to a government farm on May 17. One of the animals that had been sedated wandered 300 metres into marshland before collapsing. The next two hours were spent trying to drag the 900kg beast across the bumpy terrain using a tow truck winch. "A lot of people do not understand the difficulty of moving feral buffalos," Wong said. "We have a great place to move them: Mai Po. Those who do not want us to move them are not taking into account the animals' welfare."

Macau casinos face 2020 licence expiry - Given the billions of dollars invested and the plans for the booming gaming industry, questions are being raised over the future of the concessions - You would not know it from the record stock prices or the number of planned resorts in the pipeline, but Macau's unprecedented gambling boom has a built-in expiration date. Given the billions of investment dollars and lengthy construction timetables required by the Cotai-style megaresorts, analysts and investors are starting to ask the inevitable question of what happens when the first of Macau's six casino licences, or concessions, begin to expire on March 31, 2020. Will all six be renewed? Will the government exercise its right to take over ownership of casino assets? Will operators be hit with tax increases or other new fees? Will new bidders be allowed into the market? "The short answer is we do not know," University of Macau associate professor of law Jorge Godinho said at a gaming conference in the city last week. "These are matters that need to be considered and decided many years in advance because they involve investment plans with long-term horizons." The implications for Macau are huge. The gaming industry is the city's largest employer, and direct taxes on gambling accounted for 82 per cent of all government revenue last year. Macau's 33 casinos booked 188.3 billion patacas in gambling revenue last year. The 2001 law that ended Macau's gaming monopoly and the six concessions that were subsequently granted stipulate that the licences are at all times the property of the government, which retains vast powers over the licensees and their gaming-related assets in the territory. The licences held by SJM Holdings and MGM China will expire in 2020, while those of Wynn Resorts, Melco Crown Entertainment, Galaxy Entertainment Group (SEHK: 0027) and Sands China all run until 2022. Soaring casino revenue growth has been a bonanza for these firms and their shareholders, despite the 38-39 per cent gaming tax rate. As a result, analysts expect the government to use the licence expirations to grab a bigger piece of the pie. "It's not going to happen anytime soon simply because the government is trying to come to its own understanding of how to handle the issue," Macquarie Securities gaming analyst Gary Pinge said. But investors have failed to fully appreciate what he terms concession renewal risk. "I expect the government to regulate-down returns for operators," Pinge told the gaming conference. He said this could happen through a tax increase, a large licence renewal fee, or other methods. "All governments get greedy," said Nelson Rose, a legal consultant to the gaming industry. Rose said the government's power over the concessionaires meant it was almost certain to impose a licence renewal fee or tax increases. "You have this enormous power to say `Thank you for building the Venetian, it is now ours'. It always happens [when licences are up for renewal]. The only question is how bad will it be and how much [operators] can negotiate against that." The issue of licence renewal may also have an impact on projects built before the 2020-22 deadline. Sands and Galaxy both have large parcels of empty land on Cotai that they plan to develop, while Wynn, MGM and SJM are waiting on land grants for massive sites of their own. Bankers say that as the licence expiration date gets closer, finding long-term financing for planned projects will become complicated. "Investors, from a debt perspective in particular, will be quite nervous about extending beyond that [expiry] date unless there is some clarity given," Goldman Sachs managing director Eric Greenberg said at the conference. "Hopefully, the government won't wait until the last minute but will rather give some sort of indications to the market so it doesn't prevent companies from doing necessary financing or refinancing or capital raising." Casino firms have generally expressed confidence that the government will sort out the issue sooner rather than later. "It would be a big mistake to let 2020 anxiety become a major factor," Wynn chairman Steve Wynn said last month. "That would represent mismanagement by the government, and it would be the first time I'd seen that in the nine years I've been in Macau ... I think that if there was a chance that this was going to end in 2020 or 2022, we would have been told not to build the buildings." Galaxy last month opened a HK$15.5 billion resort on its Cotai site, two-thirds of which still remains undeveloped. "We are invited guests here," chief financial officer Bob Drake said. "We hope the Macau government will extend its invitation."

 China*:  June 14 2011  Share

Yuan to straddle region, not globe, researcher says - Hong Kong set to retain its international finance edge over Shanghai while free cross-border flow of currency is out of reach - Paola Subacchi from Chatham House says the yuan is more likely to be a regional currency in the foreseeable future. The yuan will become a regional rather than a truly global currency in the foreseeable future as Beijing pushes to make the yuan an exchange and investment medium beyond its borders, according to an international finance researcher. And Hong Kong's role as the mainland's international financial centre would likely last until at least 2020 as free cross-border circulation of the yuan remained a remote prospect, said Paola Subacchi, research director of international economics at think tank Chatham House. "I think it'll be more correct to talk about regionalisation rather than internationalisation," she said. "What I can infer from talking to various people at influential think tanks in China, is that China doesn't have the appetite to be the issuer [of a global currency] eventually as much as the United States does now." She said it was likely the yuan would become a commonly used trade settlement currency in Asia, similar to the euro's role in Europe and the Middle East, and the greenback's in the Americas. She added that neither the EU nor China had any intention to see their currencies replace the greenback as the global reserve currency. But such a development would help rebalance the world's US dollar-dominated international monetary system, and ensure stability of liquidity supply. In the 2008 global financial crisis, a US dollar liquidity shortage almost brought international trade to a halt and forced some emerging markets' central banks to step in with dollar funding to finance exports, Subacchi wrote in a research paper in October. She was speaking ahead of the start of a conference on financial centres in China organised by the Bauhinia Foundation Research Centre. Subacchi noted that while being an issuer of a major international currency was a privilege and allowed a nation to save on trade settlement costs, it also came with the responsibility to maintain sensible monetary and fiscal policies to avoid causing international financial crisis. China has amassed US$3 trillion in foreign exchange reserves, mostly in US dollar assets, making it vulnerable to the greenback's prolonged weakness. To reduce its exposure to the US dollar, Beijing has moved to make the yuan more widely used outside of the mainland, while also keeping tight control on the free flow of currencies across its borders to avoid instability in its immature financial system. These steps include creating offshore yuan trading and investment centres in places like Hong Kong and Singapore where currencies are freely convertible. But their development is restricted as Beijing's currency controls mean a relatively small amount of yuan can flow back to the mainland for investment purposes. Subacchi said that while Beijing had planned for Shanghai to become an international financial centre by 2020, a lack of commitment and clarity on when China would allow free convertibility of the yuan - a precursor for Shanghai to become a true international financial centre, Hong Kong still had an advantage over Shanghai before 2020.

China ranks first worldwide in gold transaction - A customer walks pass the chinese character "gold" of a gold store in Linyi, east China's Shandong Province, May 18, 2011. A total of 604.61 metric tons of spot goods of gold changed hands at the Shanghai Gold Exchange last year, ranking China the first in the world in terms of annual gold transaction volume, according to the China Gold Association. China produced 340.876 metric tons of gold in 2010, remaining as the world's largest gold production country for the fourth consecutive year. Global demand for gold totaled 2,778.6 metric tons in 2010, including 783.4 metric tons from India, 571.51 metric tons from China and 180.9 metric tons from the United States.

The Chinese Mainland, Taiwan to launch individual travel program - The Chinese mainland and Taiwan will launch a pilot travel program on June 28 that will allow mainlanders to visit Taiwan as individual tourists, a Taiwan affairs official said Sunday. Wang Yi, director of the State Council's Taiwan Affairs Office, announced the plan during a conference held at the weeklong Straits Forum, which opened in the mainland's coastal city of Xiamen on Saturday. Wang said the first phase of the program will apply to residents of the cities of Beijing, Shanghai and Xiamen, which is located in southeast China's Fujian Province. The two sides also agreed to give the green light to Fujian residents who wish to individually travel to Taiwan's islands of Kinmen, Matsu and Penghu. The mainland and Taiwan have witnessed booming tourism in recent years after the two sides agreed to lift a ban on mainlanders' traveling to Taiwan in July 2008. The number of mainland tourists traveling to Taiwan in groups reached 930,000 in 2009 and shot up by 127 percent to hit 1.63 million in 2010, according to statistics from Taiwan tourism authorities. Industry insiders estimate that the individual travel program will bring in 2 billion yuan ($307 million) in tourism revenues for Taiwan within half a year. In a bid to facilitate tourism between the mainland and Taiwan, the two sides also agreed to increase the number of cross-Strait passenger flights to 558 flights per week, an increase of more than 50 percent. The mainland added four stops for cross-Strait flights in the eastern cities of Yancheng, Wenzhou and Huangshan and the northwestern city of Lanzhou, Wang said at the conference. Taiwan also added its southern city of Tainan as a stop, he said, adding that there are now a total of 50 stops for cross-Strait flights on both sides. In the meantime, both sides have agreed to regulate airfares for flights from Beijing and Shanghai to Taipei, according to Wang. The annual cross-Strait forum has become an important platform for the announcement of economic and trade policies concerning the two sides. At the second Straits Forum, held in June of last year, airlines from both sides of the Taiwan Strait agreed to slash cross-Strait airfares by 10 to 15 percent to boost two-way travel.

Chinese President Hu Jintao left Beijing Sunday morning to pay state visits to Kazakstan, Russia and Ukraine, and attend a Shanghai Cooperation Organization (SCO) summit in Astana and an economic forum in St.Petersburg. Hu is making the visits from June 12 to 20 at the invitation of Kazakstan's President Nursultan Nazarbayev, Russian President Dmitry Medvedev and Ukrainian President Viktor Yanukovych, Chinese Foreign Ministry spokesman Hong Lei said earlier in a statement. During his visits, the Chinese president will attend the annual summit of the SCO in the Kazakh capital of Astana and the 15th International Economic Forum in St.Petersburg. The Astana summit will mark the 10th anniversary of the SCO's founding on Wednesday, which was established in Shanghai in 2001. The regional organization groups China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.

Hong Kong*:  June 13 2011  Share

Big brother just got smarter - Researchers in Hong Kong are developing a 'smart' video-monitoring system that can detect 'suspicious' behaviour. But will the technology be used to keep the public safe from terrorists or is it the stuff of Orwellian nightmares? CCTV cameras are already used to assist police in Hong Kong, but the technology being developed at Chinese University is altogether more sophisticated. The global war on terror has spawned major advances in surveillance technology and Hong Kong may have contributed the next big thing in this billion-dollar industry. Researchers at Chinese University have developed a "smart" video-monitoring system that can automatically pick out people acting suspiciously in a large crowd. The system, still in a test phase, is designed to detect abnormal behaviour within a crowd and alerts the authorities of danger ahead of time. This eliminates the risk caused by faulty human judgment or inattentive security guards. "Although there are numerous security cameras in Hong Kong, they are not intelligent enough, they still require people to monitor the footage," said Qian Huihuan, lead researcher and a post-doctorate fellow at the university's department of mechanical and automation engineering. "The drawback of this is that people can make mistakes, miss things and get tired." Although the idea of being individually tracked by a faceless machine sounds like an Orwellian nightmare, Qian believes the benefits of the system far outweigh the costs. While acknowledging it could be used for persecution, responsible authorities would use it only for protecting the public, he says. "The technology is primarily for checking people in crowded places to solve problems of congestion. "The system can also tell if there is behaviour that is associated with an emergency, like people suddenly crowding together or dispersing." Qian believes that the system could be especially applicable in Hong Kong because of large crowds in places such as Mong Kok, the area listed by Guinness World Records as "the most crowded place on Earth". But how does this ambitious system work? It begins with the installation of a video camera that is set at a great height. This creates a visual field where the movement of monitored persons falls within a two-dimensional space. When a person enters into the viewing area of the camera, "blob detection" occurs. This is akin to when our brains acknowledge the presence of a person or object in our line of vision. Unlike the human eye, however, the camera does not have depth perception so cannot automatically tell if a person is near or far away. It is essential for the surveillance system to be able to differentiate the positioning of people so they can be tracked individually. In order to do this, therefore, an algorithm is employed to detect multiple individuals in crowded areas. If more than one person appears on camera, they are detected as one blob before algorithms separate them into individuals. "To put it simply we detect features of people, like their hands, feet and head" said Qian. The system then gives them a unique identification number, according to the distance they travel and the colour of their clothes. The question still remains, however: how will these collections of various blobs protect public safety? The system is taught to recognise "abnormal behaviour" and if spotted, sends out an alert. Behaviour that is classified as abnormal ranges from when a person puts down a bag and leaves it unattended to someone circling a car; it also includes the aforementioned sudden gathering or dispersion of people. Qian lists other abnormal behaviour as "running when everyone else is walking, u-turning, walking in multiple different directions." Even though this system aims to "help society to become more convenient and safe" it does carry with it the danger of further infringing the privacy of an over-recorded global society. In the city of London, in the UK, for example there are already 7,431 CCTV cameras, according to a special report carried out by the BBC in 2009. These numbers pale in comparison to the mainland, where in Shenzhen alone there are 800,000 digital surveillance cameras and the streets of 660 of the nation's 676 cities are armed with CCTV. Hong Kong is no exception to this growing CCTV trend. Video surveillance has long been used to assist the police with crowd management during public festivals. And according to the Hong Kong Police website the practice of crowd monitoring by the human eye has already been put into place during the New Year and Lunar New Year festive period in the congested Yau Tsim, Central and Wan Chai districts. Whether or not the police will eventually use the hybrid algorithm approach system that Qian and his colleagues are developing is yet to be seen. The system remains as yet unable to deal with large groups of people and is still in a test phase. However, Qian is confident that within the next two years it will be able to achieve its objective of monitoring crowds in public areas.

Universities go all-out to win over best brains - Seventy Asian pupils are invited to tour Hong Kong in hopes they will attend local schools - The race for the best brains is on. Universities are ratcheting up the search for top international talent in a bid to cast the city as a world-class centre of learning. The University of Hong Kong hosted the second round of its "Taster Days" last week, inviting 70 students from top secondary schools in 10 Asian countries to tour its facilities. "We want to promote a fun and interactive approach to Hong Kong," said Daphne Wong, the program's co-ordinator. Passorn Tungkavichitwat, 17, from Thailand's Ratchasima Wittayalai School, enjoyed the international aspect of Hong Kong. She added: "This was my first time in Hong Kong. It was more interesting than I thought." Since the mid-2000s, the Hong Kong government has implemented a package of measures to attract outstanding students, creating a billion-dollar scholarship fund and increasing the number of places available to international students at public universities from 10 per cent to 20 per cent. University officials attribute the increase in the number of applicants from abroad to the draw of China's booming economy, and the greater chance for employment upon graduation. "People see their futures here," said John Spinks, senior advisor to the vice-chancellor at HKU. Still, university officials agree there's more to be done, with some asking for a further relaxing of the quota. Others lament a lack of the kind of buzz surrounding traditional education destinations like the United States, Britain, Canada and Australia. "Hong Kong has not done any brand-building in education," said Euphemia Chow, from Hong Kong Science and Technology University. "People still associate Hong Kong with Disneyland and Jackie Chan but not with top universities," added the assistant director for non-local recruitment and admission. "You can find good-quality degrees in good universities here, but the tuitions and the cost of living are significantly lower. That's our competitive edge." HKUST has an outreach programme, inviting international students each autumn to sit in different classes. For the 2010-11 academic year, the university reached the 20 per cent quota for the first time, with 360 of the 1,800 new undergraduates being non-locals. "The natural trend is to recruit half of the students from mainland China and half from the rest of the world," said Chow. Times Higher Education ranks Hong Kong University first in Asia. "Not many people actually know about the quality of Hong Kong's higher institutions," said Peter Li, director of the international office at Hong Kong Baptist University.

Five key areas for HKU-Shenzhen hospital link-up - Surgeons to share expertise in liver operations, oncology and other disciplines at showcase project - What have Hong Kong doctors got to offer the mainland? World-class expertise in liver transplants, for one thing. Surgeons from the University of Hong Kong will spend time working at a new Shenzhen hospital to pass on advanced skills in liver transplants, in vitro fertilisation and spine operations to their colleagues across the border. The University of Hong Kong Shenzhen Hospital is due to open in November. The hospital, built and funded by the Shenzhen government, will be HKU's second teaching hospital after Queen Mary Hospital in Pok Fu Lam. Supported by the Ministry of Health, the groundbreaking project will be a showcase for health care reform on the mainland. A person familiar with the discussions said the university and the Shenzhen government were expected to finalise details and sign an agreement this month. There has been a delay in the opening of the hospital, originally set for August, as both sides spend time working out the hospital's management model. The university has not yet disclosed who will be in charge of the hospital, and how responsibilities will be spilt between the two parties. HKU's head of surgery, Professor Fan Sheung-tat, said the university had identified five key areas to be developed at Shenzhen - liver transplants, spinal surgery, assisted human reproduction, cardiology and oncology. "The idea is to make the Shenzhen hospital a centre of excellence for these five areas," Fan said. The university's surgical department will send one or two surgeons to Shenzhen full-time. Some other surgeons, who usually split their time between teaching at the university and treating patients at Queen Mary Hospital, will be deployed there on a six-month rotation basis. "We worry about a manpower shortage as we will have to replace the doctors who go to Shenzhen," Fan said. "We will have to hire more doctors." Some Hong Kong surgeons have expressed reservations about teaching in Shenzhen. Those who are willing to go will receive a special allowance as an incentive. "The new teaching hospital provides us with a good opportunity for the exchange of professional skills," said Fan, known as the father of liver transplants in Hong Kong. "Doctors there can be exposed to [treating] a higher variety of diseases on the mainland." Fan, who visited Shenzhen last month, said the new hospital was more spacious than Queen Mary Hospital. It will open in phases and become fully operational, with 2,000 beds, in 2013. HKU vice-chancellor Tsui Lap-chee had earlier said the Shenzhen hospital would be "run in an HKU way". The university has pledged to introduce clinical audits and other quality assurance plans there.

The government and the banking regulator have stepped in again to curb the city's red-hot housing market with one of the toughest combined measures ever. The Hong Kong Monetary Authority announced a cut in mortgage loans for homes valued above HK$10 million to 50 per cent of the value of the property from 60 per cent, while for properties priced from HK$7 million to HK$10 million the amount able to be borrowed will be lowered to 60 per cent from 70 per cent. The total loan value must not exceed HK$5 million. The authority also added tougher restrictions on non-resident borrowers by reducing by at least 10 percentage points the maximum loan-to- value ratio they could be offered for all mortgages including residential, offices and commercial property. Analysts said the measures reflected the government's concern over the risks in the banking system, and could be a sign that it would start imposing different policies towards mainland buyers in Hong Kong. The government also announced the launch of eight sites for sale between July and September in an attempt to increase land supply. The sites are expected to offer about 6,000 flats - double the estimated 3,000 provided by the nine residential sites put up for sale in the April to June quarter. The package of changes comes seven months after the administration announced an increase in stamp duty on homes resold within two years. The stamp duty was set as high as 15 per cent if a home was resold within six months. "In view of the recent market situation, we think there is a need to boost our effort in, firstly, increasing land supply and, secondly, strengthen the risk management of the banking system," Financial Secretary John Tsang Chun-wah said yesterday. Tsang said the government would monitor the market and impose more measures if needed. Landscope Realty managing director Koh Keng-shing said the measures would trigger a turn- around in the already peaking housing sector which he said had experienced a recent drop in sales volumes, and stabilising prices.

Hong Kong IPOs Face Challenges - Investors signaled their increasing nervousness about the state of the Chinese and U.S. economies, pushing Samsonite International SA to price its $1.25 billion initial public offering at the bottom of its latest price guidance. Those jitters will make it more challenging for China Everbright Bank Co. to raise around US$7 billion over the next month in what is tipped to be the city's largest offering so far this year, analysts said. The midsized lender, which received regulatory approval for its listing plan on Friday, is one of four companies seeking to raise nearly US$11 billion in Hong Kong, the world's busiest IPO market in each of the past two years. Hong Kong's benchmark index fell for the seventh consecutive day on Friday, closing at its lowest level in three months. Investors were cautious ahead of the latest inflation report from China, due Tuesday, that could encourage the central bank to continue taking steps to cool the economy. U.S. stocks also have been weak amid worries that the economic recovery there is faltering. "The choppy market conditions will make the listing plan of Everbright Bank more challenging, as the IPO market is driven by market sentiment," said Ben Kwong, chief operating officer at KGI Asia. In a sign of the weakening appetite for IPOs, shares of Huaneng Renewables Corp., a Chinese wind-farm operator, fell 2.8% Friday to 2.43 Hong Kong dollars (31 U.S. cents) on their first day of trade following a US$799 million IPO. Uncertain market conditions had pushed Resourcehouse Ltd. to scrap its US$3.6 billion Hong Kong IPO earlier this month, the biggest offering globally to be shelved so far this year. The nervousness spread to Samsonite, which sold 671.2 million shares at 14.50 Hong Kong dollars (US$1.86) each, one of the people familiar with the situation said Friday. Samsonite's institutional tranche of the offering was four times oversubscribed and the retail tranche, accounting for 10% of the offer, was slightly oversubscribed, the person said. Samsonite had narrowed the price guidance for the IPO to HK$14.50-HK$15.50 a share Thursday, another person familiar with the situation said, compared with an earlier indicative range of HK$13.50-HK$17.50. "Even though Samsonite priced the IPO at a reasonable valuation, the weak market sentiment negatively affected investors who buy in IPO looking for a short term gain," Mr. Kwong said. Samsonite's IPO was priced at a price/earnings ratio of 18.3 based on forecast 2011 earnings, lower than the average 22.7 multiple for listed China and Hong Kong consumer stocks, according to a report by UBS, one of the banking involved in the offering. China Everbright Bank plans to begin informal meetings to gauge investor interest on Monday, people familiar with the offering said. According to the preliminary timetable, formal presentations and ordertaking are to start June 22, and the start of trading is July 11, subject to market conditions. Among other IPOs, luxury retailer Prada SpA is in the midst of ordertaking for its $3 billion IPO. Trading is expected to begin June 24. Chinese clean-energy producer Beijing Jingneng Clean Energy Co. will start investor presentations for its US$650 million IPO on Thursday. In addition, Chinese miner China Hanking Holdings Ltd. is seeking to raise as much as US$300 million through its IPO, another person familiar with the matter said. Shares are to begin trading July 7.

 China*:  June 13 2011  Share

Good omens for a hairy harvest amid drought - Yangcheng Lake's famous hairy crab industry seems likely to benefit from the very drought that has ruined many farmers and fishermen - This spring's record drought may have brought farmers and fishermen in the central mainland to the brink of ruin, but in the east some food producers are cautiously rubbing their hands. Growers of hairy crabs on Yangcheng Lake, Jiangsu province, are predicting a bumper crop of crustaceans which, coupled with reduced competition and higher prices, could see them lining their pockets with healthy profits. The drought took major rivers, lakes and reservoirs in central provinces to historically low levels before it broke last weekend, reportedly hitting crab growers in other parts of the Yangtze River Delta. While industry insiders doubt there will be a serious shortage of the freshwater delicacy, total supply is widely expected to drop by some 30 per cent and prices to rise at least 20 per cent. Yangcheng Lake, a shallow, fan-shaped expanse of water virtually segmented into three by flat causeways and peninsulas, sits between Suzhou and Kunshan , and is the most famous source of the freshwater hairy crabs - Chinese mitten crabs - which are prized by gourmets every autumn. Crabs have been harvested here for centuries as they begin to migrate out of the lake towards the Yangtze River Delta for the mating season, starting in late September. When crab season arrives, the delicacy is devoured in Shanghai restaurants by the crateful. Entire storefronts are crammed with pots of live crabs. Shi Yongxing, who runs a crab farm in Qingshui village at the heart of the lake, said his initial fears about the drought's possible impact had proven unfounded. "Water levels in the lake have certainly dropped over the past month or so, but I'm not complaining," Shi said. "This is actually better for us because the water is normally a little too deep. Shi said he was optimistic his crab haul would outstrip those of previous years. "You can never be certain until harvest time, but at the moment things are looking very positive. Our crabs are a lot bigger than they were at this time last year, so I am hoping for an above average crop." Shi is by no means alone. The Yangcheng Lake Crab Trade Association announced late last month that the region's crabs had already shed their second shells and were averaging 35-50 grams - over 10 grams heavier than at the same time last year. Hatchlings are released into the nets in February and March, so the crabs are about half way through their growth cycle. Males reach maturity first, in late September. "October is the best time," Shi said. "That's when the crabs really taste their best." The Shi family's cluster of nets extend over a football-field-sized stretch of the lake about 100 metres from shore. It is just one of hundreds of such farms that dot the lake. At another crab farm near Bacheng township, on the lake's northeastern shore, Chen Wei said he was counting his blessings. "The whole Lake Tai region hasn't fared too badly," he said, referring to a much larger lake to the west of Suzhou. "We have been very fortunate here, as I have heard that other regions have been hit very badly. A lot of growers in Nanjing have lost many crabs due to the lack of water, and obviously Poyang Lake has been the worst affected." The glint in Chen's eye hinted at a sense of schadenfreude. The annual crop of genuine Yangcheng crabs is only around 1,500 tonnes, according to the trade association. But in recent years as much as 100,000 tonnes of crustaceans stamped with the lake's name have flooded the market. Poyang Lake, in Jiangxi province, has been one of the main sources of fake Yangcheng hairy crabs. But with the drought shrinking that lake to less than a tenth of its normal area before the recent rain, its crab industry has been cut to virtually nil. "At least there will be less competition," was all Chen would say. Yang Xiong, the manager of Yang's Hairy Crabs in central Shanghai, said the drought would undoubtedly cut the city's supply. "There will definitely be a jump in prices this year, and we will have to pass that on to the customers," he said. "The drought will certainly have an impact, but so far it looks as if it won't be as bad as people had thought. But a lot can happen between now and September. You can never know for sure until they start taking the crabs out of the nets."

Pet birth control - Two volunteers for the PETA, a US-based animal rights advocacy organization, dress in condom suits to promote public awareness of the need for birth control for pets during a demonstration in Shanghai on Friday. The placard held by the person on the right reads: "Please sterilize cats and dogs (if you don't want them to give birth to little ones)." 

Jia Qinglin (R), a member of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee, who is also the chairman of the Chinese People's Political Consultative Conference (CPPCC) National Committee, meets with Kuomintang (KMT) Vice Chairman Tseng Yung-chuan at the third cross-Strait forum in Xiamen, southeast China's Fujian Province, June 11, 2011. 

Bill Gates, Robin Li form health alliance - Bill Gates (R), Microsoft Corp co-founder and co-chair of the Bill and Melinda Gates Foundation, laughs after he and Robin Li, founder and chief executive of Chinese search engine Baidu, put on shirts bearing the slogan: "Say No to Involuntary Smoking", during a media conference in Beijing June 11, 2011. Gates and Li signed an agreement to form an alliance between their charitable foundations called the "Alliance for Healthy China". 

Hong Kong*:  June 12 2011  Share

Convicted fraudster Lily Chiang Lai-lei is escorted by a prison officer yesterday at the Tai Lam Correctional Institution. Chiang is awaiting sentencing after being found guilty on Thursday of shares fraud. Yesterday, she handed in more than 40 letters written by prominent local figures to attest that she was a person of good character, a philanthropist, loving mother of four and a dutiful wife.

Singer admits drinking before crashing Bentley - Remus Choy of Grasshoppers tells court he drank four glasses of wine before driving into railings - Remus Choy, outside Eastern Court, said he felt mentally disturbed after the accident. Canto-pop star Remus Choy Yat-kit crashed his new Bentley after driving it for only a week, a court heard yesterday. Choy, 44, of the pop group Grasshopper, admitted he had been drink-driving when he crashed his car in Pok Fu Lam last month. He told Eastern Court he was so "mentally disturbed" by the accident that he needed to see a doctor. He pleaded guilty to careless driving and drink-driving. The court heard that Choy crashed his Bentley after he drank four glasses of red wine and slept for four hours. The crash took place in Sassoon Road, near Queen Mary Hospital at about 7.40am on May 1. A breath test showed a reading of 66 micrograms of alcohol per 100 millilitres or air. The legal limit is 22 micrograms. Wong Ching-yu SC, for Choy, said his client had the new car for only a week before the crash and he was not familiar with its operations. The court heard that the luxury car hit a metal railing before knocking down a mailbox and a fire hydrant. The vehicle continued to move uphill in Sassoon Road for about 200 metres, hitting a safety barrier before it eventually came to a halt. Wong told the court Choy shared two bottles of wine with his friends the night before the crash. He drank fewer than four glasses of wine and had slept for four hours. Choy was released yesterday on HK$5,000 bail. Sentencing was adjourned to June 24, pending a community service report. Choy suffered scratches to his right arm. He refused to be admitted to hospital for medical treatment. Acting Principal Magistrate David Dufton said Choy's alcohol level would not be that high if he had rested. He also questioned why Choy's car continued to move after the first crash, adding that it seemed Choy intended to leave the scene. Wong explained that it was because Choy was shocked at the time and accidentally stepped on the accelerator, causing the car to move 200 metres further. He asked the magistrate to give Choy the benefit of doubt, since there was no evidence proving he tried to flee the scene. Wong said Choy was remorseful. He had refrained from driving since and hired a personal driver. Wong said Choy was severely "mentally disturbed" by the incident and needed to see a doctor. Choy has been fined six times for traffic offences, including five for speeding. Grasshopper is a trio comprising Choy, his brother Calvin Choy Yat-chi, and Edmond So Chi-wai.

World's longest 3D painting on show in Hong Kong - The 60.46-meter painting, named "leaping dragon", set the Guinness World Record as the longest 3-D painting in the world.

The Hong Kong Monetary Authority on Friday announced tighter mortgage lending rules in a bid to cool the residential property market. A spokesman said the measures, which take immediate effect, were aimed at strengthening risk management practices in the market for residential mortgages. The new rules reduce the amount banks can lend to home buyers. The maximum loan-to-value ratio for properties priced between HK$10 million and HK$12 million has been lowered to 50 per cent. That means purchasers in Hong Kong must now hold half the capital value of a property before a bank will approve a mortgage. The loan-to-value ratio was for homes worth between HK$7 million and HK$10 million, on which a maximum loan amount of HK$5 million was also imposed, was reduced to 60 per cent. Properties priced below HK$7 million will maintain a maximum loan-to-value ratio of 70 per cent unchanged, but the amount of the loan was now capped at HK$4.2 million. A further measure was introduced to cool demand from foreign buyers - chiefly those from the mainland. The new rules will involve lowering the maximum loan-to-value ratio by 10 percentage points for buyers, whose principal income is not derived from Hong Kong. This measure will apply regardless of property types or values. HKMA chief executive Norman Chan Tak-lam said the measures aimed to encourage banks to manage credit risk more effectively. “There is, therefore, a continuing need for banks to enhance risk management in their mortgage lending business,” he said.

China Everbright Bank Co. received regulatory approval for its plan to launch an initial public offering that could raise as much as US$7 billion, a person familiar with the situation said Friday, in a deal that could be the largest IPO in Hong Kong so far this year. The company plans to begin premarketing the IPO on Monday and start formal presentations June 22, with the public offering to be launched June 27, people familiar with the situation said Thursday, adding the company is scheduled to list on the Hong Kong stock exchange on July 11. The timetable is preliminary and will be subject to market conditions, the people said. During premarketing, a company and its bankers gauge investor interest in an IPO and come up with a price range for the deal. The investor presentations constitute the official bookbuilding period, when a final price is set. Everbright Bank is the latest midsize Chinese lender to tap capital markets to boost its capital as Beijing tightens monetary policy to cool the economy. The lender said in February it would sell up to 10.5 billion shares in the Hong Kong deal, with an overallotment option of an additional 1.5 billion shares. China Everbright Securities (HK) Ltd., China International Capital Corp., J.P. Morgan Chase & Co., Morgan Stanley, BNP Paribas and UBS AG are handling the deal, a person familiar with the situation said earlier.

Sports billions on track despite Asia Games hiccup - Officials say government's policy to develop world-class facilities undeterred by lawmakers' refusal to support city's bid to host tournament - The government is forging ahead with a programme to spend HK$31.5 billion on sports facilities, despite the Legislative Council's refusal to support a bid for the 2023 Asian Games. While the authorities had indicated that they would invest the money regardless of the bidding outcome, many thought this would be scaled down after Legco in January rejected, by an overwhelming majority, a motion to bid for the Games. Instead, the government has embarked on its biggest investment to build and expand public sports facilities since Hong Kong's rapid urbanisation in the 1970s and 1980s. Jonathan McKinley, Deputy Secretary for Home Affairs, the department that oversees sports funding, said that nearly HK$12 billion had so far been approved and that a further HK$20 billion was needed for future projects, including the Kai Tak sports hub - estimated to cost HK$17 billion. "The HK$12 billion currently being spent on sports facilities shows we are walking the talk," he said in response to questions from the South China Morning Post (SEHK: 0583). "Regardless of whether Legco gives us the go-ahead to bid for the Asian Games, we aim to have a range of venues that will meet the needs of a number of users, including sports associations." There was an uproar in September when officials initially estimated the direct operating cost of hosting the Games at HK$14.5 billion, on top of HK$30 billion in indirect costs for new sports facilities. The forecast for operating costs was later slashed to HK$6 billion. "Perhaps all the negative publicity about the Asian Games came about because the people didn't know what the government was doing. I think, sadly, it was a case of miscommunication," said Pang Chung, secretary general of Hong Kong's Olympic Committee. "The government was committed to building these facilities anyway. In this light, it is a shame we did not bid for the Asian Games." While a large number of the 17 sports facilities currently being built at a cost of HK$10 billion will mainly cater for recreational use - the Siu Sai Wan complex and Tung Chung swimming pool have already been completed, each at a cost of more than HK$400 million - some could also double up and host major international competitions. The biggest of these will be the Victoria Park swimming pool complex, which includes an Olympic-size pool, and will cost HK$1.197 billion, and the indoor cycling velodrome-cum-sports centre in Tseung Kwan O, costing HK$1.129 billion. Liberal Party chairwoman Miriam Lau Kin-yee, one of the biggest critics of the Asian Games bid, said they opposed it not because of the money that was going to be spent on facilities but because the government could not come up with a convincing answer about the event's impact on Hong Kong's economy. "It was because we thought Hong Kong was not ready," she said. Additional reporting by John Carney

The Hong Kong government auctioned off real estate in a luxury residential area Thursday for less than the market had expected, reflecting caution among some developers toward a market that has seen record prices but which could slow as authorities implement measures to keep prices in check. Still, the amount paid was the second-highest for a site in a Hong Kong land auction, as a limited supply of prime real estate keeps demand buoyant. Hong Kong Financial Secretary John Tsang again warned property buyers Thursday of the risks in the market, citing rising mortgage interest rates, and said for the first time that the government will consider proposals to restrict foreign ownership of Hong Kong property. Blue-chip developer Cheung Kong (Holdings) Ltd., the property flagship of businessman Li Ka-shing, won the site on Borrett Road in the Mid-Levels district, saying the price of 11.65 billion Hong Kong dollars (US$1.5 billion) was within its budget and that it was a rare opportunity to acquire such a prime site. At HK$26,763 per square foot, the land is among the city's most expensive, though the purchase price was below the forecast range of HK$12 billion to HK$15.2 billion from five analysts polled by Dow Jones Newswires. "This is a superluxury location," said Cheung Kong Deputy Chairman Victor Li, eldest son of the Hong Kong tycoon, after the auction. "We won't sell these apartments so easily, so we may consider leasing them out first." Cheung Kong at the same auction also bought a much smaller site in the New Territories for HK$300 million, more than double the opening bid of HK$132 million, and within the analysts' forecast range of HK$200 million to HK$330 million. Hong Kong's average home prices rose around 24% in 2010, following a 30% jump in 2009, as abundant liquidity and record-low interest rates helped boost demand. A flood of mainland Chinese buyers has also driven the market boom, prompting many local residents unable to afford private housing to demand official intervention to rein in prices. For its part, the government has imposed taxes to discourage property speculation, and has pledged to increase land supply in the current financial year by selling dozens of residential sites. Results have so far been mixed, as property transaction figures have remained relatively robust in recent months, though analysts said higher interest rates could trigger a drop in the market. Major local lenders, including the Asian unit of HSBC Holdings PLC and BOC Hong Kong (Holdings) Ltd., have raised their rates several times in the past few months, driven by strong demand from local residents and wealthy mainland investors. "There's higher risk for the property market in Hong Kong due to local banks continuously increasing mortgage interest rates," Mr. Tsang, the financial secretary, said at a legislative council meeting Thursday. The city's interest rates have been near zero since late 2008. Its monetary policy moves in lockstep with that of the U.S. because of the local dollar's currency peg to the U.S. dollar. Alvin Lam, director of Midland Surveyors Ltd., said the lower-than-expected price for the Borrett Road site could be related to the large scale of investment required, thus making such a project riskier for developers. "There aren't many eligible developers that can participate in this race, thus reducing the intensity of the auction," he said. "Still, the price has already hit the highest in the same district, and the completed project could hit HK$40,000 per square foot." The purchase price surpassed the HK$10.9 billion that Sun Hung Kai Properties Ltd. paid for a site at Ho Man Tin in June last year. Hong Kong's record land price remains the HK$11.82 billion paid by Sino Land Co. for a site at Siu Sai Wan on Hong Kong Island in 1997. Charles Chan, managing director at property consultancy Savills Valuation and Professional Services, said the results from Thursday's auction reflect cautious optimism for developers on the outlook for the property market.

Peak house sells for record HK$800m - But sentiment in the luxury market has suddenly become much more cautious - A house on The Peak has sold for HK$800 million, or HK$96,362 per square foot, creating a city record. The 8,302 square foot house - No10 Pollock's Path - was built by Ryoden Development and film star Stephen Chow Sing-chi along with three similar houses on the site of the former "Skyhigh" development. Skyhigh used to be the residence of former Hongkong Bank chairman Michael Sandberg and Yaohan International chairman Kazuo Wada. The three-storey house has a private swimming pool, a garden and a sweeping view of Victoria Harbour. The price shattered the previous record by China Overseas Land (SEHK: 0688) and Investment's No6 Stanley Beach Road, which sold in March for HK$328.8 million, or about HK$62,900 per square foot. Ryoden Development was not available for comment yesterday. Ricky Poon Wai-ki, executive director of residential sales at Colliers International, said the record was not a reflection of the property market outlook. "It's just an individual transaction." He pointed to the poor response to the auction for a plot on Borrett Road, saying it showed developers had turned cautious. Henderson Land Development (SEHK: 0012) chairman Lee Shau-kee declined to share his market outlook but said: "Property prices are unlikely to rise sharply in the near term because of high lending rates on the mainland. The rates have risen to 15 to 30 per cent there and mainland buyers are not aggressively buying Hong Kong property as they were before." Howard Lo, a director at Centaline Property Agency, said the proportion of mainland buyers in the luxury residential market had decreased from 60 to 40 per cent of late.

 China*:  June 12 2011  Share

Over 70,000 Chinese applicants obtained a US green card in 2010, according to statistics released by the US Department of Homeland Security, reported China News Service Friday. The data shows that 70,863 Chinese citizens received a US green card in 2010, 6,625 more than 2009 but 9,408 less than 2008. In 2010, 1,042,625 US green cards were issued by the US, among which 6.8 percent were obtained by Chinese applicants, ranking the second-highest following the 13.3 percent of Mexican applicants. Asia and North America are the two main sources of new green card holders, respectively accounting for 40.5 percent and 32.3 percent of all issued. Among the new green card holders, more than 200,000 reside in California, roughly 150,000 live in New York and over 100,000 live in Florida, with these three states receiving the most new immigrants.

Beijing taps into Cuban oilfields - Agreements signed this week appear to be aimed at making China a significant partner in exploring onshore and offshore blocks in the Gulf of Mexico - Cuba is hoping to boost its oil output with funding and expertise from China after energy-related agreements were signed this week. China looks ready to play a major role in the development of Cuban oil, including the island's soon-to-be explored fields in the Gulf of Mexico, after the signing of energy-related accords during a visit this week by Vice-President Xi Jinping. The details have not been disclosed, but they appear aimed at making China a significant oil partner with its fellow communist-run country, which is likely to raise eyebrows in the nearby United States. State-owned China National Petroleum Corp said the accords committed the company to make full use of its oil expertise to help Cuba raise its oil output and "to expand co-operation with [state-owned] Cubapetroleo in exploring and developing new onshore and offshore oil blocks in Cuba". Whether the agreement means CNPC (SEHK: 0135) has leased Gulf of Mexico blocks for exploration was not immediately clear. But Jorge Pinon, a visiting fellow at Florida International University and an expert on Cuban oil, said the Cubans previously said they were discussing the leasing of five of their 59 offshore blocks to the Chinese. "All the pieces of the puzzle are finally falling into place," he said. Those pieces include two other accords that commit the two countries to negotiate contracts for a major expansion of a Cuban oil refinery in the city of Cienfuegos, and the construction of a liquefied natural gas project, including a regasification plant, at the refinery. The projects are estimated to cost US$6 billion, most of which would be provided by China and backed by oil from Venezuela. Socialist ally Venezuela and China are Cuba's top two trading partners. Signatories to the three accords included CNPC president Jiang Jiemen , indicating they were not idle promises. Xi and Cuban President Raul Castro attended a ceremony on Sunday in Havana. Xi is widely expected to succeed President Hu Jintao in 2013. The agreements with China, also a major creditor to Cuba, come as Cuba awaits the arrival of a Chinese-built rig contracted by Spanish oil giant Repsol YPF to conduct the first full-scale exploration in Cuba's part of the Gulf of Mexico. The hi-tech Scarabeo 9 rig is expected to arrive in Cuban waters in late September or early October and start drilling the first of a series of wells planned by companies including Repsol, Malaysia's Petronas and a unit of India's ONGC. Repsol's first well will be about 100 kilometres from Florida, which is twice as close as drillers can get to the state's west coast in US waters, due to a federal ban. Cuba says it may have 20 billion barrels of reserves, but the US Geological Survey has estimated only five billion. The prospect of Cuban drilling has touched off opposition from Florida lawmakers who say it threatens the state's environment and helps the Cuban government so hated by many in Miami, the centre of the Cuban exile community. They have filed bills in Washington trying to thwart the drilling by punishing foreign firms and individuals who take part in Cuba's exploration. US oil companies cannot work in Cuba due to a longstanding US trade embargo against the island. Repsol representatives met US Interior Secretary Ken Salazar last week to assure him they have solid safety plans in place should there be a blowout like that at the BP well last year off the Louisiana coast. "It sounds as if the [US] administration is trying to figure out how to work co-operatively with Repsol, and that is definitely in the US national interest," said Cuba expert Phil Peters at the Lexington Institute think tank in Arlington, Virginia. "Florida wants high standards of environmental protection in the gulf and Florida also doesn't want the US to talk to Cuba. You can't have it both ways," he said.

A Chinese ratings house has accused the United States of defaulting on its massive debt, state media said on Friday, a day after Beijing urged Washington to put its fiscal house in order. “In our opinion, the United States has already been defaulting,” Guan Jianzhong, president of Dagong Global Credit Rating, the only Chinese agency that gives sovereign ratings, was quoted by the Global Times saying. Washington had already defaulted on its loans by allowing the dollar to weaken against other currencies – eroding the wealth of creditors including China, Guan said. The US government will run out of room to spend more on August 2 unless Congress bumps up the borrowing limit beyond US$14.29 trillion – but Republicans are refusing to support such a move until a deficit cutting deal is reached. Ratings agency Fitch on Wednesday joined Moody’s and Standard & Poor’s to warn the United States could lose its first-class credit rating if it fails to raise its debt ceiling to avoid defaulting on loans. A downgrade could sharply raise US borrowing costs, worsening the country’s already dire fiscal position, and send shock waves through the financial world, which has long considered US debt a benchmark among safe-haven investments. China is by far the top holder of US debt and has in the past raised worries that the massive US stimulus effort launched to revive the economy would lead to mushrooming debt that erodes the value of the dollar and its Treasury holdings. Beijing cut its holdings of US Treasury securities for the fifth month in a row to US$1.145 trillion in March, down US$9.2 billion from February and 2.6 per cent less than October’s peak of US$1.175 trillion, US data showed last month. Foreign ministry spokesman Hong Lei on Thursday urged the United States to adopt “effective measures to improve its fiscal situation”. Dagong has made a name for itself by hitting out at its three Western rivals, saying they caused the financial crisis by failing to properly disclose risk. The Chinese agency, which is trying to build an international profile, has given the United States and several other nations lower marks than they received from the the big three.

Pinera offers Chile as a 'platform' for China - Chile's President Sebastian Pinera, left, shakes hands with China's Vice President Xi Jinping during a meeting at the La Moneda government palace in Santiago on Thursday. Xi is on a three-day visit to Chile. Chile's businessman president met with China's vice president on Thursday and offered his country as a platform for China to expand its business dealings in Latin America. After signing a series of economic agreements, President Sebastian Pinera stressed the importance of China for the Chilean economy, one of the region’s strongest. China is the second largest market for Chilean exports. “We hope not only to deepen the ties between both countries, but offer Chile as a platform for China to integrate with the rest of Latin America,” Pinera told China’s Vice President Xi Jinping. Xi, who arrived on his final stop of a swing through Latin America, did not directly address Pinera’s comment. He praised the Chilean leader for the recovery from last year’s earthquake and tsunami and the rescue of 33 miners trapped far underground for more than two months. “There have been major successes in all areas,” said Xi, who is widely discussed as the next president of China. In their meeting, Pinera and Xi signed nine agreements on economic cooperation, including financial, telecommunications and mining. Trade between Chile and China totals about US$17 billion a year. China is the primary destination for Chilean copper, this country’s key export. Pinera became a billionaire by introducing credit cards to Chile and building the region’s biggest airline.

GE, Harbin Electric sign deal - A steam turbine at Harbin Electric Co Ltd. The company, aiming to boost its market share in China's high-end electric sector, will buy four of GE's gas turbines. Harbin Electric Co Ltd will purchase four of GE's gas turbines with FlexEfficiency technology, to be used in district heating applications, in a move to further develop in China's high-end electric market. GE and Harbin Electric (HE) signed a Memorandum of Understanding on Friday in which they agreed to jointly provide equipment and design ideas for gas-fired power plants in the Chinese market. According to the memorandum, HE will buy four Frame 9FB gas turbines from GE by the end of 2013 and use them in the future projects. However, HE has not yet worked out the details of the projects, said Wu Weizhang, executive director and president of Harbin Power Equipment Company Ltd. Wu said that the company will work hard to expand the market for the new technology and that he is confident about the return on their investment. "There are market space and potential customers for our products in China," he said. "And our orientation is high-end products." "As the biggest wind power market in the world, China plans to expand in natural-gas power generation as well, which will bring us the ideal business opportunities for our new FlexEfficiency technology," said Paul Browning, president and CEO, thermal products, for GE Power & Water. Browning said GE is looking worldwide for new partners to bring the technology to the global market and China will be the first of four countries to have this application. "China will become the biggest natural gas power market in the world," he said. "We have a long history with HE and we are excited about this cooperation." The biggest problem for wind power is fluctuation, which makes the generation process more expensive. GE's new technology aims at solving the problem by rapidly adjusting to fluctuations in wind and solar power. Browning said the new technology will be able to integrate more renewable resources into the power grid in a stable and efficient way, which is essential for the Chinese market because the country is making efforts to increase the percentage of clean energy in its energy consumption. GE has been cooperating with HE since 2003, when it provided gas turbines for projects in China. In 2010, GE and HE formed a joint venture to develop in the wind power sector. "We will expand our cooperation with GE, and the combination of HE's steam turbine and GE's FlexEfficiency gas turbine technology is strong," Wu said.

Schneider buys clean tech company for $650m - A Schneider Electric SA production facility in Tianjin. The company estimated that energy efficiency would represent an incremental market opportunity of $45 billion annually by 2020, with a large portion coming from emerging economies such as China. Schneider Electric SA has agreed to pay $650 million for Leader & Harvest Technologies Holdings Ltd, one of the leading players in the fast-growing medium voltage (MV) drives market in China. Sources told Reuters on Monday that Schneider was among second-round bidders, along with ABB Ltd, for the private equity-owned China cleantech asset. Co-owners Affinity Equity Partners and Unitas Capital have earned more than three times their initial investment of around $200 million for the asset they acquired in late 2009. The private equity firms hired Deutsche Bank AG to run a dual-track sale and initial public offering process. The sale of Leader & Harvest offered global multinationals a rare opportunity to acquire an entire company in China. The Chinese government's emphasis on energy saving, together with the company's distribution network, added to the strong interest in Leader & Harvest. Leader & Harvest had recorded annual growth of above 20 percent in recent years, and was expected to generate sales of about $150 million this year, Schneider said in a statement on Thursday. Leader & Harvest, which has more than 750 employees and is headquartered in Beijing, holds a strong position in MV drives in China, which makes up about 40 percent of the global market. Leader & Harvest's drives are used in energy-intensive industries such as power generation, mining, minerals and metals, oil and gas, and water and water treatment. Drives can provide energy savings of up to 50 percent for industrial motors, but around 70 percent of the world's MV motors are not equipped with drives. Schneider Electric recently estimated that energy efficiency would represent an incremental market opportunity of $45 billion annually by 2020, with a large portion coming from new economies such as China. The company said it expected the acquisition to be accretive on earnings each share from year one.

Solar power to become cheaper - A photovoltaic panel production line in Jiangsu province. China had solar projects totaling 300 megawatts, at the end of 2010, after starting two pilot projects in the past two years. The price of solar power in China is expected to drop by 20 percent in the next five years as the country prepares to start large-scale application of the green energy source after 2015, a senior official from the National Energy Administration (NEA) said on Thursday. "The cost of solar power is likely to drop below 0.8 yuan (12 cents) a kilowatt hour (kWh) by 2015, when the industry will begin large-scale operation, making it economically viable, like wind energy," said Liang Zhipeng, deputy director general of the department of renewable and new energy of the NEA. The country is planning to have 10 gigawatts of installed solar capacity as part of its 12th Five-Year Plan (2011-2015), according to Liang, adding that the energy plan is still under review prior to approval. Annual growth of 150 to 200 megawatts (mW) in the solar industry is expected before 2015, Liang said. China had solar projects totaling 300 mW, as of the end of 2010, after starting two pilot projects in the past two years. The cost of solar-generated electricity fell from 1.09 yuan a kWh in 2009 to 0.99 yuan a kWh in 2010 in the projects, according to the NEA. The system is collecting 0.004 yuan for each individual consumer to compensate for the cost of solar energy, which has accumulated to 8 billion yuan this year. "However, the money collected still doesn't meet the expense," said Dong Xiufen, director of the department of renewable and new energy at the NEA. China is the world's largest solar panel supplier, producing 50 percent of global output. With demand decreasing in Europe, China's largest market for panels, the country is looking at other emerging markets. It recently announced a plan to bring solar panels to 40 African countries. Asia could be one of the largest solar markets, said Liang. Japan's "Sunrise Project" intends to lower prices for solar panels by a third from current levels by 2020 and then cut those prices in half by 2030. The government aims to have solar panels on 10 million homes in Japan by 2020. China is expanding the domestic solar market. This year, the NEA will start the third bidding session for a solar pilot project totaling 500 mW to 1,000 mW, the China Securities Journal reported. The NEA is also planning the New Energy City Program, which aims to popularize the solar power system in 100 cities during the 12th Five-Year Plan, Dong said on Thursday. Experts expect the solar market to take off with the decreasing price of solar panels, making the expensive green source of energy economically viable. Project costs will decline to 12,000 to 13,000 yuan a kW, with the module price dropping to 6 yuan from 10 yuan, according to Dong.

China MediaExpress Holdings Inc. once seemed like a small gem among a heap of Chinese companies listing shares in the U.S. Boasting rapid growth and big profits from selling advertising on video screens in Chinese intercity buses, it drew tens of millions of dollars from marquee investors. It listed its shares on the Nasdaq Stock Market, where its chief executive rang the opening bell last June. Today, MediaExpress is in chaos, its shares no longer traded on Nasdaq after a turbulent few months marked by investors' concerns over the size of its business and questions over its accounting. It is one of dozens of companies from China that have come under fire by investors and regulators for allegedly misleading investors, exposing a loophole that has U.S. regulators concerned. The company's auditor, Deloitte Touche Tohmatsu, resigned in March, saying that it had raised concerns over "possible undisclosed bank accounts and bank loans," and "issues concerning the validity of certain advertising agents/customers and bus operators," among other issues, according to a MediaExpress regulatory filing verified by Deloitte. The accounting firm also said it felt it could "no longer…rely on the representations of management" and had "lost confidence" in the MediaExpress board's commitment to "reliable financial reporting." 

Hong Kong*:  June 11 2011  Share

City's radio to go digital this year - Hong Kong will have 18 digital channels by November, but service on the MTR and in tunnels will come later - Hong Kong radio is going digital later this year - but most travellers on the MTR and in the city's tunnels will not be able to hear the broadcasts for at least another year. Starting in November, Hong Kong will have 18 digital radio channels operated by four broadcasters for the first time. Signal receptors, however, will not be ready for users underground or inside tunnels until months later. The only people who will hear the programming will be those using smartphones or similar devices to connect to the internet. Aaron Liu Kong-cheung, the acting deputy secretary for commerce and economic development, said the government would spend HK$46 million to install receptors in 11 government-run tunnels in the next two years; it plans to have the four busiest tunnels digital radio-ready by the end of next year. "The work involves some technical issues and could not be carried out 24 hours a day inside the tunnel," he said. "Work could only be carried out in a small period of time early in the morning when the traffic flow is relatively low. So there are some technical restrictions." Albert Cheng King-hon, chairman of the Digital Broadcasting Corporation Hong Kong, one of the four operators and a popular radio host, said that he was not happy with the progress. "It is not appropriate to finish it in separate stages," he said. "It is too slow and it shows that the government is not promoting digital broadcasting wholeheartedly." Cheng said his own investigation showed it would cost HK$1 million per station for digital signals to cover all 84 MTR stations, which serve an average of 4 million passengers a day. "We should not bear the cost as we are free-to-air and providing a public service," he said. Bianca Ma Kin-san, managing director of Metro Broadcast, another operator, said the operators would need government help to lobby the MTR Corporation (SEHK: 0066). She said the installation cost would be very high and the operators might need to do it in phases. But Liu said the possibility of co-operation between the MTR Corp and the four operators was subject to their own discussions. The MTR Corp was still at a very initial stage in exploring the technical issues of installing a system for digital broadcasting, and could not yet discuss installation time and cost, a spokesman said.

Shenzhen scientists create fast test for E coli strain - Mainland and Hong Kong to step up precautions over deadly outbreak of food-borne infection in Germany - A Shenzhen laboratory that first completed the DNA sequencing of the deadly E coli outbreak in Europe has developed a rapid assay test that can accurately detect the infection within two to three hours, it announced yesterday. The technology is now available online to the public for free. Shenzhen-based BGI, formerly known as Beijing Genomics Institute, told the South China Morning Post (SEHK: 0583, announcements, news) yesterday that its PCR-based (polymerase chain reaction) assay test can amplify targeted short DNA fragments of E coli bacterium and generate the fragments to thousands to millions of copies, enabling researchers to accurately detect, in a few hours, the strain of the harmful food-borne pathogen behind the German outbreak. The news came as Germany's disease control centre said the number of people reported sick in the deadly outbreak was still rising, even though German officials said there was hope the epidemic was abating. The Robert Koch Institute said that another person had died in Germany from the E coli infection, raising the toll to 24 in Germany, plus one in Sweden. The number of reported cases is up by more than 300 over the previous day to 2,648, including nearly 700 suffering from a serious complication that can cause kidney failure. Even though the reported cases are going up, there is often a lag in the reporting time, and German Health Minister Daniel Bahr says the number of new infections is "clearly going down". Meanwhile, mainland health authorities have stepped up health inspections on travellers arriving from Germany to prevent the deadly strain from reaching its shores. The General Administration of Quality Supervision, Investigation and Quarantine said in a notice yesterday that authorities should strengthen temperature and medical checks on passengers arriving from Germany. In Hong Kong, Secretary for Food and Health Dr York Chow Yat-ngok said the government was also considering making the E coli outbreak in Germany a statutory notifiable disease in case the strain arrives in the city. "Hong Kong will be prepared for the first case to arrive. We will consider if we need to put it down as a notifiable disease," Chow said. A team of German doctors from Hamburg, the northern German city at the epicentre of the outbreak, is trying an antibiotic therapy that some fear could do more harm than good. The treatment has shown initial success but there are worries about possibly fatal side effects. Dr Friedrich Hagenmueller, medical director at Hamburg's Asklepios Hospital-Altona says that with patients' lives at stake, the unorthodox therapy is worth trying. "The idea is to destroy the bacteria at the start. Hit it hard on the first day of the infection with an antibiotic." Most bacterial infections are treated using antibiotics. But officials at the World Health Organisation and the US Centres for Disease Control and Prevention typically recommend against using them in E coli cases because of concern they might cause the bacteria to release toxins faster.

Creative licence - A new breed of chefs with a passion for food, creativity and a determination to succeed are blazing the trail that is turning Hong Kong into a world-class destination for diners - Clockwise from top left: Rolland Schuller of the Drawing Room with his red prawn linguini; Margaret Xu of Cantopop with her sous vide char siu fried egg; Vinny Laurie of Linguini Fini with his thin sliced rare beef, artichoke, gorgonzola, and anchovy aioli; and David Lai of On Lot 10 with his salt-baked fish of the day.

Government lands department auctioneer G. M. Ross (third left) raises his gavel on the winning bid for a plot of land on Borrett Road at a government land auction in Hong Kong on Thursday. The land auction fell below analysts' price estimates for the sprawling residential site. Cheung Kong (Holdings) (SEHK: 0001) won a luxury residential site in Mid-Levels and another in Yuen Long at Thursday's government land auction. The developer secured the site on Borrett Road for HK$11.65 billion, or HK$26,763 per square foot. The price met the lower end of previous market estimates, local media reported. The 1.05-hectare (10,488-square-metre) site formerly housed a government staff quarters. It is one of the few large development sites in Mid-Levels still available for sale. Flats on middle-to-upper-level floors in a future development will command sweeping views over Central. Cheung Kong also won another site which went under hammer on Thursday. It offered HK$300 million – or HK$4,591 per sq ft – for the site at Ping Shan in Yuen Long. The 65,401 sq ft site us located at Ping Kwai Road, near the Tong Fong Tsuen light-rail station, could be developed into a low-density residential project with a total gross floor area of 65,401 sq ft and may be used to build a five-storey residential building, as well as houses. Cheung Kong deputy-chairman Victor Li Tzar-kuoi told reporters the company would develop the two sites. He said the developer planned to build luxury flats on the Borrett Road site. Some might be rented out after completion. “I think it is one of the prime luxury sites in the area,” Li said.

Hong Kong actor Chow Yun-fat speaks during a press conference for the 'Beginning of a Great Revival' in Beijing on Wednesday. Movie stars have gathered to launch the blockbuster propaganda movie celebrating the 90th anniversary of the Chinese Communist Party. Movie stars gathered on Wednesday to launch a blockbuster movie celebrating the 90th anniversary of the Chinese Communist Party. The Beginning of the Great Revival traces developments between the 1911 revolution that overthrew imperial rule and the establishment of the Chinese Communist Party on July 31, 1921. It is part of a series of events in China marking the anniversary. It features many of the Chinese film industry’s biggest names such as Andy Lau and Chow Yun-fat, who attended Wednesday’s event. Director Han Sanping told a news conference the movie is better than 2009’s The Founding of a Republic, which told the story of the Communist Party winning power in 1949. China Film Group is hoping for a repeat of the success it had with The Founding of a Republic, which made 415 million yuan (HK$498 million) at the box office, a large amount for China and for the usually staid propaganda genre. Its success was helped by politically correct theatre operators who flooded their properties with screenings. Beginning of the Great Revivalis likely to receive similar treatment. Communist China’s founding father, Mao Zedong, is played by actor Liu Ye, best known to Western audiences for his roles in the Zhang Yimou imperial drama Curse of the Golden Flower and the drama Dark Matter , which co-starred Meryl Streep.

Lily Chiang convicted of shares fraud - Lily Chiang Lai-lei, former chairwoman of the General Chamber of Commerce, is remanded after appearing in the District Court in Wan Chai on Wednesday. High-profile businesswoman Lily Chiang Lai-lei on Thursday was convicted of shares fraud. On the third day of delivering a 100-page verdict, Judge Albert Wong Sung-hau told the District Court he had concluded that Chiang had knowingly committed fraud. This was despite her claims to the contrary, the judge said. Wong said Chiang had a clear goal of making personal gain when she instructed staffers to hold share options on her behalf, local media reported. The court heard that Chiang, 50, granted 10 staffers the share options, in breach of listing rules, and then pocketed more than HK$3.7 million from selling the shares. Chiang was a former chairwoman of the Hong Kong General Chamber of Commerce. She was the first woman to chair the chamber in its 147-year history. She was also convicted on Thursday of authorising the issue of a prospectus that included an untrue statement relating to shares of Eco-Tek – a company Chiang had founded. Wong said evidence pointed to Chiang inducing the Hong Kong Stock Exchange to approve a company prospectus she knew contained false information, local media reported. On Wednesday, Wong described Chiang as a “dishonest and unreliable” witness during the trial. He said the businesswoman tried to make up excuses to distance herself from the crimes. Chiang was arrested by the Independent Commission Against Corruption (ICAC) in October 2007; charges were laid against her the following January. Other defendants in the case included Tahir Hussain Shah, 45, accused of one count of conspiracy to defraud and two of making false statements over the granting of share options to employees of Pacific Challenge Holdings, a listed brokerage company Chiang used to run. The other defendant is Pau Kwok-ping, 54, former chief executive of Eco-Tek Holdings, who is accused of two counts of fraud in relation to the listing of Eco-Tek. Five charges were laid against them, including fraud, conspiracy to defraud, false statements by directors, and authorising the issue of a prospectus that included an untrue statement. Two of them are alternative charges. The defendants had pleaded not guilty to all counts. The judge did not pass sentence on Thursday morning.

The Hong Kong government auctioned off a prime piece of residential real estate Thursday for less than analysts had forecast, an apparent sign of caution among developers that measures meant to keep housing prices in check could succeed. Still, with a limited supply keeping demand buoyant, the sale achieved the second-highest price ever in a Hong Kong land auction—even as Hong Kong Financial Secretary John Tsang's was warning again of the risks in the market. Hong Kong housing prices have surpassed those reached in 1997, just before what proved to be a real-estate asset bubble popped. The successful bidder for the Borrett Road, Mid-Levels plot, blue-chip developer Cheung Kong (Holdings) Ltd.—the property flagship of businessman Li Ka-shing—said the 11.65 billion Hong Kong dollars (US$1.5 billion) it's paying was within its budget and that the sale was a rare opportunity to acquire such a prime site. At HK$26,763 per square foot, the land ranks among the city's most expensive, though five analysts polled by Dow Jones Newswires had expected it to bring in even more, with forecasts ranging from HK$12 billion to HK$15.2 billion. "This is a super-luxury location," Cheung Kong Deputy Chairman Victor Li, eldest son of the Hong Kong tycoon, said to reporters after the auction. "We won't sell these apartments so easily, so we may consider leasing them out first." Cheung Kong at the same auction also bought a much smaller site in Yuen Long, New Territories, for HK$300 million, more than double the opening bid of HK$132 million, and within the polled analysts' forecast range of HK$200 million to HK$330 million. The average price of a Hong Kong home rose around 24% in 2010, following a 30% jump in 2009, as abundant liquidity and record-low interest rates helped boost demand. A flood of mainland Chinese buyers has helped fueled the boom. But many local residents, finding themselves unable to afford private housing, have demanded official intervention to rein in the high prices. For its part, the government has imposed taxes to discourage property speculation, and pledged to increase land supply in the current financial year by selling dozens of residential sites. Results have so far been mixed, as property transaction figures have remained relatively robust in recent months. Analysts say higher mortgage-interest rates could trigger a correction. Major local lenders including the Asian unit of HSBC Holdings PLC and BOC Hong Kong (Holdings) Ltd. have raised their rates several times in the past few months, driven by strong demand from local residents and wealthy mainland investors. "There's higher risk for the property market in Hong Kong due to local banks continuously increasing mortgage interest rates," Mr. Tsang, the financial secretary, told the legislative council Thursday. He also said for the first time that the government will consider proposals to restrict foreign ownership of Hong Kong property. In addition, some analysts expect local interest rates—near zero since late 2008, as the Hong Kong dollar's peg to the U.S. dollar aligns Hong Kong's monetary policy with the U.S.'s—to head higher later this year, even before U.S. rates start rising, as a result of robust demand for the local currency. That would push mortgage rates still higher. Alvin Lam, director of Midland Surveyors Ltd. said the lower-than-expected price for the Borrett Road site could be related to the investment required, which limits the field of bidders. "There aren't many eligible developers that can participate in this race, thus reducing on the intensity of the auction," he said. "Still, the price has already hit the highest in the same district and the completed project could hit HK$40,000 per square foot." The purchase price surpassed the HK$10.9 billion that Sun Hung Kai Properties Ltd. paid for a site at Ho Man Tin in June last year. Hong Kong's record land price, however, remains the HK$11.82 billion paid by Sino Land Co. Ltd. for a site at Siu Sai Wan on Hong Kong Island in 1997. Charles Chan, managing director at property consultancy Savills Valuation and Professional Services, said the results from Thursday's auction reflect cautious optimism among developers on the outlook of the property market.

 China*:  June 11 2011  Share

Wen launches Japanese film, TV week with former PM Aso - Premier Wen Jiabao (right) and former Japanese prime minister Taro Aso jointly launches the "Japanese Film and TV Week" at the National Museum of China in Beijing, June 8, 2011. Premier Wen Jiabao and former Japanese prime minister Taro Aso on Wednesday jointly launched the "Japanese Film and TV Week" at the National Museum of China, to promote cultural exchanges between young people from the two countries. Aso, from Japan's main opposition Liberal Democratic Party, is known to be an avid fan of comic books. He is currently in Beijing as a special envoy of Japanese Prime Minister Naoto Kan to introduce Japanese films, TV dramas and animation to the Chinese audience. During his meeting with Aso, Wen said the Japanese side showed its sincerity to hold cultural events on schedule after overcoming various difficulties caused by the earthquake and tsunami on March 11. He noted that comic books are popular among young people and he believes that cultural festivals would greatly enhance understanding and friendship between the people of the two nations. The film week, to be held in Beijing and Shanghai through June 18, will feature 11 movies, including Akunin (Villain), which earned the best actress award at the Montreal World Film Festival, and Kaabee (Our Mother) by award-winning director Yoji Yamada. Kyodo news quoted a Japanese official as saying that Japanese animation festivals will be held in Beijing and Shanghai in late November. Similar animation events were held in the two cities last November. In Japan, similar events to introduce Chinese cultural works are scheduled for later this year.

Tennis Champion Marks New Era in China Sports - China is celebrating its first Grand Slam tennis champion, the tattooed and free-spirited Li Na, not just as a new sporting icon but as a new face for her country. Ms. Li's popular appeal has been enhanced by her antiestablishment reputation since she broke away from the state sports administration in 2008 to climb the world tennis rankings on the strength of her individual talent and perseverance. Her victory over Francesca Schiavone 6-4, 7-6 in the final of the French Open on Saturday prompted a bout of giddy national euphoria. An estimated audience of 166 million watched the match on China Central Television. Chinese state media have been swept along by the adulation. An editorial carried by the state-run Xinhua news agency on Sunday titled "Li Na is the best PR for China," called her an "outstanding name card for China" and a "brilliant 'diplomat.'" It compared Ms. Li to Chinese NBA star Yao Ming, noting that both "can speak very fluent English, and both of them have a kind of sense of humor that is appreciated by foreigners." The normally staid People's Daily, the mouthpiece of the Chinese Communist Party, splashed a color picture of Ms. Li kissing the trophy at the top of its front page along with a gushing story framed in a celebratory red border. "Li Na reaches the summit of the Grand Slam," read the headline. A commentary on Chinese Internet portal said that Ms. Li has "conquered the whole world with her unique charm as a lady from the East." Chinese fans have grown used to watching the scientifically selected products of their state sports machine pumping out medals in gymnastics, table tennis and other Olympic events. Success at the highest level of professional tennis has eluded China until now. But what's captured the popular imagination is the way that Ms. Li achieved her breakthrough—not by submitting herself to the discipline of the sports bureaucracy, and its brutal but phenomenally successful formula of breeding national champions, but by splitting from it. Ms. Li's personal narrative has come to embody the wider aspirations of young Chinese to challenge convention and take risks. Much is made in the Chinese media of the flower tattoo on her chest. In December of 2008, four Chinese tennis players, including Ms. Li, Peng Shuai, Zheng Jie and Yan Zi, signed an experimental "fly alone" agreement with the Tennis Management Center of the General Administration of Sport of China. The deal permitted them to freely choose their coaches and decide which matches to play. It also gave them a much bigger cut of their winnings. After being forced to hand over as much as 65% of their purses, players who have opted out of the state system now pay only 8%. Ms. Li picked her husband, Shan Jiang, as her coach, although lately he's been demoted to her hitting partner. Capping the delight of Chinese TV audiences at Ms. Li's victory in Paris was the sight of the newly crowned champion answering questions posed by journalists in fluent English, clearly at ease in front of the cameras, witty, charming and flashing a high-wattage smile. She's seen as an authentic personality, in contrast to the stiff politicians and diplomats who have struggled to translate the billions of dollars that China has spent over the years on its public image—including the 2008 Olympics—into international affection for the country. China's sports bureaucracy seems eager to embrace Ms. Li's engaging personality. It's taking credit for having the vision to allow Ms. Li and her fellow tennis stars to pursue their paths to fame. Sun Jinfang, the director of the Tennis Sport Management Center, told China Central Television that Ms. Li's victory was a breakthrough for tennis in China but "most importantly, it has raised the Chinese people's status in mainstream sport in the world." He added: "I think I am really proud of being a Chinese in this regard."

Stores Push for Chinese Tourists - Visitors From China Are Big Spenders in U.S. but Visa Red Tape Means They Often Opt for Europe - More than 800,000 Chinese visited the U.S. last year. Above, a New York tour bus that caters to Chinese - The luxury business is counting on Chinese demand to drive growth—but a big chunk of that spending isn't happening in China. Chinese tourists are an increasingly important part of the equation, and U.S. retailers are feeling left out, thanks to a clunky visa process that can force would-be tourists to wait months for permission to travel. Last year, 38% of Chinese travelers on long-distance trips visited Europe, according to the U.S. Travel Association. Just 13% came to the U.S. Chinese visitors spend on average more than $6,000 apiece when they are in the U.S., more than twice their counterparts from the U.K., according to the travel association. With that in mind, U.S.-based retailers are lobbying the State Department to ease the visa process for Chinese visitors. "There's an extraordinary amount of luxury goods sold to Chinese in Europe and other countries," Roger Farah, chief operating officer of Polo Ralph Lauren Corp., said in an interview. "We're not getting our full fair share in the U.S." U.S. retailers have rushed to set up shop in mainland China, where sales of luxury goods are expected to reach €11.5 billion ($16.9 billion) this year, a 25% increase from last year, according to consultants at Bain & Co. Yet the Chinese are expected to spend as much, if not more, overseas, according to Bain. Aiming for a bigger share of that largesse, luxury companies including Polo and Saks Inc. are working through industry groups to press Congress for funding that would let the State Department process visas more quickly. In an interview, Saks CEO Steve Sadove said he is cognizant of the hurdles, including national security concerns. "Nobody wants to minimize that impact and risk, but what we've got to do is find a balance," he said. Increased international tourism "could have an enormous impact on business," he added. Reducing wait times is a primary goal. Getting a visa interview in Beijing currently takes about 57 days, according to the State Department. In Shanghai, it can take 65 days. Wait times can run twice as long due to a lack of proper U.S. technology and staffing abroad, says Geoff Freeman, executive vice president at the U.S. Travel Association. The U.S. has consular offices in half a dozen Chinese cities, requiring people who don't live near those locations to travel, he says. The groups' goal is to get wait times down to 10 days by hiring more staff, reassigning them to high-demand markets, setting up a fast-lane process and expanding a waiver program. Even with the visa hurdles, the number of Chinese visiting the U.S. has risen dramatically in recent years. Arrivals totaled 802,000 last year, more than four times the number of Chinese who visited the U.S. in 2003, according to the Commerce Department's Office of Travel and Tourism Industries. Nearly all—94% — went shopping here, beating out restaurants, sightseeing and museums as the most popular activity. The Commerce Department says Chinese tourists spent $5 billion in the U.S. last year, up 39% from the prior year. "There are a lot of Chinese with money burning holes in their pockets," says Erik Autor, vice president and international trade counsel for the National Retail Federation. Active spending by the wealthiest shoppers has returned sales of luxury goods to pre-recession levels after several difficult years. China is delivering the fastest growth. Handbag maker Coach Inc. says it is seeing strong response by Chinese shoppers to its handbags and other accessories in China—where sales are expected to reach $185 million this fiscal year, more than three times its sales from fiscal 2009—as well as a lot of business from Chinese travelers in Europe and the U.S. "The Chinese retail travel business is a very substantial opportunity for Coach," says Victor Luis, president of Coach's International Retail. Mr. Luis says the company supports efforts to strengthen ties between U.S. and Chinese governments, including "ties driven by easier access to tourism." Tour company AmericanTours International LLC, which has seen interest from China increase in recent years, includes shopping destinations as part of its travel itineraries for Chinese visitors. The cross-country package includes stops on Rodeo Drive and Fifth Avenue, as well as outlet malls in Middle America. "They want to go there," says co-founder Noel Irwin Hentschel. "It's part of what they ask for."

French Finance Minister Christine Lagarde, the front-runner for the IMF top job, complimented the appreciation of the Chinese currency so far and said she hopes the yuan will continue to rise, a French official told Dow Jones Newswires. Ms. Lagarde made the remarks during a two-day visit to China, the world's No. 2 economy and a key player in the jockeying for the top job. Christine Lagarde, France's finance minister, speaks during a news conference in Beijing on Thursday. Ms. Lagarde said she agreed with Chinese leaders that the selection of the next managing director of the International Monetary Fund should be transparent and based on merit. Interactive: Where Are Votes for IMF Chief? The subtle difference in tones underscores the persistent controversy surrounding China's exchange-rate policy as well as the growing clout of China in the world stage. To be sure, Ms. Lagarde--whose candidacy enjoys strong backing in Europe--doesn't need Beijing's vote to get the job. But China's support would lend more legitimacy to her position should she become its next managing director. The IMF has been criticized by emerging-market nations for under-representing them. Traditionally, a European fills the top spot at the fund, with an American in the No. 2 position. The yuan has risen about 5% against the dollar since China ended a two-year peg to the U.S. currency a year ago. However, the yuan's effective exchange-rate, as measured against a basket of trading partners' currencies, has fallen over that period. IMF officials have said for some time that China's currency continues to be significantly undervalued. At the fund's press briefing Thursday, John Lipsky, acting managing director of the fund, said a stronger and fully convertible yuan can help China realize its goal of shifting its economic growth pattern. After years of breathtaking economic growth fueled by exports and investments, China is now seeking to transform its economic model toward one that is focusing on domestic consumption. "The reform and liberalization of the financial system," including a strengthened currency that would help empower the Chinese to spend more, could help China realize that goal, Mr. Lipsky said. The IMF's latest findings on China's economy show that it continues to be a "bright spot" for global growth but that China still has "a propensity for property bubbles" driven by high savings and cheap financing, among other factors. The fund maintained its 9.5% growth forecast for China's economy for both 2011 and next year. It expects inflation in China to slow to around 4% by year-end. China's growing economic clout also is set to elevate its standing within the IMF. If China's economy keeps growing, its representation at the IMF should further expand, too, Ms. Lagarde told reporters during her two-day visit. She added that it would be "fully appropriate" for Zhu Min, a former deputy central banker and current special adviser to the IMF's managing director, to play a key role in the top management of the organization. Ms. Lagarde said that she was "very satisfied" with her visit but that it is up to Beijing to decide whether it supports her bid to lead the IMF. China on Thursday reaffirmed its support for an open, transparent and merit-based IMF leadership-selection process but didn't endorse anyone. Ms. Lagarde also said she agrees with Chinese leaders that the organization must continue to overhaul its governance and its ability to represent a broad array of nations. Ms. Lagarde is headed to Lisbon on Friday, where she will meet African countries' representatives at an African Development Bank meeting. She will then visit the Saudi Arabian city of Jeddah on Saturday and Cairo on Sunday, she said.

Hong Kong*:  June 10 2011  Share

Wharf Holdings (0004) is unlikely to meet its 14 billion yuan (HK$16.8 billion) mainland sales target this year as central government measures to curb property speculation are beginning to work, chairman Peter Woo Kwong- ching conceded yesterday. The blunt view was expressed even as Wharf said it had sold properties worth 5 billion yuan in China from January to May. Woo said the firm is on track to boost the proportion of its mainland assets to 50 percent of total in the next two to three years. Mainland assets now account for 33 percent of the total from just 5 percent five years ago, Woo said. The rest is made up of Hong Kong assets. Sales of retail space at shopping malls in Hong Kong saw 40 percent year-on-year growth in the first five months of 2011, vice chairman Stephen Ng Tin-hoi said. "Demand for retail rents will rise as more Western brands choose Hong Kong as a springboard to make their way into the Asian market," Woo predicted. He added that the company may raise rents in the second half of this year. Given the company's demand for more capital to develop property projects, Woo said: "Wharf will not rule out the possibility of raising capital again and may consider issuing dim sum bonds as well." Wharf's debt-to-equity ratio dropped to 17 percent in March from 19 percent last year. But the company is expected to see the ratio reach 25-30 percent by the end of this year. In the past five months, the company went to the capital market twice - a rights share issue amounting HK$10.05 billion in February and a HK$6.2 billion convertible bond offering last month. Asked if he will subscribe to the Prada (1913) initial public offering, Woo said he has not decided yet. He added he does not know if Salvatore Ferragamo, in which he holds 8 percent, will list in Hong Kong. Wharf shares dipped 0.8 percent to HK$55.65 yesterday.

Lower-rank civil servants received an unexpected but most welcome boost yesterday when the Executive Council raised a proposed salary increase to 6.16 percent - the same level as for middle- ranking staff. Staff in the upper bracket, meanwhile, are in line for 7.24 percent. If approved, the pay rises will be retroactive to April 1. The two-level salary adjustment was given the thumbs-up from the Immigration Service Officers Association, but the Chinese Civil Servants' Association said the lower increase did not match inflation. It suggested a flat 7.24 percent for all civil servants. A survey had earlier pointed to a three-tiered approach - with the lowest ranks getting a hike of only 5.16 percent - based on market trends. But Exco members used their discretion and invoked the so-called "bring-up arrangement." The pay offers were decided by the Executive Council after considering indicators derived from the recent Pay Trend Survey, the state of the local economy, changes in the cost of living, the government's fiscal position, staff pay claims and civil service morale. The survey did not cover director- level civil servants, but their pay deal will be the same as the upper salary band civil servants, which is standard practice. Ngai Sik-shui, vice chairman of the Immigration Service Officers Association, said the revised thinking "shows the government understands that junior staff are finding it tough in this time of high inflation. The proposal will surely relieve pressure and boost morale." Some junior civil servants earned only HK$14,000 a month, Ngai added. As for the higher percentage increase for senior-level staff, Ngai said the association respected the mechanism as the figure was reached after making reference to some 130 organizations. But the Chinese Civil Servants' Association argued that all civil servants should get a 7.24 percent increase to help offset inflation. "The current plan will only widen the gap between the lower and middle bands and the upper band of civil servants," vice president Lee Kwan-yin said. "It goes against the government's basic pledge to narrow the wealth gap." The association argued that the increase for lower band civil servants will be "a mere two- to three-dollar rise for a bun per day," since salaries are low. "A 7.24 percent increase will mean they can get one more bun. Yet for senior civil servants, their salary base is high, and they have a higher percentage increase, which in real terms is about 28 times what some junior servants get."

The incoming chief of the global airline industry body plans to gather support from members to push for a third runway at Chek Lap Kok. "The third runway is essential," said Tony Tyler, director general and chief executive designate of the International Air Transport Association. The former Cathay Pacific (0293) chief executive takes over from Giovanni Bisignani next month to head the 230-airline association. Tyler told IATA's annual conference in Singapore yesterday that the third runway will help deal with Hong Kong's fast air traffic growth, which is also driven by robust mainland demand. "Hong Kong airport is the main engine of the economy," Tyler said. " Not only does it bring business to Hong Kong but also to the rest of the world." A three-month public consultation on the third runway - estimated to cost HK$80 billion - got under way this week and runs to September 2. The Airport Authority argues the runway is needed to maintain Hong Kong's status as an international aviation hub. On the political forces that may hinder the plan, Tyler said one cannot get away from politics but declined to estimate the economic loss. But he will push IATA members to pursue the runway's construction. While Cathay chief executive, Tyler served on the IATA board and was chairman for a year from June 2009. Yesterday, he pledged to maintain the transparency of the organization. Asked about his vision for the industry, he said aviation is a difficult business and frequent crises are expected: "My job will be to help members be more resilient." Bisignani, who takes up a university post, praised Tyler, saying he cannot see anyone as competent and as passionate about the aviation industry. During Bisignani's 10 years at the IATA helm, carriers delivered a 67 percent rise in labor productivity, and saved US$59 billion (HK$460.2 billion) between 2004 and 2009 on improved efficiency. Safety was up 42 percent, with one accident for every 1.6 million flights. Hong Kong International Airport handled 51 million passengers and over four million tonnes of cargo last year. Those numbers may rise to 62.2 million passengers and 5.3 million tonnes of cargo in 2014, IATA said. The two runways are currently operating at about 90 percent of capacity, and the transport industry fears the airport will be full by 2020, if not earlier.

The German mystery killer bug is likely on its way to Hong Kong - and the health chief has warned the first human case of the rare E coli strain could already be here. The government will likely make the deadly bacteria strain - called E coli (0104:H4) or Enterohaemorrhagic E coli (EHEC) - a notifiable disease. A similar move was taken for SARS (severe acute respiratory syndrome), bird flu H5N1 and swine flu H1N1. Secretary for Food and Health York Chow Yat-ngok said the risk of EHEC affecting Hong Kong is still very high because German authorities have been unable to identify the outbreak's "smoking gun" despite urgent tests on beansprouts. Test results from 17 more samples of seeds, water and work surfaces at the outbreak farm were expected last night. "It is important that it [the source of contamination] is found, otherwise there will be a continuation of infected cases," Chow said. "We cannot rule out that Hong Kong may face an imported case eventually from those who return from European countries." A total of 2,325 people have so far been sickened in Germany, as well as 100 in other European countries. Twenty-four people have died across Europe in a month, mostly from serious complications leading to kidney failure. Last night, the US Centers for Disease Control and Prevention confirmed one of four suspected cases of E. coli is an American who recently traveled to Germany. And Greek health officials said they have identified an E coli strain in a German tourist but that she was likely infected before visiting the country. The 53-year-old woman showed symptoms "compatible" with the bacteria, the country's Centre for Disease Control and Prevention said. Back in Hong Kong, a spokesman for the Department of Health said: "We are actively considering options for better surveillance of Enterohaemorrhagic E coli (EHEC)." The common E coli 0157 strain is notifiable. So far this year, only one case of 0157 has been reported in Hong Kong compared with six cases in 2010 and two in 2009. The World Health Organization raised the health alert on EHEC after Germany reported the outbreak of the "unusual" strain, but has not issued a travel advisory against the country. The WHO did that for the first time during the SARS outbreak in 2003. Separately, British pharmaceutical giant GlaxoSmithKline said its ingredients for making antibiotics come from European sources and not Taiwan, where there is an ongoing scare involving plastic additives in food and drugs. Hong Kong has banned or recalled 26 food and drug items for plastic additive contamination since early last month. The WHO's technical officer in food safety for the Western Pacific region, Jenny Bishop, said the health risk associated with DEHP, or di(2- ethylhexyl phthalate, is not associated with a limited exposure. Rather, the plasticizer would need to be in the diet for some time.

Singapore has overtaken Hong Kong to become the third costliest economy in Asia for expatriates' daily needs because of its strengthening currency, human resource firm ECA International said on Wednesday. It said the Singapore dollar, which has surged by more than 10 per cent against the greenback, pushed the city-state to third place above Hong Kong, with Japan and South Korea remaining the two most expensive countries. ECA International carries out a survey twice a year by measuring a basket of common items purchased by expatriates in more than 400 locations globally, such as dairy produce, vegetables, clothing and meals out. The survey does not include housing, utilities, car and school expenses as these items can make a significant difference to costs but, the firm says, are often compensated for separately in expatriate packages. “While we are seeing price increases in a number of Asian locations, the main reason for Singapore’s rise in our ranking over the past 12 months is the strength of the currency,” says Lee Quane, the firm’s regional director. He said allowances paid to protect the purchasing power of employees on long-term assignment in Singapore are now higher than those paid to international executives posted in many other financial centres. In the latest ECA International survey, carried out in March, Singapore had leapfrogged Hong Kong to occupy sixth position in a list of the 10 most expensive Asian cities. Tokyo was followed by Nagoya, Yokohoma and Kobe, while South Korea’s capital Seoul was ranked fifth. After Singapore and Hong Kong, Beijing, Shanghai and South Korea’s port city of Busan were the most expensive Asian cities for expatriates. Globally, Tokyo heads the top 10 list followed by Oslo, Nagoya, Stavanger in Norway, Yokohoma, Zurich, Angola’s capital Luanda, Geneva, Kobe and the Swiss capital of Bern.

The Court of Final Appeal on Wednesday said it has sought advice from Beijing on interpretation of the Basic Law regarding immunity from legal proceedings in Hong Kong for foreign governments. The court said in a written statement it had decided, by a majority three-to-two verdict, to reserve judgment on a dispute between the Democratic Republic of the Congo and FG Hemisphere Associates, a US vulture fund (a fund that buys securities in troubled investments or assets, in or close to, bankruptcy). FG Hemisphere Associates is suing the Congo government over more than US$100 million (HK$778 million) it claims it is owed. In earlier hearings, lawyers for the Congo asked the court to seek an interpretation of the Basic Law by Beijing because the lawsuit involved international relations. But lawyers for FG Hemisphere Associates argued that Article 19 of the Basic Law explained the role of the courts, and did not require them to consult central government – even when cases involved foreign governments. They argued, therefore, that the court should make its judgment based on normal procedures. In Wednesday’s ruling, the court said the case had raised questions about Hong Kong’s position that required clarification from China’s Standing Committee of the National People’s Congress. The court said it remained unclear whether the territory’s courts could rule independently on cases involving foreign affairs because the Basic Law stated central government was responsible for such issues. A second question concerning the judges was the form of state immunity applicable in Hong Kong. The court said it had been unclear whether Hong Kong could only follow “absolute immunity”, which would mean proceedings regarding commercial deals involving foreign governments in Hong Kong could not be brought to a court in the mainland. The court will rule on the lawsuit between the Congo and FG after it receives advice from the National People’s Congress Standing Committee. The Court of Final Appeal is the highest court in Hong Kong. The National People’s Congress Standing Committee re-interpreted the Basic Law in 1999 – controversially overturning a Court of Final Appeal ruling granting right-of-abode to 1.7 million mainlanders.

The Court of Final Appeal on Wednesday said it has sought advice from Beijing on interpretation of the Basic Law regarding immunity from legal proceedings in Hong Kong for foreign governments. The court said in a written statement it had decided, by a majority three-to-two verdict, to reserve judgment on a dispute between the Democratic Republic of the Congo and FG Hemisphere Associates, a US vulture fund (a fund that buys securities in troubled investments or assets, in or close to, bankruptcy). FG Hemisphere Associates is suing the Congo government over more than US$100 million (HK$778 million) it claims it is owed. In earlier hearings, lawyers for the Congo asked the court to seek an interpretation of the Basic Law by Beijing because the lawsuit involved international relations. But lawyers for FG Hemisphere Associates argued that Article 19 of the Basic Law explained the role of the courts, and did not require them to consult central government – even when cases involved foreign governments. They argued, therefore, that the court should make its judgment based on normal procedures. In Wednesday’s ruling, the court said the case had raised questions about Hong Kong’s position that required clarification from China’s Standing Committee of the National People’s Congress. The court said it remained unclear whether the territory’s courts could rule independently on cases involving foreign affairs because the Basic Law stated central government was responsible for such issues. A second question concerning the judges was the form of state immunity applicable in Hong Kong. The court said it had been unclear whether Hong Kong could only follow “absolute immunity”, which would mean proceedings regarding commercial deals involving foreign governments in Hong Kong could not be brought to a court in the mainland. The court will rule on the lawsuit between the Congo and FG after it receives advice from the National People’s Congress Standing Committee. The Court of Final Appeal is the highest court in Hong Kong. The National People’s Congress Standing Committee re-interpreted the Basic Law in 1999 – controversially overturning a Court of Final Appeal ruling granting right-of-abode to 1.7 million mainlanders.

Officials hit back at Legco hearing into I.T. contract - Whistle-blower who claimed 'political pressure' over awarding of HK$220m internet learning program is accused of overseeing an unfair selection process - Permanent Secretary for Commerce and Economic Development Elizabeth Tse Man-yee and former government IT chief Jeremy Godfrey (above right) at the Legco special panel meeting yesterday. Government officials hit back yesterday at claims of political interference by whistle-blower Jeremy Godfrey in the awarding of an HK$220 million contract to run an internet learning program. They accused former government information technology chief Godfrey of overseeing an unfair selection process at a special meeting of a Legislative Council panel. Godfrey, 49, made his most detailed accusations yet of alleged "political pressure" from senior officials in the awarding of the contract to provide IT training to the underprivileged. He claims Financial Secretary John Tsang Chun-wah and Permanent Secretary for Commerce and Economic Development Elizabeth Tse Man-yee directed a "political assignment" to give the contract to a company called eInclusion, a tie-up between the Internet Professional Association (iProA) and the Boys' and Girls' Clubs Association. But his targets suggested the non-renewal of his employment contract might have motivated his claims. Tse, who was then Godfrey's direct supervisor, revealed that two of the five bidders for the project were given two opportunities to present their proposals to the evaluation panel responsible for picking the winner and which was chaired by Godfrey. She said the other three bidders were given only one chance and asked: "Was that fair?" Tse continued: "When Mr Godfrey for the first time submitted documents about the program to me, I felt very uncomfortable and a bit shocked. "It was a HK$220 million project and there should be checks and balances on it. But the evaluation panel chairman and the controlling officer of the project were the same person, i.e. Mr Godfrey. "In addition, the controlling officer overrode all other members' opinions," Tse said, referring to Godfrey's suggestion that the eInclusion company and the Hong Kong Council of Social Service (HKCSS) jointly launch the program. This was despite evaluation panel members giving the HKCSS a higher overall score than eInclusion. "I suggested to the minister that there should be checks and balances and reviews of the procedure. A review committee was therefore set up to make decisions on procedural matters," she said. Godfrey has admitted it was his suggestion that eInclusion and the HKCSS discuss the possibility of collaboration. Noting that a clear majority of the panel gave the HKCSS higher scores, he defended his decision. He said: "Compared to other members of the evaluation panel, I personally had almost 20 years of business experience. "I attached greater weight and saw a bigger difference in the business proposals and the merits of the two different business proposals. "I ended up scoring eInclusion to be marginally ahead of HKCSS." Some pro-government lawmakers asked why Godfrey had not made his complaints about the alleged "political assignment" earlier. They asked whether his later complaint was motivated by the fact that Tse had told him he might not have his employment contract renewed. But he said: "It was absolutely nothing to do with my contract renewal." Tsang, who was absent from yesterday's meeting because of a prior engagement, will appear at the panel's next special meeting a week tomorrow.

Prada Uses Catwalk to Pitch IPO - Models strutted up the catwalk in Prada's signature goggle-like glasses, silk dresses and calf-length python boots. Prada SpA pulled out all the stops to interest Hong Kong's high society in its $3 billion-share sale, laying on a fashion show Tuesday evening and inviting a selection of the city's tycoons and their wives and daughters. People at the event say there were undignified pleas to secure one of the 300-plus tickets to the 11-minute catwalk show among the famously brand-conscious Hong Kong glitterati. Celebrities present included Angela Leong, best known as the fourth wife of Chinese tycoon Stanley Ho, who recently emerged from a bruising fight with his other wives and children to stand atop one of the world's most lucrative gambling empires. The event was held in Hong Kong's Grand Hyatt, and a stylish crowd gathered in the lobby beforehand, with several women sporting Prada handbags. Prada, which has shelved plans to list its shares three times over the past decade, is determined to see through this effort at an initial public offering. There was no talk of the fallout from the euro-zone debt crisis or falling commodity prices on financial markets as models strutted up the catwalk in Prada's signature goggle-like glasses, silk dresses and calf-length python boots. The fall/winter 2011 collection also included dresses covered in sequins that looked like fish scales as well as crocodile bags and coats and some skull-hugging caps. Ivy Wu, wife of Gordon Wu, who heads infrastructure firm Hopewell Holdings Ltd., and Eliza Fok, wife of Canning Fok, managing director of Hutchison Whampoa Ltd., were also in attendance, according to people at the event. There also were a few of the tycoons themselves watching the show, including William Fung of trading empire Li & Fung Ltd., and his wife as well as Adrian Li, the deputy chief executive of Bank of East Asia Ltd., and his wife. Glad-handing existing and potential clients were bankers managing the share sale on Prada's behalf from Goldman Sachs Group Inc. and CLSA Asia-Pacific Markets, the people said. The bankers had distributed most of the events' tickets to clients such as Hong Kong's high net-worth individuals and institutional investors that they hoped would be interested in Prada's IPO. The Italian fashion house could raise as much as $3 billion in its Hong Kong initial public offering, a person familiar with the matter has said. Following the show was a 450-seat dinner for the potential investors in the IPO. Ordertaking for the institutional-investor portion of the offering began Monday. The company is selling 423.276 million shares in an indicative price range of 36.5 to 48 Hong Kong dollars (US$4.69 to US$6.17) each, according to a term sheet seen by Dow Jones Newswires. Another 63.49 million shares could be sold in the event of strong demand, lifting the value of the IPO to as much as US$3 billion. At the high end of the price range, the company is valued at US$15.7 billion. Shares are expected to begin trading on June 24. Based on the proposed price range, the shares would be valued between 21.1 and 27.7 times Prada's forecast earnings per share for 2011 and 16.2 to 21.3 times the forecast for 2012, according to the banks in charge of the deal.

Gamma Rays, Immunity, Geometry Are Shaw Winners - Prof. S W Tam, Prof. Kenneth Young, Prof. Chen-Ning Yang, Mrs Mona Shaw and Prof. Lin Ma at the press conference in Hong Kong. Scientists studying gamma rays, immunity and differential equations are the winners of this year’s Shaw Prize that rewards advances in science. The prize, named after Hong Kong film and television magnate Run Run Shaw, each year recognizes innovation in three fields—astronomy, medicine and mathematics—with three awards of US$1 million each. It’s often called Asia’s Nobel Prize, though it’s a global honor; this year’s winners, announced Tuesday by the Shaw Prize Foundation in Hong Kong, are all from Europe and the U.S. Sharing the prize in astronomy are Enrico Costa, director of research at the Italian National Institute of Astrophysics, and Gerald J. Fishman, chief scientist at the NASA Marshall Space Flight Center. Both have been researching gamma-ray bursts that shoot across the cosmos from the universe’s most extreme explosions, and have determined that they originate from two sources: massive supernovas exploding and two neutron stars colliding. “The studies don’t have much application for making money, but help us understand our place in the universe,” said Kenneth Young, a theoretical physicist and vice chairman of the board of adjudicators for the Shaw Prize. The prize rewarding advances in medicine and life sciences went to a trio of researchers: Jules Hoffman from the University of Strasbourg, Ruslan Medzhitov of Yale University and Bruce Beutler from the Scripps Research Institute. The three have been researching the molecular mechanism that triggers innate immune reactions such as swelling and inflammation. “[Based on their studies], work is in the progress to develop drugs that will inhibit certain processes that might be useful in treating asthma and other autoimmune diseases,” said Mr. Young. The Shaw Prize in mathematical sciences honored two mathematicians who helped redefine multidimensional physics using nonlinear partial differential equations. Richard Hamilton, a professor at Columbia University, introduced the Ricci Flow to Riemannian geometry in 1981 to study the shape of three-dimensional and four-dimensional space. The Ricci Flow has since become one of the most powerful tools in modern geometry. Demetrios Chistodoulou, from ETH Zurich, was honored for his contributions to general relativity. He recently proved that a strong flux of gravitational waves could create black holes. “The geometry and the physics of higher dimensions has become a very important subject of study,” said Dr. Chen-Ning Yang, chairman of the board of adjudicators for the Shaw Prize. Prize money for each category will be divided equally among laureates. Prizes will be officially presented in September.

'China Is the New Dot-Com,' Says Outgoing Hong Kong Securities Chief - The outgoing head of Hong Kong's securities regulator warned that "China is the new dot-com" of the investment world, posing risks for those who rush headlong to buy shares in the country's companies to profit from its fast-growing economy. "Everybody wants a piece of China," Martin Wheatley said in an interview on his final day as chief executive of the Securities and Futures Commission. "Therefore, there has been a rush to Chinese companies" without investors asking "the normal questions" about their fundamentals, he said, comparing the run-up to the Internet stock boom of the late 1990s. Mr. Wheatley's comments come amid growing scrutiny of accounting practices and allegations of fraud at certain overseas-listed Chinese businesses. The U.S. Securities and Exchange Commission has set up a special group to investigate problems with a number of Chinese companies that trade in New York. Shares of Sino-Forest Corp., a Hong Kong-based tree-plantation company listed in Toronto, have plummeted in recent days after a short seller published research alleging problems with the company's accounting. The company, which has its assets in mainland China, has called the research "inaccurate" and says it's investigating the allegations. Earlier this year, trading in shares of Hong Kong-listed China Forestry Holdings Ltd. were suspended after its auditors found irregularities in its books. Its CEO was fired and then arrested in China, and other members of its management team went missing. Questions about accounting and corporate governance at Chinese listed companies are especially important in Hong Kong, where China-related securities account for more than 70% of the trading volume on the local stock market. Exacerbating the problems with Chinese companies listing outside their home jurisdiction, including those that list in Hong Kong, is that regulators seeking more information about a company rely on third-party investigators, Mr. Wheatley said. In theory, the issue also applies to companies from other emerging markets such as Brazil and Russia that are listing in Hong Kong, selling their exposure to Chinese growth. He said, though, that the Hong Kong commission's relations with its Chinese counterparts have been positive, noting that it has received information on Chinese-based companies from regulators there as needed. "There was no case that I felt we have been frustrated and unable to do our job because of an unwillingness to cooperate," said Mr. Wheatley. Mr. Wheatley emphasized the need for investment banks and brokerages that underwrite share listings in Hong Kong to take greater responsibility for keeping substandard companies at bay. Hong Kong has been the world's top venue for initial public offerings over the past two years and has seen continued strong volumes this year, in part because of a large number of listings from mainland companies. One way the SFC hopes to enforce that is by holding the underwriters liable for the accuracy and completeness of listing prospectuses, Mr. Wheatley said. He added that the regulator may need to revise the Securities and Futures Ordinance—its main legal tool to combat against market misconduct—to tighten the rules, a process that could take several years. Mr. Wheatley also cautioned that trading in products based on China's currency, the yuan, will likely develop at a much slower pace than many would expect. Bankers and government officials are eagerly promoting Hong Kong's role as an offshore hub for the yuan. Mr. Wheatley said the hitch is a lack of available liquidity of the currency outside China. "I think it will happen, but I'm thinking in three to five years is when we really see that market develop," he said. During his time in Hong Kong, Mr. Wheatley, 52 years old, earned a reputation among many as a proactive enforcer, combating insider trading and other market misconduct, as well as boosting the SFC's overall standing in Hong Kong and abroad. As a result, his successor, who is yet to be named, faces high expectations. "Even if it's one step back after he goes, Mr. Wheatley put Hong Kong two steps ahead," said John Kuzmik, a corporate lawyer at Baker Botts LLP. "I don't think you'll find anyone on the right side of things who will say anything else," he said. Mr. Wheatley's edge is that, as an outsider—a Briton who spent 18 years at the London Stock Exchange before taking the SFC post in 2005—he didn't bring with him any complicated ties with Hong Kong's business sector, said Ronny Tong, a Hong Kong lawmaker. "That way he was able to make more decisive moves." The harshest public criticism Mr. Wheatley and the SFC have faced revolved around complex investment products linked to Lehman Brothers known as minibonds. Protestors were still camped outside the SFC on Mr. Wheatley's last day to complain that the SFC didn't do enough to protect individual investors who lost huge sums investing in the products even after the SFC brokered settlements with banks that helped many investors recoup much of their losses. SFC said it worked hard to ensure holders recouped some losses and implemented measures to tighten oversight of such products. After a brief hiatus, Mr. Wheatley will take a temporary position as a managing director of the U.K.'s Financial Services Authority, and eventually run a new consumer protection group to be spun out of the FSA called the Financial Conduct Authority.

PLA Chief of General Staff Chen Bingde has for the first time said that Hong Kong people are welcome to join the army. But legal hurdles, such as how the mainland's military service law can be applied in the special administrative region, have to be cleared before Hongkongers can sign up. Xu Guangyu , a retired People's Liberation Army major general, said it was only a matter of time before Hongkongers were recruited into the world's largest military force. He suggested they be allowed to serve in military units in the city before being sent to other areas. In an interview with the Hong Kong Commercial Daily published yesterday, Chen, a member of the Central Military Commission, said he would welcome Hongkongers joining its ranks. It is the first time since the handover in 1997 that a high-ranking PLA officer has given the green light for Hongkongers to join the army. Lieutenant General Qi Jianguo, Chen's assistant, said allowing Hongkongers to join the PLA would be feasible "if the Hong Kong government resolves the legal issues". Some Hong Kong people have a negative impression of the PLA after the crackdown on the pro-democracy movement in Beijing in 1989. But others have gradually warmed to the PLA's Hong Kong garrison. A survey by the University of Hong Kong's public opinion programme in April, found that 52 per cent of respondents were "satisfied" or "very satisfied" with the garrison's performance, compared with 36 per cent in a similar poll in July 1997. Under the mainland's Military Service Law, all male citizens of the People's Republic can enlist in the PLA and are obliged to perform military service if required in time of need. But the law is not applied in Hong Kong. Professor Yao Jianguo, from the China University of Political Science and Law in Beijing, said one feasible approach to solve the legal obstacles would be for the Hong Kong government to propose to the National People's Congress Standing Committee that the Military Service Law be added to the Basic Law's list of national laws applied in Hong Kong. His views were echoed by Basic Law Committee member Lau Nai-keung. "Joining the country's army is the right of the Chinese. Hong Kong people are deprived of their legitimate rights under present restrictions," he said. Xu, a member of the central government-backed China Arms Control and Disarmament Association, said: "Allowing Hong Kong to serve in the PLA would enhance their identification with the country ... it would not be very difficult to overcome the legal obstacles." Grace Ling Yu-shih, an honorary researcher at the China University of Political Science and Law, said it would be more appropriate for the NPC Standing Committee to make an interpretation of the Military Service Law to allow people from Hong Kong, Macau and Taiwan to join the PLA. "Adding the law to the Basic Law annex would arouse concern among some Hong Kong people that more mainland laws would be applied in the city in future," she said. Ling said she had encouraged her son, who is studying in England, to join the PLA to serve the country. London-based PLA expert Gary Li said he believed any local recruitment would need special regulations to allow a Hong Kong force to remain within the city - a vast difference to the way young soldiers are recruited and deployed on the mainland. "I struggle to think how Hong Kong people, used to their freedoms and lifestyle would fit in with a local PLA garrison in Inner Mongolia full of young soldiers from the villages," said Li, who monitors security issues for intelligence firm Exclusive Analysis. "The PLA has a good track record of taking tough young boys from the countryside and turning them into fine soldiers - they are generally posted far from their home counties, deliberately putting them out of their comfort zone, and sometimes are given financial inducements for deployments in the desert and so on. "It is hard to imagine quite how that would work with recruits from Hong Kong." Li said an auxiliary Hong Kong force could be based here to support PLA troops that are rotated through the city from Guangdong.

Leaders across the political divide yesterday expressed dismay they are not on the agenda when the State Council's Hong Kong and Macau Affairs Office director Wang Guangya visits Hong Kong for three days starting on Sunday. It will be Wang's first visit to the city since his appointment last October and is at the invitation of Chief Executive Donald Tsang Yam-kuen from when he was in Beijing last December. Wang is scheduled to meet Tsang and senior civil servants and attend a welcoming banquet at Government House, a government spokesman said. "He will also visit the Hong Kong Monetary Authority and Hong Kong Exchanges and Clearing as well as some community facilities," he said. Wang will attend a luncheon at which he will meet representatives of several sectors of the community and attend a youth seminar before going on to Macau for a three-day visit. Civic Party leader Alan Leong Kah- kit said he is "shocked" Wang has not taken the initiative to meet pan- democrats as such conversations are important if he wants to fully understand the situation in the city. "As the minister in charge of Hong Kong affairs, Wang is obligated to listen to opinion leaders. A meeting will surely help the central government to accurately know the thinking of the Hong Kong people," he said. Democratic Party chairman Albert Ho Chun-yan said Wang should not avoid contact with people who hold different political views. Wong Kwok-kin of the Hong Kong Federation of Trade Unions said the pro-Beijing labor group also has not received any invitation from the State Council. "As the nomination period for the third-term chief executive election is approaching, we hope to meet Wang to get an insight into how Beijing is viewing the arrangements," he said. Political analyst Hui Ching said Wang is coming to find out the challenges the Hong Kong leader needs to overcome. "Wang wants to know more about the social conflicts here before considering which candidate has the ability to overcome these problems," he said.

 China*:  June 10 2011  Share

Chinese mainland, Taiwan negotiators meet to address implementation of cross-Strait pacts - Zheng Lizhong (L), vice president of the mainland-based Association for Relations Across the Taiwan Straits (ARATS) shakes hands with Kao Koong-lian, vice chairman of the Taiwan-based Straits Exchange Foundation (SEF) during a meeting to review the implementation of cross-Strait agreements and address any possible issues, in Taipei, south China's Taiwan, June 8, 2011. Negotiators from the Chinese mainland and Taiwan held a meeting in Taipei Wednesday to review the implementation of cross-Strait agreements and address any possible issues. It was the first time for negotiators from the mainland-based Association for Relations Across the Taiwan Straits (ARATS) and the Taiwan-based Straits Exchange Foundation (SEF) to hold such a meeting, Zheng Lizhong, vice president of ARATS, said before the talks. "I believe the meeting will help improve the implementation of these pacts," he said. The two sides have sealed 15 pacts since resuming regular talks in 2008. Negotiators will review all agreements except the Economic Cooperation Framework Agreement (ECFA), which will be handled by another independent committee. An agreement on medical and health cooperation, which has not yet taken effect, is also off the table, Zheng said. The agreements cover issues such as cross-Strait air services, food security, financial cooperation, agricultural quarantine procedures and judicial cooperation. "It is understandable that we are facing new situations and problems during the implementation of these agreements. Both sides have been actively engaged in dealing with these problems," he said.

China's central bank on Wednesday said the media report that some "central bank researcher" forecast the cancellation of the home purchase limit within two years was factually incorrect. The report was carried by Wednesday's Oriental Morning Post, a Shanghai-based newspaper, saying that "Chen Zhanyun, a researcher on house price index with the central bank, forecast China may cancel the home purchase limit within two years, otherwise local governments and property sector will face fund difficulties." "Chen Zhanyun is not a researcher with the central bank and his remarks have nothing to do with the central bank," said the People's Bank of China (PBOC) or central bank in a statement. Limiting home purchases is one of the tools used by the State Council to cool the property market. The State Council has adopted a series of measures since last year to tame housing prices, including higher down payment requirements, raising interest rates, direct restrictions on home purchases, the establishment of price control targets, third-home purchase bans and a trial real estate tax in Shanghai and Chongqing, two of China's biggest cities.

IMF race 'open' as Lagarde visits China - French finance minister Christine Lagarde talks to Chinese Foreign Minister Yang Jiechi after their meeting at the Diaoyutai State Guesthouse in Beijing on Wednesday. Chinese Foreign Minister Yang Jiechi said on Wednesday the race to lead the IMF was "open" after meeting France’s Christine Lagarde, who is trying to persuade sceptical emerging nations to back her bid. The French finance minister, seeking to be the first female managing director of the International Monetary Fund, travelled to Beijing from India, where a day of talks with Indian leaders did not yield any public endorsement. China, India and other emerging nations have baulked at Europe’s traditional lock on the top job at the Washington-based IMF, calling the arrangement outdated, so their support is seen as key to the success of Lagarde’s bid. After arriving Wednesday, Lagarde launched a marathon day of talks, meeting Yang, central bank governor Zhou Xiaochuan and Vice Premier Wang Qishan, China’s top official on financial affairs, a French embassy official told reporters. The French minister, a 55-year-old former international lawyer, was also to hold a dinner meeting with Finance Minister Xie Xuren. “We had a good discussion. She explained to me the purpose of her candidacy. I listened very carefully,” Yang told reporters after his meeting with Lagarde at a government compound in Beijing where foreign dignitaries are often hosted. “It’s an open field now. There are quite a few people campaigning,” he said in English. “China of course gives serious thought to this very important issue.” Earlier, Lagarde said: “It was very important for me to come explain the purpose of my candidacy to the Chinese authorities.” Lagarde is seen as the frontrunner to replace Dominique Strauss-Kahn, who resigned last month after his arrest on sexual assault charges. He pleaded not guilty in a New York court on Monday to the attempted rape of a hotel maid. Two weeks ago, France’s chief government spokesman Francois Baroin said China – the world’s second-largest economy – was “favourable to the candidacy of Christine Lagarde”, but did not offer any evidence to back up his statement. China’s foreign ministry subsequently said the choice of a new IMF chief should be based on “openness, transparency and merit, and better represent emerging markets and better reflect changes in the world economic structure”. Lagarde – who has already visited Brazil, another major emerging economy – has pledged to reform the IMF to give emerging and developing countries more power. Indian Finance Minister Pranab Mukherjee said Tuesday after meeting Lagarde that the choice of an IMF chief should be based on “merit” and “competence”. He added that talks with Brazil, Russia, China and South Africa – who make up the so-called BRICS bloc along with India – aimed at agreeing on a joint candidate were continuing. Lagarde said she had not gone to India “seeking assurance or reassurance” but simply to present her candidacy and “listen to the concerns” of an important emerging-market economy. “It would be premature and arrogant on my part to expect assurance or reassurance,” she said in New Delhi. Lagarde was to give a press conference on Thursday in Beijing before heading on Friday to Lisbon, where African finance ministers and central bankers will be meeting for the African Development Bank’s annual gathering. The only other serious IMF contender, Mexico’s central bank chief Agustin Carstens, visited Canada on Tuesday and was to head to India on Friday on a tour that has already seen him stop off in Brazil and Argentina. The deadline for nominations is on Friday, leaving little time for anyone else to emerge.

Bank of China Ltd. has received its first approval to bring yuan it raised in Hong Kong back to mainland China in a rare move that is part of Beijing's plan to promote the global trading of the country's currency. The bank has won the backing of the People's Bank of China, the country's central bank, to bring onshore about 10.5 billion yuan ($1.6 billion), raised from selling debt in Hong Kong, according to people familiar with the matter. Bank of China will invest that capital in the domestic bond market, which generates higher yields than the cost of issuing the yuan-denominated debt in the territory. Since last year, a growing number of Chinese and foreign businesses, including banks, property companies and manufacturers, have been loading up on cheap capital denominated in China's currency by tapping Hong Kong's burgeoning market for yuan debt. The increasing debt sales come as the Chinese government has been encouraging the development of the so-called "dim sum bonds" market—as yuan-denominated debt issued outside mainland China are known—as part of its efforts to expand the use of the yuan beyond its borders. Today, there is about 125 billion yuan of dim-sum debt outstanding. However, any issuer of such debt, regardless of nationality, still needs to get Beijing's approval to bring that money back to the mainland, often a lengthy and cumbersome process. By some estimates, only about half of the funds from dim-sum bonds issued so far have been able to flow back to the mainland, and most of the money raised by Chinese banks in Hong Kong has stayed offshore. A few other Chinese banks have also gained approval from the central bank to put yuan funds to work on the mainland. Earlier this year, China Merchants Bank Co. also won similar permission. China has been handing out such approvals gradually as it wants a measured growth in offshore trading of the yuan, which until the middle of last year had been confined within China's borders thanks to the country's strict capital controls. Chinese regulators have taken a number of steps to promote the offshore trading of China's currency, centered in Hong Kong, but they also have sought to keep speculators from taking advantage of the rapidly growing market to bet on the currency's movement and potentially destabilize the economy. "China is very concerned about hot money inflows," said Becky Liu, a Hong Kong-based strategist at HSBC Holdings PLC. "But this type of inflow is not enough to have any significant impact on the economy," she said, referring to the move by Chinese banks to bring onshore the capital they raised in Hong Kong. "At the same time, (allowing such inflows) can help develop the offshore yuan market." In recent months, Chinese banks have been racing to build up their yuan deposit base in Hong Kong by issuing dim-sum debt, which allows them to take advantage of the low funding costs enabled by growing demand for yuan-linked assets. Last month, the Hong Kong subsidiaries of lenders including Bank of China., China Construction Bank Corp. and China Merchants Bank raised nearly 16 billion yuan by issuing certificates of deposit, or CDs, according to data provided by HSBC. Bank of China led the pack, with about 8 billion yuan of CD issuance. The banks' sales were the biggest driver in May for the dim-sum bonds market. The CD-issuing Chinese banks plan to use the proceeds to expand their yuan lending in offshore markets, according to bank officials and analysts. Meanwhile, some of them also intend to invest the money in mainland China's market for interbank bonds, given the still-tepid demand for loans denominated in yuan in the offshore markets. Indeed, the opportunities for lending out yuan funds haven't kept pace with the growth in yuan deposits in Hong Kong, which have soared as investors seek higher returns by holding an appreciating currency. The supply-demand gap, in turn, has led to low rates on dim-sum debt.

Hong Kong*:  June 9 2011  Share

The long-promised HK$6,000 helping handout for Hong Kong residents is finally in sight. The registration of those who qualify - and that is all adults who are permanent residents - is likely to start on August 28, an auspicious date in Cantonese which loosely translates as "easy riches." But the money will be paid out only in late November or early December. The choice of a Sunday to begin the process for up to 6.1 million people is to "make it convenient for residents," says a source, though this means that 22 participating local banks and Hongkong Post will have to bring in extra staff or pay overtime to cope with the registration rush. The Immigration Department will verify eligibility later. Bank account holders can register online and receive the HK$6,000 by direct deposit, and Standard Chartered Bank has agreed to issue checks to 300,000-400,000 people who do not have accounts, sources told Sing Tao Daily, sister paper of The Standard. The source said the money will be paid out to those who are 18 at the end of the financial year on March 31, 2012. The government will likely have to pay administrative fees to banks, and talks are under way on a figure per applicant. But some officials believe banks have a social responsibility to help in the process. And in a bid to encourage people to keep the money in banks, those not making a withdrawal in the first year will enjoy an annual interest rate of 5 percent. That means an extra HK$300 at the end of 12 months. The Democratic Alliance for the Betterment and Progress of Hong Kong yesterday called for a speedy release of the cash. About 10 members of the DAB petitioned Financial Secretary John Tsang Chun-wah when he turned up at Tai Po Waterfront Park to celebrate the Dragon Boat Festival. Party district service officer Clement Woo Kin-man said there is an urgent need to distribute the cash since people face soaring prices but little in pay rises. "We've talked about this issue for months," he said, "but it's still unclear when the money will be distributed. I understand there are procedures, but people are getting impatient." Woo also said some young people fear they will not receive the handout, for there is the question of age qualification at the youngest end of the scale. But Hong Kong Federation of Trade Unions legislator Wong Kwok-hing wants December 31 to apply. "If it's set at the end of the financial year some people may argue it's unfair because the issue was introduced in 2011," he said. Legislators passed an amendment to the budget in April that gives HK$6,000 to every adult permanent resident. An application for funding for the handout process will go to the legislature's finance panel in July.

Hostels' reduced opening linked to minimum wage - Youth Hostels Association says running facilities every day is financially unsustainable, but legislators question the way it is run - The youth hostel at Pak Sha O which is now closed every Tuesday, Wednesday and Thursday. The Youth Hostels Association has begun closing four of its seven hostels for three days every week, and says the introduction of the minimum wage is partly to blame. It also cites a lack of resources and low visitor numbers for the decision to shut the hostels at Pak Sha O, Chek Keng, Ngong Ping and Tai Mo Shan every Tuesday, Wednesday and Thursday, unless there are group bookings. But legislators point out the government gave it the sites for hostels for a nominal fee, and says the organisation has used public resources injudiciously. They say they will scrutinise the association's financial standing. The non-profit organisation, which recently won the right to turn a 1950s Shek Kip Mei complex into a youth hostel as part of a heritage conservation project with the government, said that running the hostels every day of the year is financially unsustainable. The reduced opening hours have been in force since May 1. Some employers have been accused of reducing employees' working hours now that they have to pay them a minimum of HK$28 an hour. An association spokesman, who declined to be named, confirmed that the four hostels are closed from Tuesday to Thursday each week because of poor patronage and the minimum wage. "It [the minimum wage] was partly the reason. But in fact, some hostels do not even have one person visiting each day during the non-peak season," the spokesman said. On a recent Monday afternoon, calls made to its Tai Po and Lantau Island hostels went unanswered. The spokesman said the organisation had not breached any rules with its decision. The association, which obtained the right to run the hostels for a nominal fee, is a registered charitable institution exempt from tax under section 88 of the Inland Revenue Ordinance. It is also a member of Hostelling International, a youth hostel association that operates 4,000 hostels in 80 countries. Its website says that hostels run by the Youth Hostels Association are open throughout the year. Angela Spaxman, a hiker who stayed in the association's Chek Keng hostel during the last Christmas holidays, regretted that the hostels had been partially closed. "It is unfortunate because there are people who want to hike during weekdays," she said. She said the hostel was a nice getaway facility. Legislator Peter Cheung Kwok-che said the association should not close its facilities even if there were financial difficulties. There were other ways to cut costs. Fellow legislator Tanya Chan said the association should use its facilities better. "There ought to be a purpose for the land to be given out for a nominal fee. The resources don't seem to be properly used," she said. She had worries about the association being able to run the Shek Kip Mei project without problems. That facility is scheduled to open next year. The association was set up in 1973 with the support of Hong Kong's then governor Murray MacLehose, who established the city's country parks and was himself a keen hiker. Its executive committee is led by former Sun Hung Kai Properties (SEHK: 0016) executive director Michael Wong Yick-kam.

Peak price of HK$580m for French consul's home - Paris authorities cash in on the red hot market by selling official residence - and then renting it back - The French government made a "good deal" in Hong Kong's red hot property market last week, selling its official residence on the Peak for HK$580 million, their consul-general in Hong Kong and Macau said. But Arnaud Barthelemy denied it was property speculation, saying it was part of Paris's worldwide review of their real estate assets. "The French government is not a speculator, for sure," he said. "But if we can make a good deal, there's no reason why we shouldn't be as smart as many other people in Hong Kong." A former investment director of France's sovereign fund, Barthelemy was appointed by French President Nicolas Sarkozy after his predecessor, Marc Fonbaustier, was recalled to Paris last November for stealing expensive wines at a private club. Barthelemy said the French government sold the property on 8 Pollock's Path to Ryoden Development on June 3 and rented it back for two years at a monthly rate of HK$250,000. The 11,222-square foot property was sold at an average of HK$51,684 per square foot, making it one of the most expensive sales in the world. The building sits at the top of the Peak and was made a grade II historic building last year. Records from the Land Registry show that the French government took possession of the house in 1981 - along with their two-story consulate general office in Admiralty Building and HK$90 million from Palwell Ltd - in exchange for their previous official residence, Victoria Lodge on Old Peak Road. Barthelemy said he had not begun looking for a new place, and would live with his wife in the house for another two years. "The house we have now in the Peak is not in a very good state. It's very old. We would like to something more modern, but it's not an emergency," he said. "We want to have a prestigious residence in Hong Kong, given the strengthening ties between France and Hong Kong, so I can invite people to come. We are reviewing our real estate assets all over the world." Meanwhile, he admitted that Fonbaustier had stolen wines, confirming previous official comments that it was "likely he did not meet the requirements of professional conduct for a French diplomat". He said Fonbaustier still works for the French government and had been demoted, "but what he does now is not public". Fonbaustier stole two bottles of wine from the Hong Kong Country Club, and was asked to return to Paris a year after taking the top post. When Sarkozy asked Barthelemy to take over the position in February, it took him "less than a minute to say yes," he said. "Hong Kong reminds me a lot of New York, where I used to work," said France's former first secretary to the UN Security Council. "I had never been to Hong Kong, and I was very surprised by the huge French presence here. "People here are very nice. The Hong Kong government has also been very helpful."

Dragon boat fun delights thousands - Tuen Ng Festival draws huge crowds to beaches for nine racing events, and there's a first for mentally disabled rowers at Sai Kung event - Dragon boat teams in action in Sai Kung (top) and at Tai Po Waterfront Park. The Pa Teng team boat takes part in a parade of deities in Tai O. High temperatures and mostly blue skies made beaches, beer and boat races all the more appealing, and rain showers just added to the watery atmosphere as tens of thousands of people flocked to the races and festivities held all over Hong Kong yesterday for the Tuen Ng Festival. It was a special celebration for the people of Tai O, whose traditional water parade - in which fishermen perform dragon boat rituals unique to the picturesque Lantau town - had just made it onto a list of national cultural treasures. There was also a landmark at Sai Kung, where the first dragon boat race for mentally disabled people from Hong Kong, the mainland, Taiwan and Macau was held, with Chief Executive Donald Tsang Yam-kuen handing out the prizes. "I have being coming to Sai Kung since March to practice for the competition," said one of the winners, Alan Mok Ho-yin from Hong Kong. "I am overjoyed at the result." With temperatures hitting 33 degrees Celsius in some places and a hot weather warning in force, more than 30,000 people gathered at Stanley Beach for the biggest of the nine events, the Sun Life Stanley Dragon Boat Championships. Some 75 per cent of the rowers in 220 teams were from outside Hong Kong. They wore a variety of consumes, from Mickey Mouse hats to gold body paint. "We train hard, but we also have fun," said David Hoopar, whose Fair Dinkum social club dressed up in black tutus and won an award for their costumes. Some of the biggest cheers were reserved for the team from the Hong Kong Federation for Handicapped Youth, with nine disabled athletes. "This is my fifth year rowing, but the first year for us to be competing here in Stanley, and we are here to prove that we can do it," said paddler Chan Tsun-ming. Last year's winner Henley Group's Tai Tam Tigers lost to A Seagods A in the mixed category. The women's division gold was clinched by Global Paddlers (AWA) and the men's gold went to BW Furniture. Macau, meanwhile, showcased its casinos on water for the festival commemorating the death of patriotic poet Qu Yuan, who drowned himself 2,500 years ago in protest against official corruption. Six casinos - StarWorld Macau, SJM, Sands China Ltd., MGM, Melco Crown Entertainment, and Wynn Macau - entered one or more teams in the event, which also drew contestants from businesses, schools, and clubs to the 500-metre course on the Nam Van Lake. Nearly 300 athletes from across Asia vied for a chance to hoist one of the silver trophies. "We are just enjoying it here," said Nepalese paddler Tamra Karsurat, a member of the Sands China Team along with Chinese, Filipino, and local company employees. "This is the Chinese culture. It's very nice, it's interesting." Vivien Costam, manager and member of the Banco Nacional Ultramarino team said the Macau event was different from the Hong Kong one with which it coincided. "I think the atmosphere there is very outdoors - a lot of sun, and beaches, and people dancing and singing. Here, we have a shelter for the team members to rest. And the sea is much calmer".

Almost half the government's HK$100 million Mega Events Fund is lying unused less than 10 months before the expiry of the tourism-boosting initiative, set up to advance sports, arts and cultural projects. "I believe there is close to HK$50 million left in the fund, whose deadline is next March. I don't know what will happen to all this money," a government insider said. The fund has been criticised for asking sports bodies to adhere to eligibility requirements including a minimum of 10,000 spectators. It was set up in May 2009 to allocate HK$100 million over three years to help non-profit-making organisations stage major events. The initiative came six years after the controversial HK$100 million HarbourFest concerts, which were held following the 2003 Sars outbreak. "We could easily have met this requirement, yet we didn't qualify when we approached the government for funds for the Bledisloe Cup [rugby match between Australia and New Zealand] last year. I really don't know what criteria they used to measure us," said Hong Kong Rugby Football Union chairman Trevor Gregory. Another sports official said: "I'm not surprised [the government] cannot dole out the money. The requirements are too tough. They want a guaranteed 10,000 spectators. If we could do that, we wouldn't need government backing in the first place." So far six sports events - including dragon boating and dragon- and lion-dancing - have received awards totalling HK$32 million. It is unclear if the government will extend the initiative, intended to promote Hong Kong as the events capital of Asia, and top up the fund or close it down. "The Mega Events Fund will come to a close at the end of March next year. We will have a complete review of the operation of the fund this year before deciding the way forward," said a Commerce and Economic Development Bureau spokesman. The fund has been declared a success despite not using all the money. "All MEF-sponsored events which have been approved so far have attracted nearly 610,000 participants, including over 130,000 visitors. These events are also estimated to have created over 8,000 jobs," said the spokesman. "As for enhancing Hong Kong's image, the MEF-supported events have [...] boosted Hong Kong's status as an events capital." Sports events have received the bulk of the money, the latest being the UBS Hong Kong Golf Open in December, which received HK$8 million for promotional activities. Other sports events which have benefited included the Hong Kong Tennis Classic - in 2010 it received HK$9 million and this January HK$5 million - the Dragon Boat Carnival (HK$5 million last year and HK$4 million for this month's event in Victoria Harbour) and a dragon- and lion-dancing extravaganza on January 1, which received HK$1 million. HK$18 million is estimated to have been spent on arts and cultural events.

Italian fashion house Prada SpA, which plans to raise up to US$3 billion in a Hong Kong initial public offering, is selling the shares at a premium to those of its global luxury-goods peers, according to a term sheet seen by Dow Jones Newswires on Tuesday. The company is selling 423.276 million shares in an indicative price range of 36.5 to 48 Hong Kong dollars (US$4.69 to US$6.17) each. That would be 21.1 to 27.7 times Prada's forecast earnings per share for 2011 and 16.2 to 21.3 times the forecast for 2012, according to the deal's bookrunners. Asian retailers on average are trading at 26.2 times forecast 2011 earnings and 20.7 times forecast 2012 earnings; the ratios for global luxury firms are 21.1 for 2011 and 17.8 for 2012, according to a report from Goldman Sachs Group Inc., one of the bookrunners of the deal. Prada's offering has a greenshoe option of an additional 63.49 million secondary shares, or 15% of the offer, said the term sheet. The high end of the price range would value Prada at US$15.7 billion. The public offering for the Hong Kong IPO is scheduled to start June 13, with the shares listed on the Hong Kong stock exchange June 24, the term sheet said. CLSA Asia-Pacific Markets, Intesa Sanpaolo unit Banca Imi and Unicredit SpA are the other bookrunners on the deal, according to the term sheet.

Cathay Pacific (0293) expects cargo traffic to rebound in the second half of the year, chalking up an annual growth of 5-6 percent due to robust demand from China. "Normally cargo is busy in the second half because of the Christmas rush," chief executive John Slosar said on the sidelines of the International Air Transport Association meeting in Singapore. Slosar expects Cathay to receive delivery of six new Boeing B747-8 freighters this year. He said first and business class passenger numbers have returned to levels seen just before the 2008 financial tsunami struck. Meanwhile, Dragonair expects a single digit growth in passenger levels this year. The airline, which is an affiliate of Cathay Pacific, flew seven million passengers last year. So far this year, passenger levels on flights to second-tier cities in the mainland such as Chengdu and Chongqing, along with the Thai island resort of Phuket, have been exceptional, Dragonair chief executive James Tong said. As for Japan's devastating earthquake and tsunami on March 11, the impact on passenger numbers has been limited. Also at the annual IATA meeting was Zhao Xiaohang, senior vice president of Air China (0753), in which Cathay Pacific holds an 18.77 percent stake. Zhao insisted a rapidly expanding high-speed rail network in the mainland does not threaten the airline. "On average, our domestic flights cover 1,300 kilometers while the high-speed railway covers 800km. Thus, the impact is limited," he said.

 China*:  June 9 2011  Share

As costs escalate, delta firms get more creative - Factories shift to LED lamps, form nimbler work cells and put operations under one roof to lift productivity - Deep in the Pearl River Delta, Techtronic Industries (SEHK: 0669) is swimming against the tide. At a time when skyrocketing wages are forcing many factories to relocate further inland or move to lower-cost countries such as Bangladesh, the Hong Kong-listed power-tool maker is staying put and betting on a new strategy: improving its productivity. The company, which was founded in Hong Kong and set up its first factory in Guangdong province in 1985, is even moving some of the operations it had set up in Germany to Dongguan. Minimum wages in Guangdong jumped nearly 19 per cent from March 1 and are expected to rise by an annual average of 20 per cent for the next five years, affecting tens of thousands of factories making everything from toys to furniture to computer components. Meantime, labour shortages are worsening as migrant workers, many of them from inland areas, find work closer to home, or opt for jobs in service industries such as hotels or in air-conditioned shops as sales assistants. Besides ballooning labour costs, factory owners, who mostly make goods for export, face other price pressures, said Shen Jianguang, chief economist of Mizuho Securities Asia in Hong Kong. Among them, he said, are tighter controls on pollution, rising raw materials costs and the gradual elimination of Chinese tax rebates on exports. Manufacturers are also contending with power shortages as well as a strengthening yuan, which reduces their profits when converted into other currencies such as the Hong Kong dollar. The rising wages are part of the mainland's efforts to shift its export-reliant economy towards one more dependent on domestic consumption. At the same time, Beijing is trying to encourage higher-value-added products and innovation through more research and development.

China, a permanent member of the UN Security Council, has backed Ban Ki-moon's bid for a second term as chief of the global body, praising his work over the past four years. Ban, who has led the United Nations since January 2007, on Monday put himself forward for a second five-year term as secretary general. “As a native Asian, Mr Ban Ki-moon has served the United Nations for more than four years,” said foreign ministry spokesman Hong Lei in comments reported by Xinhua on Tuesday. “China applauds his work as the secretary general,” Hong said. “Mr Ban has made great contributions in promoting the UN to play a greater role in international affairs,” he added. China’s UN ambassador Li Baodong said Asian nations backed Ban and that he had strengthened the UN role in promoting “peace and development” during his term. France, another permanent member of the Security Council, also quickly came out in support of Ban’s bid. Ban earlier said China must improve human rights as he defended his record on the issue in announcing his bid for a new term. He has been criticised by rights groups in the past about his use of “quiet diplomacy” with Beijing and other major nations. But the UN secretary general insisted he has always spoken out on human rights, which he called a “cornerstone” of the UN charter. “I have been speaking with them [China] constantly about improvement, the necessity of improvement of human rights in China,” Ban told a news conference at which he announced he would be standing for a new term. “I will continue to discuss this matter wherever it happens.” Ban was particularly criticised after a visit to China in November when he failed to raise the case of jailed Nobel Peace Prize winner Liu Xiaobo in a meeting with President Hu Jintao. Diplomats say that with no rival for the position, the UN Security Council is expected to give its approval and the UN General Assembly will hold a vote before the end of June. Ban’s term ends on December 31.

The first high-speed Electrical Multiple Unit (EMU) train made for Rio de Janeiro, Brazil, successfully completed by Changchun Railway Vehicles Co Ltd, is on display on June 7, 2011, in Changchun, Jilin province. This is the first trade of an EMU between China and the South American market, and in total 30 trains will be delivered in preparation for the 2014 FIFA World Cup and the 2016 Rio de Janeiro Olympic Games.

Future Leader’s Wife Steps Further Into the Limelight - It is often said that Peng Liyuan, the wife of Xi Jinping, China’s likely next president and Communist Party chief, is more famous than her husband inside China. Peng Liyuan, wife of Chinese vice president Xi Jinping, attends the opening session of the Chinese People’s Political Consultative Conference at the Great Hall of the People in Beijing in March. Now Ms. Peng, 48, has taken an unprecedented step into the international spotlight by becoming a Goodwill Ambassador for Tuberculosis and HIV/AIDS for the World Health Organization. The appointment Friday makes her the first spouse of a top Chinese leader to take such a prominent international role, and hints at the changes in leadership style that may await after Mr. Xi’s anticipated promotion in a once-a-decade Party reshuffle next year. Liu Yongqing, the wife of current President and Party chief Hu Jintao, rarely appears — and almost never speaks — in public, even inside China. She does accompany him on some overseas trips, but did not join him on a state visit to the U.S. in January. Wang Yeping, the wife of Mr. Hu’s predecessor, Jiang Zemin, also kept a low profile. Ms. Peng, however, looks set to play a “First Lady” role more comparable to Michelle Obama or France’s Carla Bruni-Sarkozy–the latter of whom is Goodwill Ambassador for the Global Fund to Fight AIDS, Tuberculosis and Malaria. Ms. Peng, a major general in the musical troupe of the People’s Liberation Army, was already unique among top Chinese leaders’ spouses for being a national celebrity in her own right. A regular performer at the annual Chinese New Year gala on state television, she has been an AIDS ambassador for China’s Ministry of Health for several years. She has also broken the mould by discussing her husband in interviews, once telling a state-run magazine: “When he comes home, I’ve never thought of it as though there’s some leader in the house. In my eyes, he’s just my husband. When I get home, he doesn’t think of me as some famous star. In his eyes, I’m simply his wife.” But she has fallen conspicuously silent on the subject, and avoided appearing alongside him in public since his promotion in 2007 to the Politburo Standing Committee, the party’s top decision-making body. Her new appointment is especially remarkable since her job will involve actively urging governments around the world to take stronger action to combat the two diseases, and to help victims — despite China’s general aversion to anything that smacks of interfering in other countries’ internal affairs. “It is a great honor to be given this important role by WHO,” Ms Peng said at an inauguration ceremony at WHO headquarters in Geneva, according to a press release from the WHO. “I hope to make a significant contribution to the great work of WHO in saving lives from TB and HIV/AIDS, and that my involvement will benefit those who are at most at risk.” The WHO said she would take part in a series of high profile events to help raise international attention on the two diseases, which together were responsible for the deaths of more than 3.5 million people in 2009. In addition, it said, she would advocate for stronger action to ensure those in need can access prevention, care and treatment services.

Australia will launch this week a new initiative to attract more visitors from China, as the usual tourists from the U.S. and Japan stay put in the face of uncertain economies and the strong Aussie dollar. The campaign will focus on collecting research on China's emerging middle class and its main cities in an effort to double the number of Chinese visitors to Australia by the end of the decade. In the first quarter of this year, roughly 129,000 Chinese short-term visitors came to Australia, about 9% more than the number of U.S. citizens that headed Down Under, according to data from the Australian Bureau of Statistics. In the year-earlier period, the percentage of U.S. visitors was 14% higher than China visitors. The number of U.S. tourists coming to Australia has been nearly flat at about 40,000 per month for most of the decade, but it dipped in 2009 as the U.S. economy suffered a hit. Meanwhile, the U.S. dollar has lost about one-third of its value compared with the Aussie since the end of 2008, making the trip increasingly expensive for Americans. Faced with outcry from the local tourism industry, the government and groups in states such as Queensland, home to the Great Barrier Reef, are eyeing a greater share of the $48 billion that the Australian government estimates that 57.4 million Chinese travelers spent overseas last year. "We know how important this market is going to be for us," said Kerri Anderson, a spokeswoman for Tourism Queensland, which has set up "China-ready" workshops for those in the holiday industry throughout the tourism-rich Queensland state. Outside mining, tourism is one of Australia's biggest sources of foreign currency earnings, accounting for more than 2.5% of gross domestic product worth an estimated 34 billion Australian dollars ($36.5 billion). But the industry has suffered not just from the strength of the Aussie dollar but also a sharp loss of visitors from tsunami-hit Japan and flooding that hit large swathes of Queensland. Increasingly, Australian tour operators are seeking to attract wealthier Chinese tourists as incomes in the world's second-largest economy after the U.S. rise quickly. "The industry for Chinese tourists used to be just dominated by these cheap tour groups, but that simply doesn't work anymore," said Harry Gu, 45, managing director of Flag Travel, a holiday company based in Shanghai and Sydney. "We're collecting data on the booking habits so that we can see where things trend over the next few years." The market for Chinese visitors will be the central focus of a summit starting Tuesday in the tropical resort of Cairns, located in the far north of Queensland, with senior government officials and airline executives attending. The event will also see the government's Tourism Australia office unveil its initiative to increase the country's share of Chinese visitors. Australia isn't the only tourism hotspot seeking to lure more Chinese visitors. Cities like Dubai, New York and London have placed attracting Chinese tourists near the top of their agendas. Aware of the competition, Australia signed a deal in April with China to expand the number group tours allowed by the Asian country. But Australian tourism businesses say more will need to be done to win market share. "I'm not sure we have what we need to look after this market," said Janene Rees. The 46-year-old business-development manager at Moonshadow Cruises & Port Stephens Four Wheel Drive Tours is based in New South Wales, a state that boasts Sydney, the Blue Mountains and the wine-growing Hunter Valley among its main attractions.

Chinese Companies Embark on Shopping Spree in Europe - The chairman of China's biggest food company was blunt. "We need to buy a top-three European food company," Wang Zong Nan told two consultants over Sunday brunch at a downtown Sheraton hotel here. Mr. Wang, chairman of Bright Food Group, is among Chinese business leaders going shopping for European companies. Their ambitions, encouraged by the government in Beijing, have the potential to reshape global trade and investment flows in coming years and are already creating anxieties in the European Union. The world's top exporting nation amassed $2.7 trillion in aggregate domestic savings by the end of 2009, a pot likely to grow sixfold by 2020, according to the World Bank. Experts are predicting a surge of overseas takeovers by Chinese companies over the next decade. A five-year plan Beijing approved in March calls for establishing "international sales networks and brand names." Chinese companies' investment in European businesses, which totaled just $853 million in 2003-05, surged to $43.9 billion in 2008 through 2010, according to Dealogic, a London consultancy. The burst gave Chinese companies control of 118 European businesses. In the latest deal, Chinese personal-computer maker Lenovo Group Ltd. last week agreed to buy 37% of Medion AG, a German computer and consumer-electronics company, and will launch a public offer for enough additional shares to gain control. While some of the deals make headlines, such as last year's purchase of Volvo auto operations from Ford Motor Co. by Zhejiang Geely Holding Group, Chinese companies have also quietly acquired control of more than 100 smaller European businesses, ranging from a Czech cigarette company to a Dutch pharmaceuticals firm to a British wood producer. The frequency of these takeovers is increasing. Thilo Hanemann, research director at New York consultancy Rhodium Group, predicts Chinese companies will invest more than $1 trillion overseas between now and 2020 and says that besides their well-known interest in natural resources, Chinese companies "are increasingly looking for opportunities in mature markets." That makes the EU a focus. With thousands of manufacturers and sellers of products ranging from cars to glass—in a 27-nation market that is the world's richest by economic output—Europe has quietly become the top target for Chinese mergers and acquisitions. A third of 3,000 large Chinese companies polled in a 2009 government survey said they had invested in EU nations, compared with 28% that named the U.S. For the most part, Chinese investment has been welcomed in Europe as a source of capital, but in a few places, it has unleashed tensions. The EU's industry commissioner, Antonio Tajani, and some officials of southern-tier EU countries like Spain, Italy and France say they worry that Chinese companies are buying European businesses to strip them of their technology. One reason Chinese business leaders cite for favoring Europe: Unlike America, where the Committee on Foreign Investment in the U.S. can block deals involving foreign direct investment on national-security grounds, EU regulators have no say on money coming in to buy businesses. "There are hundreds of attractive companies [in Europe] and there is a lower sensitivity on national-security issues compared to the U.S. and other economies," says Mr. Hanemann, the consultant.

Hong Kong*:  June 8 2011  Share

Outblaze keeps its eye on apps - Cyberport's pioneering IT company is one of the biggest developers on the App Store worldwide - and it is aiming to keep it that way - Yat Siu, Outblaze's founder and chief executive, display examples of his company's products. According to Siu, his company's apps business has been doubling every month. Hong Kong internet company Outblaze, a dotcom survivor that has become one of the world's leading mobile application developers, aims to expand its efforts on Apple's online App Store this year while exploring new growth opportunities on Google's Android Market. Yat Siu, the founder and chief executive of privately held Outblaze, said the company had started "porting a whole bunch of our apps on the Android platform", but remained "focused on furthering our apps business" on Apple. "We need to maintain that focus," Siu said. "At this point, we're one of the biggest developers on the App Store worldwide. But if you drop the ball, you can easily be forgotten in this market." Based at Cyberport in Pok Fu Lam, Outblaze is the developer of the popular Pretty Pet series of games that have been downloaded an estimated seven million times and achieved Top-10 ranking in dozens of markets on the App Store since the application was introduced on January 26. That mobile game franchise includes Pretty Pet Salon, Pretty Pet Salon Seasons and Pretty Pet Tycoon. These are free to download and play from the App Store, with the option of buying premium upgrades through credit card transactions on the platform. Last month, Outblaze released a version of Pretty Pet Salon for the Android Market that is also free to download and play, with upgrades available for purchase. In the game, players take control of a piglet named Piglina to help her operate a pet-grooming salon frequented by some very demanding customers. "Our apps business has been doubling every month," said Siu, without disclosing any figures. "We're not just into games." Outblaze, for example, launched its multilingual Chinese horoscope application in January in time for the Lunar New Year. The application immediately became No1 on the Hong Kong App Store early this year and reached either a top-five or top-10 ranking in other markets around the world. The company also has so-called "edutainment" applications, such as Alphabet Car and Baby Musician. "Even though the sale of Android [operating system-based] devices is growing faster, Apple so far represents the larger chunk of paid revenue [for developers worldwide] because more people are using content on its App Store," Siu said. According to a report last month by media research and consulting firm IHS Screen Digest, combined revenues from the four major mobile application stores run by Apple, Google, Nokia Corp and BlackBerry maker Research In Motion will increase to US$3.8 billion this year from US$2.1 billion last year. Apple's App Store is projected to take about 76 per cent, or US$2.91 billion, of that total market revenue. The other major digital distribution platforms are Nokia's Ovi Store and RIM's BlackBerry App World. Those four application stores are currently the major players, but other sites, such as Microsoft Corp's Windows Marketplace, are expected to gain enough size and presence in the future to shake up the market. In February, Nokia announced that its Ovi Store would be integrated into Windows Marketplace, as part of the Finnish company's strategic alliance with software giant Microsoft. IHS Screen Digest forecast that total download revenue to continue rising over the next few years, jumping to US$5.6 billion next year, US$6.9 billion in 2013 and US$8.3 billion in 2014. "With consumers continuing to show robust, unflagging interest in downloading games and other applications to devices like smartphones and [media] tablets, collective revenues from the four stores will climb sharply this year," said Jack Kent, an analyst for mobile media, at IHS Screen Digest. IHS Screen Digest first started tracking mobile application store revenues in 2008, when Apple introduced the App Store in July that year to support its release of the iPhone 3G. Founded in 1998, Outblaze in 2009 sold for an undisclosed amount its core online messaging and collaboration operations to International Business Machines Corp. The business acquired by IBM from Outblaze offers hosted e-mail and collaboration services in 22 languages to more than 40 million users worldwide. These assets in Cyberport have since been transformed into IBM's first cloud-computing facility in Hong Kong. Following the IBM deal, Outblaze has push for more projects in the online community market, including games, chats, message boards and blogs. Its Web 2.0 initiatives, meanwhile, include social-networking applications in the education and business sectors. Siu said Outblaze's strategic partnership with Turner Entertainment Holdings Asia-Pacific has continued. Their joint venture, Turnout Ventures, develops highly interactive community networks customised around the Cartoon Network's extensive library of established brands and characters.

No substitute - The growth of Hong Kong as an offshore renminbi business centre doesn't pose any threat to the local currency; in fact, confidence in the HK dollar remains strong - During the first half of last year, when renminbi cross-border trade settlement was still at the initial stage of development, it and renminbi deposits in Hong Kong were growing rather modestly. Then, some people were concerned that offshore renminbi business in Hong Kong might not take off. Some even considered the Monetary Authority too conservative in promoting this new business. However, with strong support from Beijing and relevant authorities, and with the joint effort of the HKMA and various sectors in Hong Kong, development has made very good progress. The significant growth in the use of renminbi for trade settlement was particularly noteworthy. Renminbi trade transactions settled through Hong Kong made up more than 70 per cent of the mainland's total renminbi trade settlement last year. That grew to more than 80 per cent in the first quarter of this year. Renminbi deposits are also growing at a fast pace, and have risen from 60 billion yuan (HK$72 billion) in January last year to 510 billion yuan by the end of this April. Of these deposits, two-thirds are from corporate clients. With Hong Kong's development as an offshore renminbi centre gradually taking shape, some commentators have expressed concern about the potential risks from such rapid development, including the substitution of renminbi for the Hong Kong dollar, or in other words "marginalisation" of the local currency. These concerns are ill-founded. Let's look at what "currency substitution" and "marginalisation" actually mean. Generally, currency substitution occurs when domestic residents lose confidence in their own currency, as a result of which they prefer to use a foreign currency in domestic transactions. I have noticed two misconceptions by some commentators. First, they think that wider circulation of renminbi in the retail market is "currency substitution". The fact is that as tourists around the world come to Hong Kong to shop and spend, shops and merchants seek to facilitate these customers by accepting payment in foreign currencies. As more mainland tourists visit Hong Kong, it is only natural that we see a greater use of the renminbi. This is a result of our booming inbound tourism industry and has nothing to do with any loss of confidence in the local currency. The second misconception is the notion that the growth in renminbi deposits means the Hong Kong dollar is being marginalised. Renminbi deposits have indeed grown very rapidly, and now they make up around 8 per cent of total deposits in Hong Kong. But it is important to note that most of the rise in 2010, amounting to 250 billion yuan, came from deposits from corporate clients. These are mostly renminbi funds remitted by mainland enterprises into banks in Hong Kong to pay for imports of goods and services, rather than conversion from Hong Kong dollars by Hong Kong companies. As for renminbi deposits from personal customers, some do come from conversion of Hong Kong dollars for payment, savings or investment purposes. But, again, the conversion into renminbi by personal customers does not only involve Hong Kong dollars: foreign currency deposits are also being used. Such currency switching is just normal asset allocation behaviour and should not be mistaken as evidence for Hong Kong residents' reluctance to use or hold the domestic currency because of a loss of confidence. Confidence of Hong Kong people in the local currency has remained strong, as evidenced by the amount of HK dollar banknotes issued in the past 10 years. These notes, together with credit and debit cards, continue to be the primary means of payment in daily domestic spending by local residents. Over the past 10 years, the value of HK dollar banknotes in circulation increased from HK$108 billion at the end of 2001 (8 per cent of gross domestic product) to HK$227 billion at the end of last year (13 per cent of GDP). This shows that the use of Hong Kong dollars in payment has grown faster than the economic output. Hong Kong is an international financial centre in Asia with the presence of many big international banks. Banks in Hong Kong take deposits in renminbi as well as other foreign currencies. Total deposits in foreign currencies grew from HK$700 billion in 1990 to HK$1.6 trillion in 2000, and HK$3.2 trillion last year. But at the same time, HK dollar deposits have grown at a similar pace, increasing from HK$520 billion in 1990 to HK$1.8 trillion in 2000 and HK$3.6 trillion last year. In 2010, deposits in HK dollars and foreign currencies each grew by a similar amount of HK$240 billion. In other words, the ratio of foreign currency deposits has remained steady at about 50 per cent of total deposits in our banking sector in the past 20 years. The continued growth of foreign currency deposits and their high percentage in total deposits are clear evidence of Hong Kong's attraction and success as an international financial centre. Any worry of marginalisation of the HK dollar is thus unfounded. Likewise, as the internationalisation of the renminbi progresses, the accumulation of a big pool of the currency in Hong Kong reflects the attraction of the city as an offshore renminbi business centre. Many overseas companies have chosen to place renminbi funds received from trading, investment and other channels in Hong Kong, thereby enabling the city to form the largest renminbi liquidity pool outside mainland China. Though the outlets for renminbi lending and investment are still somewhat constrained, Hong Kong has already become the hub for renminbi fund-raising. Moreover, we are seeing more diversified debt issuers and investors coming from Asia, Europe and America. Significant growth in renminbi deposits and in other channels of financial intermediation in Hong Kong demonstrates our success as an international financial centre and offshore renminbi business centre. There is no need to worry that such developments will undermine the status of the Hong Kong dollar.

 China*:  June 8 2011  Share

The Shanghai authorities' insistence on merging an exhibition on Confucius with a Swiss exhibition on Albert Einstein has forced the organiser to look for another mainland venue. "The Einstein exhibition will not go to Shanghai as planned," a person close to the situation said. The main reason, he said, was that the Shanghai Science and Technology Museum insisted that the exhibition from the Historical Museum of Bern, be mixed with one on Confucius, curated by the Shanghai museum - a move that baffled the Swiss. The Shanghai museum has not specified why it wanted to fuse the ancient philosopher and the modern scientist. As no other suitable venue in Shanghai could be located, it is unclear where the exhibition will go after it finishes at the Hong Kong Science Museum at the end of August. It is understood that the Swiss museum is talking to other mainland cities so it can continue its tour, which is a celebration of 60 years of diplomatic relations between China and Switzerland, financed by the Swiss government. Ironically, the exhibition, entitled Albert Einstein (1879-1955), has displayed the countries' different approach to cultural education since it started in Beijing in May last year. Ten days before it opened in Beijing, the China Science and Technology Museum requested that all historical references concerning the first world war be removed; a request that confounded the Bern museum. The Swiss firmly opposed the request and insisted the exhibition be shown as it was - given the relevance of the first world war to Einstein's life - or it would cancel the whole thing. The Beijing museum eventually relented and the exhibition, in its entirety, received around 200,000 visitors in four months. "I think as a science museum, they didn't see why we should talk about world history in an exhibition on Albert Einstein," the person close to the situation said. "And they were afraid their visitors would not understand that you can have a message of peace and tolerance in an exhibition which talks and shows negative events, like the national socialists in Germany and the persecution of Jews leading up to the concentration camps." In Hong Kong a section of the exhibition dealing with the Holocaust and Nazi concentration camps carries a disclaimer warning visitors it is "not suitable for children". Shanghai is where Einstein is said to have officially learned that he won the 1921 Nobel Prize for Physics. The Shanghai museum did not reply to requests for details.

Li Ping and her husband, both retirees, pick over the offerings at a Beijing market to prepare traditional dumplings for the Dragon Boat festival. Rocketing food prices are limiting their options. "We can hardly afford meat now, it's too expensive," Li, 67, said, explaining that they now only enjoy that privilege two or three times a month. Apples are also too dear. The mainland authorities say reining in inflation is their top priority and have taken a raft of policy measures to cool prices. But those moves are not yet trickling down to help low-income households like Li's. Li's pension provides her with 1,100 yuan (HK$1,320) a month - far from enough to deal with spiralling prices. "My kids have to subsidise us," she said. "We will have to depend on them in the future. I feel guilty." The couple bought some vegetables, sticky rice and wrapping leaves to make the dumplings 10 days before today's Dragon Boat festival - to avoid expected price rises as the holiday drew nearer. The country's consumer price index, a key gauge of inflation, rose 5.3 per cent on year in April driven by increasing food prices, a slight easing from the previous month but still well above Beijing's four-percent target for 2011. May inflation data is due next week. The central bank has responded to growing price pressures by raising interest rates four times since October and repeatedly increasing the amount of money banks must keep in reserve. However, analysts warn that current price increases are much more serious than those seen in previous years, with the cost of everything from land to labour to raw materials all climbing. "Inflation pressures are far more stubborn this time because structural inflation is a much bigger problem than it was at any time in the last decade," said Ben Simpfendorfer, managing director of economic consultancy firm China Insider. Analysts are expecting the May inflation rate to exceed the 5.4 per cent in March - a 32-month high - as domestic demand, bolstered by low interest rate levels and massive government spending, remains strong. In addition, a prolonged drought along the Yangtze river - which has left millions of people and livestock without water and devastated a major grain-producing belt - may further complicate the battle against inflation. The average price of 17 out of the 29 staple foods monitored by the National Bureau of Statistics soared month on month in the May 11-20 period, with the price of one type of fish surging 22.5 per cent.

Chinese celebrate Dragon Boat Festival - Participants compete in a dragon boat race to mark the annual Dragon Boat Festival at Hong Kong's Aberdeen fishing port June 6, 2011.

Hong Kong*:  June 7 2011  Share

Three registered medicines imported from Taiwan have been recalled after tests indicated the presence of two cancer-causing plastic additives. The Department of Health ordered the recall yesterday after tests showed the presence of the plasticizers DEHP and DINP in three other products. Mebendazole Tab 100 milligrams (Panbiotic), manufactured by Taiwan's Panbiotic Laboratories, and used to treat worm infections, was found to contain 2.2 parts per million of DEHP, or Di(2-ethylnexyl) phthalate. Oxo Cap 100mg, manufactured by Taiwan's Yung Shin Pharm Ind and used to treat respiratory tract infections, was found to contain 1.6 ppm of DEHP. Scoro Orabase 1mg/g Meider, an oral gel for mouth ulcers, manufactured by Taiwan's Meider Pharm was found to contain 1.8 ppm DEHP and two ppm of another plasticizer DINP, or Di-isononyl phthalate. "Taking DEHP over a long period of time and at high dosages may affect the liver and kidneys, and may cause cancer. DINP has a similar chronic toxicity as DEHP," a department spokesman said. He added the levels of DEHP and DINP detected are unlikely to have any harmful effects if taken at the recommended dosage. This comes as questions have arisen about the safety of Hong Kong's water supply, after a Dongguan manufacturer was found to have used DEHP-tainted additives in its products distributed across the mainland. Most of Hong Kong's water comes from Dongguan. But a spokesman of the Water Supplies Department said the plasticizer found in Dongguan "is not related to water and the department regularly inspects the water quality." A separate study by South China Agricultural University professor Liu Chun-hong also showed that DEHP is found in many instant noodles and rice noodles sold in the mainland. So far, Hong Kong has banned imports of Brand's Calcium Grow Chewable Tablets, two sports drinks - Speed Sports Drink and Speed Sports Drink Lemon Flavour - and "ShengXiangZhen" taro flavor fruit jelly.

The tender for the two small residential sites in Hung Hom received a total of 20 bids yesterday, showing developers' hunger for land even though the sites are small and in an unfashionable area. Hong Kong Ferry (Holdings), Sino Land, K Wah International, Wang On Group and Chinachem Group yesterday submitted bids for both of the two sites. Cheung Kong (Holdings) (SEHK: 0001) and New World Development did not disclose which site they were bidding for. The government said the site at 5-23 Lee Kung Street, near Ka Wai Chuen, received 11 bids. Sun Hung Kai Properties (SEHK: 0016), Wheelock (SEHK: 0020) Properties, Emperor International and the consortium formed by Paliburg Holdings and Regal International confirmed that they had joined bidding for the site. Surveyors believe the bidders were attracted because the site area was bigger, the area was quiet and could be packaged into a boutique residential project. The site at the junction of Gillies Avenue South and Bulkeley Street attracted nine bids. Chuang's Consortium is one of the bidders and is expected to be planning a residential project with 70 to 100 flats. Surveyors estimated the sites to be worth between HK$870 million and HK$1.3 billion. To increase the supply of small flats, the government has stipulated that the developments will be limited to small and medium-sized flats. However, it did not affect developers' appetite for the sites. Alnwick Chan Chi-hing, executive director at surveyors firm Knight Frank, said the sites were in an old district with strong demand for housing. "And the investment costs are small. Many developers can afford it," he said, adding that the strong sales of small-flat projects in recent months had encouraged developers to develop similar projects. The site at Lee Kung Street has a higher value, compared with the site at Bulkeley Street. It has a site area of 13,979 square feet, which could yield a total gross floor area of 104,841 sq ft. It could house a single block residential tower, providing about 170 flats. Under the development restriction, the flats have been limited to between 377 and 431 sq ft in terms of saleable area. The other site has a site area of 6,268 sq ft. It could house a residential tower with a total gross floor area of 56,411 sq ft. The project has been restricted to provide at least 70 flats with sizes ranged between 377 and 431 sq ft in terms of saleable area.

Floating business couple plead for increase in city maritime facilities - Wong Wing-kuen and his wife Yip Lai-chun have been struggling to find marinas where they can moor their hire boats. For three decades, Wong Wing-kuen and his wife Yip Lai-chun have made a living from the sea that surrounds Hong Kong. In 2001, they relocated their business - renting small fishing boats to locals for day trips - from Tiu Keng Leng to Tseung Kwan O due to a high-rise development. Every morning before 7.30am, the couple leave their houseboat moored at the mouth of the bay and head to their office, a 22ft fibreglass boat, just metres from their floating home. They check on their inventory of 40 two-seater motorised fishing boats scattered around the bay, which is home to dozens of other medium-sized boats. Customers must cross a wooden plank to a makeshift floating pier to hire a fishing boat for HK$200 a day. Wong, who came to Hong Kong from Guangdong in 1979 and has two adult children who live on land, said his repeated requests to the Marine Department and the Lands Department for better boating facilities had fallen on deaf ears. "We have no power," the 55-year-old said. "How can we influence the government? I'm not a property developer so I've got no power to bargain with them. "The government should just build more piers, that would be good. Or even just let us use the existing one here as a mooring, but they won't."

Local sailors left high and dry - The lack of mooring facilities for pleasure craft is having an adverse effect on boat sales and keeping many would-be mariners from enjoying the city's waters - Marinas in Hong Kong are so crowded that owners are forced to hide their boats against embankments, under bridges, in small bays or in out-of-the-way places, where there are no easy ways to reach them. Hong Kong's title as a vibrant harbour city is drifting backwards because the government is failing to plan for and cater to a growing interest in sailing by young locals, according to boat brokers desperate for space to moor vessels. This lack of planning is also undermining employment opportunities for captains and other marine workers who have either lost their jobs or who are now underemployed as the fishing industry continues to weaken. Boat brokers in Hong Kong say they are losing million of dollars in sales because buyers are now demanding a guaranteed mooring before they sign on the dotted line. This trend started two years ago and had now become the norm among buyers, said Bart Kimman, managing director of boat brokerage Asia Yacht Services. "They basically say to boat dealers, `I won't buy the boat until you can organise a berth for me'," he said. "It depends on the size of the boat, but it's getting more and more difficult." Kimman said the government had failed to "anticipate that marinas would fill up", a trend he said started "three years ago, maybe longer, be it for swing moorings or marinas". "Everyone has been asleep and now the panic is breaking out. It's going to take several years to plan and building a new marina will take three to five years, so this situation is getting worse by the day." He said the Marine Department had to be more "open minded with areas they control like typhoon shelters". "A lot of these typhoon shelters could be set up, to a limited extent, for pleasure boat swing moorings, but the department is not doing that. It is all commercial, but a lot of the fishing industry is leaving and there are plenty of places where you could create [space] for pleasure boats. "If everybody would just be willing, the issue could be solved, but it seems no one wants to tackle the problem" Grant Saunders , senior yacht broker for Simpson Marine, said he had 30 people on a waiting list to buy boats, but only when moorings became available. The type of boats they wanted to buy ranged from 40ft craft costing €250,000 (HK$2.85 million) to 120ft vessels for €12 million, he said. "Providing more space is also providing more jobs," Saunders said. "There are a considerable amount of captains out there looking for jobs so if there is no space for boats, they will not be able to work." Saunders said the idea that sailing was just a hobby for rich expats was long gone with many local people joining the sport. "Many years ago you wouldn't see a local at the Royal Hong Kong Yacht Club, but now there are a lot of young locals who get into consortiums to buy racing yachts," he said. Kimman echoed his thoughts: "You see more and more Chinese in the sailing clubs. This town is about luxury, exclusivity and spending money so why are we so concerned about this being a rich man's sport? The whole sensitivity about this is totally misplaced. Sailing is not expensive. If you want to go sailing every Saturday, you become a member of a club and you can do it for HK$1,000 a month." At the Hebe Haven Yacht Club in Sai Kung, there are 300 people on the waiting list for spots to keep their boats. According to a spokeswoman they are looking at an estimated waiting period of "a few years, at least". A spokesman for the Marine Department said the current supply of space for boats in Hong Kong was "adequate and can meet the projected demand" but he did not explain what this entailed and said it was not the department's responsibility to worry about demand, supply or development of marinas in Hong Kong. "The department's involvement is limited to providing professional views on the marine operational/traffic safety impacts at the marinas and in their vicinity," he said.

As Hong Kong considers a third runway at Chek Lap Kok airport, some air traffic controllers claim they are already struggling to cope with a manpower shortage they say is leading to fatigue and putting flight safety in jeopardy. The group claimed some controllers were owed as much as 180 days' leave yet were unable to take holidays, creating potentially dangerous levels of fatigue in the control tower. They said air traffic teams were increasingly stretched as flights hit record levels of up to 1,000 flights a day and preparations were made for a new control centre. They said "10 to 15 more controllers" were needed to meet current demand. One controller, speaking on condition of anonymity, said morale was at the lowest level he had known and claimed many young controllers were "demoralised, unmotivated and numbed into submission". The claims were dismissed by Civil Aviation Department director general Norman Lo who said that although staffing levels were "tight", new controllers were being hired and training streamlined. There was no evidence of fatigue affecting operations, he insisted. A department spokeswoman also said it did not anticipate any problems in meeting the required staff levels for air traffic controllers if the third runway project went ahead. A statement drawn up by a number of air traffic controllers and passed to the Sunday Morning Post described controllers being owed 180 days' leave as "totally unacceptable". Seventy per cent of operational staff had not had a two- or three-week holiday in five years, the statement said, adding that "safety issues" were most obvious on night shifts where similar traffic loads were handled by a "skeleton staff". The controllers said they feared the situation would worsen as senior controllers retired and not enough new controllers were coming through the ranks to replace them. "The situation should have been addressed at least two years ago," said one controller, pointing out that it took five years to train a controller. In an incident last September cited by the controllers as an example of fatigue and manpower issues, a Cathay Pacific (SEHK: 0293) plane taking off for London after midnight had to deviate from the runway centre line at high speed because the tail of another plane was too close to its path. The second plane was unable to get out of the way because another aircraft was blocking its path on the taxiway. Cathay Pacific confirmed the incident and said a pilot's report on it had been sent to air traffic controllers afterwards. A Civil Aviation Department spokeswoman said an investigation found that the second plane's tail was too close but had not protruded on to the runway. The controller involved was "thoroughly coached and debriefed". Lo said there was no evidence of an increase in incidents related to fatigue and said steps were being taken to reduce outstanding leave. He conceded there were times when the department had "difficulty in satisfying staff requests on leave" because of seasonal heavy traffic and busy days. "It is because we run on very tight staff resources," he said. Staff have to realise the difficulties and problems the management is facing at this time, especially when traffic demand is always on the increase." The departmental spokeswoman stressed that rosters were carefully reviewed to prevent controller fatigue. "Over the past five years, more than 40 new rated controllers were added to the system, with more being trained up consistently - around 15 a year,'' she said. Meanwhile, Airport Authority chief executive Stanley Hui Hon-chung yesterday told RTHK radio the body would have to discuss with the government about how to raise the HK$100 billion needed to build the third runway if the plan went ahead. He had earlier suggested that airport users - ranging from airlines and passengers to hotels and retailers - could help pay part of the costs. Previous estimates put the cost at HK$136.2 billion, including inflation. After bank loans, the authority would still need HK$100 billion.

Newly listed casino operator MGM China Holdings Ltd. is considering expanding on the Macau peninsula and in Taiwan, its chief executive said, the latest gambling company executive to outline an aggressive expansion strategy in Asia's booming casino market. Grant Bowie also told The Wall Street Journal in an interview that he expects MGM China, the smallest of Macau's six casino operators, can narrow the gap with rival Wynn Resorts Ltd., whose Wynn Macau Ltd. he headed for almost four years. "Clearly Wynn's performance has been exceptional," he said. But "we're improving and I think we've got a lot of opportunities to close that gap further." In addition to its plans to build in Macau's Cotai area, he said, MGM China "will be seeking other opportunities, whether on the peninsula...or potentially in Taiwan if that opportunity were to materialize." Casino gambling is illegal in Taiwan. MGM China rivals Las Vegas Sands Corp. and Wynn have expressed similar wishes to expand in another potentially incredibly lucrative Asian jurisdiction where casinos aren't now permitted: Japan. For now, though, Macau looks plenty hot. Just weeks ago Galaxy Entertainment Group Ltd. opened the doors of a $2 billion casino complex in Macau's Cotai area, home to Las Vegas Sands' Venetian Macao, and where Wynn Resorts and SJM Holdings Ltd. also plan to launch enormous projects. With gambling revenue totaling nearly US$13 billion during the first five months of the year, Macau is on track to rake in five times the gambling revenue of the Las Vegas Strip in 2011. Analysts are predicting Asian rival Singapore, which welcomed its first casinos last year, could overtake the Strip this year. MGM China is a joint venture between MGM Resorts International and Pansy Ho, a daughter of Macau gambling magnate and SJM founder Stanley Ho. On the first day of trading Friday in Hong Kong, its shares rose 1.8% to 15.62 Hong Kong dollars, or about $2.01. The company's $1.5 billion initial public offering priced at the top of its indicative range, reflecting optimism over Macau's gambling market. The company could sell up to 15% more shares through an over-allotment option. The company, which operates the MGM Macau casino on Macau's crowded peninsula, is also on the lookout for other projects in that area, Mr. Bowie said. Fellow casino operator and MGM Resorts International investor Genting Group has a prime piece of land on the peninsula, but Mr. Bowie said MGM China hasn't spoken with the Malaysian casino group about working on a project there. The 87,000 square-foot piece of land opposite the Wynn Macau is 75% owned by Genting Hong Kong Ltd. Mr. Bowie said MGM China is fleshing out plans for a three million square foot casino-resort in Cotai, where properties are typically larger and feature more non-gambling amenities than their peers on the Macau peninsula to the north. Pansy Ho has said she expects the government to grant Cotai land rights to MGM China, Wynn Macau and SJM within the year. "It's not about replicating what we've already done," Mr. Bowie said. "It needs to be much more a space where people can entertain themselves than simply where we have to entertain them," he said, suggesting the company may not invest as heavily in amenities such as theaters as competitors Melco Crown Entertainment Ltd. and Las Vegas Sands unit Sands China Ltd. have done with mixed success. Mr. Bowie said he is confident MGM China can continue to grow at its existing peninsula casino even though it can't open more than 427 gambling tables for the time being under a government-imposed cap on the industry. Instead, he said MGM China can maximize revenue by targeting rich customers to increase the spending per table and slot machine—a strategy Mr. Bowie acknowledges has been well executed by Wynn Macau. He presided over Wynn Macau's opening in September 2006, left in July 2007 and started as head of the MGM joint venture in August 2008. Under Mr. Bowie's leadership, MGM China's share of gambling revenue has increased to an average of 11% so far in 2011 from 7.5% between June and August 2010. Mr. Bowie attributes the improvement to the addition of a couple of "significant" new junket operators—the middlemen to bring high rollers to casinos, extend credit and collect debt—as well as decisions such as reorganizing the gaming floor, building a customer-relationship program and tweaking food and beverage offerings. Mr. Bowie brushed off industry concerns that MGM China's improved performance was fueled by laxer credit policies that could be unsustainable and raise the risk of bad debt. He said his principal responsibility as an executive is "managing risk." MGM China's past underperformance "was a learning curve," he said. "Should we have maybe been able to have sped up that process? The answer to that is probably yes. But I think that what we're demonstrating is that we've learned our lessons...and I think we're now making the contribution to Macau that we've always intended to." Mr. Bowie said MGM China's post-IPO ownership structure, under which MGM Resorts International is now the venture's controlling shareholder with a 51% stake, will simplify the company's decision-making process but that "the engagement with the partners is basically the same." Previously MGM Resorts and Ms. Ho each held 50%, prompting analysts to worry about who was steering the venture. Ms. Ho holds 29% of the company after selling the rest of her shares to the public and before any exercise of an over-allotment option. But Mr. Bowie insisted Ms. Ho, who was recently involved in a public family dispute over control of her father's multibillion-dollar rival casino empire, will remain an active participant in MGM China despite her share sell-down. "Let me assure you the nature of Pansy means that she will still raise issues when she wants to raise issues," he said.

 China*:  June 7 2011  Share

Fast expanding loans to local government financing vehicles are threatening the mainland banking system as such debts amounted to more than 14 trillion yuan (HK$16.8 trillion) as at December 2010, the People's Bank of China warned yesterday. Most of the loans are large and carry a lengthy tenure, making it difficult for regulators to monitor the use of the funds, a report by the PBoC said. "Some local government financing vehicles are not properly operating, and this is not sustainable," the central bank warned. There were more than 10,000 such vehicles in 2010 versus 8,000 in 2009. Such loans accounted for less than 30 percent of total bank lending last year amounting to 14.38 trillion yuan. "We should carefully look at other options to strengthen the financing platform, including issuance of local government bonds, restructuring of the vehicles and restricting local government borrowings," the report said. Outstanding loans to such vehicles totaled 7.7 trillion yuan as at June 30, 2010, the China Banking Regulatory Commission said. Around 23 percent of this amount, or 1.8 trillion yuan, carried default risk, the commission estimated. Beijing is moving to clean up local government debt, it was reported earlier this week. This would involve paying off debts amounting to 2 to 3 trillion yuan, in a bid to reduce the risk of defaults. James Liu at CIMB-GK Securities Research believes most of the loans to the vehicles have been extended by small and medium-sized lenders, and the big banks are taking good care of their loan quality. As of March 31, Industrial and Commercial Bank of China (1398) had lent 515.1 billion yuan to such vehicles, bearing a non- performing ratio of 0.30 percent. China Construction Bank (0939) has lent 540 billion yuan as at the end of last year. ICBC shares fell 1.39 percent to HK$6.41 yesterday while CCB shares dropped 1.1 percent to HK$7.20.

Google lacked evidence to support its accusations that Chinese hackers are behind the alleged cyber attacks on hundreds of its email accounts and the timing to make such accusations is evil-intentioned, Chinese experts said on Friday. "Google's accusation is neither serious nor credible as it has not published any evidence that shows the hackers are from China," said Dai Yiqi, a cyber security expert with Tsinghua University. Eric Grosse, engineering director of Google's Security Team wrote on the company blog Wednesday that unidentified hacker attacks likely originated from the eastern Chinese city of Jinan, tried to collect user passwords of the Gmail accounts of hundreds of users, including senior US government officials, Chinese "human rights activists" and journalists. A report released in 2009 by the United States-China Economic and Security Review Commission, an organization created by the US Congress, claimed that Jinan is the home of a Chinese military reconnaissance office. An anonymous cyber security expert believes, despite Google not referring to the Chinese government in the latest attack claim, the company is targeting the Chinese government by listing the victims of the attacks as those whom only the Chinese government are interested in. "Both their intentions and the timing of the accusation are dubious," Dai said. Google's accusation followed on the heel of the reported Pentagon's first formal cyber strategy. The Wall Street Journal reported Tuesday that the Pentagon concluded that computer sabotage coming from another country can count as an act of war and the United States may respond by using traditional military force. Li Shuisheng, a research fellow with a top military science academy of the People's Liberation Army, believes there are political motives behind Google's accusation. Google may well have attempted to instigate a new round of the cyber row between China and the United States, Li said. Wednesday's accusation by Google came more than a year after the company allegedly uncovered a cyber attack on its systems that it said it traced to China. In January, 2010, Google said it had been attacked by hackers supported by the Chinese government, and later announced to withdraw from Chinese mainland. The row ended up with Google redirecting Chinese mainland users to a site in Hong Kong. In such cyber attacks, it is easy to locate the IP address of hackers but hard to tell where the hackers actually are, said Dai. "Hackers usually launch attacks by camouflaging their own IP addresses or controlling computers of others. Therefore, we can hardly tell the location of the hacker unless we have sufficient evidence," he said. China is one of the leading targets of cyber attacks. It has the world's largest number of computers infected with bot, a type of malware which allows a cyber attacker to gain control over the affected computer. About 13 percent of the world's computers infected with bot are in China. "Without cooperation between governments, absolute security cannot be guaranteed in cyber community," said Li , adding only cooperation can ensure safe information exchange.

Students from the special education school in Xincai county, Henan province, receive zongzi as festival gifts from the local federation of trade unions. The most popular food for the Dragon Boat Festival are traditional zongzi dumplings made from layers of sticky rice and different fillings wrapped in bamboo or reed leaves. Though various kinds of zongzi are sold in markets, many people still celebrate the festival by making their own at home as a family tradition. Three weeks before this year's Dragon Boat Festival, 78-year-old Yuan Ruhua of Hefei in East China's Anhui province started to prepare the traditional food - her yearly routine for the past 50 years. Reed leaves used in wrapping zongzi appeared in Hefei markets soon after the May Day holiday. "It's good to keep the leaves in the fridge for some time so they will not be ruined when wrapping," she said. With many of her neighbors asking her to make zongzi for them, the festival is Yuan's favorite occasion. Some gather at her house to learn the skill. In fact, her 23-year-old granddaughter Su Yuhan cannot wait until June to enjoy the delicacy. She asked her grandmother to make zongzi to share with her college classmates though the festival was still 10 days away. "I can recall my grandma's zongzi since childhood. Today, there are finely wrapped zongzi in the supermarket, yet I still like the family food most," she said. "I love to bring them to my lab and share with my classmates. Grandma uses our favorite fillings, something we can't buy in the supermarket." According to historical records, zongzi were originally made of millet and chestnuts with no filling. Today popular fillings include sweetened bean, jujube and meat. Their shape and fillings vary according to locale. In south China, they are usually wrapped in bamboo leaves, with fresh local leaves preferred. People in north China often wrap zongzi in reed leaves. Generally, people in the north love sweet zongzi. In Beijing, there are three types, with the simplest made only of sticky rice and dipped in sugar when eating. Others have jujube and other preserved fruits or sweet bean paste. People in the south prefer salty meat as the filling. In Guangdong province, special fillings include egg yolk, salted seafood, green beans and dried mushrooms. Shanghai zongzi are diverse and exquisite, not only in their fillings but also in shape. Some are wrapped into squares and some into a pentagon. In Jiaxing, Zhejiang province, the famous old brand Wufangzhai is exquisitely made with well-chosen sticky rice and various fillings such as chicken and salted yolk. This year, Yuan plans to wrap more than a hundred zongzi with meat, yolk, red bean and sweet jujube fillings. The only shape she is good at making is the tricorn. "Most of the families love salty food," she said, "So most zongzi I make are meat and yolk." Yuan bought three kilograms of reed leaves, enough to wrap 10 kilograms of rice. Both rice and meat are marinated in soy sauce for an hour. With 50 years of experience, Yuan said the procedure is not complicated, but the trickiest part is wrapping, a handiwork that requires patience and hand strength. Roughly trimmed fresh reed leaves are kept in water so they will not spoil. The first step is placing two reed leaves parallel to each another and folding a third of their length into the shape of a funnel. "For me the first step is the hardest, but the most important in making an attractive zongzi," said Yuan's daughter. "It takes a lot of practice before you can fold a good funnel shape. When I was learning as a teenager, my mother asked me to practice the first step many times before moving on to the next." The next step is to fill the funnel with sticky rice and meat. If the funnel is not well folded, rice is likely to leak from the leaves. "The interesting thing about making zongzi yourself is that you can change the recipe," Yuan said. In Hefei, there are still many families with older generations that make the delicacy. But for young people living away from home, making the traditional food for Boat Dragon Festival is quite a project. "My grandchildren are not very interested in learning the skill," Yuan said. "My daughter is the only one that helps out. Young people do not have the patience, but they love buying zongzi from bakery stores and supermarkets." Wufangzhai, the famous Jiaxing brand, is selling its product online this year. Its store on sold almost 12,000 boxes of zongzi in May, and the number is rising.

Li Na makes history! - Li Na of China poses with her trophy near the Eiffel Tower in Paris after winning her women's final against Francesca Schiavone of Italy at the French Open tennis tournament at the Roland Garros stadium in Paris June 4, 2011.

US to keep military presence in Asia: Gates - Chinese Defense Minister Liang Guanglie (right) shakes hands with former US defense secretary William Cohen at the Asia-Pacific security forum in Singapore on Saturday. Despite its fiscal troubles, the US will maintain a "robust" military presence across Asia, backed up by new high-tech weaponry, US Defense Secretary Robert Gates said. Gates made the remark during a speech on the second day of the Shangri-La Dialogue, hosted by the International Institute for Strategic Studies in Singapore. The US military will expand its presence by sharing facilities with Australia in the Indian Ocean and deploying new littoral combat ships in Singapore, where it has regular access to naval facilities, he said. "Gates' comments were made as assurance to the allies of the US in the region that its policies will continue after his impending retirement," said Major General Luo Yuan, a senior researcher with the Academy of Military Sciences. Gates will step down by the end of June, and the current director of the CIA, Leon Panetta, has been nominated to replace him. Worries about the ability of the US to maintain its military presence have been raised as President Barack Obama faces mounting political pressure to deal with Washington's $1.4 trillion budget deficit and more than $14 trillion in debt. Gates said that he would take a $100 bet that "in five years, the US influence in this region will be as strong, if not stronger than now". The US remains as the dominant power in the Asia-Pacific region, and its influence over the region will continue in the next five years, said Yuan Peng, director of the American Studies Center at China Institutes of Contemporary International Relations in Beijing. In his speech, Gates also said the key to solving the maritime issues in the Southeast Asia is to provide a "peaceful mechanism" that will not intensify tensions. "We should not lose any time before strengthening these mechanisms of dealing with the claims. Clashes serve nobody's interests," he said in answer to questions about the South China Sea issues. China's stance on these issues remains that they should be solved bilaterally, between China and other coastal countries. Confidence is needed that the parties concerned can solve the problems themselves through a peaceful bilateral mechanism. The regional disputes should be solved by countries in this region, Luo said, adding that a third party, who is not familiar with the history and culture in the region and has a different mode of thinking, can make things more complicated. During meetings with Chinese Defense Minister Liang Guanglie on the sidelines of the Shangri-La Dialogue, China's neighbors voiced appreciation on Saturday for Beijing's efforts toward regional security and international assistance. Kim Kwan-jin, defense minister of the Republic of Korea, appreciated China's work at maintaining stability and peace on the Korean Peninsula and thanked China for its help in protecting South Korean merchant ships in waters off Somalia from pirate attacks in February. Japanese Defense Minister Toshimi Kitazawa and Wayne Mapp, defense minister of New Zealand, thanked China for its rapid aid to their countries when they were struck by major earthquakes this year. Liang also met with Russian Deputy Prime Minister Sergei Ivanov, who is in charge of the country's national defense affairs and military industries. Gates called for all countries to recognize the potential problems caused by cyber attacks, saying that the US defense system is under attack "all the time". The Pentagon is working to identify hackers, who will be responded to in kind or with traditional offensive action, Gates said. "We take the cyber threat very seriously and we see it from a variety of sources, not just one or another country," he said. "China is one of the biggest targets of cyber attacks," said Luo, adding that China always tries to work with other countries to fight against such attacks.

The Chinese infrastructure giant, the China Communication Construction Company (CCCC), was awarded a contract to design a third bridge over the Panama Canal, the Panama Canal Authority (ACP) said Friday. The ACP said in a statement that the Chinese company has presented the lowest budget worth 4.662 million U.S. dollars and won the bid over five other competing companies. The bid was presented in partnership with engineering consultancy firm Louis Berger Group, the ACP said. Other competing companies included a 4.9 million dollar bid from the TYPSA Principia group, a 6.1 million dollar bid submitted by URS Holdings, a 7.2 million dollar bid from the Puente de Colon JV company, a 8.5 million dollar bid from the group ARUP and a 9.6 million dollar bid from Ty Lin International.p The ACP has specified that the new bridge must be braced with ties, built at 75 meters above sea level with a full length of five kilometers including access roads to the bridge. Currently, the Bridge of the Americas and the Centennial Bridge -- both on the Pacific side -- provide the only routes for vehicles to cross the Canal. This new bridge, the first-ever on the Atlantic side of the waterway, will double trans-canal traffic capacity once completed in 2014.

Hong Kong*:  June 6 2011  Share

Towngas set to issue more dim sum bonds - Utility seeks to tap growing demand for yuan investment products to finance HK$10 billion investment across the border in the next three years - Managing director Alfred Chan says Towngas is taking advantage of the yuan bond's low interest rates to fund mainland investments. Utility Hong Kong and China Gas (SEHK: 0003), with its "Towngas" trademark, is keen on issuing more yuan bonds as it taps cost-effective funding for its planned HK$10 billion investment across the border in the next three years, a top official says. Managing director Alfred Chan Wing-kin said low-interest-rate yuan-denominated bonds, dubbed "dim sum" bonds, were gaining popularity on the back of a large pool of yuan deposits in Hong Kong and strong demand for yuan investment products. He said the group would seek to sell more dim sum bonds "soon" after becoming the city's first blue-chip company to issue this type of bond, raising 1 billion yuan (HK$1.2 billion) in April. "The dim sum bond is an option to raise lower-interest-rate funds," Chan said after the group's annual general meeting yesterday. "This is despite the fact that we have HK$9.5 billion cash on hand." Towngas, a dominant gas utility which has supplied piped naphtha gas to customers in Hong Kong for nearly 150 years, has earmarked HK$10 billion over the next three years for acquiring projects on the mainland for growth, he said. The group, which has chalked up a portfolio of 124 projects on the mainland spanning natural gas supply, new energy sources and water supply, was in talks to invest in about 30 projects at present, he said. Of the potential investments, 15 projects were expected to be finalised this year, Chan said. On the back of the 12th five-year plan to 2015 encouraging the use of clean fuels, Towngas planned to seal five projects this year in new energy sources such as coal-bed gas and shale gas as supply of natural gas remained tight. The group's investments in new energy resources were on track to be profitable in the second half of this year, he said. "The mainland portfolio will account for about half of our total profit next year, and the rest from Hong Kong," Chan said. "We are on the early stage of a harvesting period." Last year, Towngas' mainland operations generated an after-tax profit of HK$1.65 billion, or a 3 per cent rise from 2009. Chan said Towngas sold 23 per cent more natural gas on the mainland last year at 8.5 billion cubic metres, or 10 times the amount of gas it sold in Hong Kong. The growth accelerated in the first three months of this year, at 26 per cent, as the central government encouraged the use of the clean fuel, he said. In Hong Kong, gas sales grew 3.9 per cent in the first quarter - thanks to cooler weather, he added. Separately, Chan said Towngas' subsidiary, Towngas China, with a portfolio of 65 piped-gas projects around the mainland, planned to raise funds to refinance US$150 million of debt maturing in September. Towngas shares fell 2.88 per cent to HK$17.48 yesterday while Towngas China rose 0.48 per cent to HK$4.20.

Hong Kong's flagship airline says the multibillion-dollar cost of a third runway at Chek Lap Kok does not seem so much compared with the amount it has committed to new aircraft in the coming decade. Coming out in support of the project, Cathay Pacific Airways (SEHK: 0293) chief executive John Slosar said that while the runway was estimated to cost HK$86.2 billion - or HK$136.2 billion after inflation - the airline had budgeted HK$180 billion - at today's prices - for 87 new planes. Slosar said it would be bad business for the airline if it could not expand, which is what the Airport Authority has warned will happen in about 2020 without the third runway. Cathay was the world's second most profitable airline last year, with a net profit of HK$14 billion, beaten only by its strategic partner Air China (SEHK: 0753), which made HK$14.23 billion. "The airport is a foundation for the many pillar industries - finance, professionals in the legal, trade, logistics and tourism sectors," Slosar said. "Once the critical mass is gone, it may be hard to have it back." Airport Authority chief executive Stanley Hui Hon-chung said yesterday that apart from bank borrowing and government cash, the user-pays principle could be used to help pay for the project. Users range from passengers, airlines and cargo handlers to hotels and retailers. But as one of the biggest users, Cathay was cautious in committing to any possible rise in parking and landing charges. Slosar said the company would study the "economic justification" when the need arose. The public has been given three months to decide if they want a third runway by 2030. Funding details will not be available until after that. But figures in a document that outlines the airport's development for the next two decades offer some hints. The airport is expected to generate a net profit of HK$102.7 billion in the seven years to 2030 - the period when the third runway would be under construction. The government usually receives 80 per cent of the profit as a dividend, and is estimated to rake in HK$78.9 billion over the period. If it uses that for the runway it will leave a shortfall of about HK$57.3 billion. The authority has said it could raise HK$11 billion in bank loans, leaving HK$46.3 billion to be raised elsewhere, including from users.

Italian fashion house Prada expects to post a profit of at least €150.7 million (HK$1.69 billion) for the first half of this year. The company also plans to add 80 directly run stores globally by January next year, according to a filing with the Hong Kong stock exchange yesterday. The Milan-based company, which is seeking an initial public offering in Hong Kong to raise about US$2 billion, said there was still "substantial potential" for growth in the Asia-Pacific, particularly in China. It intends to open about 70 directly operated stores in the three financial years to January 2014, with 30 on the mainland. "We believe further growth is possible due to continuing growth of the Chinese economy, which enables us to further our penetration into more Chinese cities," Prada said in the prospectus. The company also hopes to enhance its presence in rapidly growing markets in the Middle East, South America and eastern Europe. Prada, which also owns the Miu Miu, Car Shoe and Church's brands, will be the first global luxury brand to list in Hong Kong. It plans to sell 423.3 million shares in the offering. The shares will be priced on June 17 and list on the Hong Kong exchange on June 24, Reuters said, citing a term sheet of the offering. The company reported a net profit of €250 million for the past financial year, more than double that of the previous year. The Asia-Pacific is the fastest growing market in Prada's global strategy with a compound annual growth rate as high as 51 per cent in the past two financial years. By contrast, growth in Europe, North America and Japan remained from 0.8 to 8.7 per cent for the period. The Asia-Pacific region generates 32 per cent of the company's revenue, while Europe and North America contribute 22.3 and 14.6 per cent, respectively. Prada's chief financial officer Donatello Galli was quoted by the Hong Kong Economic Times that Chinese consumers' spending, both domestically and overseas, amounted to 30 per cent of its total sales last year. At the end of January, Prada had 319 directly operated stores compared with 211 three years ago. In addition, it also runs a wholesale business which accounts for 30 per cent of its revenue. Miu Miu is another business focus in the company's blueprint. It said 35 per cent of Miu Miu's net sales originated from the Asia-Pacific, reflecting the fashion-forward products under the brand are well received by Asian consumers. "We plan to continue the aggressive expansion of Miu Miu's directly operated store network in this region, particularly greater China," it said. The company will raise the number of shops in the Asia-Pacific to 55 from 25 over the next three financial years. As well as increasing "significantly" investment in marketing and communications, Prada also plans to host a Miu Miu fashion show in Shanghai this year "to enhance its growing brand recognition in Asia". In addition to Prada, several big brands including luggage maker Samsonite International, Coach and Burberry have planned or shown interest in selling shares in Hong Kong.

Hong Kong could be set to get its first university in which theology is a compulsory subject. A 470-year-old Catholic Church order, the Society of Jesus, is to bid for one of six sites earmarked by the government for the building of private universities. If it wins the 16-hectare site in Fanling - a former colonial military camp and the biggest piece of land on offer - the society, which is headquartered in Rome, would make theology a core and compulsory area of study for students. The Jesuits stressed that it would be a university for everyone, regardless of their religion. Planners for the society, who submitted an expression of interest to the government, are among nine institutions vying for the massive Queen's Hill site. Reports said earlier that interested parties included Chu Hai College of Higher Education and a number of other unnamed foreign institutions. Officials are reviewing proposals and have yet to set a time frame for a decision. The tender is expected to becompleted by the end of next year. Religious studies will be part of a two-year core curriculum, that also includes psychology and philosophy. "We have an emphasis on values. The education features of the Society of Jesus is that we don't force students to accept one set of values but we will introduce values that we think proper to students," the Reverend Stephen Chow, the supervisor of Jesuit school Wah Yan College, who is a also a key planner for the Hong Kong university bid, said. After papal authorisation in 1540, the Society of Jesus has grown into one of the largest religious orders in the world and has dozens of universities across the globe. Formed by Spanish knight Ignatius of Loyola, the Catholic order entered China in the late 16th century, initiated by a missionary led by St Francis Xavier. But a Jesuit university has been unheard of in China and Chow said it was the main reason why the society was bidding for the site. "Hong Kong is an internationalised city," he said. Chow said the university would have three main streams: humanities, social science and science. Subjects such as Chinese history and literature will also be provided but the university may not have a business major. It plans to enroll 3,000 students initially and provide four years of boarding. Under the government's plan, the Fanling site can accommodate 8,000 students. Describing it as a liberal arts college, Chow said it would provide students with a new perspective to view world affairs.

A policy that requires overseas employees on the mainland to pay up to 22 per cent of their wages into the country's social security fund threatens to drive thousands of companies and professionals out of business. The deputy chairman of the Federation of Hong Kong Industries, Stanley Lau Chin-ho, described it yesterday as the last straw for manufacturers already struggling with rising prices, soaring wage bills, a strong yuan and chronic power and labour shortages. It comes into effect on July 1. "If manufacturers are lucky, they may be able to pass some of the extra costs to customers," Lau said, but it would be survival of the fittest. Under the Social Insurance Law passed last October, all overseas people who have worked on the mainland for more than six months will have to pay social security insurance. While details of the regulations are still being worked out, officials have made it clear that only foreign nationals whose countries have signed bilateral social insurance agreements with the mainland will be exempted. Only Germany and South Korea have signed such treaties with Beijing. Hong Kong has no such arrangement and to do so would require the city to change its Mandatory Provident Fund policy to exclude mainland workers. A spokesman for the Constitutional and Mainland Affairs Bureau said it was not responsible for negotiating such an agreement and had no idea which department would handle such a task. Alex Fong Chi-wai, chief executive of the Hong Kong General Chamber of Commerce, said it had submitted its members' concerns to the mainland authorities but had not received a reply. The Chinese General Chamber of Commerce said it was consulting members for their opinions. "If the law is broadly applied, this will raise the operation costs of all foreign nationals, including Hong Kong people working on the mainland," Fong said. "We hope the regulation will contain a special waiver." The new law was formulated six years ago as Beijing took steps to establish a social security network. It was first tested in Guangdong on a voluntary basis. Now Beijing wants to make it compulsory and extend it to the rest of the country. It is estimated there are 600,000 foreign workers on the mainland. This does not include the 200,000 Hongkongers. Anyone evading the payment risks a hefty fine of up to three times the due contributions. Overseas workers would be eligible for payments after contributing to the scheme for over 15 years. They could also arrange for their children to inherit their pension accounts. Alex Pun Wing-kit, a 31-year-old civil engineer from Hong Kong who will be posted to Nanjing in November, said the new policy would force him to rethink his job. "I'm not happy to see a significant portion taken out of my pocket after already contributing to Hong Kong's retirement pension. It's unlikely that I will work on the mainland permanently. I don't know when and how much I am getting back in return after all of the money is taken out," Pun said. "I'd seriously look into staying in Hong Kong if I have to bear the extra social security burden myself." It will be employers, however, who will bear the brunt of the new law with contributions for their overseas employees on the mainland. In some cases it could amount to 40 per cent of workers' salaries. David Hui Cheung-wing, who runs factories in Guangdong, said that since 2005 they had already been asked to pay the equivalent of 20 per cent of their Hong Kong workers' monthly salaries into local social security funds. He said politicians in the city seemed to know little about it. "About a year ago, I asked Rita Fan Hsu Lai-tai [NPC Standing Committee member] about the rule, and she said it had not been passed yet," Hui said. "But authorities have been charging me for years. This is puzzling." Hui said he had to pay an additional HK$1.2 million a month for the insurance funds. Many employers are expected to transfer the extra costs to their employees, possibly leading to more labour strife and office rebellions. Tsui Li, managing director of a Hong Kong-based logistics firm with six branches on the mainland and two Japanese staff working in its Shanghai office, said the new regulation would significantly drive up operational costs. "I'm quite angry to hear this as no concrete details have been released, except one line of ambiguous regulation," said Tsui, whose company had tried preparing for the law six months ago but was unsure where to start. "I'm quite angry to hear this. Mainland government officials are shifting the responsibility of providing social security for its people to corporations. It is not fair for businesses to shoulder that much." She said her foreign staff would not be able to make use of local public medical services anyway even after contributing to social insurance due to language barriers. "With the law coming into effect at such short notice, we are worried that the work visas of our foreign staff might not be extended all of a sudden after July." Joe Leung Cho-bun, professor of social administration at The University of Hong Kong, said the mainland's pension rate was one of the highest in the world and it was a concern that the system was solely operated by the government without an independent monitoring body. He said other jurisdictions around the world, such as the United States, Singapore and Hong Kong, required foreign workers to contribute to social insurance or retirement provident funds. But Leung said the system on the mainland was extremely complicated and also lacked transparency. "Contributions made by corporations and the labour force today are being pooled to subsidise retiring workers. The government may run out of money to cover workers' retirement pensions in the future." But the mainland authorities regard the new law as a move to help foreign workers there. Lu Xuejing , a social security expert at Capital University of Economics and Business, told China Daily that although the government's move would increase the burden on employers, bosses should take the chance to realise that it was their responsibility to pay social security for everyone they employed, no matter where they were from. Lu said the rule would also help foreign workers from developing countries who were not covered by expatriate packages to access subsidised local medical services.

"Unconfirmed rumors" say actor Nicholas Tse allegedly took a swing at actor Edison Chen during a recent encounter among Chen, Tse and Tse's wife, actress Cecilia Cheung, at Hong Kong's Four Seasons Hotel, reports. Cheung allegedly got into a frenzy as security guards rushed to Chen's rescue, the website cites the unverified rumors as saying.Proof that media must be careful about what they print is the fact that Tse's agent is considering suing the Hong Kong-based Apple Daily for a "false" May 30 report that Tse is seeking separation from Cheung for making amends with Chen, reports. Cheung and Chen became bitter foes after sex photos of Chen and several starlets, including Cheung, flooded the Internet three years ago. But the two appeared chummy when they - by chance or by scheming, as some speculate - recently ended up sharing the first-class cabin of the same flight, media report. "I (Nicholas Tse) never sent letters asking for a legal separation from Cheung," Tse's agent, Emperor Entertainment Group's Mani Fok, posted on a micro blog. "And I reserve the right to initiate legal proceedings against Apple Daily for starting the rumor." The couple's close friend, Hong Kong TV hostess Eileen Cha, confirmed the pair faces a relationship crisis, but says they haven't split. TV host and actress Dee Hsu says she enjoys meeting her husband in the buff when he comes home in hopes of arousing him sufficiently to impregnate her with a boy, reports. When not clad in her full birthday suit, she often loses the bra but keeps the shirt, which she says also hits her hubby's "on" switch. But there's a catch, she says. "Because my father-in-law lives with us, my husband says I should remember to wear a bra," Hsu says. "But when I enter my private room, I always strip down to excite my husband in hopes of getting pregnant." Hsu reportedly once devoured a gecko and then another larger lizard species to make her "strong" enough to bear male offspring. Kelly Lin has confirmed suspicions that she is far ahead of Hsu's game and has been with child since before her wedding. But unlike Hsu, Lin's husband and mother-in-law are crossing their fingers for a girl, reports. Lin denies accusations that her March 22 march down the aisle was a shotgun wedding. "We only knew (about the pregnancy) after the wedding," she says. "My husband is happy and touched." She says she plans to have another child after her firstborn arrives in October. "But I don't want to gain too much weight," Lin says. Sister Phoenix - the 25-year-old who became an Internet sensation after passing out pamphlets of lofty demands for a boyfriend despite her, um, lack of conventional beauty - has been inquiring about 76-year-old vitriolic author Li Ao's romantic availability. She has made her interest clear on her micro blog. "Who is Li Ao? What does he do? How old is he? Is he handsome? Has he married? Is he wealthy?" she asks of the Taiwan writer, whose main claim to fame is badmouthing celebrities. Netizens immediately responded with thousands of comments and reposts that follow the tradition of deriding Phoenix, whose actual name is Luo Yufeng, for her appearance and antics.

 China*:  June 6 2011  Share

Li beats Schiavone: French Open Women’s Final - Li Na, a 29-year-old from Wuhan, China, became the first man or woman from Asia to win a Grand Slam singles title on Saturday, beating defending champion Francesca Schiavone from Italy, 6-4, 7-6(0). Li, cool and calm as she won point after point in the second-set tiebreaker, fell onto her back when Schiavone’s last shot landed long. The crowd at Court Philippe Chatrier began the day decidely rooting for Schiavone but slowly turned its support to Li, who matched her well-known power with surprising speed and grace. Li, whose ranking will rise to a career-high No. 4 on Monday, has made the finals of the past two Grand Slams. But winning at Roland Garros was a far bigger surprise, since clay is her least-favorite surface. But Li looked like a veteran on the slippery surface, chasing down Schiavone’s array of shots and firing precision two-handed backhands to the inside edges of all the lines. The question now broadens to the after-effect for tennis. Tens of millions were expected to watch the match on television, and Li — already a household name and face — may have provided the impetus for a new revolution. Check back for more coverage of the French Open, including Chris Clarey’s final roundup of the women’s final.

Friendly tone to Sino-US talks - Outgoing US defence secretary and his Chinese counterpart conciliatory despite ongoing tensions - Continued Sino-US military relations - even in times of trouble - are critically important, outgoing US Defence Secretary Dr Robert Gates told his Chinese counterpart, General Liang Guanglie, last night. The pair's final meeting before Gates leaves office later this month opened with both defence chiefs acknowledging improvements in military ties compared to the chill of last year. Liang noted "progress" while Gates said the relationship was moving forward, despite considerable work still ahead. "As I leave office at the end of this month, I believe that our military relationship is on a more positive trajectory," Gates said. In the face of ongoing flux in the security situations at both regional and international levels, it was crucial for both sides to ensure healthy and stable development, China News Service quoted Liang as telling Gates. The pair met for an hour before the opening of the informal Shangri-La Dialogue on security issues in Singapore. Liang's appearance marked the first time Beijing has sent a ministerial-level official to the meeting, attended by defence chiefs from across the wider region and beyond. Officials close to the meeting said a wide range of regional issues were touched on, though Gates' appeal for an ongoing relationship appeared to anticipate troubles ahead. Liang, on the other hand, told Gates the two countries should see each other as partners, not rivals. While some Southeast Asian states continue to urge a robust US position on rising tensions over the South China Sea, Taiwan looms as another potential Sino-US sticking point. Some US senators are calling for sales of F-16 jet fighters to Taiwan - a move certain to rile Beijing, which froze ties after earlier weapons sales in February last year. Ahead of the meeting, Gates said the US would not try to "hold down" an emerging China, and he acknowledged its role as a global power. But he added that Beijing had learnt from the folly of military build-up in the former Soviet Union, and would concentrate on its operations within Asia. Liang also met his Vietnamese counterpart Phung Quang Thanh last night - a meeting that comes amid fresh Sino-Vietnamese tensions over oil exploration in the South China Sea. Opening the conference , Malaysian Prime Minister Najib Abdul Razak urged restraint in a region that must never again degenerate into the "bilateralism of the cold war".

Chinese Vice-President Xi Jinping and Italian Prime Minister Silvio Berlusconi witnessed the signing of a series of deals worth $3.3 billion after their meeting on Friday. Among the 16 agreements, 14 were signed by China Development Bank, China National Petroleum Cooperation, Huawei, Guangzhou Auto and other Chinese companies with Italian companies, covering areas including telecommunications, medicine, finance, automobiles and new energy. The other two agreements were on scientific research cooperation and innovation. Xi is currently on a four-day visit to Italy on the occasion of the country's celebration of its 150th anniversary as a unified state. He also met Italian Foreign Minister Franco Frattini on Friday, who said Italy is willing to enhance ties with China, which is not only a market for Italy, but also a dialogue partner on global political issues. China is a respected partner and Italy attaches great importance to China's economic potential, said Frattini, who will visit China in July. Tao Jingwen, president of Huawei's West Europe Region, told China Daily after the signing ceremony that the company signed contracts worth $1.3 billion with Telecom Italia and Linkem, accounting for more than one-third of the total value of all the deals. Under the contracts, Huawei will provide a five-year broadband service to Italy and sell telecommunication equipment worth about $360 million to the country, he said. Over the past 10 years, Huawei has offered about 3,000 job opportunities to Europeans and purchased equipment worth about $300 million from companies in the European Union, said Tao. Xi's visit will take bilateral ties to a new level, said Zhao Junjie, a Beijing-based senior researcher of European studies at the Chinese Academy of Social Sciences. "China has shown the importance it attaches to ties with Italy, and Italy has also expressed its willingness for more practical cooperation with China," Zhao said. "Italy will become another key partner of China in Europe." China and Italy established diplomatic ties in 1970, and in recent years the two countries have become important trade partners. China is Italy's 10th largest trading partner, while Italy is China's fourth-biggest trading partner in the EU. The bilateral trade volume between China and Italy is expected to reach $80 billion by 2015, almost double the $45.1 billion in 2010. Currently, more than 2,500 Italian companies have invested in China. According to Zhao, high-tech cooperation will be a source of more economic benefits for both countries in the future. Xinhua News Agency contributed to this story.

S China completes early-rice planting amid drought - A total of 56.95 million mu of the country's farmland (about 3.8 million hectares) was affected by drought, the country's top drought relief authority said Friday. Farmers plant middle-season rice in a crop field in Nanhu village of Xiaogan city, Central China's Hubei province, June 4, 2011. Even so, early-season rice planting of 58 million mu was almost completed in five south China provinces, it added. The Office of State Flood Control and Drought Relief Headquarters (SFDH) said amount of drought-stricken farmland had increased by 7.18 million mu from the end of May in the provinces of Jiangsu, Anhui, Jiangxi, Hubei, and Hunan. The five provinces had mobilized over 9.69 million people to fight the drought, said the SFDH Office. The Three Gorges Dam has also been releasing more water to solve water shortage problems downstream, it said. Shu Qingpeng, deputy head of the SFDH Office, said the dam is currently discharging water at a rate of 12,500 cubic meters per second. The Three Gorges Dam has discharged 4.86 billion cubic meters of water since May this year, said Shu.

Clay sculptures simulate renowned scroll painting "Riverside Scene on the Qingming Festival" - A visitor takes pictures among figurines in a clay sculpture park built to simulate the scene in a renowned Chinese scroll painting "Riverside Scene on the Qingming Festival" in Changzhuang township, Tangshan city of North China's Hebei province, June 3, 2011. The park, with hundreds of handmade sculptures, was officially open to the public on Friday.

Hong Kong*:  June 5 2011

Solar power cells get even smaller - City team produces a thin film with thickness comparable to one-tenth of a piece of human hair - A student demonstrates solar power cells developed by local researchers. A panel is lined up on a toy car to show its thinness. Ultra-thin solar power cells have been all the rage among green enthusiasts. Now, a group of local researchers say they can do it cheaper and thinner than anyone else. The team, led by physics professor Xiao Xudong, says it has come up with the world's thinnest solar power cells, called CIGS, made of copper, indium, gallium and selenium. "When mass production technology for CIGS cells matures, we 8believe that it will be the most competitive solar cell," he said. The cells are light enough to serve as portable mobile phone chargers, and thin enough to be rolled up like papers. The chargers can be as thin as 0.1 millimetres. Line them up as solar panels on roofs or outer walls and they can generate enough electricity for a household, doing it cheaply enough to replace coal. "The cell is a thin film with thickness comparable to one-tenth of a piece of human hair," said Li Quan an associate professor in Xiao's team. CIGS are 50 times thinner than traditional silicon solar cells and half the cost. The Chinese University scientists say they can make it even cheaper. For a household using around 10kWh of electricity a day, with power generated by coal, the monthly cost would be around HK$300. 8Installing CIGS panels to supply the same amount of electricity would cost about HK$250 a month. Buying and installing the panels would cost HK$30,000 but they could run for 20 years without requiring maintenance, Xiao said. Xiao expects that chargers and large panels to be manufactured in 1-1/2 year's time if they have a HK$600 million investment. "It is estimated that 45 per cent of total electricity consumption in Hong Kong can be supplied by solar cells if they are installed on all roofs in the city," he said. CIGS panels can be rolled up and put in a bag. They can be integrated into backpacks and tents for charging personal electronic products. A charger the size of a hand can fully charge a mobile phone in three hours under sunlight.

MGM China makes tepid HK debut - Pansy Ho, chairwoman and executive director of MGM China Holdings Limited, poses with Lawrence Fok, of the HKEX at the stock exchange in Hong Kong on Friday. MGM China Holdings rose a tepid 2 per cent on its Hong Kong debut on Friday as falls in rival casino operators muted sentiment for investors chasing exposure to a boom in Macau, the world’s largest gaming market. Macau’s gambling revenue, now about four times larger than that of neon rival Las Vegas, has surged to record highs over the past year, fuelling a spike in Hong Kong-listed casino operators. MGM China, controlled by MGM Resorts International and Hong Kong billionaire Pansy Ho, was an attractive bet due to its discount to its peers even after pricing its US$1.5 billion initial public offering at the top of its indicative range, analysts said. MGM China gained as much as 6 per cent during Friday’s trading session but a pullback elsewhere in the sector weighed. “You can see it (MGM China) is under pressure because its peers falling 4-5 per cent,” said Ken Chen, analyst at Jefferies & Co in Hong Kong. “In terms of the overall market people are still confident. I am still confident, I am still bullish on the market.” The former Portuguese colony has been transformed from a den of smuggling and piracy in the South China Sea into a glitzy ensemble of gold-plated edifices, luxury retail outlets and Michelin star dining. Macau said January-May revenue totalled about US$13 billion eclipsing Las Vegas’ US$10 billion for the whole of last year. MGM China is the second-smallest operator by market value out of the six licensed casino companies. With a market capitalisation of about US$7 billion, it is around a third the size of rival US operator Las Vegas Sands’s Macau unit Sands China , valued at around US$21 billion. The stock is backed by cornerstone investors including Kirk Kerkorian and hedge fund manager John Paulson and its IPO helped make Pansy Ho Hong Kong’s richest woman. With its towering bronze, gold and silver property on Macau’s main peninsula, MGM China has a market share of about 11 per cent in Macau – compared with about 30 per cent held by SJM, the largest casino operator. SJM has nearly three times the revenue of MGM China. MGM China was offered at around 19 times forecast this year, compared with around 25 times for Sands China Ltd, 26 times for Steve Wynn’s Wynn Macau Ltd and 27 times for Galaxy Entertainment Group (SEHK: 0027). “It is much cheaper than Sands and Wynn. No matter if you are talking about PE and EBITDA,” said Gabriel Chan, analyst at Credit Suisse in Hong Kong. Investors have piled into operators such as SJM Holdings Ltd, owned by Pansy Ho’s father, Macau casino mogul, Stanley Ho, sending its shares up 230 per cent in the last 12 months. Galaxy Entertainment, which opened a US$2 billion property in May, gained 370 per cent in the same period. Caution that record revenue gains will soften in coming months on a lack of catalysts such as long public holidays also prompted investors to cash in on a winning run and tempered gains in MGM China. Shares in rival casino operators fell on Friday as buyers shifted out of Galaxy, down 6.6 per cent and SJM, down 4.9 per cent. After a sluggish start to the year, Hong Kong has attracted some high profile listings this year, including commodity giant Glencore and upcoming offerings from Italian fashion house Prada and luggage maker Samsonite. An estimated US$54 billion in IPOs is expected to be raised in the city this year, according to Thomson Reuters data. That’s US$1 billion more than last year, a record year. The proceeds of the MGM China listing will be pocketed by Pansy Ho, Hong Kong’s richest woman, after cashing in her stake in the company. Chairwoman and executive director of MGM China, she has retained between 26-29 per cent of MGM China’s shares. The petite, 48-year old divorcee, once dubbed “party girl pansy” is critical to MGM China’s operations in Macau due to her extensive government and regulatory contacts. Pansy, who was involved in a high profile legal spat with her father over his multi billion fortune earlier this year, has said she will help develop the gaming firm’s presence in Macau, Greater China and Taiwan.

Hong Kong stands to lose HK$480 billion worth of economic benefits over the next 50 years if the airport does not have a third runway in 20 years' time, according to Airport Authority calculations. In a blueprint outlining the airport's traffic forecast and development strategies, officials predict that by 2030 the airport will face annual demand for 602,000 aircraft movements, 97 million passengers and 8.9 million tonnes in cargo volume - nearly double present levels. This is expected to contribute HK$167 billion to gross domestic product by 2030 in terms of jobs and income created by the industry. Translated into an economic rate of return - a calculation of the return on investment - the document says the runway will return HK$912 billion over the 50 years to 2061 on an investment of HK$136.2 billion (adjusted for inflation). But it says if the proposal fails and the airport is limited to the existing two runways, Chek Lap Kok will reach full capacity by 2020 and have to start turning away cargo and passengers to rival airports. "We could resort to other expansion plans, but that could at best meet the demand until 2022," an 8authority spokesman said. The alternative plan - which covers terminal one's apron and passenger concourse, travellators, road networks and the construction of a high-speed baggage system - would 8require an investment of HK$42.5 8billion. The cost of this expansion is less than a third of the estimated HK$136.2 billion for a third runway and it would contribute HK$120 billion to gross domestic product by 2030 and a return on equity of HK$432 billion over 50 years. This would seem to make it a more attractive option. But the authority argues the HK$120 billion would mean the aviation sector contributed just 3.3 per cent to overall GDP, a drop from 4.6 per cent in 2008. More importantly, the authority says without the runway the airport would cease to grow. "If we cannot open new destinations or enhance flight frequency, new airlines cannot come and less profitable routes may be sacrificed for more profitable ones, eventually cutting our number of destinations and connectivity to the world," authority chairman Marvin Cheung Kin-chung said. Another drawback with a runway operating at full capacity is its reduced ability to handle emergencies or bad weather and the smallest incident could lead to lengthy delays, the authority says. The authority spokesman said analysts had considered having take-offs and landings on the same runway to maximise the number of plane movements, but they gave this up eventually due to local terrain, safety and airspace constraints.

Battle Over Hong Kong Airport Expansion Begins - A proposal to build a third runway at Hong Kong's airport, in what would be the city's costliest infrastructure project ever, underscores the urgency with which this Asian financial and logistics hub is expanding capacity as air traffic in the region is propelled by growth in mainland China. Airport Authority Hong Kong, the government-owned operator of the city's Chek Lap Kok airport, Thursday kicked off a three-month public consultation on the new runway, to be built on reclaimed land at a cost of about 86.2 billion Hong Kong dollars (US$11.1 billion) at 2010 prices. The project, which includes new passenger terminals, could cost HK$136.2 billion in nominal terms. Some experts warn that a lack of air-traffic coordination with neighboring airports, as well as tight restrictions on the use of Chinese airspace, could cap the growth in Hong Kong's air traffic, undercutting the project's returns. Hong Kong's airport is within 150 kilometers radius of four other major civil airports in the Pearl River Delta, an industrial hub and China's busiest airspace. The four—in Guangzhou, Shenzhen, Macau and Zhuhai—operate hundreds of scheduled domestic and international commercial flights. The region's airspace is managed under two separate air-traffic control centers—Hong Kong and Guangzhou—in a further complication matters, mainland Chinese controllers use meters and kilometers to measure height and distance, while those in Hong Kong use feet and nautical miles, which are more commonly used in international civil aviation. Zheng Tianxiang, a professor at Sun Yat-sen University in Guangzhou who specializes in transport, said a combined air-traffic control center could significantly boost efficiency and reduce bottlenecks. "Airspace congestion is part of the reason why Hong Kong's two existing runways aren't fully utilized yet," he said. The existing airport opened in 1998 at a cost of HK$55 billion. Prices of construction materials such as steel and aluminum have soared since then. The airport, which set a single-day record of 1,003 flight movements—take-offs and landings—on April 22, has battled congestion in recent years. Think tank Hong Kong Ideas Centre estimates it may reach saturation by 2017 and be forced to turn away flights. The city's airport authority has said that the two runways at Hong Kong airport will be able to handle a maximum of 68 aircraft movements per hour in 2015, from about 60 now but well below the designed capacity of more than 80, according to some earlier estimates. Mr. Zheng said a combined air-traffic-control system could help the five area airports more effectively deal with its congested airspace. China's airspace is mainly controlled by the military, making China one of global aviation's most restrictive countries. Civilian flights are allowed to operate only on very limited routes and altitudes. Serious delays at times of inclement weather and military activity are common. Though the airspace above Hong Kong isn't under Chinese military control, many flights pass above mainland China. Restrictions that affect the city include one requiring planes to enter or leave Chinese airspace from the city at an altitude of around 5,000 meters during most of the day. To gain enough altitude, aircraft heading north of the city must first fly south before reversing course, while aircraft arriving from the north need to fly past Hong Kong to lose enough altitude before landing. These restrictions often add 10 to 15 minutes to flight time. Peter Lok, a former head of civil aviation in Hong Kong, cited these existing bottlenecks as some of the reasons why a new runway shouldn't be constructed in Hong Kong. He said Hong Kong should seek cheaper alternatives, such as working with other neighboring airports to better allocate flights. "While an expansion is necessary, the real question is which city the third runway should be located in," he said, noting that Hong Kong could get extra capacity from Shenzhen's airport by siphoning traffic to the adjacent city. Norman Lo, the current head of the civil aviation department, said Thursday the Hong Kong government has regular meetings with aviation authorities in China to discuss ways to enhance air traffic coordination and optimize air routes in the region, but he declined to elaborate.

The Hong Kong stock exchange stepped up its competition with Singapore by approving an estimated US$650 million spin-off of PCCW (SEHK: 0008)'s telecommunications units into the city's first listed business trust. PCCW, chaired by media tycoon Richard Li Tsar-kai, was given the approval late on Thursday. The news boosted PCCW shares as much as 7 per cent to a five-week high on Friday, bucking a 1.1 per cent fall in benchmark Hong Kong share index. The approval came after PCCW appealed a decision made in April by the exchange’s listing committee to block its plan for the city’s first listed business trust. Hong Kong Exchanges and Clearing (SEHK: 0388, announcements, news) does not yet have regulatory framework in place to allow business trust listings and is working to have the rules in place within the next few months. That will establish a level playing field with Singapore Exchange, which already allows such listings. PCCW is working with Hong Kong regulators to finalise a structure that would enable the business trust to operate within Hong Kong’s existing regulatory framework. In March, tycoon Li Ka-Shing, Richard Li’s father, listed the ports business of Hutchison Whampoa (SEHK: 0013) as a business trust in Singapore, rather than in his home city of Hong Kong. Business trusts are popular with companies because they allow them to raise cash without relinquishing control. In a business trust model, the trust sells units to investors, but control of the business is left with the trustee manager, who is usually an affiliate of the company establishing the trust. “The news is having a short-term [upside] impact on the stock price, but for the spin-off itself, it doesn’t really excite the market very much when there are many IPOs around,” said Patrick Yiu, a director at CASH Asset Management. “On the business front, their businesses are set to be the same with rather stable growth prospect for telecom industry in a mature market like Hong Kong,” Yiu added. PCCW plans to distribute between 5 and 10 per cent of the stapled securities of the business trust through a bonus issue to PCCW shareholders. Some analysts estimate the PCCW spin-off will raise about HK$4-5 billion (US$514-643 million). “The business trust will have increased financial resources and a clearer focus on the mature and stable cash-flow generating telecommunications business,” PCCW said in filing to the stock exchange late on Thursday. PCCW stock rose as much as 6.7 per cent to HK$3.17, its highest since April 27. By later afternoon, the stock gave up some gains to trade at HK$3.10. “The stock jumped in response to the news, but it might overshoot and we would advise investors to wait for further clues such as how likely it could obtain minority shareholders’ support,” said Linus Yip, chief strategist at First Shanghai Securities. Since the spin-off will be via a trust, dividend yield is seen as the main attraction for investors. PCCW said the company intends to maintain at least the same level of dividend distribution to shareholders as last year for the three years following the proposed spin-off. After the spin-off, PCCW will retain control of the telecommunications business, its controlling stake in property business unit PCPD (SEHK: 0432) and a 100 per cent interest in each of the solutions business and the media business, it said. PCCW intends to hold 55 per cent of the trust, selling the remaining 45 per cent the listing process. “The structure being discussed with the regulators involves the listing of stapled securities, with each stapled security comprising a unit in a trust and a share in the holding company of the telecommunications business,” PCCW said. Operations of the unit will comprise local telephony services, local data services, international telecommunications services and mobile services, it said. The proceeds will be used to cut debt and to generate funds to expand PCCW’s businesses, the company said. Up to 30 per cent of the offering will be made available to shareholders on a preferential basis, it said and the spin-off is subject to shareholder approval.

 China*:  June 5 2011

Shanghai set to expand port at Yangshan - The project will raise capacity by 40pc at the world's busiest container facility when completed in 2015 - Shanghai is about to start the fourth phase of the expansion of the Yangshan Port, a project that will add more than 40 per cent to the handling capacity of the deepwater port. The city government, awaiting a nod from the National Development and Reform Commission, plans to spend more than 10 billion yuan (HK$12 billion) on the development of new deepwater berths, according to Wang Xuan, chief engineer with Shanghai Tongsheng Investment, in charge of building the Yangshan port. The expanded project, expected to be completed in 2015, will have an annual capacity of four million 20-foot equivalent units (teu). Shanghai, the world's busiest container port, handled 29 million teus last year. At Yangshan, which became operational at the end of 2005, the throughput last year topped 10 million teus, exceeding its designed capacity of 9.3 million based on its three completed phases. "The timing of expansion is in compliance with the real business growth," Wang said. "We were prepared for this new phase of construction." Yangshan Port is a megaproject endorsed by the central government to reinforce Shanghai's bid to become a global shipping centre. The Yangshan Islands are connected to the coast by a 32-kilometre bridge. Benefiting from the affluent Yangtze River Delta, container throughput in Shanghai grew faster in the past decade as the region's exports and imports boomed. Despite leapfrogging Singapore to become the world's No1 container port last year, Shanghai has yet to transform itself into an international shipping hub because of the small volume of international transshipments via the city. "Shanghai Port has to fine-tune services and operations before it can really compete with foreign rivals to vie for transshipments," said Shao Xiaoping, director of the Yangshan Customs House. "We still have a long way to go." The customs and port authorities have been striving to increase efficiencies to attract more international shipping lines. The customs house in Yangshan streamlined customs procedures, cutting the time for customs clearance to as little as two hours, from one day previously. Shanghai is facing competition from neighbouring ports such as Ningbo at home and Busan in South Korea to consolidate its role as a key shipping centre in East Asia. Transshipments account for only 5 per cent of the total container throughput in Shanghai. Shao said Shanghai would not be universally recognised as an international shipping hub unless 40 per cent of the cargos were transported to other countries via the city.

The Chinese mainland has banned its restaurants from selling or using beverages, food products and food additives from 10 producers in Taiwan that are suspected to have been tainted with a cancer-causing plastic additive. The State Food and Drug Administration issued an urgent notice on Thursday, ordering all restaurants not to purchase or use food and food additives containing plasticizers. A food processing company in Guangdong province was found on Tuesday to have imported ingredients from Taiwan that included the illegal additive DEHP, according to the Guangdong food safety authority. The authority announced on Wednesday that Yuyan Food Company in Dongguan had brought the illegal items into the country before reselling some to businesses in other cities in the province, including Guangzhou and Jiangmen. Officers have detained suspects from the company and are trying to track down consignments of illegal additives that have been resold, so they can be recalled. The investigation into the use of illegal additives, which was initiated by the provincial government, was started in the aftermath of a high-profile scandal involving Taiwan drinks that contain DEHP, a type of plasticizer. The additive is used to make plastic soft and pliable and can affect hormone balances in young people. It is illegal to put DEHP in any food product. Guangdong residents are being encouraged to report to the authorities any illegal products still being sold. Instant noodles sold in Guangzhou have also been found to contain DEHP and DBP - another type of plasticizer - according to the research of Liu Chunhong, a food expert at South China Agricultural University. The chemicals had contaminated the noodles from the plastic packages that contained the instant noodles. The Food Safety Commission of the State Council has also required other places nationwide to carry out similar inspections to ensure food safety. Blacklisted beverages produced by problematic Taiwan enterprises were found in supermarkets in Shanghai and Nanjing, the capital of Jiangsu province. Local food safety authorities have ordered them to be pulled from the shelves. In reaction to public concern, the Ministry of Health issued an emergency notice on Wednesday, adding DEHP to the list of inedible materials that are likely to be illegally added to food. A hotline was also set up so that consumers can call 12320 to ask about the dangers posed by DEHP. On Tuesday, the top quality watchdog issued a temporary ban on importing food and drink from Taiwan enterprises that have been identified as producing food contaminated by DEHP. The ban listed 10 enterprises as problematic, and sports drinks, juices, tea drinks, fruit jams, syrups, tablets, powders and food additives produced by these 10 enterprises will be banned from entering the mainland market. On May 23, Taiwan's health authorities announced that DEHP had been found in some bottled beverages and dairy products, and with an investigation ongoing, they found that more than 200 enterprises had been implicated and 500 kinds of products contaminated. On Thursday Taiwan authorities approved a draft bill that will lead to a 33-fold increase in the maximum fine for lacing food items with banned chemicals as the island battles its worst food scare in decades. The change to the food sanitation law, which now awaits the legislature's final approval, also makes it possible to sentence violators to up to five years in jail, compared with three years now. It allows a fine of up to NT$10 million ($345,000) for violators, up from NT$300,000 before, Taiwan's "cabinet" said in a statement. The bill is expected to be submitted to the island's legislature and approved before it adjourns on June 14.

Hong Kong*:  June 4 2011

Billionaire Lee Shau-kee, chairman of Henderson Land (0012), says that buying plots with old buildings on them is more profitable than acquiring new sites for development. Still, Lee is keen to acquire a much- eyed plot on Borrett Road being auctioned on June 9. "Everyone is interested in it," he said, though he hopes it will move at "a reasonable price." Henderson Land is currently involved in 23 development projects. Conditions appear rosy for another firm controlled by Lee - the hotel- and mall-focused Miramar Group (0071). Its hotel business saw a 28-percent jump in guest numbers since January, and the average room rate rose 25 percent to HK$1,800 per night. Its shopping mall operations also looks promising. On that, managing director Martin Lee Ka-shing said rents at The Mira will definitely go up after the Tsim Sha Tsui mall is refurbished. And the strong performance of the initial public offering of restaurant chain Tang Palace (1181) last month may prompt the group to spin off its own catering business, the junior Lee noted. In another field, "our Japan tour business has been reviving after the earthquake in March," said Martin Lee. Asked about the equity market, Lee Shau-kee expects the Hang Seng Index to fluctuate by 10 percent around the 23,500 mark throughout the year. "Only when the HSI goes up to 24,000 to 25,000 could our bonus warrants perform better," he said in a reference to a HK$58 per-share warrants issued last year on Henderson Development (0012). The warrants have not performed well this year. The Lees were speaking after the annual general meeting of Miramar Group. Meanwhile, saying a buyer problem involving 39 Conduit Road was "old news," Lee noted that deposits equal to 10 percent of prices of units had been forfeited.

China’s Ministry of Finance plans to issue up to 10 billion yuan (US$1.5 billion) in bonds in Hong Kong, its third debt issue denominated in the Chinese currency in the territory, two people familiar with the situation said on Thursday. The final size of the issue has not yet been fixed, said one of the people. They declined to be named because the plans were not yet public. China issued 6 billion yuan of debt in 2009 and 8 billion yuan in debt last year.

Starbucks said on Thursday it signed an agreement with its joint venture partner in South China, Maxim's Caterers that gives the world's largest coffee chain full control of more than half of its retail stores in the mainland. As part of the agreement, Starbucks has assumed 100 per cent equity of its business in the Chinese provinces of Guangdong, Hainan, Sichuan, Shaanxi and Hubei, and the municipality of Chongqing. Maxim’s has acquired Starbucks’ remaining equity stake in the Hong Kong and Macau markets. “Full ownership of our stores in Central, South and Western China is part of our broader strategy to build China as our second home market outside of the US ...,” John Culver, president, Starbucks Coffee International said in a statement. The deal is part of the company’s plan to have 1,500 stores in the mainland by 2015.

New Director of Public Prosecutions Kevin Zervos believes his appointment enhances Hong Kong's credentials as an international city. It also marks a milestone for the Department of Justice's prosecutions division because the Australian is the first in its history to hold a masters degree in human rights, a qualification he obtained from the University of Hong Kong in 2009. Both his predecessors were expatriates and it would not have been too much of a stretch to have predicted that 14 years after the 1997 return of sovereignty, the person in charge of who does and doesn't go on trial would have been Chinese. "It reflects the fact that Hong Kong is an international city," Zervos says. "I came here nearly 20 years ago. Hong Kong is my home, I'm committed to Hong Kong. It's my life, it's my community. "Becoming DPP is a great honour and I would like to think it was due to my hard work. I think that reflects well on Hong Kong. I have great confidence in the people who make up the prosecution service. They are keen, bright, public-spirited and they are part of the next generation that will carry the baton forward. I am very confident that we will be able to maintain the high standards of the past and take them into the future and probably do better. "The commitment is so strong, it is genuine. People who work here do so because they have a civic sense of duty. Do not underestimate how bright they are." While the top prosecutor has struggled to find the time to master Cantonese in two decades here - "the Cantonese that I have picked up in court is not the Cantonese you would want use in open discussion'' - he says his background of being raised in Australia's Greek migrant community had stood him in good stead, and allowed him to develop an affinity for the city and its people. "I've learned what it's like to go through difficult times and to appreciate a fair and just society. I strongly believe in this principle. It's something I want to make sure our prosecutors understand - the underlying policy of our work is that everybody is treated equally before the law and the law is applied equally to everybody. "Being of Greek background, I also come from an old culture and I have noticed quite a number of similarities between the Greek culture and the Chinese culture. My own background is not dissimilar to the Hong Kong story, so I have an affinity with the people and the place.'' And how does he relax: "I read law. But I also enjoy meeting people, getting out, experiencing the community, its richness and great diversity and I bathe in it whenever I chance to. Hiking, water sports, a bowl of noodles or simply shopping. Everything is available for you here."

The mainland remained the largest source of talented migrants to the city, figures on the quality migrants scheme showed yesterday. The Immigration Department figures showed that of the 1,486 people admitted to Hong Kong under the scheme in the past three years, 1,136 came from the mainland. Of these, 536 joined the financial or commercial sector, followed by the information technology and telecommunications sector. It is the first time the department has released a comprehensive detailed breakdown of the migrant scheme. Legislator James To Kun-sun said the figure showed the city depended largely on talent from the mainland. "But it depends on what orientation Hong Kong wants to have. If it wants to be an international centre for China business, it is not bad to attract this talent," he said. He said it was understandable as the mainland was close to Hong Kong and more people were willing to work in the city. It was also relatively cheaper for employers in terms of covering travelling costs than hiring staff from further afield. To said he was not worried about Hong Kong's ability to attract professionals from abroad, since mainlanders also bring foreign capital and business partners. But he said the scheme could be manipulated by some companies as part of a business deal - for example by helping close relatives of business partners migrate to Hong Kong. Lawmaker Chim Pui-chung, of the financial sector, said such employees often had experience working in foreign investment firms, and ordinary small firms could not afford to hire them. "Local employees may not be able to compete with them," he said. "But you can say these migrants and local employees were from two different worlds. They could be complementary to each other." Human resources consultant Armstrong Lee Hon-cheung, from the Worldwide Consulting Group, said the scheme was largely market-driven. He said a large influx of mainland migrants meant that many local firms wanted to expand their market to the mainland. Government figures showed that 1,102 of these migrants were aged between 25 and 39. But Lee said they posed no threat to local employees. "Employers only opt for new staff from the mainland when they can't find suitable talent in Hong Kong," he said. Employers were looking for people who were well-connected on the mainland or were good at research and development, Lee said.

More of the world's top luxury brands are set to list on Hong Kong's bourse to tap China's deep capital markets - and draw more customers - as demand for premium goods soars in Asia, analysts say. The city's profile as a luxury magnet was boosted in January when Prada said it would list its shares in Hong Kong, after French cosmetics chain L'Occitane raised HK$5.5 billion here last year. The Italian fashion house, which also includes the Miu Miu, Church's and Car Shoe brands, is expected to raise as much as HK$15.6 billion when it debuts later this month. In May, New York-listed handbag maker Coach announced its shares may start trading in Hong Kong by year-end, saying it hoped to heighten the brand's profile in Asia Pacific. Upscale luggage-maker Samsonite's Hong Kong share sale, which starts this week, is also expected to raise as much as HK$11.7 billion. And Britain's Burberry is also reportedly eyeing a listing as high-end retailers scramble to profit from the region's rising incomes, especially in the mainland, the world's fastest-growing market for luxury goods. China is forecast to be the world's top buyer of cosmetics, handbags, watches, shoes and clothes by 2015, according to accounting giant PricewaterhouseCoopers. The rush to list here has seen advertising splashed across billboards and newspaper pages to generate interest among the retail investors for luxury brands' stock as much as their handbags and shoes. "These companies are already getting more than half of their global luxury sales from Asian customers," said Aaron Fischer, consumer analyst at brokerage CLSA. China's soaring economic success has produced a staggering 1.11 million US dollar millionaires, according to a Boston Consulting Group report that found only the US and Japan had more millionaires. That new wealth has also seen private jet makers and auction houses including Sotheby's and Christie's zero in on the mainland market. Hong Kong now rivals New York and London in the auction business. China's deep capital pool helped Hong Kong claim the title as the world's biggest listing market in 2010 for the second consecutive year. Firms raised more than US$50 billion in Hong Kong offerings last year, making it the world's biggest market for new listings including two monster sales by Asian insurer AIA and Agricultural Bank of China. "Listing in Hong Kong will enable Prada and Coach to access a deep capital base in Asia," said Liu Qiao, a professor of finance at Peking University's Guanghua School of Management. "Finance should follow where your real activities are. As the market and future growth engines are in Asia, listing in Hong Kong is a natural step forward for these firms."

Tsang agrees to remove structure - Chief executive says he will have glass panels on the balcony of an apartment he owns in MacDonnell Road dismantled 'to put things beyond doubt' Chief Executive Donald Tsang Yam-kuen has agreed to remove a potentially illegal structure from a flat he owns in Mid-Levels after being told to either prove it did not break the law or take it down. In a statement issued last night, Tsang (pictured) said he would have glass panels on a balcony on the MacDonnell Road property dismantled "to put things beyond doubt". His decision came after the Buildings Department sent him a letter asking him to "take the initiative to remove the large glass panels ... or appoint an authorised person to substantiate that the works comply with the requirements of the relevant regulations". Pressure had been mounting on Tsang over the glass-panelled balcony after a string of his senior officials were caught with law-breaking structures on properties they own, among them Secretary for Constitutional and Mainland Affairs Stephen Lam Sui-lung and Secretary for Education Michael Suen Ming-yeung. Business leaders and politicians have been similarly exposed. The latest high-level controversy piles more pressure on development chief Carrie Lam Cheng Yuet-ngor to come up with a clear policy to tackle the long-standing and widespread problem as soon as possible. Yesterday, the Buildings Department said the Mid-Levels building which houses Tsang's flat - owned through a company - was among hundreds that had been targeted in a large-scale operation to remove all immediately "actionable" unauthorised building works in 2006. The balcony structure that Tsang will have taken down was not deemed "actionable" at that time but he was ordered to remove two unauthorised items and did so before being issued with a letter of compliance. It was only later that buildings officials issued the "advisory letter" asking the chief to prove the balcony's glass panels were not in breach of the rules. The chief executive's statement last night said: "On the allegation against possible unauthorised building works in the property on MacDonnell Road which I own under the name of a company, I have appointed an authorised person to inspect the premises and follow up with the Buildings Department. "To put all things beyond doubt, I have instructed the authorised person to dismantle the existing glass panels as soon as possible in accordance with the Buildings Department's advisory letter, and to follow up with the reconstruction of the verandah of the living room that meets all legal requirements." A government official said the demolition work would not start today as "it might take some time to apply to the building's management office for the demolition work and make arrangements with the tenant". Democrat Lee Wing-tat said the Buildings Department had still not said clearly whether the balcony was illegal, while fellow Democrat James To Kun-sun said the department was using a "polite and indirect way" to say the structure was illegal.

Harbor swimmers to take plunge in October - Officials and organisers agree on a route and date to revive popular event after 33 years, but not everyone's convinced that the water is clean enough - After 33 years, the annual crossharbour swim is set to make a huge splash again, with a date and route being agreed by organisers and the government. But environmentalists have sounded a warning to would-be swimmers that the water may not be as clean as they think. Ronnie Wong Man-chiu, secretary of the Hong Kong Amateur Swimming Association, said yesterday: "The race is set to be held on October 16. "We have already got a route approved by all the government departments concerned. We now need to sort out a few more details, but it is looking good." A new 2-kilometre route from eastern Lei Yue Mun to North Point was mapped out after that stretch was found to be the cleanest. The original plan was to swim from Hung Hom to Tai Koo Shing. "We changed our route because of the water quality," Wong said. "Tests have proved that the E coli level is way below average and that this stretch is clean and acceptable. The Environmental Protection Department did not object. "We will start from the public pier at Lei Yue Mun and finish near the fireboat landmark in North Point. We will limit entry to a maximum of 800 for the first year." The department, which is in the process of cleaning up the harbour, had told the association the water would not be clean enough until 2013. But with certain sections passing muster already, it has been given the green light. "We expect to get the final permission to hold the race this month," Wong said. Earlier this year, organisers carried out two trials with 10 swimmers, all of whom received a clean bill of health afterwards. Another test run will be held this weekend - to see how much space is available at the start and finish points - before a final proposal is submitted. In the 1960s, the cross-harbour race began from the old Kowloon station on the pier and ended at Queen's Pier. "It was a huge annual attraction and we want to make the new race just as popular," Wong said. "Everyone has been very supportive in getting this swim going again. I'm certain it will be a huge success." The race - stopped in 1978 because of the poor water quality - will coincide with the 60th anniversary celebrations of the Hong Kong Sports Federation and Olympic Committee. Wong won the race as a teenager three years in a row from 1968 to 1970 and it has been a personal crusade for him to get the swim going again. "We hope to turn this into a major event involving overseas athletes as well," he said. Dr Man Chi-sum, from Green Power, said people should not be in a rush to revive the event until the water quality had improved enough. "Tonnes of raw sewage are still pumped into the central harbour every day and changes in tidal flow and weather might worsen the water quality in the eastern half, too," he said. Bacteria levels near the swim route last year were the highest since 2002, though a sewage treatment program has diverted wastewater away from the eastern harbour to the Stonecutters Island treatment works. Infectious disease specialist Dr Lo Wing-lok said: "I find it difficult to understand the fact that we are told by officials it is unsafe to use harbour water for fish tanks in restaurants yet they approve of people swimming in it."

The number of Hongkongers travelling to Japan - one of the city's favourite holiday destinations - dropped nearly 90 per cent a month after the earthquake and tsunami, Japanese tourism officials say. Only 5,800 Hong Kongers went to Japan in April, an 87.6 per cent plunge from 46,598 a year ago, said the Hong Kong office of the Japan National Tourism Organisation. Its executive director Kazunari Taguchi said Hong Kong was the source market which saw the largest drop in visitors. About 80 per cent of all HK visitors to Japan are tourists, he said. The same proportion of them are repeat visitors to the country. "Business travellers may reduce their number of trips, but they still need to go to Japan. But there is no strong necessity for tourists to come," he said. Singapore, with an 82 per cent decrease in visitor numbers, saw the second-biggest fall. South Korea and China, the two biggest sources of travellers to Japan, saw drops of 66.4 per cent and 49.5 per cent respectively. "I can't tell when we'll be able to recover. The exchange rate is still unfavourable for tourists," Taguchi said. Yesterday, HK$1 would buy 10.5 yen compared to 11.7 yen a year ago. EGL Tours and another firm, Package Tour, resumed trips to Hokkaido and Okinawa on April 16. They started tours to Tokyo a month later. To attract more tourists, the Japanese body is proposing special programs to local tour agencies. But Taguchi did not go into details, saying a deal had yet to be concluded. Twenty official and private groups from the country will exhibit at the International Travel Expo, which runs from June 9 to 12 at the Convention and Exhibition Centre. The first two days are for trade members and the remaining two are open to the public. Representatives from the quake-stricken northeast will skip this year's show, but Shikoku - one of the four big islands of Japan - will be represented for the first time. Another 55 countries and regions will also take part in the annual exhibition, a record number and 20 per cent more than last year. There are 10 newcomers - Bhutan, Brazil, Cuba, Hungary, Nepal, Mexico, Moscow, the Seychelles, Tunisia and South Africa. Meanwhile, managing director of Taipei World Trade Centre Liu Shi-wei expected one million visitors from Hong Kong to go to Taiwan despite the recent food scare. One in 10 Hongkongers - or 750,000 - went to the island last year. "Authorities require all products to be removed from shelves unless sellers provide test results to show they are safe ... so food available in the retail market should all be OK," he said. Taiwanese authorities have found more than 506 drink and food products - produced by 156 manufacturers - to have been contaminated by the possible carcinogen DEHP.

 China*:  June 4 2011

No swell time for melon growers - Zhou Deyi, a 45-year-old farmer from Beijing's watermelon production base of Panggezhuang in Dexing district, works in her watermelon greenhouse on May 29. Reports of watermelons bursting from excessive amounts of a "swelling agent" have also popped the incomes of growers. "I have been here since 9 am but sold only 10 watermelons in five hours," said Zhou Deyi, a 45-year-old farmer who has relied on her watermelon production to support the education of her two daughters. Zhou said that last May she could sell 400 kilograms of watermelon a day on the weekends for more than 3,000 yuan ($460). Zhou has been growing melons for more than 10 years in Panggezhuang, which for seven centuries has been Beijing's most famous watermelon production center. While waving flags along the Beijing-Kaifeng Highway to remind passers-by of the ongoing 23rd Beijing Daxing Watermelon Festival, the waiting melon booths receive few consumers. Not only have sales fallen, the price has dropped from 4 yuan per kg to 3 yuan per kg in less than one week, Zhou said. "Swelling agent? I have grown watermelons for more than 10 years and had never heard about it until recently. All of a sudden it seemed every consumer was asking me about it," Zhou said. She said the Panggezhuang area enjoys the most comfortable temperature for growing watermelons plus more sunshine than most other producing regions. The sandy soil absorbs the heat during the day and releases it at night, which is perfect for making melons sweet, she said.
Zhou started to grow watermelons, along with peaches and sweet potatoes, in 1998 on a nearly half hectare of farmland. Each year, she grows two batches of watermelons - one from March to June, the other from June to September. All together, Zhou said, she usually harvests around 3,000 watermelons, which she sells for more than 30,000 yuan. "Forced ripening won't happen here because the natural environment provides the best fertilizer for the melon," she added. In fact, to ensure the watermelon's quality and taste, Zhou and her fellow villagers even built greenhouses for the watermelon plants in 2006 with subsidies from the local government. "Inside the greenhouse, it takes 10 more days for the watermelons to ripen," Zhou said. "But watermelons produced this way also taste better." For fertilizer, Zhou turns to a nearby chicken farm for its organic waste, which she sometimes also shows to her customers to convince them about the quality of her watermelons. But most of the time when consumers ask about the swelling agent, Zhou simply opens some watermelons to let them taste. Excessive swelling agent decreases the melons' sweetness and quality, Zhou tells her customers, citing what she has heard from experts. "Facts speak louder than words," Zhou said. "I know how my watermelons taste because I tend to their growth personally." Nevertheless, Zhou said she expects a decline in sales of her watermelons this year, but she is not complaining much. Last year, with the opening of subway Line 4, Zhou landed a job in a station as a cleaner with a monthly income of 1,000 yuan. "Now growing watermelons has become my sideline," Zhou said.

A reunion after 360-year split - One of China's best-known ancient paintings, the Dwelling in the Fuchun Mountains, is shown in its entirety for the first time in more than 360 years in the Palace Museum, Taipei, June 1,2011. The painting was damaged and torn in two in the 17th century. One part of the painting was kept in Taiwan after 1948 while the other section remained on the Chinese mainland.

Gates: U.S. Won't Try to Block China's Growing Influence - The United States will not try to block the growing influence of China, Defense Secretary Robert Gates said Thursday, as he counseled patience in building relations with Beijing. "We are not trying to hold China down," Mr. Gates said. "China has been a great power for thousands of years. It is a global power and will be a global power." Mr. Gates is scheduled to meet with his Chinese counterpart, Liang Guanglie, on Friday, ahead of the Shangri-La Dialogue, an annual security meeting in Singapore. The two men are expected to discuss how to advance a strategic dialogue on security issues, including cyber warfare and nuclear weapons, as well as efforts to rebuild military-to-military ties. U.S. Secretary of Defense Robert Gates is greeted by Singapore Air Force's Brigadier General Siak Kian Cheng upon his arrival at Payar Lebar Air Base in Singapore on Thursday ahead of the Shangri-La Dialogue annual security meeting. Mr. Gates noted that China's military modernization included building capabilities "that are a concern" to the United States, including missiles capable of striking aircraft carriers, cyber weapons, and anti-satellite missiles. But he emphasized his belief that the Chinese were building their military in order to extend their influence in Asia, not to directly challenge the United States. "I think the Chinese learned a powerful lesson from the Soviet experience and they do not intend to compete with us across the full range of military capabilities," Mr. Gates said. In addition to his meetings with Asian defense ministers, Mr. Gates is expected to deliver a speech at the security forum emphasizing that the U.S. intends to keep a robust presence in Asia, even in a time of growing fiscal austerity. Since Mr. Gates became defense secretary in late 2006, military relations with China have been up, down and up again. After a period of cool relations, Chinese President Hu Jintao this year has pushed the leadership of the People's Liberation Army to try to improve ties with the U.S. military. Pentagon officials are hopeful that the two militaries will conduct a joint humanitarian relief exercise in the months to come. Mr. Gates said he was "very satisfied" with the recent progress but that people should expect the ties between the two militaries to build slowly over time. "I think we are in a pretty good place now," Mr. Gates said. "We need more of what is always in short supply when it comes to the United States and its government, and that is patience. These relationships take time to develop." Still, the recent improvements in military cooperation would likely be rolled back should the U.S. sell a new package of arms to Taiwan. The Chinese have repeatedly cut back on military cooperation after the U.S. has sold arms to Taipei. And there are growing calls in Congress for the U.S. to sell Taiwan updated F-16 fighter planes. Mr. Gates declined to comment directly on the prospective sale of the planes. He acknowledged that in every meeting with the Chinese, differences over Taiwan have been discussed in detail. China would like the U.S. to acknowledge that Taiwan is a "core interest" for Beijing. U.S. officials want Beijing to understand while they adhere to a one-China policy that recognizes the government in Beijing, the Taiwan Relations Act means America will continue to help with Taipei's defenses. And despite warmer relations, there is little sign the two sides have made any progress on the Taiwan issue. Asked about Mr. Gates' remarks at a routine briefing Thursday, Chinese Foreign Ministry Spokesman Hong Lei said: "China and the U.S., as the world's largest developing country and largest developed country, have shared responsibilities in maintaining global peace, development and stability…We are willing to work together with the U.S. to deepen mutual trust, dialogue and practical cooperation. "At the same time, China and the U.S. have important shared interests in the Asia Pacific region. The two sides should cooperate and work to shape a more peaceful, stable and prosperous Asia Pacific region in the 21st century." While Mr. Gates emphasized Thursday that Mr. Hu has made improving military ties a priority, questions remain over whether the People's Liberation Army shares that enthusiasm. Mr. Gates' visit to Beijing in January was marred when the military decided to test the J-20, the Chinese stealth fighter, on the same day that the defense secretary was meeting with Mr. Hu. Although Mr. Gates said he believed the military was "responsive" to civilian leadership, it does not always tell political overseers what it is up to. "What I perceived was on a day-to-day basis, they didn't go out of their way to keep their political leadership informed," Mr. Gates said.

Lenovo sets sights on Europe - Chinese computer giant offers to buy controlling stake in German company Medion as a step towards entering the western European market - Lenovo's purchase of Medion will help make up for the disappointment of missing out on Packard Bell. Lenovo Group (SEHK: 0992) said it planned to accelerate its expansion in Europe after securing a deal for Germany's Medion, which makes personal computers and consumer electronics products and also provides mobile communications services. The Chinese computer giant has made a conditional offer to acquire a controlling stake in Medion for up to €466 million (HK$5.2 billion) to Medion shareholders, who are led by founder and chief executive Gerd Brachmann. Wong Wai-ming, Lenovo's chief financial officer, yesterday said that as part of the total transaction, the company would pay €231 million, 80 per cent of which would be in cash and the rest in Lenovo shares, to Brachmann under a separate agreement. Lenovo's offer to the remaining shareholders of Medion was at €13 per share in cash. The deal is expected to close this August and give Lenovo between 55 per cent and 80 per cent stake in Frankfurt-listed Medion. If completed, the transaction would be Lenovo's second-largest acquisition after it closed the US$1.75 billion purchase of IBM's personal computer business on May 1, 2005. Lenovo and Medion will continue to maintain their own product brands, while providing sales and support through existing channels. Wong said the combined company would have more than a 14 per cent share in the German personal computer market and about a 7.5 per cent share in western Europe. Both Lenovo's and Medion's boards have approved the transaction, which is subject to customary closing conditions and regulatory approvals. "The acquisition is a great addition for Lenovo, which has been looking to enter the western European consumer market for some time," said Eszter Morvay, a London-based research manager at market analyst firm International Data Corp (IDC). "The company took a cautious approach in entering the market after it failed to purchase Packard Bell." Lenovo's plan to expand swiftly in Europe by acquiring personal computer supplier Packard Bell in 2007 was derailed after Taiwanese competitor Acer, through its United States-based Gateway subsidiary, sealed a deal to buy Packard Bell's parent company. "Medion has a solid presence across the western European consumer PC market, ranking ninth in the first quarter of this year with a 4 per cent market share and 10th last year with a 3 per cent share," Morvay said. According to IDC, Lenovo had a 0.5 per cent market share in the same market last quarter, which was down from its 1.6 per cent share last year. There appears to be plenty of work ahead for Lenovo as it integrates Medion. The German company sells more than 60 per cent of its personal computers in its home country. "Outside Germany, Medion is strong in Austria and Belgium, but not really in the other [western European] countries," Morvay said. Lenovo's shares fell 3.28 per cent to close at HK$4.43 yesterday.

Gas deal for Hu's Russian visit - Years of talks just one step away from opening a new export route from western Siberia to the world's biggest energy market, with further deals in the pipeline - Wang Qishan shakes hands with Igor Sechin as Vladimir Putin applauds during the signing ceremony. Russia says it will finalise a major gas supply deal with China in time for a visit in mid-June by President Hu Jintao , wrapping up years of talks to open a new export route to the world's biggest energy market. Russian Deputy Prime Minister Igor Sechin said he had reached broad agreement at a meeting in Moscow with his counterpart Wang Qishan to supply China with 68 billion cubic metres (bcm) a year of gas over 30 years. After the negotiations Wang told Russian Prime Minister Vladimir Putin that China hoped the two sides could make further essential progress in gas talks as soon as possible. Putin said energy co-operation played an important role in boosting the Sino-Russian strategic partnership. Gas export monopoly Gazprom would deliver 30 bcm a year through the "Altai" route, pumping gas from its existing fields in western Siberia across the narrow stretch of common border between Kazakhstan and Mongolia. A further 38 bcm per year would go by pipeline down Russia's Pacific seaboard and into northeast China. The viability of this route had been in doubt until recently. The launch of gas exports to China would break Russia's export dependency on the European market, to which the world's largest gas producer expects to export more than 150 bcm this year. Sechin said final agreement had not yet been reached on price but the two sides had told their state energy firms, Gazprom and CNPC (SEHK: 0135), to finalise terms for signing by June 10. "We are one big step away from achieving our aims," Liu Tienan , head of China's state energy directorate, said later. "We have created the conditions for the final step." Officials want a deal to be finalised before a visit to Russia by Hu, who will be the guest of honour at the St Petersburg International Economic Forum from June 16-18. Separately, Russian officials said a dispute over payments for Russian oil exports to China had been resolved, after China paid nearly US$200 million in outstanding arrears to state-controlled oil major Rosneft and pipeline monopoly Transneft. Neither side gave any dates for the start of gas deliveries, but the "Altai" route is likely to start first as it would tap into Gazprom's core resource base of fields in western Siberia that are already in production. The Pacific route, by contrast, would rely on developing new gas assets, such as the Chayandinskoye field, in remote eastern Siberia, that are years away from exploitation. Start dates have often slipped since the two sides signed a memorandum of understanding in 2006, with a joint document inked in October 2009 stating that deliveries would start in 2014-15. Price terms, a key sticking point given Gazprom's push to benchmark the price China pays off its European export prices, have yet to be finalised. No Chinese loan is foreseen as part of the gas export supply deal.

Hong Kong*:  June 3 2011

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The government is set to launch the inflation-linked bonds - or iBonds - through initial public offerings on the local exchange, the Hong Kong Monetary Authority said yesterday. The bonds - expected to be worth between HK$5 billion and HK$10 billion - will be available in the third quarter of this year and only to Hong Kong residents. The three-year bonds will have a ticket price of around HK$10,000. Yields will be determined at a rate linked to inflation over the previous six months. Dividends will be paid once every six months, with commissions set at 0.15 percent of the purchase price. Each investor can submit only one application, which may be for more than one unit - but the government's objective is to make sure all the subscribers are assigned at least one unit. The HKMA briefed selected market participants on the notes yesterday. Financial Secretary John Tsang Chun-wah first mentioned iBonds in his budget speech on February 23 in a bid to offer local investors some protection amid spiraling inflation. Like other investment products, banks and brokerages are required to apply thorough risk assessment on buyers who do not have any investment or securities accounts before selling them the notes. "However, citizens with investment accounts can purchase the bonds directly through intermediaries, without undergoing any suitability test," an HKMA spokesman said. First Shanghai Securities chief strategist Linus Yip Sheung-chi said it will prove unnecessary to have the bonds listed on the local bourse. "Trading of such bonds will be rare given the low liquidity," said Yip, adding that the amount seems too small to be an effective hedge against inflation. The issue will be arranged by HSBC (0005) and Bank of China (Hong Kong) (2388). Agnes Chan Shui-kuen, E&Y regional managing partner, said the size of the proposed iBond offer is not enough for eligible buyers in Hong Kong. Hong Kong's consumer price index rose 2.4 percent in 2010, amid strong recovery in the city and rising global commodity prices. It recorded inflation of 3.8 percent in the first quarter of the year. The government last week amended its inflation forecast for 2011 to 5.4 percent from the previous 4.5 percent. At the new level of inflation forecast, each holder of a HK$10,000 iBond will see a return of HK$540 a year. iBonds will be the first government bonds to be issued in the city.

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Training with a dragon boat team proves to be a tough challenge for rookie paddler - It's hard to believe that the Dragon Boat Festival (also known as the Tuen Ng Festival), one of the liveliest and most vibrant celebrations in Hong Kong, actually stems from a tragedy in folklore. Legend has it that in 278BC, Chinese scholar Qu Yuan drowned himself in what is today's Hunan province as a protest against corrupt rulers. The next day, disheartened local villagers, who revered Qu, paddled boats out to the river, beat drums and threw rice into the water, believing the noise and food would keep fish from devouring Qu's body. They arrived too late. Nevertheless, dragon boat races and ceremonial offerings of rice became an annual affair to symbolise the valiant attempt to rescue Qu. Competitions have been held in China for hundreds of years, but it was Hong Kong that turned it into an official sport in 1976 - and has been helping to globalise the sport by heading the International Dragon Boat Federation. The sport is booming. According to Raymond Ma Siu-wing, chairman of the Hong Kong Dragon Boat Association, a record number of teams participated in tournaments last year. "Half of the world's dragon boat teams are in Hong Kong," adds Ma, 59, whose association is officially sanctioned by the government. Ahead of the Dragon Boat Festival on Monday, when thousands of paddlers will take to the water, including more than 140 teams in Stanley, I make a date with the Altius Dragons to find out what all the fuss is about. I have never been on a dragon boat before but, as someone who leads an active lifestyle, I think it is going to be easy. How hard can sitting down and paddling be, right? Arriving at Sai Kung pier on a Tuesday night, I am greeted by a bevy of twenty-something butts - everyone is bent over, stretching. "You're late. Quick, join the warm-ups," says coach Shek Chi-hung. Nicknamed "Fei-hung", after the legendary Chinese folk hero, Shek is a veteran rower with a stern attitude. We stretch our thigh muscles, which, from an outsider's point of view, don't seem so important for paddling. I ask why, to which Shek responds, flatly: "Just do it." Next come upper-body stretches, followed by the dreaded "30x30x2" - 30 push-ups and 30 sit-ups, twice. The Altius Dragons are a diverse bunch: the 30-plus members range from public relations women in their 30s to young married couples to middle-aged men. But it's a close-knit group; there's plenty of banter and laughter during the warm-up. I am already breaking into a bigger sweat than I had expected to, and this is before we've even got into the boat.

The government announced on Wednesday an increase of HK160 per day, or 4.5 per cent, in the minimum wage for foreign domestic helpers in Hong Kong. The new wage would be HK$3,740 per month – up from the current monthly wage of HK$3,580. Food allowances for helpers would also go up, by HK$25 per day. The new wage would apply to all foreign domestic helpers who sign their contracts on Thursday and thereafter, a government spokesman said. Contracts signed on Wednesday or before with the existing minimum wage of HK$3,580 and food allowance of not less than HK$750 would still be processed by the Immigration Department until June 29. The pay rise comes after a coalition of unions representing foreign maids called for a 12 per cent increase last week. “The review takes into account Hong Kong’s general economic and employment situation, as reflected through a basket of economic indicators including the relevant income movement, price change and labour market situation,” the spokesman explained. There are about 290,000 foreign domestic workers in Hong Kong.

The results of tests on food, drink and medicine imported from Taiwan would be regularly released to the public in the wake of a new food scare in Hong Kong, Secretary for Health York Chow Yat-ngok said on Wednesday. Chow, speaking after a seminar on food safety, said health authorities planned to check Taiwanese food, drink and medicine after drinks and jam from there were found to contain the chemical DEHP, which can lead to cancer when consumed by humans. “In the past week many items have been taken from the market for laboratory tests and we will release the results on a daily basis,” Chow said. Officials would order a recall of any contaminated item and ban its sale, he added. Some legislators have called for a new law to ban the use of DEHP in food. Chow said there were no immediate plans to ban the chemical, but he did indicate the government would consider including DEHP on a list of substances that require regular monitoring. Hong Kong on Monday banned two sport drinks imported from Taiwan after the levels of DEHP they contained were found to exceed the World Health Organisation (WHO) safety levels by up to 17 times. DEHP is used as a cheap substitute for vegetable oil. It is used to produce clouding agents which give beverages a more appealing flavour. It can, however, affect the liver, kidney and reproductive system. It can also damage the hormone balance in young people, health experts say. Officials were still assessing how long the current food scare would last.

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Gambling revenue in Macau rose 42% in May from a year earlier, government statistics issued Wednesday show, as the opening of a massive new casino resort last month helped revenue rise to a record high for the fourth month in a row. Gambling revenue in Macau, the only place in China where casinos are legal, has been growing at a blistering pace since the end of 2009 as mainland Chinese visitors continue to place bets despite local government policies to slow the booming industry and encourage a more measured pace of growth. Macau overtook the Las Vegas Strip as the world's biggest gambling market in 2006 and last year raked in about four times the Strip's gambling revenue. Analysts expect Macau's gambling revenue to grow to five times the size of the Strip's this year. Gambling revenue in the Chinese territory rose to 24.31 billion patacas ($3 billion) last month, up from 17.08 billion patacas a year earlier, according to data from Macau's Gaming Inspection and Coordination Bureau. The May figure was 19% more than the last monthly record of 20.51 billion patacas set in April. In the year to May 31, Macau's gambling revenue was up 43%, following a 58% surge for the whole of last year. Following the data, RBS analyst Philip Tulk said he will need to raise his current forecast for Macau's gambling revenue to grow 28% in 2011. CLSA analyst Huei Suen Ng noted Macau's May revenue alone was equal to almost half the house's $6.5 billion forecast for the Las Vegas Strip's gambling revenue for 2011. Macau's May revenue was at the high end of a May 26 forecast from Bank of America Merrill Lynch for gambling revenue to hit between 23 billion patacas and 24 billion patacas last month. Analyst Billy Ng said the strong growth was partly due to the May 15 opening of Galaxy Entertainment Group Ltd.'s new casino resort in Macau's Cotai area. "We see Galaxy Macau driving traffic and injecting new VIP liquidity, with growth in both mass (market) and VIP for the rest of 2011," Mr. Ng wrote. U.S. casino companies Las Vegas Sands Corp. and Wynn Resorts Ltd. have been benefiting from the frenetic pace of growth through their Macau units as revenue in Las Vegas remains sluggish. So has MGM Resorts International through a joint venture with a daughter of Macau kingpin Stanley Ho called MGM China Holdings Ltd., which is set to list in Hong Kong on Friday following a $1.5 billion initial public offering. MGM China's IPO was priced at the higher end of its indicative range, reflecting investor optimism about Macau's gambling industry. The three operators compete against Stanley Ho's SJM Holdings Ltd., the market's largest operator with about one-third of the territory's gambling revenue; Melco Crown Entertainment Ltd., co-chaired by Mr. Ho's son Lawrence and Australian James Packer; and Galaxy Entertainment Group, controlled by the family of Hong Kong tycoon Lui Che Woo.

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Sky-high property prices are driving some Hong Kongers to turn to cheaper commercial or industrial property for home use. But while loft living in converted commercial buildings is popular in cities such as New York, there’s a hitch in Hong Kong: It’s illegal. Zoning laws prohibit the conversion of commercial or industrial buildings to residential space. For those who risk breaking the law, the payoff can be large. One chef who moved to Hong Kong from London a few years ago found his 1,300-square-foot Mid-Levels apartment got “a bit crowded” during his supper-club parties. He yearned for the large and open loft space he had had back in the U.K. So he went searching, and after a few months found the perfect spot: a 2,500-square-foot raw expanse with 10-foot ceilings in an industrial building in Aberdeen. The monthly rent: 15,000 Hong Kong dollars (US$1,929) plus a management fee of HK$3,500—far less than the $27,000 he’d been paying for less than half that space in the Mid-Levels. He now comfortably hosts dinner parties of up to 30 people. There are no official estimates of the number of residents living in industrial or mixed-use space in Hong Kong. But real-estate agents say popular areas for such conversions include Aberdeen, Chai Wan, Fo Tan, Kwun Tong, To Kwa Wan, Yau Tong and San Po Kong, neighborhoods that typically house warehouses and commercial buildings. The Hong Kong government says it doesn’t intervene unprompted. “Given the vast area of land and units involved, it is impracticable for the Government to carry out regular inspections. We normally act on complaints,” the Hong Kong Development Bureau said in a statement to The Wall Street Journal, adding that it does not keep figures on the number of complaints filed. Tenants who are outed are first issued a warning letter, and can be evicted. There are other downsides to loft living. The spaces often require extensive renovation to make them livable. The chef’s space in Aberdeen had no facilities—he spent HK$150,000 to install a toilet, a kitchen and some walls to create a bedroom. To save on costs, he did much of the construction himself. Utilities are also costlier because tenants are charged higher commercial rates. For the chef’s 2,500-square-foot space, the monthly electricity bill varies from HK$700 to HK$2,000. Then there’s the difficulty of obtaining the space to begin with. For those looking to buy, getting a mortgage can be tricky. Hong Kong banks assess property values based on previous transaction prices of comparable units within the building. The value of an unusual space like a loft could be based on a transaction years—and millions of dollars—ago, thus requiring a buyer to put down a large sum of cash up front. Later selling the converted space can be just as hard. And getting homeowner’s insurance for a commercial space is impossible. “In general we don’t recommend [living in non-residential space], especially industrial space,” said Ruby Suen, a broker at Asia Pacific Properties. Still, she is brokering a 1,500-square-foot apartment in a mixed-use building in Central that was used as residential space by its owners, even though it is zoned for commercial use. Tenants and owners must pay rent or mortgage payments on a commercial or industrial space rent through a business. One loft dweller, a lawyer, started a solar-power consulting firm in order to buy a 2,000-square-foot loft, with a 2,000-square-foot roof deck, in Fo Tan last year. The payoff: He paid HK$1,100 a square foot; today’s apartments in the area fetch HK$5,000 to HK$7,000 a square foot. Lastly, there’s the question of neighbors—or lack thereof. The tenants above may very well operate a printing press or manufacturing equipment. And weekends can be lonely. “You need to love living in these places because there’s nothing—you’re alone, no shopping or restaurants. On Sunday you live in an abandoned city. But I personally think it’s one of the coolest things you can do,” says the chef, who is also a former consultant. Indeed, there are signs the government may be growing more interested in converting commercial and industrial buildings. Hong Kong Chief Executive Donald Tsang, in his 2009-10 policy address, announced a package of measures to optimize the use of industrial buildings through redevelopment or wholesale conversion. But laws require the entire structure be demolished and rebuilt. Because of this, it’s still “unlikely or impossible” to legally convert an existing industrial or commercial building into residential loft space, says Samson Chu, chartered surveyor at the professional consultancy department at Centaline Commercial, a branch of Centaline Property Agencies Ltd. The lawyer in Fo Tan said he became interested in the New Territories neighborhood after visiting some art galleries in the area. Fo Tan is known for its art studios converted from industrial space. With that in mind, he renovated the space to have maximum flexibility so he could double it as an gallery. Folding doors in the loft can slide to the side, opening up the 2,000-square-foot space. He also spent HK$1 million in a renovation that included energy-efficient appliances and solar panels on the roof. The solar panels, which take up about a third of the rooftop space, heat the water and take care of 10% to 20% of his energy use, he says. He converted the rest of the rooftop into lounge space with a dining table, chairs and artificial turf. “I like the idea of reusing industrial space,” he says. “It gives you the freedom to be creative to spread out…You can play your music as loud as you want, no one will complain.”

 China*:  June 3 2011

Coca-Cola, the world's largest soft-drink company, said on Wednesday it may explore a possible listing in Shanghai, joining other global firms in testing the waters for a China listing, along with its increasing presence there. Coke has said it will commit US$2 billion in investment into China and last October opened three new plants in Inner Mongolia. “We are interested in exploring the opportunity of listing our stock on the Shanghai Stock Exchange,” Geoff Walsh, public affairs and communications director for Asia Pacific of Coca-Cola, said in an e-mail reply to reporters. “Obviously, we need to better understand the regulatory framework and listing requirements,” Walsh said. “We continue to have positive discussions with Chinese government officials as we look at this opportunity.” Walsh’s comments follow a report in the Hong Kong Economic Journal, saying Coca-Cola was studying a possible listing on the proposed international board on the Shanghai Stock Exchange. HSBC (SEHK: 0005), Unilever and Standard Chartered have said they want to list on the international board, which was originally slated to be launched last year. The New York Stock Exchange is working with China to launch the country’s international board that will allow foreign firms to list on the mainland, in a move seen as a crucial step in developing its capital markets.

China's official purchasing managers' index hit a nine-month low in May, a survey showed on Wednesday, reinforcing evidence that economic growth is slowing under the weight of government credit curbs and power shortages. The PMI, which is designed to provide a snapshot of conditions in China’s vast manufacturing sector, fell to 52 from 52.9 in April, the China Federation of Logistics and Purchasing said. The federation compiles the index on behalf of the National Bureau of Statistics. “The continued fall in PMI in May, after a drop in April, shows the rising possibility of a slowdown in economic growth,” Zhang Liqun, a government researcher, said in a statement accompanying the data release. “The input price sub-index saw significant decline, indicating a possible change in inflationary expectations. De-stocking activities may increase. All these will drive down the pace of economic growth,” he said. The reading was slightly weaker than market expectations of 52.2 in a Reuters poll. Despite Beijing’s sustained tightening campaign over the past half year to control price rises, which has included hikes in banks’ required reserves and interest rates, most economists believe the economy is retaining much of its momentum. May was the 27th straight month that the official PMI stood above the threshold of 50 demarcating expansion from contraction. The input prices sub-index, a measure of how much factories pay for raw materials and intermediary goods, eased to 60.3 in May, a 10-month low. But easing factory prices may take some time to trickle down to consumer inflation, which is widely expected to quicken in May from 5.3 per cent in April. With inflation running at its fastest in nearly three years, analysts expect the government to press ahead with policy tightening in the coming months. The new orders sub-index weakened to 52.1 in May from 53.8 in April. Much of the drop was driven by slower growth in export orders, whose sub-index dipped to 51.1 from 51.3 in April.

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DHL to expand in western China - China's robust market has attracted a large amount of investment from DHL Express. Its North Asian hub in Shanghai, a $175 million investment, is under construction and is expected to ease the capacity strain on its Hong Kong hub. Deutsche Post-DHL's express division will continue expanding its investment in China, especially in the western region, said Ken Allen, chief executive of DHL Express. "Our business there is growing faster than the rest of the country. We always keep the investments ahead of the demand curve," Allen said, without disclosing further details, in an exclusive interview with China Daily. Wu Dongming, managing director of DHL-Sinotrans International Air Courier Ltd, a joint venture in charge of DHL's express business in China, said notable business growth was seen in cities in the western and central regions, such as Chengdu, Chongqing and Wuhan. To meet the growth in business volume, the company will consider scheduling more flights to connect Chengdu and Chongqing with its central Asian hub in Hong Kong, Wu said. "It's all because the growth continues, and we have to add capacity to the market," Allen said. China's robust market has attracted a large amount of investment from the company. Its North Asian hub in Shanghai, a $175 million investment, is under construction and is expected to ease the capacity strain on its Hong Kong hub, Allen said. "Once the North Asian hub opens up, we will be looking at more direct flights out of Shanghai into the key Asian markets," he said. "It is going to be a big boost to our business overall in China." The company reported 216 million euros ($311.5 million) in pretax profit during the first quarter, compared with 110 million euros during the same period in 2010 and a 392 million euro loss in the first quarter of 2009. However, as China is keen on improving its economic and trade structure, its rapid GDP increase is estimated to slow to less than 8 percent this year and imports and exports are also expected to decline. Since the beginning of the year, trade growth has declined, compared with 2010. China's exports in April rose by 3.4 percentage points over those in the first quarter, but imports dropped by 10.8 percentage points, according to the Ministry of Commerce. DHL remains confident about China's performance this year. "Maybe the overall growth rate of the Chinese economy is going to slow down a little bit, but that's still going to make it one of fastest growing markets in the DHL network," Allen said. "Some of (China's) export figures have slowed down a little bit, but we have seen our business holding on very well," he added. Between January and April, revenue in China's express industry jumped by 25.7 percent year-on-year to 21.42 billion yuan. The overseas express business accounted for 26.9 percent of the total revenue, according to China's State Post Bureau.

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Real-name ticket buying system goes national - Two passengers show their id cards and train tickets at the Shenyang North railway station in Shenyang, Northeast China's Liaoning province, June 1, 2011.

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Louis, Georges and Gaston-Louis Vuitton (lying down on a trunk-bed) posing with factory workers in front of a horse-drawn delivery van circa 1888. Louis Vuitton is making a pitch to consumers in a spot no Western brand has ventured before: the National Museum of China. The French luxury giant, celebrating its 20th year in China, is unveiling special summer exhibit titled “Voyages,” which features the brand’s historical luggage and handbags, in one of the country’s most renowned museums. Having just opened its doors after an epic-long three-year renovation, the museum is one of the most highly-sought spots for the country’s tourists. That makes it a perfect place for Louis Vuitton, which is playing off the current travel craze hitting China. China’s consumers are set to catapult the country’s tourism market past Japan’s by 2020, according to Boston Consulting Group. Last year, China’s outbound tourism market alone was worth 1.5 trillion yuan of revenues, filling the pockets of airline and hotel industries. The upscale brand, owned by luxury house LVMH Moet Hennessey Louis Vuitton, is eager to tap into the travel boom. China, where the taste for luxury goods has driven sales for countless high-end labels, is one of Louis Vuitton’s key growth markets. Travelers, who likely have higher disposable incomes than the average stationary low-income worker, are the brand’s target audience. LV’s museum partnership also fits into China’s recent art rage. According to a report commissioned by the European Fine Art Foundation, China is now the world’s second-largest market for art and antiques. The global art market was estimated at around $60 billion in 2010, of which China accounted for 23%. Other luxury brands are trying out the artistic pitch in China too. Christian Dior launched a multimedia photo exhibit in Shanghai in mid-May, showing off its Lady Dior line of handbags. Earlier this year, U.S. designer Diane von Furstenberg rolled out her “Journey of a Dress” exhibit in Beijing’s 798 art district. Many question whether luxury brands have the credibility to position themselves as art. Louis Vuitton took a little heat, when it opened an art gallery in its Champs Elysees flagship store, showing off an exhibit of nude black and white women spelling out and “L” and a “V” with their bodies. The French company also hit a rocky patch in China earlier in May, when Shanghai’s city government required the company to demolish one of its advertisements—a 65-foot-tall suitcase—that violated the city’s outdoor ad regulations. Louis Vuitton hopes this new suitcase endeavor will result in a little less baggage.

Pacific Can, the largest two-piece aluminum can maker in China, has been given the listing committee green light to raise up to HK$1.17 billion in Hong Kong. International placement starts next Tuesday, with retail books to open on June 10. Pacific Can's clients include Coca-Cola, Pepsi and Tsingtao. In other news, Lee & Man Holdings (0746) plans to spin off its handbag unit through listing by introduction. Lee & Man Handbags debuts on June 27 and will be traded at 2,000 shares per board lot. The company will not raise additional funds from the listing. Lee & Man Handbags reported a revenue of HK$835.50 million last year, up 14.80 percent from 2009. It has a factory and two processing agents in Dongguan. Australian miner Resourcehouse saw its retail tranche 1.67 percent covered by margin financing orders, while Huaneng Renewable Energy's public offering was only 1.13 percent covered by margin orders, according to four brokerages. But Huaneng's international placement was five times oversubscribed, as it attracted six big-name investors including Cheung Kong (0001), Atlantis Investment Management and GIC - which subscribed for US$300 million (HK$2.34 billion), sources said. Chemical storage and terminal services provider Dragon Crown locked HK$188 million in margin orders - nearly five times the amount it seeks to raise from the retail tranche of the HK$390 million offering. Meanwhile, Newton Resources, controlled by New World Development (0017), plans to raise up to US$700 million to fund mining expansion. It will kick off its roadshow on June 13 and will likely price the offering on June 24. Mainland paper packaging maker Zhengye saw its public offering 340 times oversubscribed, locking up HK$6.1 billion, sources said. Subscribers for one board lot of shares have only a 10 percent chance of allotment, while those who subscribed for 30 board lots will get at least one.

Hong Kong*:  June 2 2011

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Big Japanese restaurant chains in Hong Kong are starting to bounce back from three months of reduced business after the radiation scare in the tsunami-ravaged country. But smaller businesses and high-end outlets that prided themselves on dishes "fresh from Japan" are still struggling to regain public confidence. "Many of the things are fine - untainted by radiation - but because most people are scared of all food imported from Japan now, so we have been forced to import from other countries," restaurant owner Nelson Wong Nai-ping said. The Hong Kong Food Council, which has thrown its weight behind efforts to ease public fears, says it knows of 300 of the city's 2,000 Japanese restaurants that still have their backs to the wall, having lost as much as 70 per cent of their business. But it says the bigger chains, which only suffered drops of about 30 per cent, have recovered fairly well. The council and the Hong Kong Federation of Restaurants & Related Trades joined with 15 other organisations for the "Japan Mega Fest" - a series of events starting next month - in the hope of regaining public trust in food from Japan. "[The public] needs to know this: Japanese food imported into Hong Kong goes through layers of severe inspection before getting onto their plates," council chairman Simon Wong Ka-wo said. Nelson Wong said he used to import 80 per cent of his food from Japan, but had to change to ingredients from India, Canada and other countries. The Hong Kong Mortgage Corporation is offering enterprises dealing in Japanese products that show a 30 per cent drop in business turnover a chance for fee waivers.

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Italian jewelry on display in Hong Kong - A model poses with Picchiotti's ruby and diamond jewelry on May 30, 2011, at an exhibition in Hong Kong. Picchiotti, an Italian jeweler, exhibited about 200 pieces at the show.

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The Hong Kong Monetary Authority said yesterday that yuan deposits had reached 510 billion yuan (HK$610.24 billion) by April, but stressed that concerns about a marginalisation of the local currency are "ill-founded". Responding to commentators who suggested the yuan is a potential substitute for the Hong Kong dollar, HKMA chief executive Norman Chan Tak-lam wrote that surging yuan deposits did not mean locals were abandoning the Hong Kong dollar. The growth in yuan deposits was mainly being driven by yuan funds "remitted by mainland enterprises into banks in Hong Kong to pay for imports of goods and services, rather than conversion from Hong Kong dollars by Hong Kong companies", Chan said. Two-thirds of the yuan deposits in Hong Kong are from corporate clients, while the rest are from personal customers, according to the city's de-facto central bank. Yuan deposits rose 750 per cent to 510 billion yuan in April from 60 billion yuan in January last year, and now make up about 8 per cent of total deposits in Hong Kong. At the same time, Hong Kong dollar banknotes, along with credit cards and debit cards, continue to be the primary means of payment in daily domestic spending by Hong Kong residents, according to the HKMA. The reason companies are showing a growing preference for using the yuan as the cross-border trade currency is mainly to hedge foreign exchange fluctuation risk and to hold yuan in view of its long-term appreciation, according to an HSBC (SEHK: 0005) survey of 1,300 companies on the mainland. Montgomery Ho, head of commercial banking at HSBC China, said the bank expected more than half of total mainland trade, or about US$2 trillion, will be settled in yuan by 2015. Yuan trade transactions settled through Hong Kong made up more than 80 per cent of the mainland's total yuan trade settlements in the first quarter. As for individual yuan deposits, some do come from the conversion of Hong Kong dollars for payment, savings or investment purposes. But the HKMA added that such currency switching is normal asset allocation behaviour by individuals and "should not be mistaken as evidence for Hong Kong residents' reluctance to use or hold the domestic currency because of a loss of confidence". Raymond Yeung, ANZ senior economist for China, said that given its storage value and for transaction purposes, there is a chance the yuan could replace the Hong Kong dollar - but not in the near future. For now, he said it was viable to have two popular currencies and frequent yuan use did not mean the city must change its peg to the US dollar.

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Shares in Giordano International (SEHK: 0709) jumped to a record high yesterday after tycoon Cheng Yu-tung increased his stake in the casual wear retailer for a third time in a month. The stock rose as much as 13.6 per cent to HK$7.58, its highest since the company went public in June 1991, before closing at HK$7.17 yesterday, up 7.5 per cent or 50 HK cents. Investors grew bullish after billionaire Cheng, chairman of New World Development and owner of jewellery chain Chow Tai Fook, raised his stake to 16.2 per cent after buying 17.8 million Giordano shares at an average price of HK$6.13 last Wednesday, according to a Hong Kong stock exchange disclosure. It was the third purchase for Cheng, who bought 6.75 million shares in the company at an average price of HK$5.85 and 218.36 million shares for an average of HK$4.81 earlier this month. Giordano's stock price has surged by 25 per cent since May 9 when Cheng (pictured) started raising his stake. Hong Kong's Ming Pao newspaper quoted an anonymous source last Friday as saying Giordano's management thought Cheng would continue buying shares to gain a controlling stake in the company, although he was unlikely to make a hostile takeover. Spokesmen for Giordano and New World Development did not comment. The retailer operates more than 2,300 stores in 30 countries. First-quarter sales rose 26 per cent to HK$1.42 billion and gross profit grew 30 per cent to HK$823 million, the company said in a statement to the Hong Kong stock exchange earlier this month. Taifook Securities analyst Winnie Fong said Cheng's increasing stake in Giordano could help it tap the high-end retail market because New World Development also had a retail arm on the mainland.

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Futures market mulls longer trading hours - HKEx plans to follow international practice with extended business session in the evening that will initially focus on index and gold derivatives - Hong Kong is the world's fifth-largest derivatives trading market but its hours are relatively short. After already losing their leisurely long lunches, futures brokers may have to make do with a sandwich for dinner if plans to extend trading hours in line with international practice go ahead. The Hong Kong Exchanges and Clearing (SEHK: 0388) wants to have a new 6-1/2-hour session from 4.45pm to 11.15pm, expanding futures trading to 12-1/2 hours. HKEx will collect feedback on the proposal until July 8 and if there is support, it will be introduced in the second half of next year. The extended hours would only involve three futures products - Hang Seng Index, H-share index and gold. At present, the market trades for 5-1/2 hours but will be extended to six hours from March next year. "Hong Kong is the world's fifth-largest derivatives markets but has relatively short trading hours and has to catch up," said Calvin Tai Chi-kin, the head of the trading division at HKEx. Hong Kong has generally lagged behind overseas markets in terms of trading hours. Before March, the city had the shortest trading period of all major stock markets and was open for only four hours a day while the futures market only traded 4-1/2 hours. From March both markets opened 30 minutes earlier and the two-hour lunch break was cut by 30 minutes. The lunch break will be cut another 30 minutes in March next year. Tai said eight of the top 10 derivatives markets had already extended trading. In these markets, the volume of contracts after the stock market close represented 15 to 30 per cent of those dealt during regular hours. Even after the proposed extension, Hong Kong's futures trading will still be dwarfed by markets such as the US where it is open for 23 hours and 15 minutes a day while London trades 20 hours. If Hong Kong extends its trading time, it will edge closer to Osaka Stock Exchange, where it is open for 13 hours and 15 minutes. But Osaka will extend its market to 16 hours and 45 minutes in the second half of this year. HKEx has proposed a 30-minute break between the current market close and the new trading session. Trades in the extended session will be settled the following trading day. "More than 90 futures brokers are now working in the evening to offer trading of European and US futures during London and New York business hours. This represents almost half of the HKEx's 183 futures brokers. We believe there is a demand for trading in the evening,'' Tai said. Brokers, however, have mixed views on the proposals. "There has been lower turnover in the stock market over the past three months even after trading hours were extended. We have doubts about whether we should extend futures market trading further," said Chim Pui-chung, the legislator for the financial services sector. Chim said if the stock market closed at night but futures trading stayed open, there would be a lot of speculative activity. Joseph Tong Tang, an executive director of Sun Hung Kai Financial, however, supported the proposed move. "We already offer services at night for customers who want to trade US or European futures products. We have staff on night shift anyway so there is no harm in trading Hong Kong futures products at night,'' Tong said. "The new session may not have much turnover but it would be a good move for Hong Kong to be more in line with the international markets."

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Hong Kong's cleanest beaches - Want the splash without the trash? We go searching for Hong Kong's cleanest beaches - As the mercury rises and the city swelters, it's time for hotheads to hotfoot it to the beach. Fortunately, in Hong Kong you never need to travel too far to cool off because there are 41 government gazetted public bathing beaches that dot the city's coastline. But finding your place in the sun on some beaches may mean having to put up with rubbish that has washed up on shore or been left behind by inconsiderate earlier beach-goers. The most common debris found on beaches includes broken glass, plastic bags, beverage bottles, foam boxes, and food wrappers and containers. And if you venture out into the water, you might have to dodge a lot more than litter. Some beaches are polluted by sewage, usually a result of poor infrastructure - either sewage pipes do not run far enough out to sea or the waste is not properly treated. During and after periods of heavy rain, many beaches are also likely to be more polluted for up to 72 hours, because rivers and sewage tanks overflow. Exposure to sewage can cause diseases such as gastroenteritis and diarrhoea, as well as enteric fever, hepatitis and kidney infection. Those with weaker immune systems, such as children and the elderly, may also be susceptible to viral respiratory infections. In some rare cases, exposure can be fatal. But it's not all bad news. To keep Hong Kong's beaches as healthy and safe as possible, the Environmental Protection Department has a comprehensive monitoring programme in place. It grades beaches on a scale of one (good) to four (very poor), based on the bacterial (E coli) level in the water from the five most recent samples that have been taken. This initiative, known as the Water Quality Objective, was implemented 25 years ago. Last year, the department monitored all 41 gazetted beaches and found that, for the first time, every one complied with the objective. It is a remarkable improvement from the 93 per cent recorded in 2009, and the 83 per cent recorded between 2003 and 2008. These protocols for monitoring beach water quality are similar to those used overseas in coastal cities such as Miami, Los Angeles, Sydney and Melbourne. "In terms of bacteriological water quality, [Hong Kong's] is comparable with those cities," says an Environmental Protection Department spokesman. "The government continually takes measures to improve the beach water quality by improving the sewerage infrastructure." This includes extending the network to cover villages without sewage systems, building new sewage treatment plants, and diverting polluted storm water discharge away from the catchment areas of the beaches. Volunteer group International Coastal Cleanup says better co-ordination and an overall strategy between the different government departments in charge of cleaning up designated areas are needed to prevent rubbish from ending up in the sea. Concerned? Keep up to date with the latest beach water quality ratings at Or participate in the International Coastal Cleanup Challenge, a beach clean-up event later this year (see Every little bit helps. Meanwhile, take the plunge at the city's top five cleanest beaches.

Hong Kong has banned two imported sports drinks contaminated by cancer-causing chemical DEHP as Taiwan struggles to contain its worst food scare in a decade. The level of DEHP detected in Speed Sports Drink, Speed Sports Drink (Lemon Flavour) and Brand's Calcium Grow Chewable Tablets exceeded the WHO safety levels by one to 17 times, Hong Kong health officials said. Hong Kong immediately banned the two drinks from sale. Chicken essence maker Brand's began a voluntary recall of the tainted products on Friday. All the retail outlets checked by the South China Morning Post (SEHK: 0583, announcements, news) last night had removed the products from their shelves. DEHP is used as a cheap substitute for vegetable oil to produce clouding agents that give beverages a more appealing flavour. However, it can affect the liver, kidneys and reproductive system and is particularly harmful to young people as it upsets their hormone balance. Children who consume 350ml of tainted fluid containing 12 parts per million (ppm) of DEHP on a daily basis for a year are six to eight times more at risk of developing problems with their reproductive system as adults, according to recent research by the Taiwan National Health Research Institutes. DEHP levels detected in the two sports drinks were 11 to 43 parts per million, whereas the level detected in the tablets was 40 ppm. Since last Tuesday, the Taiwanese authorities have found more than 506 drink and food products - produced by 156 manufacturers - to have been contaminated by DEHP. Only the two Speed sports drinks are exported to Hong Kong. Hong Kong Centre for Food Safety controller Dr Constance Chan Hon-yee urged the public not to panic. "These sports drinks would only be harmful if you drank them every day for more than a decade. If you drink them occasionally, it should be fine," she said. She said there was no need to ban all food imported from Taiwan and the government would continue testing Taiwanese food products and sports drinks from all origins. Hong Kong also imports 896 medications from Taiwan, 42 of which contain syrups that could be tainted with DEHP. The Department of Health said results of the five samples tested so far were satisfactory. It will finish tests on the remaining products in the coming week. The department said local drug manufacturer MPL used a Taiwanese brand of syrup in five of its products, but the suppliers were not those named by the Taiwanese authorities as DEHP users. The direct impact of the safety scare on Hong Kong is limited, but Taiwan's food industry is reeling. Media on the island have compared it to the mainland's melamine-tainted milk products scandal in 2008. Taiwanese authorities yesterday ordered an unprecedented inspection of all shops, canteens, night markets and drug stores. Online retailers are also being checked to make sure contaminated products aren't sold. From today, food and beverages containing clouding agents will be banned from sale in Taiwan, unless manufacturers can provide safety certificates, the island's health minister Chiu Wen-ta said. All sports drinks, juices, tea beverages, syrups, jams and powders that contain clouding agents must be tested before entering the market, Chiu said. Shops caught selling these products without safety certificates would be fined up to NT$1.5 million (HK$405,405), Chiu said.

Some sharp questions will be asked about the government's proposed HK$80 billion third runway at Chek Lap Kok airport when a consultation on the project begins on Thursday. The aviation industry is united in its call for a third runway, believing it is needed for Hong Kong to maintain its position as a leading aviation hub in the region. But critics are quick to point out that there are cheaper options, such as forming a strategic alliance with nearby Shenzhen airport. A proposed rail link, estimated at HK$50 billion, would connect the two and many hope that by pooling resources, both airports could reduce the need for unnecessary expansion. The idea of the rail link is being considered by the government, although a detailed plan will not be ready for two years. The Civic Party's vice-chairman, Albert Lai Kwong-tak, said the government should table both proposals to the public for consideration. "Nearly 30 per cent of our flights go to the mainland," Lai said. "If those passengers can go to Shenzhen airport by using the airport link, we may not need an extra runway." He led a popular campaign against a project to link Hong Kong with the mainland's high-speed rail network and was behind a recent judicial review against the Hong Kong-Zhuhai-Macau bridge. But supporters of the new runway said the two projects were not mutually exclusive. A person familiar with the situation said the proposed railway was never meant to be a replacement for the third runway. "Most of that 30 per cent patronage is from direct flights between Hong Kong and Beijing and Shanghai. Those passengers may not want to take a detour to Shenzhen airport, even if there is a rail link between them," the source said. "The link is meant to open a whole new market for local travellers who can go to Shenzhen and fly from there to second- and third-tier mainland cities that do not have direct flights with Hong Kong." The rail link was once classified as one of 10 major infrastructure projects in 2008. But a lack of obvious benefits has seen it being put on hold for further study. The Airport Authority estimates that the two runways at Chek Lap Kok will run out of capacity by 2020. Air traffic will have to be slowed if there is no third runway. But even if the runway can be justified economically, it remains to be seen if it can pass environmental impact tests. Some environmentalists have raised concerns over the possible impacts on air quality and the endangered Chinese white dolphins. They say the government needs to come up with plans to lessen the damage. Executives close to the runway project say that, while a new reclamation method will be adopted to minimise disturbance to marine life, changes to aircraft directions will also alleviate noise problems faced by residents on the island of Ma Wan. "The south runway, whose flight path is closest to Ma Wan, will serve as a backup when the new runway on the northern side of the existing north runway comes into place." Air passenger and cargo volume at Hong Kong airport rose 10.3 per cent to 50.92 million and 23.3 per cent to 4.13 million tonnes respectively last year. The two businesses continued to expand during the first four months this year.

Hong Kong tycoon Li Ka-shing's Husky Energy is reviving a flotation plan, which could see the Canadian oil producer obtaining a secondary listing in the city. According to a report in the Hong Kong Economic Journal yesterday, the step could be taken as early as the second half of this year and had hired Goldman Sachs, HSBC Holdings (SEHK: 0005) and UBS to handle the deal, citing unidentified insiders. "We do not comment on market speculation," a Hutchison Whampoa (SEHK: 0013) spokesman said. Hutchison Whampoa has a 34.55 per cent interest in Husky Energy, listed on the Toronto Stock Exchange. In 2009, Li said he wanted to float part of Husky Energy's assets in Asia, a recurring idea for the billionaire over the past two years. In 2010, Husky Energy generated a total of HK$45.21 billion of revenue, and income before deducting tax and interest was HK$3.07 billion. Husky is known for its dominant position in heavy oil producing and processing in Canada, and for its Husky and Mohawk petrol filling stations in western Canada. Analysts said given that Hutchison Whampoa had just put its losses in 3G behind, now was a good time to spin-off Husky Energy, which had been one of Hutchison's main earnings contributors. Lam Ka-kei, investment manager at Redford Asset Management, said a Hong Kong listing would give Husky Energy a platform to raise capital as it partners with mainland companies for projects. Last December, the Canadian oil company said it signed a deal with the mainland's CNOOC (SEHK: 0883) for the funding and operation of China's first deep-water gas discovery. Husky will operate the deep- water portion of Liwan 3-1 in the South China Sea, including drilling and links to a shallow-water platform. CNOOC will operate the platform, pipelines to the shore and an onshore gas-processing plant. Husky found gas at two fields in the South China Sea including Liwan 3-1, which could be China's largest offshore deposit with more than 100 billion cubic metres of gas, according to government estimates in 2006. "Husky is in sound financial position," Lam said. "But it's possible that it needs funding for the infrastructure in the deep-water gas project with CNOOC."

Owners of at least 10 clusters of old residential buildings are interested in inviting the Urban Renewal Authority to redevelop their flats under a new scheme, details of which will be announced by the authority today. Dubbed a demand-led approach, the new mechanism allows owners to initiate and apply for redevelopment if a majority agrees to it. It is aimed at tackling public concerns about the URA's lack of transparency in selecting projects and the impression that it chooses only profitable ones. Most of those who expressed interest live in old tenement buildings in Tai Kok Tsui, Sham Shui Po, To Kwa Wan and Kowloon City, where lifts are lacking and flats are often divided into rental apartments. "These old buildings were built in the 1960s," Yau Tsim Mong district councillor Henry Chan Man-yu said. "Elderly people living in poor conditions have to walk up as far as the ninth floor, while the division of flats aimed at tenants looking for a cheap place undermines the safety of the buildings." He said most residents living in Tai Nan, Ki Lung and Poplar streets in Sham Shui Po wanted redevelopment, although consensus had not been gained from shop owners. Property owners typically wait ages for the URA to move in and redevelop their sites or invite private developers to acquire their estate. The latter approach often yields a lower price and takes years. The new mechanism provides an extra option to such people. It arose from a review held last year to improve the old urban renewal strategy. A person close to the URA said board members would decide today the percentage of owners that should be regarded as a majority, the circumstances in which the authority should accept the applications and the financial implications. The authority will still acquire land, offer compensation and rehouse affected residents, as it does in existing projects. But to secure URA approval, the redevelopment should be identified as urgent by the district urban renewal forum, a committee that formulates renewal strategy for various districts. Preliminary rules state that an applicant must gain majority consensus from owners at two stages - when they apply for redevelopment and after the authority announces the acquisition price. Redevelopment will begin only when a certain percentage of owners endorse it. But it is unclear if the project must be financially viable. "I hope the authority will not approve profitable projects only. Or it will be little different from a developer," Chan said. Kowloon City district councillor Siu Yuen-sheung, a member of the district urban renewal forum, believes the new mechanism will attract many applicants, such as people living in the run-down district of To Kwa Wan known as "Thirteen Streets", as the latest acquisition price offered by the URA this month to residents of nearby Ma Tau Wai is at a record-breaking compensation of HK$9,785 per square foot.

 China*:  June 2 2011

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Chery Auto to build $200m factory in S America - Chery Automobile Co will break new ground in Latin America when its $200 million factory in Venezuela starts producing vehicles for the region later this year, a move seen as further enhancing foothold in the overseas market of the automaker, a top company executive told China Daily. Chery had signed a cooperative agreement with China Development Bank and the Venezuelan government to set up the new factory, which will be the second-largest that Chery has in Latin America, following its existing auto manufacturing facility in Brazil. Du Weiqiang, vice-president of Chery International, said the new auto-making plant will be producing 20,000 cars annually. "Venezuela is not an open market, which leaves huge potential for us to tap, if we have an assembly factory there to sell domestically. And also, Chery has rich experiences in Latin American nations," Du said. The new factory will be the first Chinese automotive plant in Venezuela and will help Chery - China's largest auto exporter and largest Chinese independent automaker - to ramp up its exports. Since December 2007, Venezuela raised import tariffs on autos to 40 percent from 35 percent, as a way to fend off imports and protect its own auto industry. It is estimated that 15 global auto-making companies - mostly from the United States, the European Union, Japan and South Korea - have established factories in Venezuela to cash in on the potential growth of the emerging economy, whose annual production capacity is 250,000 vehicles at the moment. But such capacity is far from meeting local demand, especially people who want to buy budget vehicles. That provides a niche opportunity for Chinese automakers to gain entry into the domestic market. "The new factory will mainly make budget cars. Our target is the local consumers," Du said. Under the agreement, China Development Bank will "grant loans to the Venezuelan government and Chery will transfer technology." Venezuela imports more than 50 percent of its auto parts annually. The local government has urged foreign companies, including Chinese automakers, to transfer technologies to local partners. Venezuela is a major crude oil producer and exporter. Since October 2009, the nation has launched a wave of economic stimulus packages, including building infrastructure and simplifying administrative processes. Venezuela's economy dropped by 1.4 percent in 2010, but it bounced back and increased by 4.5 percent during the first quarter of this year. Chery has 16 manufacturing bases abroad, including two in Latin America - Brazil and Uruguay. The factory in Brazil, with an investment of $400 million, can eventually produce 150,000 autos annually. "Latin America is the best performing region for Chery's overseas market, thanks to a stable political situation, less trade barriers and a mature consumption market," Du said. Since the recent global financial crisis began, Latin America has been one of the top three overseas markets for Chinese automakers, with Brazil expected to overtake Germany as the world's fourth-largest auto market this year. In 2010, Chery registered sales of 23,000 vehicles in Latin America, making the region the fastest growing market for the Chinese automaker. Last year, Chery sold 91,986 vehicles, mostly in developing regions such as Southeast Asia, the Middle East, Latin America and Africa. The company has set a target to sell 120,000 vehicles in the overseas markets for 2011.

Japan's largest airline company will put into operation a flight course from Tokyo to Chengdu, the first Chinese inland destination city, demonstrating its belief in Chinese-Japanese tourism and in Chengdu's potential as an aviation hub. The remark was made by Shinichiro Ito, President and CEO of All Nippon Airways Co., Ltd, (ANA), one of the largest in Asia, at Chengdu Shuangliu Airport lounge on May 24. "This is the second time I have visited Chengdu. I was here when the May 12 Wenchuan earthquake took place in 2008," said Mr. Ito. He said Chengdu had made great progress over the past three years, particularly in the aviation industry. "I have seen substantial progress and I see enormous potential in Shuangliu Airport through the second runway recently going into normalized operation and the second Terminal to be completed soon." "I have also seen rich tourism resources," Mr. Ito added, "and all sorts of gourmet foods this time in Chengdu. The city is so fascinating. Naturally, this was an important factor in our decision to choose Chengdu as the first destination among Chinese inland cities for our new scheduled flights." "We conducted market surveys to select Chinese inland cities for the new scheduled flights. In the end, we chose Chengdu from a list of candidate cities, such as Wuhan and Xi'an," said Mr. Ito. "The decision was made for three reasons. The first factor was the economic growth rate, in which the market surveys showed Chengdu surpassed all other candidates. The second factor was tourism resources. No doubt, Chengdu boasts obvious competitiveness. The third factor was trade and economic ties with Japan, as showed Chengdu was worth high attention," Mr. Ito said. Mr. Ito said the opening of the Chengdu-Tokyo direct flight sent a signal to Chinese tourists that tourism has become normal in Japan. He believed that Japan's tourism market for overseas travelers would recover soon. He said ANA had decided to open up the Chengdu-Tokyo scheduled flights three years ago, before the Wenchuan earthquake. Now, in the wake of Japan's own devastating earthquake, ANA remained resolved to implement the original plan, because it had confidence in growing exchanges between the two countries. When the Chengdu-Tokyo direct flight is opened, Chengdu, the first western Chinese city with direct flights to Tokyo, will assume a more important role as an aviation hub. By that time, Shuangliu International Airport will have 16 scheduled direct flights to overseas destinations, including Amsterdam, Bangalore, Bangkok, Kuala Lumpur, Singapore and Seoul, and cargo flights to Dubai and Vienna. It has 12 code-sharing international flight destination cities and 6 international direct tourist charter flights destination cities. Mr. Ito said that by 2015 Chengdu will develop into China's fourth largest international airfreight hub. He is confident in the future of the Chengdu aviation industry, with a view to the recently opened second runway and second terminal to be completed soon. ANA is considering initiating cargo flights to Chengdu.

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Western Graduates Head To China for Internships - Asian Work Experience Helps Résumés Stand Out in Tough Market - In a crowded job market, having work experience in China on your résumé can make a big difference. Recent graduates in industries from engineering to finance in both Europe and the U.S. are making their way to the country, hoping to land their first jobs faster and more easily than their competitors. Lesmes Gutiérrez, a 23-year-old engineering graduate of Loughborough University in the U.K., who had a two-week placement with Baoshang Bank in Beijing late last year, says potential employers are more impressed with those who can demonstrate a willingness to move out of their comfort zone. "It's quite a big step to go somewhere not knowing what to expect. The idea of going to China calls for awareness and the willingness to relocate," which could be appealing to employers, he says. And he's not the only one to have spotted the competitive advantage work experience in China may bring. Applications for internships there have more than tripled over the past couple of years, according to figures released by CRCC Asia, a London-based recruitment consultancy. In 2009, the company received about 250 applications, compared with more than 1,000 so far this year, says CRCC Asia Director Daniel Nivern. "The Chinese economy is booming and it's very appealing for graduates to get an insight as to why that's happening by visiting [the country]. With the job market depressed in the U.K. and the U.S., China offers a great opportunity to get a long-term career," he says. He says China has also come into focus for Western companies looking to grow. "A lot of businesses realize that if they want to be part of the global economy, they need to be going into China," adds Mr. Nivern, whose company has mostly placed recent graduates from the U.K. and the U.S., but also from other European countries like Spain, in finance, marketing and legal firms in China. "I have been told repeatedly that my work in China looks great on my résumé," says Alexander Lesher, who recently finished a master's degree in Environmental Engineering at the Indiana-based Purdue University and subsequently undertook a two-month internship at environmental company Nanjing Zhuangxun Tech Co. in Beijing. He says his experience there gave him a greater awareness of cultural differences. He says he was surprised by the way business people interacted during lunches. During a working meal with a group of about eight people, a single person would buy enough food to completely fill the table and would go out of his or her way to make sure everyone ate as much as possible. "Then they would act humbly, as if they have done nothing," he says. "That wouldn't happen in the U.S." Others visiting China for the first time found the first few days disconcerting. Sophie Corcut, a former unpaid marketing intern at fair-trade company Shangrila Farms, says: "Living in Beijing and dealing with a totally foreign language was challenging. Things like crossing the road or buying things in the supermarket or counting the numbers were suddenly difficult." But it was precisely that challenge that Ms. Corcut, who borrowed from her parents to fund her trip, was looking for. "It was brilliant. I was looking for that stimulation." Ms. Corcut, who now has a full-time job with management consultancy Accenture in London, says her two months' work experience in China was more rewarding than previous internships she had done in her native England. "I have done a lot of work experience in the U.K., and they actually don't need you. You are just there, and they are constantly trying to find you work. You are given something very menial," she says. "But in China they were actually using me. I was lucky to be interning for a young company that needed a lot of help." She says initially after graduation she wasn't sure what to do professionally with a degree in history and French, but in China she learned how to use Adobe Illustrator and Photoshop and started designing promotional leaflets for the company. "I tried to get a big sales push and tried to get new clients," she says. But some recruiters are swift to point out that China isn't the only place that will help students stand out. Chris McCarthy, of London-based recruiter Hays PLC, says it isn't China experience per se that employers are looking for but evidence that potential employees are willing to challenge themselves. "If Europe and the U.S. are going to maintain their place in global business people need to be prepared to put on a back pack" and head for less familiar places, says Mr. McCarthy. "It is evidence that people are willing to challenge themselves, not specifically China, that employers are looking for. They want to see a bit of ambition and entrepreneurship," he says. He adds, however, that China can be of particular relevance to employers looking for people with experience in emerging markets. But while experience in China may be invaluable, some obstacles can seem formidable. Mr. Gutiérrez, working at a microlender, struggled with Chinese. "The problem with a rural bank is that Chinese is its first language and English is not used at all. When it came to producing reports on the fluctuation of gold prices, there were no previous templates I could use so I had to rely on an intuitive process and then improve the subsequent reports based on feedback." Despite some barriers, the benefits run in both directions, and companies in China are profiting from the surge in interest from potential interns in the West. Thomas Cao, chief executive of Beijing-based Broad Global Venture Capital Co., says he finds real value in the work done by interns. "We look for graduates to come and do real work. We have asked our interns, for example, to help us analyze the chances of companies going public on the Hong Kong Stock Exchange," he says. Ultimately, says Mr. Lesher, going to China was about turning a personal fascination into a tangible benefit for his career. "The country was just a point of personal fascination. I wasn't sure how it would work out."

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Hot air balloons are seen on Monday during a group wedding in Anyang, Central China’s Henan province. About 30 couples from across the country participated in the hot air balloon wedding, part of the 2011 International Aero Sports Tourism Festival held in Anyang. 

China has raised prices of electricity for industrial use in some regions by around 20 yuan ($3.08) per 1,000 kilowatt-hour, said the country's top economic planner on Monday.

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Li makes French Open history - Sixth seed becomes first Chinese player to reach the last eight at Roland Garros after stunning comeback - Maybe Li Na's husband should have left the stadium earlier. The sixth-seeded Li was trailing 3-0 in the third set yesterday at the French Open when Jiang Shan, who is also her former coach, left Court Philippe Chatrier. The Australian Open runner-up then won the final six games to advance to the quarter-finals with a 2-6, 6-1, 6-3 victory over Petra Kvitova of the Czech Republic. "I don't know what happened. Maybe it's just my husband left and I was able to win six games in a row," joked Li, who became the first Chinese player to reach the quarter-finals at Roland Garros. After falling in the Australian Open final to Kim Clijsters, Li lost four consecutive matches and decided it was time to stop the slide. She started working with new coach Michael Mortensen in April before the Madrid Open, and their collaboration immediately paid off as she reached the semi-finals in the Spanish capital. Li said she needed a break from her husband both on and off the court after three years of working together. "Of course I was tired," she said. "And also after Melbourne I didn't do well. So I needed to change the team a little bit to improve a lot. That's why I asked for Michael. He's from Denmark. I asked him to help me, and now the husband is [my] hitting partner." Li tried not to hurt her husband when she told him their collaboration was over and said she didn't use the word "fired". "I would never say that," she said. "I mean, it's tough. ... So I tried to never say, `I fire you'." Li has now reached the quarter-finals at all four major tournaments and will next play either fourth-seeded Victoria Azarenka or Ekaterina Makarova. Although Li doesn't like to play on clay, she is confident she can reach the same level she had at the Australian Open - or even better - and believes in her chances to go deeper in the draw. "Why not? I already qualified [for the quarter-finals]," she said. "I won a fourth-round match, so what should I say? Did I play bad tennis? I don't think so." Defending men's champion Rafael Nadal, meanwhile, improved his record at Roland Garros to 42-1, beating Ivan Ljubicic 7-5, 6-3, 6-3 to reach the quarter-finals. The five-time champion was not troubled on Court Philippe Chatrier, and the win kept him on course to equal Bjorn Borg's record of six titles on the Parisian clay. "I have improved since the tournament started," said Nadal, who was pushed to five sets in the first round. "I'm able to play better and I'm going to continue on this path." Novak Djokovic also had a successful day, even though he wasn't scheduled to play. The second-seeded Serb reached the semi-finals of the tournament - where he could meet Roger Federer - when quarter-final opponent Fabio Fognini withdrew because of injury. "Walkover from Fognini. Bad luck for him, hope he recovers fast. Today i get to enjoy Paris in a different way :-)" Djokovic wrote on Twitter.

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China's Zhang Jilong will take the reins of the Asian Football Confederation after its president, Mohamed bin Hammam, was suspended from all soccer activity by Fifa on Sunday, an AFC insider said yesterday. But mainland soccer journalists and analysts said it meant little to China's soccer industry, which is still struggling with its own scandals. Asian soccer head bin Hammam was suspended over bribery allegations in the worst corruption scandal to blight soccer's world governing body, hours after abandoning his campaign to unseat Fifa president Sepp Blatter. Zhang, 59, the AFC's first vice-president and the former deputy chairman of the China Football Association, ran for a seat on Fifa's executive committee in January but was beaten in a vote at the AFC congress in Doha. The China Football Association said yesterday afternoon that it had not received any official information about Zhang's promotion and could not comment. Mainland soccer circles paid little attention to the news, with just a few portals posting translations from foreign media on their websites by last night. Ma Dexing, the deputy editor of sports newspaper Titan Sports Weekly, said he heard the news but thought it was not a big deal. "Zhang is the first vice-president so if there is anyone to temporarily replace bin Hammam, it should be him," he said. Liu Xiaoxin, chief editor of Guangzhou-based Soccer News, said Zhang was qualified for the position because of his long experience in the AFC. "But it's meaningless to us," Liu said, adding that mainland soccer had more to worry about. Two former chiefs of the Chinese Football Association, Nan Yong and Xie Yalong, and several dozen CFA officials, soccer players and referees have been arrested for alleged match-fixing, gambling and bribery since the end of 2009. None of the senior officials has yet stood trial.

Hong Kong*:  June 1 2011

Bank of China Ltd. said Friday that Executive Vice President Zhou Zaiqun has resigned because he is being transferred to work in Hong Kong. The Chinese lender said that Mr. Zhou, who joined in 2000, will also step down as executive director at the bank, effective Saturday. Bank of China said Zhou "has confirmed that he has no disagreement with the board and that there are no matters with respect to his resignation that need to be brought to the attention of the bank's shareholders." Bank of China didn't specify which of its units Zhou will be reassigned in Hong Kong. Blue-chip lender BOC Hong Kong (Holdings) Ltd. is the Chinese bank's main listed unit in the city.

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Samsonite Hong Kong IPO Seeks Up to US$1.51 Billion - U.S. luggage maker Samsonite International S.A. is seeking to raise up to $1.51 billion in a Hong Kong initial public offering ahead of June 16 listing on the city's stock exchange, according to a term sheet seen by The Wall Street Journal on Monday. The deal comes as foreign companies look to Hong Kong as a gateway to the vast China market. Other foreign retailers that plan to list in the city in coming months include Japanese clothing retailer Baroque Japan Ltd. and Italian fashion company Prada SpA. Brand-name companies are keen to raise their profiles in Asia so they can sell more products to the region's growing ranks of affluent consumers. At the same time, they are also looking to tap the increasing amount of Chinese capital flowing across the border into Hong Kong. Luxembourg-incorporated Samsonite, which started measuring demand from institutional investors Monday, plans to offer 671.24 million shares, of which 82% are secondary shares from existing shareholders, at an indicative price range of 13.50-17.50 Hong Kong dollars (US$1.74-US$2.25) each, the term sheet said. The fund-raising size—above the US$1 billion people familiar with the matter had said the company was seeking earlier—comes as the company looks to make a bet on its product-appeal in China's burgeoning consumer market. Samsonite is scheduled to launch the Hong Kong public offering June 3, the term sheet said. Samsonite booked US$1.2 billion in sales in 2010, up 18% from the US$1 billion it posted a year ago, while 2010 adjusted net profit—profit after tax and minority interest—was up 71% to US$106 million from US$62 million in 2009, according to a report by UBS, one of the bookrunners on the deal. Europe was the largest market for the company last year, accounting for 33.5% of sales, while Asia, which accounted for 33.3% of sales, was the second-largest market. Buyout firm CVC Capital Partners bought Samsonite for US$1.7 billion in July 2007 after securing US$1.43 billion in financing from RBS for the deal. The hefty debt package severely affected Samsonite when the financial crisis hit, and in June 2009 CVC was forced to put US$175 million cash into the company to avoid a breach of its banking covenants. In return, it was able to retain its 60% interest while lender RBS swapped some debt for a minority stake. Samsonite's fortunes have since improved. According to the UBS report, CVC currently owns 54.3% of Samsonite and RBS holds 29.9%. Samsonite, which makes suitcases, casual bags and travel products, had more than 37,000 points of sales by the end of 2010, of which 36,384 were wholesale and 734 were retail, the report said. Goldman Sachs Group Inc., Morgan Stanley, HSBC Holdings PLC, Royal Bank of Scotland Group PLC and UBS AG are bookrunners on the deal.

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Home on the World's Most Expensive Street - House of the Day: Severn Road, atop Hong Kong's Victoria Peak, is considered the world's priciest road in terms of real estate. Now a townhouse on the street has been put on the market for $36 million.

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Hong Kong is set to ban imports of food and drinks from Taiwan that contain a cancer-causing plastic additive. The order would also apply to common drugs and medicines with the chemical DEHP. From tomorrow the island will end the nearly two-decade practice of adding any of six chemicals - including di(2- ethylnexyl) phthalate - to clouding agents, which can affect the hormone balance of youngsters. Food and Health Secretary York Chow Yat-ngok said yesterday: "The practice seems to be quite widespread in many aspects of food ingredients, involving not only drinks but also drugs. "If necessary, we can use our existing regulations to ban imports to ensure that those products will not be sold in the market." Chow urged retailers to dump "affected products from shelves." In Taiwan a clouding agent is used in fruit jelly, yogurt powder mix, juice and other drinks to keep the emulsions evenly dispersed. More than 460,000 bottles of sports drinks and fruit juice, 20 tonnes of fruit and yogurt powder and 130,000 packs of probiotic powder were recalled last week after the plasticizer was detected. Cough mixture and calcium tablets were yesterday also found to be contaminated. Taipei urged clinics and pharmacies to suspend the use of tainted fruit-flavored syrups. Chow said most of the contaminated products are not sold here. "Only a small amount of Taiwan-imported cough syrup is sold in Hong Kong." A spokeswoman for the Centre for Food Safety said: "DEHP is currently excluded from the regular food surveillance program and we will adjust regular inspected items based on government inspection results." Local food and health experts called for a ban on DEHP, adding that there is no regulation of the chemical, despite it being banned in the United States and Europe. A previous study found DEHP traces in 99 percent of blood samples from 200 SAR residents, indicating that it is absorbed easily into the body, said Chris Wong Kong-chu, professor at the department of biology, Hong Kong Baptist University. Gabriel Choi Kin, president of the Hong Kong Medical Association, said local distributors of medicines made in Taiwan should declare whether they have used DEHP to dilute cough syrup or make liquid tonics. He said island-made medicines come prepackaged from manufacturers and are not prepared at doctors' clinics. Leung Ka-sing, visiting associate professor at the department of applied biology and chemical technology, Hong Kong Polytechnic University, said DEHP is for industrial use and has been banned worldwide in food and children's toys for more than 10 years. Dr Kwok Ka-ki, a health policy advocate, said high dosage of DEHP may badly affect female hormones, bringing a higher risk of breast and ovarian cancer. "With men, it can suppress their sexual ability and potency. Children's puberty and development of secondary sexual characteristics can be affected if they intake large dosage," Kwok said.

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Arts hub: no time to lose - Experienced administrator Michael Lynch should be able to kick-start the West Kowloon Cultural District project, but will he really have the desired autonomy? Veteran arts administrator Michael Lynch has just stepped into a job that is as formidable and ambitious as the HK$21 billion project of which he is now in charge. The West Kowloon Cultural District has never just been about the 42 hectares of land on which 15 performing arts venues, a large piazza, a visual-arts museum and an exhibition centre will be built. It is also about giving the city the much needed space to develop its arts and culture, elevating local artistic standards to a world-class level, building links and partnerships with the existing cultural facilities and integrating the new district with its neighbourhoods and the rest of Hong Kong. As its chief executive, the 60-year-old Australian will not only have to deal with artists but also builders, politicians and government officials from an array of departments. The position has so far proved to be a poisoned chalice: Angus Cheng Siu-chuen left the job after just a week in 2009 and Graham Sheffield, former artistic director of the Barbican Centre in London, resigned from the post in January after five months, citing health reasons. However, many believe that Lynch, with his extensive experience and international background, will be able to take the challenges in his stride. The former head of the Sydney Opera House and the Southbank Centre in London has arrived at a crucial phase in the project: the conceptual plan for the West Kowloon Cultural District proposed by British architect Norman Foster was approved by the government in March and should be endorsed by the Town Planning Board at the end of this year at the earliest. The next step is to turn concepts into reality. "Lynch will be a leader not just of West Kowloon but all its surrounding districts," says one observer who is close to the project. "There are many technical issues that need to be ironed out and there is an urgent need for the WKCD to come up with a construction programme or infrastructural blueprint for the plan. For instance, the Foster plan proposes underground traffic. How will that be connected with the existing local traffic in the area?" Besides traffic, the arts district authority will have to figure out how to integrate the cultural hub and the nearby Hong Kong-Guangzhou high-speed railway. Sorting out these issues will be laborious and time-consuming. And it will involve a slew of government departments, including the Town Planning Board, Environmental Protection Department, Transport Department, Lands Department, Home Affairs Bureau and district councils. All the while, the WKCD Authority must keep a close eye on its budget to ensure that it does not overspend. The project needs to start its construction phase very soon if it is to meet the scheduled completion of its first phase around 2015. That means building 12 performing arts venues and the M+ art museum. But the authority made some progress while searching for Sheffield's replacement. On Wednesday, Lars Nittve, executive director of the M+, told a group of international art dealers and reporters in town for the Hong Kong International Art Fair that "the momentum is already there". He said he hoped the designer for M+ would be identified, through an international competition, by next April and the architect by next summer. "We are now working on the policy of collection, as everything is [built] from inside out," he said, adding that HK$1 billion was earmarked for acquisition. "In 10 years' time, the collection should reflect that you are here in Hong Kong, the Pearl River Delta, China, Southeast Asia and the rest of Asia." M+ aimed to display local artwork, Nittve said, "but more importantly to bring great art here from around the world". Louis Yu Kwok-lit, the executive director for performing arts, is looking at the feasibility of major local performing arts companies taking up residence in some of the new venues. It will be Lynch's job to get his team of eight senior executives together and ensure everyone is working towards the same vision. He will need to get board members in agreement to put his administrative decisions in effect. The question of autonomy - whether WKCD will be free to make decisions about art without government interference - will need to be addressed, discussed and confirmed. Most of all, Lynch has to learn about this city - fast. Despite his glowing resume and extensive experience, Hong Kong is no London or Sydney. He will have a lot of catching up to do to understand the local cultural scene and more. The learning curve will be very steep. "His position is not simply to oversee a cultural district; being an outsider, he needs to have an understanding of the government, how it works, the arts community and potential audience in order to design the project," says one veteran artist who is close to the project. The WKCD cannot take the same approach as the government in promoting the arts, which places more emphasis on "fairness and pleasing everyone" instead of artistic merit, the artist says. "West Kowloon should take a leader's role in local art and cultural development. This district is a project that is of international world-class standard. Artistically, it has to be able to decide what is of quality. You cannot cater to everybody. "So will the new chief executive have the courage to make that decision? "On the one hand [Lynch] will need to communicate and work with the government - which is set in its way of doing things - and on the other striving for high standards. He needs to be brave enough to stand up for his decisions and choices and that is really challenging." But the success of the WKCD will not rest on Lynch's shoulders alone. The district's evolution will depend on who will take over the reins as chief executive in the future. For now, it is hoped that Lynch will at least stay long enough to kick-start this mammoth project and give it a solid head start.

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Asia Society's co-chairs 'to build a shared future' - Decision to share key post is very much about Asia and America, says organisation's president - The Asia Society's president has defended the appointment of Hang Lung chairman Ronnie Chan Chi-chung as its co-chair, the first time the body has appointed an Asian to the position, to be shared with a former US government official. The Hong Kong property tycoon (pictured) will serve as co-chair with Henrietta Holsman Fore. Fore - a former administrator of the US Agency for International Development - and Chan will take up their posts on June 10, when the incumbent, Charles Kaye, steps down. Their appointments have drawn complaints that the arrangement undermines the status of Asians in the international organisation. "Within the American context and the Asian context ... to have a co-chair on each side of the Pacific is unprecedented," said Vishakha Desai, the president and chief executive officer of the New York-based body. "Asia Society's mission, especially now, is to strengthen partnerships among Asians and Americans to build a shared future. In other words, we really do think of partnerships and relationship on both sides of the Pacific as crucial. It's not just about Asia. It's very much about Asia and America," she said. Desai, an Indian-American art expert, became the organisation's first Asian president in 2004. She was in Hong Kong on a business visit. Chan has been vice-chairman of the society's board since 1998 and is chairman of its Hong Kong centre. Meanwhile, the society's centre in Admiralty is expected to be open in the first quarter of next year, about four years behind schedule. Edith Chan, the centre's executive director, said the delay was due to the complexity of the project and the desire to preserve the former Explosives Magazine military buildings. "We recognise the significance of this heritage conservation responsibility. "This explains the care and dedication at each and every step we make," she said. She added that the centre would be open to the public.

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Hotel's windfall space put to work - Cheung Kong Holdings has used the HK$1.3b worth of free floor area it squeezed out of the Marine Police headquarters in key areas of the hotel project - Heritage 1881 under construction. At least some of Cheung Kong (SEHK: 0001) Holdings's windfall of 30 per cent extra floor space at the former Marine Police headquarters in Tsim Sha Tsui has been put to use as back offices, a garden, bars and restaurants in the hotel-and-mall complex that the developer has built on the controversial site. An investigation by the South China Morning Post (SEHK: 0583) has found that the former basement of the historic building is being used as the back offices of the 1881 Heritage complex's hotel, called Hullett House, after being turned into a mezzanine floor above the new ground-floor lift lobby. The former ground floor is now the first floor of Hullett House. These facilities and adjoining spaces occupy a large portion of the extra 1,350 square metres of floor space, worth HK$1.3 billion, that Cheung Kong has acquired thanks to an oversight in a government survey before the site was put to tender. Originally, the government offered a site of 1,450 square metres for this project but the development now covers 2,750 square metres, with guest rooms occupying the remaining space, on the second and third floors. Guests check in on the second floor, at ground level on the north side of the building. The current spatial arrangement has surprised an architect who was involved in the 1881 Heritage project, saying that the original basement was little more than an underfloor space used for ventilation. "The basement was so low I had to lie down to enter," he said. The discrepancy between actual space and the gross floor area put out to tender was reported by the Post in November, when real estate agents estimated that the windfall to Cheung Kong was worth HK$1.3 billion at prices of HK$1 million per square metre for Tsim Sha Tsui. Albert Lai Kwong-tak, the former chairman of the Conservancy Association, echoed a warning the green group gave when the project was first proposed eight years ago, saying that when a developer took over a historic site its main objective was profit, not conservation. "All the controversies of the former Marine Police headquarters project, ranging from wiping out the Tsim Sha Tsui Hill and destroying an entire woodland, to the discrepancy in gross floor area, are rooted in the selling of a historic building to a property developer whose nature is to seek maximum profit," Lai said. Since the Post report on the floor-space discrepancy at the former Marine Police headquarters, Secretary for Development Carrie Lam Cheng Yuet-ngor has said that the government did not survey the exact size of the historic buildings before putting the site out to tender. The pre-tender estimate came from a consultancy study on development opportunities commissioned by the Planning Department in 1999, she said. Town planner Andrew Lam, who was in charge of the study, said he was shocked to learn this study had been used as the basis for the tender document, as he had not done any detailed measurements of the site. "The former Marine Police headquarters had no building plans," Lam said. "Our estimation was based on a visual survey. The geotechnical engineering office had surveyed the site; we used their materials for our study ... [but] it wasn't intended for a tender document." Lam thinks the 30 per cent discrepancy may come about from different ways of perceiving development potential. "We are not developers; our perspective is different from theirs. It is possible they figure out potential that we do not notice." The brief summary of the planning application at the Town Planning Board shows Cheung Kong applied in November 2004 to build an office block, which was not included in an application it had filed previously, in January 2004. Cheung Kong insists it has not altered the main building, because it is a monument. The Lands Department said the developer had not added an extra floor to the main building.

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Widely tipped as the main contestants in the election to become chief executive next year, Chief Secretary Henry Tang Ying-yen (right) and Executive Council convenor Leung Chun-ying shook hands yesterday when their paths crossed at an exhibition opening ceremony. The two men were mobbed by photographers and reporters but neither would be drawn on when they might officially throw their hats into the ring. Also attending the event at the IFC mall to mark the anniversary of the 1911 Chinese revolution was former Legco president Rita Fan Hsu Lai-tai, seen by many as a dark-horse candidate for the top job.

HK gets in line with international practice on dispute resolutions - Law revamp allows city to handle cases from more jurisdictions as Singapore mounts challenge to status - On Wednesday a new law will align Hong Kong's arbitration system with international practice, which lawyers say will boost the city's bid to be Asia's premier arbitration hub. The Arbitration Ordinance will remove the distinction between domestic and international arbitrations in Hong Kong, said Peter Chow, a partner with law firm Bryan Cave. "The key change is the introduction of a unitary regime based on international practice. This is a complete revamp of the old law. It aims to be more user-friendly. In particular, practitioners from outside Hong Kong will appreciate this." The aim of the law is to attract more international businesses to resolve legal disputes in Hong Kong since their lawyers will be more familiar with international practice, Chow said. "Parties may choose Hong Kong to resolve disputes even though they have no Hong Kong connections." Modelled on the United Nations Commission on International Trade Law, the law applies only to international arbitration cases in Hong Kong, not domestic cases, said James Kwan, an international arbitration expert at law firm Baker & McKenzie. A unitary regime avoids confusion and gives clearer details on matters such as confidentiality, Kwan said. Hong Kong's current system recognises arbitration awards made in countries that are signatories to the New York Arbitration Convention, and China. The new law broadens this recognition and enforcement of international arbitral awards to jurisdictions beyond China and New York Convention states, said a note by law firm Latham & Watkins. "The wide recognition of arbitral awards and extensive provisions for their enforcement will foster Hong Kong as an ideal arbitration centre for international entities engaging in China-related business. With the new Arbitration Ordinance, Hong Kong has taken another ... step in maintaining its position as the pre-eminent forum for commercial arbitration in the region," the note said. "Hong Kong already has the advantage of an independent judiciary ... and institutions such as the HKIAC [Hong Kong International Arbitration Centre] which is renowned for transparency and independence. Having user-friendly legislation can only bolster Hong Kong's reputation as an arbitration hub," Kwan said. Chow said Hong Kong and Singapore were the leading arbitration centres in Asia. "Singapore is positioning itself as the leading centre and challenging Hong Kong." "In terms of numbers Hong Kong still leads Singapore, but last year the cases administered by the HKIAC dropped. On the other hand, the case load handled by the Singapore International Arbitration Centre doubled in the last three years." The HKIAC handled 291 cases last year against 429 in 2009. There were 175 international cases and 116 domestic cases. Singapore handled 198 cases including 140 international cases. The Singapore government plays an active role in promoting arbitration, for example by supporting the development of the world's first integrated dispute resolution complex with international institutions such as the American Arbitration Association in Singapore, said Chow. "Chinese clients prefer Hong Kong as an arbitration centre, but some US and European clients can't shake off the perception that Hong Kong is too politically tied to China. Singapore is seen to be more neutral than Hong Kong. Also, Korean and Indian parties prefer Singapore," he said. The changes will have a significant impact on Hong Kong's construction industry, which accounted for 28 per cent of arbitration cases last year, Chow said. "Large numbers of cases involve the construction industry. Hong Kong is expected to increase spending on infrastructure projects in the next few years, to the tune of more than HK$50 billion this year alone. All these are likely to lead to more legal disputes." Hong Kong's construction industry wants to keep some features of domestic arbitration under the current system, Chow said. Kwan said: "The construction industry got what it wanted - an option to incorporate aspects of a regime it was familiar with." This includes appeals on questions of law, having a sole arbitrator which saves time and costs, and consolidation of arbitrations into a single set of proceedings, as infrastructure projects often involve many contracts, subcontractors and suppliers.

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A Hong Kong dentist helping to reveal the hieroglyphs beyond a mysterious shaft inside the Great Pyramid of Khufu in Giza, has had to stop work due to the Egypt uprising. Ng Tze-chuen, 58, is founder of Djedi, an international team of 10 scientists tasked with finding out what is in the secret chamber, described by Zahi Hawass, Egypt's minister of state for antiquities affairs, as the last great mystery of the pyramid. The mass protests have delayed the release of the team's first report in the official Annales du Service des antiquites de l'Egypte. Because of the protests, Hawass has told the team to put off their exploration for safety reasons. But the Causeway Bay dentist for 30 years said he could not wait to get inside and resume work on the project of his dreams. "I'm not afraid of protesters .We'll be working inside the very secure pyramid anyway," he said. "We've been on the project for nine years and I really can't wait to find out and show the world what's behind it." Rare images sent back from Djedi's endoscopic camera showed hieroglyphs written in red paint and lines in the stone that could be marks left by stone masons when the chamber was being carved. If these hieroglyphs can be deciphered, they may give clues as to how the part of the pyramid was built and maybe what the shafts were for. Egyptologists have said painted numbers and graffiti were common around Giza. They could be numbers, dates or the names of the gangs. The team's next task, scheduled for September, is to check whether the second door is a solid block of stone by bouncing balls off the wall. They will calculate its thickness from the frequencies given by the impacts. It will help gauge how long the drill has to be to penetrate the second door. Two previous expeditions into the shafts in 1993 and 2002, by German and then American scientists, hit brick walls when their robots were blocked on their way up the shaft of the Queen's Chamber. Hawass said something might be hidden in the pyramid. His theory is based on an ancient story that the magician Djedi met Khufu, who was looking for the god Thoth so he could discover the secret of the pyramid.

Boost for trade as accountants agree to co-operate - Global expansion by mainland companies, and Hong Kong companies' penetration of the mainland, received a boost with an agreement signed yesterday. The agreement was between the Hong Kong Institute of Certified Public Accountants (HKICPA) and the Beijing Institute of Certified Public Accountants (BICPA), which signed a letter of intent to boost co-operation among small and medium-sized accounting firms in both cities. The expectation is that better co-operation between accounting firms will help their client companies too. "The small and medium accountancy firms of both cities will expand co-operation, train human resources, exchange knowledge and clients," said Winnie Cheung, HKICPA chief executive. This is the first agreement between the HKICPA and a mainland counterpart, said Cheung, who expressed hope that more mainland accountancy institutes would sign agreements with the HKICPA. Currently, Hong Kong accountancy firms are not allowed to establish branches on the mainland. This agreement will enable Hong Kong accountancy firms to partner mainland accountancy firms to win business in the mainland, Cheung said. BICPA President Guo Wenjie said: "Hong Kong companies are expanding into the mainland. Hong Kong accounting firms follow Hong Kong companies. This agreement will help mainland small and medium enterprises expand abroad." Although the number of mainland SMEs venturing abroad is currently small, more will go overseas in future, which will create a demand for accounting services for their international operations, Guo said. "Chinese companies are expanding overseas. Chinese accounting firms will follow them. "This is an inevitable trend."

Myanmar's trade with China's Hong Kong hit 1.7 billion U.S. dollars in the fiscal year of 2010-11 ending in March, a sharp increase of 79 percent year on year, according to Myanmar's monthly economic indicators Friday. Of the total, Myanmar's exports to the Hong Kong Special Administrative Region amounted to 1.69 billion dollars, while its imports from the region took 4.7 million dollars. Hong Kong stood third in Myanmar's trading partner line-up after Thailand and Chinese mainland, according to the figures. In 2009-2010, Myanmar-Hong Kong bilateral trade was registered at 949 million dollars, with Myanmar's exports to the region at 938 million dollars and its imports from the region at 10.9 million dollars. According to Chinese official figures, China-Myanmar bilateral trade hit 4.44 billion U.S. dollars in 2010, a 53.2-percent increase over the previous year. For the first quarter of 2011, it has broken a figure of 1.6 billion dollars, increasing by 70 percent correspondingly.

Hong Kong banks have been ordered to conduct stress tests assuming customer withdrawals of as much as US$89 billion over the next year, adding to signs of concern that lenders' balance sheets have grown too fast. Banks should assume that half of the HK$1.38 trillion of customer deposits in local and foreign currencies added since late 2008 will flow out in six to 12 months, the Hong Kong Monetary Authority says. Capital might flow out of Hong Kong once the United States starts raising interest rates, HKMA chief executive Norman Chan Tak-lam said last month. The de facto central bank is in talks with lenders about slowing credit growth amid concern funding may tighten and cause property prices to slump after they surged more than 50 per cent in the past two years. "The potential problem is that liquidity is tightening in the banking sector," said Paul Lee, an analyst at Haitong International Securities Group. "When the US ends its quantitative easing, monetary policy and global liquidity will tighten, and this may cause more fund outflows." Yuan deposits in the city tripled to a record 451 billion yuan (HK$540.39 billion) in the past two quarters amid forecasts it will be the best performer among the so-called BRIC nations this year. Housing prices have surged more than 50 per cent in the past two years as buyers from the mainland were attracted by the city's relatively low rates and weaker currency. The government in November last year increased property transaction taxes and pledged to boost land supply amid public protests over living costs. Measures to curb speculative investments led to a 37 per cent drop in new mortgage loan approvals from March to HK$27.6 billion in April. Bank loans have also grown faster than deposits, pushing the loan-deposit ratio to 81.7 per cent in March from 71 per cent early last year. "At smaller banks, the loan-deposit ratio is probably between 90 and 100 per cent, so the worry is that smaller banks would have to embark on a potential liquidity chase," said Ismael Pili, the head of Asia bank research at Macquarie Capital. "Funding cost will go higher, and margins at these banks would come off." Chan said last week he was talking to banks with "quite aggressive" loan growth expectations. The central bank also plans to adopt more measures to stabilise the industry if needed.

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After taking on Hong Kong Disneyland with Universal Studios Singapore, the Lion City is set to unveil a rival to Ocean Park. Developer Resorts World Sentosa said it will open the "world's largest oceanarium" in the middle of next year, which is expected to lure tourists away from the venerable Ocean Park. Marine Life Park, an eight-hectare home to 700,000 fish inside a 30-million-liter lagoon, is on track for Sentosa's phase two expansion, which also includes a maritime museum, an aquarium and two hotels. Ocean Park covers 87 hectares but its Grand Aquarium contains only 5,000 fish of more over 400 species. The new marine park was revealed at Friday's grand opening of Universal Studios Singapore, one of the resort's anchor attractions on an island off the southern coast. Its official opening came nine months after its soft launch and was attended by former American Idol judge and now X Factor USA judge Paula Abdul and iconic Hong Kong actress Maggie Cheung Man-yuk. "The advantage we probably have here is that the Universal Studios is in the same resort as the Marine Life Park," said Sentosa executive chairman Lim Kok Thay. "When compared with Hong Kong, we actually have two in one [attractions]." He admits that Marine Life Park "shares a lot of similarities in concept" with its competitor in Hong Kong, adding the resort learned a lot from the Ocean Park group in particular. It is in the same HK$41 billion integrated resort with the movie theme park and a casino, which was developed by Genting Singapore. The city-state's concentrated effort to lure tourists away from neighboring travel destinations such as Hong Kong has been paying off. Last year, it welcomed a record 12 million visitors, a year- on-year rise of around 25 percent. Since March, Universal Studios Singapore has attracted about two million visitors, of whom 75 percent are foreigners. The 20-hectare theme park now has 21 rides and shows in seven themed zones, the newest a river boat ride. It launched the world's tallest dueling roller coasters, Battlestar Galactica, in February. Universal Studios Singapore, the second of its kind in Asia after the one in Japan, covers an area of 25 football fields - smaller than Ocean Park and the world's smallest Disneyland in Hong Kong. Ocean Park welcomed the marine park, saying it would generate competition and attract more tourists to Asia.

 China*:  June 1 2011

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Finger pointing no solution - The urgent need to rebalance the Sino-US economic relationship, as Commerce Secretary Gary Locke told a number of US senators on Thursday, is more than obvious. Yet, his pronounced ardor to press for more access to the Chinese market and faster revaluation of the yuan as the elixir for all the US' economic ills is misdirected. Given the current US political climate, s